**UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549**

---

**FORM 10-K**

---

(Mark One)

**[X]       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934**

**FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999**

**OR**

**[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934**

**For the transition period from ________to _________**

**Commission file number 0-19986**

**CELL GENESYS, INC.**
(Exact name of Registrant as specified in its Charter)



|**Delaware**                                                   | **94-3061375**                      
|-------------------------------------------------------------- | ------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification Number)

**342 Lakeside Drive, Foster City, California   94404**(Address of Principal Executive Offices including Zip Code)

**(650) 425-4400**(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

**Common Stock, $.001 Par Value**(Title of Class)

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  [   ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.  [X]

As of March 15, 2000, the approximate market value of voting stock held by
nonaffiliates of the Registrant was $978,080,218. 4,103,910 shares of Common
Stock held by each officer, director and holder of 5 % or more of the outstanding
Common Stock have been excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a
conclusive determination for other purposes.

As of March 15, 2000, the number of outstanding shares of the Registrant's
Common Stock was 33,509,669

DOCUMENTS INCORPORATED BY REFERENCE

The information called by Part III of this Form 10-K is incorporated by
reference to the definitive proxy statement for the annual meeting of
stockholders of the company which will be filed no later than 120 days
after December 31, 1999.







**CELL GENESYS, INC.
                                   FORM 10-K**
                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

**TABLE OF CONTENTS**

**PART I**

Item 1.   Business

Item 2.   Properties

Item 3.   Legal Proceedings

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

**PART II**

Item 5.   Market for Registrant's Common Equity and Related Stockholder Matters

Item 6.   Selected Consolidated Financial Data

Item 7.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations

> OutlookResults of OperationsLiquidity and Capital ResourcesRisk FactorsYear 2000 Compliance

Item 7A.  Quantitative and Qualitative Disclosure About Market Risks

Item 8.   Consolidated Financial Statements and Supplementary Data

Item 9.   Changes in and Disagreements with Accountants on Accounting and
          Financial Disclosure

**PART III**

Item 10.  Directors and Executive  Officers of the  Registrant

Item 11.  Executive  Compensation

Item 12.  Security Ownership of Certain Beneficial Owners and Management

Item 13.  Certain  Relationships and Related  Transactions

**PART IV**

Item 14.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

**Signatures**

**Power of Attorney**

**PART I**

**ITEM 1. BUSINESS**

**OVERVIEW**

Statements made in this document other than statements of
historical fact, including statements about the Company's and its
subsidiary's progress and results of preclinical studies, clinical
trials, marketability of potential products and nature of  product
pipelines, corporate partnerships, licenses and intellectual
property, including that pertaining to the Company's technologies
and the Company's patent portfolio, are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934 and are subject to
a number of uncertainties that could cause actual results to differ
materially from the statements made, including risks associated with
the success of research and product development programs, results
achieved in future preclinical studies and clinical trials, the
regulatory approval process, competitive technologies and products,
the scope and validity of patents, proprietary technology and
corporate partnerships. Reference is made to discussions about risks
associated with product development programs, intellectual property
and other risks which may affect the Company under "Risk Factors"
below. The Company does not undertake any obligation to update
forward-looking statements.

Since its inception in April 1988, Cell Genesys, Inc. ("Cell
Genesys" or "the Company") has focused its research and product
development efforts on human disease therapies which are based on
innovative gene modification technologies. The Company's strategic
objective is to develop and commercialize in vivoand/or ex vivo gene
therapies to treat cancer and other major, life-threatening diseases
including hemophilia. Cell Genesys' clinical programs include GVAX®
cancer vaccines in Phase II studies for prostate cancer and Phase I/II
studies for lung cancer. GVAX® vaccines for prostate cancer and for
lung cancer are being developed through a worldwide collaboration with
the pharmaceutical division of Japan Tobacco Inc. ("JT"). In
addition, Cell Genesys has preclinical programs which are evaluating
potential gene therapies for hemophilia, cancer, cardiovascular
disorders and Parkinson's disease. The Company also has assets outside
of its core business which can be used to help maintain financial
strength while product candidates are under development. These assets
include Cell Genesys' equity ownership of Abgenix, Inc. ("Abgenix",
Nasdaq-AMEX: ABGX), which is focused on the development and
commercialization of antibody therapies and a licensing program in
gene activation technology.

During 1999, Cell Genesys continued to build its gene therapy
business through progress in both clinical and preclinical programs,
by further validating its technology through multiple scientific
papers and patent issuances, and by establishing several licensing
agreements for its gene therapy technologies.  During 1999, Cell
Genesys' financial position significantly increased as a result of
the appreciation in value of the Company's holdings in Abgenix which
had a market value of more than $430 million at the end of 1999.  Cell
Genesys' financial resources are enabling the Company to aggressively
pursue its clinical programs while also targeting certain of its
preclinical programs, including hemophilia, for clinical studies.

Cell Genesys believes that gene therapies are likely to be
developed on a continuum, progressing from ex vivo(modification of
cells outside the patient's body for injection as therapy) to in vivo
(modification of cells within the patient's body to provide therapy).
The Company's goal is to emphasize "off-the-shelf" products that
enable gene therapy to be provided in out-patient settings. These
potentially include both non-patient-specific therapies, which could
be vialed pharmaceuticals for direct administration, and patient-
specific gene therapy products, which could be packaged as "kits" for
overnight cell processing at clinical laboratories.

Ex vivo gene therapies currently are being evaluated by Cell
Genesys in human clinical studies. These include studies of GVAX®
therapeutic vaccines for prostate cancer and lung cancer which are
designed to impart new disease-fighting capabilities to the patient's
immune system, in order to enhance an immune response against diseased
cells. During 1999, Phase I/II human trials evaluating the GVAX®
vaccine for prostate cancer demonstrated antitumor effects as measured
by levels of prostate specific antigen (PSA), a cancer "marker," and
by specific antibody formation.  As a result, the Company initiated
two additional multicenter Phase II GVAX® clinical trials for prostate
cancer.  In late 1999, the Company's Phase I/II lung cancer trial was
completed, and clinical data from this trial also revealed preliminary
evidence of antitumor activity.  Based on encouraging preliminary data
from this trial, a multicenter Phase I/II GVAX® lung cancer vaccine
trial was initiated in February 2000.

In vivogene therapies are at the preclinical stage of development
at Cell Genesys. Treatment strategies may target cells that typically
cannot be removed from the body for external processing and therefore
are modified within the body. With in vivo gene therapy, the treatment
goals include stimulating targeted cells to produce a protein or other
substance needed to normalize key biological processes, or otherwise
inhibiting specific disease processes.  In 1999, the Company continued
preclinical studies in a number of therapeutic areas and further
developed its gene therapy technologies.  The Company's preclinical
research focuses on studies of gene therapy in animal models for
hemophilia, cancer, restenosis and Parkinson's disease. In hemophilia
studies, for example, a single injection of gene therapy resulted in
improved blood clotting and a 90 percent reduction in bleeding
episodes in a dog hemophilia model.  As a result of these and other
data, as well as the Company's increased financial resources, studies
are under way targeting the initiation of clinical trials of
hemophilia gene therapy.

Parkinson's disease, a single injection of gene therapy essentially eliminated
the need for daily L-dopa injections in mice with a Parkinson's-like condition.
Cardiovascular gene therapy studies demonstrated the successful delivery of
genes to blood vessel lining cells.

Cell Genesys ended 1999 with approximately $50 million
in cash and short-term investments.  The Company has maintained its financial
position by relying on funding from various corporate collaborations
and licensing agreements, as well as through strategic management of
its resources. Revenues for 1999 were derived primarily from the
above-mentioned GVAX® collaboration, payments received in connection
with the Company's gene activation technology licensing program, and
payments associated with the discontinuance of a collaboration
agreement for the Company's AIDS gene therapy program.  In the first
quarter of 2000, Cell Genesys received net proceeds of approximately
$194 million for the sale of 966,000 shares of Abgenix common stock.
The transaction was related to a secondary Abgenix offering in which a
total of 3,450,000 Abgenix shares were sold with 966,000 of the shares
being sold by Cell Genesys.  After the transaction, Cell Genesys
retains 2,426,034 shares, or approximately 12 percent of Abgenix
common stock. The Company expects to use its financial resources to
more aggressively drive its core programs and to potentially acquire a
late-stage product candidate most likely in the cancer area.

