<PAGE>   1

                       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, 1998 or

[ ]  Transition report pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934

COMMISSION FILE NUMBER: 0-19454


                                  ANERGEN, INC.
             (Exact name of registrant as specified in its charter)


<TABLE>
<S>                                                                       <C>
                DELAWARE                                                      77-0183594
     (State or other jurisdiction of                                       (I.R.S. Employer
     incorporation or organization)                                       Identification No.)


          301 PENOBSCOT DRIVE,                                                   94063
        REDWOOD CITY, CALIFORNIA                                              (Zip Code)
(Address of principal executive offices)
</TABLE>

                        Telephone number: (650) 361-8901


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 [ ]


At November 6, 1998, Registrant had outstanding 18,924,000 shares of Common
Stock.

<PAGE>   2

                                  ANERGEN, INC.

                                      INDEX


<TABLE>
<CAPTION>
                                                                             Page No.
<S>       <C>                                                                  <C>
PART I - FINANCIAL INFORMATION

ITEM 1.   Financial Statements

          Condensed balance sheets - September 30, 1998
            and December 31, 1997 ...........................................   3

          Condensed statements of operations - three month and nine months
            ended September 30, 1998 and 1997 ...............................   4

          Condensed statements of cash flows - nine months
            ended September 30, 1998 and 1997 ...............................   5

          Notes to condensed financial statements ...........................   6

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


PART II - OTHER INFORMATION


ITEM 6.   Exhibits and Reports on Form 8-K ..................................  20

          Signatures ........................................................  21
</TABLE>


                                       2

<PAGE>   3

PART I - FINANCIAL INFORMATION

                                  ANERGEN, INC.
                            CONDENSED BALANCE SHEETS
                       (IN THOUSANDS EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                         SEPTEMBER 30,      DECEMBER 31,
                                             ASSETS                          1998               1997
                                                                         -------------      ------------
                                                                          (UNAUDITED)
<S>                                                                        <C>                <C>      
Current assets:
     Cash and cash equivalents .......................................     $   1,868          $   1,412
     Short-term investments ..........................................           502              6,991
     Contract receivables ............................................            --                836
     Prepaid expenses ................................................            50                 78
                                                                           ---------          ---------
                   Total current assets ..............................         2,420              9.317

Property and equipment, net ..........................................         1,173              1,703
Other assets .........................................................            36                 36
                                                                           ---------          ---------
                                                                           $   3,629          $  11,056
                                                                           =========          =========
                              LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Accounts payable and accrued liabilities                              $     730          $   1,281
     Deferred revenue.................................................            --                502
     Current portion of capital lease obligations and debt                     1,003                616
                                                                           ---------          ---------
                   Total current liabilities .........................         1,733              2,399

Long-term portion of capital lease obligations and debt                           --                870
Commitments
Shareholders' equity:
     Preferred stock, no par value;  10,000,000 shares authorized;  
            none issued and outstanding  .............................            --                 --
     Common stock, no par value; 60,000,000 shares authorized;
           18,892,000 shares issued and outstanding 
           (18,846,264 at December 31, 1997) .........................        57,705             57,670
     Additional paid-in-capital.......................................           659                659
     Accumulated other comprehensive income                                       --                 (6)
     Accumulated deficit .............................................       (56,468)           (50,536)
                                                                           ---------          ---------
                   Total shareholders' equity ........................         1,896              7,787
                                                                           ---------          ---------
                                                                           $   3,629          $  11,056
                                                                           =========          =========
</TABLE>


Note:  The balance sheet at September 30, 1998 is derived from unaudited
       financial statements. The December 31, 1997 information is derived from
       audited financial statements.

                             See accompanying notes.


                                       3

<PAGE>   4

                                  ANERGEN, INC.
                       CONDENSED STATEMENTS OF OPERATIONS
                     (IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         THREE MONTHS ENDED            NINE MONTHS ENDED
                                                            SEPTEMBER 30,                 SEPTEMBER 30,
                                                       ----------------------        ----------------------
                                                         1998          1997            1998          1997
                                                       --------      --------        --------      --------
<S>                                                    <C>           <C>             <C>           <C>     
Revenues:
     Contract Revenue related party                    $    250      $    696        $    923      $  1,797
     Contract Revenue...........................            156           606           2,198         2,667
     Interest income............................            104           161             300           460
                                                       --------      --------        --------      --------
                                                            510         1,463           3,421         4,924
Expenses:
     Research and development...................          1,842         2,902           6,374         8,611
     General and administrative.................          1,014           587           2,873         2,180
     Interest expense...........................             29            70             106           174
                                                       --------      --------        --------      --------
                                                          2,885         3,559           9,353        10,965
                                                       --------      --------        --------      --------
Net loss........................................       $ (2,375)     $ (2,096)       $ (5,932)     $ (6,041)
                                                       ========      ========        ========      ========
Basic net loss per share........................       $  (0.13)     $  (0.11)       $  (0.31)     $  (0.32)
                                                       ========      ========        ========      ========

Shares used in calculating per share data ......         18,891        18,820          18,878        18,807
                                                       ========      ========        ========      ========
</TABLE>


                             See accompanying notes.


                                       4

<PAGE>   5

                                  ANERGEN, INC.
                       CONDENSED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                          NINE MONTHS ENDED
                                                                              SEPTEMBER 30,
                                                                         1998              1997
                                                                       ---------        ---------
<S>                                                                    <C>              <C>       
Cash flows provided by (used in) operating activities:
   Net loss.....................................................       $  (5,932)       $  (6,041)
   Adjustments to reconcile net loss to net cash used in 
   operating activities:
     Depreciation and amortization..............................             625              633
   Changes in operating assets and liabilities:
     Contract receivables - related party ......................             333             (889)
     Prepaid expenses ..........................................              29              118
     Accounts payable and accrued liabilities ..................            (551)             (18)
                                                                       ---------        ---------
Net cash used in operating activities ..........................          (5,496)          (6,197)

Cash flows provided by (used in) investing activities:
   Purchase of investments available-for-sale ..................          (7,285)         (20,946)
   Sale of investments available-for-sale ......................          13,779           29,201
   Purchase of property and equipment ..........................             (94)          (1,021)
                                                                       ---------        ---------
Net cash provided by investing activities ......................           6,400            7,234
                                                                       ---------        ---------

Cash flows provided by (used in) financing activities:
   Proceeds from facility and equipment debt financing .........               0              659
   Repayments of capital lease obligations and debt ............            (483)            (452)
   Issuance of common stock, net................................              35              102
                                                                       ---------        ---------
Net cash provided by (used in) financing activities ............            (448)             309

Net increase (decrease) in cash ................................             456            1,346
Cash and cash equivalents at beginning of period ...............           1,412            3,963
                                                                       ---------        ---------
Cash and cash equivalents at end of period .....................           1,868            5,309
Short-term investments at end of period ........................             502            4,219
                                                                       ---------        ---------
Cash, cash equivalents and short-term investments 
at end of period ...............................................        $  2,370        $   9,528
                                                                       =========        =========
</TABLE>

                             See accompanying notes.


                                       5

<PAGE>   6
                                  ANERGEN, INC.
                     NOTES TO CONDENSED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1998
                                   (UNAUDITED)


1.   NATURE OF BUSINESS

     Anergen, Inc. ( the "Company") was incorporated on April 26, 1988 for the
     purpose of developing therapies using biopharmaceutical compounds for the
     treatment of autoimmune diseases. The Company devotes its efforts to
     research and development on its own behalf and also on behalf of its
     corporate partners. At September 30, 1998 the Company had cash, cash
     equivalents and short-term investments of approximately $2,370,000 which at
     historical cash consumption rates is not sufficient to fund operations
     through the end of the year. In October 1998 the Company announced that it
     was restructuring operations due to an inability to secure financing. The
     Company plans to focus on the clinical development of AnergiX for
     rheumatoid arthritis, in collaboration with N.V. Organon and partnering and
     merger opportunities. The Company is also seeking to raise additional
     capital through equity or debt financing. If the Company is unsuccessful in
     these efforts it may be required to further reduce or cease operations.

