FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

(Mark One)

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

                                   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)
                                                                                    June 30,              December 31,
     ASSSETS                                                                         2000                    1999
                                                                                ---------------        -----------------

<S>                                                                                 <C>                      <C>

     Cash and cash equivalents                                                         $12,632                  $11,582
     Marketable securities                                                              21,261                   18,776
     Accounts receivable                                                                 3,087                    3,068
     Prepaid expenses                                                                      429                      899
                                                                                ---------------        -----------------

       Total current assets                                                             37,409                   34,325

Marketable securities, non-current                                                      48,987                   70,354
Property and equipment, net                                                             10,268                   11,534
Other assets                                                                             1,246                    2,059
                                                                                ---------------        -----------------


TOTAL ASSETS                                                                           $97,910                 $118,272
                                                                                ---------------        -----------------


     LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
     Accounts payable                                                                   $2,652                   $1,572
     Other accrued liabilities                                                           9,306                   11,157
     Deferred contract revenue                                                          17,148                   17,890
     Current portion of long term debt                                                      --                    2,000
                                                                                ---------------        -----------------

       Total current liabilities                                                        29,106                   32,619

Long-term debt                                                                          44,876                   42,866
                                                                                ---------------        -----------------

       Total liabilities                                                                73,982                   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; 5,000,000
        shares authorized; none issued and outstanding                                      --                       --
     Common stock; $.001 par value; 150,000,000
        shares authorized; issued and outstanding
        38,468,652 and 38,468,652 shares, respectively                                      38                       38
     Additional paid-in capital                                                        416,746                  416,600
     Treasury stock; 631,358 and 735,036
        shares, respectively                                                           (2,970)                  (3,458)
     Notes receivable from stockholders                                                  (167)                    (108)
     Deferred compensation, net                                                          (169)                    (340)
     Accumulated other comprehensive loss                                                (831)                  (1,060)
     Accumulated deficit                                                             (388,719)                (368,885)
                                                                                ---------------        -----------------

       Total stockholders' equity                                                       23,928                   42,787
                                                                                ---------------        -----------------


     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                        $97,910                 $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                       Six months ended
                                                                   June 30,                                June 30,
                                                           2000                1999                2000                1999
                                                      ----------------    ---------------     ---------------     ---------------

<S>                                                       <C>                <C>
                                                                 (Unaudited)                             (Unaudited)
Revenues:
      Product sales                                            $7,895             $9,472             $13,202             $17,294
      Co-promotion commissions                                  2,049              1,886               4,074               4,614
      Research & development contracts                          1,482              2,885               3,376               5,062
                                                      ----------------    ---------------     ---------------     ---------------

                                                               11,426             14,243              20,652              26,970
                                                      ----------------    ---------------     ---------------     ---------------


Costs and expenses:
      Cost of goods sold                                        4,603              4,890               7,703               9,198
      Research and development                                 11,294              8,129              20,578              18,672
      Marketing, general and administration                     5,593              4,249              11,369               9,568
      Profit distribution to third parties                        920              1,528               1,521               2,645
      Restructuring charges (credits)                           (993)                 --               (993)               6,670
                                                      ----------------    ---------------     ---------------     ---------------

                                                               21,417             18,796              40,178              46,753
                                                      ----------------    ---------------     ---------------     ---------------


Loss from operations                                          (9,991)            (4,553)            (19,526)            (19,783)

Other income and expense:
      Investment income                                         1,204              1,100               2,588               2,126
      Interest expense                                        (1,019)              (670)             (2,010)             (1,340)
      Realized gains (losses) on securities                     (100)                305               (184)               5,091
      Other income (expense), net                               (403)                 41               (702)                 272
                                                      ----------------    ---------------     ---------------     ---------------

                                                                (318)                776               (308)               6,149

                                                      ----------------    ---------------     ---------------     ---------------

      Net loss                                               (10,309)            (3,777)            (19,834)            (13,634)
                                                      ----------------    ---------------     ---------------     ---------------


Other comprehensive income (loss):
      Change in unrealized gains (losses)
            on securities                                         325              (978)                 229            (11,808)
                                                     ----------------    ---------------     ---------------     ---------------

Comprehensive loss                                           ($9,984)           ($4,755)           ($19,605)           ($25,442)
                                                     ----------------    ---------------     ---------------     ---------------


      Loss per common share:
           Basic and diluted                                  ($0.27)            ($0.10)             ($0.52)             ($0.36)
                                                     ----------------    ---------------     ---------------     ---------------


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

           Basic and diluted                               37,780,077         37,724,094          37,780,077          37,735,349
                                                      ----------------    ---------------     ---------------     ---------------


</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)
                                                                                     Six months ended
                                                                                         June 30,
                                                                                 2000                1999
                                                                              ------------        -----------
                                                                                       (Unaudited)
<S>                                                                            <C>                <C>

