FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  EXCHANGE
ACT OF 1934 For the quarterly period ended June 30, 1999

                                       OR

|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from ________ to ___________

Commission file number: 0-11749

                                   Scios Inc.
             (Exact name of Registrant as specified in its charter)

                 Delaware                                           95-3701481
         (State or other jurisdiction of                        (I.R.S. Employer
         incorporation or organization)                      Identification No.)

                                   Scios Inc.
                                820 W. Maude Ave.
                               Sunnyvale, CA 94086
               (Address of principal executive offices) (Zip code)

                                (408) 616-8200
                     (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  registrant's
classes of common stock, as of the latest practicable date.

Title                                                        Outstanding

Common Stock, $.001 par value                                38,468,652


<PAGE>







                                   SCIOS INC.
                                AND SUBSIDIARIES

PART I.   FINANCIAL INFORMATION

Item 1. Financial Statements







































<PAGE>





                                         SCIOS INC.
                                      AND SUBSIDIARIES
                                 Consolidated Balance Sheets
                              (In thousands, except share data)
<TABLE>
<CAPTION>

     ASSETS                                                  June 30,          December 31,
                                                               1999              1998
                                                           --------------    -------------
                                                            (Unaudited)
<S>                                                               <C>              <C>

Current assets:
     Cash and cash equivalents                                    $6,922           $6,683
     Marketable securities                                        12,550           23,394
     Accounts receivable                                           4,481            6,768
     Prepaid expenses                                                669              568
                                                           --------------    -------------
       Total current assets                                       24,622           37,413

Marketable securities, non-current                                58,345           67,234
Property and equipment, net                                       29,733           32,214
Other assets                                                       1,912            1,968
                                                           --------------    -------------

TOTAL ASSETS                                                    $114,612         $138,829
                                                           --------------    -------------

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                             $1,766           $2,327
     Other accrued liabilities                                     9,929           10,087
     Deferred contract revenue                                    17,231           16,896
                                                           --------------    -------------
       Total current liabilities                                  28,926           29,310

Long-term debt                                                    35,912           34,573
Minority interests                                                    --               20
                                                           --------------    -------------
       Total liabilities                                          64,838           63,903
                                                           --------------    -------------

Stockholders' equity:
     Preferred stock; $.001 par value; 20,000,000
        shares authorized; none issued and outstanding                --               --
     Common stock; $.001 par value; 150,000,000
        shares authorized; issued and outstanding
        38,468,652 and 38,468,652 shares, respectively                38               38
     Additional paid-in capital                                  416,698          416,428
     Treasury stock; 775,036 and 754,199
        shares, respectively                                     (3,646)          (3,481)
     Notes receivable from stockholders                            (108)            (145)
     Deferred compensation, net                                    (357)            (505)
     Accumulated other comprehensive income (loss)                 (396)           11,412
     Accumulated deficit                                       (362,455)        (348,821)
                                                           --------------    -------------
       Total stockholders' equity                                 49,774           74,926
                                                           --------------    -------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $114,612         $138,829
                                                           --------------    -------------
</TABLE>


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



<PAGE>




                                   SCIOS INC.
                                AND SUBSIDIARIES

           Consolidated Statements of Operations and Comprehensive Income (Loss)
                        (In thousands, except share data)
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                            Three months ended                  Six months ended
                                                                 June 30,                           June 30,
                                                          1999                 1998           1999           1998
                                                    ------------------        --------     ------------   ------------
<S>                                                            <C>              <C>            <C>            <C>

Revenues:
     Product sales                                             $9,472           $4,729         $17,294        $13,159
     Co-promotion commissions                                   1,886            1,985           4,614          3,253
     Research & development contracts                           2,885           22,881           5,062         27,473
                                                    ------------------        ---------    ------------   ------------
                                                               14,243           29,595          26,970         43,885
                                                    ------------------        ---------    ------------   ------------

Costs and expenses:
     Cost of goods sold                                         4,890            2,985           9,198          7,790
     Research and development                                   8,129           11,930          18,672         22,457
     Marketing, general and administration                      4,242            4,480           9,555          9,082
     Profit distribution to third parties                       1,528              128           2,645          1,198
     Restructuring charges                                         --               --           6,670             --
                                                    ------------------        ---------    ------------   ------------
                                                               18,789           19,523          46,740         40,527
                                                    ------------------        ---------    ------------   ------------

