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 September 30, 2000

                                       OR

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

Commission file number: 0-11749

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

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

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

                                 (408) 616-8200
            (Registrant's telephone number including area code)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ___

         Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock, as of the latest practicable date.


Title                                                        Outstanding

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


<PAGE>



15

                                   SCIOS INC.
                                 AND SUBSIDIARY



PART I.  FINANCIAL INFORMATION


Item 1.  Financial Statements


<PAGE>
<TABLE>
<CAPTION>



                                   SCIOS INC.
                                 AND SUBSIDIARY
                           Consolidated Balance Sheets
                         (In thousands, except share data)
                                                                                    September 30,             December 31,
    ASSETS                                                                               2000                    1999
                                                                                  ------------------        -----------------
<S>                                                                                     <C>                        <C>
                                                                                  ------------------        -----------------
                                                                                     (Unaudited)
Current assets:
    Cash and cash equivalents                                                           $3,282                  $11,582
    Marketable securities                                                               19,181                   18,776
    Accounts receivable                                                                  2,960                    3,068
    Prepaid expenses                                                                       345                      899
                                                                                  ------------------        -----------------
      Total current assets                                                              25,768                   34,325

Marketable securities, non-current                                                      50,668                   70,354
Property and equipment, net                                                              9,358                   11,534
Other assets                                                                             1,045                    2,059
                                                                                  ------------------        -----------------
TOTAL ASSETS                                                                           $86,839                 $118,272
                                                                                  ==================        =================

    LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable                                                                   $2,915                   $1,572
    Other accrued liabilities                                                           8,293                   11,157
    Deferred contract revenue                                                          16,954                   17,890
    Current portion of long term debt                                                     --                     2,000
                                                                                  ------------------        -----------------
      Total current liabilities                                                        28,162                   32,619

Long-term debt                                                                         38,225                   42,866
                                                                                  ------------------        -----------------
      Total liabilities                                                                66,387                   75,485
                                                                                  ------------------        -----------------

Stockholders' equity:
    Series A preferred stock; $.001 par value; 20,000,000
       shares authorized; none issued and outstanding                                    --                        --
    Series B preferred stock; $.001 par value; 50,000
       shares authorized; 4,991 shares issued and outstanding                            --                        --
       in 2000 and none in 1999
    Common stock; $.001 par value; 150,000,000
       shares authorized; issued and outstanding
       38,468,652 and 38,468,652 shares in 2000                                          38                         38
       and 1999,  respectively
    Additional paid-in capital                                                      422,315                    416,600
    Treasury stock; 346,968 and 735,036
       shares, respectively                                                          (1,632)                    (3,458)
    Notes receivable from stockholders                                                 (211)                      (108)
    Deferred compensation, net                                                         (417)                      (340)
    Accumulated other comprehensive loss                                               (444)                    (1,060)
    Accumulated deficit                                                            (399,197)                  (368,885)
                                                                                  ------------------       -----------------
      Total stockholders' equity                                                     20,452                     42,787
                                                                                  ------------------       -----------------
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                      $86,839                   $118,272
                                                                                  ==================       =================

</TABLE>
[FN]

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



<PAGE>
<TABLE>
<CAPTION>


                                SCIOS INC.
                             AND SUBSIDIARY
      Consolidated Statements of Operations and Comprehensive Loss
             (In thousands, except share and per share data)

                                                             Three months ended                       Nine months ended
                                                                September 30,                           September 30,
                                                           2000               1999                2000                1999
                                                     -----------------   ----------------    ----------------    ----------------

<S>                                                         <C>              <C>

                                                                (Unaudited)                             (Unaudited)
Revenues:
     Product sales                                             $7,085            $10,633             $20,287             $27,927
     Co-promotion commissions                                   1,875              2,025               5,950               6,639
     Research & development contracts                           1,192              2,067               4,567               7,129
                                                     -----------------   ----------------    ----------------    ----------------
        Net revenues                                           10,152             14,725              30,804              41,695
                                                     -----------------   ----------------    ----------------    ----------------

Costs and expenses:
     Cost of goods sold                                         4,232              5,638              11,935              14,836
     Research and development                                   9,645              7,042              30,223              25,714
     Marketing, general and administration                      5,841              5,557              17,204              15,125
     Profit distribution to third parties                         808              1,718               2,329               4,363
     Restructuring charges (credits)                               --                 --               (993)               6,670
                                                     -----------------   ----------------    ----------------    ----------------
        Total costs and expenses                               20,526             19,955              60,698              66,708
                                                     -----------------   ----------------    ----------------    ----------------