Cash flows from operating activities:

   Net loss                                                                     ($19,834)          ($13,634)
   Adjustments to reconcile net loss to net
   cash used in operating activities:
      Depreciation and amortization                                                 1,967              1,551
      Accrued long-term interest payable                                            2,010              1,339
      (Gain) loss on sale of securities                                               184            (5,091)
      Minority interest                                                                --               (20)
      Deferred compensation                                                           170                148
      Change in assets and liabilities:
        Accounts receivable                                                          (19)              2,287
        Accounts payable                                                            1,079              (561)
        Other accrued liabilities                                                   (799)            (2,904)
        Other                                                                       1,224               (45)
        Deferred contract revenue                                                   (742)                335
        Restructuring charges                                                     (1,052)              4,019
                                                                              ------------        -----------
             Net cash used in operating activities                               (15,812)           (12,576)
                                                                              ------------        -----------

Cash flows from investing activities:

   Purchases of property and equipment                                              (701)            (1,843)
   Proceeds from the sale of assets                                                    --              1,500
   Sales/maturities of marketable securities                                       34,262             68,303
   Purchases of marketable securities                                            (15,335)           (55,287)
                                                                              ------------        -----------
             Net cash provided by investing activities                             18,226             12,673
                                                                              ------------        -----------

Cash flows from financing activities:
   Issuance of common stock and collection of notes
      receivable from stockholders                                                    636              1,189
   Purchase of treasury stock                                                          --            (1,047)
   The payment of notes payable                                                   (2,000)                 --
                                                                              ------------        -----------
             Net cash provided by (used in) financing activities                  (1,364)                142
                                                                              ------------        -----------

Net increase in cash and cash equivalents                                           1,050                239
Cash and cash equivalents at beginning of period                                   11,582              6,683
                                                                              ------------        -----------
Cash and cash equivalents at end of period                                       $ 12,632            $ 6,922
                                                                              ============        ===========

Supplemental cash flow data:

   Cash paid during the period for interest                                        $2,000                $--
Supplemental disclosure of non-cash investing
   and financing:
   Change in net unrealized gains on securities                                     $ 229           $ 11,808

</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 June 30, 2000 and the  Company's  consolidated  results of
          operations for the  three-month  and six-month  periods ended June 30,
          2000 and 1999.  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, 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.

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

<PAGE>

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.
<TABLE>
<CAPTION>

                                                                       Asset      Lease
                                                        Workforce (Disposal)       exit     Contractual
       Restructuring charge (credits)                  reductions   Proceeds      costs     Commitments  Facilities       Total
       -------------------------------------------------------------------------------------------------------------------------
      <S>                                                <C>        <C>        <C>              <C>          <C>       <C>

       Restructuring provisions at March 1, 1999           $2,819     $1,800       $581          $1,110        $360      $6,670
       Charges to restucture in 1999                      (2,293)               (1,795)
                                                                       (400)                      (555)       (305)     (5,348)
       1999 change in estimate:                               233    (1,400)
                                                                                 1,507            (555)        (55)       (270)
                                                     ---------------------------------------------------------------------------
       Restructuring liability at December 31, 1999           759         --       293              --          --       1,052
                                                     ---------------------------------------------------------------------------

       First quarter 2000 activity                          (111)                 (73)              --          --       (184)
       Second quarter 2000 activity                         (159)        284        --              --          --         125

                                                     ---------------------------------------------------------------------------
       Restructure balance on completion                      489        284       220              --          --         993
       Credit to restructure reserve on completion
             of restructuring plan                          (489)      (284)     (220)              --          --       (993)
                                                     ---------------------------------------------------------------------------

       Restructuring liability at June 30, 2000            $----      $----      $----           $----       $----       $----
                                                  ==============================================================================

</TABLE>

<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                Six months ended
                                                               June 30,                         June 30,
                                                         2000             1999                2000         1999
                                                        -----------     -----------     -----------     -----------
        <S>                                             C>             <C>              <C>             <C>

         Numerator

         Basic

            Net loss                                    $  10,309      $   3,777        $ 19,834        $ 13,634
                                                        -----------     -----------     -----------     -----------
         Diluted

             Net loss                                   $  10,309      $   3,777        $ 19,834       $  13,634
                                                        -----------     -----------     -----------     -----------

         Denominator

         Basic

            Weighted average shares                        37,781         37,724          37,781           37,735

         Basic loss per share                             $  0.27        $  0.10        $   0.52        $    0.36
                                                        -----------     -----------     -----------     -----------

Diluted (loss) per share                                  $  0.27        $  0.10        $   0.52        $    0.36
                                                        -----------     -----------     -----------     -----------
</TABLE>


               The  potentially   dilutive  effect  of  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  in both 2000 and 1999 and was therefore  excluded
          from the calculations.

