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, 2000, 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 April 20, 2000
Common Stock Outstanding 8,532,071



             AQUILA BIOPHARMACEUTICALS, INC.
                Form 10-Q, March 31, 2000

INDEX

PART I - FINANCIAL INFORMATION

Item 1. Unaudited Financial Statements     Page Number

   Consolidated Balance Sheets as of
   March 31, 2000and December 31, 1999...............3

   Consolidated Statements of Operations
   for the three month periods ended
   March 31, 2000 and 1999...........................4

   Consolidated Statements of Cash Flows
   for the three month
   periods ended March 31, 2000 and 1999.............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........................ 10

Item 1.  Legal Proceedings - None

Item 6.  Exhibits and Reports on Form 8-K - None


SIGNATURES..........................................12













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

Assets                                      3/31/00         12/31/99

Current Assets:
 Cash and cash equivalents                 $  3,436        $     524
 Marketable securities                        4,961            6,493
 Receivables                                  1,109              637
 Inventories                                    533              498
 Prepaid expenses & other current assets        222              280
       Total current assets                  10,261            8,432

Investments                                     244              244
Property, Plant, and Equipment, Net           6,009            6,191
Patents and Purchased Technology, Net            35               47
Other Assets                                    832              828
       Total Assets                        $ 17,381        $  15,742

Liabilities & Shareholders' Equity
Current Liabilities:
  Accounts payable                         $    375        $     554
  Accrued professional fees                     121              165
  Other accrued expenses                      1,195              884
  Current maturities of long term debt        1,343            1,577
       Total Current Liabilities              3,034            3,180

Deferred Revenue                                150              150
Long Term Debt                                2,323            2,607
       Total Liabilities                      5,507            5,937

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: 8,509,465 at March 31,2000
   and 7,888,446 at December 31, 1999             85              79
  Treasury Stock at cost: 7,631 shares
   In 2000 and 1999                              (34)            (34)
  Additional paid in capital                 145,345         141,802
  Accumulated other comprehensive income         (21)            426
  Accumulated Deficit                       (133,501)       (132,468)
       Total Shareholders' Equity             11,874           9,805

Total Liabilities and Shareholders' Equity  $ 17,381       $  15,742

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 31,2000
                                      2000               1999
Revenue:
  Product sales                     $   276           $    43
  Research and development            1,166               119
                                      1,442               162

Costs and expenses:
  Cost of sales                         246               297
  Research and development            2,084             1,243
  General & administrative              707               834
        Total costs and expenses      3,037             2,374

Other income, net                       562                68
Net Loss                            $(1,033)          $(2,144)
  Unrealized holding gains on
    available-for-sale securities        28                11
  Less: reclassification for gain
    included in net income             (475)               --
     Total other comprehensive
     income/(loss)                     (447)               11
Comprehensive loss                  $(1,480)          $(2,133)

Basic and diluted loss
  per weighted average share:

Net loss                            $ (0.13)           $(0.31)

Weighted average number of
  common shares outstanding:
        Basic and diluted             7,980             6,998



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,
                                                  2000       1999
Cash Flows From Operating Activities:
Net Loss                                      $ (1,033)   $(2,144)
Adjustments to reconcile net loss to net cash
 provided/(used) by operating activities:
  Depreciation and amortization                    202        199
  Issuance of non-employee options                  15         --
  Changes in assets and liabilities:
  Receivables                                     (472)       (78)
  Inventories                                      (35)        13
  Prepaid expenses and other current assets         58        129
  Accounts payable and other accrued expenses       88       (511)
	Net cash used by operating activities	(1,177)    (2,392)

Cash Flows From Investing Activities:
  Purchases of marketable securities              (500)    (7,000)
  Proceeds from maturities
    of marketable securities                     1,575      5,017
  Other noncurrent assets                            6          7
  Purchases of property, plant, and equipment       (8)      (181)
    Net cash provided/(used) by
    investing activities                         1,073     (2,157)

Cash Flows From Financing Activities:
  Payment of long-term obligations                (518)      (199)
  Issuance of common stock                       3,534         21
    Net cash provided/(used)
      by financing activities                    3,016       (178)
Net increase/(decrease) in cash and cash
      equivalents                                2,912     (4,727)

Cash and cash equivalents at the beginning
     of the year                                   524      5,270
Cash and cash equivalents at the end
     of the period                             $ 3,436    $   543




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, 1999, which are contained
in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999, 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, reimbursement for the cost of 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.  Asset information
by segment is not reported because Aquila does not
produce such information internally.

                                   Three Months Ended
                                        March 31,
                                   2000          1999
        Development
                Revenue         $    43      $     68
                Net loss         (2,308)       (1,647)
	Manufacturing
                Revenue           1,399            94
                Net income/(loss)   728          (537)
	Reconciling items
                Net income (1)      547            40
	Consolidated totals
                Revenue           1,442           162
                Net loss       $ (1,033)    $  (2,144)

	   (1) 2000 includes a gain of $550,000 on the sale of an
investment and $114,000 of royalty income offset by interest expense
of $127,000.  1999 includes $50, 000 of royalty income, $10,000
gain on disposal of an asset, and a charge for excess facilities of $20,000.


3.   Inventories:

Inventories consist of the following:          (000'S)
                                        3/31/00       12/31/99
                                        -------       --------
     Finished goods                     $  329          $  157
     Work-in-process                       124             236
     Raw materials & supplies               80             105
                                        $  533          $  498


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, 2000 and March 31, 1999;
therefore, common stock equivalents were not used to
compute diluted loss per share since the effect would
have been anti-dilutive.  Options to purchase
1,005,094 and 1,077,341 shares of common stock at
weighted average prices of $3.44 and $3.88,
respectively, were outstanding at March 31, 2000 and
1999, respectively.  Warrants to purchase 60,680
shares of common stock at an exercise price of $4.12
were outstanding at March 31, 2000.

