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 March 31, 1998

                                       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.
                              2450 Bayshore Parkway
                             Mountain View, CA 94043
               (Address of principal executive offices) (Zip code)

                                 (650) 966-1550
               (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                                __________

<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                                                         March 31,           December 31,
                                                                      1998                 1997
                                                                   ----------          ------------
                                                                   (Unaudited)
<S>                                                                <C>                  <C>    
Current assets:                                                    
    Cash and cash equivalents                                          $18,535              $10,197
    Marketable securities                                                3,500               13,322
    Accounts receivable, net                                             1,471                5,215
    Prepaid expenses                                                       583                  600
                                                                   ------------         ------------
      Total current assets                                              24,089               29,334

Marketable securities, non-current                                      52,513               41,181
Investment in affiliate                                                 10,150               10,537
Property and equipment, net                                             33,200               33,583
Other assets                                                             1,934                2,236
                                                                   ------------         ------------

TOTAL ASSETS                                                          $121,886             $116,871
                                                                   ------------         ------------

    LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                    $1,912               $1,685
    Other accrued liabilities                                            7,559               11,134
    Deferred contract revenue                                           11,951               11,652
    Current portion of long-term debt and capital leases                   141                  339
                                                                   ------------         ------------
      Total current liabilities                                         21,563               24,810

Long-term debt and capital leases                                       32,557               31,919
                                                                   ------------         ------------
      Total liabilities                                                 54,120               56,729
                                                                   ------------         ------------


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:
       38,368,210 and 38,032,120, respectively                              38                   38
    Additional paid-in capital                                         415,481              411,045
    Treasury stock                                                      (2,660)              (4,758)
    Notes receivable from stockholders                                    (203)                 (13)
    Net unrealized gains on securities                                     244                  288
    Accumulated deficit                                               (345,134)            (346,458)
                                                                   ------------         ------------
      Total stockholders' equity                                        67,766               60,142
                                                                   ------------         ------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                        $121,886             $116,871
                                                                   ------------         ------------
</TABLE>


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

 2
<PAGE>


                                   SCIOS INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                                                          Three months ended
                                                                              March 31,
                                                                      1998                 1997
                                                                   ------------         ------------
                                                                             (Unaudited)
<S>                                                                <C>                  <C>   
Revenues:
    Product sales                                                       $8,430               $6,159
    Co-promotion commissions                                             1,268                1,696
    Research & development contracts                                     4,592                  474
                                                                   ------------         ------------
                                                                        14,290                8,329
                                                                   ------------         ------------

Costs and expenses:
    Cost of goods sold                                                   4,805                3,854
    Research and development                                            10,527               10,880
    Marketing, general and administration                                4,715                5,326
    Profit distribution to third parties                                 1,070                  567
                                                                   ------------         ------------
                                                                        21,117               20,627
                                                                   ------------         ------------

Loss from operations                                                    (6,827)             (12,298)

Other income:
    Investment income                                                      987                  791
    Interest expense                                                      (650)                (134)
    Realized gains (losses) on securities                                8,039                 (105)
    Other income, net                                                       19                  148
                                                                   ------------         ------------
                                                                         8,395                  700

Equity in net loss of affiliates                                          (244)                (611)
Minority interests                                                          --                   77
                                                                   ------------         ------------
    Net income (loss)                                                   $1,324             ($12,132)
                                                                   ------------         ------------

Earnings (loss) per common share:
    Basic                                                                $0.04               ($0.34)
                                                                   ------------         ------------
    Diluted                                                              $0.03               ($0.34)
                                                                   ------------         ------------

    Weighted average number of common shares outstanding used in calculation of:

    Basic                                                           37,273,536           35,831,662
                                                                   ------------         ------------
    Diluted                                                         38,835,221           35,831,662
                                                                   ------------         ------------
</TABLE>

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

 3
<PAGE>

                                   SCIOS INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                          Three months ended
                                                                              March 31,
                                                                      1998                 1997
                                                                   ------------         ------------
                                                                             (Unaudited)
<S>                                                                <C>                  <C>  
Cash flows from operating activities:
   Net income (loss)                                                   $ 1,324             ($12,132)
   Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
      Depreciation and amortization                                        971                1,345
      Accrued long-term interest payable                                   638                   --
      Equity in net loss of affiliates                                     244                  611
      Minority interest                                                     --                  (77)
      Change in assets and liabilities:
        Accounts receivable                                              3,744                1,302
        Accounts payable                                                   227               (1,615)
        Other accrued liabilities                                         (576)              (3,489)
        Other                                                              128                  192
        Deferred contract revenue                                          299                5,000
                                                                   ------------         ------------
             Net cash provided by (used in) operating activities         6,999               (8,863)
                                                                   ------------         ------------

