SECURITIES AND EXCHANGE COMMISSION               
                              Washington, DC 20549
                                   FORM 10-Q

(Mark One)
[X]  Quarterly report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934.
     For the quarterly period ended March 31, 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 0-12081

                         AQUILA BIOPHARMACEUTICALS, INC.
           (Exact Name of Registrant as Specified in Its Charter)

                Delaware                              04-3307818
       (State or other Jurisdiction of              (I.R.S. Employer    
       Incorporation or Organization)              Identification No.)
  
                175 Crossing Boulevard, Framingham, MA 01702
           (Address of Principal Executive Offices)   (Zip Code)

                                (508) 628 - 0100
              (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 ____.

APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY PROCEEDINGS DURING THE
PRECEDING FIVE YEARS

     Indicate by check mark whether the registrant has filed all documents and 
reports required to be filed by Sections 12, 13 or 15(d) of the Securities 
exchange Act of 1934 subsequent to the distribution of securities under a plan 
confirmed by a court.
Yes _X__ No ___

                      APPLICABLE ONLY TO CORPORATE ISSUERS:
     Indicate the number of shares outstanding of each of the issuer's classes 
of common stock, as of the latest practicable date.

As of May 13, 1999
Common Stock Outstanding 6,996,740



                        AQUILA BIOPHARMACEUTICALS, INC.
                           Form 10-Q, March 31, 1999

INDEX

     PART I - FINANCIAL INFORMATION

     Item 1. Unaudited Financial Statements                 Page Number

          Consolidated Balance Sheets as of March 31, 1999
          and December 31, 1998.......................................3

          Consolidated Statement of Operations for three month periods 
          ended March 31, 1999 and 1998...............................4

          Consolidated Statement of Cash Flows for the three month
          periods ended March 31, 1999 and 1998.......................5

          Notes to Interim Financial Statements.......................6         

     Item 2.  Management's Discussion and Analysis of Financial
     Condition and Results of Operations .............................7        
   
     PART II - OTHER INFORMATION.................................... 10

     Item 6.  Exhibits and Reports on Form 8-K.......................11

     SIGNATURES......................................................13






















                                      
Item 1 - Financial Statements
                       Aquila Biopharmaceuticals, Inc.
                         Consolidated Balance Sheet
                               (unaudited)
                             (in thousands)

Assets                                      	 3/31/99	 12/31/98

Current Assets: 
 Cash and cash equivalents                 	$    543	$   5,270
 Marketable securities                     	  11,879	    9,885
 Receivables (less allowance					
    for doubtful accounts of $47,000)              1,106            1,028
 Inventories                                         422              435
 Prepaid expenses & other current assets             224              353
                                                  ------           ------
       Total current assets                  	  14,174	   16,971

Investments                                          320              320
Property, Plant, and Equipment, Net   		   6,372	    6,372
Patents and Purchased Technology, Net                 98              116
Other Assets                                         842              849
                                                  ------           ------
       Total Assets                        	$ 21,806	$  24,628
                                                  ======           ======
Liabilities & Shareholders' Equity
Current Liabilities:
  Accounts payable                              $    327        $     486
  Accrued royalties                                  137              134
  Accrued professional fees                          249              299
  Other accrued expenses                     	   1,666	    1,971
  Current maturities of long-term debt         	   2,180	    2,191
                                                   -----            -----
       Total Current Liabilities                   4,559            5,081

Deferred Revenue                                     225              225
Long Term Debt                                     3,481            3,669
                                                   -----            -----
       Total Liabilities                   	   8,265	    8,975

Shareholders' Equity:
  Preferred stock, authorized:
   5,000,000 shares, none issued                       0                0
  Common stock, par value: $.01 per
   share, authorized: 30,500,000 
   shares, issued: 6,998,826 at March 31,1999
   and 6,992,483 at December 31, 1998                 70               70      
  Treasury Stock                                     (34)             (34)
  Additional paid in capital                  	  139,833	         139,812
  Accumulated other comprehensive income              90               79
  Accumulated Deficit                           (126,418)        (124,274)
                                                 -------          -------
       Total Shareholders' Equity                 13,541           15,653
                                                 -------          -------

Total Liabilities and Shareholders' Equity 	$ 21,806	$  24,628
                                                  ======           ======
The accompanying notes are an integral part of these unaudited statements.
                         