The Company's plan is to continue to finance its
operations when possible through corporate collaborations with established
pharmaceutical and biotechnology companies in order to develop its
technologies as broadly as possible, to fund product development and
to accelerate the commercialization of certain product opportunities.
Such alliances are intended to provide financial resources, research,
development and manufacturing capabilities, and marketing
infrastructure to aid in the commercialization of potential disease
therapies.  Cell Genesys also evaluates, on an ongoing basis,
opportunities to in-license or acquire products and/or technologies
that complement its portfolio. There can be no assurance that Cell
Genesys will be able to enter into additional collaborative
relationships or obtain new products and/or  technologies on
acceptable terms, if at all, or that if such actions occur, they will
be successful.  Failure to enter new corporate relationships or expand
Cell Genesys' product and technological base may limit Cell Genesys'
success unless alternative financing strategies are available.

In October 1999, Cell Genesys agreed to merge with Genzyme General
("Genzyme") in a stock-for-stock transaction in which Cell Genesys
was valued at approximately $350 million. However, between October and
December, Abgenix's stock price dramatically increased, resulting in a
$240 million increase in the value of Cell Genesys' ownership of
Abgenix.  Consequently, Cell Genesys' board of directors no longer
felt that the merger was in the best interest of the company or its
shareholders and withdrew its recommendation to merge with Genzyme,
following which, Genzyme terminated the merger agreement.  The
termination resulted in a $15 million termination fee which Cell
Genesys paid to Genzyme in December 1999.  As has always been the
case, the Cell Genesys board of directors will evaluate future
prospective merger and acquisition opportunities, if any, on a case by
case basis.

**BACKGROUND**

For many years the pharmaceutical industry has focused on
developing chemical compounds as pharmaceutical drugs and disease
therapies. These traditional pharmaceutical products are most often
synthesized in the laboratory or derived from substances found in
nature, and they include antibiotics, antineoplastics, analgesics and
a variety of other compounds. The therapeutic value of such agents
generally depends on their ability to stimulate or inhibit
physiological processes related to disease, to interfere directly with
infection or cancer, or to correct various chemical imbalances. In
certain cases, traditional pharmaceutical products may not be able to
achieve these objectives, due to a variety of reasons including
unwanted side effects, delivery of insufficient amounts of drug to the
disease site, or treatment of symptoms rather than the underlying
cause of illness.  Although the biotechnology industry has made
significant advances with respect to the development of therapeutic
products based on proteins or monoclonal antibodies, such products are
not always successful in treating certain complex diseases.  Examples
include types of cancer, AIDS, cardiovascular diseases, neurologic
conditions and a variety of genetic diseases and disorders. Cell
Genesys believes that an important approach to the treatment of these
and other diseases could involve the genetic modification of cells, ex
vivo or in vivo, to potentially provide new, enhanced or expanded
functions in the form of "gene therapy."

**GENE THERAPY**

A critical component of gene therapy is genes, or segments of DNA,
which typically are contained in the nucleus of cells. Genes provide
the chemical instructions that direct cells to produce proteins. The
production process is known as gene "expression," and the resulting
proteins determine the nature and function of cells and tissues in all
living organisms.

A worldwide effort has been under way for several years to discover
and study genes and their functions. Findings by academic
institutions, government organizations and various corporations are
providing an increased understanding of the relationship between
specific genes and human disease.  It is now well known that genes are
implicated in the cause of many diseases, including not only inherited
conditions involving a defective or missing gene, but also a wide
range of diseases arising from inappropriate biological activity, such
as the over- or under-expression of a normal gene as a result of
environmental factors.  Certain genes also may provide therapeutic
benefits by stimulating the production of proteins that can overcome
various disease processes.

The field known as gene therapy is based on the principle that
naturally occurring or genetically modified genes can be introduced
into target cells to bring about a therapeutic effect. Depending upon
the choice of genetic material delivered, gene therapy may be used to
enhance normal cell activities or enable cells to perform new roles.
In addition, certain forms of gene therapy may involve "gene
correction," which introduces normal genes into relevant cells of
patients with genetically inherited diseases, or may involve
"vaccination," which uses genetic material or modified cells to
stimulate the patient's immune response. Cell Genesys' lead gene
therapy programs, which currently are undergoing human clinical
testing, are designed to expand the capabilities of immune cells to
target and more effectively fight disease.

Another key component of gene therapy is the methodology used to
introduce therapeutic genes into cells.  Whether ex vivo or in vivo,
the insertion of genes into cells is typically accomplished using
reagents known as vectors.  The role of vectors is to deliver the gene
to the target cell, in order to allow the production of a specific
protein. Depending upon the type of gene and its delivery site in the
cell, the expressed protein may remain within the cell for
intracellular effect, travel to the cell membrane to exert a cell-
surface effect, or be secreted into the bloodstream to provide a
systemic effect.

Different types of vectors are needed for multiple gene therapy
products, and the appropriateness of a specific vector is based on the
disease indication, safety considerations, production efficiencies,
disease site and other factors.  Certain viruses, because of their
natural ability to insert genes into cells, have proven to be
particularly efficient vectors and can be genetically modified to
substantially eliminate inherent disease-causing properties.
Engineered viruses may potentially have selective capabilities for
targeting the delivery of genes into specific cell types and specific
regions within the cells.  Cell Genesys is focusing its gene delivery
efforts on the development and use of viral vector systems, including
adeno-associated viral (AAV), lentiviral, adenoviral and retroviral vectors.

**PRODUCT DEVELOPMENT**

Cell Genesys' strategic objective is to develop and commercialize
ex vivo andin vivogene therapies to treat major, life-threatening
diseases and disorders.  Toward this end, Cell Genesys is genetically
modifying selected cell types to impart disease-fighting capabilities
that are not possible with conventional therapeutic agents.

**Clinical Programs**

Overview Of GVAX® Cancer Vaccine Program. GVAX® cancer vaccine is a
treatment vaccine, not a preventative vaccine, designed to stimulate
the patient's overall immune system to effectively fight cancer.  This
program was obtained by Cell Genesys as part of its acquisition of
Somatix Therapy Corporation in 1997.  The GVAX® cancer vaccine is
comprised of tumor cells which are genetically modified to secrete an
immune-stimulating protein, granulocyte-macrophage colony stimulating
factor (GM-CSF), and then are lethally irradiated for safety.
Administration of the resulting product involves injecting the
genetically modified, irradiated cells into the patient.  The goal is
to stimulate an anti-tumor immune response that targets and destroys
tumor cells which persist or recur following surgery, radiation
therapy and other forms of cancer treatment. Cell Genesys is currently
testing two configurations of its GVAX® cancer vaccine in human
clinical studies, a non patient-specific format in prostate cancer and
a patient-specific format in lung cancer.  The Company expects to
pursue the non patient-specific format in future trials for lung and
other types of cancer.

GVAX® Vaccine For Prostate Cancer. This product candidate is
comprised of an "allogeneic" (non-patient specific) vaccine which
employs prostate cancer cell lines that have been genetically modified
with GM-CSF and irradiated for safety.  The Company's plan is to
develop and manufacture this potential product as an "off-the-shelf"
pharmaceutical for use after surgery or radiation therapy for the
primary cancer.  Data from the initial Phase I/II trial of GVAX®
prostate cancer vaccine, completed in 1999, demonstrate that the
vaccine was safe and well tolerated and resulted in preliminary
evidence of antitumor activity. The trial was conducted at Johns
Hopkins Medical Institutions and enrolled men whose only evidence of
recurrent prostate cancer was a rising prostate specific antigen (PSA)
level.  The treatment achieved disease stabilization and a decrease in
the rate of rise of PSA levels in 15 of 21 (71 percent) patients.  In
addition, there was clear evidence of antitumor immunity as measured
by the production of specific antibodies in their blood directed
against the prostate cancer cells comprising the vaccine as well as
biopsy evidence of an antitumor cellular immune response.  Based on
these findings, Cell Genesys initiated two multicenter clinical trials
of GVAX® prostate cancer vaccine during 1999, both of which attained
full enrollment by the first quarter of 2000.  The first trial has
enrolled approximately 35 early stage patients who have not yet
received hormone therapy for prostate cancer.  The second trial has
enrolled approximately 55 patients who have failed standard hormone
therapy.  The Company expects to report data from these trials during
the next year.

