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, 1999

                                       OR

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

Commission file number: 0-11749

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

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

                                   Scios Inc.
                               820 West 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 October 12, 1999.

Title                                                        Outstanding

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


<PAGE>







                                   SCIOS INC.
                                AND SUBSIDIARIES

PART I.   FINANCIAL INFORMATION

Item 1. Financial Statements







































<PAGE>




                                         SCIOS INC.
                                      AND SUBSIDIARIES
<TABLE>
<CAPTION>

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

     ASSETS                                                       September 30,       December 31,
                                                                      1999              1998
                                                                  -------------     -------------
                                                                  (Unaudited)
Current assets:                                                     <C>               <C>
     Cash and cash equivalents                                          $4,815            $6,683
     Marketable securities                                              17,237            23,394
     Accounts receivable                                                 5,171             6,768
     Prepaid expenses                                                      860               568
                                                                  -------------     -------------
       Total current assets                                             28,083            37,413

Marketable securities, non-current                                      74,267            67,234
Property and equipment, net                                             12,258            32,214
Other assets                                                             1,929             1,968
                                                                  -------------     -------------

TOTAL ASSETS                                                          $116,537          $138,829
                                                                  -------------     -------------

     LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable                                                   $1,060            $2,327
     Other accrued liabilities                                          11,635            10,087
     Deferred contract revenue                                          22,198            16,896
                                                                  -------------     -------------
       Total current liabilities                                        34,893            29,310

Long-term debt                                                          36,626            34,573
Minority interests                                                          --                20
                                                                  -------------     -------------
       Total liabilities                                                71,519            63,903

Stockholders' equity:
     Preferred stock; $.001 par value; 20,000,000
        shares authorized; none issued and outstanding                      --                --
     Common stock; $.001 par value; 150,000,000
        shares authorized; issued and outstanding
        38,468,652 and 38,468,652 shares, respectively                      38                38
     Additional paid-in capital                                        416,597           416,428
     Treasury stock; 735,036 and 754,199
        shares, respectively                                           (3,458)           (3,481)
     Notes receivable from stockholders                                  (108)             (145)
     Deferred compensation, net                                          (424)             (505)
     Accumulated other comprehensive income (loss)                       (436)            11,412
     Accumulated deficit                                             (367,191)         (348,821)
                                                                  -------------     -------------
       Total stockholders' equity                                       45,018            74,926
                                                                  -------------     -------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                       $116,537          $138,829
                                                                  -------------     -------------

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


<PAGE>
<TABLE>
<CAPTION>




                                   SCIOS INC.
                                AND SUBSIDIARIES

           Consolidated Statements of Operations and Comprehensive Income (Loss)
                        (In thousands, except share data)
                                   (Unaudited)

                                                               Three months ended                 Nine months ended
                                                                 September 30,                      September 30,
                                                              1999            1998              1999             1998
                                                          -------------   -------------     -------------    -------------
<S>                                                         <C>             <C>               <C>              <C>
Revenues:
      Product sales                                            $10,633          $7,407           $27,927          $20,566
      Co-promotion commissions                                   2,025           1,436             6,639            4,691
      Research & development contracts                           2,067           4,747             7,129           32,220
                                                          -------------   -------------     -------------    -------------
                                                                14,725          13,590            41,695           57,477
                                                          -------------   -------------     -------------    -------------
Costs and expenses:
      Cost of goods sold                                         5,638           4,167            14,836           11,957
      Research and development                                   7,042          10,071            25,714           32,535
      Marketing, general and administration                      5,556           4,985            15,111           14,051
      Profit distribution to third parties                       1,718             711             4,363            1,909
      Restructuring charges                                         --              --             6,670               --
                                                          -------------   -------------     -------------    -------------
                                                                19,954          19,934            66,694           60,452
                                                          -------------   -------------     -------------    -------------

Loss from operations                                           (5,229)         (6,344)          (24,999)          (2,975)
                                                          -------------   -------------     -------------    -------------

Other income and expense:
      Investment income                                          1,300           1,202             3,426            3,151
      Interest expense                                           (713)           (657)           (2,053)          (1,951)
      Realized gains (losses) on securities                       (92)             169             4,999            8,246
      Other income, net                                             --             382               272              860
                                                          -------------   -------------     -------------    -------------
                                                                   495           1,096             6,644           10,306
                                                          -------------   -------------     -------------    -------------

