SECURITIES AND EXCHANGE COMMISSION                      
                           Washington, D.C. 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 September 30, 1996 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 Identification No.)
 Incorporation or Organization)

                 365 Plantation Street, Worcester, MA  01605
             (Address of Principal Executive Offices) (Zip Code)

                           (508) 797-5777
             (Registrant's Telephone Number, Including Area Code)
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                       CAMBRIDGE BIOTECH CORPORATION    
               (Former Name, Former Address, and Former Fiscal 
                     Year if Changed Since Last Report) 
               
    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____ No__X__

                   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 November 6, 1996
Common Stock Outstanding 5,000,000
                      
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                      AQUILA BIOPHARMACEUTICALS, INC.
                       Form 10-Q September 30, 1996
                                 INDEX

PART I - FINANCIAL INFORMATION
                                                                        
Item 1.  Unaudited, Consolidated Financial Statements                    

         Consolidated Balance Sheets as of September 30, 1996          
         and December 31, 1995                                    

         Consolidated Statements of Operations for three and 
         nine month periods ended September 30, 1996 and 1995                  

         Consolidated Statements of Cash Flows for nine month 
         periods ended September 30, 1996 and 1995                        

         Notes to Consolidated Interim Financial Statements            

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

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings                                             

Item 2.  Changes in Securities                                         

Item 6.  Exhibits and Reports on Form 8-K                              

SIGNATURES                                                             
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Item 1.  Consolidated Financial Statements

The following Consolidated Financial Statements present the financial 
condition as of and results from operations for the period ended 
September 30, 1996 for Aquila Biopharmaceuticals, Inc. ("Aquila").  Aquila
is the successor to the biopharmaceutical business of Cambridge Biotech 
Corporation ("CBC"), pursuant to CBC's Plan of Reorganization ("Plan")
consummated October 21, 1996.  Aquila is the successor to CBC under the 
Securities Exchange Act of 1934, and is the registrant filing this quarterly 
report on Form 10-Q.  The financial transactions that were a part of the 
Plan consummation, including the exchange of CBC common stock (26,065,000
shares outstanding) for Aquila common stock (5,000,000 shares outstanding) 
had not occurred by the date of these Consolidated Financial Statements and 
are therefore not reflected herein.

                      AQUILA BIOPHARMACEUTICALS, INC.
                 (formerly Cambridge Biotech Corporation)
                       Consolidated Balance Sheets
                              (Unaudited)
                             (In Thousands)

Assets                                9/30/96     12/31/95       
                                      -------     --------
Current Assets:
  Cash and cash equivalents           $15,350      $ 6,856
  Restricted Cash                       1,000            0
  Marketable Securities                     0          216
  Accounts receivable-                                                
    trade (net of allowance
    for doubtful accounts)              2,617        2,638
  Other receivables                       118          126
  Inventories                           4,568        4,368
  Prepaid expenses & other
    current assets                        511          695
                                       ------       ------
  Total Current Assets                 24,164       14,899

Investments                               855            0

Property, plant, and equipment, 
  net                                   4,896        6,986
Patents and purchased 
  technology, net                         503        1,055
Other assets                               64          105
                                       ------       ------
Total Assets                         $ 30,482      $23,045
                                       ======      ======= 
Liabilities & Shareholders' 
Equity

Current Liabilities:
   Accounts payable                  $    701      $   851
   Accrued royalties                      570        1,192
   Accrued professional fees              860          753
   Accrued incentive 
     compensation                       1,220        1,458
   Accrued restructuring costs            201          257
   Other accrued expenses               2,312        2,001
   Deferred revenue-current             2,273          411
                                       ------        -----
    Total Current Liabilities           8,137        6,923
                                   
   Deferred revenue-Long Term           2,150        2,287
                                                                
   Liabilities subject to                   
    Chapter 11 proceedings              9,531        9,880
                                        -----        -----
    Total Liabilities                  19,818       19,090

    Minority Interest                      11            9
    
    Shareholders' Equity:
       Preferred Stock, par value:
       $.01 per share, authorized:
       5,000,000 shares, none issued
       Common Stock, par value:
       $.01 per share, authorized:
       40,000,000 shares, 
       issued: 26,065,000 
       shares (CBC)                       261          261
     Additional paid in 
        capital                       120,382      120,382
      Unearned compensation              (138)        (138)
      Deficit                        (109,852)    (116,559)
                                      -------      -------
    Total Shareholders'Equity          10,653        3,946
                                       ------      -------
    Total Liabilities and 
      Shareholders' Equity            $30,482      $23,045
                                      =======      =======

The accompanying notes are an integral part of these unaudited consolidated
financial statements.               
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                         AQUILA BIOPHARMACEUTICALS, INC.
                    (formerly Cambridge Biotech Corporation)
                      Consolidated Statement of Operations
              (Unaudited) (In Thousands except per share amounts)
                               
                                Three Months Ended       Nine Months Ended 
                                   September 30,           September 30,
                                  1996       1995         1996        1995     
Revenue:                          ----       ----         ----        ----     
Product sales                  $  443     $   490      $ 1,449    $   835
 Research & development          1,292       1,416        3,949      3,765
 Royalties                         372         435        1,277      1,343
                                 -----       -----        -----      -----
                                 2,107       2,341        6,675      5,943
Cost and expenses:
 Cost of sales                     480         416        1,578      1,601
 Research & development            878       1,774        3,319      4,298
 Sales, general &                                         
   administrative                1,307       1,400        4,000      4,269
                                 -----       -----        -----      -----
                                 2,665       3,590        8,897     10,168
Other:
 Other income and interest 
   expense net of interest 
   income                        3,858         104        4,054        292
                                 -----      ------        -----      -----
Income/(loss) from continuing 
   operations before 
   reorganization items 
   and income tax expense        3,300      (1,145)       1,832     (3,933)