                       Aquila Biopharmaceuticals, Inc.
                    Consolidated Statement of Operations
                               (unaudited)
                   (in thousands, except per share amounts)
                                                   
                    			Three Months Ended      			
                                           March 31,1999               
                                      1999               1998
                                      ----               ----
Revenue:  
  Product sales                   $    43		$  301     
  Research and development            119		 1,040
                                      ---                -----
                                      162                1,341   
Cost and expenses:
  Cost of sales                       297		   257	  
  Research and development          1,243                1,428       
  General & administrative            834                1,073
                                    -----                -----
        Total costs and expenses    2,374                2,758     

Other income, net                      68                  621
                                    -----                -----
Net Loss                          $(2,144)              $( 796)
                                    -----                -----
  Unrealized holding gains on
  available-for-sale securities        11                   --
                                    -----                -----
     Total other comprehensive
     income                            11                   --
                                    -----                -----
Comprehensive loss                $(2,133)              $ (796)
                                    =====                =====
Basic and diluted loss
  per weighted average share:	
						    
Net loss                       $    (0.31)              $(0.14)    

Weighted average number of	
  common shares outstanding:
        Basic and diluted           6,998                5,505
	


The accompanying notes are an integral part of these unaudited statements.     
                                      
                            

















                              Aquila Biopharmaceuticals, Inc.
                            Consolidated Statement of Cash Flows
                                 (unaudited),(in thousands)
                                                      For the three months 
                                                        ended March 31,
                                                        1999         1998
                                                        ----         ----
Cash Flows From Operating Activities:    
Net Loss                                            $ (2,144)     $  (796)
Adjustments to reconcile net loss to net cash
 provided/(used) by operating activities:
  Depreciation and amortization                          199           64
  Changes in assets and liabilities:
  Receivables                                            (78)         398
  Inventories                                             13          (14)
  Deferred revenue                                         0        2,250
  Prepaid expenses and other current assets              129          (42)
  Accounts payable and other accrued expenses           (511)        (309)
                                                       -----        -----
	Net cash provided/(used)by                       	
            operating activities                      (2,392)       1,551

Cash Flows From Investing Activities:
  Purchases of marketable securities                  (7,000)          --
  Proceeds from maturities
    of marketable securities                           5,017        4,023
  Other noncurrent assets and liabilities                  7         (748) 
  Purchases of property, plant, and equipment           (181)        (269)
                                                       -----        -----
    Net cash provided/(used) by
    investing activities                              (2,157)       3,006

Cash Flows From Financing Activities:                            
  Payment of long-term obligations                      (199)         (17)
  Issuance of common stock                                21        3,813
                                                       -----        -----
    Net cash provided/(used) 
      by financing activities                           (178)       3,796
                                                       -----        -----
Net increase/(decrease) in cash and cash
      Equivalents                                     (4,727)       8,353

Cash and cash equivalents at the beginning                       
     of the year                                       5,270        7,352
                                                       -----        -----
Cash and cash equivalents at the end 
     of the period                                    $  543      $15,705
                                                       =====       ======
Supplemental disclosures:    
        Interest paid                                 $  173      $     5


The accompanying notes are an integral part of these unaudited statements.










                        AQUILA BIOPHARMACEUTICALS, INC.

NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS

1.   Basis of Presentation:

The accompanying interim financial statements are unaudited and have been 
prepared on a basis substantially consistent with the audited financial 
statements.  Certain information and footnote disclosures normally included in 
the Company's annual financial statements have been condensed or omitted 
pursuant to the Securities and Exchange Commission's rules and regulations.  
The interim financial statements, in the opinion of management, reflect all
adjustments (including normal recurring accruals) necessary for a fair 
presentation of the results for the interim periods.  Certain items have been 
reclassified to conform to the current period's presentation.
     
