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, 1997

                                       OR

o  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                                 36,762,162


<PAGE>


Part I.  Financial Information

Item 1.  Financial Statements





















































                                       2

<PAGE>


                                   SCIOS INC.
                                AND SUBSIDIARIES

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

                                                                          June 30,            December 31,
                                                                            1997                 1996
                                                                        -------------        ------------
ASSETS                                                                  (Unaudited)
<S>                                                                       <C>                 <C>
Current assets:
    Cash and cash equivalents                                                $14,631             $1,587
    Marketable securities                                                     16,914              6,888
    Accounts receivable                                                        6,010              4,808
    Prepaid expenses                                                             438                786
                                                                        -------------        -----------
      Total current assets                                                    37,993             14,069

Marketable securities, non-current                                            40,345             53,695
Investment in affiliate                                                       10,752              6,939
Property and equipment, net                                                   36,054             36,839
Other assets                                                                   2,259              2,419
                                                                        -------------        -----------

TOTAL ASSETS                                                                $127,403           $113,961
                                                                        -------------        -----------

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Notes payable to banks                                                    $3,000             $3,000
    Accounts payable                                                           1,683              2,507
    Other accrued liabilities                                                  7,411             10,011
    Deferred contract revenue                                                 11,786              3,666
    Current portion of long-term debt and capital leases                         685                723
                                                                        -------------        -----------
      Total current liabilities                                               24,565             19,907

Long-term debt and capital leases                                             30,714                349
Minority interests                                                                --                 77
                                                                        -------------        -----------
      Total liabilities                                                       55,279             20,333
                                                                        -------------        -----------

Stockholders' equity:
    Preferred stock; $.001 par value;  20,000,000 shares authorized;  issued and
       outstanding:
       10,132 and 12,632, respectively (liquidation                               --                 --
       preference of $9,625 and $12,000, respectively)
    Common stock; $.001 par value;  150,000,000  shares  authorized;  issued and
       outstanding:
       36,762,162 and 36,506,297, respectively                                    37                 37
    Additional paid-in capital                                               409,441            404,456
    Treasury stock                                                            (4,758)            (2,991)
    Notes receivable from stockholders                                           (13)               (13)
    Unrealized gains (losses) on securities                                       16                (70)
    Accumulated deficit                                                     (332,599)          (307,791)
                                                                        -------------        -----------
      Total stockholders' equity                                              72,124             93,628
                                                                        -------------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                  $127,403           $113,961
                                                                        -------------        -----------
</TABLE>



                 See notes to consolidated financial statements.


                                       3
<PAGE>

                                   SCIOS INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Operations
                        (In thousands, except share data)
<TABLE>
<CAPTION>
                                                           Three months ended                     Six months ended
                                                                June 30,                              June 30,
                                                         1997              1996                1997              1996
                                                    ---------------    --------------     ---------------    --------------
                                                               (Unaudited)                          (Unaudited)
<S>                                                      <C>               <C>                 <C>               <C>
Revenues:
      Product sales                                         $7,537            $8,445             $13,696           $17,088
      Co-promotion commissions                               1,423             1,243               3,119             2,286
      Research & development contracts                       1,922             2,104               2,396             3,902
                                                    ---------------    --------------     ---------------    --------------
                                                            10,882            11,792              19,211            23,276
                                                    ---------------    --------------     ---------------    --------------

Costs and expenses:
      Cost of goods sold                                     4,369             5,130               8,223            10,303
      Research and development                              13,059             9,119              23,939            17,785
      Marketing, general and administration                  5,022             4,471              10,348             8,890
      Profit distribution to third parties                     896               922               1,463             1,917
                                                    ---------------    --------------     ---------------    --------------
                                                            23,346            19,642              43,973            38,895
                                                    ---------------    --------------     ---------------    --------------

Loss from operations                                       (12,464)           (7,850)            (24,762)          (15,619)

Other income:
      Investment income                                      1,136               966               1,927             2,069
      Interest expense                                        (750)             (148)               (884)             (307)
      Realized losses on securities                            (74)             (181)               (179)             (100)
      Other income, net                                          1               243                 149               299
                                                    ---------------    --------------     ---------------    --------------
                                                               313               880               1,013             1,961

Equity in net loss of affiliates                              (525)             (646)             (1,136)           (1,375)
Minority interests                                              --                --                  77                --
                                                    ---------------    --------------     ---------------    --------------
      Net loss                                            ($12,676)          ($7,616)           ($24,808)         ($15,033)
                                                    ---------------    --------------     ---------------    --------------

      Net loss per common share                             ($0.35)           ($0.21)             ($0.69)           ($0.42)
                                                    ---------------    ----------------------------------    --------------

      Weighted average number of
         common shares outstanding                      35,826,469        35,834,351          35,829,065        35,862,428
                                                    ---------------    --------------     ---------------    --------------

</TABLE>


                 See notes to consolidated financial statements.


