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 June 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 0-12081

                   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)
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     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 August 10, 1999
Common Stock Outstanding 7,885,902



AQUILA BIOPHARMACEUTICALS, INC.
Form 10-Q, June 30, 1999

INDEX

     PART I - FINANCIAL INFORMATION

     Item 1. Unaudited Financial Statements                 Page Number

          Consolidated Balance Sheets as of June 30, 1999
          and December 31, 1998.......................................3

          Consolidated Statements of Operations for three and six month
          periods ended June 30, 1999 and 1998........................4

          Consolidated Statements of Cash Flows for the six month
          periods ended June 30, 1999 and 1998........................5

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

     Item 2.  Management's Discussion and Analysis of Financial
     Condition and Results of Operations .............................8

     PART II - OTHER INFORMATION

     Item 1.  Legal Proceedings .................................... 12

     Item 6.  Exhibits and Reports on Form 8-K.......................13

     SIGNATURES......................................................15























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

Assets                                      	 6/30/99	 12/31/98

Current Assets:
 Cash and cash equivalents                 	$  1,276	$   5,270
 Marketable securities                     	   8,115	    9,885
 Receivables (less allowance
    for doubtful accounts)                 	     558	    1,028
 Inventories                                         401              435
 Prepaid expenses & other current assets             244              353
       Total current assets                       10,594           16,971

Investments                                          320              320
Property, Plant, and Equipment, Net                6,252            6,372
Patents and Purchased Technology, Net                 80              116
Other Assets                                         887              849
       Total Assets                        	$ 18,133	$  24,628

Liabilities & Shareholders' Equity
Current Liabilities:
  Accounts payable                         	$    374	$     486
  Accrued professional fees                          239              299
  Other accrued expenses                             987            2,105
  Current maturities of long-term debt             2,197            2,191
       Total Current Liabilities                   3,797            5,081

Deferred Revenue                                     225              225
Long Term Debt                                     3,148            3,669
       Total Liabilities                           7,170            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 June 30,1999
   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              87               79
  Accumulated Deficit                           (128,993)        (124,274)
       Total Shareholders' Equity                 10,963           15,653

Total Liabilities and Shareholders' Equity      $ 18,133        $  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          Six Months Ended
                                      June 30,                   June 30,
                                 1999         1998          1999           1998
Revenue:
  Product sales                $  230    $     255       $   273     $      556
  Research and development        169        1,195           288          2,235
                                  399        1,450           561          2,791
Cost and expenses:
  Cost of sales                   295          207           592            464
  Research and development      1,942        2,338         3,185          3,752
  Purchased incomplete             --        9,927            --          9,927
  technology
  General & administrative        754          980         1,588          2,067
        Total costs and         2,991       13,452         5,365         16,210
        expenses

Other income, net                  17          434            85          1,055
Net Loss                      $(2,575)    $(11,568)     $ (4,719)      $(12,364)
  Unrealized holding gains/
  (losses) on available-for
  -sale securities                (3)           --             8            --
     Total other comprehensive
     income/(loss)                (3)           --             8            --
Comprehensive loss           $(2,578)     $(11,568)     $ (4,711)     $(12,364)

Basic and diluted loss
  per weighted average share:

Net loss                  $    (0.37)     $  (1.69)     $ (0.67)      $ (2.00)

Weighted average number of
  common shares outstanding:
        Basic and diluted     6,999         6,833         6,999         6,169



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



















                        Aquila Biopharmaceuticals, Inc.
                      Consolidated Statement of Cash Flows
                           (unaudited),(in thousands)
                                                       For the six months
                                                         ended June 30,
                                                         1999          1998
Cash Flows From Operating Activities:
Net Loss                                             $ (4,719)     $(12,364)
Adjustments to reconcile net loss to net cash
 provided/(used) by operating activities:
  Depreciation and amortization                           401           128
  Stock and debt issued for incomplete technology          --         9,638
  Changes in assets and liabilities:
  Receivables                                             470           323
  Inventories                                              34           (30)
  Deferred revenue                                          0         1,500
  Prepaid expenses and other current assets               109           (33)
  Accounts payable and other accrued expenses          (1,290)          358
	Net cash provided/(used)by
            operating activities                       (4,995)         (480)

