COMPANY DATA:
          COMPANY CONFORMED NAME:                 SCIOS INC
          CENTRAL INDEX KEY:                      0000726512
          STANDARD INDUSTRIAL CLASSIFICATION:     WHOLESALE-DRUGS PROPRIETARI
          IRS NUMBER:                             953701481
          STATE OF INCORPORATION:                 DE
          FISCAL YEAR END:                        1231

     FILING VALUES:
          FORM TYPE:                    10-Q
          SEC ACT:
          SEC FILE NUMBER:              000-11749
          FILM NUMBER:                  98620118
          

     BUSINESS ADDRESS:
          STREET 1:                     2450 BAYSHORE PKWY
          CITY:                         MOUNTAIN VIEW
          STATE:                        CA
          ZIP:                          94043
          BUSINESS PHONE:               6509661550

     MAIL ADDRESS:
          STREET 1:                     2450 BAYSHORE PKWY
          CITY:                         MOUNTAIN VIEW
          STATE:                        CA
          ZIP:                          94043

     FORMER COMPANY:                    
          FORMER CONFORMED NAME:        SCIOS INC
          DATE OF NAME CHANGE:          19920703
          
     FORMER COMPANY:
          FORMER CONFORMED NAME:        CALIFORNIA BIOTECHNOLOGY INC
          DATE OF NAME CHANGE:          19920302



                              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, 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 is 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 10 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






















                                      1
<PAGE>
                                SCIOS INC.
                            AND SUBSIDIARIES


<TABLE>
<CAPTION>
                       Consolidated Balance Sheets
                    (In thousands, except share data)

  <S>        

ASSETS                                         March 31,           December 31,
                                                 1999                 1998
                                              ------------         ------------ 
                                              (Unaudited)
                                                  <C>                 <C> 
Current assets:
     Cash and cash equivalents                     $13,402               $6,683
     Marketable securities                          11,035               23,394
     Accounts receivable                             6,654                6,768
     Prepaid expenses                                  924                  568
                                              ------------         ------------                          
       Total current assets                         32,015               37,413

Marketable securities, non-current                  57,996               67,234
Property and equipment, net                         31,530               32,214
Other assets                                         1,929                1,968
                                              ------------         ------------ 
TOTAL ASSETS                                      $123,470             $138,829
                                              ------------         ------------ 

     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                               $4,566               $2,327
     Other accrued liabilities                      12,315               10,087
     Deferred contract revenue                      16,990               16,896
                                              ------------         ------------
       Total current liabilities                    33,871               29,310
                                            
Long-term debt                                      35,243               34,573
Minority interests                                      --                   20
                                              ------------         ------------ 
       Total liabilities                            69,114               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, respectively         38                   38
     Additional paid-in capital                    416,498              416,428
     Treasury stock; 733,706 and 754,199
        shares, respectively                        (3,542)              (3,481)
     Notes receivable from stockholders               (111)                (145)
     Deferred compensation, net                       (431)                (505)
     Accumulated other comprehensive income            582               11,412
     Accumulated deficit                          (358,678)            (348,821)
                                              ------------         ------------ 
       Total stockholders' equity                   54,356               74,926
                                              ------------         ------------ 
     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY   $123,470             $138,829
                                              ------------         ------------ 

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
</TABLE>
                                      2
<PAGE>

<TABLE>
<CAPTION>

                                    SCIOS INC.
                                 AND SUBSIDIARIES

        Consolidated Statements of Operations and Comprehensive Income (Loss)
                             (In thousands, except share data)
                                                     Three months ended
                                                         March 31,
                                                 1999                     1998
                                       ---------------           --------------
                                                      (Unaudited)
 <S>                                       <C>                        <C>
Revenues:
      Product sales                             $7,822                   $8,430
      Co-promotion commissions                   2,728                    1,268
      Research & development contracts           2,177                    4,592
                                       ---------------           --------------
                                                12,727                   14,290
                                       ---------------           --------------

Costs and expenses:
      Cost of goods sold                         4,308                    4,805
      Research and development                  10,543                   10,527
      Marketing, general and administration      5,313                    4,711
      Profit distribution to third parties       1,117                    1,070
      Restructuring charges                      6,670                       --
                                       ---------------           --------------
                                                27,951                   21,113
                                       ---------------           --------------

Loss from operations                           (15,224)                  (6,823)