Equity in net loss of affiliates                                    --           (518)                --          (1,343)
                                                          -------------   -------------     -------------    -------------
      Income (loss) before provision for income taxes          (4,734)         (5,766)          (18,355)            5,988

Provision for income taxes                                         (1)              --              (14)            (127)
                                                          -------------   -------------     -------------    -------------
      Net income (loss)                                        (4,735)         (5,766)          (18,369)            5,861
                                                          -------------   -------------     -------------    -------------

Other comprehensive income (loss):
      Change in unrealized gains (losses) on securities           (40)             971          (11,848)              967
                                                          -------------   -------------     -------------    -------------
Comprehensive income (loss)                                   ($4,775)        ($4,795)         ($30,217)           $6,828
                                                          -------------   -------------     -------------    -------------

Earnings (loss) per common share:
      Basic                                                    ($0.13)         ($0.15)           ($0.49)            $0.16
                                                          -------------   -------------     -------------    -------------
      Diluted                                                  ($0.13)         ($0.15)           ($0.49)            $0.15
                                                          -------------   -------------     -------------    -------------

      Weighted average number of common shares outstanding
         used in calculation of:
      Basic                                                 37,708,060      37,907,160        37,726,253       37,677,168
                                                          -------------   -------------     -------------    -------------
      Diluted                                               37,708,060      37,907,160        37,726,253       38,495,891

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

                                                 SCIOS INC.
                                              AND SUBSIDIARIES

                                   Consolidated Statements of Cash Flows
                                               (In thousands)

                                                                                    Nine months ended
                                                                                      September 30,
                                                                                 1999                1998
                                                                              ------------        -----------
 <S>                                                                                      (Unaudited)
Cash flows from operating activities:                                        <C>                  <C>
   Net income (loss)                                                            ($18,369)            $ 5,861
   Adjustments to reconcile net income (loss) to net
   cash provided by (used in) operating activities:
      Depreciation and amortization                                                 2,085              2,819
      Accrued long-term interest payable                                            2,053              1,913
      Equity in net loss of affiliates                                                 --              1,343
      Gain on sale of securities                                                  (4,999)                 --
      Minority interest                                                              (20)                 --
      Amortization of deferred compensation                                           233                 --
      Change in assets and liabilities:
        Accounts receivable                                                         1,597              1,773
        Accounts payable                                                          (1,267)              1,018
        Other accrued liabilities                                                 (2,103)            (4,230)
        Other                                                                       (252)                212
        Deferred contract revenue                                                   5,302                910
        Restructuring charges                                                       3,263                 --
                                                                              ------------        -----------
             Net cash provided by (used in) operating activities                 (12,477)             11,619
                                                                              ------------        -----------

Cash flows from investing activities:
   Purchases of property and equipment                                            (3,486)            (1,645)
   Proceeds from sale of investment in affiliate                                       --                144
   Proceeds from sale of assets                                                    21,744                 --
   Sales/maturities of marketable securities                                       80,529            212,029
   Purchases of marketable securities                                            (88,254)          (227,855)
                                                                              ------------        -----------
             Net cash provided by (used in) investing activities                   10,533           (17,327)
                                                                              ------------        -----------

Cash flows from financing activities:
   Issuance of common stock and collection of notes receivable from
      stockholders, net                                                             1,124              7,448
   Purchase of treasury stock                                                     (1,048)              (580)
   Payment of notes payable and capital leases                                         --              (323)
                                                                              ------------        -----------
             Net cash provided by financing activities                                 76              6,545
                                                                              ------------        -----------

Net increase (decrease) in cash and cash equivalents                              (1,868)                837
Cash and cash equivalents at beginning of period                                    6,683             10,197
                                                                              ------------        -----------
Cash and cash equivalents at end of period                                        $ 4,815           $ 11,034
                                                                              ------------        -----------
</TABLE>





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

<PAGE>

                                                    SCIOS INC.
                                                 AND SUBSIDIARIES

                                    Notes to Consolidated Financial Statements
                                                    (unaudited)

1.       Basis of Presentation and Accounting Policies

         The unaudited  consolidated financial statements of Scios Inc. ("Scios"
         or  the  "Company")  reflect,   in  the  opinion  of  management,   all
         adjustments,  consisting  only of  normal  and  recurring  adjustments,
         necessary  to  present  fairly  the  Company's  consolidated  financial
         position at September 30, 1999 and the Company's  consolidated  results
         of operations and cashflows for the three-month and nine-month  periods
         ended  September  30,  1999 and 1998.  Interim-period  results  are not
         necessarily  indicative  of results of  operations  or cash flows for a
         full-year period.

