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, 1997

                                       OR

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
   ACT OF 1934

For the transition period from ________ to ___________

                        Commission file number: 0-11749


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

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

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

                                (650) 966-1550
               (Registrant's telephone number including area code)


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

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

Title                                                        Outstanding

Common Stock, $.001 par value                                37,865,668



<PAGE>


Part I.  Financial Information

Item 1.  Financial Statements






<PAGE>

                                                          SCIOS INC.
                                                       AND SUBSIDIARIES

                                                 Consolidated Balance Sheets
                                              (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                                 September 30,             December 31,
                                                                                     1997                      1996
                                                                               ------------------        -----------------
<S>                                                                            <C>                       <C> 
ASSETS                                                                            (Unaudited)

Current assets:
     Cash and cash equivalents                                                            $9,555                   $1,587
     Marketable securities                                                                 9,813                    6,888
     Accounts receivable                                                                   5,752                    4,808
     Prepaid expenses                                                                        523                      786
                                                                               ------------------        -----------------
       Total current assets                                                               25,643                   14,069

Marketable securities, non-current                                                        48,347                   53,695
Investment in affiliate                                                                   10,406                    6,939
Property and equipment, net                                                               34,323                   36,839
Other assets                                                                               2,260                    2,419
                                                                               ------------------        -----------------

TOTAL ASSETS                                                                            $120,979                 $113,961
                                                                               ------------------        -----------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Notes payable to banks                                                               $3,000                   $3,000
     Accounts payable                                                                      1,379                    2,507
     Other accrued liabilities                                                             6,839                   10,011
     Deferred contract revenue                                                            11,700                    3,666
     Current portion of long-term debt and capital leases                                    685                      723
                                                                               ------------------        -----------------
       Total current liabilities                                                          23,603                   19,907

Long-term debt and capital leases                                                         31,168                      349
Minority interests                                                                            --                       77
                                                                               ------------------        -----------------
       Total liabilities                                                                  54,771                   20,333
                                                                               ------------------        -----------------

Stockholders' equity:
     Preferred stock; $.001 par value; 20,000,000 shares
        authorized; issued and outstanding: 0 and 12,632,
        respectively (liquidation preference of $0 and                                        --                       --
        $12,000, respectively)
     Common stock; $.001 par value; 150,000,000 shares
       authorized; issued and outstanding: 37,865,668 and
       36,506,297, respectively                                                               38                       37
     Additional paid-in capital                                                          409,750                  404,456
     Treasury stock                                                                      (4,758)                  (2,991)
     Notes receivable from stockholders                                                     (13)                     (13)
     Unrealized gains (losses) on securities                                                 219                     (70)
     Accumulated deficit                                                               (339,028)                (307,791)
                                                                               ------------------        -----------------
       Total stockholders' equity                                                         66,208                   93,628
                                                                               ------------------        -----------------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                              $120,979                 $113,961
                                                                               ------------------        -----------------
                

                                           See notes to consolidated financial statements.

</TABLE>


<PAGE>

                                                       SCIOS INC.
                                                    AND SUBSIDIARIES

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

                                                          Three months ended                   Nine months ended
                                                             September 30,                       September 30,
                                                         1997              1996              1997              1996
                                                    ---------------    -------------    ---------------    --------------
                                                               (Unaudited)                        (Unaudited)
<S>                                                 <C>                <C>              <C>                <C>    
Revenues:
      Product sales                                         $8,750          $11,705            $22,446           $28,793
      Co-promotion commissions                               1,381            2,204              4,500             4,490
      Research & development contracts                       2,445            2,641              4,841             6,543
                                                    ---------------    -------------    ---------------    --------------
                                                            12,576           16,550             31,787            39,826
                                                    ---------------    -------------    ---------------    --------------

Costs and expenses:
      Cost of goods sold                                     4,955            6,663             13,178            16,966
      Research and development                               8,261           11,129             32,200            28,914
      Marketing, general and administration                  4,941            5,106             15,289            13,996
      Profit distribution to third party                     1,057            1,668              2,520             3,585
                                                    ---------------    -------------    ---------------    --------------
                                                            19,214           24,566             63,187            63,461
                                                    ---------------    -------------    ---------------    --------------