The results of operations for the interim periods are not necessarily 
indicative of the results of operations to be expected for the fiscal year.  
These interim financial statements should be read in conjunction with the 
audited financial statements for the year ended December 31, 1998, which are 
contained in the Company's Annual Report on Form 10-K for the year ended 
December 31, 1998, filed with the Securities and Exchange Commission.

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

2. Segment information:

The Company has determined that its reportable segments are development and 
manufacturing.  All research programs are aggregated in the development 
segment.  Revenues from the sale of the feline leukemia vaccine, the QS-21 
material supplied to research partners, and QS-21 license fees are reported in 
the manufacturing segment.  Financial results of segments are presented on the 
same accounting basis as the Company's consolidated results.  There are no 
inter-segment activities. The Company's business is conducted entirely within 
the United States.
                                           Three Months Ended                  
                                            March 31,1999                   
                                          1999         1998
                                          ----         ----
        Development
                Revenue                 $   68       $  161 
                Net loss                (1,647)      (1,628)
	Manufacturing
                Revenue                     94        1,180 
                Net income/(loss)         (537)         429
	Reconciling items
                Revenue                      0            0
                Net income (1)              40          403
	Consolidated totals
                Revenue                    162        1,341
                Net loss               $(2,144)      $ (796)
                                         =====        =====
	   (1) 1999 includes $50, 000 of royalty income, $10,000 gain on
disposal of an asset, and a charge for excess facilities of $20,000.  1998
includes net interest income of $284,000, royalty income of $225,000, $80,000
from settlement of a claim, and a charge for excess space of $200,000.


3.   Inventories:

Inventories consist of the following:              (000'S)

                                         3/31/99                12/31/98
                                         -------                --------
     Finished goods                     $  229                  $  231
     Work-in-process                        81                     122
     Raw materials & supplies              112                      82
                                        $  422                  $  435


4.	Earnings Per Share:

The common stock equivalents of the Company consist of stock options and 
warrants.  The Company was in a net loss position at March 31, 1999 and March 
31, 1998; therefore, common stock equivalents were not used to compute diluted 
loss per share since the effect would have been anti-dilutive.  Options to 
purchase 1,077,341 and 826,655 shares of common stock at weighted average 
prices of $3.88 and $4.26, respectively, were outstanding at March 31, 1999 
and 1998, respectively.  Warrants to purchase 68,680 shares of common stock at 
an exercise price of $4.12 were outstanding at March 31, 1999. 

5.	Contingencies:

In March 1995, an Adversary Proceeding was commenced by Institut Pasteur and 
Genetic Systems Corporation against the Company's predecessor Cambridge Biotech
Corporation ("CBC") alleging patent infringement.  Institut Pasteur appealed the
Bankruptcy Court's ruling and the United District Court's affirmation thereof
to the Federal Circuit Court of Appeals. The technology at issue is part of a
business that has been sold with the only liability arising out of the conduct
of the Company prior to the sale.  Accordingly, based on current information,
management believes that any adverse settlement will not have a material effect
on the Company's financial position or results of operations.

The Company has been named a potentially responsible party ("PRP") by the 
Environmental Protection Agency ("EPA") at a waste disposal site.  The EPA 
will generally impose joint and several liability upon each PRP at each site. 
The extent of the Company's required financial contribution to the cleanup of 
this site is expected to be limited based on the number and financial strength 
of the other named PRPs and the volume and types of waste involved which might 
be attributable to the Company.

CSL International ACN ("CSL") and Seed Capital, Inc. filed an opposition with 
the European Patent Office on the issuance of the Company's StimulonTM patent 
in Europe. In a hearing, the Company prevailed against all points raised in 
opposition.  CSL may appeal the decision of the hearing and though the Company 
does not believe CSL's claims have any merit, there can be no assurance that 
the Company will prevail in any future actions taken to attack the validity of 
its StimulonTM patents.