                                       4
<PAGE>

                                   SCIOS INC.
                                AND SUBSIDIARIES

                      Consolidated Statements of Cash Flows
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                      Six months ended
                                                                                          June 30,
                                                                                  1997                1996
                                                                               ------------        -----------
                                                                                        (Unaudited)
<S>                                                                              <C>                 <C>
Cash flows from operating activities:
   Net loss                                                                       ($24,808)          ($15,033)
   Adjustments to reconcile net loss to net
   cash used by operating activities:
      Depreciation and amortization                                                  2,738              2,301
      Deferred contract revenue                                                      8,120             (1,859)
      Equity in net loss of affiliates                                               1,136              1,375
      Minority interests                                                               (77)                --
      Change in assets and liabilities:
        Accounts receivable                                                         (1,202)              (299)
        Accounts payable                                                              (824)            (2,585)
        Other accrued liabilities                                                   (2,600)              (673)
        Other                                                                          508                462
                                                                               ------------        -----------
             Net cash used by operating activities                                 (17,009)           (16,311)
                                                                               ------------        -----------

Cash flows from investing activities:
   Payments for property and equipment, net                                         (1,953)            (2,070)
   Sales/maturities of marketable securities                                       101,525             97,306
   Purchases of marketable securities                                              (98,115)           (76,544)
                                                                               ------------        -----------
             Net cash provided by investing activities                               1,457             18,692
                                                                               ------------        -----------

Cash flows from financing activities:
   Purchase of treasury stock                                                       (1,767)            (1,455)
   Issuance of notes payable                                                        30,638                 --
   Other                                                                              (275)                51
                                                                               ------------        -----------
             Net cash provided (used) by financing activities                       28,596             (1,404)
                                                                               ------------        -----------

Net increase in cash and cash equivalents                                           13,044                977
Cash and cash equivalents at beginning of period                                     1,587              2,847
                                                                               ------------        -----------
Cash and cash equivalents at end of period                                        $ 14,631            $ 3,824
                                                                               ------------        -----------

Supplemental cash flow data:
   Cash paid during the period for interest                                          ($246)             ($307)
Supplemental disclosure of non-cash investing
   and financing:
   Change in net unrealized losses on securities                                       (86)              (821)
   Investment in affiliate                                                         $ 4,948            $ 4,708


</TABLE>




                 See notes to consolidated financial statements.



                                       5
<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 June
         30,  1997 and the  Company's  results of  operations  for the three and
         six-month periods ended June 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.

                  In February 1997,  the Financial  Accounting  Standards  Board
         issued  Statement  of  Financial  Accounting  Standards  No. 128 ("SFAS
         128"),   "Earnings  Per  Share",   which  specifies  the   computation,
         presentation and disclosure  requirements for earnings per share.  SFAS
         128  supersedes  Accounting  Principles  Board  Opinion  No.  15 and is
         effective  for  financial  statements  issued for periods  ending after
         December 15, 1997.  SFAS 128 requires  restatement of all  prior-period
         earnings per share data  presented  after the effective  date.  FAS 128
         will not have a material  impact on the Company's  financial  position,
         results of operations or cashflows.

                  In June 1997, the Financial  Accounting Standards Board issued
         Statement  of  Financial  Accounting  Standards  No. 130 ("SFAS  130"),
         "Reporting    Comprehensive   Income".   This   statement   establishes
         requirements  for  disclosure  of  comprehensive   income  and  becomes
         effective for the Company for fiscal years beginning after December 15,
         1997,  with   reclassification  of  earlier  financial  statements  for
         comparative  purposes.  Comprehensive  income generally  represents all
         changes in stockholders' equity except those resulting from investments
         or contributions by stockholders. The Company is evaluating alternative
         formats  for  presenting  this  information,  but does not expect  this
         pronouncement to materially impact the Company's results of operations.