Loss from operations                                        (6,638)          (8,016)           (31,400)          (23,635)

Other income:
      Investment income                                      1,043              730              2,970             2,799
      Interest expense                                        (638)              (2)            (1,522)             (309)
      Realized losses on securities                             --              (35)              (179)             (135)
      Other income (expense), net                              150             (269)               299                30
                                                    ---------------    -------------    ---------------    --------------
                                                               555              424              1,568             2,385

Equity in net gain (loss) of affiliates                       (346)           2,682             (1,482)            1,307
Minority interests                                              --               --                 77                --
                                                    ---------------    -------------    ---------------    --------------
      Net loss                                             ($6,429)         ($4,910)          ($31,237)         ($19,943)
                                                    ---------------    -------------    ---------------    --------------

      Net loss per common share                             ($0.18)          ($0.14)            ($0.87)           ($0.56)
                                                    ---------------    -------------    ---------------    --------------

      Weighted average number of
         common shares outstanding                      35,845,927       35,931,277         35,834,686        35,885,377
                                                    ---------------    -------------    ---------------    --------------



                                             See notes to consolidated financial statements.

</TABLE>



<PAGE>
                                                 SCIOS INC.
                                              AND SUBSIDIARIES

                                    Consolidated Statements of Cash Flows
                                               (In thousands)

<TABLE>
<CAPTION>

                                                                                     Nine months ended
                                                                                       September 30,
                                                                                  1997                1996
                                                                               ------------        -----------
                                                                                        (Unaudited)
<S>                                                                            <C>                 <C>    
Cash flows from operating activities:
   Net loss                                                                       ($31,237)         ($19,943)
   Adjustments to reconcile net loss to net
   cash used by operating activities:
      Depreciation and amortization                                                  4,525             3,445
      Deferred contract revenue                                                      8,034            (1,986)
      Equity in net loss of affiliates                                               1,482            (1,307)
      Minority interests                                                               (77)               --
      Change in assets and liabilities:
        Accounts receivable                                                           (944)           (2,216)
        Accounts payable                                                            (1,128)           (1,785)
        Other accrued liabilities                                                   (1,897)              763
        Other                                                                          460              (335)
                                                                               ------------        -----------
             Net cash used by operating activities                                 (20,782)          (23,364)
                                                                               ------------        -----------

Cash flows from investing activities:
   Payments for property and equipment, net                                         (1,970)           (5,968)
   Sales/maturities of marketable securities                                       220,220           143,059
   Purchases of marketable securities                                             (217,506)         (112,331)
                                                                               ------------        -----------
             Net cash provided by investing activities                                 744            24,760
                                                                               ------------        -----------

Cash flows from financing activities:
   Purchase of treasury stock                                                       (1,767)           (1,602)
   Issuance of notes payable, net of capital lease payments                         29,523                --
   Other                                                                               250               (37)
                                                                               ------------        -----------
             Net cash provided (used) by financing activities                       28,006            (1,639)
                                                                               ------------        -----------
 
Net increase (decrease) in cash and cash equivalents                                 7,968              (243)
Cash and cash equivalents at beginning of period                                     1,587             2,847
                                                                               ------------        -----------
Cash and cash equivalents at end of period                                         $ 9,555           $ 2,604
                                                                               ------------        -----------

Supplemental cash flow data:
   Cash paid during the period for interest                                          $ 248             $ 309
Supplemental disclosure of non-cash investing
   and financing:
   Change in net unrealized gains losses on securities                               $ 289             $ 723
   Investment in affiliate                                                         $ 4,949           $ 4,708




                                           See notes to consolidated financial statements.
</TABLE>

<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  financial  position  at
         September  30, 1997 and the  Company's  results of  operations  for the
         three  and  nine-month  periods  ended  September  30,  1997 and  1996.
         Interim-period  results are not  necessarily  indicative  of results of
         operations or cash flows for a full-year period.

                  These  financial  statements  and the notes thereto  should be
         read in conjunction  with the Company's  annual report on Form 10-K for
         the year ended  December 31, 1996.  Investors are  encouraged to review
         the Form 10-K for a broader  discussion of the  Company's  business and
         the opportunities and risks inherent in the Company's business.  Copies
         of the 10-K are available from the Company on request.