               At June 30, 2000 and 1999 stock  options at prices  ranging  from
          $3.8125 to $5.5625 and from $3.688 to $7.125 per share,  respectively,
          would have  increased  the number of weighted  average  common  shares
          outstanding for both the three-month and six-month periods of 2000 and
          1999,  but were not  included in the  computation  of diluted loss per
          share because they were antidilutive.

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

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




5.       Recent Accounting Pronouncements

               In June 1998, 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  years
          beginning in 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 upfront 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.  SAB 101 will be effective  beginning
          the third quater 2000.

               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  noncompensatory  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  is effective
          July 1, 2000,  but certain  conclusions in this  Interpretation  cover
          specific  events that occur after either December 15, 1998, or January
          12,  2000.  Management  believes  that FIN 44 will 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 Form 10-K for the year ended December 31, 1999.

Operating Results
-----------------

     Three Months Ended June 30, 2000 and 1999

     Revenues in the second quarter of 2000 were $11.4 million and included $7.9
million in product sales,  $2.0 million in  co-promotion  commissions,  and $1.5
million in contract revenues. Revenues in the corresponding quarter of 1999 were
$14.2  million,  including  $9.5  million  in  product  sales,  $1.9  million in
co-promotion  commissions and $2.9 million in contract revenues. The decrease in
revenues  from the second  quarter of 1999 to the same period in 2000 was mainly
due to a $1.6 million  decline in sales of  psychiatric  products under licenses
from  SmithKline  Beecham  Corporation  ("SB  Products")  and to the  decline in
contract  revenue of $1.4 million.  The decline was  partially  offset by a $0.1
million increase in co-promotion  commissions  period to period. The decrease in
SB Product sales was partially the result of reduced distributor inventories due
to a temporary shortening of the shelf-life of Eskalith CR, one of five products
developed and manufactured by SmithKline  Beecham  Corporation that are now sold
by the  Company.  The  Company  expects  that over time SB  Product  sales  will
continue to erode because of  competition  from new market  entrants and generic
drugs.  The  decline  quarter-to-quarter  in  contract  revenue  was  due to the
Company's receipt in 1999 of a one-time  milestone payments of $1.0 million from
Gen-Vec and $0.4 million in contract  revenue from Bayer AG ("Bayer")  that were
not repeated in 2000.

     The Company incurred total operating expense of $21.4 million in the second
quarter of 2000  versus  $18.8  million  for the same  period in 1999.  The $2.6
million  increase in expenses  was mainly due to the increase of $3.2 million in
research and  development  expenses and $1.4 million in  marketing,  general and
administrative  expenses that were  partially  offset by the decrease in cost of
goods,  profit  distribution  to third parties and  restructuring  credits.  The
increase in research  and  development  expenses  was mainly due to increases in
Natrecor  clinical trial expenses and to increased  expenses for  development of
p-38 kinase  inhibitors.  The increase in marketing,  general and administrative
was mainly the  result of  increased  Natrecor  marketing  activities  and other
consulting during the period.  The decline  quarter-to-quarter  in cost of goods
and profit distribution was a result of the decline in sales of SB Products.  In
the second quarter the Company completed the 1999  restructuring  activities and
recorded a $1.0 million  credit to the statement of  operations  relating to the
unused portion of the restructure reserve.

<PAGE>

     Other income and expense were $0.8 million of income for the second quarter
of 1999 compared to $0.3 million of expense in 2000. Investment income increased
$0.1  million  from  quarter-to-quarter  due  mainly to higher  interest  rates.
Interest expense increased from $0.7 million in 1999 to $1.0 million in 2000 due
to increases in interest rates quarter-to-quarter and to increased notes payable
balances  period-to-period.  Realized  gains on sales of  securities  were  $0.3
million in the  second  quarter of 1999  compared  to a loss of $0.1  million in
2000.  Other income was $0.4 million in 1999 and was mainly  comprised of rental
income,  which the  Company did not have in 2000  because the rental  properties
were sold as part of the restructure in 1999.

     The net loss for the second quarter of 2000 was $10.3 million compared to a
net  loss of $3.8  million  in the  second  quarter  of 1999.  The $6.5  million
increase in losses  quarter-to-quarter  was mainly the result of  decreasing  SB
product  sales  and  increasing   expenses  for  Natrecor  clinical  trials  and
development costs for p-38 kinase inhibitors.