GVAX® Vaccine For Lung Cancer. This product candidate is comprised
of an "autologous" (patient-specific) vaccine which employs cancer
cells obtained from individual patients. After surgical removal of a
patient's tumor, the vaccine is prepared by genetically modifying the
cells to secrete GM-CSF and irradiating them for safety. The
production process allows overnight preparation of the vaccine at the
hospital. The vaccine is injected into the patient with the intent of
stimulating an immune response against the patient's own tumor cells.
This form of GVAX® could potentially be commercialized by Cell Genesys
as a gene therapy "kit" for use by hospitals to produce vaccines on a
patient-by-patient basis.  During 1999, Cell Genesys announced
preliminary data from its initial Phase I/II clinical trial of GVAX®
cancer vaccine for lung cancer--a cancer which has been largely
unresponsive to other immunotherapies to date.  Of 17 evaluable
patients with advanced non-small cell lung cancer, the majority of
whom had failed prior treatment with surgery, radiation and/or
chemotherapy, three patients had evidence of disease stabilization
over periods ranging from three months to ongoing at 18 months.  In
addition, one patient who had failed prior chemotherapy experienced a
greater than 50 percent reduction in tumor size at two of three
disease sites.  In all cases, GVAX® therapy was shown to be safe and
well tolerated in the outpatient setting.  This initial trial of GVAX®
lung cancer vaccine enrolled approximately 22 patients and was
conducted at Dana-Farber Partners Cancer Care, Harvard Medical School
(Boston, MA).  Cell Genesys expects to report additional data from
this trial during 2000 and initiated a new multicenter Phase I/II
clinical trial for GVAX® lung cancer vaccine in February 2000.  This
trial is being conducted at five clinical sites and is expected to
enroll up to approximately 40 patients which will include both early
stage and advanced stage non-small cell lung cancer patients.  The
Company expects to report data from these trials during the next year.

Cell Gensys' GVAX® cancer vaccines are novel therapies which
must undergo rigorous human testing regulated by the Food and Drug Administration
(FDA).  There is no assurance that either configuration of GVAX® will be
proven safe or efficacious, or if approved, that either configuration can be
successfully commercialized. Although preliminary results reported to
date from Cell Genesys' Phase II clinical testing of GVAX® vaccine for
prostate cancer are encouraging, and the therapy appears to be both safe
and well tolerated by patients, there can be no assurance that this
therapy will be tolerated over an extended period of time or that the
clinical efficacy of this therapy will be demonstrated. There also can be
no assurance that Phase I/II studies of GVAX® vaccine for the treatment
of lung cancer will demonstrate clinical efficacy. Any conclusion as to
whether the Company's GVAX® cancer vaccines can potentially play a role
in the treatment of prostate cancer or lung cancer will be based on both
the results of ongoing clinical trials as well as future Phase II and
Phase III studies.

T Cell Gene Therapy For HIV Infection. Human immuno-
deficientcy virus ("HIV") is the virus which infects the human immune
system and causes AIDS. Cell Genesys' T cell gene therapy for HIV
infection involves genetically modifying the patient's own immune T
cells to impart the ability to recognize and destroy HIV-infected cells
potentially eliminating reservoirs of virus that persist despite
antiviral drugs. Specifically, killer T cells (CD8 cells) and helper T
cells (CD4 cells) are collected from the patient's blood via a
standard blood bank procedure (apheresis) and are genetically modified
with the CD4-zeta gene, which encodes a novel cell surface receptor
that targets a viral protein present on HIV-infected cells. The
genetically modified T cells are then expanded in number and infused
into the patient periodically in an outpatient clinical setting, with
the goal of reducing the number of HIV-infected cells.  During 1999,
the Company reported the results of randomized, controlled Phase II
trial of T cell gene therapy in approximately 40 patients with
undetectable, plasma HIV on antiretroviral drug therapy which
indicated a reduction in blood and tissue reservoirs of HIV infection.
In September 1999, Hoechst Marion Roussel, the company's codevelopment
partner for its HIV T cell gene therapy program, elected to terminate
its collaboration with Cell Genesys for this program.  The Company is
currently seeking a new collaborator and does not have plans further
for clinical trials of T cell gene therapy.

**Preclinical Programs**

During 1999, Cell Genesys conducted preclinical studies
in four in vivo gene therapy programs including hemophilia, cancer,
cardiovascular disorders and Parkinson's disease.  Positive results
have been achieved in preclinical studies for each of these programs.

Hemophilia Gene Therapy.  Cell Genesys scientists and academic
collaborators have evaluated gene therapy using an adeno-associated
viral (AAV) vector to deliver the factor IX gene into the liver of
both small and large animals with hemophilia. Factor IX is deficient
in one type of hemophilia referred to as hemophilia B.  Liver cells
are the primary site for production of blood clotting proteins. With
successful gene therapy, liver cells may be modified to provide a
missing blood clotting protein.  In the preclinical studies of
hemophilia gene therapy, a single gene therapy injection led to stable
production of the factor IX protein for the duration of study:
17 months in mice and currently out to 20 months in dogs. In the
treated dogs, the time required to form blood clots was reduced, and
there was a significant reduction in bleeding episodes in the large animals.
No immune response against the gene therapy was observed.  The Company's
increased financial resources have prompted the decision to pursue
hemophilia gene therapy including hemophilia A, the more common type
of hemophilia, which is caused by the deficiency of a blood clotting
factor called factor VIII.  The company has the option to utilize
either its proprietary lentiviral vector system, which has the
capacity to carry the entire factor VIII gene, or its proprietary AAV
vector system, if a shorter form of the gene can be successfully
applied.  Hemophilia gene therapy is now considered Cell Genesys' lead
preclinical program.

Cancer Gene Therapy. Cell Genesys is exploring a variety
of gene therapy strategies to block blood vessel growth to tumors,
thereby starving the tumor blood supply.  This method is known as
antiangiogenesis.  Cell Genesys is collaborating with EntreMed, Inc.
to deliver two genes with antiangiogenic properties--Angiostatin® and
Endostatin--using the Company's adenoviral and AAV vectors.  Cell
Genesys also has an agreement with Rigel Pharmaceuticals in
this area.  Rigel is using their high throughput functional genomics
screening to identify novel genes which have antiangiogenic
capabilities.  Cell Genesys will be granted exclusive worldwide rights
to these targets in the field of gene therapy.  In 1999, the Company
also conducted preclinical studies in cancer with the p27/p16 gene, a
cell cycle inhibitor gene exclusively licensed from Mitotix, Inc.

Cardiovascular Gene Therapy. Cell Genesys' cardiovascular gene
therapy program is focused on the development of gene therapy to
prevent or treat restenosis, a complication of thrombolysis and
angioplasty, a surgical procedure employed to open blood vessel
blockages and restore blood flow in patients with cardiovascular
disease.  Restenosis occurs when blood vessel lining cells migrate to
and proliferate at such treatment sites thereby constricting blood
flow. Cell Genesys believes that gene therapy represents a potential
approach to treating or preventing restenosis by delivering genes to
blood vessel lining cells that can inhibit or slow the proliferation
of the blood vessel cells associated with restenosis. Medical
procedures are currently available to achieve the site-specific
delivery of these genes to appropriate sites in blood vessels.  Cell
Genesys' scientists and academic collaborators have demonstrated that
adenoviral gene delivery systems can be used to deliver genes to blood
vessel lining cells in studies in rabbits and that the delivery of the
p27/p16 fusion gene can effect potent inhibition of vessel wall
occlusion by reducing the proliferation of cells that contribute to
restenosis.  Cell Genesys has exclusively licensed certain cell cycle
inhibitor genes, including p27/p16 from Mitotix, Inc. for use in
cardiovascular and cancer gene therapy.