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

2.       Litigation

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



<PAGE>

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

         The following  discussion  contains  forward-looking  statements  about
plans, objectives, future results and intentions of Scios. These forward-looking
statements are based on the current expectations of the Company, and the Company
assumes no obligation to update this information. Realization of these plans and
results involves risks and uncertainties, and the Company's actual results could
differ  materially  from those  discussed  here.  Factors  that  could  cause or
contribute to such differences  include, but are not limited to, those discussed
below,  as well as those discussed in the Company's Form 10-K for the year ended
December 31, 1996.

Operating Results

         The net loss for the quarter ended  September 30, 1997 was $6.4 million
compared to a net loss of $4.9 million in the corresponding quarter of 1996. For
the  nine-month  periods ended  September 30, 1997 and 1996, the net losses were
$31.2 million and $19.9 million, respectively. For both the three and nine-month
periods, the increase in net losses was primarily due to lower product sales and
changes in the net gains and losses of affiliates.

         Total revenues for the three months ended September 30, 1997 were $12.6
million versus $16.6 million for the corresponding period in 1996. Product sales
from psychiatric products under license from SmithKline Beecham Corporation (the
"SB Products")  declined to $8.8 million from $11.7 million for the three months
ended  September 30, 1997 and 1996,  respectively.  The decline in sales was the
result of competition  from new market entrants and generic  alternatives to the
SB Products.

         For the nine months ended  September  30, 1997 and 1996,  revenues were
$31.8  million  and  $39.8  million,  respectively.  The  year-to-year  decrease
resulted from a decline in product sales and research and  development  contract
revenues.  The  decline in sales was the result of  competition  from new market
entrants and generic alternatives to the SB Products.  Contract revenues for the
nine-month  period  decreased $1.7 million from 1996 to 1997 due to receipt of a
one-time  licensing payment in 1996 and the cessation of funding for Alzheimer's
research under a contract that ended in December 1996.

     Total costs and expenses for the three months ended September 30, 1997 were
$19.2  million  versus $24.6  million for the same period in 1996.  Spending for
research and development decreased to $8.3 million in 1997 from $11.1 million in
1996 as a  result  of lower  clinical  trials  costs  due to  suspension  of the
Company's  Phase  III  trial  for   AURICULIN(R)anaritide   and  the  successful
completion  of the  Company's  Phase  III  trials  for  NATRECTOR(R)BNP  for the
treatment of acute congestive heart failure. Expenses for marketing, general and
administration  decreased to $4.9 million in 1997 from $5.1 million in 1996. The
third quarter decline in profit  distribution to third parties and cost of goods
from 1996 to 1997 was the result of lower SB Product sales.

         Total costs and expenses for the nine months ended  September  30, 1997
were $63.2 million  versus $63.5  million for the same period in 1996.  Spending
for  research  and  development  increased  to $32.2  million in 1997 from $28.9
million in 1996  because of higher  staffing  levels and  clinical  trial costs.
Expenses for marketing, general and administration increased to $15.3 million in
1997 from  $14.0  million  in 1996  because  of higher  staffing  levels  and an
increase in depreciation expense.  Profit distribution to third parties and cost
of goods decreased from 1996 to 1997 because of lower SB Product sales.

         Other income  increased to $0.6 million in the quarter ended  September
30, 1997 from $0.4 million in the comparable quarter of 1996. For the nine-month
periods  ended  September  30, 1997 and 1996,  other  income  decreased  to $1.6
million  from  $2.4  million.  The  decrease  for  the  nine-month  periods  was
principally due to an increase in interest  expense  associated with a loan from
Genentech,  Inc.  ("Genentech")  at the end of the first  quarter  of 1997.  The
decline  in  equity  in the net  loss of  affiliates,  for both  the  three  and
nine-month  periods,  was  the  result  of  the  Company's  affiliate,  Guilford
Pharmaceuticals  Inc.  ("Guilford"),  reporting net losses in 1997 as opposed to
net  gains  in  1996.  The  Company's   percentage  ownership  of  Guilford  and
corresponding share of gains or losses is approximately 7.8%.