2.   BASIS OF PRESENTATION

     The interim financial statements included herein have been prepared by the
     Company and have not been audited, pursuant to the rules and regulations
     promulgated by the Securities and Exchange Commission (the "Commission").
     Certain information and footnote disclosures, normally included in
     financial statements prepared in accordance with generally accepted
     accounting principles, have been omitted pursuant to Commission rules and
     regulations; nevertheless, the Company believes that the disclosures are
     adequate to make the information presented not misleading. These condensed
     financial statements should be read in conjunction with the audited
     financial statements and notes thereto contained in the Company's Annual
     Report on Form 10-K for the year ended December 31, 1997. In the opinion of
     management, all adjustments, consisting only of normal recurring
     adjustments, necessary to present fairly the financial position of the
     Company (subject to year-end adjustments) with respect to the interim
     financial statements, and of the results of its operations and cash flows
     for the interim periods then ended, have been included. The results of
     operations for the interim periods are not necessarily indicative of the
     results for the full year.

     Net Loss Per Share

     Effective December 31, 1997, the Company adopted Statement of Financial
     Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). SFAS 128
     requires the presentation of basic earnings (loss) per share and diluted
     earnings (loss) per share, if more diluted.

     Basic net loss per share is computed using the weighted average number of
     shares of common stock outstanding during the period.

     Diluted net loss per share has not been presented as stock options and
     other common stock equivalents are antidilutive.

     Comprehensive Income (Loss)

     As of January 1, 1998, the Company adopted the provisions of SFAS No. 130,
     "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes new
     rules for the reporting and presentation of comprehensive income and its
     components; however, the adoption of SFAS 130 had no impact on the
     Company's net loss or shareholders' equity. SFAS 130 requires unrealized
     gains or losses on the Company's available-for-sale securities, which prior
     to adoption were reported separately in shareholders' equity, to be
     included in other comprehensive income (loss).


                                       6

<PAGE>   7

     The table below shows comprehensive loss for the periods presented:

<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,       SEPTEMBER 30,
                                                                           1998                1997
                                                                       ------------        ------------
                                                                        (UNAUDITED)
<S>                                                                    <C>                 <C>          
     Net loss ......................................................   $ (5,932,000)       $ (6,041,000)
     Net unrealized gain (loss) on securities available for sale ...         (6,000)            (37,000)
                                                                       ------------        ------------

     Comprehensive loss ............................................   $ (5,926,000)       $ (6,004,000)
                                                                       ============        ============
</TABLE>

     Reclassification

     Certain prior year amounts have been reclassified to conform to the current
     periods presentation.

3.   DEBT OBLIGATION

     On December 27, 1996 the Company entered into an agreement with Silicon
     Valley Bank of California ("SVB") which provided $1,500,000 in financing
     available through December 31, 1997, all of which is secured by equipment
     and leasehold improvements purchased by the Company. At September 30, 1998,
     the Company had net borrowings of $1,003,000 under the original loan
     agreements. As of the end of the third quarter ended September 30, 1998,
     the Company was no longer in compliance with certain covenants related to
     its outstanding loan with SVB. As a result, the Company has reclassified
     the long term portion of the debt obligation into the current portion of
     the debt obligation. SVB has the right to demand full repayment of the loan
     while the Company is out of compliance with the covenants. Immediate
     repayment of the loan would have material adverse effect on the Company's
     operating cash flow.


                                       7

<PAGE>   8


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

     Management's Discussion and Analysis of Financial Condition and Results of
Operations contains certain forward-looking statements which involve risks and
uncertainties including but not limited to the adequacy of capital resources,
the nature of the Company's capital requirements, the availability and timing of
financing, the progress of the Company's clinical trials, and research and
development programs, the likelihood of development of potential products, if
any, from such research and the effect of Year 2000 problems, if any. The
Company's actual results could differ materially from the results anticipated in
these forward-looking statements as a result of certain factors set forth
hereunder and in the Company's Annual Report as filed on Form 10-K filed with
the Securities and Exchange Commission for the year ended December 31, 1997.

LIQUIDITY AND CAPITAL RESOURCES

     To date, the Company has financed its operations primarily through private
     placements of its equity securities with venture capitalists (which raised
     an aggregate of approximately $7.6 million in net proceeds), through the
     sale of its Common Stock to Novo Nordisk A/S (which raised approximately $8
     million in net proceeds), through the issuance of its Common Stock and
     Warrants to purchase shares of Common Stock through a private placement in
     exchange for $1.5 million in proceeds, and through public offerings of its
     Common Stock which have raised an aggregate of $38.8 million in net
     proceeds, including $9.4 million in net proceeds from the sale of 3.5
     million shares of Common Stock to the public in August 1996 and
     approximately $500,000 from the underwriters' exercise of the
     over-allotment option in September 1996. The Company's cash, cash
     equivalents and short-term investments at September 30, 1998 were
     approximately $2.4 million. Accounts payable and accrued liabilities
     decreased to $730,000 at September 30, 1998 from $1,281,000 at December 31,
     1997. Long-term debt decreased from $870,000 at December 31, 1997 to zero
     at September 30, 1998 due to repayment of loans and the need to reclassify
     the remaining long term debt to short term as the Company is out of
     compliance with the loan convenants. The Company had shareholders' equity
     at September 30, 1998 of approximately $1.9 million which decreased from
     $7.8 million at December 31, 1997 due to the net loss from operations

     During October of 1998, the Company announced a restructuring pursuant to
     which it took a number of steps to reduce expenses including the
     termination of 33 employees. The Company has also ceased its research
     efforts and is focusing on clinical development on AnergiX for rheumatoid
     arthritis in collaboration with N.V. Organon. It is also seeking partnering
     and merger opportunities. The Company restructured its operations due to an
     inability to date to secure financing. As a result of the restructuring,
     the Company believes that its current capital resources are likely to be
     sufficient to continue to fund the Company's operations through December
     31, 1998, assuming Silicon Valley Bank does not require immediate repayment
     of its loan. See note 3 of the "Notes to condensed Financial Statements."
     Thereafter, the Company will require substantial additional funds to
     continue its operations. The Company is currently in negotiations with
     certain existing investors to obtain bridge financing which may allow the
     Company to continue its operations into 1999. There is no assurance that
     the bridge financing will be completed. There is also no assurance that its
     partnering and merger efforts will be successful. These foregoing
     forward-looking statements regarding the Company's capital requirements
     involve risks and uncertainties that could cause actual results to differ
     materially. The Company's capital requirements will vary depending on
     numerous factors, many of which are outside the Company's control. These
     factors include the progress of the Company's development programs, the
     results and progress of the Company's clinical programs, the size and
     complexity of these programs, the scope and results of laboratory testing
     and clinical trials, the time and cost required to seek regulatory
     approvals to commence clinical trials for the Company's initial products,
     the need to obtain licenses to other proprietary rights, any required
     adjustments to the Company's operating plan to respond to competitive
     pressures or technological advances, developments with respect to the
     Company's existing or future collaborative arrangements, and the
     availability of various methods of financing. In addition, The Nasdaq Stock
     Market notified the Company in November 1998 that it would be delisted from
     the Nasdaq National Market. While the Company is appealing the notice of
     delisting, there is no assurance the Company will remain listed on the
     Nasdaq National Market, and such delisting could impair the Company's
     inability to raise additional capital. Any additional equity financing may
     be dilutive to shareholders, and debt financing, if available, may involve
     restrictions on 


                                       8

<PAGE>   9

     stock dividends and other restrictions on the Company. Adequate funds for
     the Company's operations, whether from equity or debt, collaborative or
     other arrangements with corporate partners or from other sources, may not
     be available when needed or on terms attractive to the Company.
     Insufficient funds may require the Company to delay, scale back or
     eliminate some or all of its research and product development programs, to
     license third parties to commercialize products or technologies that the
     Company would otherwise seek to develop itself, or to cease its operations.
     The Company's liquidity will be reduced as amounts are expended for
     continuing development.