Parkinson's Disease Gene Therapy. Cell Genesys scientists and
academic collaborators have also evaluated AAV-based gene therapy in
Parkinson's disease, a neurodegenerative condition affecting brain
cells responsible for movement and speech. Currently, the drug, L-dopa
is commonly prescribed as a treatment for Parkinson's disease.  In a
study in mice exhibiting certain Parkinson's symptoms, an AAV gene
delivery system was used to deliver the genes required for the
production of L-dopa to specific regions of the brain where L-dopa
production could be detected throughout the one-year observation
period.  Additionally, after a single gene therapy injection, treated
mice could survive during the study without daily L-dopa treatments.
Cell Genesys is seeking a collaborative partner for this program.

**Proprietary Gene Therapy Technologies**

Successful gene therapy -- ex vivo orin vivo-- depends on an
effective combination of therapeutic genes and vectors, the gene
delivery technologies used to transfer genes into cells. Cell Genesys'
proprietary gene delivery technologies include AAV, lentiviral,
adenoviral and retroviral vectors. This broad portfolio of vectors
enhances the number of gene therapy applications that the Company and
its collaborators can pursue.

The selection of a specific vector is based on the disease
indication, safety considerations, production efficiencies, disease
site and other factors. Adenoviral vectors deliver larger genes into
dividing or nondividing cells, and they are currently being used ex
vivo in human clinical studies of GVAX® vaccine for lung cancer. AAV
vectors deliver smaller genes to certain nondividing cells, including
muscle, liver, nerve and blood vessel cells. Effective in vivo gene
delivery using the AAV vector has been achieved in the Company's
hemophilia and Parkinson's disease preclinical programs.  Lentiviral
vectors deliver larger genes to dividing and nondividing cells,
including nerve, liver, muscle and bone marrow stem cells.  Company
scientists have recently described improved third-generation lentiviral
vectors that employ a new safety mechanism which can prevent the vector
from functioning should it recombine with infectious virus already present
in the individual receiving the gene therapy treatment.  The Company
believes that these third generation lentiviral vectors could potentially
be employed in human clinical studies. Finally, retroviral vectors are
suitable for delivering genes ex vivo to dividing cells.

Cell Genesys believes that its broad portfolio of vectors
position the company as an attractive partner for biotechnology and
pharmaceutical companies as well as academic institutions which have
proprietary genes with potential in gene therapy.  Since 1998, Cell
Genesys signed deals relating to its vector technologies with six
different companies.  These collaborations include transactions in
which Cell Genesys is reimbursed for providing gene delivery
technologies to other companies with gene therapy product
opportunities within their portfolio as well as transactions in which
Cell Genesys acquired commercial rights to therapeutic genes owned or
discovered by other companies. Examples of the former type of
transaction include agreements with Collateral Therapeutics, Inc. in
cardiovascular gene therapy, EntreMed, Inc. in cancer gene therapy,
Pharmacia & Upjohn in animal health and Clontech Laboratories, Inc., a
division of Becton Dickinson, in genomic research kits.  Examples of the
latter type of transaction include a collaboration with Rigel, Inc.
providing access to genes for cancer, as well as an earlier agreement
with Mitotix, Inc., which provides Cell Genesys with exclusive rights to
the gene therapy applications of p27/p16 cell cycle inhibitor genes in
the fields of cancer and cardiovascular disease.

**Government Regulations**

FDA Regulation. The activities required before a pharmaceutical
agent may be marketed in the United States begin with preclinical
testing. Preclinical tests include laboratory evaluation of potential
products and animal studies to assess the potential safety and
efficacy of the product and its formulations. The results of these
studies and other information must be submitted to the FDA as part of
an investigational new drug application, which must be reviewed and
approved by the FDA before proposed clinical testing can begin.
Clinical trials involve the administration of the investigational new
drug to healthy volunteers or to patients under the supervision of a
qualified principal investigator. Clinical trials are conducted in
accordance with Good Clinical Practices under protocols that detail
the objectives of the study, the parameters to be used to monitor
safety and the efficacy criteria to be evaluated. Each protocol must
be submitted to the FDA as part of the investigational new drug
application. Further, each clinical study must be conducted under the
auspices of an independent institutional review board at the
institution at which the study will be conducted. The institutional
review board will consider, among other things, ethical factors and
the safety of human subjects. In addition, certain protocols involving
the use of genetically modified human cells must also be reviewed by
the Recombinant Advisory Committee of the National Institutes of
Health.

Typically, clinical testing involves a three-phase process.
In Phase I, clinical trials are conducted with a small number of subjects
to determine the early safety profile and pharmacology of the new
therapy. In Phase II, clinical trials are conducted with groups of
patients afflicted with a specific disease in order to determine
preliminary efficacy, optimal dosages and expanded evidence of safety.
In Phase III, large scale, multicenter, comparative clinical trials
are conducted with patients afflicted with a target disease in order
to provide enough data for the statistical proof of efficacy and
safety required by the FDA and others. In the case of products for
life-threatening diseases, the initial human testing is generally done
with diseased patients rather than with healthy volunteers. Since
these patients are already afflicted with the target disease, it is
possible that such studies may provide some results traditionally
obtained in Phase II trials. These trials are frequently referred to
as Phase I/II trials. Although the preliminary Phase I/II clinical
results of Cell Genesys' GVAX® cancer vaccine have shown no significant
treatment-related safety problems to date, there can be no assurance
that such therapy or product will be tolerated at higher doses or that
the clinical efficacy of such therapy or product will be demonstrated.

The results of the preclinical and clinical testing, together
with chemistry and manufacturing information, are submitted to the FDA in
the form of a new drug application for a pharmaceutical product, and
in the form of a product license application for a biological product,
for approval to commence commercial sales. In responding to a new drug
application or a product license application, the FDA may grant
marketing approvals, request additional information or further
research, or deny the application if it determines that the
application does not satisfy its regulatory approval criteria.
Approvals may not be granted on a timely basis, if at all, or if
granted may not cover all the clinical indications for which Cell
Genesys is seeking approval or may contain significant limitations in
the form of warnings, precautions or contraindications with respect to
conditions of use.

Other Government Regultaion. In addition to laws and
regulations enforced by the FDA, Cell Genesys is also subject to regulation
under the Occupational Safety and Health Act, the Environmental Protection
Act, the Toxic Substances Control Act, the Resource Conservation and
Recovery Act and other present and potential future federal, state or
local laws and regulations as Cell Genesys research and development
involves the controlled use of hazardous materials, chemicals, viruses
and various radioactive compounds.

Cell Genesys' manufacturing facility for production of clinical quantities
quantities of its products was licensed in 1994 by the California
Department of Health Services. The California Department of Health
Services may inspect the facility annually. Manufacture of clinical
quantities of Cell Genesys' products does not require an FDA license,
although the FDA may at any time inspect the facility. The continued
operation of this facility requires compliance with FDA standards for
this type of manufacturing. A separate license from the FDA is
required for commercial manufacturing of any products. During 1995,
Cell Genesys completed construction of a clinical scale manufacturing
facility. This facility is being used to manufacture clinical product
for the company's GVAX® cancer vaccine clinical trials. Cell Genesys
will consider contract manufacturing for commercial scale requirements
in the future to the extent possible, or expansion of its own
facilities if necessary.