Loss from operations                                         (10,374)            (5,230)            (29,894)            (25,013)

Other income and expenses:
     Investment income                                          1,221              1,300               3,809               3,426
      Interest expense                                          (917)              (713)             (2,928)             (2,053)
     Realized gains (losses) on securities                        (3)               (92)               (187)               4,999
     Other income (expense), net                                (411)                 --             (1,112)                 272
                                                     -----------------   ----------------    ----------------    ----------------
        Total other income and expenses                         (110)                495               (418)               6,644

                                                     -----------------   --------------------------------------------------------
     Net loss                                                (10,484)            (4,735)            (30,312)            (18,369)
                                                     -----------------   --------------------------------------------------------

Other comprehensive loss:
      Changes in unrealized gains (losses)
       on securities                                              387               (40)                 616            (11,848)
                                                     -----------------   ----------------    ----------------    ----------------
       Comprehensive loss                                    ($10,097)           ($4,775)           ($29,696)           ($30,217)
                                                     -----------------   ----------------    ----------------    ----------------

     Loss per common share:
          Basic and diluted                                   ($0.28)            ($0.13)             ($0.80)             ($0.49)
                                                     -----------------   ----------------    ----------------    ----------------

          Weighted  average  number  of  common  shares   outstanding   used  in
            calculation of:
                                                     -----------------   ----------------    ----------------    ----------------
          Basic and diluted                                37,881,422         37,708,060          37,813,858          37,726,253
                                                     -----------------   ----------------    ----------------    ----------------

</TABLE>

[FN]

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

</FN>


<PAGE>
<TABLE>
<CAPTION>

                                   SCIOS INC.
                                AND SUBSIDIARY
                     Consolidated Statements of Cash Flows
                                 (In thousands)
                                                                                     Nine months ended
                                                                                       September 30,
                                                                                  2000               1999
                                                                              -------------       ------------
                                                                                        (Unaudited)
<S>                                                                             <C>                    <C>


Cash flows from operating activities:
   Net loss                                                                      ($30,312)          ($18,369)
   Adjustments to reconcile net loss to net
   Cash used in operating activities:
      Depreciation and amortization                                                  2,775              2,085
      Loss on property and equipment retirement                                        254                 --
      (Gain) loss on sale of securities                                                187            (4,999)
      Minority interest                                                                 --               (20)
      Deferred compensation                                                            232                233
      Change in assets and liabilities:
        Accounts receivable                                                            108              1,597
        Accounts payable                                                             1,342            (1,267)
        Accrued long term interest payable                                           2,927              2,053
        Other accrued liabilities                                                  (1,812)            (2,103)
        Other                                                                        1,568              (252)
        Deferred contract revenue                                                    (936)              5,302
        Restructuring charges                                                      (1,052)              3,263
                                                                              -------------       ------------
             Net cash used in operating activities                                (24,719)           (12,477)
                                                                              -------------       ------------

Cash flows from investing activities:
   Purchases of property and equipment                                               (853)            (3,486)
   Proceeds from the sale of assets                                                     --             21,744
   Sales/maturities of marketable securities                                        63,238             80,529
   Purchases of marketable securities                                             (43,528)           (88,254)
                                                                              -------------       ------------
             Net cash provided by investing activities                              18,857             10,533
                                                                              -------------       ------------

Cash flows from financing activities:
   Issuance of common stock and collection of notes
      receivable from stockholders, net                                              2,123              1,124
   Purchase of treasury stock                                                           --            (1,048)
   Payment of notes payable                                                        (4,561)                 --
                                                                              -------------       ------------
             Net cash provided by (used in) financing activities                   (2,438)                 76
                                                                              -------------       ------------

Net decrease in cash and cash equivalents                                          (8,300)            (1,868)
Cash and cash equivalents at beginning of period                                    11,582              6,683
                                                                              -------------       ------------
Cash and cash equivalents at end of period                                         $ 3,282            $ 4,815
                                                                              =============       ============

Supplemental cash flow data:
   Cash paid during the period for interest                                         $4,561                $--
Supplemental disclosure of non-cash investing
   And financing:
   Change in net unrealized gains (losses) on securities                             $ 616           $ 11,808
   Conversion of note payable to preferred stock                                   $ 5,006                $--

</TABLE>
[FN]

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

</FN>

<PAGE>



                                   SCIOS INC.
                                 AND SUBSIDIARY

                   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  September  30,  2000,  the
Company's  consolidated results of operations for the three-month and nine-month
periods ended September 30, 2000 and 1999, and the  consolidated  cash flows for
the nine-month period ended September 30, 2000 and 1999.  Interim-period results
are not  necessarily  indicative  of results of  operations  or cash flows for a
full-year  period.  The  year-end  balance  sheet data were derived from audited
financial  statements,  but do not include all disclosures required by generally
accepted accounting principles.