Reorganization items:
 Professional fees              (1,224)       (343)      (1,934)      (952)
 Interest earned on
  accumulated cash
  resulting from 
  Chapter 11 proceedings           181          84          412        291
                                  -----       -----       -----       -----
Total reorganization items      (1,043)       (259)      (1,522)      (661)  
                                 ------       -----       -----       -----
Income/(loss) from continuing     
 operations before income 
 tax expense                     2,257      (1,404)         310     (4,594)

Income tax (expense)                 0           0           (2)         0 
                                  -----       -----       ------     -----
Income/(loss) from 
 continuing operations           2,257      (1,404)         308     (4,594)
                               
Discontinued operations: 
  Income/(loss) from           
   operations                      369         258        1,799       (492)
  Gain/(loss) on disposal           62           0        4,600          0
                                 -----      ------        -----       -----
Net Income/(loss)               $2,688     ($1,146)      $6,707    ($5,086)
                                ======     ========      ======     ======
Net Income/(loss) per 
 weighted average number of 
 CBC common shares:            
     Continuing operations       $0.09      ($0.05)       $0.01     ($0.18)
     Discontinued operations     $0.01       $0.01        $0.25     ($0.02)
                                 -----      -------      -------   -------
Net Income/(loss) per CBC share  $0.10      ($0.04)       $0.26     ($0.20)
                                 =====      =======       =====     =======
Weighted average number of
CBC common shares outstanding   26,065      26,065       26,065     26,065
                                ======      ======       ======     ======      
The accompanying notes are an integral part of these unaudited consolidated 
financial statements.             
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                        AQUILA BIOPHARMACEUTICALS, INC.
                   (formerly Cambridge Biotech Corporation)   
                      Consolidated Statement of Cash Flows
            For the nine months ended September 30, 1996 and 1995
                                 (Unaudited) 
                                (In Thousands)                       
                               
                                             1996      1995                    
                                             ----      ----
 Cash Flows From Operating 
 Activities:
  Net Income/(Loss)                         $6,707   ($5,086)         
  Adjustments to reconcile net 
   income/(loss) to net cash 
   provided by/(used in) 
   operating activities:    
  Depreciation and 
   amortization                              2,998     3,620              
  Provision for doubtful accounts               45        59
  Non-cash compensation expense                  -        49              
  Gain on sale of Enterics business         (4,396)        -
  Receipt of investments                      (300)        -
  Loss on disposition and write down
   of investments                             (555)        1
  Changes in assets and liabilities,        
   net of effects of disposed businesses:
    Restricted cash                         (1,000)        -
    Accounts and other receivables             (16)     (595)    
    Inventories                               (200)     (135)        
    Deferred revenue                         1,725    (2,990)
    Prepaid and other 
     current assets                            185      (552)                 
    Accounts payable and other accrued
     expenses                               (1,038)    3,910
    Accrued restructuring charges              (55)     (104)
    Other non-current assets and 
     liabilities                                41        (1)
    Minority interest                            2         6
      Net cash provided by/(used 
        in) operating activities            ------     ------
                                             4,143    (1,818)         
 Cash Flows From Investing 
    Activities:
    Proceeds from sale of
     marketable securities                     216         -           
    Purchases of property,                                                  
     plant, and equipment                     (297)     (394)            
    Patents & purchased 
     technology                               (166)     (171)           
  Proceeds from sale of
    Enterics business                        4,601         -
                                             ------    ------
  Net cash provided by/(used in)
     investing activities                    4,354      (565)               

  Cash Flows from Financing
    Activities:
    Payment on long-term 
       obligations                              (3)       (3)           
                                            -------    ------
  Net cash (used in) 
       financing activities                     (3)       (3)           
                                             -------   ------
 Net increase(decrease) in cash
  and cash equivalents                       8,494    (2,386)                 

 Cash and cash equivalents at
  the beginning of the year                  6,856     8,538                 
                                             -----    ------
 Cash and cash equivalents at
  the end of the period                    $15,350    $6,152               
                                            ======     =====
Supplemental disclosures:                        
Income taxes paid                          $     5    $    0           
                                            ======     =====
Interest paid/(refunded)                   $     1   ($    7)
                                            ======    ======
      
The accompanying notes are an integral part of these unaudited consolidated
financial statements.            
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                      AQUILA BIOPHARMACEUTICALS, INC.
       NOTES TO UNAUDITED, CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1.  Basis of Presentation:
    
The accompanying consolidated interim financial statements of Aquila
Biopharmaceuticals, Inc. ("Aquila" or the "Company"), the successor to the 
biopharmaceutical business of Cambridge Biotech Corporation ("CBC"), are 
unaudited and have been prepared on a basis substantially consistent with 
the audited financial statements.  Further, these statements are based upon 
treating the retroviral and enterics businesses as discontinued operations 
as discussed in Footnote 3.  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 consolidated 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.