**Cell Genesys' Assets Outside Of Its Core Business In Gene Therapy**

Minority-Owned Abgenix, Inc. ("Abgenix") Subsidiary.Abgenix is
developing antibody therapies for transplantation-associated medical
conditions, inflammation, autoimmune disorders and cancer.  Abgenix's
core technology includes strains of transgenic mice capable of
generating fully human antibodies.  Cell Genesys formed Abgenix as a
separate business subsidiary in June 1996, contributing $14 million in
cash, research, development and manufacturing technology as well as
patents and other intellectual property specific to the antibody
therapy programs. Abgenix completed its public offering (Nasdaq-AMEX:
ABGX) in July 1998. Following the initial public offering, Cell
Genesys' ownership of Abgenix dropped below 50 percent. Additional
Abgenix financings, including the early 2000 secondary offering in
which Cell Genesys sold 966,000 shares of Abgenix stock,
decreased Cell Genesys' holdings to 2,426,034 shares of common stock
or approximately 12 percent ownership of Abgenix.  The Company may
decide to sell additional shares of Abgenix common stock over time,
when appropriate, to provide additional funding for Cell Genesys' gene
therapy business.

Gene Activation Technology. Cell Genesys has developed a
novel and proprietary method for protein production referred to as
"gene activation." Gene activation involves the insertion of genetic
regulatory elements at specific sites in cell chromosomes in proximity
to a human gene responsible for the production ("expression") of a
therapeutic protein. Subsequently, the gene-activated protein could be
produced in a cell-based production system. Gene activation may be
applied to therapeutic proteins such as erythropoietin (EPO) and
potentially other proteins and may offer certain advantages. Gene
activation licensing agreements have provided more than $23 million in
revenues to Cell Genesys as of February 2000.  Most recently, Cell
Genesys executed a license agreement with Hoechst Marion Roussel, now
Aventis Pharmaceuticals, in February 1997 for gene-activated EPO and a
second undisclosed protein. The agreement provides for up to $26
million in milestone payments and fees, in addition to any royalties
on future sales of these two potential gene-activated protein
products. As of February 2000, Cell Genesys had received over $15
million under this license agreement, including a milestone payment
for the 1998 initiation of a Phase III clinical trial for gene-
activated EPO, which Hoechst Marion Roussel is developing in
collaboration with Transkaryotic Therapies, Inc.

**Corporate Collaborations**

Pharmaceutical Division Of Japan Tobacco.In December 1998,
Cell Genesys announced the signing of a worldwide collaboration with the
pharmaceutical division of Japan Tobacco Inc. ("JT") for selected
product candidates from the Company's GVAX® cancer vaccine program.
Initially the collaboration will focus on two targets: prostate cancer
and lung cancer.  Under the terms of the agreement, the two parties
will share equally in the product development costs and future profits
on a worldwide basis. Cell Genesys will have marketing rights in North
America; JT will have marketing rights in Japan, Taiwan and Korea; and
the two companies will share equally in marketing rights in Europe and
the rest of the world.  The agreement provides for committed payments
to Cell Genesys of $12.7 million due at signature and a first
anniversary payment of $2.5 million. Based primarily on the research
and development progress with the two GVAX® products, Cell Genesys
could receive up to $27.5 million in research and development funding
in the first three years, and approximately $80 million in milestone
payments if JT continues in the collaboration through the regulatory
approvals of the two products. Additionally, the agreement provides
for loans of up to $30 million to Cell Genesys for Phase III
development costs, if JT continues in the collaboration into Phase III
trials. The parties have also agreed to support an ongoing clinical
trial of GVAX® for kidney cancer in Japan which is the first clinical
trial of cancer gene therapy in Japan. If the parties agree to proceed
with the development of this third GVAX® product, Cell Genesys will be
eligible to receive additional funding in the form of research and
development reimbursements and other payments to be agreed upon at a
later date. Of the above payments to be received by Cell Genesys,
approximately $45 million thereof are expected during the first two
years of the agreement. None of the payments involve an additional
equity investment in Cell Genesys by JT, which currently owns
approximately 3 percent of the Company. This is the second
collaboration agreement between Cell Genesys and JT. The first
collaboration, signed in 1991, funded the successful development of
the fully human monoclonal antibody technology employed by Abgenix.

Aventis Pharmaceuticals (formerly Hoechst Marion Roussel). In  1995,
Cell Genesys signed a worldwide agreement with Hoechst Marion Roussel
(now Aventis Pharmaceuticals) for the development and
commercialization of Cell Genesys' T cell gene therapy for AIDS. The
agreement provided funding for Cell Genesys' AIDS gene therapy program
including the Phase II human clinical trials completed in 1999.
During the collaboration, Cell Genesys received approximately $71.6
million under its agreement with Hoechst Marion Roussel including a
$20 million equity investment in Cell Genesys' common stock,
representing approximately 6 percent of the outstanding Cell Genesys
common stock as of December 31, 1999.  During 1999, Cell Genesys
reacquired product rights to its AIDS gene therapy program following
the termination of a collaboration agreement with Hoechst Marion
Roussel.  In connection with the termination, the Company received
a payment of approximately $8 million.

Other Collaborations. Since early 1999, Cell Genesys has signed
deals with five different companies relating to its gene delivery
technologies.  Cell Genesys and Mitotix, Inc., who have a worldwide
license and research collaboration under which Cell Genesys has
exclusive rights to use certain cell cycle inhibitor genes for the
development of gene therapy products to treat cardiovascular disease.
This agreement was expanded in April 1999 to include cancer applications
as well.  In August 1999, Cell Genesys signed a research collaboration
for cancer gene therapy with EntreMed, Inc. Under the agreement,
EntreMed's Angiostatin® and Endostatin genes will be combined with
Cell Genesys' proprietary adenoviral and adeno-associated viral (AAV)
gene delivery systems in preclinical studies designed to assess
whether the gene therapy can treat tumors by inhibiting their blood
supply.  In September 1999, the Company signed a collaboration with
Pharmacia & Upjohn in which Cell Genesys will provide its proprietary
adenoviral and AAV gene delivery technologies to Pharmacia & Upjohn to
evaluate certain applications of gene therapy in animal health.  In
September 1999, Cell Genesys signed a research collaboration and
license agreement with Rigel Pharmaceuticals, Inc.  Under the
agreement, Rigel is employing its proprietary functional genomics
technology to identify novel therapeutic genes for the treatment of
cancer--through antiangiogenesis--and Cell Genesys will be granted
exclusive, worldwide rights to these genes in the field of gene
therapy.  In exchange, Rigel gains access to certain Cell Genesys
patents and technology pertaining to retroviral gene delivery
technology for use in the field of functional genomics.  In January
2000, Cell Genesys nonexclusively licensed certain retroviral gene
delivery technology to Clontech Laboratories, Inc., a wholly owned
subsidiary of Becton Dickinson and Company. Under the license, Cell
Genesys will receive royalties on worldwide sales of certain research
kits, currently being marketed, and any future products employing Cell
Genesys' proprietary retroviral gene delivery technology.
Additionally, customers of Clontech who intend to market products
arising from research using these kits will need to obtain an
additional license to this technology from Cell Genesys prior to
product commercialization.

**GENE THERAPY PATENTS AND TRADE SECRETS**

The patent positions of pharmaceutical and biotechnology firms, including
including Cell Genesys, are generally uncertain and involve complex
legal and factual questions. Cell Genesys currently has approximately
220 issued or granted patents and more than 335 pending applications.
While Cell Genesys is currently prosecuting its patent applications,
it cannot be certain whether any given application will result in the
issuance of a patent or, if any patent is issued, whether it will
provide significant proprietary protection or will be invalidated.
Because patent applications in the United States are confidential
until patents are issued and publication of discoveries in the
scientific or patent literature tends to lag behind actual discoveries
by several months, Cell Genesys cannot be certain that it was the
first creator of inventions covered by pending patent applications or
that it was the first to file patent applications for such inventions.

The commercial success of the Company will also depend in
part on not infringing the patents or proprietary rights of others and
not breaching licenses granted to the Company. The Company may be
required to obtain licenses to third party technology or genes necessary
to conduct its business. Any failure by the Company to license at
reasonable cost any technology or genes required to commercialize its
technologies or products may have a material adverse effect on the
Company's business, results of operations, financial condition or cash
flow.