RESULTS OF OPERATIONS

     The Company's net loss increased by 13% to $2,375,000 in the fiscal quarter
     ended September 30, 1998 compared to a $2,097,000 loss in the corresponding
     period in the previous year. The increase was due to revenues that
     decreased 65% to $510,000 in the fiscal quarter ended September 30, 1998
     compared to $1,465,000 in the corresponding period in the previous year,
     and by a decrease in expenses of 18% to $2,885,000 in the fiscal quarter
     ended September 30, 1998 compared to $3,559,000 in the corresponding period
     in the previous year. The decrease in revenue was primarily due to
     decreasing revenue from the Company's previous collaborative agreement with
     Novo Nordisk as the phase I clinical trial of AnergiX for the treatment of
     multiple sclerosis completed in August 1998. On February 26, 1998, the
     Company announced that it and Novo Nordisk had agreed to terminate the
     collaboration on AnergiX for Multiple Sclerosis (MS), Myasthenia Gravis
     (MG), and Insulin Dependent Diabetes Mellitus (IDDM). Pursuant to the
     termination, Novo Nordisk paid the Company $1,000,000, the estimated costs
     to complete the AnergiX for multiple sclerosis phase I study. In addition,
     revenue from the Company's collaborative partner, N.V. Organon, has
     decreased as the Company moved from reimbursement of manufacturing expenses
     in 1997 to reimbursement of phase I clinical trial expenses for AnergiX for
     the treatment of rheumatoid arthritis in 1998. Research and development
     expenses decreased 37% to $1,842,000 for the quarter ended September 30,
     1998 from $2,902,000 in the corresponding period in the previous year. A
     contributing factor relates to a decrease in year over year of
     manufacturing for clinical trial material in 1997 for the AnergiX RA phase
     I clinical trial. The Company's net loss decreased by 2% for the nine
     months ended September 30, 1998 compared to the corresponding period in the
     previous fiscal year. The decrease was due to revenues that decreased 31%
     to $3,421,000 in the nine months ended September 30, 1998 compared to
     $4,924,000 in the corresponding period in the previous year. The revenue
     decrease was offset by a decrease in expenses of 14% to $9,247,000 for the
     nine months ended September 30, 1998 compared to $10,791,000 in the
     corresponding period in the previous year. A contributing factor is the
     decrease in revenue from the Company's current collaborative partner, N.V.
     Organon and the Company's previous collaborative partner Novo Nordisk.
     Research and development expenses decreased 26% to $6,374,000 for the nine
     months ended September 30, 1998 from $8,611,000 in the corresponding period
     in the previous year. A contributing factor is the decrease in expenses
     related to the Company's on-going clinical trials of AnergiX RA compared to
     expenses related to the clinical trials for AnervaX MS in 1997.

     General and administrative expenses increased 73% to $1,014,000 for the
     quarter ended September 30, 1998 compared to $587,000 in the corresponding
     period in the previous year primarily due to increased personnel expenses
     associated with additional officer headcount and related expenses in 1998
     compared to 1997. General and administrative expenses increased 32% to
     $2,873,125 for the nine months ended September 30, 1998 compared to
     $2,180,000 in the corresponding period in the previous year.

     Interest income decreased to $104,000 for the quarter ended September 30,
     1998 as compared to $161,000 in the corresponding period in the previous
     year. Interest income decreased 35% to 300,000 for the nine months ended
     September 30, 1998 as compared to $460,000 in the corresponding period in
     the previous year. The decreases in interest income are due to lower
     average cash balances in 1998. Interest income is expected to decline
     gradually over future periods as invested capital is used for operating
     activities. Interest expense decreased 58% to $29,000 for the quarter ended
     September 30, 1998 as compared to $70,000 in the corresponding period in
     the previous year due to lower debt balances.


                                       9

<PAGE>   10

     The Company's losses on a quarter-by-quarter basis may vary depending upon
     a variety of factors, any of which may fluctuate, including the level of
     development activities, the timing of hiring of scientific and management
     personnel, the retention of consultants, the purchase or leasing of
     laboratory equipment, the licensing of any required technology and other
     factors. Accordingly, the Company believes that quarter-by-quarter losses
     will not be a useful indicator of the performance of the Company.

IMPACT OF YEAR 2000

     The Company has established a committee consisting of its Chief Financial
     Officer, controller, information systems manager and the facilities manager
     to ensure that its information technology (IT) and non-IT systems are Year
     2000 compliant. Based on its identification and assessment efforts to date,
     the committee has determined that most of the systems it currently uses
     (including computer equipment and software) will not need to be replaced or
     modified in order to make them Year 2000 compliant. Those systems that are
     not compliant are old and will need to be replaced in the normal course of
     business over the next year. The Company currently anticipates that its
     Year 2000 identification, assessment, remediation and testing efforts,
     which began in March 1998, will be completed by July 1999. The Company
     believes, but cannot at this time guarantee, that such efforts will be
     completed before any currently anticipated impact on its computer equipment
     and software. As of November 10, 1998, the Company has completed
     approximately 40% of its Year 2000 project plan. The following is a
     breakdown by phase of the progress the Company has made to date on its
     project plan.

<TABLE>
<CAPTION>
     PHASE                                      TIME FRAME       PERCENT COMPLETE
     ----------------------------------------------------------------------------
     <S>                                       <C>                     <C>
     Initial identification and assessment      3/98 - 8/98            100%
     Remediation                                3/98 - 3/99             50%
     Testing                                   12/98 - 3/99              0%
     Contingency planning                       1/99 - 6/99              0%
     Implementation                             1/99 - 3/99              0%
     Post-2000 audit                            5/99 - 7/99              0%
     ----------------------------------------------------------------------------
</TABLE>

     The Company is reliant upon third parties to provide Year 2000 compliant
     systems sufficiently before December 31, 1999. The Company has surveyed all
     of the Company's key suppliers, partners, banks, computer hardware and
     software providers and its clinical sites ("Third Parties") to determine
     whether they are Year 2000 compliant. The Company has discovered that
     certain of the Third Parties use systems that are not Year 2000 compliant,
     but all of the Third Parties have programs in place to address these Year
     2000 issues. The Company cannot guarantee that all of the Third Parties
     will achieve Year 2000 compliance in a timely manner. The failure of Third
     Parties to successfully address the Year 2000 issue could have a material
     adverse effect on the Company's business, financial condition and results
     of operations.

     The Company expects that the total costs associated with addressing and
     solving the Year 2000 issue will not exceed $50,000. These funds will be
     provided from contract revenues. As of November 10, 1998, the Company has
     spent less than $500 on addressing the Year 2000 issue.

     The Company is heavily reliant on its clinical sites to perform clinical
     trials on a timely basis in order to meet certain performance milestones.
     Failure to correct material Year 2000 problems in such clinical sites could
     result in a delay in or disruption of the clinical trial process. This
     delay or disruption could cause the Company to miss its performance
     milestones, which would result in a loss of contract revenues. The Company
     has received assurances from all of its clinical trial sites that they are
     either Year 2000 compliant or are actively addressing the Year 2000 issue.

     Failure of the Company's (or Third Parties') computer systems could
     materially adversely affect the Company's results of operations, liquidity
     and financial condition. Due to the general uncertainty of the Year 2000
     readiness of Third Parties, the Company is unable to determine at this time
     whether the consequences of Year 2000 failures will have a material impact
     on the Company's results of operations, liquidity and financial condition.