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 consolidated interim financial statements should be read in conjunction 
with the audited financial statements for the year ended December 31, 1995, 
which are contained in the Company's Annual Report on Form 10-K for the year 
ended December 31, 1995, filed with the Securities and Exchange Commission.
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2.  Subsequent Events:              

On October 21, 1996 the Plan of Reorganization the ("Plan"), which was 
confirmed by the U.S. Bankruptcy Court on July 18, 1996, was consummated.  A 
number of steps were taken to consummate the transactions contemplated by the 
Plan, including: (i) the issuance by Aquila of 5,000,000 shares of Aquila 
common stock (together with a right to purchase a "Unit" as described below) 
to CBC's equity security holders and certain CBC creditors in exchange for 
their interests in and claims against CBC, and the payment of other creditors 
in cash; (ii) the distribution of the assets of the biopharmaceutical business 
to Aquila on the consummation date under the Plan; (iii) the sale of all of 
the issued and outstanding stock of CBC to bioMerieux Viteck, Inc. 
("bioMerieux") pursuant to the Master Acquisition Agreement; and (iv) the 
commencement of a rights offering (the "Rights Offering") pursuant to which 
the holder of each share of Aquila common stock distributed pursuant to the 
Plan on account of an allowed claim or interest would be entitled to 
purchase a "Unit" entitling the purchaser to one share of Aquila common stock 
and a warrant to purchase one share of Aquila common stock.  Each participant 
in the Rights Offering would also obtain certain rights with respect to 
unsubscribed Units.  

3.  Discontinued Operations:

Effective as of October 22, 1996, Aquila sold all of the issued and outstand-
ing stock of CBC to bioMerieux pursuant to the Master Acquisition Agreement 
("Purchase Agreement") dated April 4, 1996 for approximately $6,450,000 
in cash.  At the same time, bioMerieux entered into a ten year lease with 
Aquila for the portion of Aquila's Maryland real estate on which CBC operates 
its retroviral business, which lease was simultaneously assigned by 
bioMerieux to CBC.  At the time of the sale, CBC's assets consisted solely 
of the retroviral business, assets principally related to the manufacture 
and sale of diagnostic kits for the diagnosis of retroviruses, including 
those associated with AIDS.  These assets include manufacturing operations 
in Rockville, Maryland, inventory, equipment, patents, patent applications, 
and patent rights granted to CBC, licenses and sublicenses, trademarks, and 
trademark applications and registrations.  In addition, pursuant to a 
modification of the Purchase Agreement, $650,000 in cash, representing a 
portion of a paid-up license fee, was included in the assets retained by CBC.  
The results of operations of the retroviral business are reported as 
discontinued operations and prior periods have been restated to reflect 
that occurrence.  The income from the discontinued retroviral operations for 
the three and nine months ended September 30, 1996 was $369,000 and 
$1,179,000 respectively, compared to income of $36,000 and a loss of $824,000 
for the same periods in 1995.  A gain on disposal of the retroviral business 
will be recorded in the fourth fiscal quarter of 1996.

As previously reported, on June 24, 1996, Aquila sold the assets of its
enterics diagnostic business pursuant to an Asset Purchase Agreement 
to Meridian Diagnostics, Inc. ("Meridian") for approximately $5,700,000 in 
cash and other considerations including $1 million in cash placed in escrow
and not reported in the gain on disposal.  The results from operations and 
gain on disposal of the enterics business are reported as discontinued 
operations and the prior periods have been restated to reflect that 
occurrence.  The income from the discontinued enterics operation for the
three and nine months ended September 30, 1996 was $0 and $620,000, 
respectively, compared to $222,000 and $332,000, respectively,  for the same 
periods in 1995.  A gain on disposal of approximately $4,600,000 was 
recorded.

4.  Inventories:

    Total inventories (including Aquila inventories of biopharmaceutical
    products and inventories of CBC's retroviral products) consist of the 
    following:                       
                                                   (000'S)

                                             9/30/96      12/31/95
                                             -------      --------
    Finished goods                            $  891       $   681
    Work in process                            2,977         2,887
    Raw materials & supplies                     700           800
                                             -------       ------- 
                                              $4,568       $ 4,368
                                             =======       =======
5.  Pro Forma Financial Statements

Attached as Exhibit 99.1 is a pro forma balance sheet that gives effect to 
a) the sale by Aquila of all of the capital stock of CBC to bioMerieux, and 
b) the transactions completed pursuant to the consummation of the Plan,
including the exchange of approximately 26,065,000 shares of CBC common stock
for 5,000,000 shares of Aquila common stock.  The pro forma balance sheet 
assumes that these transactions had been completed as of September 30, 1996.  
On a pro forma basis, Aquila had working capital of $17,876,000, a current 
ratio of 4.33 to 1, and a cash value and a book value per Aquila share 
(5,000,000 outstanding) $3.42 and $3.59, respectively.  

Attached as Exhibit 99.2 is a pro forma statement of operations for the 
nine months ended September 30, 1996 that gives effect to a) the sale by 
Aquila of all of the capital stock of CBC to bioMerieux and b) the sale of 
the assets of the enterics business to Meridian.  The pro forma statement of 
operations assumes that these transactions occurred immediately prior to the 
beginning of the nine month period ended September 30, 1996.  On a pro forma 
basis, Aquila earned $.06 per Aquila share from continuing operations for 
the nine months ended September 30, 1996, including certain non-recurring 
items reflected in Other Income.

Certain of the pro forma adjustments represent estimates, and therefore may 
not be indicative of the results that would have been achieved had these 
transactions actually occurred on or before September 30, 1996.

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Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
         RESULTS OF OPERATIONS
General                                
------- 
Aquila, a Delaware corporation is the successor to the biopharmaceutical 
business of CBC pursuant to the terms of the Plan and is the successor to CBC 
under the Securities Exchange Act of 1934 and Rule 12g-3(a) thereunder.