Litigation, which could result in substantial cost to the Company,
may also be necessary to enforce any patents issued to the Company or
to determine the scope and validity of other parties' proprietary
rights. To determine the priority of inventions, interference
proceedings are frequently declared by the U.S. Patent Office that
could result in substantial costs to the Company and may result in an
adverse decision as to the priority of the Company's inventions.  Cell
Genesys is currently involved in interference and/or opposition
proceedings with regard to: (i) gene activation technology, (ii) ex
vivo gene therapy, (iii) chimeric receptor technology employed in the
company's T cell gene therapy program and (iv) certain retroviral
vector technology.  The outcome of these proceedings cannot be
predicted, but are not expected to have a material adverse effect on
the Company's intellectual property position or its business. The
Company may be involved in other interference and/or opposition
proceedings in the future. The Company believes there will continue to
be significant litigation in the industry regarding patent and other
intellectual property rights.

The Company also relies on unpatented trade secrets and
improvements, unpatented know-how and continuing technological
innovation to develop and maintain its competitive position. No
assurance can be given that others will not independently develop
substantially equivalent proprietary information and techniques, or
otherwise gain access to the Company's trade secrets or disclose such
technology, or that the Company can meaningfully protect its rights to
its unpatented trade secrets.

Cell Genesys requires its employees and consultants to execute a
confidentiality agreement upon the commencement of an employment or
consulting relationship with the Company. These agreements provide
that all confidential information developed by or made known to an
individual during the course of the employment or consulting
relationship generally must be kept confidential. In the case of
employees, the agreements provide that all inventions conceived by the
individual, while employed by the Company, relating to the Company's
business are the Company's exclusive property. These agreements may
not provide meaningful protection for the Company's trade secrets in
the event of unauthorized use or disclosure of such information.

**Human Resources**

As of December 31, 1999, Cell Genesys employed 124 persons, of whom
17 hold Ph.D. degrees and four hold M.D. degrees. Approximately 92
employees are engaged in research and development, and 32 support
business development, intellectual property, finance and other
administrative functions. Cell Genesys' senior management and
directors have had prior product development experience in the
biotechnology and pharmaceutical industries.

Cell Genesys' success will depend in large part upon its ability to
attract and retain employees. Cell Genesys faces competition in this
regard from other companies, research and academic institutions,
government entities and other organizations. Cell Genesys believes
that it maintains good relations with its employees.

**Executive Officers**

The executive officers of Cell Genesys and their ages as of March 30,
2000 are as follows:



|**Name**                 | **Age** | **Positon with Cell Genesys**                               
|------------------------ | ------- | ------------------------------------------------------------
|Stephen A. Sherwin, M.D  | 51      | Chairman of the Board, President and Chief Executive Officer
|Joseph J. Vallner, Ph.D. | 53      | Executive Vice President and Chief Operating Officer        
|Matthew J. Pfeffer       | 42      | Vice President and Chief Financial Officer                  
|Dale G. Ando M.D.        | 46      | Vice President -- Clinical Research and Regulatory Affairs  
|David F. Broad, Ph.D.    | 46      | Vice President -- Development and Manufacturing             
|Bruce A. Hironaka        | 45      | Vice President -- Corporate Development                     
|Christine McKinley       | 46      | Vice President -- Human Resources                           

Dr. Sherwin has served as the president and chief executive officer
and a director of Cell Genesys since March 1990. In March 1994, Dr.
Sherwin was elected to the additional position of chairman of the
board of directors of Cell Genesys. From 1983 to 1990, Dr. Sherwin
held various positions at Genentech, Inc., a biotechnology company,
most recently as vice president of clinical research. Prior to 1983,
Dr. Sherwin held various positions on the staff of the National Cancer
Institute.  Dr. Sherwin currently serves as chairman of the board of
Abgenix, Inc. and is also a director of Neurocrine Biosciences, Inc.,
Rigel Pharmaceuticals, Inc. and Calyx Therapeutics, Inc.  Dr. Sherwin
holds a B.A. in biology from Yale University and an M.D. from Harvard
Medical School.

Dr. Vallner joined Cell Genesys in October 1999 as executive
vice president and chief operating officer and currently manages the
research, development, manufacturing, clinical, regulatory and operations
departments at Cell Genesys.  Prior to Cell Genesys, Dr. Vallner was with
Sequus Pharmaceuticals for seven years where he was instrumental in the
product launch of two products including Doxil®, a liposome-based cancer
therapeutic.  In addition, Dr. Vallner helped transition the company
through its merger with Alza Corporation.  Prior to Sequus, he held
various positions with Syntex Corporation and G.D. Searle and Company,
and was an associate professor of pharmaceutics at the University of
Georgia prior to that.  Dr. Vallner received his Ph.D. in pharmaceutics,
his M.S. in physical chemistry and his B.S. in pharmacy from the
University of Wisconsin, Madison.

Mr. Pfeffer joined Cell Genesys in June 1996 as director of
finance and was appointed chief financial officer in September 1998 and
vice president in April 1999. From 1989 to 1996, Mr. Pfeffer held a variety
of positions at Diasonics Ultrasound, Inc., most recently as corporate
controller. From 1987 to 1989, he was in the finance department at
ComputerLand Corporation. From 1981 to 1987, Mr. Pfeffer was in the
audit and consulting groups at Price Waterhouse, where he obtained his
CPA certificate. Mr. Pfeffer graduated with a B.S. degree in business
administration from the University of California, Berkeley.

Dr. Ando, vice president, clinical research and regulatory affairs,
joined Cell Genesys in July 1997. Dr. Ando brings over nine years of
clinical development and research experience to Cell Genesys,
including three years at Cetus Corporation and six years at Chiron
Corporation. Most recently he has served as director of clinical gene
therapy for Chiron Technologies at Chiron. His experience includes
clinical development of biological therapeutics and gene therapy for
both cancer and HIV infection. Dr. Ando began his career as a faculty
member at UCLA medical school in the division of rheumatology. He
received his M.D. and Internal Medicine training at the University of
Michigan and a B.S. in Chemistry from Stanford University.

Dr. Broad joined Cell Genesys in 1993 and is currently vice
president of development and manufacturing. His prior experience in
biological product development includes more than six years at
Celltech Limited, where he specialized in cell-based manufacturing
systems for therapeutic proteins and antibodies. Dr. Broad also served
as a senior development scientist at Beecham Pharmaceuticals. He
received his B.S. and Ph.D. in microbiology from the University of
London and served as a postdoctoral research fellow in the
Microbiology Section of the School of Pharmacy, University of London.

Mr. Hironaka, vice president, corporate development, joined Cell
Genesys in 1994. From 1992 to 1994, Mr. Hironaka was with Aviron, a
biotechnology company focusing on viral vaccines, most recently as
vice president responsible for business development, finance, human
resource and operations. Previously, he was a consultant with McKinsey
& Company, a leading international management consulting firm. Mr.
Hironaka received an A.B. in economics from the University of
California, Berkeley and holds an M.B.A. and J.D. from Stanford
University.

Ms. McKinley, vice president, human resources joined Cell
Genensys in l994. From 1986 to 1994, she was responsible for human resources
at Nellcor Puritan Bennett, Inc. Previously, Ms. McKinley also worked at
Genentech, Inc. for seven years in various human resource positions.
She received a B.A. in psychology from the University of California,
Santa Barbara.