     Six Months Ended June 30, 2000 and 1999

     Total  revenues for the six months  ended June 30, 2000 were $20.7  million
versus $27.0 million for the same period in 1999.  The $6.3 million  decrease in
revenues  was  principally  due to  declines  of  $4.1  million  in  sales  from
psychiatric  products  under  license  from SB,  $0.5  million  in  co-promotion
commissions and $1.7 million in research and development contracts. The decrease
in SB Product sales was partially the result of reduced distributor  inventories
due  to a  temporary  shortening  of  the  shelf-life  of  Eskalith  CR  and  to
competition from new market entrants and generic drugs. Co-promotion commissions
declined as a result of lower incentive  payments  received from co-promotion of
Risperdal(R)  (risperidone)  in 2000 versus  1999.  The decrease in research and
development  revenue  from 1999 to 2000 was mainly the result of a $1.2  million
decrease in revenue from Bayer, the Company's former  Natrecor(R)  partner,  and
from a $0.4 million decrease in milestone  payments.  In the six-month period of
1999, the Company received a $1.0 million  milestone payment from Gen-Vec versus
a $0.6 million  payment in the same period in 2000 from  Biosite for  diagnostic
uses of BNP.

     Total costs and  expenses for the six months ended June 30, 2000 were $40.2
million  compared to $46.8  million for the same  period in 1999.  The  spending
decrease  was mainly  due to a one-time  charge of $6.7  million  for  corporate
restructuring  activities  that was  recorded in the first  quarter of 1999.  On
completion of the corporate  restructuring  in the current  period,  the Company
recorded  a  $1.0  million  credit   relating  to  the  unused  portion  of  the
restructuring  reserve.  Cost of goods  decreased  $1.5  million  from period to
period as a result of the decline in SB product sales. Spending for research and
development  increased  $1.9 million from $18.7 million to $20.6 million for the
six-month period in 1999 and 2000, respectively.  The increase was the result of
a $3.6 million increase in Natrecor clinical trial expenses which was partially
offset by the decreases in headcount expenses that resulted from the restructure
in March 1999. The marketing,  general and  administrative  expense  increase of
$1.8 million was mainly  attributable to proxy contest expenses and increases in
consulting,  marketing  and medical  education  symposia  for  Natrecor.  Profit
distribution to third parties declined $1.1 million from the six-month period in
1999 to the comparable period in 2000 because of decreased sales of SB Products.

<PAGE>

     Other income and expense  decreased $6.4 million from the six-month  period
ended June 30, 1999 to the comparable period in 2000. The decrease in income was
principally  due to the  $5.3  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.  In the  six-month  period  ended  June  30,  2000,  investment  income
increased  by $0.5  million  from the same  period  in 1999.  The  increase  was
principally  due to higher  interest  rates and cash  balances for the six-month
period in 2000 compared to the same period in 1999.  Interest expense  increased
to $2.0  million  from $1.3  million for the six months  ended June 30, 2000 and
1999, respectively,  due to increased notes payable balances and higher interest
rates from period to period.

     In 1999,  the  Company  determined  with  the Food and Drug  Administration
("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 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.




Liquidity and Capital Resources
-------------------------------

     Combined cash, cash equivalents and marketable securities (both current and
non-current) totaled $82.9 million at June 30, 2000, a decrease of $17.8 million
from December 31, 1999. The decrease was primarily  attributable to cash used to
fund operations and to the repayment of $2.0 million in debt.

<PAGE>

     The  Company is  striving to achieve  profitability  over the next  several
years,  however the Company expects it may incur losses over the next two years.
The timing of the  Company's  success in reaching its  objectives to achieve and
sustain profitability,  in the short term, depends principally on the success of
the  Company  in  achieving  regulatory  approvals  and  generating  sales  from
Natrecor.  Profitability will also depend on a number of other factors including
the Company's success and timeliness of its product development, clinical trial,
regulatory approval and product introduction efforts. Other contributing factors
will be the Company's ability to develop new revenue sources to support research
and development programs and its success in marketing and promoting the products
of third parties that may be licensed by the Company.

     The Company's  resources of $82.9  million in cash,  cash  equivalents  and
marketable  securities (both current and non-current) at June 30, 2000, together
with a $3.4  million  operating  lease line that  expires  December 31, 2001 and
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 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.

     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
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.

<PAGE>

Recent Accounting Pronouncements

     In June 1998, 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 years  beginning in 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  upfront 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.  SAB 101 will be effective  beginning in the
third quarter 2000.

     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 noncompensatory 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 is effective
July 1, 2000,  but certain  conclusions  in this  Interpretation  cover specific
events  that  occur  after  either  December  15,  1998,  or January  12,  2000.
Management believes that FIN 44 will 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 7A, Quantitative and Qualitative Disclosures About Market Risk, 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.

                                        /s/ Richard B. Brewer
August 14, 2000                     By:________________________________________
                                       Richard B. Brewer, President and CEO


                                       /s/ David W. Gryska
August 14, 2000                    By:_________________________________________
                                      David W. Gryska,  Vice President and CFO