On or about October 21, 1996, CBC's Biopharmaceutical Business (as defined
in the Plan) was transferred to Aquila, free and clear of liens, encumbrances,
claims and interests, except as otherwise provided in the Plan or Confirmation
Order.  Included among the assets transferred to Aquila was the Maryland real
estate on which CBC operates its Retroviral Business (as defined in the Plan).
Pursuant to the Plan, Aquila common stock was exchanged for CBC common stock;
and, as a result, CBC became a wholly-owned subsidiary of Aquila.  Effective
as of October 22, 1996, Aquila sold all of the issued and outstanding stock
of CBC to bioMerieux pursuant to the Purchase Agreement for $6,450,000.  At
the same time bioMerieux entered into a ten year lease with Aquila for a 
portion of the Maryland real estate which lease was simultaneously assigned
by bioMerieux to CBC.

At the time of the sale to bioMerieux, CBC's assets consisted of the 
Retroviral Business (as defined in the Plan), which include all assets and
business of CBC principally relating to the manufacture and sale of 
diagnostic kits for the diagnosis of retroviruses, including those associated
with AIDS.  The assets include manufacturing operations in Rockville, 
Maryland, inventory, equipment, patents, patent applications, and patent 
rights granted to CBC, licenses and sublicense, trademarks and trademark 
applications and registrations, and certain equipment relating to the 
manufacturing of the retroviral diagnostic products.  In addition, pursuant 
to a modification of the Purchase Agreement, Six Hundred and Fifty Thousand 
Dollars ($650,000) in cash representing a portion of a paid-up license fee 
was included in the assets retained by CBC at the time of the sale.

Results of Operations
---------------------
The Consolidated Statement of Operations presents Aquila's results from
operations exclusive of both the enterics and retroviral diagnostic 
businesses, which are presented as Discontinued Operations in the statement.  
Revenues, costs, expenses, and other items reflect the results of Aquila's  
biopharmaceutical business and administrative functions only, as more 
fully described below.

Three and Nine Months Ended September 30, 1996 and 1995  
-------------------------------------------------------
Revenues were $2,107,000 for the three months ended September 30, 1996 
compared to $2,341,000 in the same period in 1995.  Revenues for the nine
months ended September 30, 1996 were $6,675,000 compared to $5,943,000 in 
the same period in 1995.

Product sales decreased to $443,000 in the third quarter of 1996 from
$490,000 for the same period in 1995, a decrease of approximately 10%, that
is primarily due to the discontinuation of reference laboratory services in
the second quarter of 1996.  Product sales for the first nine months of 1996 
increased to $1,449,000 from $835,000 for the same period in 1995.  The 
increase from 1995 is primarily attributable to increased sales of FeLV 
antigen to a marketing partner.

Research and Development ("R&D") revenues were $1,292,000 in the third
quarter of 1996 compared to $1,416,000 for the same period in 1995.   
R&D revenue for the first nine months of 1996 increased to $3,949,000 from 
$3,765,000 for the same period in 1995.  The increase from 1995 is primarily
attributable to a license payment from MicroGenesys.  The decrease in the    
third quarter of 1996 from 1995 is attributable to reduced revenue from 
research contracts that expired in 1996 and lower expenses on a funded
research program.

Royalty revenue decreased to $372,000 in the third quarter of 1996 compared 
to $435,000 for the same period in 1995, and to $1,277,000 for the first 
nine months of 1996 compared to $1,343,000 for the same period in 1995.

Cost of products sold as a percentage of product sales was 108% for the 
three months ended September 30, 1996 compared to 85% for the same period
in 1995.  For the nine months ended September 30, 1996 and 1995, the cost of 
products sold as a percentage of product sales was 109% and 192%, respect-
ively.  During the first six months of 1995, production problems associated
with certain animal health products resulted in both higher costs and lower
sales volumes than were experienced historically.  In 1996, costs as a
percent of product sales were negatively affected by production problems
early in the year, and more recently by lower unit prices resulting from 
volume increases needed to compensate for reduced shipments in 1995 on 
certain animal health products.

Research and development expenses decreased to $878,000 in the third quarter 
of 1996 from $1,774,000 for the same period in 1995.  For the first nine 
months of 1996 compared to the same period in 1995, research and development 
expenses were $3,319,000 and $4,298,000, respectively. The decrease in the 
third quarter of 1996 is due to a reduction in contract work on the funded
research project mentioned above.  The decrease over the entire period is 
primarily due to the accrual of expenses related to Aquila's employee 
stock incentive plan for research and development employees that occurred in 
1995 and the reduction in scope or completion of certain research contracts.

General and administrative expenses decreased to $1,307,000 in the 
third quarter of 1996 from $1,400,000 for the same period in 1995.  For the 
first nine months of 1996, general and administrative expenses decreased to 
$4,000,000 from $4,269,000 for the same period in 1995.  The decrease is 
primarily due to the accrual of expenses related to Aquila's employee stock 
incentive plan for administrative employees that occurred in 1995 and 
decreased personnel expenses in 1996.

Chapter 11 related professional fees and interest earned on accumulated 
cash were $1,224,000 and $181,000, respectively for the three months ended 
September 30, 1996, compared to $343,000 and $84,000 for the same period 
in 1995. For the first nine months of 1996 compared to the same period in 
1995, Chapter 11 related professional fees and interest earned on 
accumulated cash were $1,934,000 and $412,000 compared to $952,000 and 
$291,000, respectively.  The increase in professional fees in 1996 is due to
the increased effort expended by Aquila and its legal counsel to emerge from
Chapter 11 in the third quarter of 1996.
                                                                          
Other income and interest expense net of interest income includes $3,250,000
received in the third quarter of 1996 from Abbott Laboratories under an 
amendment to a sublicense agreement which granted Abbott a fully paid-up 
sublicense for the non-exclusive diagnostic use of certain HIV-related 
technology.