**SCIENTIFIC ADVISORY BOARD**

Cell Genesys has created a prominent scientific advisory board
that includes several leaders in the cancer immunotherapy and gene therapy field. As of
March 30, 2000 the board consists of following individuals:

`NAME                            SCIENTIFIC POSITION
-------------------------------- ----------------------------------------------
Fred H. Gage, Ph.D. ............ Professor of Neuroscience
                                 The Salk Institute
Ronald N. Germain, M.D., Ph.D. . Deputy Chief of Laboratory of Immunology
                                 Chief, Lymphocyte Biology Section
                                 National Institutes of Health
                                 National Institute of Allergy and Infectious
                                 Diseases
Jordan U. Gutterman, M.D. ...... Chairman, Clinical Immunology and Biological
                                 Therapy M.D. Anderson Cancer Center
Raju S. Kucherlapati, Ph.D. .... Kramer Professor
                                 Chairman of the Department of Molecular Genetics
                                 Albert Einstein College of Medicine
John T. Potts, Jr., M.D. ....... Director of Research
                                 Massachusetts General Hospital
                                 Physician-in-Chief Emeritus Jackson
                                 Distinguished Professor of Clinical Medicine
                                 Harvard Medical School
Thomas E. Shenk, Ph.D. ......... Elkins Professor
                                 Chairman of the Department of Molecular Biology
                                 Professor, Princeton University
Inder M. Verma, Ph.D. .......... Professor of Molecular Biology and Virology
                                 The Salk Institute`

**ITEM 2. PROPERTIES**

Cell Genesys occupies administrative offices and research
laboratories covering approximately 78,253 square feet of space in a
research and development office park located in Foster City, California.
An additional 13,382 square feet of space will revert back to Cell
Genesys on April 1, 2000.  Cell Genesys' lease of these facilities
expires in 2002, with an option to renew the lease for an additional
four-year term. Cell Genesys' laboratories are equipped for biochemical
and tissue culture research and development. Additionally, Cell Genesys
has constructed a facility licensed for Good Manufacturing Practices
("GMP") manufacturing of clinical quantities of Cell Genesys' products.

In addition, Cell Genesys leases certain other facilities,
including facilities assumed as part of its acquisition of Somatix Therapy
Corporation in 1997.  These facilities are not currently occupied by Cell
Genesys, but are largely sublet to other companies under sub-leasing
arrangements.  Cell Genesys also retains approximately 25,000 square feet
of GMP manufacturing space in Alameda, California available for future
products.  The Company believes its facilities are in good repair and are
adequate for its current needs.

**ITEM 3. LEGAL PROCEEDINGS**

Not applicable.

**ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS**

Not applicable.

**PART II**

**ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS**

The Cell Genesys common stock is traded in the over-the-counter
market and is quoted on The Nasdaq-AMEX National Market under the symbol "CEGE."
The following table sets forth, for the periods indicated, the high and low bid
prices per share of Cell Genesys common stock as reported by The Nasdaq-AMEX
National Market. Cell Genesys did not pay any cash dividends with respect to the
Cell Genesys common stock during any of the periods indicated below.

`High       Low
                                                      --------- ---------
Calendar Year 1998
  First Quarter......................................    $8.63     $6.19
  Second Quarter.....................................    $9.00     $6.50
  Third Quarter......................................    $8.94     $3.00
  Fourth Quarter.....................................    $6.00     $2.69

Calendar Year 1999
  First Quarter......................................    $7.06     $4.50
  Second Quarter.....................................    $5.88     $3.88
  Third Quarter......................................    $9.13     $4.50
  Fourth Quarter.....................................   $14.06     $7.00

Calendar Year 2000
  First Quarter (through March 15, 2000).............   $52.00     $11.81`

As of March 15, 2000, there were approximately 28,000 holders of record of
the Company's common stock. On March 15, 2000 the last reported sales price on
the Nasdaq-AMEX National Market for the common stock was $29.19. The market for
the Company's common stock is highly volatile.

**ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA**

`Year Ended December 31,
                                            --------- ----------------------------------------
                                              1999      1998       1997      1996      1995
                                            --------- --------- ---------- --------- ---------
                                                       (in thousands, except per share data)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue under collaborative agreements-
  principally from related parties.........  $33,607   $24,146    $23,806   $22,505   $13,822
Operating expenses:
  Research and development.................   24,538    37,932     36,830    27,587    25,879
  General and administrative...............    4,833     8,204     10,659     7,469     5,670
  Charge for purchased in-process
   technology..............................      --        --      72,270       --        --
  Restructuring charge related to
   acquisition.............................      --        --       6,576       --        --
  Charge for cross-license and settlement
   (includes $11,250 equity in losses of
   Xenotech joint venture associated with
   cross-license and settlement)...........      --        --      22,500       --        --
  Merger termination costs.................   15,382       --
                                            --------- --------- ---------- --------- ---------
          Total operating expenses.........   44,753    46,136    148,835    35,056    31,549
                                            --------- --------- ---------- --------- ---------
Operating loss.............................  (11,146)  (21,990)  (125,029)  (12,551)  (17,727)
Equity in loss of Abgenix..................   (3,083)   (2,917)      --         --        --
Gain on sale of stock of Abgenix...........      --      7,020       --         --        --
Interest income, net.......................    2,235     1,567      1,500     3,277     2,739
                                            --------- --------- ---------- --------- ---------
Loss before minority interest..............  (11,994)  (16,320)  (123,529)   (9,274)  (14,988)
Loss attributed to minority interest.......      --      4,192       --         --        --
                                            --------- --------- ---------- --------- ---------
Net loss...................................  (11,994)  (12,128)  (123,529)   (9,274)  (14,988)
Deemed dividend to preferred stockholders..      392     1,088       --         --        --
                                            --------- --------- ---------- --------- ---------
Net loss attributed to common stockholders. ($12,386) ($13,216) ($123,529)  ($9,274) ($14,988)
                                            ========= ========= ========== ========= =========
Basic and diluted net loss per
  common share.............................   ($0.39)   ($0.46)    ($5.33)   ($0.57)   ($1.07)
                                            ========= ========= ========== ========= =========
Shares used in computing net loss per
  common share.............................   31,682    28,607     23,172    16,373    14,025
                                            ========= ========= ========== ========= =========



                                                               December 31,
                                            --------------------------------------------------
                                              1999      1998       1997      1996      1995
                                            --------- --------- ---------- --------- ---------
                                                               (in thousands)
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term
  investments..............................  $50,287   $53,243    $88,816   $85,584   $81,929
Working capital............................  471,646    44,080     51,804    64,137    76,098
Total assets...............................  489,683    65,799    106,887    99,809    94,120
Total current liabilities..................   13,430     9,964     39,955    22,612     7,007
Long-term obligations......................    3,198     4,860     11,082     6,133     7,720
Redeemable convertible preferred stock.....    7,679    12,083     19,817       --        --
Accumulated deficit........................ (203,803) (191,809)  (179,563)  (56,270)  (46,459)
Stockholders' equity.......................  465,376    38,892     18,641    71,064    79,393`

**ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS**

Statements made in this Item other than statements of historical
fact, including statements about the Company's clinical trials, research
programs, product pipelines, current and potential corporate
partnerships, licenses and intellectual property, the adequacy of capital
reserves and anticipated operating results and cash expenditures are
forward-looking statements within the meaning of section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934.  As such, they are subject to a number of uncertainties that could
cause actual results to differ materially from the statements made,
including risks associated with the success of research and product
development programs, the issuance and validity of patents, the
development and protection of proprietary technology, the ability to
raise capital, operating expense levels and the ability to establish and
retain corporate partnerships. Reference is made to discussions about
risks associated with product development programs, intellectual property
and other risks which may affect the Company under "Risk Factors"
below. The Company does not undertake any obligation to update forward-
looking statements. The following should be read in conjunction with the
Company's Annual Report on Form 10-K  for the year ended December 31,
1999, the Company's Quarterly Reports on Form 10-Q, the Company's current
report on Form 8-K filed on January 27, 2000.

**Overview**

Since its inception in April 1988, Cell Genesys, Inc. ("Cell
Genesys" or "the Company") has focused its research and product
development efforts on human disease therapies which are based on
innovative gene modification technologies. The Company's strategic
objective is to develop and commercialize in vivoand/or ex vivo gene
therapies to treat cancer and other major, life-threatening diseases
including hemophilia. Cell Genesys' clinical programs include GVAX®
cancer vaccines in Phase II studies for prostate cancer and Phase I/II
studies for lung cancer. GVAX® vaccines for prostate cancer and for
lung cancer are being developed through a worldwide collaboration with
the pharmaceutical division of Japan Tobacco Inc. ("JT"). In
addition, Cell Genesys has preclinical programs which are evaluating
potential gene therapies for hemophilia, cancer, cardiovascular
disorders and Parkinson's disease. The Company also has assets outside
of its core business which can be used to help maintain financial
strength while product candidates are under development. These assets
include Cell Genesys' equity ownership of Abgenix, Inc. ("Abgenix",
Nasdaq-AMEX: ABGX), which is focused on the development and
commercialization of antibody therapies and a licensing program in
gene activation technology.