         These financial  statements and the notes  accompanying  them should be
         read in conjunction  with the Company's  annual report on Form 10-K for
         the year ended  December 31, 1998.  Investors are  encouraged to review
         the Form 10-K for a broader  discussion of the  Company's  business and
         the opportunities and risks inherent in the Company's business.  Copies
         of the 10-K are  available  from the  Company on  request  and from the
         Securities  and  Exchange  Commission's  Edgar  database  at  web  site
         www.sec.gov.

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

2.       Restructuring Charges and Expenses

         On March 1, 1999,  the  Company  announced  a  restructuring  plan that
         included  a  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. In the quarter ended March 31, 1999, the Company
         recorded a one-time  restructuring charge of approximately $6.7 million
         for the disposal of certain  excess  assets and  severance  costs.  The
         provision for the  restructure and the activity  through  September 30,
         1999 are summarized in the following table:

<TABLE>
<CAPTION>

                                                                                      Accrued
                                            Restructure                             Restructure
                                            Provision at                  Cash     Provisions at
                                             March 1,      Non-Cash    (Payments)  September 30,
                                               1999          Items      Receipts        1999
                                            ------------  ---------    ---------   -------------
      <S>
     (in thousands)
                                              <C>       <C>           <C>           <C>
Facilities                                      $360                     $(304)         $56

Workforce reductions                           2,819                    (2,200)         619

Contractual Commitments                        1,110                      (312)         798

Write off of assets                            1,800     $(21,262)       21,336       1,874

Lease exit costs                                 581                      (278)         303
                                           ------------  ---------    ---------   -------------
                                              $6,670     $(21,262)      $18,242      $3,650
                                           ------------  ---------    ---------   -------------
</TABLE>
<PAGE>
3.       Computation of Earnings (Loss) Per Share


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

                                                          Three months ended               Nine months ended
                                                            September 30,                    September 30,
                                                          1999            1998            1999            1998
                                                       --------------- --------------- --------------- ---------------
         <S>                                            <C>                <C>          <C>                <C>
         Numerator

         Basic
            Net income (loss)                            ($ 4,735)         ($ 5,766)     ($ 18,369)         $ 5,861

         Diluted
            Net income (loss)                            ($ 4,735)         ($ 5,766)     ($ 18,369)         $ 5,861

         Denominator

         Basic
            Weighted average shares                        37,708            37,907         37,726           37,677
            Effect of dilutive securities:
              Employee stock options                        ---                ---             ---              819
                                                     --------------- --------------- --------------- ---------------
            Weighted average shares and
               assumed conversions                         37,708            37,907         37,726           38,496
                                                     --------------- --------------- --------------- ---------------

         Basic earnings (loss) per share                 ($  0.13)          ($ 0.15)      ($ 0.49)           $ 0.16
                                                     --------------- --------------- --------------- ---------------

         Diluted earnings (loss) per share                ($ 0.13)          ($ 0.15)      ($ 0.49)           $ 0.15
                                                     --------------- --------------- --------------- ---------------


<FN>

         The  potentially  dilutive  effect of  outstanding  options to purchase
         common stock would have been  anti-dilutive in both periods of 1999 and
         in the three months ended  September 30, 1998,  and they were therefore
         excluded  from the diluted  earnings  calculations  for these  periods.
         Although potentially dilutive, the payoff of the Genentech loan through
         the issuance of common stock would have been  anti-dilutive in 1998 and
         1999 and was, therefore, excluded from the calculations.

         At September 30, 1999,  stock options at prices  ranging from $3.688 to
         $7.125 per share would have  increased  the number of weighted  average
         common shares  outstanding by 172 and 473,257 shares for the three- and
         nine-month periods of 1999, respectively,  but were not included in the
         computation of diluted income per share because they were antidilutive.