5.	Contingencies:

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 has not received any
further communication from CBC and upon review does
not feel that adverse settlement of this matter would
have a material effect on its financial position or
results of operations.

6. Accounting Pronouncement:

In December 1999, the United States Securities and
Exchange Commission issued Staff Accounting Bulletin
101, "Revenue Recognition in Financial Statements"
("SAB 101").  SAB 101 provides the staff's views in
applying generally accepted accounting principles to
selected revenue recognition issues, as well as
examples of how the staff applies revenue recognition
guidance to specific circumstances.  Accordingly, in
the second quarter of 2000 Aquila will change its
accounting for initial license fees.  Through the
first quarter of 2000 revenue was recognized when the
agreement was reached and no contingent factors were
present.  Under the new guidance of SAB 101, revenue
will be deferred and recognized ratably over the
appropriate life.  In the second quarter of 2000, a
cumulative adjustment will be recorded retroactive to
January 1, 2000 to create deferred revenue that will
be recognized over future years.




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

Three months ended March 31, 2000 compared to three
months ended March 31, 1999:

Revenue

Total revenues were $1.4 million for the three months
ended March 31, 2000 compared to $0.2 million in the
same period in 1999.

First quarter 2000 product sales were $276,000
compared to $43,000 the same period one year ago.  The
primary reason for the higher revenues was an increase
in shipments to our marketing partner, Virbac S.A.,
and a price increase.

First quarter research and development revenues were
$1.2 million compared to $0.1 million for the same
period in 1999. The reasons for the quarter-to-quarter
increase were a milestone fee payment totaling $0.5
million, higher quantities of QS-21 supplied to our
corporate partners for use in their clinical programs
and an increase in the reimbursable cost of QS-21,
which accounted for $229,000 of the revenue increase.

Costs and Expenses

For the first quarter of 2000, cost of sales was 89%
of product sales.  For the first quarter of 1999,
costs of sales exceeded sales revenue because we were
finishing the fit-out and validating the new
facilities, during which time no product was produced
for sale.  First quarter 2000 research and development
spending increased by 68% from one year ago to $2.1
million.  The increase was due to higher outside costs
associated with the mastitis clinical trials and a
payment in connection to the issuance of a mastitis
patent. Spending for clinical trials is expected to
decrease for the remainder of the year upon the
completion of the pivotal licensing trials for the
Company's bovine mastitis product in the second
quarter of 2000. In the first quarter of 2000,
spending on the tuberculosis program acquired from
VacTex was $177,000 compared to $217,000 in the first
quarter of 1999. Our future spending on this program
may fluctuate based on the progress of the research
and the availability of funding and resources. General
and administrative expenses were reduced by 15% from
one year ago due to lower staffing levels and legal
fees.

Other Income, Net

First quarter 2000 other income was $0.6 million
compared to $0.1 million for the same period in 1999.
The reasons for the increase were a gain of $0.5
million on the sale of 11,250 shares of Progenics
Pharmaceuticals common stock and higher royalty
income.

Liquidity, Capital Resources and Business Outlook

Total cash, cash equivalents and marketable securities
were $8.4 million at March 31, 2000 compared to $7.0
million at December 31, 1999.

During the first three months of 2000, operating
activities used cash of $1.2 million primarily due to
the net loss of $1.0 million.  Investing activities
provided cash of $1.1 million primarily due to $1.0
million of net proceeds from sale of marketable
securities.   Financing activities provided cash of
$3.0 million, due to $3.5 million of proceeds received
from the sale of 500,000 shares of common stock to the
State of Wisconsin Investment Board and option
exercises by employees offset by payment of long term
obligations. As of March 31, 2000, we had a balance of
$3.4 million under our loan agreement with
Transamerica Business Credit Corporation and owed $0.3
million for the $1.3 million of debentures issued in
connection with the acquisition of VacTex, Inc.

Aquila management expects that available cash and
marketable securities, and   cash flows from research
contracts, product sales, and borrowings will be
sufficient to finance planned operations and capital
requirements for the next fifteen months.  The bovine
mastitis program, if successful and approved by the
USDA in the second half of 2000, will require
additional working capital and capital investment to
support market introduction. Our ability to fund long-
term operations is dependent on several factors,
including our 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.

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.

Accounting Pronouncement

In December 1999, the United States Securities and
Exchange Commission issued Staff Accounting Bulletin
101, "Revenue Recognition in Financial Statements"
("SAB 101").  SAB 101 provides the staff's views in
applying generally accepted accounting principles to
selected revenue recognition issues, as well as
examples of how the staff applies revenue recognition
guidance to specific circumstances.  Accordingly, in
the second quarter of 2000 Aquila will change its
accounting for initial license fees.  Through the
first quarter of 2000 revenue was recognized when the
agreement was reached and no contingent factors were
present.  Under the new guidance of SAB 101, revenue
will be deferred and recognized ratably over the
appropriate life.  In the second quarter of 2000, a
cumulative adjustment will be recorded retroactive to
January 1, 2000 to create deferred revenue that will
be recognized over future years.


PART II - OTHER INFORMATION

Item 1: Legal Proceedings

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 has not had any further
communication from CBC and upon review does not feel
that adverse settlement of this matter would have a
material effect on its financial position or results
of operations.

Item 6.  Exhibits and Reports of Form 8-K

         Exhibits
               27. Financial Data Schedule
         Reports on Form 8-K
               1. None filed in the first quarter
                  of 2000.

--------------------------------------------------



                        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: April 24, 2000       /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