                                       6
<PAGE>

                  In June 1997, The Financial  Accounting Standards Board issued
         Statement  of  Financial  Accounting  Standards  No. 131 ("SFAS  131"),
         "Disclosures about Segments of an Enterprise and Related  Information".
         This statement  establishes  standards for disclosure  about  operating
         segments in annual  financial  statements  and selected  information in
         interim financial  reports.  It also establishes  standards for related
         disclosures  about  products and  services,  geographic  area and major
         customers.  This statement supersedes Statement of Financial Accounting
         Standards  No. 14,  "Financial  Reporting  for  Segments  of a Business
         Enterprise".  The new  standard  becomes  effective  for  fiscal  years
         beginning  after  December 15,  1997,  and  requires  that  comparative
         information   from  earlier   years  be  restated  to  conform  to  the
         requirements   of  this   standard.   The  Company  is  evaluating  the
         requirements  of SFAS 131 and the  effects,  if any,  on the  Company's
         current reporting and disclosures.

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, 1996.
         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.





                                       7
<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  June 30,  1997 was $12.7  million
compared to a net loss of $7.6 million in the corresponding quarter of 1996. For
the six-month  periods  ended June 30, 1997 and 1996,  the net losses were $24.8
million  and $15.0  million,  respectively.  For both the  three  and  six-month
periods, the increase in net losses was primarily due to lower product sales and
higher research and development expenses.

         Total  revenues  for the three  months  ended June 30,  1997 were $10.9
million,  versus $11.8  million for the  corresponding  period in 1996.  Product
sales  from   psychiatric   products  under  license  from  SmithKline   Beecham
Corporation  (the "SB Products")  declined to $7.5 million from $8.4 million for
the three  months  ended June 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 six months  ended June 30, 1997 and 1996,  revenues  were $19.2
million and $23.3 million, respectively. The year-to-year decrease resulted from
a decline in product sales and research and development  contract revenues which
were  partially  offset by higher  revenue from  co-promotion  commissions.  The
increase in  co-promotion  commissions  resulted  from sales growth of HALDOL(R)
Decanoate, a product co-promoted with Ortho-McNeil Pharmaceutical,  an affiliate
of Johnson and Johnson, and on sales of EFFEXOR(R)  (venlafaxine HCl), a product
co-promoted with Wyeth-Ayerst Laboratories, a division of American Home Products
Corporation.  Contract  revenues for the six-month period decreased $1.5 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 June 30, 1997 were
$23.3  million  versus $19.6  million for the same period in 1996.  Spending for
research and development increased to $13.1 million in 1997 from $9.1 million in
1996 as a result of higher  staffing levels and clinical trials costs to support
expanded product  development  activities.  Expenses for marketing,  general and
administration  increased to $5.0 million in 1997 from $4.5 million in 1996. The
second quarter decline in profit distribution to third parties and cost of goods
from 1996 to 1997 was the result of lower SB Product sales.

                                       8
<PAGE>

         Total costs and  expenses  for the six months  ended June 30, 1997 were
$44.0  million  versus $38.9  million for the same period in 1996.  Spending for
research and  development  increased to $23.9 million in 1997 from $17.8 million
in 1996 for the reasons noted in the paragraph  above.  Expenses for  marketing,
general and administration  increased to $10.4 million in 1997 from $8.9 million
in 1996 because of higher staffing levels.  Profit distribution to third parties
and cost of goods decreased from 1996 to 1997 because of lower SB Product sales.

         Other income  decreased  to $0.3 million in the quarter  ended June 30,
1997 from $0.8  million in the  comparable  quarter of 1996.  For the  six-month
periods  ended June 30, 1997 and 1996,  other  income  decreased to $1.0 million
from $2.0  million.  The  decrease  for both  three and  six-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
six-month periods, was the result of the Company's decreasing share of losses of
Guilford  Pharmaceuticals Inc. ("Guilford").  The Company's percentage ownership
of  Guilford  and  subsequent  share  of  losses  has  declined  to 7.8%  due to
Guilford's most recent share offering completed in April 1997.

         The Company  expects to announce key results in the second half of 1997
from  two  Phase  III  clinical  trials  in the  United  States  on  the  use of
NATRECOR(R) BNP for the treatment of acute congestive heart failure. The outcome
of the clinical  trials could have a substantial  effect on the Company's  stock
price - either  positive or negative - depending  on the nature of the  results.
For  example,  the  Company's  stock  price  dropped  earlier in the year on the
announcement   that  the  Company  was  terminating   clinical   development  of
AURICULIN(R) anaritide for the treatment of oliguric acute renal failure.