The Company earned $2,257,000 or $0.09 per share (based on approximately
26,065,000 shares outstanding prior to Plan consummation) from continuing 
operations and had net income of $2,688,000 or $0.10 per share in the third 
quarter of 1996 including the income and gain from disposal from discontinued 
operations, as compared to a loss of $1,404,000 or ($0.05) per share from 
continuing operations and a net loss of $1,146,000 or ($0.04) per share 
including the income from discontinued operations for the same period in 1995.  
For the first nine months of the year, Aquila had net income of $308,000 or 
($0.01) per share from continuing operations and had net income of $6,707,000 
or $.26 per share including the income and gain from disposal from 
discontinued operations, compared to a loss of $4,594,000 or ($0.18) per 
share from continuing operations and a net loss of $5,086,000 or ($0.20) 
per share including the loss from discontinued operations for the 
same period in 1995.  All per share amounts discussed above are based on
approximately 26,065,000 CBC shares outstanding prior to Plan Consummation.

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Liquidity and Capital Resources
-------------------------------
The ability of Aquila to fund its long term operations is dependent upon 
several factors, including the success of the Rights Offering and Aquila's 
ability to attract funding through additional public or private financing 
or by establishing corporate partnerships and collaborative arrangements.  
There can be no assurance that such additional funding can be obtained on 
acceptable terms.

Cash and cash equivalents were $15,350,000 at September 30, 1996 compared to 
$6,856,000 at December 31, 1995, with the increase resulting primarily from 
the sale of the enterics business, the receipt of a license payment from a 
large pharmaceutical partner, and the receipt of a paid-up license fee from
a sub-licensee of certain diagnostic technology.

The net cash provided by operating activities was $4,143,000 for the nine
months ended September 30, 1996 as compared to net cash used in operating 
activities of $1,818,000 for the same period in 1995.  The primary items 
included in net income or loss that are not operating sources or uses of
cash were depreciation and amortization of $2,998,000 and $3,620,000 for 
nine months ended September 30, 1996 and 1995, respectively and the 
$4,396,000 gain from the sale of the enterics business.   In addition, cash 
increased due to a $3,500,000 license payment received in 1996 which was 
recorded as deferred revenue and is taken to income pro rata throughout 
1996, and the $1,000,000 in deferred revenue from the escrowed portion of 
the enterics purchase price.  Accounts payable and accrued expenses 
increased in 1995 due to patent related milestone obligations, employee 
retention bonuses, and timing of expenditures. 
 
Aquila's investing activities provided cash of $4,354,000 for the nine 
months ended September 30, 1996, compared to using cash of $565,000 for 
the same period in 1995.  The sale of the enterics business and of 
certain marketable securities were the primary reasons for the increase 
in cash provided by investing activities.

Aquila had total working capital of $16,027,000 and current ratio of 
2.97 to 1 at September 30, 1996, compared to $7,976,000 and 2.15 to 1 at 
December 31, 1995.  However, CBC had approximately $9,531,000 in liabilities 
subject to Chapter 11 proceedings as of September 30, 1996 and if all of 
these liabilities were considered current liabilities, the current ratio
would have been 1.37 to 1 at September 30, 1996, compared to 0.89 to 1 at
December 31, 1995.

Aquila's discussions as to management's plans and objectives for Aquila's 
business after the date hereof are forward looking statements. Actual 
results may differ from those projected by Aquila as a result of the 
effect of economic conditions, risks in product and technology 
development and other risks identified in Aquila's Securities and Exchange 
Commission filings and the exhibits thereto.

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PART II.  OTHER INFORMATION

Item 1.  LEGAL PROCEEDINGS

As reported above (see Part I. Item I) CBC's plan of reorganization was 
consummated during the week of October 21, 1996.  See Current Report on
Form 8-K dated October 21, 1996, for a summary of the steps taken to 
consummate the Plan.

Four parties appealed from the Bankruptcy Court's July 18, 1996 order 
confirming the Plan.  Of these, the appeals taken by Alfa Laval Agri AB
and Behring Diagnostics, Inc. have either been dismissed or are to be 
dismissed under agreements with CBC that have been approved by the 
Bankruptcy Court.  The appeal by Deloitte & Touche, LLP ("Deloitte") 
remains pending before the United States District Court for the District of 
Massachusetts (No. 96-40192-NMG) ("the District Court").  Deloitte contests
the right of counsel to Class 5 Claimants to bring an action against 
Deloitte on behalf of CBC as provided in the Plan.

An appeal taken by Institut Pasteur and Pasteur Sanofi Diagnostics 
(collectively "Pasteur") was dismissed and the confirmation order affirmed,
after hearing, by the District Court by order dated September 27, 1996 (No.
96-40176-NMG).  Pasteur has since taken a further appeal to the First Circuit
Court of Appeals, which by order dated October 9, 1996, denied Pasteur's
request for a stay of the confirmation order pending appeal.  Pasteur 
contests the confirmation of the Plan to the extent that it provides for
CBC's assumption of certain patent licences from Pasteur.  On 
October 28, 1996, CBC filed a motion to dismiss the Pasteur appeal as moot.
Aquila intends to file a similar motion to dismiss in the Deloitte appeal.
Oral argument on Pasteur's appeal and CBC's motion to dismiss is scheduled
for November 5, 1996.  Aquila believes that the likelihood of either of the
remaining appeals resulting in the unraveling of the Plan, or any part of 
the Plan, is remote, although there can be no assurance that that will not
occur.  