                                       10

<PAGE>   11

     The Company has not currently completed its contingency planning but
     intends to implement a contingency plan in the future.

     The costs of the Company's Year 2000 project plan, the dates on which the
     Company believes it will complete each phase of its Year 2000 project plan
     and the Company's contingency planning are forward-looking statements and
     are based on management's best estimates, which are derived from
     assumptions regarding future events, including the continued availability
     of certain resources, Third Party remediation plans and other factors.
     There can be no assurance that these estimates and plans will prove to be
     accurate, and actual results could differ materially from those currently
     anticipated.

RESTRUCTURING

     The Company announced in October that, as a result of the inability to
     raise sufficient funds to support its operations and programs at its
     current operating level, it was reducing its staff approximately 65% (by 33
     people) and is focusing its efforts on clinical and business development
     including a possible merger of the Company. The Company is continuing its
     phase I clinical trial of its AnergiX technology for rheumatoid arthritis,
     which is expected to be complete in the first half of 1999. Further
     clinical development for AnervaX for RA and preclinical development of
     DiavaX for type I diabetes will depend upon corporate partnering. Anergen
     has discontinued all discovery research programs. The Company expects to
     take a charge of approximately $657,000 in the fourth quarter ended
     December 31, 1998. The charge includes the cost of severance payments to
     the employees affected by the reduction.

     The Company is currently in negotiation with certain current investors to
     obtain bridge financing, which may allow the Company to continue operations
     into 1999. There is no assurance that this bridge financing will be
     completed, nor that it will be sufficient to fund operations. The Company
     believes that it will be delisted from the NASDAQ National Market and will
     trade on the over-the-counter market.


RISK FACTORS THAT MAY AFFECT FUTURE OPERATING PERFORMANCE


FUTURE REQUIREMENT FOR SIGNIFICANT ADDITIONAL CAPITAL

     During October of 1998, the Company announced a restructuring pursuant to
     which it took a number of steps to reduce expenses including the
     termination of 33 employees. The Company has also ceased its research
     efforts and is focusing on clinical development on AnergiX for rheumatoid
     arthritis in collaboration with N.V. Organon. It is also seeking partnering
     and merger opportunities. The Company restructured its operations due to an
     inability to date to secure financing. As a result of the restructuring,
     the Company believes that its current capital resources are likely to be
     sufficient to continue to fund the Company's operations through December
     31, 1998, assuming Silicon Valley Bank does not require immediate repayment
     of its loan. See note 3 of the "Notes to condensed Financial Statements."
     Thereafter, the Company will require substantial additional funds to
     continue its operations. The Company is currently in negotiations with
     certain existing investors to obtain bridge financing which may allow the
     Company to continue its operations into 1999. There is no assurance that
     the bridge financing will be completed. There is also no assurance that its
     partnering and merger efforts will be successful. These foregoing
     forward-looking statements regarding the Company's capital requirements
     involve risks and uncertainties that could cause actual results to differ
     materially. The Company's capital requirements will vary depending on
     numerous factors, many of which are outside the Company's control. These
     factors include the progress of the Company's development programs, the
     results and progress of the Company's clinical programs, the size and
     complexity of these programs, the scope and results of laboratory testing
     and clinical trials, the time and cost required to seek regulatory
     approvals to commence clinical trials for the Company's initial products,
     the need to obtain licenses to other proprietary rights, any required
     adjustments to the Company's operating plan to respond to competitive
     pressures or technological advances, developments with respect to the
     Company's existing or future collaborative arrangements, and the
     availability of various methods of financing. In addition, The Nasdaq Stock
     Market notified the Company in November 1998 that it 


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<PAGE>   12

     would be delisted from the Nasdaq National Market. While the Company is
     appealing the notice of delisting, there is no assurance the Company will
     remain listed on the Nasdaq National Market, and such delisting could
     impair the Company's inability to raise additional capital. Any additional
     equity financing may be dilutive to shareholders, and debt financing, if
     available, may involve restrictions on stock dividends and other
     restrictions on the Company. Adequate funds for the Company's operations,
     whether from equity or debt, collaborative or other arrangements with
     corporate partners or from other sources, may not be available when needed
     or on terms attractive to the Company. Insufficient funds may require the
     Company to delay, scale back or eliminate some or all of its research and
     product development programs, to license third parties to commercialize
     products or technologies that the Company would otherwise seek to develop
     itself, or to cease its operations. The Company's liquidity will be reduced
     as amounts are expended for continuing development.

EARLY STAGE OF PRODUCT DEVELOPMENT; LACK OF COMMERCIAL PRODUCTS; NO ASSURANCE OF
SUCCESSFUL PRODUCT DEVELOPMENT

     The Company was founded in 1988 to discover and develop biopharmaceutical
     compounds for the treatment of autoimmune diseases. To achieve profitable
     operations, the Company, alone or with others, must successfully develop,
     obtain regulatory approval for, manufacture and market products. The
     Company does not have any products available for sale nor does it expect to
     have any products commercially available for at least several years, if at
     all. The Company's potential products are at the early stages of research
     and development, with only limited human testing of certain of the
     Company's products undertaken to date. The products currently under
     development by the Company will require significant additional research,
     laboratory testing and clinical trials and investment of capital prior to
     their commercialization. There can be no assurance that any potential
     products will be successfully developed, prove to be safe and efficacious
     in clinical trials, meet applicable regulatory ly standards, be capable of
     being produced in commercial quantities at acceptable costs or be
     successfully marketed.

LIMITED OPERATING HISTORY; HISTORY OF LOSSES

     The Company has experienced significant net losses every year since its
     inception in 1988. Net losses for the quarters ended September 30, 1998 and
     1997 were approximately $2.4 million and $2.1 million, respectively, and
     the Company had an accumulated deficit of approximately $56.5 million as of
     September 30, 1998. The Company expects to incur substantial and increasing
     operating losses for at least the next several years. The amount of net
     losses and the time required by the Company to reach profitability are
     highly uncertain. There can be no assurance that the Company will ever be
     able to generate product revenue or achieve profitability on a substantial
     basis or at all. See "Management's Discussion and Analysis of Financial
     Condition and Results of Operations."

UNCERTAINTIES RELATED TO PRECLINICAL AND CLINICAL TRIALS

     Before obtaining regulatory approvals for the commercial sale of any of its
     products under development, the Company must demonstrate through
     preclinical studies and clinical trials that the product is safe and
     efficacious for use in each target indication. The results from preclinical
     studies and early clinical trials may not be predictive of results that
     will be obtained in large-scale testing, and there can be no assurance that
     the Company's clinical trials will demonstrate the safety and ch efficacy
     of any products or will result in any marketable products. A number of
     companies in the biotechnology industry have suffered significant setbacks
     in advanced clinical trials, even after promising results in earlier
     trials. The failure to adequately demonstrate the safety and efficacy of a
     therapeutic product under development could delay or prevent regulatory
     approval of the product and could have a material adverse effect on the
     Company.

     The rate of completion of the Company's clinical trials is dependent upon,
     among other factors, the Food and Drug Administration's willingness to
     allow Anergen to proceed; the results of Anergen's continued research and
     development, including test results and success in producing the epitopes
     and HLA molecules for each AnergiX compound; the number of skilled
     scientists, clinicians, and consultants the Company is able to employ in
     its efforts and the general interest in the medical community in a
     therapeutic using the Company's approach for treatment of the diseases
     targeted by the Company and the ability of the Company to secure additional
     financing. Currently, the Company does not anticipate establishing its own
     clinical trials facility. The rate of completion of clinical trials is also
     dependent on patient enrollment, which is a function of many factors,
     including the size of 


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<PAGE>   13

     the patient population, the proximity of patients to clinical sites and the
     existence of competitive trials. If the Company is unable to successfully
     complete its clinical trials, its business, financial condition and results
     of operations could be materially and adversely affected.