Income (loss) from operations                                 (4,546)           10,072        (19,770)          3,358
                                                    ------------------        ---------    ------------   ------------

Other income and expense:
     Investment income                                          1,100              962           2,126          1,948
     Interest expense                                           (670)            (643)         (1,340)        (1,292)
     Realized gains on securities                                 305               39           5,091          8,077
     Other income, net                                             41              460             272            477
                                                    ------------------        ---------    ------------   ------------
                                                                  776              818           6,149          9,210
                                                    ------------------        ---------    ------------   ------------

Equity in net loss of affiliates                                   --            (581)              --          (825)
                                                    ------------------        ---------    ------------   ------------
     Income (loss) before provision for income taxes          (3,770)           10,309        (13,621)         11,743

Provision for income taxes                                        (7)              (6)            (13)          (116)
                                                    ------------------        ---------    ------------   ------------
     Net income (loss)                                        (3,777)           10,303        (13,634)         11,627
                                                    ------------------        ---------    ------------   ------------

Other comprehensive income (loss):
     Unrealized gains (losses) on securities                    (978)               40        (11,808)            (4)
                                                    ------------------        ---------    ------------   ------------
Comprehensive income (loss)                                  ($4,755)          $10,343       ($25,442)        $11,623
                                                    ------------------        ---------    ------------   ------------

Earnings (loss) per common share:
     Basic                                                    ($0.10)            $0.27         ($0.36)          $0.31
                                                    ------------------        ---------    ------------   ------------
     Diluted                                                  ($0.10)            $0.26         ($0.36)          $0.30
                                                    ------------------        ---------    ------------   ------------

Weighted average number of common shares outstanding used in calculation of:
     Basic                                                 37,724,094          37,850,807   37,735,349     37,562,172
                                                    ------------------        ------------ ------------   ------------
     Diluted                                               37,724,094          42,092,920   37,735,349     38,733,164
                                                    ------------------        ------------ ------------   ------------
</TABLE>

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

<PAGE>
                                                 SCIOS INC.
                                              AND SUBSIDIARIES

                                   Consolidated Statements of Cash Flows
                                               (In thousands)
<TABLE>
<CAPTION>

                                                                                     Six months ended
                                                                                         June 30,
                                                                                 1999                1998
                                                                              ------------        -----------
<S>                                                                             <C>                 <C>
                                                                                       (Unaudited)
Cash flows from operating activities:
   Net income (loss)                                                            ($13,634)           $ 11,627
   Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
      Depreciation and amortization                                                 1,551              1,909
      Accrued long-term interest payable                                            1,339              1,275
      Equity in net loss of affiliates                                                 --                825
      Gain on sale of securities                                                  (5,091)                 --
      Minority interest                                                              (20)                 --
      Amortization of deferred compensation                                           148                 --
      Non-cash restructuring expenses                                               1,273                 --
      Change in assets and liabilities:
        Accounts receivable                                                         2,287            (6,140)
        Accounts payable                                                            (561)              2,128
        Other accrued liabilities                                                 (2,904)            (5,004)
        Other                                                                        (45)                281
        Deferred contract revenue                                                     335                 29
        Restructuring charges                                                       2,746                 --
                                                                              ------------        -----------
             Net cash provided by (used in) operating activities                 (12,576)              6,930
                                                                              ------------        -----------

Cash flows from investing activities:
   Purchases of property and equipment                                            (1,843)            (1,099)
   Proceeds from sale of investment in affiliate                                       --                144
   Proceeds from sale of assets                                                     1,500                 --
   Sales/maturities of marketable securities                                       68,303            148,264
   Purchases of marketable securities                                            (55,287)          (164,759)
                                                                              ------------        -----------
             Net cash provided by (used in) investing activities                   12,673           (17,450)
                                                                              ------------        -----------

Cash flows from financing activities:
   Issuance of common stock and collection of notes receivable from
      stockholders, net                                                             1,189              7,317
   Purchase of treasury stock                                                     (1,047)                 --
   Payment of notes payable and capital leases                                         --              (297)
                                                                              ------------        -----------
             Net cash provided by financing activities                                142              7,020
                                                                              ------------        -----------