Cash flows from investing activities:
   Purchases of property and equipment                                    (588)              (1,026)
   Proceeds from sale of investment in affiliate                           144                   --
   Sales/maturities of marketable securities                            74,373               89,091
   Purchases of marketable securities                                  (75,927)             (78,032)
                                                                   ------------         ------------
             Net cash provided by (used in) investing activities        (1,998)              10,033
                                                                   ------------         ------------

Cash flows from financing activities:
   Issuance of common stock and collection of notes receivable from
      stockholders, net                                                  3,535                   --
   Purchase of treasury stock                                               --                 (349)
   Payment of notes payable and capital leases                            (198)                (116)
   Proceeds from notes payable and capital leases                           --               30,000
                                                                   ------------         ------------
             Net cash provided by financing activities                   3,337               29,535
                                                                   ------------         ------------

Net increase in cash and cash equivalents                                8,338               30,705
Cash and cash equivalents at beginning of period                        10,197                1,587
                                                                   ------------         ------------
Cash and cash equivalents at end of period                            $ 18,535             $ 32,292
                                                                   ------------         ------------

Supplemental cash flow data:
   Cash paid during the period for interest                               ($12)               ($134)
Supplemental disclosure of non-cash investing
   and financing:
   Change in net unrealized gains on securities                           ($44)               ($256)
   Investment in affiliate                                               ($388)               ($611)

</TABLE>

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

 4
<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 March 31, 1998 and the  Company's  consolidated  results of
         operations  and cashflows for the  three-month  periods ended March 31,
         1998 and 1997. 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, 1997.  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.

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

                  Effective  December 31, 1997,  the Company  adopted  Financial
         Accounting  Standards No. 128 ("SFAS  128"),  "Earnings Per Share" and,
         accordingly,  all prior periods presented have been restated. Basic net
         income (loss) per share is calculated using the weighted average number
         of common shares outstanding for the period.  Diluted net income (loss)
         is calculated  using the weighted average number of common and dilutive
         common equivalent shares outstanding during the period. In 1997, common
         equivalent  shares are excluded  from the  computation  of net loss per
         common share - assuming dilution as their effect is anti-dilutive.

                  The  Company  has  adopted  the  provisions  of  Statement  of
         Financial  Accounting  Standards  No.  130,  "Reporting   Comprehensive
         Income,"  effective  January  1,  1998.  This  statement  requires  the
         disclosure of comprehensive  income and its components in a full set of
         general-purpose  financial statements.  Comprehensive income is defined
         as net income plus revenues,  expenses,  gains,  and losses that, under
         generally accepted accounting principles, are excluded from net income.
         The  components  of  comprehensive  income which are excluded  from net
         income  are  not  significant,   individually  or  in  aggregate,   and
         therefore,  no  separate  statement  of  comprehensive  income has been
         presented.
<PAGE>

         The  following  table sets forth the  computation  of Scios'  basic and
         diluted  earnings  (loss)  per share (in  thousands,  except  per share
         amounts):
<TABLE>
<CAPTION>
                                                                                   1998                1997
                  -------------------------------------------------------    ----------           ---------
                  <S>                                                        <C>                  <C> 
                  Numerator

                  Basic
                     Net income (loss)                                       $    1,324           $(12,132)

                  Diluted
                     Net income (loss)                                       $    1,324           $(12,132)

                  Denominator

                  Basic
                     Weighted average shares                                     37,274             35,832
                     Effect of dilutive securities:
                       Employee stock options                                     1,562                ---
                     Weighted average shares and assumed
                        conversions                                              38,836             35,832

                  Basic earnings (loss) per share                            $     0.04           $  (0.34)

                  Diluted earnings (loss) per share                          $     0.03           $  (0.34)
<FN>
         -------------------------------------------------------
         The  potentially  dilutive  effect of  outstanding  options to purchase
         common  stock  would  have been  anti-dilutive  in 1997,  and they were
         therefore excluded from the 1997 diluted earnings calculation. Although
         potentially  dilutive,  the payoff of the  Genentech  loan  through the
         issuance of common stock would have been anti-dilutive in both 1997 and
         1998 and was therefore excluded from the calculations.
</FN>
</TABLE>

2.          Subsequent Events

                  In April  1998,  Scios  and  Ortho-McNeil  Pharmaceutical,  an
         affiliate of Johnson and Johnson,  agreed to terminate the co-promotion
         contract for Haldol(R)  Decanoate  because of new generic  competition.
         Concurrently,  the  Company  initiated  a new  agreement  with  Janssen
         Pharmaceutica  for the co-promotion of Janssen's  product  Risperdal(R)
         (risperidone).

                  Also in April 1998,  Scios filed a New Drug  Application  with
         the US Food and Drug Administration requesting approval for Natrecor(R)
         (nesiritide) for the treatment of acute congestive heart failure.

                  On  May  6,  1998,   Scios  announced  the  termination  of  a
         co-promotion  agreement with Wyeth-Ayerst  Laboratories,  a division of
         American  Home  Products  Corporation,   under  which  Scios  has  been
         co-promoting Effexor(R) (venlafaxine HCl),  Wyeth-Ayerst's  proprietary
         antidepressant.