UNCERTAINTY OF MARKET ACCEPTANCE

     Even if the requisite regulatory approvals are obtained for the Company's
     potential products or for products developed in collaboration with the
     Company, uncertainty exists as to whether such products will be accepted by
     the market. A number of factors also may limit the market acceptance of a
     product which may be developed by, or discovered through collaboration
     with, the Company, including the rate of adoption by health care
     practitioners, the indications for which the product is approved, the rate
     of the product's acceptance by the target population, the timing of market
     entry relative to competitive products, the availability of alternative
     therapies, the price of the Company's product relative to alternative
     therapies, the availability of third-party reimbursement and the extent of
     marketing efforts by the Company and third-party distributors or agents
     retained by the Company. Side effects or unfavorable publicity concerning a
     Company product or any similar product could have an adverse effect on the
     Company's ability to obtain physician, patient or third-party payor
     acceptance and on efforts to sell that product. There can be no assurance
     of the Company's ability, or the length of time required, to achieve
     commercialization of the Company's products or that physicians, patients or
     third party payors will accept any of the Company's products as readily as
     alternative therapies, or at all.

GOVERNMENT REGULATION; NO ASSURANCE OF OBTAINING PRODUCT APPROVALS

     The Company's research and development activities are subject to regulation
     by numerous governmental authorities in the United States and other
     countries. Further, the future production and marketing of any products
     developed by the Company would also be regulated, particularly as to safety
     and efficacy. In the United States, vaccines, drugs and biologics are
     subject to rigorous FDA review. The Federal Food, Drug, and Cosmetic Act,
     the Public Health Service Act and other federal statutes and regulations
     govern or influence the testing, manufacture, safety, labeling, storage,
     record keeping, approval, advertising and promotion of such products.
     Noncompliance with applicable requirements can result in fines, recall or
     seizure of products, clinical study holds, total or partial suspension of
     production, refusal of the government to approve NDAs, PLAs, ELAs or allow
     the Company to enter into supply contracts and criminal prosecution. The
     FDA also has the authority to revoke PLAs and ELAs previously granted.

     In order to obtain FDA approval of a new biological product, the Company
     must submit proof of safety, purity, potency and efficacy. In most cases
     such proof entails extensive pre-clinical, laboratory, and clinical tests.
     The testing, preparation of necessary marketing applications and processing
     of those applications by the FDA is expensive and time consuming, can vary
     based on the type of product, and may take several years to complete. There
     is no assurance that the FDA will act favorably or quickly in making such
     reviews, and significant difficulties or costs may be encountered by the
     Company in its efforts to obtain FDA approvals that could delay or preclude
     the Company from marketing any products it may develop or furnish an
     advantage to competitors. The FDA may also require post-marketing testing
     and surveillance to monitor the effects of approved products or place
     conditions on any approvals that could restrict the commercial applications
     of such products. Product ly approvals may be withdrawn if compliance with
     regulatory standards is not maintained or if problems occur following
     initial marketing. In addition, delays imposed by the governmental approval
     process may materially reduce the period during which the Company may have
     the exclusive right to exploit patented products or technologies.

     The FDA approval process for a new biological drug involves completion of
     pre-clinical studies which include laboratory tests and animal studies to
     assess safety and effectiveness of the drug. Among other things, the
     results of these studies as well as how the product will be manufactured,
     are submitted to the FDA in an IND and, unless the FDA objects, the IND
     becomes effective 30 days following receipt by the FDA. FDA cleared human
     clinical trials may then be conducted. The results of the clinical trials
     are submitted to the FDA as part of a PLA. In addition to obtaining FDA
     approval for each AnergiX indication, an ELA must be filed and the FDA must
     approve the manufacturing facilities for the product. Product sales may
     commence only if the PLA and ELA are approved. Regulatory requirements for
     obtaining such FDA approvals are rigorous and there can be no assurance
     that such approvals will be obtained on a timely basis or at all.

     Sales of pharmaceutical products outside the United States are subject to
     foreign regulatory requirements that 


                                       13

<PAGE>   14

     vary widely from country to country. The time required to obtain approvals
     required by foreign countries may be longer or shorter than that required
     for FDA approval, and requirements for licensing may differ from FDA
     requirements.

     If FDA approval is obtained, the Company will be subject to continuing FDA
     obligations. When manufacturing biologics, the Company will be required to
     adhere to regulations setting forth current Good Manufacturing Practices
     ("GMP"), which require that the Company manufacture its products and
     maintain its records in a prescribed manner with respect to manufacturing,
     testing and quality control activities. Further, the Company must pass a
     preapproval inspection of its manufacturing facilities by the FDA before
     obtaining approval.

     Satisfaction of these FDA requirements, or similar requirements by foreign
     regulatory agencies, typically takes several years and the time needed to
     satisfy them may vary substantially, based upon the type, complexity and
     novelty of the pharmaceutical product. The effect of government regulation
     may be to delay or to prevent marketing of potential products for a
     considerable period of time and to impose costly procedures upon the
     Company's activities. There can be no assurance that the FDA or any other
     regulatory agency will grant approval for any products or indications being
     developed by the Company on a timely basis, or at all. Success in
     preclinical or early stage clinical trials does not assure success in later
     stage clinical trials. Data obtained from preclinical and clinical
     activities are susceptible to varying interpretations which could delay,
     limit or prevent regulatory approval. If regulatory approval of a product
     is granted, such approval may impose limitations on the indicated uses for
     which a product may be marketed. Further, even if regulatory approval is
     obtained, later discovery of previously unknown problems with a product may
     result in restrictions on the product, including withdrawal of the product
     from the market. Delay in obtaining or failure to obtain regulatory
     approvals would have a material adverse effect on the Company's business,
     financial condition and results of operations.

DEPENDENCE UPON COLLABORATIVE PARTNERS

     The Company's strategy for the development, clinical trials, manufacturing
     and commercialization of its products includes maintaining and entering
     into various collaborations with corporate partners, licensors, licensees
     and others. The Company has entered into collaborative arrangements with
     Novo Nordisk with respect to the Company's AnergiX compounds for the
     treatment of MS, MG and IDDM, and with Organon with respect to an AnergiX
     compound for the treatment of RA. In February 1998, the he Company
     announced that it and Novo Nordisk had agreed to terminate the
     collaboration in AnergiX for MS, MG and IDDM effective February 9, 1998
     with all rights returning to the Company. There can be no assurance that
     the interests and motivations of the Company's collaborators are, or will
     remain, aligned with those of the Company or that such collaborators will
     successfully perform their development, regulatory compliance,
     manufacturing or marketing functions or that such collaborations in he
     whole or in part will continue. There can also be no assurance that the
     Company will be able to negotiate additional collaborative arrangements in
     the future on acceptable terms, if at all, or that any such collaborative
     arrangements will be successful. To the extent that the Company is not able
     to maintain or establish such arrangements, the Company would be required
     to undertake such activities at its own expense, which would significantly
     increase the Company's capital requirements and he limit the programs the
     Company is able to pursue. In addition, the Company may encounter
     significant delays in introducing its products into certain markets or find
     that the development, manufacture or sale of its products in such markets
     is adversely affected by the absence of such collaborative agreements. 