Item 2.  Changes in Securities

Aquila was organized by CBC as a new Delaware corporation of which CBC was 
the sole stockholder on March 7, 1996.  Pursuant to the Plan, on 
October 21, 1996, 100% of all then issued and outstanding shares of CBC 
were deemed transferred to Aquila in exchange for 3,442,305 shares of 
Aquila Common Stock (and related Rights described below).  Effective 
October 22, 1996, Aquila delivered to bioMerieux a stock certificate 
representing all of the issued and outstanding capital stock in CBC in 
exchange for $6,450,000 in immediately available funds.

As a result of the consummation of the Plan and the assumption by Aquila of 
the registration of CBC's common stock under the Securities Exchange Act of 
1934 pursuant to Rule 12g-3 thereunder, the authorized capital stock of the 
registrant now consists of 30,000,000 shares of common stock, $.01 par value 
per share ("Aquila Common Stock") and 5,000,000 shares of Preferred Stock, 
$.01 par value per share ("Aquila Preferred Stock").

The following description summarizes certain information regarding the 
Aquila Common Stock, Aquila Preferred Stock, and the Rights and Warrants 
being distributed pursuant to the Plan.  This information is subject in its 
entirety to the applicable provisions of the Aquila Articles of 
Incorporation, the Aquila By-Laws, and the Rights and Warrant Agreement 
(all of which were previously filed as Exhibit 2 to Current Report on 
Form 8-K, dated July 18, 1996, File No. 0-12081), as well as the provisions 
of the Delaware General Corporation Law.

Common Stock
------------
As of the Initial Distribution Date, after giving effect to the 
reorganization, there were 5,000,000 shares of Aquila Common Stock 
outstanding.

The holders of Aquila Common Stock are entitled to one vote per share on 
all matters to be voted upon by the stockholders and are entitled to receive 
such dividends, if any, as may be declared from time to time by the board
of directors of Aquila from funds legally available therefore.  Upon 
liquidation or dissolution of Aquila, the holders of Aquila Common Stock are
entitled to receive all assets available for distribution to the stockholders,
subject to any preferential or other rights of the holders of Preferred
Stock.  The Aquila Common Stock has no preemptive or other subscription 
rights, and there are no conversion rights or sinking fund provisions with
respect to such shares.

Rights            
------
As of the Initial Distribution Date, October 29, 1996, there were 4,989,474
Rights outstanding.

Each Right entitles the holder thereof to purchase during the Rights Exercise
Period (including any extension) one Unit (each Unit consisting of one share
of Aquila Common Stock and a Warrant to purchase one additional share of 
Aquila Common Stock).  The Rights Exercise Period extends for 20 days after
the Initial Distribution Date or until November 18, 1996, unless extended
by Aquila for up to 15 additional calendar days.  The Rights are exercisable
at a price of $9.49.  In addition, each holder of a Right (or beneficial
owner in the case of securities held in street name) who has fully 
exercised his basic right to purchase one Unit for each Right received    
also will have the right to purchase any desired number of Units that have 
not been subscribed for by the holders of other Rights, subject to proration 
if oversubscribed.   Aquila reserves the right to reduce the subscription 
price for the Units in certain circumstances.  The Rights are freely 
transferable, although they will not be listed on any established market.

Warrants
--------
Each Warrant issuable on exercise of a Right will entitle the registered
holder thereof to purchase one share of Aquila common stock at a price
equal to 150% of the Unit subscription price, subject to adjustment in 
certain circumstances.  The Warrants will be issued as part of an offering
of Rights to purchase a Unit, each Unit consisting of one share of Common
Stock of Aquila and one warrant to purchase a share of Common Stock (the 
"Units").  The Warrants are separately tradeable immediately upon issuance.
The Warrants which are exercisable at any time after the date of 
distribution, expire on the third anniversary of the Initial Distribution 
Date.

The Rights and the Warrants will be issued in registered form pursuant to
the terms of the Rights and Warrants Agreement (the "Warrant Agreement")
between Aquila and First National Bank of Boston as Rights Agent and 
Warrant Agent.  The Warrant Agreement, (which was filed as Exhibit 2 to 
Current Report on Form 8-K dated July 18, 1996, File No. 0-12081) is
incorporated herein by reference and its description herein is qualified
in its entirety by reference to the Warrant Agreement.

Aquila may redeem outstanding Warrants at any time upon not less than 30
days written notice, at a price of $.10 per Warrant, provided that the 
Warrants may not be redeemed by Aquila unless the Warrants are then 
exercisable and the Daily Market Price (as defined in the Warrant Agreement)
of the Aquila Common Stock shall have been at least 150% of the Warrant 
Exercise Price for 20 consecutive Business Days ending within 10 Business 
Days of the date of the notice of redemption.  If Aquila exercises its right 
to redeem the Warrants, the Warrants will be exercisable until 4:00 p.m. 
Eastern Time on the Business Day immediately preceding the date fixed for 
redemption in such notice.  If any Warrant called for redemption is not 
exercised by such time, it will cease to be exercisable, and the holder 
thereof will be entitled only to the redemption price.  The exercisable 
price and number of shares of Aquila Common Stock or other securities 
issuable on exercise of the Warrants are subject to adjustment in certain 
circumstances, including in the event of a stock dividend, stock split, 
recapitalization, merger or consolidation of Aquila.