         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, 1999.  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  Securities  and  Exchange  Commission's  Edgar
database at web site www.sec.gov.


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 recorded a
one-time  restructuring charge of approximately $6.7 million for the disposal of
certain unused assets and severance  costs.  All  restructuring  activities were
complete by the end of the second quarter of 2000,  leaving a remaining  balance
of $1.0  million in the  reserve.  The unused  reserve was due to changes in the
estimates of the cost of workforce reductions and the gain on the sale of excess
capital assets that were unanticipated.  The reserve was credited to restructure
expense in the second quarter of 2000.


<PAGE>





3.       Computation of Loss Per Share

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

<TABLE>
<CAPTION>

                                                          Three months ended              Nine months ended
                                                            September 30,                   September 30,
                                                         2000             1999              2000         1999
                                                   -----------------------------------------------------------------
<S>                                                        <C>               <C>             <C>            <C>



         Numerator
         Basic
            Net loss                                    ($  10,484)     ($   4,735)      ($ 30,312)      ($ 18,369)

         Diluted
             Net loss                                   ($  10,484)     ($   4,735)      ($ 30,312)      ($ 18,369)

         Denominator
         Basic
            Weighted average shares                       37,881             37,708        37,814            37,726

         Basic loss per share                             ($  0.28)     ($    0.13)    ($     0.80)     ($    0.49)

         Diluted loss   per share                         ($  0.28)     ($    0.13)    ($     0.80)     ($    0.49)



</TABLE>


         The  potentially  dilutive  effect of preferred  stock and  outstanding
options to purchase common stock would have been  anti-dilutive in both 2000 and
1999, and were therefore excluded from the diluted earnings calculation for both
periods. Although potentially dilutive, the payoff of the Genentech loan through
the  issuance of stock  would have been  anti-dilutive  for both the  nine-month
periods ended 2000 and 1999 and was therefore excluded from the calculations.

         At September  30, 2000,  the Company had  5,238,021  outstanding  stock
options at prices ranging from $3.6875 to $21.125 per share. Options to purchase
common  stock  were  excluded  from  earnings  calculations  because  they  were
anti-dilutive.


<PAGE>




4.       Industry and Geographic Segment Information

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

         All long-lived assets are located in the United States and all revenues
were earned in the United States in the nine-month  periods ended  September 30,
2000 and 1999.


5.       Recent Accounting Pronouncements

         In June  1999,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 133,  ("SFAS 133"),  "Accounting  for Derivative  Instruments  and
Hedging  Activities."  SFAS 133  establishes  new  standards of  accounting  and
reporting for derivative  instruments and hedging  activities.  SFAS 133 will be
effective  for fiscal  2001.  The Company  does not  currently  hold  derivative
instruments or engage in hedging activities.

         In December 1999,  the staff of the Securities and Exchange  Commission
issued Staff  Accounting  Bulletin No. 101 (SAB 101),  "Revenue  Recognition  in
Financial  Statements."  SAB 101  requires  that license and other up front fees
received  from  research  collaborators  be  recognized  over  the  term  of the
agreement  unless the fee is in  exchange  for  products  delivered  or services
performed that represent the  culmination of a separate  earnings  process.  The
Company has not yet determined the impact of its implementation on the reporting
of the Company's contract revenue.

         In  March  2000,  the  Financial   Accounting  Standards  Board  issued
Interpretation  No. 44,  "Accounting  for Certain  Transactions  Involving Stock
Compensation - an interpretation of APB No. 25," ("FIN 44"). The  Interpretation
clarifies  the  definition  of employee for purposes of applying APB No. 25, the
criteria for determining  whether a plan qualifies as a  non-compensatory  plan,
the accounting consequence of various modifications to the terms of a previously
fixed  stock  option  or  award  and the  accounting  for an  exchange  of stock
compensation awards in a business combination. This Interpretation was effective
July 1, 2000,  and did not have a material  effect on the financial  position or
results of operations of the Company.