Net increase in cash and cash equivalents                                             239            (3,500)
Cash and cash equivalents at beginning of period                                    6,683             10,197
                                                                              ------------        -----------
Cash and cash equivalents at end of period                                        $ 6,922            $ 6,697
                                                                              ------------        -----------

</TABLE>

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


<PAGE>
                                   SCIOS INC.
                                AND SUBSIDIARIES

                   Notes to Consolidated Financial Statements
                                   (unaudited)

1.       Basis of Presentation and Accounting Policies

         The unaudited  consolidated financial statements of Scios Inc. ("Scios"
         or  the  "Company")  reflect,   in  the  opinion  of  management,   all
         adjustments,  consisting  only of  normal  and  recurring  adjustments,
         necessary  to  present  fairly  the  Company's  consolidated  financial
         position at June 30,  1999 and the  Company's  consolidated  results of
         operations  and cashflows  for the  three-month  and six-month  periods
         ended  June  30,  1999  and  1998.   Interim-period   results  are  not
         necessarily  indicative  of results of  operations  or cash flows for a
         full-year period.

         These financial  statements and the notes  accompanying  them should be
         read in conjunction  with the Company's  annual report on Form 10-K for
         the year ended  December 31, 1998.  Investors are  encouraged to review
         the Form 10-K for a broader  discussion of the  Company's  business and
         the opportunities and risks inherent in the Company's business.  Copies
         of the 10-K are  available  from the  Company on  request  and from the
         Security  and  Exchange   Commission's   Edgar  database  at  web  site
         www.sec.gov.

         The year-end  balance  sheet data was derived  from  audited  financial
         statements,  but do not include all  disclosures  required by generally
         accepted accounting principles.

2.       Restructuring Charges and Expenses

         On March 1, 1999,  the  Company  announced  a  restructuring  plan that
         included  a  reduction  of  the   Company's   full-time   workforce  by
         approximately   30%  and  the   consolidation   of  its   headquarters,
         development  and research  staff into  currently  leased  facilities in
         Sunnyvale,  California.  In the  quarter  ending  March 31,  1999,  the
         Company recorded a one-time  restructuring charge of approximately $6.7
         million for the disposal of certain excess assets and severance  costs.
         The provision  for the  restructure  and the activity  through June 30,
         1999 are summarized in the following table:
<TABLE>
<CAPTION>
                                                                Balance at
         (in thousands)              Provision     Activity     June 30,1999

----------------------------------------------------------------------------------------------------------
         <S>                            <C>          <C>              <C>
         Facilities                     $  360       $  256           $  104
         Workforce reductions            2,819        1,805            1,014
         Contractual commitments         1,110          281              829
         Asset write-downs               1,800        1,273              527
         Lease exit costs                  581          309              272
                                     ---------    ---------       ----------
                                        $6,670       $3,924           $2,746

</TABLE>


<PAGE>




3.       Computation of Earnings (Loss) Per Share

         The following  table sets forth the  computation of the Company's basic
         and diluted  earnings (loss) per share (in thousands,  except per share
         amounts):
<TABLE>
<CAPTION>

                                                          Three months ended                Six months ended
                                                               June 30,                         June 30,
                                                          1999            1998            1999            1998
         ------------------------------------------- --------------- --------------- --------------- ---------------
        <S>                                              <C>               <C>           <C>               <C>

        Numerator

         Basic
            Net income (loss)                            ($  3,777)        $ 10,303      ($ 13,634)        $ 11,627

         Diluted
             Net income (loss)                           ($  3,777)         $10,303      ($ 13,634)         $11,627
             Add: Genentech interest                           ---              638            ---             ---
            Net income (loss)                            ($  3,777)        $ 10,941      ($ 13,634)          11,627

         Denominator

         Basic
            Weighted average shares                        37,724            37,851         37,735           37,562
            Effect of dilutive securities:
              Genentech conversion  of
               loan to common stock                          ---              3,000            ---              ---
              Employee stock options                         ---              1,242            ---            1,171
            Weighted average shares and
               Assumed conversions                         37,724            42,093         37,735           38,733

         Basic earnings (loss) per share                  ($  0.10)         $  0.27    ($     0.36)          $ 0.31

         Diluted earnings (loss) per share                ($  0.10)         $  0.26    ($     0.36)          $ 0.30


<FN>

         The  potentially  dilutive  effect of  outstanding  options to purchase
         common stock would have been anti-dilutive in both periods of 1999, and
         they  were   therefore   excluded   from  the  1999  diluted   earnings
         calculations.   Although  potentially  dilutive,   the  payoff  of  the
         Genentech  loan  through the  issuance of common  stock would have been
         anti-dilutive  in 1999 and for the  six-month  period  in 1998 and was,
         therefore, excluded from the calculations.