         In September  1997, the Company  announced  positive Phase III clinical
results from its pivotal efficacy study of NATRECTOR(R) BNP for the treatment of
acute congestive heart failure.  Based on the results of this study, the Company
plans  to  file  a  New  Drug  Application   ("NDA")  with  the  Food  and  Drug
Administration in the first half of 1998. The Company also completed  enrollment
in a separate 300 patient safety study, the results of which will be included in
the NDA filing and presented at an appropriate  scientific  forum. The timing of
the NDA filing  will be  dependent  on factors  such as the speed with which the
Company can assemble extensive data from numerous areas into the format required
for the NDA.

         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  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  and
FIBLAST(R)  trafermin;  the  Company's  ability  to  secure a  commercial  scale
cost-effective drug supply; the Company's success in developing and implementing
cost-effective  sales   and  marketing  strategies;  and  the  level  of  market
acceptance,  if products  are  approved,  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  SB  Products,   HALDOL(R)  Decanoate,
EFFEXOR(R) (venlafaxine HCl) and any additional third-party product rights which
it may acquire;  the  disposition of various patent  proceedings  related to the
protection  of the Company's  potential  products;  the  perceived  value of the
Company's  current product  portfolio and research  programs to outside parties;
and the success of third  parties,  such as Kaken  Pharmaceuticals  Co., Ltd. in
Japan and  Wyeth-Ayerst  Laboratories  in the United  States,  in developing and
commercializing the Company's products. 

Liquidity and Capital Resources

         Combined cash, cash equivalents and marketable securities (both current
and  non-current)  totaled  $67.7  million at September 30, 1997, an increase of
$5.5 million from  December 31, 1996.  The increase  resulted from a $30 million
loan from  Genentech  which was  partially  offset by $20.8 million used to fund
operating  activities,  $2.0 million for the purchase of property and  equipment
and $1.8 million for the acquisition of treasury stock.

         The Company has  experienced  net operating  losses since its inception
and  expects to continue  to incur  losses for at least the next two years.  The
Company's ability to achieve and sustain  profitability,  and therefore the rate
of utilization of the Company's current financial resources,  will depend upon a
number  of  factors,  including  the  success  and  timeliness  of  its  product
development  efforts,   clinical  trials,   regulatory  approvals,  and  product
introduction  efforts,  as well as the  Company's  election to either market its
products  on its own or in  partnership  with  other  companies  who may  fund a
portion  of  product  launch  costs.  Other  contributing  factors  will  be the
Company's  success in  developing  new revenue  sources to support  research and
development programs and its success in marketing and promoting the SB Products,
HALDOL,  EFFEXOR and any other third-party  products that may be licensed by the
Company.

         The Company's cash, cash equivalents and marketable securities of $67.7
million at September  30,  1997,  together  with  revenues  from product  sales,
collaborative agreements,  interest income, funding from existing or future debt
arrangements and proceeds from the sale of equity holdings in affiliates will be
used to fund  continuing  research  and  development  programs,  current and new
clinical trials,  commercialization efforts on behalf of future products and for
other  general  purposes.  The  Company  believes  its  cash  resources  will be
sufficient to meet its operating and capital  requirements for at least the next
two years.  Key factors  which will affect future cash use and the timing of the
Company's need to seek additional financing include the success of the Company's
partnering  efforts  and the timing and  amounts  realized  from  licensing  and
partnering   activities,   the  rate  of   spending   required  to  develop  and
commercialize  the  Company's  products,  the  Company's  ability  to respond to
changing  business  conditions  and  the  net  contribution  obtained  from  the
Company's marketing efforts 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.

Part II.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

         11       Computation of Net Loss Per Share

(b)      Reports on Form 8-K

         None


<PAGE>



                                   SIGNATURES

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
 
                                     SCIOS INC.

                                     /s/ Richard L. Casey
November 13, 1997                    By:_____________________________________
Date                                     Richard L. Casey
                                         Chairman and Chief Executive Officer



                                     /s/ David Southern
November 13, 1997                    By:_____________________________________
Date                                     David Southern
                                         Controller (Chief Accounting Officer)