</FN>
</TABLE>
<PAGE>




4.       Industry and Geographic Segment Information

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

<TABLE>
<CAPTION>

         All long-lived  assets are located in the United States and revenues by
         geographic  area are as follows for 1999 and 1998, respectively:


                                           Three Months Ended            Nine Months Ended
                                              September 30,                 September 30,
                  (in thousands)         1999            1998             1999             1998
                  --------------         ----            ----             ----             ----

                <S>                   <C>             <C>               <C>             <C>
         Revenues - U.S.               $14,345         $10,134           $ 40,091        $ 30,661
         Revenues - International          380           3,458              1,604          26,816
                                       -------         -------            -------         -------
         Total                         $14,725         $13,592            $41,695         $57,477
                                       -------         -------            -------         -------
</TABLE>

5.       Subsequent Event

         On October 8, 1999 the Company  announced that its  collaboration  with
         Wyeth-Ayerst   Laboratories   division   of  American   Home   Products
         Corporation for Fiblast(R) (trafermin) in the treatment of neurological
         and cardiovascular disorders had been dissolved. All rights for Fiblast
         in these indications  revert to Scios. Scios and Wyeth-Ayerst have been
         collaborating  on Fiblast  development  from 1996 and shared  expenses.
         Dissolution of the agreement also  terminated the $12 million letter of
         credit  provided to the Company by  Wyeth-Ayerst  to fund  expansion of
         Fiblast  manufacturing  capacity.  No funds had been drawn down against
         this letter of credit.  The Company  plans to  out-license  Fiblast and
         does not expect to incur  further  costs to develop  these  indications
         internally.



<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,  1998 and the
Company's Forms 10-Q for the quarters ended March 31, 1999 and June 30, 1999.

 Results of Operations

         Three Months Ended September 30, 1999 and 1998

         Revenues in the third  quarter of 1999 were $14.7  million and included
$10.6 million in product sales,  $2.0 million in  co-promotion  commissions  and
$2.1 million in contract revenues. Revenues for the corresponding period in 1998
were $13.6  million,  including $7.4 million  generated by product  sales,  $1.4
million in  co-promotion  commissions  and $4.7 million from  contract  revenue.
Product sales from  psychiatric  products under license from SmithKline  Beecham
Corporation ("SB Products")  continued to outperform sales in the  corresponding
period of the prior year.  Co-promotion  commissions increased from 1998 to 1999
due to a change in the  products  co-promoted  by the Company  that  occurred in
1998.  The  decrease  in contract  revenue  was mainly due to lower  development
funding  from  Bayer AG  ("Bayer")  as a result of  Bayer's  termination  of the
agreement for the  commercialization  of  Natrecor(R)(nesiritide)  in the second
quarter of 1999.

         The Company  incurred total operating  expenses of $20.0 million in the
third  quarter of 1999 versus  $19.9  million in the same period in 1998. A $3.0
million  decline in  research  and  development  expenses  from 1998 to 1999 was
offset by  increases  of $1.4  million in cost of goods  sold,  $1.0  million in
profit  distribution and $0.6 million in marketing,  general and  administration
expenses.  The  decrease in research  and  development  expenses  was mainly the
result of lower headcount due to the restructuring plan announced in March 1999.
The increases in both cost of goods sold and profit distribution were the result
of higher SB Product  sales in the  current  quarter as compared to the year ago
quarter.  Marketing,  general  and  administration  expenses  increased  due  to
spending on Natrecor pre-marketing studies.

         The net loss for the quarter was $4.7 million compared to a net loss of
$5.8 million in 1998.  The $1.1 million  decrease in the net loss was  primarily
due to the revenue increase in 1999.

<PAGE>



         Nine Months Ended September 30, 1999 and 1998

         Revenues in the first nine  months  totaled  $41.7  million in 1999 and
$57.5 million in 1998. SB Product sales  increased from $20.6 million in 1998 to
$27.9 million in 1999.  Co-promotion  commissions increased by $1.9 million from
1998 to 1999 because of the change in product lines promoted by the Company. The
Company   currently   co-promotes   Risperdal(R)   (risperidone)   with  Janssen
Pharmaceutica and Paxil(R) (paroxetine HCl) with SmithKline Beecham Corporation.
The decline of $25.1 million in research and development  contract  revenue from
1998 to 1999 was mainly due to receipt of a $20.0  million up front payment from
Bayer for the commercialization of Natrecor and from milestone payments received
from Novo Nordisk in 1998.