Other income and expense:
      Investment income                          1,026                      987
      Interest expense                            (670)                    (650)
      Realized gains on securities               4,786                    8,039
      Other income, net                            231                       19
                                       ---------------           --------------
                                                 5,373                    8,395

Equity in net loss of affiliates                    --                     (244)
                                       ---------------           --------------
Income (loss) before provision for 
   income taxes                                 (9,851)                   1,328

Provision for income taxes                          (6)                      (4)
                                       ---------------           --------------
      Net Income (loss)                        ($9,857)                  $1,324
                                       ---------------           --------------

Other comprehensive income (loss):
      Unrealized gains on securities               582                      244
                                       ---------------           --------------
Comprehensive income (loss)                    ($9,275)                  $1,568
                                       ---------------           --------------

      Earnings (loss) per common share:
                                      
           Basic                                ($0.26)                   $0.04
                                       ---------------           --------------
           Diluted                              ($0.26)                   $0.03
                                       ---------------           --------------

           Weighted average number of 
           common shares outstanding  
           used in calculation of:
           Basic                            37,746,605               37,273,536
                                       ---------------           --------------                              
           Diluted                          37,746,605               38,835,221
                                       ---------------           --------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial 
statements.
                                       3            

<PAGE>

<TABLE>
<CAPTION>
  
                                          SCIOS INC.
                                       AND SUBSIDIARIES

                             Consolidated Statements of Cash Flows
                                        (In thousands)
                                                        Three months ended
                                                              March 31,
                                                       1999             1998
                                                   -----------       ----------
                                                            (Unaudited)
<S>                                                <C>                 <C>
Cash flows from operating activities:
   Net income (loss)                                  ($9,857)          $ 1,324
   Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
      Depreciation and amortization                        826              971
      Accrued long-term interest payable                   670              638
      Equity in net loss of affiliates                      --              244
      Gain on sale of securities                        (4,786)              --
      Minority interest                                    (20)              --
      Deferred compensation                                 74               --
      Change in assets and liabilities:
        Accounts receivable                                114            3,744
        Accounts payable                                 2,239              227
        Other accrued liabilities                       (3,517)            (576)
        Other                                             (317)             128
        Deferred contract revenue                           94              299
        Restructuring charges                            5,745               --
                                                   -----------       ----------
Net cash provided by (used in) operating activities     (8,735)           6,999
                                                   -----------       ----------

Cash flows from investing activities:
   Purchases of property and equipment                    (141)            (588)
   Proceeds from sale of investment in affiliate            --              144
   Sales/maturities of marketable securities            54,102           74,373
   Purchases of marketable securities                  (38,549)         (75,927)
                                                   -----------       ----------
Net cash provided by (used in) investing activities     15,412           (1,998)
                                                   -----------       ----------

Cash flows from financing activities:
   Issuance of common stock and collection of notes 
     receivable from stockholders, net                     400            3,535
   Purchase of treasury stock                             (358)              --
   Payment of notes payable and capital leases                             (198)
                                                    -----------      ----------
Net cash provided by financing activities                   42            3,337
                                                    -----------      ----------

Net increase in cash and cash equivalents                6,719            8,338
Cash and cash equivalents at beginning of period         6,683           10,197
                                                   ===========       ==========
Cash and cash equivalents at end of period            $ 13,402         $ 18,535
                                                   ===========       ==========

Supplemental cash flow data:
   Cash paid during the period for interest                 --              $12
Supplemental disclosure of non-cash investing
   and financing:
   Change in net unrealized gains (losses) 
     on securities                                       $10,830            $44
   Investment in affiliate                                  --             $388



</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, 1999 and the  Company's  consolidated  results of
         operations  and cashflows for the  three-month  periods ended March 31,
         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 were  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   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.  The Company's Mountain View, California campus
         will be sold.  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
         accrual and  changes to the  accrual for the first  quarter of 1999 are
         summarized in the following table:

  <TABLE>
<CAPTION>

         <S>                 
                               Balance at       Charges       Balance at
         (in thousands)        March 1, 1999    Utilized      March 31,1999
         ----------------------------------------------------------------------
                                   <C>              <C>           <C>   
         Facilities                $  360         $ ---           $  360
         Workforce reductions       2,819           781            2,038
         Contractual commitments    1,110           144              966
         Asset write-downs          1,800           ---            1,800
         Lease exit costs             581           ---              581
                              -----------  ------------     ------------
                                   $6,670          $925           $5,745
</TABLE>
                                       