<PAGE>




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

         In accordance  with Federal laws, the Company  reminds readers that the
following   discussion   contains   forward-looking   statements   about  plans,
objectives,  future results and intentions of the Company. These forward-looking
statements are based on the current expectations of the Company, and the Company
assumes no obligation to update this information. Realization of these plans and
results involves risks and uncertainties, and the Company's actual results could
differ  materially  from the historical  results or future plans discussed here.
Factors that could cause or contribute to such differences  include, but are not
limited to, those items discussed below, as well as the considerations discussed
in the  Company's  Annual  Report on Form 10-K for the year ended  December  31,
1999.


Operating Results

Three Months Ended September 30, 2000 and 1999

Revenues

     The Company had total revenues of $10.2 million and $14.7 million for the
 quarters  ended  September  30,  2000 and 1999,  respectively.  Net  revenues
include  revenues from product sales,  co-promotion  commissions,  and contracts
(including research and development collaborations).

         Product sales of psychiatric  products  under licenses from  SmithKline
Beecham Corporation ("SB Products")  accounted for 69.8 % of the revenues in the
third quarter of 2000 and 72.2 % in the third quarter of 1999.  However,  during
this period sales of the SB Products declined $3.5 million from $10.6 million in
the third quarter of 1999 to $7.1 million in the current  quarter.  The decrease
was  largely   the  result  of  reduced   distributor   inventories   caused  by
manufacturing and product shelf life issues of Eskalith CR (one of five products
developed and manufactured by SB that are now sold by the Company), coupled with
the erosion of sales as a result of new market entrants and generic drugs.

         Co-promotion  commissions  were $1.9  million for the third  quarter of
2000 and $2.0  million for the same  quarter in 1999.  Co-promotion  commissions
declined as a result of lower incentive  payments  received from co-promotion of
Risperdal  (risperidone).  Contract  revenues  were $1.2 million for the quarter
ended  September 30, 2000 and $2.1 million for the  comparable  quarter in 1999.
The decline in the current quarter  reflects the Company's  receipt in 1999 of a
one-time  milestone  payment of $0.3 million for BNP  diagnostics,  and contract
revenues of $0.4  million  from Bayer AG  ("Bayer"),  and $0.2  million in other
contract revenues that were not repeated in 2000.


<PAGE>


Cost of Goods Sold

         Cost of goods sold was $4.2 million, or 59.7% of net product sales, for
the quarter ended September 30, 2000, and $5.6 million,  or 53.0% of net product
sales,  for the quarter  ended  September 30, 1999.  Net product sales  includes
allowances  for rebates  and product  returns.  The  increase in the  percentage
relationship  between  cost of goods sold and  product  sales was largely due to
higher rebates,  and product returns due to the manufacturing issues of Eskalith
CR.


Operating Expenses

         For the third quarter ended September 30,2000, research and development
(R&D) expenses were  $9.6 million,  up from  $7.0  million for  the same quarter
in 1999.  Major development projects in  2000  include   Natrecor(R)(nesiritide)
clinical  trial  expenses for the  potential  treatment  of patients  with acute
decompensated  congestive heart failure,  and the Company's p38 kinase inhibitor
program for rheumatoid arthritis and other inflammatory disorders.

         Marketing, general and administrative, and profit distribution to third
parties for the three  months  ended  September  30,  2000,  were $6.6  million,
compared  with $7.3  million  for the same  quarter of 1999.  The year over year
decline in third  quarter  expenses  was largely  attributable  to lower  profit
distributions of $0.9 million primarily due to lower SB Product sales.


Other Income and Expenses

         The Company  reported other income and expense of $0.1 million  expense
for the  third  quarter  of 2000  compared  to $0.5  million  of  income  in the
comparable  quarter in 1999.  The $0.6  million  change was  comprised of a $0.2
million  increase  in  interest  expense,  a  $0.2  million  write-down  of  the
investment  in a  privately  held  company,  and a $0.2  million  write-down  of
property and equipment.

         The net loss for the three months ended was $10.5  million or $0.28 per
share.  This compares to a net loss of $4.8 million,  or $0.13 per share for the
corresponding 1999 quarter.


Nine Months Ended September 30, 2000 and 1999


Revenues

         Revenues for the nine-month  period ended September 30, 2000 were $30.8
million in 2000 compared to $41.7 million for the same period in 1999.  Revenues
in 2000 include  revenues  from  product  sales of $20.3  million,  co-promotion
commissions of $5.9 million,  and contracts of $4.6 million (including  research
and development collaborations).