         For the  nine-month  period,  costs and expenses  increased  from $60.5
million in 1998 to $66.7 million in 1999. The increase in expenses was primarily
due to the higher cost of goods sold and profit  distribution  to third  parties
resulting  from the  higher  product  sales  and from a  one-time  $6.7  million
restructure expense recognized in the first quarter of 1999.

The restructure expense resulted from the closure of the Company's Mountain View
facilities and from a 30% reduction in the Company's workforce,  and is expected
to reduce  annual  operating  expenses by $14.0  million per year.  In the third
quarter,  the Company  completed  the sale of the Mountain  View  facility.  The
Company  expects to complete the move of  personnel  from  Mountain  View to two
leased facilities in Sunnyvale, California by the end of October 1999. A portion
of the Mountain View facility will continue to be leased back through the second
quarter of 2000 to fulfill an obligation to Kaken Pharmaceutical associated with
their drug approval application for Fiblast in Japan.

         Other income and expense declined from $10.3 million for the nine-month
period in 1998 to $6.6  million for the same period in 1999.  The  decrease  was
mainly  due to a  reduction  in  realized  gains  on the  sale of the  Company's
securities from period to period.  For the nine-month  period in 1998,  realized
gains on securities were $8.2 million which was primarily the result of the sale
of the Company's  entire interest in its subsidiary,  Karo Bio, through a public
stock offering.  For the same period in 1999,  realized gains were $5.0 million,
which  were  mainly  due to the  sales of the  Company's  holdings  in  Guilford
Pharmaceuticals Inc.

         The Company  had a net loss of $18.4  million for the first nine months
of 1999 versus net income of $5.9 million for the same period in 1998. The $24.3
million  change in income is primarily due to the $20.0 million up front payment
received from Bayer for  commercialization of Natrecor in 1998, coupled with the
$6.7 million recorded for restructuring in 1999.

         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(R)
(nesiritide);  the Company's  success in managing third party  manufacturers  to
ensure a  cost-effective  drug  supply;  the  Company's  ability to develop  and
implement 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

<PAGE>

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. on Fiblast(R)  (trafermin)
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 $96.3 million at September 30, 1999, a decrease of $1.0
million from December 31, 1998.  For the nine-month  period,  cash received from
the sale of the Company's equity holdings in Guilford  Pharmaceuticals  and from
the sale of the Company's Mountain View, California facility offset cash used to
fund the  Company's  operations.  At the end of the third  quarter,  the Company
received a $4 million  milestone  payment due  October  1st,  from Novo  Nordisk
associated with the  development of GLP-1.  The payment was recorded as deferred
revenue and will be recognized as revenue in the fourth quarter.

         The Company is striving to achieve  profitability over the next several
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.  The Company has  recently  determined  with the FDA the nature of the
additional  clinical trials that the agency will require before it will consider
approval of Natrecor for marketing.  The Company expects to initiate  enrollment
in the trial in October 1999, with  enrollment in the study to be  approximately
500  patients at an estimated  cost of $10.0  million.  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 $96.3 million in cash, cash equivalents and
marketable securities at September 30, 1999, together with revenues from product
sales,  collaborative agreements,  interest income and any funding from existing
or future debt or equity  arrangements,  will be used to support current and new
clinical  trials  for  proprietary   products  under  development,   to  support
development and commercialization efforts for prospective products and for other
general purposes.  The Company 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.

<PAGE>

         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.

Impact of Year 2000

         The Year 2000 Issue is the result of computer  programs  being  written
using two digits  rather  than four to define the  applicable  year.  Any of the
Company's  computer  programs or hardware that have  date-sensitive  software or
embedded  chips may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operations,  including, among other things, a temporary inability
to process  transactions,  send invoices,  or engage in similar normal  business
activities.

         Based on recent  assessments,  the Company has determined  that it will
not be  required  to modify or  replace  significant  portions  of  hardware  or
software  to ensure  that those  systems  will  properly  utilize  dates  beyond
December  31,  1999.  The  Company  presently   believes  that  with  achievable
modifications and modest replacement of existing hardware and software, the Year
2000 Issue can be mitigated. However, if such modifications and replacements are
not made, or are not completed on a timely basis, the Year 2000 Issue could have
an impact on the operations of the Company.