         At June 30, 1999, stock options at prices ranging from $3.688 to $7.125
         per share would have  increased the number of weighted  average  common
         shares  outstanding by 323,525 and 2,230,578  shares for the three- and
         six-month periods of 1999,  respectively,  but were not included in the
         computation of diluted income per share because they were antidilutive.

</FN>
</TABLE>

<PAGE>




4.       Industry and Geographic Segment Information

         Management uses one measurement of profitability for its business.  The
         Company  receives  revenue from product  sales and from  licensing  and
         development of products.  The Company  markets its products in the U.S.
         and  receives  licensing  revenue  from  partners in the U.S.,  Canada,
         Europe and Asia Pacific and operates in one business segment.

         All long-lived  assets are located in the United States and revenues by
         geographic  area are as  follows  for the first  half of 1999 and 1998,
         respectively:
<TABLE>
<CAPTION>

                  (in thousands)               June 30, 1999      June 30, 1998
                  --------------               -------------       ------------
                  <S>                                <C>               <C>

                  Revenues - U.S.                    $ 25,746          $ 20,527
                  Revenues - International              1,224            23,358
                                                   ----------         ---------
                    Total                            $ 26,970          $ 43,885
                                                     --------          --------
</TABLE>


5.       Subsequent Event

         The  Company  completed  the  sale of its  Mountain  View,  California,
         facilities in July 1999 for proceeds of  approximately  $20.0  million.
         Under the terms of the sale, the Company will lease back  approximately
         56,000 square feet of the facility for an additional six months.



<PAGE>




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

         In accordance  with Federal laws, the Company  reminds readers that the
following   discussion   contains   forward-looking   statements   about  plans,
objectives,  future results and intentions of the Company. These forward-looking
statements are based on the current expectations of the Company, and the Company
assumes no obligation to update this information. Realization of these plans and
results involves risks and uncertainties, and the Company's actual results could
differ  materially  from the historical  results or future plans discussed here.
Factors that could cause or contribute to such differences  include, but are not
limited to, those items discussed below, as well as the considerations discussed
in the Company's Form 10-K for the year ended December 31, 1998.

 Results of Operations

         Three Months Ended June 30, 1999 and 1998

         Revenues in the second  quarter of 1999 were $14.2 million and included
$9.5 million in product sales, $1.8 million in co-promotion commissions and $2.9
million in contract revenues. Revenues for the corresponding period in 1998 were
$29.6  million,   including   $6.7  million   generated  by  product  sales  and
co-promotion  commissions and $22.9 million from contract revenue.  The decrease
in contract  revenue is mainly due to a $20.0 million  payment  received in 1998
from Bayer AG ("Bayer") upon signing an agreement for the  commercialization  of
Natrecor(R)(nesiritide).  Product sales from psychiatric  products under license
from SmithKline Beecham Corporation ("SB Products")  increased $4.7 million from
1998 to 1999, in part,  because of unusually low sales in the second  quarter of
1998.  During the second quarter of 1999,  Bayer elected to terminate its rights
to Natrecor and returned all rights and  technology to the Company.  The Company
is currently seeking another commercialization partner.

         The Company  incurred total operating  expenses of $18.8 million in the
second quarter of 1999 versus $19.5 million in the same period in 1998. The $0.7
million  decline in expenses is due to a $3.8  million  decrease in research and
development  expenses which are partially offset by increases of $1.9 million in
cost of goods and $1.4 million in profit distribution.  The decrease in research
and  development  expenses was mainly the result of lower  headcount  due to the
March 1999  restructure,  and lower  expenses  for  Natrecor  drug  supply.  The
increase in both cost of goods and profit  distribution  is the result of higher
SB Product sales in the current quarter as compared to the year ago quarter.

         The net loss for the quarter was $3.8 million compared to net income of
$10.3  million in 1998.  The $14.1  million  decrease in earnings was due to the
$20.0  million  Bayer  payment  received in 1998,  coupled  with a $3.8  million
reduction in research and development expenses in the second quarter of 1999.