<PAGE>


         For the nine months ended  September  30, 2000 product sales were $20.3
million,  a decline of $7.6 million or a 27.4 % decrease over the same period in
1999.  As  previously  mentioned,  the  decline  in  product  sales was  largely
attributable  to inventory  issues with SB and erosion of sales due to increased
competition and generic entrants.

         For the first nine months of 2000,  co-promotion  commissions were $6.0
million  compared  with  $6.6  million  in 1999 as a result  of lower  incentive
payments received from co-promotion of Risperdal.  In this same period, contract
revenues totaled $4.6 million in 2000 and $7.1 in 1999. The nine months decrease
in contract revenues was mainly the result of a $1.6 million decline in revenues
from Bayer,  the  Company's  former  Natrecor  partner,  and from a $0.9 million
reduction in milestone and other contract revenues.


Cost of Goods Sold

         For the nine month period cost of goods sold was $11.9 million in 2000,
and $14.8 million in 1999. Cost of goods as a percent of product sales was 58.8%
and 53.1%, respectively,  for the nine months ended September 30, 2000 and 1999.
The  increase  in cost of  goods  sold as a  percentage  of  product  sales  was
principally due to higher rebates and product  returns due to the  manufacturing
issues of Eskalith CR.


Operating Expenses

         In the nine-month  periods ended  September 30, R&D expenses were $30.2
million in 2000 and $25.7 million in 1999.  Major  development  projects in 2000
include  Natrecor  clinical trial expenses and p38 kinase  programs,  which were
partially  offset by the declines in headcount  expenses  that resulted from the
restructure  in March 1999.  The Company  expects R&D costs to increase in 2001,
primarily  reflecting higher expenses related to the development of Natrecor for
other indications, and p38 human trials.

         For the nine months ended  September 30, 2000,  marketing,  general and
administrative,  profit distribution to third parties,  and restructuring charge
credits totaled $18.5 million compared with $26.2 million for the same period in
1999. The major factors that resulted in the decline in expenses of $7.7 million
were the absence of restructuring  charges of $6.7 million included in 1999, and
lower profit distributions of $2.0 million, partially offset by higher marketing
and  general  and  administrative  expenses  of $2.0  million.  The  increase in
marketing,  general and  administrative  was  principally the result of Natrecor
marketing  activities  and other  consulting  expenses  during the  period.  The
Company  expects its marketing costs to  significantly  rise in 2001, to support
the sales force build-up and product promotion activities in preparation for the
launch of Natrecor.  The Company  anticipates that Natrecor will obtain Food and
Drug Administration ("FDA") approval in mid 2001.


<PAGE>



Other Income and Expenses

         Other income and expense  decreased  $7.0  million from the  nine-month
period in 1999 to the comparable period in 2000. The decline in other income was
principally  due to the  $5.2  million  decrease  in  realized  gains on sale of
securities.  In the first  quarter of 1999,  the Company sold its  remaining 1.3
million  shares  of  Guilford  Pharmaceuticals,  Inc.  stock  for a gain of $4.8
million.  Investment  income increased by $0.4 million for the nine-month period
in 2000 from the  comparable  period in 1999.  The increase was primarily due to
the increases in interest rates from period to period. Interest expense increase
from  $2.1million  in 1999 to $2.9  million  in 2000 was a result  of  increased
average notes payable balances and higher interest rates from period to period.

         For the  nine-month  periods  ended  September  30, 2000 and 1999,  net
losses  were  $30.3  million  or $0.80 per share and $18.4  million or $0.49 per
share, respectively.

         In  1999,  the  Company  determined  with  the  FDA the  nature  of the
additional  clinical trial (referred to by the Company as the "VMAC Trial") that
the agency requires before it will consider  approval of Natrecor for marketing.
The Company has continued regular  interactions with the FDA about the filing of
an amended NDA containing the results of the VMAC Trial.  The Company  initiated
enrollment in the VMAC Trial in October 1999 and on July 31, 2000  announced the
completion of the 480 patient study.  The results of the trial will be presented
at the American Heart  Association's  Clinical Trial Results  Plenary Session on
November 15, 2000.