Preferred Stock
---------------
There are no shares of Preferred Stock outstanding.  The board of directors
of Aquila has the authority to issue Preferred Stock in one or more series
and to fix the rights, preferences, privileges and restrictions thereof,
including dividend rights, dividend rates, conversion rates, voting rights, 
terms of redemption, redemption prices, liquidation preferences and number
of shares constituting each series, or the designation of such series, 
without further action by stockholders.  Although Aquila has no intention
at the present time of doing so, it could issue Preferred Stock that could,
depending on its terms, either impede or facilitate the completion of a 
merger, tender offer or other takeover attempt.  Although the board of
directors is required to make any determination to issue such stock based 
on its judgment as to the best interests of the stockholders of Aquila, the 
board of directors could act in a manner that would discourage a transaction 
that some, or a majority, of the stockholders might believe to be in their 
best interests.

However, until the conclusion of Aquila's 1997 annual meeting, the board of
directors may establish a class or series of Preferred Stock only if it is
approved by a specified vote of the board of directors which, in effect, 
requires at least one director who was either elected by stockholders after 
the Consummation Date or was selected by the Equity Committee in CBC's 
Chapter 11 case to vote in favor of the action.

Provisions Affecting Changes of Control
---------------------------------------
In addition to the Preferred Stock described above, the Aquila Certificate
of Incorporation, Aquila By-Laws, and Delaware law contain provisions that 
could have certain anti-takeover effects.  The board of directors has no
current plans to formulate or effect additional measures that could have 
anti-takeover effects.

1.  Classified Board of Directors.  The Aquila Certificate of Incorporation
provides that the directors shall be divided into three classes as nearly 
equal in number as possible, elected for staggered three-year terms.  This
has the effect of deferring the time when an acquirer of a majority of the 
capital stock could gain control of Aquila.

2.  Size of Board, Vacancies, and Removal of Directors.  The Aquila 
Certificate of Incorporation provides that the size of the board of 
directors will be fixed by the directors, that vacancies on the board 
can only be filled by the remaining directors, and that, subject to any 
right hereafter granted to any class or series of preferred stock to 
elect or remove directors, a director may only be removed, with or 
without cause, by vote of two-thirds of the directors then in office or 
the holders of 66 2/3% of the total voting power of all outstanding 
shares of capital stock entitled to vote.

3.  No Stockholder Action by Written Consent; Special Meetings.  The 
Aquila Certificate of Incorporation prohibits stockholder action by 
written consent in lieu of a meeting.  This provision may have the 
effect of delaying consideration of a stockholder proposal until the 
next annual meeting unless a special meeting is called and would also 
prevent the holders of a majority of the outstanding shares of Aquila 
Stock from using the written consent procedure to take stockholder action 
without giving all the stockholders of Aquila entitled to vote on a 
proposed action the opportunity to participate in determining such 
proposed action.  It also provides that a special meeting may be called 
only by the board of directors, Chairman, President or the holders of 
66 2/3% of the total voting power of all outstanding shares of capital 
stock entitled to vote.

4.  Advance Notice Requirements for Stockholders' Proposals and Director
Nominations.  The Aquila By-Laws establish an advance notice procedure with
regard to the nomination, other than by or at the direction of the board of
directors or a committee thereof, of candidates for election as directors and
with regard to certain matters to be brought before a meeting of stockholders
of Aquila.  These procedures provide that the notice of proposed stockholder
nominations for the election of directors or stockholder proposals to bring
business before a meeting must be timely given in writing to the Secretary
of Aquila prior to the meeting.  Notice must be received not less than 60
days prior to the date of the stockholders' meeting or 10 days after the 
date on which notice of the meeting is first given.

5.  Amendment of Certain Provisions of the Certificate of Incorporation and
By-Laws.  Any amendment of the Aquila Certificate of Incorporation to change 
the provisions relating to the rights and preferences of capital stock, the
corporate governance provisions of Articles Sixth and Seventh and the 
amendment provisions of Article Ninth will require the affirmative vote of 
holders of at least 66 2/3% of the total voting power of all outstanding 
shares of capital stock entitled to vote.  Further, any amendment of the 
Aquila By-Laws by shareholders requires the same 66 2/3% vote.  These 
provisions will make it more difficult for stockholders to make changes 
in the Aquila Certificate of Incorporation and Aquila By-Laws and mean that 
the holders of a minority of the voting stock can prevent the holders of a 
majority of the capital stock from amending such provisions.

6.  Section 203 of the Delaware General Corporation Law.  Aquila is subject
to the provisions of Section 203 of the Delaware Corporation Law.  This
statute generally prohibits, under certain circumstances, a Delaware corp-
oration whose stock is publicly traded, from engaging in a "business 
combination" with an "interested stockholder" for a period of three years
after the date of the transaction in which the person became an interested
stockholder, unless (i) the corporation has elected in its certificate of
incorporation or by-laws not to be governed by this Delaware law (Aquila
has not made such an election), (ii) prior to the time the stockholder 
became an interested stockholder, the board of directors approved either the
business combination or the transaction which resulted in the person becoming
an interested stockholder, (iii) the stockholder owned at least 85% of the
outstanding voting stock of the corporation (excluding shares held by 
directors who were also officers or held in certain employee stock plans
upon consummation of the transaction which resulted in the stockholder 
becoming an interested stockholder, or (iv) the business combination was
approved by the board of directors and by two-thirds of the outstanding
voting stock of the corporation (excluding shares held by the interested
stockholder).  An "interested stockholder" is a person who, together with
affiliates and associates, owns (or any time within the prior three years
did own) 15% of more of the corporation's outstanding voting stock.  The
term "business combination" is defined generally to include mergers, 
consolidations, stock sales, asset based transactions, and other 
transactions resulting in a financial benefit to the interested stockholders.
-----------------------------------------------------------------------------
Item 6.  Exhibits and Reports on Form 8-K

(a) Exhibits
    --------
   2.   Confirmed Reorganization Plan (consisting of Reorganization Plan 
        dated May 20, 1996, and Modification dated July 15, 1996) (incor-
        porated by reference to Exhibit 2 to Current Report on Form 8-K
        dated July 18, 1996, File No. 0-12081).
   