Cash Flows From Investing Activities:
  Purchases of marketable securities                   (8,000)      (16,234)
  Proceeds from maturities
    of marketable securities                            9,723        10,020
  Other noncurrent assets and liabilities                  17          (797)
  Purchases of property, plant, and equipment            (245)         (836)
    Net cash provided/(used) by
    investing activities                                1,495        (7,847)

Cash Flows From Financing Activities:
  Payment of long-term obligations                       (515)          (35)
  Issuance of common stock                                 21         3,827
    Net cash provided/(used)
      by financing activities                            (494)        3,792
Net increase/(decrease) in cash and cash
      Equivalents                                      (3,994)       (4,535)

Cash and cash equivalents at the beginning
     of the year                                        5,270         7,352
Cash and cash equivalents at the end
     of the period                                     $1,276       $ 2,817

Supplemental disclosures:
        Interest paid                                  $  152       $    11


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.
                                                  Six Months Ended
                                                      June 30,
                                                 1999          1998
Development
                Revenue                       $   231      $    389
                Net loss                       (3,801)       (4,105)
	Manufacturing
                Revenue                           330         2,402
                Net income/(loss)                (941)        1,027
	Reconciling items
                Net income/(loss)(1)               23        (9,286)
	Consolidated totals
                Revenue                           561         2,791
                Net loss                      $(4,719)     $(12,364)

  (1) 1999 includes $50,000 of royalty income, a gain of $10,000 on
disposal of an asset, $35,000 refund of insurance premium, $16,000 of net
interest expense, income tax expense of $10,000 and a charge for excess
facilities of $44,000.  1998 includes $516,000 of net interest income, $423,000
of royalty income, $80,000 proceeds from settlement of a claim, a $398,000
charge for excess space, and a charge for incomplete technology of $9,927,000.


3.   Inventories:

Inventories consist of the following:                     (000'S)

                                                  6/30/99         12/31/98
                                                  -------         --------
     Finished goods                                $  203         $  231
     Work-in-process                                   44            122
     Raw materials & supplies                         154             82
                                                   $  401         $  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 June 30, 1999 and June
30, 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 1,069,123 and 828,030 shares of common stock at weighted-average
prices of $3.88 and $4.26, respectively, were outstanding at June 30, 1999 and
1998, respectively.  Warrants to purchase 68,680 shares of common stock at an
exercise price of $4.12 were outstanding at June 30, 1999.  Most of these
options and all of these warrants have exercise prices that exceeded the
average market price during the second quarter of 1999.

5.	Contingencies:

In March 1995, an Adversary Proceeding was commenced by Institut Pasteur and
Genetic Systems Corporation against 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 Federal Circuit Court of Appeals has
in a decision issued July 7, 1999 affirmed in all respects the District Court's
decision.

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.  The EPA has informed the Company by letter
dated July 16, 1999 that it plans to "take no further action" against the
Company with respect to this matter.

CSL International ACN ("CSL") and Seed Capital, Inc. filed an opposition with
the European Patent Office on the issuance of the Company's Stimulon(R) patent
in Europe. In a hearing, the Company prevailed against all points raised in
opposition. The period during which CSL could appeal this decision has expired
without appeal.

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.

6. Subsequent Events:

In July 1999, the Company sold 666,667 newly issued shares of common stock to
an investor for net proceeds of $1,500,000 in a directed limited placement.
The Company also redeemed $722,000 of its outstanding debentures including
accrued interest for 216,974 shares of common stock and $233,000 in cash.

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

Three months ended June 30, 1999 compared to three months ended June 30, 1998:

Revenue

Total revenues were $ 399,000 for the three months ended June 30, 1999
compared to $1,450,000 in the same period in 1999.

Second quarter 1999 product sales were $230,000 compared to $255,000 the same
period one year ago and research and development revenues were $169,000
compared to $1,195,000 for the same period in 1998. The primary reason for the
quarter-to-quarter decrease in research and development revenues was $950,000
of license fee revenue recorded in the second quarter of 1998, $750,000 from a
multi-year series of payments for use of QS-21 and $200,000 from a milestone
payment for another QS-21 program. The remainder of the change resulted from
the advancement of the Company's funded research program for bovine mastitis
to the final licensing stage where fewer costs are shared with the
Company's partner.