The Company received a letter from CBC in February 1999 alleging that the 
Company must indemnify CBC under a Master Acquisition Agreement among the 
Company, CBC, and bioMerieux, Inc. for potential losses from the termination 
of CBC's rights under a license agreement.  The Company is evaluating this 
claim and has not yet determined the effect, if any, the claim might have on 
the Company.




Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL   
         CONDITION AND RESULTS OF OPERATIONS

Three months ended March 31, 1999 compared to three months ended March 31, 
1998:

Revenue

Total revenues were $0.2 million for the three months ended March 31, 1999 
compared to $1.3 million in the same period in 1998, a decrease of 88%.

First quarter 1999 product sales were $43,000 compared to $301,000 the same 
period one year ago.  The primary reason for the lower revenues was the 
requirement to complete validation of the Company's new manufacturing facility 
prior to the shipment of newly manufactured product.  Validation is expected 
to be complete in the second quarter of 1999.  Also, a reseller was acquired 
by a competitor in the second quarter of 1998.  The Company's marketing 
partner has informed the Company that it will respond to this competitive 
action; however, until the reseller sales are replaced, product sales are 
expected to be lower than historical levels.

First quarter research and development revenues were $0.1 million compared to 
$1.0 million for the same period in 1998. The primary reason for the quarter-
to-quarter decrease was a license fee payment in 1998 of $3.0 million with 
$0.8 million recognized in the first quarter of 1998. The balance of the 
change resulted from lower shipments of QS-21 to research partners and 
advancement of the Company's funded research program to the final licensing 
stage where costs are not shared with the Company's partner.
 
Costs and Expenses

For the first quarter of 1999, cost of sales exceeded product sales due to 
costs incurred for validation and preparation of the Company's new 
manufacturing facilities.  First quarter research and development spending 
decreased by 13% from one year ago to $1.2 million.  The decrease was due to 
lower spending for clinical trials partially offset by assumption of the 
research programs from VacTex, acquired in April 1998. Spending for clinical 
trials is expected to increase for the remainder of the year with the start of 
pivotal licensing trials for the Company's bovine mastitis product.  General 
and administrative expenses were reduced by 22% from one year ago due to lower 
staffing levels, legal fees and facility costs.

Other Income, Net

First quarter 1999 other income was $0.1 million compared to $0.6 million for 
the same period in 1998. The reasons for the decrease were interest expense of 
$0.2 million on the Company's outstanding debt, lower interest income by $0.1 
million due to lower average cash balances, and $0.2 million lower royalty 
income. Royalty income may continue to decline as new products or technology 
replace current products.  

Liquidity, Capital Resources and Business Outlook

Total cash, cash equivalents and marketable securities were $12.4 million at 
March 31, 1999 compared to $15.2 million at December 31, 1998.

During the first three months of 1999, operating activities used cash of $2.4 
million primarily due to the net loss of $2.1 million.  Investing activities 
used cash of $2.2 million primarily due to the net purchase of marketable 
securities.   Financing activities used cash of $0.2 million for repayment of 
debt principal. As of March 31, 1999, the Company had a balance of $4.3 
million under its loan agreement with Transamerica Business Credit Corporation 
and owed $1.4 million for the debentures issued in connection with the 
acquisition of VacTex, Inc.  As of May 7, 1999, $0.1 million of the debentures 
had been redeemed. 

During the first three months of 1998, the Company sold common stock in a 
private placement for proceeds of $3.6 million and received $3.0 million from 
a research partner, the last of a series of license fee payments.