         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.  The Company's success in commercializing  its own products
will depend on: 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; and the level
of market  acceptance if products are approved.  The Company's  ability to raise
additional  revenue  through  third parties will be dependent on: its success in
marketing  and  selling the SB  Products,  HALDOL,  EFFEXOR  and any  additional
third-party  product  rights which it may acquire;  the  disposition  of various
patent  proceedings  related  to  the  protection  of  the  Company's  potential
products;  the perceived value of the Company's  current  product  portfolio and
research programs to outside parties; and the success of third parties,  such as
Kaken  Pharmaceuticals Co., Ltd. in Japan, in developing and commercializing the
Company's products.

                                        9
<PAGE>

Liquidity and Capital Resources

         Combined cash, cash equivalents and marketable securities (both current
and  non-current)  totaled  $71.9  million at June 30, 1997, an increase of $9.7
million from  December 31, 1996.  The increase  resulted from a $30 million loan
from  Genentech  which  was  partially  offset  by  $17.0  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,  particularly  the  success  and  timeliness  of its product
development,  clinical  trials,  regulatory  approval  and product  introduction
efforts.  Other contributing factors will be the Company's success in developing
new revenue sources to support research and development programs and its success
in  marketing  and  promoting  the SB  Products,  HALDOL,  EFFEXOR and any other
third-party products that may be licensed by the Company.

         The Company's cash, cash equivalents and marketable securities of $71.9
million  at  June  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 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.


                                       10
<PAGE>

Part II.  Other Information

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

         The Company's Annual Meeting of Stockholders was held on May 13, 1997.

         (a)      The following  individuals were elected directors of the
                  Company,  each to serve until a successor is elected:
<TABLE>
<CAPTION>

                                                     Total Vote For               Total Vote Withheld
                  Name                               Each Director                From Each Director
                  <S>                                <C>                          <C>

                  Samuel H. Armacost                 30,203,034                   2,902,100
                  Richard L. Casey                   31,058,627                   2,046,507
                  Myron Du Bain                      31,185,728                   1,919,406
                  Robert W. Schrier, M.D.            31,128,815                   1,976,319
                  Solomon H. Snyder, M.D.            30,826,574                   2,278,560
                  Burton E. Sobel, M.D.              31,168,552                   1,936,582
                  Eugene L. Step                     30,830,790                   2,274,344
</TABLE>

         (b)      The following matters were approved by stockholder vote, with
                  votes cast as indicated:

                  To ratify and approve  amendments to the Company's 1992 Equity
                  Incentive Plan:

                  Votes for:                         25,713,951
                  Votes against                       6,980,986
                  Abstentions:                          410,197

                  To ratify the  selection of Coopers & Lybrand as the Company's
                  independent auditors for fiscal year 1997:

                  Votes cast for:                    32,612,982
                  Votes cast against:                   283,888
                  Abstentions:                          208,264

                  Broker non-votes were not relevant to the foregoing matters.

                                       11
<PAGE>

         (c)      The following  matters that were submitted by  stockholders of
                  the Company were defeated by stockholder vote, with votes cast
                  as indicated:

                  Stockholder  proposal to appoint a special committee to seek a
                  buyer for the Company:

                  Votes cast for:                     4,986,918
                  Votes cast against:                16,672,246
                  Abstentions:                          420,113
                  Broker Non-Votes:                  11,025,887

                  Stockholder proposal to require an independent chairman of the
                  board:

                  Votes cast for:                     5,700,377
                  Votes cast against:                15,875,089
                  Abstentions:                          503,811
                  Broker Non-Votes:                  11,025,857

                  Stockholder proposal to form a shareholder advisory committee:

                  Votes cast for:                     4,986,116
                  Votes cast against:                16,657,933
                  Abstentions:                          453,198
                  Broker Non-Votes:                  11,025,887

Item 6.  Exhibits and Reports on Form 8-K

(a)   Exhibits

          10.11   1992 Equity Incentive Plan
          11.1.   Computation  of Net Loss Per Share for the three  months ended
                  June 30, 1997 and June 30, 1996.
          11.2.   Computation of Net Loss Per Share for the six months ended
                  June 30, 1997 and June 30, 1996

(b)   Reports on Form 8-K

          Report on Form 8-K, dated April 2, 1997 (pursuant to Item 5) regarding
the  Company's  announcement  of the  Company's  suspension  of  development  of
AURICULIN for oliguric acute renal (kidney) failure.


                                       12
<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.

August 12, 1997                         By: /s/ Richard L. Casey
--------------------
Date                                    Richard L. Casey, Chairman and
                                        Chief Executive Officer



August 12, 1997                         By: /s/ Kevin McPherson
--------------------
Date                                    Kevin McPherson, Director of
                                        Finance (Chief Accounting
                                        Officer)