     The Company cannot control the amount and timing of resources which its
     collaborative partners devote to the Company's program or potential
     products, which can vary because of factors unrelated to the potential
     product. Collaborator participation will depend not only on the achievement
     of research objectives by the Company and its collaborators, which cannot
     be assured, but also on each collaborator's own financial, competitive,
     marketing and strategic considerations, which are outside the he Company's
     control. Such strategic considerations may include the relative advantages
     of alternative products being marketed or developed by others, including
     relevant patent and proprietary positions. The Company's collaborative
     partners may develop, either alone or with others, products that compete
     with the development and marketing of the Company's products. Competing
     products, either developed by the collaborative partners or to which the
     collaborative partners have rights, may result in their withdrawal of
     support with respect to all or a portion of the Company's technology, which
     would have a material adverse effect on the Company's business, financial
     condition and results of operations. If Organon or any future collaborative
     partner breaches or terminates their agreements with the Company or
     otherwise fails to conduct their collaborative activities in a timely
     manner, the preclinical or clinical development or commercialization of
     product candidates or research programs in will be delayed, and the Company
     will be required 


                                       14

<PAGE>   15

     to devote additional resources to product development and commercialization
     or terminate certain development programs. There also can be no assurance
     that disputes will not arise in the future with respect to the ownership of
     rights to any technology developed with third parties. These and other
     possible disagreements between collaborators and the Company could lead to
     delays in the collaborative research, development and commercialization of
     certain product candidates or could require or result in litigation or
     arbitration, which would be time consuming and expensive, and would have a
     material adverse effect on the Company's business, financial condition and
     results of operations. See "Management's Discussion and Analysis of
     Financial Condition and Results of Operations--Liquidity and Capital
     Resources".

UNCERTAINTY RELATING TO PATENTS AND PROPRIETARY RIGHTS

     The Company's success will depend in significant part on its ability to
     maintain patent protection for its therapeutic approach and for any
     developed products, to preserve its trade secrets and to operate without
     infringing the proprietary rights of third parties. Although the Company
     has obtained patents covering certain aspects of its technology, no
     assurance can be given that additional patents will be issued or, if
     issued, that the scope of any patent protection will be significant, or
     that the patents will be held valid if subsequently challenged. Moreover,
     the Company cannot ascertain with certainty that no patent conflict will
     exist with other products or processes which could compete with the
     Company's approaches.

     Because of the length of time and expense associated with bringing new
     products through development and to the marketplace, and the length of time
     required for the governmental approval process, the pharmaceutical industry
     has traditionally placed considerable importance on obtaining and
     maintaining patent and trade secret protection for significant new
     technologies, products and processes. The Company and other biotechnology
     and pharmaceutical firms have applied, and are applying, for patents for
     their products and certain aspects of their technologies. The
     enforceability of patents issued to biotechnology and pharmaceutical firms
     is highly uncertain. Federal court decisions indicating legal
     considerations surrounding the validity of patents in the field are in
     transition, and there can be no assurance that the historical legal
     standards surrounding questions of validity will continue to be applied or
     that current defenses as to issued patents in the field will offer
     protection in the future. In addition, there can be no assurance as to the
     degree and range of protection any patents will afford, whether patents
     will be issued or the extent to which the Company will be successful in not
     infringing patents granted to others.

     While the Company pursues patent protection for products and processes
     where appropriate, it also relies on trade secrets, know-how and continuing
     technological advancement to develop and maintain its competitive position.
     The Company's policy is to have each employee enter into an agreement that
     contains provisions prohibiting the disclosure of confidential information
     to anyone outside the Company. Research and development contracts and
     relationships between the Company and its scientific n consultants provide
     access to aspects of the Company's know-how that is protected generally
     under confidentiality agreements with the parties involved. There can be no
     assurance, however, that these confidentiality agreements will be honored
     or that the Company can effectively protect its rights to its unpatented
     trade secrets. Moreover, there can be no assurance that others will not
     independently develop substantially equivalent proprietary information and
     techniques or otherwise gain access to the Company's trade secrets.

     The Company may be required to obtain licenses to patents or other
     proprietary rights from third parties. There can be no assurance that any
     licenses required under any patents or proprietary rights will be made
     available on terms acceptable to the Company, if at all. If the Company
     does not obtain required licenses, it could encounter delays in product
     development while it attempts to redesign products or methods or it could
     find that the development, manufacture or sale of products requiring such
     licenses could be foreclosed.

     The Company is aware of a European patent and corresponding U.S. and
     Australian patents which contain claims that relate to certain of the
     Company's proposed products and their uses. In accordance with European
     Patent Office ("EPO") procedures, third parties can oppose an EPO patent
     grant by presenting information which they believe justifies narrowing or
     revoking the grant of the patent. The Company is opposing the
     aforementioned grant in the EPO. There can, however, be no assurance that
     the granted EPO claims will be revoked or significantly narrowed in scope
     as a result of the opposition proceeding. If valid claims in these patents
     are found to be infringed by the Company's products, the Company's ability
     to make, use, offer to sell, or sell, such products could be materially and
     adversely affected.


                                       15

<PAGE>   16

     In addition, the Company could incur substantial costs in defending any
     patent litigation brought against it or in asserting the Company's patent
     rights, including those licensed to the Company by others, in a suit
     against another party. The United States Patent and Trademark Office (the
     "USPTO") could institute interference proceedings in connection with one or
     more of the Company's patents or patent applications which proceedings
     could result in an adverse decision as to priority of an he invention. The
     USPTO also could institute reexamination proceedings in connection with one
     or more of the Company's patents or patent applications, which could result
     in an adverse decision as to the patents' validity or scope.

NEED TO DEVELOP MANUFACTURING CAPABILITIES

     The Company has no volume manufacturing capacity or experience in volume
     manufacturing of pharmaceutical or other biological products. Establishing
     its own volume manufacturing capabilities would require significant
     scale-up expenses and additions to facilities and personnel. In addition,
     the Company must successfully develop the process required for volume
     manufacturing. The pharmaceutical products under development by the Company
     have never been manufactured on a commercial scale and there can be no
     assurance that such products can be manufactured at a cost or in quantities
     to make them commercially viable. The Company will be required to establish
     arrangements with contract manufacturers to supply a portion of its
     compounds for subsequent clinical trials as well as the manufacture,
     packaging, labeling and distribution of finished products. If the Company
     is unable to contract for sufficient supply of a portion of its compounds
     on acceptable terms, and it is unable to develop e the capability to
     produce the epitopes internally, the Company's human clinical testing
     schedule would be delayed, resulting in the delay of submission of products
     for regulatory approval and initiation of new development programs, which
     would have a material adverse effect on the Company. If the Company should
     encounter delays or difficulties in establishing relationships with
     manufacturers to produce, package and distribute its finished products,
     market introduction and subsequent sales of e such products would be
     adversely affected. Moreover, contract manufacturers that the Company may
     use must adhere to current GMP regulations enforced by the FDA through its
     facilities inspection program. If these facilities cannot pass a
     pre-approval plant inspection, the FDA pre-market approval of the products
     will be adversely affected.

LACK OF MARKETING EXPERIENCE; DEPENDENCE ON THIRD PARTIES

     The Company currently has no sales, marketing or distribution capability.
     The Company intends to rely on relationships with one or more
     pharmaceutical companies with established distribution systems and direct
     sales forces to market its products. In the event that the Company is
     unable to reach agreement with one or more pharmaceutical companies to
     market its products, it may be required to market its products directly and
     to develop a marketing and sales force with technical expertise and
     supporting distribution capability. There can be no assurance that the
     Company will be able to establish in-house sales and distribution
     capabilities or relationships with third parties, or that it will be
     successful in gaining market acceptance for its products. To the extent
     that the Company decides to utilize existing or future co-promotion or
     other licensing arrangements, the Company must develop its own sales,
     marketing or distribution capability, and there can be no assurance that
     such efforts will be successful.