                                       5
<PAGE>


3.       Computation of Earning (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>
     

                                                      1999                1998
                <S>                         --------------        -------------
                                            <C>                   <C>    
                Numerator

                Basic
                   Net income (loss)              ($ 9,857)              $1,324

                Diluted
                   Net income (loss)              ($ 9,957)             $ 1,324

                Denominator

                Basic
                   Weighted average shares          37,747               37,274
                   Effect of dilutive securities:
                     Employee stock options            ---                1,562
                                                 ----------         ----------- 
                   Weighted average shares and assumed
                      conversions                    37,747              38,836

                Basic earnings (loss) per share      ($0.26)             $ 0.04
                                                 ----------         -----------
 
                Diluted earnings (loss) per share    ($0.26)             $ 0.03
                                                 ----------         ----------- 
         
</TABLE>
         The  potentially  dilutive  effect of  outstanding  options to purchase
         common  stock  would  have been  anti-dilutive  in 1999,  and they were
         therefore excluded from the 1999 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 1999 and
         1998 and was therefore excluded from the calculations.

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 Japan and receives  licensing  revenue  from  partners in the U.S.,
         Canada, Europe and Asia Pacific and operates in one business segment.
<TABLE>
<CAPTION>

         All long-lived assets are located in teh United States and revenues by 
geopraphic area are as follows for the first quarter of 1999 and 1998, 
repectively:

    <S>                  
   (in thousands)                  March 31, 1999    March 31, 1998
   --------------                  --------------    --------------
                                   <C>               <C>  
 
   Revenues - U.S.                       $ 12,727          $ 12,243
   Revenues - International                   ---             2,047    
   Total
                           ----------------------    --------------------------    
    
                                         $ 12,727          $ 14,290
 

</TABLE>
                                     6
<PAGE>



5.       Subsequent Event

         On April 27,  1999,  the Company was advised by the U.S.  Food and Drug
         Administration  ("FDA") that the FDA did not approve the  Company's New
         Drug  Application  for  Natrecor(R)  (nesiritide)  ("Natrecor")  in the
         treatment of acute  congestive  heart failure.  The FDA determined that
         there are uncertainties remaining about the effectiveness and safety of
         Natrecor at this time necessitating future study. The Company will work
         closely with the FDA to determine what additional  clinical studies are
         required for approval of Natrecor and with its Natrecor partner,  Bayer
         AG, to determine the plan for such future trials.





                                     7
<PAGE>




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

         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.

 Operating Results

         The net loss for the  quarter  ended  March 31,  1999 was $9.9  million
compared to net income of $1.3 million in the corresponding quarter of 1998. The
net loss in 1999 was  primarily  due to a $6.7 million  corporate  restructuring
charge and a $3.3 million decrease in realized gains on the sale of securities.

         Total  revenues  for the three  months  ended March 31, 1999 were $12.7
million compared to 1998 first quarter  revenues of $14.3 million.  The decrease
in revenues  was  principally  due to a $2.4  million  decline in  research  and
development  contract revenues as a result of the timing of product  development
milestone payments.  Product sales from psychiatric  products under license from
SmithKline  Beecham  Corporation  (the "SB Products")  decreased to $7.8 million
from  $8.4  million  for the  three  months  ended  March  31,  1999  and  1998,
respectively.  The Company expects that over time SB Product sales will continue
to erode  because of  competition  from new market  entrants and generic  drugs.
Co-promotion  commissions increased to $2.7 million in 1999 from $1.3 million in
1998.  The  increase  in  co-promotion  commissions  was the  result  of  higher
commissions  received from the sales of Risperdal(R)  (risperidone) and Paxil(R)
(paroxetine  HCl)  in the  first  quarter  of 1999 as  compared  to  commissions
received from sales of Haldol(R)  Decanoate and Effexor(R)  (venlafaxine HCl) in
the comparative  quarter in 1998.  Contract  revenues for the three months ended
March 31,  1999  decreased  to $2.2  million  in 1999 from $4.6  million  in the
corresponding period in 1998,  principally due to receipt of product development
milestone payments in 1998.