<PAGE>



         Six Months Ended June 30, 1999 and 1998

         Revenues  in the first six  months  totaled  $27.0  million in 1999 and
$43.9 million in 1998. SB Product sales  increased from $13.2 million in 1998 to
$17.3 million in 1999.  Co-promotion  commissions increased by $1.4 million from
1998 to 1999 because of the change in product lines promoted by the Company. The
Company   currently   co-promotes   Risperdal(R)   (risperidone)   with  Janssen
Pharmaceutica and Paxil(R) (paroxetine HCl) with SmithKline Beecham Corporation.
The decline of $22.4 million in research and development  contract  revenue from
1998 to 1999 was  mainly  due to  receipt  of $20.0  million  from Bayer for the
commercialization  of Natrecor and from  milestone  payments  received from Novo
Nordisk in 1998.

         For the  six-month  period,  costs and  expenses  increased  from $40.5
million in 1998 to $46.7 million in 1999.  The increase in expenses is primarily
due to the one-time $6.7 million restructure expense associated with the closure
of  the  Company's  Mountain  View  facilities  and  to a 30%  reduction  in the
workforce in the first  quarter.  The  restructure  is expected to reduce annual
operating expenses by $14.0 million per year.

         Other income and expense  declined  from $9.2 million for the six-month
period in 1998 to $6.1  million for the same period in 1999.  The  decrease  was
mainly  due to a  reduction  in  realized  gains  on the  sale of the  Company's
securities  from period to period.  For the six-month  period in 1998,  realized
gains on securities were $8.1 million which was primarily the result of the sale
of the Company's  entire interest in its subsidiary,  Karo Bio, through a public
stock offering.  For the same period in 1999,  realized gains were $5.1 million,
which  were  mainly  due to the  sales of the  Company's  holdings  in  Guilford
Pharmaceuticals Inc.

         The Company had a net loss of $13.6 million for the first six months of
1999 versus net income of $11.6  million for the same period in 1998.  The $25.2
million  change in income is primarily  due to the $20.0  million  received from
Bayer for  commercialization  of Natrecor in 1998, coupled with the $6.7 million
recorded for restructuring in 1999.

         The ability of the Company to achieve profitability depends principally
on the Company's success in developing and  commercializing its own products and
on its  ability  to  complete  agreements  with  third  parties  that  result in
additional revenue.  Among the factors that will determine the Company's success
in  commercializing  its products are: the  demonstrated  safety and efficacy of
products in  development;  the cost of and the time taken to  complete  clinical
trials and regulatory submissions; the timing and scope of regulatory approvals,
particularly   with  respect  to  the   Company's   lead   product   Natrecor(R)
(nesiritide);  the Company's ability to secure a cost-effective drug supply; the
Company's  success in  developing  and  implementing  cost  effective  sales and
marketing  strategies  either on its own  behalf or in  partnership  with  other
companies;  and the level of market acceptance if products are approved, both at
product launch and over time. The Company's ability to raise additional  revenue
through third parties will be dependent on the factors  described above, as well
as other factors such as: its success in marketing  and selling the  third-party
products  which it may  acquire  the right to  co-promote;  the  disposition  of
various patent proceedings  related to the protection of the Company's potential
products;  the perceived value of the Company's  current  product  portfolio and
research programs to outside parties; and the success of third parties,  such as
<PAGE>
Kaken  Pharmaceutical  Co., Ltd. and Wyeth-Ayerst  Laboratories on Fiblast;  and
Novo  Nordisk  A/S on GLP-1 in  developing  and  commercializing  the  Company's
products.


Liquidity and Capital Resources

         Combined cash, cash equivalents and marketable securities (both current
and  non-current)  totaled  $77.8  million at June 30, 1999, a decrease of $19.5
million from December 31, 1998. The decrease was primarily  attributable to cash
used to fund  operations  and to a decrease of $5.9  million in the value of the
Company's  Guilford  stock between  year-end 1998 and the time of the sale.  The
Company sold all of its holdings in Guilford in the first six months of 1999.