Aquila expects that its available cash and marketable securities, and its cash 
flows from research contracts, product sales, and borrowings will be 
sufficient to finance its planned operations and capital requirements for the 
next fifteen months. The management of the Company is taking all reasonable 
steps at its disposal to assure continuation of the Company's programs. The 
Company's ability to fund its long term operations is dependent on several 
factors, including the Company's ability to attract funding through additional 
public and private financing or by establishing corporate partnerships and 
collaborative agreements.  There can be no assurance that such additional 
funding can be obtained on acceptable terms.

Aquila's revenues and expenses vary from quarter to quarter and will continue 
to vary in the future.  Future revenues depend primarily upon the success of 
Aquila's efforts to license its proprietary technology and enter into cost 
sharing programs, and its ability to market its products currently undergoing 
development or clinical trials.  Aquila's expenses fluctuate primarily due to 
clinical trials, which take from six months to two years, and require varying 
degrees of financial support.  Revenues or operating results in any period 
will not necessarily be indicative of results in subsequent period.

The Year 2000 ("Y2K") issue originates in computer programs that characterize 
the year with two digits instead of four.  This method of characterization may 
result in interpretation of the year 2000 in a manner that would cause 
inadequate or inaccurate results.  The Company is engaged in basic research 
and product development, and in manufacturing a product for animal healthcare 
and material for its research partners. The Company believes that with the 
relocation to newly constructed facilities in September 1998 and the 
conversion to Y2K compliant business systems software in the first quarter of 
1998, the Y2K problem will not pose significant internal operational problems 
for the Company. The Company has conducted an internal review of equipment and 
software employed in its business, manufacturing and research operations and 
concluded that there are no Y2K systemic dependencies.  Specific items of 
equipment and associated software found to be date dependent are expected to be 
replaced prior to the year 2000 due to capacity or quality improvements. In 
the normal course of its business, the Company conducts audits of key vendors 
and vendors used for regulated products to assure their ability to supply 
materials.  These audits have not revealed any Y2K compliance issues with 
respect to the Company's key vendors.  The Company's marketing partner is a 
French company and there can be no assurance that this company will be Y2K 
compliant. The Company has material transfer agreements with a number of other 
companies and there can be no assurance that these companies will be Y2K 
compliant.  The Company has expended less than $100,000 to date for items
directly relating to the Y2K issues, mainly new business software and harware,
and expects to spend less than $50,000 in the future.  Y2K issues could
adversely affect both revenues and costs if the Company were unable to supply
material and products to customers and research partners.  To ensure no
interruption in supply during the two quarters immediately proceeding and
following the year 2000, the Company may consider carrying higher inventories
of raw material from vendors used for regulated products and higher finished
goods inventories to supply the needs of customers and partners.

Aquila's discussions as to management's plans and objectives for Aquila's 
business after the date hereof are forward looking statements that involve a 
number of risks and uncertainties.  Actual results may differ materially from 
those projected by Aquila.  The following factors, among others, could effect 
the Company's actual results: general economic conditions; risks in product 
and technology development; delays and difficulties in the regulatory approval
process; difficulties in obtaining raw materials and supplies for the 
Company's products; failure of corporate partners to commercialize 
successfully products using the Company's technology; competition from other 
companies; the cost of acquiring additional technology; failure to obtain the 
funding necessary for the Company's planned activities; and other risks 
identified in this Form 10Q and in Aquila's other Securities and Exchange 
Commission filings and the exhibits thereto.





                         PART II - OTHER INFORMATION



Item 6.  Exhibits and Reports of Form 8-K

		Exhibits
			27. Financial Data Schedule
		Reports on Form 8-K
                         None filed in the first quarter of 1999. 
                   
     -----------------------------------------------------------

                                 
                                 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  undersigned thereunto duly authorized.

                           AQUILA BIOPHARMACEUTICALS, INC.

     Date: May 14, 1999   /s/ Alison Taunton-Rigby            
                           Alison Taunton-Rigby
                           President and Chief Executive Officer


                          /s/ James L. Warren    
                           James L. Warren
                           Vice President Finance,
                           Chief Financial Officer and Treasurer