<PAGE>

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

         In  accordance  with  Federal  law,  Scios  reminds  readers  that  the
following   discussion   contains   forward-looking   statements   about  plans,
objectives,  future  results  and  intentions  of Scios.  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, 1997.

 Operating Results

         Net  income  for  the  quarter  ended  March 31, 1998  was $1.3 million
compared to a net loss of $12.1 million in  the corresponding  quarter of 1997. 
Net income was primarily due to the gain realized on the sale of the  Company's
entire equity interest in its subsidiary  Karo Bio AB ("Karo Bio"),  and higher 
revenue from product sales and research and development contracts.

         Total  revenues for the three months ended March 31, 1998  increased to
$14.3  million from $8.3 million in the  corresponding  period of 1997.  Product
sales  from   psychiatric   products  under  license  from  SmithKline   Beecham
Corporation (the "SB Products")  increased to $8.4 million from $6.2 million for
the three  months  ended  March 31,  1998 and 1997,  respectively.  Although  SB
Product sales increased quarter-to-quarter, the Company continues to expect that
over time the sales of these products will erode because of competition from new
market  entrants and generic drugs.  Co-promotion  commissions  declined to $1.3
million  in 1998  from  $1.7  million  in 1997.  The  decrease  in  co-promotion
commissions  was the  result of lower  sales of  Haldol(R)  Decanoate.  Contract
revenues for the three months ended March 31, 1998  increased  $4.1 million from
the  corresponding  period in 1997,  principally  due to receipt of a  milestone
payment from Novo Nordisk for development of insulinotropin, and funding for the
Company's Alzheimer's research program.

         Total costs and expenses for the three months ended March 31, 1998 were
$21.1 million versus $20.6  million  for  the same period in 1997.  Spending for
research and  development  decreased to $10.5 million in 1998 from $10.8 million
in 1997.  Expenses for marketing, general and  administration  decreased to $4.7
million from $5.3 million for the three-month  periods  ended March 31, 1998 and
1997,  respectively,  because of  a decrease  in staffing  and  lower consulting
expenses.  The first quarter increase  from  1997 to 1998 in cost of  goods  and
profit distribution to third parties was the result of higher SB Product sales.

<PAGE>

         Other income  increased to $8.4 million in the quarter  ended March 31,
1998 from $0.7  million in the  comparable  quarter of 1997.  The  increase  was
principally  due to a gain on the sale of the Company's  entire  interest in its
subsidiary,  Karo Bio, through a public stock offering  completed in March 1998.
Following  the sale of its  stock,  the  Company  no  longer  has any  financial
interest in the results of Karo Bio.  Interest expense increased $0.5 million in
the first  quarter from 1997 to 1998 due to interest on the loan from  Genentech
Inc.,  which was drawn down at the end of the first quarter of 1997.  The equity
in the net loss of  affiliates  of $0.2 million in 1998 and $0.6 million in 1997
is the Company's  proportional share of losses of Guilford  Pharmaceuticals Inc.
("Guilford"),  an affiliate  of the Company  which  completed an initial  public
offering in 1994. The Company's proportional share of Guilford was 7% and 10% on
March 31,  1998 and 1997,  respectively.  The  Company's  proportional  share of
Guilford declined as a result of Guilford's  issuance of additional common stock
in April 1997,  and Scios' sale of 12,500  shares of Guilford  stock in 1997 and
20,000 shares in 1998.

         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   products   Natrecor(R)
(nesiritide)  and  Fiblast(R)  (trafermin);  the  Company's  ability to secure a
cost-effective 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 Kaken Pharmaceutical Co., Ltd. in Japan and Wyeth-Ayerst
Laboratories  in the  United  States,  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  $74.5 million at March 31, 1998, an increase of $9.8
million from December 31, 1997. The increase was primarily  attributable to $7.7
million  received  from the  sale of Karo Bio  stock  and the  exercise  of $3.5
million in stock options during the quarter,  which was partially  offset by net
operating expenses.


<PAGE>

         The Company has  experienced  net operating  losses since its inception
and  expects to continue  to incur  losses for at least the next two years.  The
Company's ability to achieve and sustain  profitability,  and therefore the rate
of utilization of the Company's current financial resources,  will depend upon a
number of factors,  including  the  Company's  success in securing a partner for
Natrecor(R)  (nesiritide),  and  the  success  and  timeliness  of  its  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  cash  resources  of $74.5  million  at March 31,  1998,
together with revenues from product sales, collaborative agreements and interest
income,  proceeds  from the sale of stock  held as equity  investments,  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  will  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,
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.
<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.

May  , 1998                          By:  /s/ Richard L. Casey
Date                                          Richard L. Casey, Chairman and CEO



May  , 1998                          By:  /s/ David Southern
Date                                          David Southern, Controller
                                              (Chief Accounting Officer)