         The Company is striving to achieve  profitability over the next several
years. The timing of the Company's success in reaching its objectives to achieve
and sustain profitability, in the short term, depends principally on the success
of the Company in  achieving  regulatory  approvals  and  generating  sales from
Natrecor.  The Company has  recently  determined  with the FDA the nature of the
additional clinical trials that the agency will require before it would consider
approval of Natrecor for marketing.  The Company expects to initiate  enrollment
in the trial in October,  with enrollment in the study to be  approximately  500
patients at an estimated cost of $10.0 million.  Profitability  will also depend
on a number of other factors  including the Company's  success and timeliness of
its other product development,  clinical trial,  regulatory approval and product
introduction  efforts.  Other contributing factors will be the Company's ability
to develop new revenue sources to support research and development  programs and
its success in marketing and promoting the products of third-parties that may be
licensed by the Company.

         The Company's  resources of $77.8 million in cash, cash equivalents and
marketable  securities  at June 30, 1999,  together  with  revenues from product
sales,  collaborative  agreements,  interest income, the sale of real estate and
any funding from existing or future debt  arrangements,  will be used to support
current and new clinical trials for proprietary  products under development,  to
support commercialization efforts for prospective products and for other general
purposes. The Company believes its cash resources will be sufficient to meet its
operating  and capital  requirements  for at least the next several  years.  Key
factors that will affect future cash use and the timing of the Company's need to
seek additional  financing include the Company's decisions concerning the degree
to which it will incur  expenses  to launch its  products  in the United  States
market  following  the  necessary  regulatory  approvals,  the  results  of  the
Company's partnering efforts, the timing and amounts realized from licensing and
partnering  activities,  the rate of spending  required to develop the Company's
products and respond to changing business  conditions,  and the net contribution
produced by the Company's  ability to co-promote  and market  products for third
parties.

         Over  the  long-term,  the  Company  may  need  to  arrange  additional
financing   for  the  future   operation   of  its   business,   including   the
commercialization of products currently under development,  and it will consider
collaborative   arrangements  and  additional  public  or  private   financings,
<PAGE>
including additional equity financings.  Factors influencing the availability of
additional  funding include,  but are not limited to, the Company's  progress in
product  development,  investor  perception of the  Company's  prospects and the
general conditions of the financial markets.

Impact of Year 2000

         The Year 2000 Issue is the result of computer  programs  being  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's  computer  programs or hardware that have  date-sensitive  software or
embedded  chips may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

         Based on recent  assessments,  the Company has determined  that it will
not be  required  to modify or  replace  significant  portions  of  hardware  or
software  to ensure  that those  systems  will  properly  utilize  dates  beyond
December  31,  1999.  The  Company  presently   believes  that  with  achievable
modifications and modest replacement of existing hardware and software, the Year
2000 Issue can be mitigated. However, if such modifications and replacements are
not made, or are not completed on a timely basis, the Year 2000 Issue could have
an impact on the operations of the Company.

         The  Company's  plan to  resolve  the  Year  2000  Issue  involves  the
following four phases: assessment,  remediation, testing, and implementation. To
date the Company has fully completed its assessment of all internal systems that
could be  significantly  affected  by the Year 2000.  The  completed  assessment
indicated that most of the Company's significant  information technology systems
are Year 2000 compliant.  That assessment  did,  however,  indicate that certain
systems were at risk.  Affected  systems include  chromatography,  clinical case
report  forms  tracking,  and  statistical  analysis  software.  The  Company is
currently  assessing  cost  comparisons  on whether to remediate or replace this
equipment and expects to have the  equipment  corrected and re-tested by October
31, 1999. For its information  technology exposures,  to date the Company is 75%
complete on the remediation phase and expects to complete software reprogramming
and replacement no later than November 30, 1999.

         The Company is in the process of querying its  important  suppliers and
contractors  that do not share  information  systems with the Company  (external
agents). To date, the Company is not aware of any external agent Year 2000 issue
that would materially impact the company's results of operations,  liquidity, or
capital resources.  However,  the Company has no means of ensuring that external
agents will be Year 2000 ready.  The  inability  of external  agents to complete
their Year 2000 resolution  process in a timely fashion could materially  impact
the  Company.   The  effect  of   non-compliance   by  external  agents  is  not
determinable.  The Company will update its analysis of external agent systems in
subsequent reports.

