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, 1997

                                       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 94043x
               (Address of principal executive offices) (Zip code)

                                 (415) 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                                36,510,923



<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>
                                                                        March 31,           December 31,
                                                                           1997                1996
                                                                       -------------        -----------
ASSETS                                                                   (Unaudited)

<S>                                                                     <C>                 <C>   
Current assets:
    Cash and cash equivalents                                               $32,292             $1,587
    Marketable securities                                                    10,387              6,888
    Accounts receivable                                                       3,506              4,808
    Prepaid expenses                                                            748                786
                                                                       -------------        -----------
      Total current assets                                                   46,933             14,069

Marketable securities, non-current                                           38,881             53,695
Investment in affiliate                                                       6,328              6,939
Property and equipment, net                                                  36,520             36,839
Other assets                                                                  2,265              2,419
                                                                       -------------        -----------

TOTAL ASSETS                                                               $130,927           $113,961
                                                                       -------------        -----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Notes payable to banks                                                   $3,000             $3,000
    Accounts payable                                                            892              2,507
    Other accrued liabilities                                                 6,522             10,011
    Deferred contract revenue                                                 8,666              3,666
    Current portion of long-term debt and capital leases                        781                723
                                                                       -------------        -----------
      Total current liabilities                                              19,861             19,907

Long-term debt and capital leases                                            30,146                349
Minority interests                                                               --                 77


Stockholders' equity:
    Preferred stock; $.001 par value;  20,000,000 shares authorized;  
       issued and outstanding: 12,632 and 16,053, respectively (liquidation  
       preference of $12,000 and $15,250, respectively)                          --                 --
    Common stock; $.001 par value;  150,000,000  shares  authorized;  
       issued and outstanding: 36,510,923 and 36,506,297, respectively           37                 37
    Additional paid-in capital                                              404,485            404,456
    Treasury stock                                                           (3,340)            (2,991)
    Notes receivable from stockholders                                          (13)               (13)
    Unrealized losses on securities                                            (326)               (70)
    Accumulated deficit                                                    (319,923)          (307,791)
                                                                       -------------        -----------
      Total stockholders' equity                                             80,920             93,628
                                                                       -------------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                 $130,927           $113,961
                                                                       -------------        -----------

</TABLE>


                           See notes to consolidated financial statements.




<PAGE>



                                             SCIOS INC.
                                          AND SUBSIDIARIES

                                Consolidated Statements of Operations
                                  (In thousands, except share data)
<TABLE>
<CAPTION>

                                                                        Three months ended
                                                                            March 31,
                                                                 1997                       1996
                                                             --------------             --------------
                                                                           (Unaudited)
<S>                                                          <C>                        <C>    
                                                                          
Revenues:
      Product sales                                                 $6,159                     $8,642
      Co-promotion commissions                                       1,696                      1,043
      Research & development contracts                                 474                      1,799
                                                             --------------             --------------
                                                                     8,329                     11,484
                                                             --------------             --------------

Costs and expenses:
      Cost of goods sold                                             3,854                      5,173
      Research and development                                      10,880                      8,666
      Marketing, general and administration                          5,326                      4,419
      Profit distribution to third parties                             567                        994
                                                             --------------             --------------
                                                                    20,627                     19,252
                                                             --------------             --------------

Loss from operations                                               (12,298)                    (7,768)

Other income:
      Investment income                                                657                        943
      Realized gains (losses) on securities                           (105)                        81
      Other income, net                                                148                         56
                                                             --------------             --------------
                                                                       700                      1,080

Equity in net loss of affiliates                                      (611)                      (729)
Minority interests                                                      77                         --
                                                             --------------             --------------
      Net loss                                                    ($12,132)                   ($7,417)
                                                             --------------             --------------

      Net loss per common share                                     ($0.34)                    ($0.21)
                                                             --------------             --------------

      Weighted average number of
         common shares outstanding                              35,831,662                 35,890,504
                                                             --------------             --------------


</TABLE>


                           See notes to consolidated financial statements.


<PAGE>


                                                 SCIOS INC.
                                              AND SUBSIDIARIES

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

                                                                                     Three months ended
                                                                                         March 31,
                                                                                  1997                1996
                                                                               ------------        -----------
                                                                                        (Unaudited)
<S>                                                                            <C>                 <C>    
Cash flows from operating activities:
   Net loss                                                                       ($12,132)           ($7,417)
   Adjustments to reconcile net loss to net
   cash used by operating activities:
      Depreciation and amortization                                                  1,345              1,121
      Deferred contract revenue                                                      5,000               (584)
      Other                                                                            534                729
      Change in assets and liabilities:
        Accounts receivable                                                          1,302                661
        Accounts payable                                                            (1,615)            (2,622)
        Other accrued liabilities                                                   (3,489)            (1,216)
        Other                                                                          192                714
                                                                               ------------        -----------
             Net cash used by operating activities                                  (8,863)            (8,614)
                                                                               ------------        -----------