   3.1  Articles of Incorporation of Aquila Biopharmaceuticals, Inc.
        (incorporated by reference to Exhibit 2 to Current Report on
        Form 8-K dated July 18, 1996, File No. 0-12081.)

   3.2  By-Laws of Aquila Biopharmaceuticals, Inc. (incorporated by 
        reference to Exhibit 2 to Current Report on Form 8-K dated
        July 18, 1996, File No. 0-12081.)

   4.1  Form of certificate for Aquila Common Stock (incorporated by
        reference to Exhibit 4 to Current Report on Form 8-K dated
        October 21, 1996, File No. 0-12081).

   4.2  Form of certificate for Warrant to Purchase Common Stock
        (incorporated by reference to Exhibit 2 to Current Report on 
        Form 8-K dated July 18, 1996, File No. 0-12081).

   4.3  Form of Certificate for Right to Purchase a Unit (incorporated
        by reference to Exhibit 2 to Current Report on Form 8-K dated
        July 18, 1996, File No. 0-12081).

   4.4  Rights and Warrants Agreement dated July 29, 1996, between Aquila
        Biopharmaceuticals, Inc. and The First National Bank of Boston
        (incorporated by reference to Exhibit 2 to Current Report on
        Form 8-K dated July 18, 1996, File No. 0-12081).
  
  10.1  Master Acquisition Agreement by and among bioMerieux Vitex, Inc.
        Aquila Biopharmaceuticals, Inc. and Cambridge Biotech Corporation
        dated as of April 4, 1996.  (incorporated by reference to Exhibit
        10.1.  Quarterly Report on Form 10Q for quarter ending 
        June 30, 1996, File No. 0-12081).

  10.2  Asset Purchase Agreement between Meridian Diagnostics, Inc. and
        Cambridge Biotech Corporation dated as of June 24, 1996 
        (incorporated by reference to Exhibit 2.1 to Current Report on 
        Form 8-K, dated June 24, 1996, File No. 01-12081).

  27.  Financial Data Schedule
 
  99.1  Pro Forma Balance Sheet 

  99.2  Pro Forma Statement of Operations
-----------------------------------------------------------------------------
(b)  Reports on Form 8-K

      During the quarter ended September 30, 1996 and subsequent thereto, 
      CBC filed the following reports on Form 8-K:

      1.  Current Report on Form 8-K dated 07/18/96

      2.  Current Report on Form 8-K dated 10/21/96

                              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:  November 6, 1996
                                 /s/ Alison Taunton-Rigby
                                ------------------------------------------
                                Alison Taunton-Rigby
                                President and Chief Executive Officer

                                /s/ Stephen J. DiPalma
                                ------------------------------------------
                                Stephen J. DiPalma
                                Chief Financial Officer, Vice President of
                                Finance and Treasurer

------------------------------------------------------------------------------
   Exhibit Index
   -------------
   2.   Confirmed Reorganization Plan (consisting of Reorganization Plan 
        dated May 20, 1996, and Modification dated July 15, 1996) (incor-
        porated by reference to Exhibit 2 to Current Report on Form 8-K
        dated July 18, 1996, File No. 0-12081).
   
   3.1  Articles of Incorporation of Aquila Biopharmaceuticals, Inc.
        (incorporated by reference to Exhibit 2 to Current Report on
        Form 8-K dated July 18, 1996, File No. 0-12081.)

   3.2  By-Laws of Aquila Biopharmaceuticals, Inc. (incorporated by 
        reference to Exhibit 2 to Current Report on Form 8-K dated
        July 18, 1996, File No. 0-12081.)

   4.1  Form of certificate for Aquila Common Stock (incorporated by
        reference to Exhibit 4 to Current Report on Form 8-K dated
        October 21, 1996, File No. 0-12081).

   4.2  Form of cert0ficate for Warrant to Purchase Common Stock
        (incorporated by reference to Exhibit 2 to Current Report on 
        Form 8-K dated July 18, 1996, File No. 0-12081).

   4.3  Form of Certificate for Right to Purchase a Unit (incorporated
        by reference to Exhibit 2 to Current Report on Form 8-K dated
        July 18, 1996, File No. 0-12081).

   4.4  Rights and Warrants Agreement dated July 29, 1996, between Aquila
        Biopharmaceuticals, Inc. and The First National Bank of Boston
        (incorporated by reference to Exhibit 2 to Current Report on
        Form 8-K dated July 18, 1996, File No. 0-12081).
  
  10.1  Master Acquisition Agreement by and among bioMerieux Vitex, Inc.
        Aquila Biopharmaceuticals, Inc. and Cambridge Biotech Corporation
        dated as of April 4, 1996.  (incorporated by reference to Exhibit
        10.1.  Quarterly Report on Form 10Q for quarter ending 
        June 30, 1996, File No. 0-12081).

  10.2  Asset Purchase Agreement between Meridian Diagnostics, Inc. and
        Cambridge Biotech Corporation dated as of June 24, 1996 
        (incorporated by reference to Exhibit 2.1 to Current Report on 
        Form 8-K, dated June 24, 1996, File No. 01-12081).

* 27.  Financial Data Schedule           

* 99.1  Pro Forma Balance Sheet 

* 99.2  Pro Forma Statement of Operations

* Filed herewith