COMPETITION AND TECHNOLOGICAL CHANGE 

     The biotechnology and pharmaceutical industries are characterized by
     rapidly evolving technology and intense competition. The Company's
     competitors include major pharmaceutical, chemical and specialized
     biotechnology companies, most of which have financial, technical, research
     and development, manufacturing, clinical and marketing resources
     significantly greater than those of the Company. The Company believes that
     these other entities recognize the need for effective therapies for the h
     autoimmune diseases targeted by the Company and are highly motivated to
     develop such therapies. In addition, many specialized biotechnology
     companies have formed collaborations with large, established companies to
     support research, development and commercialization of products that may be
     competitive with those of the Company. Academic institutions, governmental
     agencies and other public and private research organizations are also
     conducting research activities and seeking patent protection and may
     commercialize products on their own or through joint ventures. The Company
     is aware of certain products in development by competitors that are
     intended to be used for the prevention or treatment of certain diseases the
     Company has targeted for product development.

     The existence of these products, or other products or treatments of which
     the Company is not aware, or products or treatments that may be developed
     in the future which may be more effective, may adversely affect the


                                       16

<PAGE>   17

     commercialization or marketability of products which may be developed by
     the Company or potentially render the Company's technology obsolete or
     non-competitive.

     The Company's competitive position will depend on its ability to attract
     and retain qualified scientific and other personnel, develop effective
     proprietary products, implement production and marketing plans, obtain
     patent protection and secure adequate capital resources. In addition, the
     first pharmaceutical product to reach the market in a therapeutic or
     preventive area is often at a significant competitive advantage relative to
     later entrants to the market. The Company expects its products, if approved
     for sale, to compete primarily on the basis of product efficacy, safety,
     patent position, reliability, price and patient convenience rather than on
     speed to market.

UNCERTAINTY RELATED TO PHARMACEUTICAL PRICING AND REIMBURSEMENT

     Political, economic and regulatory influences are subjecting the health
     care industry in the United States to fundamental change. Initiatives to
     reduce the federal deficit and to reform health care delivery are
     increasing these cost containment efforts. The Company anticipates that
     Congress, state legislatures and the private sector will continue to review
     and assess alternative benefits, controls on health care spending through
     limitations on the growth of private health insurance premiums and Medicare
     and Medicaid spending, the creation of large insurance purchasing groups,
     price controls on pharmaceuticals and other fundamental changes to the
     health care delivery system. Any such proposed or actual changes could
     cause existing and potential partners of the Company to limit or eliminate
     spending on collaborative development projects. Legislative debate is
     expected to continue in the future, market forces are expected to demand
     reduced costs and Anergen cannot predict what s impact the adoption of any
     federal or state health care reform measures or future private sector
     reforms may have on its business.

     In both domestic and foreign markets, sales of the Company's proposed
     products will depend in part upon the availability of reimbursement from
     third-party payors, such as government health administration authorities,
     private health insurers and other organizations. In addition, other
     third-party payors are increasingly challenging the price and cost
     effectiveness of medical products and services. Significant uncertainty
     exists as to the reimbursement status of newly approved health care
     products. There can be no assurance that the Company's potential products
     or products discovered in collaboration with the Company will be considered
     cost-effective or that adequate third-party reimbursement will be available
     to enable Anergen to maintain price levels sufficient to realize an
     appropriate return on its significant investment in product research and
     development. Legislation and regulations affecting the pricing of
     pharmaceuticals may change before the Company's proposed products are
     approved for marketing. Adoption of such legislation could further limit
     reimbursement for medical products. If adequate coverage and reimbursement
     levels are not provided by the government and third-party payors for the
     Company's products, the market acceptance of these products would be
     adversely affected, which would have a material adverse effect on the
     Company's business, financial condition and results of operations.
     

DEPENDENCE ON AND NEED FOR ADDITIONAL KEY PERSONNEL; RELIANCE ON ACADEMIC
COLLABORATORS

     As part of the Company's restructuring efforts, the Company announced in
     October 1998 that it reduced its staff approximately 65% (by 33 people).
     The success of the Company and of its business strategy is dependent in
     large part on the ability of the Company to retain key management and
     operating personnel and to obtain additional funds to fulfill its personnel
     needs as they arise. The Company's current employees are in high demand and
     are often subject to competing offers. The Company will s need to develop
     expertise or retain consultants in such areas as development, clinical
     testing, government approvals, marketing and manufacturing in the future.
     There can be no assurance that the Company will be able to attract and
     retain the qualified personnel or develop the expertise needed for its
     business. The loss of the services of one or more of the Company's officers
     or other members of the research or management group or the inability to
     hire additional personnel and develop expertise as needed would have a
     material adverse effect on the Company.

     A significant portion of the Company's research and development and
     clinical trials is conducted under sponsored research programs with several
     universities. The Company depends on the availability of the principal
     investigator for each such program, and the Company cannot assure that
     these individuals or their research staffs will be available to conduct
     research and development or clinical trials. The Company's academic
     collaborators are not employees of the Company. As a result, the s Company
     has limited control over their activities and can expect that only limited
     amounts of their time will be dedicated to Company activities. In addition,
     the Company's academic collaborators are employed by major institutions
     which have collaborative relationships 


                                       17

<PAGE>   18

     with other parties, some of which may be competitors of the Company.
     Accordingly, there can be no assurance that research and development,
     preclinical and clinical testing performed by these collaborators will be
     completed in a timely manner, if at all, and any inability to do so could
     have a material adverse effect on the Company.

POTENTIAL PRODUCT LIABILITY

     The testing, marketing and sale of human health care products entail an
     inherent risk of exposure to product liability claims in the event that the
     use of the Company's technology or prospective products is alleged to have
     resulted in adverse effects. While the Company has taken, and will continue
     to take, what it believes are appropriate precautions to minimize exposure
     to product liability, there can be no assurance that it will avoid
     significant liability. The Company possesses limited a general liability
     and product liability insurance related to its clinical trials of AnervaX
     for RA and AnergiX for MS and RA and certain other types of insurance
     customarily obtained by business organizations. There can be no assurance
     that the existing insurance coverage is adequate or that it will avoid
     liability. The Company intends to seek insurance against product liability
     risks associated with the testing, manufacturing or marketing of its
     products. However, there can be no assurance that it will be able to obtain
     such insurance in the future, or that if obtained, such insurance will be
     sufficient in amount. Consequently, a product liability claim or other
     claims with respect to uninsured liabilities or in excess of insured
     liabilities could have a material adverse effect on the business or
     financial condition of the Company.

HAZARDOUS MATERIALS; ENVIRONMENTAL MATTERS

     The Company is subject to regulation by the Occupational Safety and Health
     Administration ("OSHA") and the Environmental Protection Agency ("EPA") and
     to regulation under the Toxic Substances Control Act, the Resource
     Conservation and Recovery Act and other regulatory statutes, and may in the
     future be subject to other federal, state or local regulations. Although
     the Company believes that it has complied with these laws, regulations and
     policies in all material respects and has not been ce required to take any
     significant action to correct any material noncompliance, there can be no
     assurance that the Company will not be required to incur significant costs
     to comply with environmental and health and safety regulations in the
     future. The Company's research and development involves the controlled use
     of hazardous materials, including but not limited to certain hazardous
     chemicals and radioactive materials. Although the Company believes that its
     safety procedures for handling and disposing of such materials comply with
     the standards prescribed by state and federal regulations, the risk of
     accidental contamination or injury from these materials cannot be
     eliminated. In the event of such an accident, the Company could be held
     liable for any damages that result and any such liability could exceed the
     resources of the Company. In addition, regulations may be promulgated
     governing biotechnology that may affect the Company's research and
     development programs. The Company is unable to predict whether any agency
     will adopt any regulation which would have a material adverse effect on the
     Company's business, financial condition and results of operations.