Cash flows from investing activities:
   Payments for property and equipment, net                                         (1,026)              (542)
   Sales/maturities of marketable securities                                        89,091             40,910
   Purchases of marketable securities                                              (78,032)           (31,269)
                                                                               ------------        -----------
             Net cash provided by investing activities                              10,033              9,099
                                                                               ------------        -----------

Cash flows from financing activities:
   Purchase of treasury stock                                                         (349)            (1,338)
   Issuance of notes payable                                                        30,000                 --
   Other                                                                              (116)              (159)
                                                                               ------------        -----------
             Net cash provided (used) by financing activities                       29,535             (1,497)
                                                                               ------------        -----------

Net increase (decrease) in cash and cash equivalents                                30,705             (1,012)
Cash and cash equivalents at beginning of period                                     1,587              2,847
                                                                               ------------        -----------
Cash and cash equivalents at end of period                                        $ 32,292            $ 1,835
                                                                               ------------        -----------

Supplemental cash flow data:
   Cash paid during the period for interest                                          ($134)             ($160)
Supplemental disclosure of non-cash investing
   and financing:
   Change in net unrealized losses on securities                                      (256)              (833)
   Investment in affiliate                                                           ($611)           $ 4,708



</TABLE>



                               See notes to 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 March 31, 1997 and the  Company's  consolidated  results of
         operations  and cashflows for the  three-month  periods ended March 31,
         1997 and 1996. 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, 1996.  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.

                  In February 1997, the Financial  Accounting Standards Board 
         issued Statement No. 128, "Earnings Per Share" ("SFAS No. 128") which 
         specifies the  computation,  presentation and disclosure  requirements
         for earnings per share.  SFAS No. 128 will become  effective for the 
         Company's  1997 fiscal year.  The impact of adopting SFAS No. 128 is 
         not expected to have a material impact on the Company's financial 
         condition or results of operations.

2.       Litigation

                  In September  1996,  the United States  District Court for the
         Northern District of California dismissed with prejudice a lawsuit that
         had been filed by certain  stockholders in May 1995 against the Company
         and Richard L. Casey,  its chairman  and chief  executive  officer,  on
         behalf  of  the  individual  plaintiffs  and  other  purchasers  of the
         Company's  stock during the period from October 6, 1993 to May 2, 1995.
         The action alleged violations of federal securities laws, claiming that
         the  defendants  issued a series  of false and  misleading  statements,
         including   filings  with  the  Securities  and  Exchange   Commission,
         regarding  the  Company  and  clinical  trials  involving  AURICULIN(R)
         anaritide  ("AURICULIN").  The  plaintiffs  have filed notice that they
         will appeal the District  Court's  ruling in favor of the Company.  The
         ultimate  outcome  of  this  action  cannot  presently  be  determined.
         Accordingly,  no  provision  for any  liability or loss that may result
         from   adjudication  or  settlement   thereof  has  been  made  in  the
         accompanying consolidated financial statements.

3.       Subsequent Events

                  On April 2, 1997, the Company  announced that it had suspended
         development of AURICULIN based upon the results of an interim  analysis
         of data from an ongoing 250 patient  Phase III study in oliguric  acute
         renal failure.  The study was suspended due to the low probability that
         a positive  outcome  could be  obtained  with  respect  to its  primary
         clinical  endpoint,   dialysis-free   survival.   AURICULIN  was  under
         development in collaboration with Genentech, Inc. ("Genentech").


<PAGE>


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

         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 those  discussed  here.  Factors  that  could  cause or
contribute to such differences  include, but are not limited to, those discussed
below,  as well as those discussed in the Company's Form 10-K for the year ended
December 31, 1996.

Operating Results

         The net loss for the quarter  ended  March 31,  1997 was $12.1  million
compared to a net loss of $7.4 million in the corresponding quarter of 1996. The
increase in net loss was  primarily  due to lower revenue from product sales and
research and development contracts combined with higher research and development
expenses.

         Total  revenues for the three  months ended March 31, 1997  declined to
$8.3 million from $11.5  million in the  corresponding  period of 1996.  Product
sales  from   psychiatric   products  under  license  from  SmithKline   Beecham
Corporation  (the "SB Products")  declined to $6.2 million from $8.6 million for
the three months ended March 31, 1997 and 1996, respectively.  The sales decline
was the result of competition  from new market entrants and generic drugs to the
SB Products.  Gross  margins  decreased to 37% for the quarter  ending March 31,
1997 from 40% in the prior  year  period as a result of an  increase  in product
returns.  The increase in  co-promotion  commissions  from 1996 to 1997 resulted
from higher  revenue  recognition  based on sales growth of HALDOL(R)  Decanoate
("HALDOL"), a product co-promoted with Ortho-McNeil Pharmaceutical, an affiliate
of  Johnson  and  Johnson,   and  on  sales  of  EFFEXOR(R)   (venlafaxine  HCl)
("EFFEXOR"), a product co-promoted with Wyeth-Ayerst Laboratories, a division of
American Home Products Corporation. Contract revenues for the three months ended
March 31, 1997 decreased $1.3 million from the corresponding  period in 1996 due
to receipt of a one-time  licensing payment in 1996 and the cessation of funding
for Alzheimer's research under a contract that ended in December 1996.