Costs and Expenses

For the second quarter of 1999, cost of sales exceeded product sales due to
costs incurred for validation and preparation of the Company's new
manufacturing facilities.  Second quarter research and development
spending decreased by 17% from one year ago to $1,900,000.  The decrease was
due to lower spending for clinical trials and work contracted outside the
Company 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 due to the pivotal licensing trials for the
Company's bovine mastitis product that commenced in July, 1999.  General and
administrative expenses were reduced by 23% from one year ago due to
lower staffing levels, legal fees and facility costs.

Other Income, Net

Other income net for the second quarter of 1999 was $17,000 compared to
$434,000 for the same period in 1998. The reasons for the decrease were
$107,000 lower interest income from lower average cash balances, a
decline in royalty income of $144,000, and interest expense of $164,000 on
debt incurred late in the second quarter of 1999 to fit-out the Company's
new facility. Royalty income is expected to continue to decline as new
products or technology replace current products.

Six months ended June 30, 1999 compared to six months ended June 30, 1998:

Revenue

Total revenues were $561,000 for the six months ended June 30, 1999 compared
to $2,791,000 in the same period in 1998.

Product sales for the first six months of 1999 were $273,000 compared to
$556,000 the same period one year ago.  The reason for the lower revenues was
low shipments in the first quarter of 1999 during which the Company's new
facility was prepared for operation.

First half research and development revenues were $288,000 compared to
$2,235,000 for the same period in 1998. The primary reason for the decrease
was license fee payments in 1998 of $1,500,000 and $200,000 recorded as
revenue in the first half of 1998. The balance of the change resulted from
slightly lower shipments of QS-21 to research partners and advancement of the
Company's funded research program to the final licensing stage where fewer
costs are shared with the Company's partner.

Costs and Expenses

For the first half of 1999, cost of sales exceeded product sales due to costs
incurred for validation and preparation of the Company's new manufacturing
facilities.  First half research and development spending decreased by 15%
from one year ago to $3,185,000.  The decrease was due to lower spending
for clinical trials partially offset by assumption of the research programs
from VacTex, acquired in April 1998. General and administrative expenses were
reduced by 23% from one year ago due to lower staffing levels, legal fees and
facility costs.

Other Income, Net

Other income for the first half of 1999 was $85,000 compared to $1,055,000 for
the same period in 1998. The reasons for the decrease were $219,000 lower
interest income from lower average cash balances, a $371,000 decline in
royalty income and interest expense of $337,000 on debt.

Liquidity, Capital Resources and Business Outlook

Total cash, cash equivalents and marketable securities were $9,391,000 at
June 30, 1999 compared to $15,155,000 at December 31, 1998.

During the first six months of 1999, operating activities used cash of
$4,995,000 primarily due to the net loss of $4,719,000 and the pay-down of
year-end accruals in connection with the fit-out of the Company's new
facility.  Investing activities provided cash of $1,495,000 primarily due to
the net sales of marketable securities.   Financing activities used
cash of $515,000 for repayment of debt. As of June 30, 1999, the Company had
a balance of $4,134,000 million under its loan agreement with Transamerica
Business Credit Corporation and owed $1,211,000 for the 7% debentures issued
in connection with the acquisition of VacTex, Inc.  In July 1999, the Company
redeemed $722,000 of its outstanding debentures including accrued interest for
216,974 shares of common stock and $233,000 in cash. Also in July 1999, the
Company sold 666,667 newly issued shares for proceeds of $1,500,000 in a
directed limited placement.

During the first six months of 1998, the Company sold common stock in a
private placement for proceeds of $3,600,000 and received $3,000,000 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 twelve 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 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. Total amounts expended to date in direct connection to the Y2K
issue were for new business software and hardware and were less than $100,000.
Future costs are expected to be less than $50,000. Y2K issues could adversely
affect both revenues and costs if the Company were unable to supply material
and products to customers and research partners.  In insure 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 1: Legal Proceedings

CSL International ACN ("CSL") and Seed Capital, Inc. filed an opposition with
the European Patent Office on the issuance of the Company's Stimulon(R) patent
in Europe. In a hearing, the Company prevailed against all points raised in
opposition. The period during which CSL could appeal this decision has expired
without appeal.

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                               SIGNATURES

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

                           AQUILA BIOPHARMACEUTICALS,INC.


     Date: August 9, 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