         The Company  will  utilize  both  internal  and  external  resources to
reprogram,  or replace, test and implement the software and scientific equipment
for Year  2000  modifications.  The  total  cost of the  Year  2000  project  is
<PAGE>
estimated at  approximately  $75,000 and is being funded through  operating cash
flows.  To date, the Company has incurred  approximately  $13,000 related to all
phases  of  the  Year  2000  project.  Of the  total  remaining  project  costs,
approximately  $28,000 is attributable to the purchase of new software,  $20,000
for new  hardware,  which will be  capitalized,  and  $14,000  for the repair of
hardware and software.

         The Company's plans to complete the Year 2000  modifications  are based
on  management's  best  estimates,   which  were  derived   utilizing   numerous
assumptions  of  future  events  including  continued  availability  of  certain
resources,  and other  factors.  Estimates on the status of  completion  and the
expected  completion dates are based on costs incurred to date compared to total
expected costs. However,  there can be no guarantee that these estimates will be
achieved and actual results could differ  materially from those plans.  Specific
factors that might cause such material  differences include, but are not limited
to, the availability and cost of personnel  trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.

         The  Company  has  not   completed  a  formal   contingency   plan  for
non-compliance,  but it is developing a plan based on the  information  obtained
from third parties and an on-going evaluation of the Company's own systems.  The
Company  anticipates  having a  contingency  plan in place by November 30, 1999,
which will include development of backup procedures, identification of alternate
suppliers and possible  increases in supplies  inventory levels. The Company has
not  identified its most  reasonably  likely worst case scenario with respect to
possible losses in connection with Year 2000 related problems. The Company plans
on completing this analysis by November 30, 1999.

         The information above contains  forward-looking  statements  including,
without  limitation,  statements  relating to the Company's  plans,  strategies,
objectives,  expectations,  intentions,  and  adequate  resources  that are made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995. Readers are cautioned that forward-looking  statements about
the Year 2000 should be read in  conjunction  with the Company's  disclosures in
its  Annual  Report  or Form  10-K as filed  with the  Securities  and  Exchange
Commission.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

         No change has occurred  since the filing by the Registrant on Form 10-K
for the year ended  December  31,  1998.  Reference is made to Part II, Item 7A,
Quantitative and Qualitative  Disclosures About Market Risk, in the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1998.








<PAGE>




Part II.  Other Information

Item 4.  Submission of Matters to a Vote of Security Holders

                  The Company's  Annual Meeting of Stockholders  was held on May
11, 1999.

                  (a)      The following  individuals were elected  directors of
                           the  Company,  each to  serve  until a  successor  is
                           elected:
<TABLE>
<CAPTION>

                                        Total Vote For  Total Vote Withheld
                  Name                   Each Director   From Each Director
                  <S>                       <C>                <C>

                  Samuel H. Armacost        32,987,153         152,210
                  Richard B. Brewer         32,983,496         155,867
                  Myron Du Bain             32,844,616         294,747
                  Donald B. Rice, Ph.D.     32,989,609         149,754
                  Charles A. Sanders, M.D.  32,973,807         165,556
                  Solomon H. Snyder, M.D.   32,993,017         146,346
                  Burton E. Sobel, M.D.     32,982,110         157,253
                  Eugene L. Step            32,964,947         174,416
</TABLE>

                  (b) The  following  matter was approved by  stockholder  vote,
with votes cast as indicated:

                   To ratify the selection of PricewaterhouseCoopers
                   LLP as the  Company's  independent  auditors  for
                   fiscal year 1999:

                    Votes cast for:           32,958,128
                    Votes cast against:           84,422
                    Abstentions:                  73,325
                  Broker non-votes were not relevant to the foregoing matters.

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

      None.

(b)  Reports on Form 8-K

      Report on Form 8-K,  dated April 28, 1999  (pursuant  to Item 5) regarding
the  non-approval  of  the  Company's  New  Drug  Application  on  Natrecor  (R)
nesiritide by the United States Food and Drug Administration.

       Report on Form 8-K,  dated June 10, 1999  (pursuant  to Item 5) regarding
the termination of the Company's  commercial  alliance with Bayer Corporation on
Natrecor (R) nesiritide.

<PAGE>

                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                            SCIOS INC.

August 12, 1999                     by:     ___/s/ Richard B. Brewer__________
                                               ---------------------          -
                                            Richard B. Brewer, President and CEO

August 12, 1999                     by:     ___/s/ David W. Gryska____________
                                               -------------------
                                        David W. Gryska,  Vice President and CFO