         Total costs and expenses for the three months ended March 31, 1997 were
$20.6  million  versus $19.3  million for the same period in 1996.  Spending for
research and development increased to $10.9 million in 1997 from $8.7 million in
1996 as a result of higher  staffing levels and clinical trials costs to support
expanded product  development  activities.  Expenses for marketing,  general and
administration  increased to $5.3 million from $4.4 million for the  three-month
periods ended March 31, 1997 and 1996, respectively,  because of higher staffing
levels. The first quarter decrease from 1996 to 1997 in cost of goods and profit
distribution to third parties was the result of the lower SB Product sales.

     Other income  decreased to $0.7 million in the quarter ended March 31, 1997
from  $1.1  million  in  the  comparable  quarter  of  1996.  The  decrease  was
principally  due to a net loss on sales of  securities in 1997 versus a net gain
for the same  period  in 1996  and on a  decline  in  interest  income  from the
Company's  marketable  securities.  The equity in the net loss of  affiliates of
$0.6  million  in 1997 and $0.7  million in 1996 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 10% and 12% on March  31,  1997 and  1996,
respectively. The Company's proportional share of Guilford declined further as a
result of Guilford's issuance of additional common stock in April 1997.

         The  ability  of the  Company  to  achieve  profitability  will  depend
principally  upon whether or not the Company is  successful  in  developing  and
commercializing  its own products and on its ability to complete agreements with
third parties that result in additional revenue.  In the case of AURICULIN,  the
Company was  unsuccessful  in its  development  efforts.  The  Company  recently
announced  termination  of its clinical  development  of AURICULIN  based on the
results of an interim  analysis  of data from an ongoing  250-patient  Phase III
study in oliguric  acute renal failure and the low  probability  that a positive
outcome  could be  obtained  with  respect  to its  primary  clinical  endpoint,
dialysis-free  survival.  The  Company's  success in  commercializing  its other
products,  including  its  lead  products,   NATRECOR(R)  BNP  ("NATRECOR")  and
FIBLAST(R) trafermin  ("FIBLAST"),  will depend on numerous factors,  including:
whether or not the Company can  demonstrate  safety and efficacy of the products
in  development;  the time taken to  complete  clinical  trials  and  regulatory
submissions; the timing and scope of regulatory approvals; the Company's ability
to secure a cost-effective commercial scale drug supply; and the level of market
acceptance of approved products. In the case of NATRECOR, the Company expects to
announce  important  clinical data in the second half of 1997. Such data will be
an important  consideration  in determining  whether to proceed with development
for the current  indication.  The Company's ability to raise additional  revenue
through third parties will be dependent on: its success in marketing and selling
the SB Products,  HALDOL,  EFFEXOR and any additional third-party product rights
which it may acquire;  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.
("Kaken") in Japan, in developing and  commercializing  the Company's  products.
There can be no assurance  that the Company will be  successful in achieving its
development and commercialization goals.

Liquidity and Capital Resources

         Combined cash, cash equivalents and marketable securities (both current
and  non-current)  totaled $81.6 million at March 31, 1997, an increase of $19.4
million from December 31, 1996. The increase was  attributable  to $30.0 million
received  from the drawdown of a loan from  Genentech.  The loan is repayable in
cash, stock or a combination  thereof,  at the Company's  option,  no later than
December 30, 2002.  Proceeds from the loan were partially offset by $8.9 million
used to fund  operating  activities,  $1.0  million in  property  and  equipment
spending, $0.3 million for the acquisition of treasury stock and $0.3 million of
unrealized  losses on marketable  securities  resulting  from a change in market
interest rates during the three-month period.

         Deferred  contract  revenues  for the three months ended March 31, 1997
increased to $8.7 million from $3.7 million in the corresponding  period of 1996
due to receipt  of a payment  from Kaken  associated  with the future  supply of
FIBLAST to support commercialization in Japan.

         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,  particularly  the  success  and  timeliness  of its product
development,  clinical  trial,  regulatory  approval  and  product  introduction
efforts.  Other contributing factors will be the Company's success in developing
new revenue sources to support research and development programs and its success
in  marketing  and  promoting  the SB  Products,  HALDOL,  EFFEXOR and any other
third-party product rights that may be licensed by the Company.

         The  Company's  cash  resources  of $81.6  million  at March 31,  1997,
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 two years. Key factors
which will affect future cash use and the timing of the  Company's  need to seek
additional financing include the results of the Company's partnering efforts and
the timing and amounts  realized from licensing and partnering  activities,  the
rate of spending required to develop and launch the Company's products,  the net
contribution  from the  Company's  marketing of current and future  products for
itself and third parties and changes in the Company's business environment.

         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.

Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

          (a)      Exhibit 11.1:            Computation of Net Loss Per Share

          (b)      Reports on Form 8-K:     None


<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 6, 1997                         By:/s/ Richard L. Casey
Date                                   Chairman and CEO


May 6, 1997                         By:/s/ Kevin McPherson
Date                                   Director of Finance
                                      (Chief Accounting Officer)