         The  Company's  plan to  resolve  the  Year  2000  Issue  involves  the
following four phases: assessment,  remediation, testing, and implementation. To
date the Company has fully completed its assessment of all internal systems that
could be  significantly  affected  by the Year 2000.  The  completed  assessment
indicated that most of the Company's significant  information technology systems
are Year 2000 compliant.  That assessment  did,  however,  indicate that certain
systems were at risk.  Affected  systems include  chromatography,  clinical case
report  forms  tracking,  and  statistical  analysis  software.  The  Company is
currently  assessing  cost  comparisons  on whether to remediate or replace this
equipment and expects to have the  equipment  corrected and re-tested by October
31, 1999. For its information  technology exposures,  to date the Company is 80%
complete on the remediation phase and expects to complete software reprogramming
and replacement no later than November 30, 1999.

         The Company is in the process of querying its  important  suppliers and
contractors (external agents) regarding their Year 2000 remediation  activities.
To date,  the  Company is not aware of any  external  agent Year 2000 issue that
would  materially  impact the company's  results of  operations,  liquidity,  or
capital resources.  However,  the Company has no means of ensuring that external
agents will be Year 2000 ready.  The  inability  of external  agents to complete
their Year 2000 resolution  process in a timely fashion could materially  impact
the  Company.   The  effect  of   non-compliance   by  external  agents  is  not
determinable.  The Company will update its analysis of external agent systems in
subsequent reports.

         The Company  will  utilize  both  internal  and  external  resources to
reprogram,  or replace, test and implement the software and scientific equipment
for Year  2000  modifications.  The  total  cost of the  Year  2000  project  is
estimated at approximately  $75,000 and is being funded through operating

<PAGE>

cash flows. To date, the Company has incurred  approximately  $31,000 related to
all  phases of the Year 2000  project.  Of the total  remaining  project  costs,
approximately  $28,000 is attributable to the purchase of new software,  $10,000
for new hardware, both of which will be capitalized, and $6,000 for the repair
of hardware and software.

         The Company's plans to complete the Year 2000  modifications  are based
on  management's  best  estimates,   which  were  derived   utilizing   numerous
assumptions  of  future  events  including  continued  availability  of  certain
resources,  and other  factors.  Estimates on the status of  completion  and the
expected  completion dates are based on costs incurred to date compared to total
expected costs. However,  there can be no guarantee that these estimates will be
achieved and actual results could differ  materially from those plans.  Specific
factors that might cause such material  differences include, but are not limited
to, the availability and cost of personnel  trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties.

         The  Company  has  not   completed  a  formal   contingency   plan  for
non-compliance,  but it is developing a plan based on the  information  obtained
from third parties and an on-going evaluation of the Company's own systems.  The
Company  anticipates  having a  contingency  plan in place by November 30, 1999,
which will include development of backup procedures, identification of alternate
suppliers and possible  increases in supplies  inventory levels. The Company has
not  identified its most  reasonably  likely worst case scenario with respect to
possible losses in connection with Year 2000 related problems. The Company plans
on completing this analysis by November 30, 1999.

         The information above contains  forward-looking  statements  including,
without  limitation,  statements  relating to the Company's  plans,  strategies,
objectives,  expectations,  intentions,  and  adequate  resources  that are made
pursuant to the "safe harbor"  provisions of the Private  Securities  Litigation
Reform Act of 1995. Readers are cautioned that forward-looking  statements about
the Year 2000 should be read in  conjunction  with the Company's  disclosures in
its  Annual  Report  or Form  10-K as filed  with the  Securities  and  Exchange
Commission.


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, 1998. 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,
1998.








<PAGE>




Part II.  Other Information

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

(a)  Exhibits

          None



Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibits

     Exhibit
     Number     Description

     10.39       Purchase  and Sale  Agreement  and Joint  Escrow  Instructions
                  (Mountain  View Real Estate Sale),  dated May 24, 1999 between
                  Alexandria  Real Estate  Equities,  Inc.  and  Registrant  and
                  Registrant's wholly owned Subsidiary Bio-Shore Holdings, Ltd.

     Portions of the exhibit has been omitted pursuant to a request for
     confidential treatment.

(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.


October 12, 1999          By:     /s/Richard B. Brewer
                                  -------------------------------------------
                                  Richard B. Brewer, President and CEO

October 12, 1999          By:     /s/David W. Gryska
                                  -------------------------------------------
                                  David W. Gryska, Vice President and CFO