         The ability of the Company to achieve profitability depends principally
on the Company's success in developing and  commercializing its own products and
on its  ability  to  complete  agreements  with  third  parties  that  result in
additional revenue.  Among the factors that will determine the Company's success
in  commercializing  its products are: the  demonstrated  safety and efficacy of
products in  development;  the cost of and the time taken to  complete  clinical
trials and regulatory submissions; the timing and scope of regulatory approvals,
particularly with respect to the Company's lead product Natrecor;  the Company's
ability to maintain 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 Kaken Pharmaceutical
Co., Ltd. and Chiron  Corporation  on Fiblast and Novo Nordisk A/S on GLP-1,  in
developing and commercializing the Company's products.


<PAGE>




Liquidity and Capital Resources

         Combined cash, cash equivalents and marketable securities (both current
and  non-current)  totaled  $73.1  million at September  30, 2000, a decrease of
$27.6 million from December 31, 1999. The decrease was primarily attributable to
cash used to fund operations and to the repayment of $4.6 million on the debt to
Genentech Inc.

         The Company's  resources of $73.1 million in cash, cash equivalents and
marketable  securities  (both  current and  non-current)  at September 30, 2000,
together with revenues from product sales,  collaborative  agreements,  interest
income and any funding from existing or future debt or equity arrangements, will
be used to support  current and new  clinical  trials for  proprietary  products
under  development,  to support  development and  commercialization  efforts for
prospective products and for other general purposes.  The Company has terminated
its equipment lease line-of credit after drawing down approximately $0.6 million
in the third  quarter of 1999.  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 financing, including
additional equity financing.  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.

         The information above contains  forward-looking  statements  including,
without  limitation,  statements  relating to the Company's  plans,  strategies,
objectives, expectations, intentions, and the adequacy of its resources that are
made  pursuant  to  the  "safe  harbor"  provisions  of the  Private  Securities
Litigation Reform Act of 1995.  Readers are cautioned that actual results may be
materially  different  than those expected and that  forward-looking  statements
should be read in conjunction with the Company's  disclosures in its most recent
Annual Report on Form 10-K as filed with the Securities and Exchange Commission.


Recent Accounting Pronouncements

         In June  1999,  the  FASB  issued  Statement  of  Financial  Accounting
Standards No. 133,  ("SFAS133" ),  "Accounting  for Derivative  Instruments  and
Hedging  Activities."  SFAS 133  establishes  new  standards of  accounting  and
reporting for derivative  instruments and hedging  activities.  SFAS 133 will be
effective  for fiscal  2001.  The Company  does not  currently  hold  derivative
instruments or engage in hedging activities.
<PAGE>


        In December 1999,  the staff of the Securities and Exchange  Commission
issued Staff  Accounting  Bulletin No. 101 (SAB 101),  "Revenue  Recognition  in
Financial  Statements."  SAB 101  requires  that license and other up front fees
received  from  research  collaborators  be  recognized  over  the  term  of the
agreement  unless the fee is in  exchange  for  products  delivered  or services
performed that represent the  culmination of a separate  earnings  process.  The
Company has not yet determined the impact of its implementation on the reporting
of the Company's contract revenue.

         In  March  2000,  the  Financial   Accounting  Standards  Board  issued
Interpretation  No. 44,  "Accounting  for Certain  Transactions  Involving Stock
Compensation - an interpretation of APB No. 25," ("FIN 44"). The  Interpretation
clarifies  the  definition  of employee for purposes of applying APB No. 25, the
criteria for determining  whether a plan qualifies as a  non-compensatory  plan,
the accounting consequence of various modifications to the terms of a previously
fixed  stock  option  or  award  and the  accounting  for an  exchange  of stock
compensation awards in a business combination. This Interpretation was effective
July 1, 2000,  and did not have a material  effect on the financial  position or
results of operations of the Company.







Item 3.   Quantitative and Qualitative Disclosures About Market Risk

         No  significant  change in market risk has occurred since the filing by
the Company on form 10-K for the year ended December 31, 1999. Reference is made
to Part II, item 7, Financial Risk Management, in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999.



<PAGE>




Part II. Other Information


Item 2.  Changes in Securities


         None.


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


         None.


Item 6.  Exhibits and Reports on Form 8-K


(a)      Exhibits


         None.


(b)      Reports on Form 8-K


         None.




                                      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.



November 10, 2000                   By:     S/S  Richard B. Brewer
                                       ----------------------------------------
                                        Richard B. Brewer, President and CEO



November 10, 2000                   By:     S/S   David W.  Gryska
                                       ---------------------------------------
                                        David W. Gryska, Vice President and CFO