Total costs and expenses for the three months ended March 31, 1999 were $28.0
million versus $21.1 million for the same period in 1998. Spending for research
and development remained the same at $10.5 million in both 1999 and 1998 
quarters.  Expenses for marketing, general and administration increased to $5.3
million from $4.7 million for the three-month  periods ended March 31, 1999 and
1998, respectively, because of increased headcount and consulting expenses. The
first quarter decrease of $0.5 million in cost of goods from 1998 to 1999 was
the result of lower SB Product sales. Profit distribution to SB remained at $1.1
million from period to period.  On March 1, 1999, the Company announced a 
restructuring and right-sizing plan that included reduction of the Company's
full-time workforce by approximately 30% or 80 employees and the consolidation  

                                     8
<PAGE>

of its headquarters, development and research staff into currently leased 
facilities in Sunnyvale, California.  The Company's Mountain View, California 
campus will be sold.  In the first half of 1999, the Company will discontinue  
using  its manufacturing facility due to its low capacity and high operating  
expenses and the ready availability of third party recombinant protein 
manufacturing capacity. During this period, the Company will have completed the 
manufacture of Fiblast(R)(trafermin)required for delivery under its contract 
with Kaken. The manufacturing facility will be maintained for a number of 
months until a possible inspection by regulatory authorities which could occur 
if Kaken receives approval of Fiblast(R)(trafermin) for wound healing in Japan. 
The consolidation is expected to create improved  management  and  operational
synergies and save approximately  $14.0 million annually.  In the quarter ending
March  31,  1999,  the Company  recorded  a  one-time  restructuring  charge of
approximately  $6.7 million for the disposition  of certain  excess  assets and
severance costs.

         Other income and expense  decreased from $8.4 million in income for the
quarter ended March 31, 1998 to $5.4 million in the comparable  quarter of 1999.
The decrease was principally due to the $3.3 million  decrease in realized gains
on sale of  securities.  For the three months ended March 31, 1999,  the gain on
sale of  securities  was $4.8 million  compared to $8.0 million in 1998.  In the
first  quarter  of  1999,  the  Company  sold 1.3  million  shares  of  Guilford
Pharmaceutical  Inc.  ("Guilford")  stock for a gain of $4.8 million compared to
the  Company's  sale of its entire  interest in Karo Bio AB,  completed in March
1998 for an $8.0  million  gain.  The Company  currently  owns 80,500  shares of
Guilford stock.

         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 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 Bayer AG on Natrecor;  Kaken Pharmaceutical Co., Ltd. and
Wyeth-Ayerst  Laboratories  on  Fiblast;  and  Novo  Nordisk  A/A  on  GLP-1  in
developing and commercializing the Company's products.

                                      9
<PAGE>

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 determined that it will not be
required to modify or replace significant portions of hardware and software so 
that those systems will properly utilize dates beyond December 31, 1999. The
Company presently believes that with modifications and 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.  The Company has gathered  information about the Year 2000 compliance
status of its significant suppliers and contractors and continues to monitor 
their compliance.  For its information technology exposures, to date the 
Company is 70% 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.

                                     10
<PAGE>

         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 
estimated at approximately  $75,000 and is being funded through  operating cash 
flows.  To date, the Company has incurred approximately $11,000 related to all 
phases of the Year 2000 project.  Of the total remaining project costs, 
approximately $30,000 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 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.

                                      11
<PAGE>

Liquidity and Capital Resources

         Combined cash, cash equivalents and marketable securities (both current
and  non-current)  totaled  $82.4 million at March 31, 1999, a decrease of $14.9
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 most of its holding in Guilford in the first quarter of 1999.

         The Company is striving to achieve  profitability over the next several
years.  The timing on which the Company will succeed in its objective to achieve
and sustain profitability, in the short term, depends principally on the success
of the Company and its  collaboration  partner,  Bayer, in achieving  regulatory
approvals and generating  sales from Natrecor.  The Company is determining  with
the FDA the  nature of the  additional  clinical  trials  that the  agency  will
require   before  it  would   consider   approval  of  Natrecor  for  marketing.
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 $82.4 million in cash, cash equivalents and 
marketable securities at March 31, 1999, together with revenues from product 
sales, collaborative agreements and interest income, 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,
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.

                                     12
<PAGE>

                                SIGNATURES

     Pursuant to the requirements of the Securites 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 11, 1999                  By:  s/s Richard B. Brewer
Date                               Richard B. Brewer
                                   Chief Executive Officer


May 11, 1999                  By:  s/s David W. Gryska
Date                               David W. Gryska
                                   Chief Financial Officer