VOLATILITY OF STOCK PRICE 

     The market price of the Company's Common Stock, similar to the securities
     of other biotechnology companies, has been and is likely to continue to be
     highly volatile. Announcements regarding the results of regulatory approval
     filings, clinical trials or other testing, technological innovations or new
     commercial products by the Company or its competitors, patents and
     intellectual property rights by the Company or its competitors,
     developments as to current or future collaborations by the Company or its
     competitors, government regulations, the status of health care reform
     initiatives, fluctuations in operating results, changes in recommendations
     by financial analysts, and general market conditions for biotechnology
     stocks could have a significant impact on the future price of the Common
     Stock. Trading volume of the Company's Common Stock has been relatively
     limited and sales of substantial amounts of Common Stock could have an
     adverse effect on the price of the Common Stock. In addition, the Company
     received notice from the Nasdaq Stock Market that its Common Stock will be
     delisted from the Nasdaq National Market. Such delisting will result in the
     Company's stock to be traded on the over-the-counter market which may
     result in great volatility in the trading price.

CONTROL BY EXISTING STOCKHOLDERS

     The Company's officers, directors and principal shareholders, namely
     Warburg, Pincus Ventures, L.P. ("Warburg"), International Biotechnology
     Trust PLC ("IBT"), and Novo Nordisk, collectively beneficially own


                                       18

<PAGE>   19

     approximately 48% of the Company's outstanding Common Stock. Under a March
     1995 common stock purchase agreement with Warburg and IBT ("Warburg/IBT
     Purchase Agreement"), the Company is currently obligated to include in the
     slate of nominees recommended by the Company's Board of Directors and
     management, at each election of directors, two candidates selected by
     Warburg, one candidate selected by IBT and one candidate mutually agreed to
     by IBT and Warburg. Additionally, while not obligated to do so, since 1993,
     the Company has included a representative of Novo Nordisk in its slate of
     nominees for the Board of Directors. The ownership of the Company's Common
     Stock, and the ability to designate candidates for the Company's
     recommended slate of nominees for the Board of Directors, of Warburg, IBT
     and Novo Nordisk will enable such shareholders to have significant
     influence over major corporate transactions as well as the election of
     directors of the Company and control over board decisions and could have
     the effect of delaying, deterring or preventing a change in control of the
     Company. 

ANTI-TAKEOVER PROVISIONS; POSSIBLE ISSUANCE OF PREFERRED STOCK OR ACCELERATION
OF OPTION VESTING

     The Board of Directors has authority, without further action by
     shareholders, to issue up to 10,000,000 shares of Preferred Stock with
     rights, preferences and privileges designated by the Board of Directors.
     This Preferred Stock could be issued quickly with terms calculated to delay
     or prevent a change in control of the Company or to make removal of
     management more difficult. In certain circumstances, such issuance could
     have the effect of decreasing the market price of the Common Stock or of
     delaying, deterring or preventing a change in control of the Company. The
     Company has no present plan to issue any shares of Preferred Stock.
     Further, pursuant to the Company's option plans, in the event of certain
     mergers of the Company with other entities, transfers of voting control of
     the Company's capital stock or sale of all or substantially all of the
     Company's assets, the Company's Board of Directors has the right under
     certain circumstances to cause all outstanding options to become fully
     vested prior to the event causing such acceleration and all unexercised
     options will terminate upon completion of such event.

SECTION 203 OF THE DELAWARE CORPORATION LAW

     Generally, Section 203 of the DGCL prohibits a publicly held Delaware
     corporation from engaging in a broad range of "business combinations" with
     an "interested stockholder" (defined generally as a person owning 15% or
     more of a corporation's outstanding voting stock) for three years following
     the date such person became an interested stockholder unless (i) before the
     person becomes an interested stockholder, the transaction resulting in such
     person becoming an interested stockholder or the e business combination is
     approved by the board of directors of the corporation, (ii) upon
     consummation of the transaction that resulted in the stockholder becoming
     an interested stockholder, the interested stockholder owns at least 85% of
     the outstanding voting stock of the corporation (excluding shares owned by
     directors who are also officers of the corporation or shares held by
     employee stock plans that do not provide employees with the right to
     determine confidentially whether shares held e subject to the plan will be
     tendered in a tender offer or exchange offer), or (iii) on or after such
     date on which such person became an interested stockholder the business
     combination is approved by the board of directors and authorized at an
     annual or special meeting, and not by written consent by the affirmative
     vote of at least 66.6% of the outstanding voting stock excluding shares
     owned by the interested stockholders. The restrictions of Section 203 do
     not apply, among other reasons, if a corporation, by actions of its
     shareholders, adopts an amendment to its certificate of incorporation or
     bylaws expressly electing not to be governed by Section 203, provided that,
     in addition to any other vote required by law, such amendment to the
     certificate of incorporation or bylaws must be approved by the affirmative
     vote of a majority of the shares entitled to vote. Moreover, an amendment
     so adopted is not effective until twelve months after its adoption and does
     not apply to any business combination between the corporation and any
     person who became an interested stockholder of such corporation on or prior
     to such adoption. The Certificate of Incorporation and Bylaws of the
     Company do not currently contain any provisions electing not to be governed
     by Section 203 of the DGCL.

     Section 203 of the DGCL may discourage persons from making a tender offer
     for or acquisitions of substantial amounts of the Common Stock. This could
     have the effect of inhibiting changes in management and may also prevent
     temporary fluctuations in the Common Stock that often result from takeover
     attempts.


                                       19

<PAGE>   20

                                  ANERGEN, INC.


PART II - OTHER INFORMATION


Item 1. Legal Proceedings

     None

Item 2. Changes in Securities

     None

Item 3. Defaults upon Senior Securities

     On December 27, 1996 the Company entered into an agreement with Silicon
     Valley Bank of California ("SVB") which provided $1,500,000 in financing
     available through December 31, 1997, all of which is secured by equipment
     and leasehold improvements purchased by the Company. At September 30, 1998,
     the Company had net borrowing of $1,003,000 under the original loan
     agreements. As of the end of the third quarter ended September 30, 1998,
     the Company was no longer in compliance with certain convenants related to
     its outstanding loan with SVB. As a result, the Company has reclassified
     the long term portion of the debt obligation into the current portion of
     the debt obligation. SVB has the right to demand full repayment of the loan
     while the Company is out of compliance with the convenants. Immediate
     repayment of the loan would have material effect on the Company's operating
     cash flow.

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

     None

Item 5. Other Information

     None

Item 6. Exhibits and reports on Form 8-K

     a)   Exhibits

<TABLE>
<CAPTION>
          Exhibit       Description
          -------       -----------
<S>                     <C>
          3.1(1)        Certificate of Incorporation.
          3.2           Bylaws, as amended.
          4.1(2)        Form of Common Stock Certificate.
          27.1          Financial Data Schedule
</TABLE>

(1)  Incorporated by reference to the exhibit filed with the Form 8-K on July
     27, 1998.

(2)  Incorporated by reference to the exhibit filed with Registrant's
     Registration Statement on Form S-1 (No. 33-42107), as amended.


     b)   Reports on Form 8-K. No reports on Form 8-K were filed by the Company
          during the quarter ended September 30, 1998.


                                       20

<PAGE>   21

                                    SIGNATURE


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


                                           ANERGEN, INC.


Date: November 12, 1998                    By: /s/ DAVID V. SMITH
                                              ----------------------------------
                                              David V. Smith
                                              Vice President, Finance and Chief 
                                              Financial Officer on behalf of the
                                              Company and as principal financial
                                              and chief accounting officer


                                       21

<PAGE>   22

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
Exhibit
Number              Description
------              -----------
<S>                 <C>
 3.1(1)             Certificate of Incorporation.
 3.2                Bylaws, as amended.
 4.1(2)             Form of Common Stock Certificate.
27.1                Financial Data Schedule
</TABLE>


(1)  Incorporated by reference to the exhibit filed with the Form 8-K on July
     27, 1998.

(2)  Incorporated by reference to the exhibit filed with Registrant's
     Registration Statement on Form S-1 (No. 33-42107), as amended.