Cell Genesys believes that gene therapies are likely to be
developed on a continuum, progressing from ex vivo (modification of cells
outside the patient's body for injection as therapy) toin vivo
(modification of cells within the patient's body to provide therapy).
The Company's goal is to emphasize "off-the-shelf" products that enable
gene therapy to be provided in out-patient settings. These potentially
include both non-patient-specific therapies, which could be vialed
pharmaceuticals for direct administration, and patient-specific gene
therapy products, which could be packaged as "kits" for overnight cell
processing at clinical laboratories.

During 1999, the Company has reported encouraging data from its
Phase I/II human trials evaluating the GVAX® vaccine for prostate cancer.
Data from the recently completed Phase I/II trial of GVAX® prostate
cancer vaccine demonstrate evidence of clinical safety and preliminary
evidence of antitumor effects as measured by levels of prostate specific
antigen ("PSA"). Based on positive results from this trial, the Company
initiated two multicenter Phase II trials of GVAX® vaccine in prostate cancer.
Phase I/II clinical trials for GVAX® vaccine in lung cancer revealed
preliminary indications of antitumor activity and the Company recently
initiated a multicenter Phase I/II trial for GVAX® lung cancer treatment.
During 1999, the Company reported results from a recently completed randomized,
controlled Phase II trial of T cell gene therapy for AIDS.  The trial
included 40 patients with HIV infection who had no detectable HIV in
their bloodstream while receiving optimal antiretroviral drug therapy and
indicated a reduction in blood and tissue reservoirs of HIV infection.
On September 15, 1999, the Company reacquired product rights to its AIDS
gene therapy program following the termination of a collaboration
agreement with Hoechst Marion Roussel, Inc. now Aventis Pharmaceuticals.
Since October 1995 the agreement has provided funding of approximately
$43.6 million for the Company's AIDS gene therapy program including
the Phase II human clinical trials conducted to date.
In addition, the Company received a payment of $8 million
from Hoechst Marion Roussel as a wind-down payment following the
termination of the collaborative agreement.

A separate agreement between Cell Genesys and Aventis Pharmaceuticals,
formerly Hoechst Marion Roussel, for the Company's gene activation technology
for specific therapeutic proteins is continuing.  In 1997, the Company signed
a license agreement with Hoechst Marion Roussel providing access to the
Company's gene activation intellectual property for erythropoietin (EPO)
and a second undisclosed protein.  In exchange, the Company may receive
up to $26.0 million in milestone payments and fees in addition to royalties
on potential future sales of these two gene-activated products.  To date,
the Company has received over $15 million from this license agreement.

In 1999, the Company's preclinical research has focused on
studies of gene therapy in animal models for hemophilia, cancer, restenosis
and Parkinson's disease. For example, in hemophilia studies, a single
injection of gene therapy resulted in improved blood clotting and reduced
number of bleeding episodes in a dog hemophilia model.  Similarly, in
studies for Parkinson's disease, a single injection of gene therapy
essentially eliminated the need for daily L-dopa injections in mice with
a Parkinson's-like condition.  Cardiovascular gene therapy studies
demonstrated the inhibition of smooth muscle cell proliferation in rabbit
models of restenosis.  During 1999, the Company expanded its collaboration
with Mitotix, Inc. for p16/p27 genes to include applications in cancer
gene therapy in addition to cardiovascular gene therapy.  In addition,
since the beginning of 1999 the Company entered into agreements with
Entremed, Inc., Rigel Pharmaceuticals, Inc., Pharmacia & Upjohn and
Clontech Laboratories, Inc., a wholly owned subsidiary of Becton Dickinson.

Cell Genesys ended the year of 1999 with approximately $50.3
million in cash and short-term investments.  The Company has maintained
its financial position by relying on funding from various corporate
collaborations and licensing agreements, as well as through expense
management.  The Company plans to continue to finance its operations,
when possible, through corporate collaborations with established
pharmaceutical and biotechnology companies.  This funding strategy should
allow the Company to develop its technologies as broadly as possible, to
fund product development and to accelerate the commercialization of
certain product opportunities.  Such alliances are intended to provide
financial resources for research, development, manufacturing
capabilities, and marketing infrastructure, which will aid in the
commercialization of potential disease therapies.

**Results Of Operations**

As a result of Abgenix's IPO on July 2, 1998, the Company's
ownership percentage was reduced to less than 50 percent and Abgenix has been
accounted for under the equity method of accounting subsequent to that
date.  In 1999, Abgenix completed a public offering of 3 million shares
and a private placement of 1.8 million shares of its common stock,
further reducing Cell Genesys' ownership to approximately 19 percent.
Consequently, from November 1999 forward, the Company is accounting for
its investment in Abgenix as equity securities which are considered
"available for sale" in accordance with SFAS 115 "Accounting for
certain investments in Debt and Equity Securities."  Abgenix was fully
consolidated in the Company's financial statements prior to July 1, 1998.
In order to provide more meaningful analysis of the Company's results of
operations in comparison with the same period in 1998 and 1997, the
following table sets forth the Company's operations (referred to as the
"Gene Therapy Operations") excluding the results of Abgenix for such
periods.  Except as otherwise noted, the discussion which follows relates
to this table.

`Gene Therapy Operations
                                              (in thousands)


                                     --------- --------- ---------
                                         1999      1998      1997
                                     --------- --------- ---------
Revenue.............................. $33,607   $22,530   $21,961
Research and development expenses....  24,538    29,206    25,534
General and administration expenses..   4,833     6,037     7,278
Charge for purchased in-process
   technology and restrucuturing
   costs.............................      --        --    78,846
Merger termination costs.............  15,382        --        --
Interest and other income............   3,059    10,414     3,842
Interest expense.....................    (824)   (1,848)   (1,938)
Net income (loss).................... ($8,911)  ($4,147) ($87,793)`

Revenue increased to $33.6 million in 1999, from $22.5 million
and $22.0 million in 1998 and 1997, respectively.  The collaboration with JT
entered into in December 1998 for Cell Genesys GVAX® programs provided
revenue of approximately $21.0 million during 1999 and approximately
$12.0 million during 1998.  JT will continue to fund the GVAX® programs
up to $27.5 million in research and development expenditures during the
first three years and could pay up to $80 million in milestone payments.
During 1999, the Company recognized and received $9.0 million in
milestone payments for the GVAX®  prostate and lung programs.  The
collaboration with Hoechst Marion Roussel which was entered into in 1995
for Cell Genesys' AIDS gene therapy program was terminated on September
15, 1999.  In connection with this termination, the Company received $8.0
million wind-down payment for the AIDS gene therapy program in September
1999. Revenue from the AIDS gene therapy agreement totaled $8.0 million
in 1999, $6.4 million in 1998, and $14.4 million in 1997.  In February
1997, Cell Genesys entered into an agreement to license the Company's
gene activation technology to Hoechst Marion Roussel for erythropoietin
(EPO) and a second undisclosed protein.  The agreement provides for
milestone payments and annual maintenance fees, in addition to royalties
on future sales of these two potential gene-activated protein products.
The Company recognized revenue of $4.5 million, $4.0 million and $5.1
million in 1999, 1998 and 1997, respectively, pursuant to the agreement.

Research and development expenses decreased to $24.5 million during
1999, from $29.2 million and $25.5 million in 1998 and 1997,
respectively.  The decrease is primarily a result of a corporate
restructuring plan implemented in the fourth quarter of 1998.  The
restructuring and cost reductions allowed the Company to focus its
resources on its clinical stage programs. The decrease in 1999
also reflects the discontinuance of the AIDS gene therapy
program.  The Company expects that its research and development
expenditures will increase in future years to support expanded clinical
trials and additional product development activities, particularly in the
field of cancer, for which a number of the Company's GVAX®  cancer
vaccine trials commenced in 1998.  The rate of increase depends on a
number of factors including progress in research and development, and
clinical trials.

General and administrative expenses were $4.8 million during 1999
compared to $6.0 million and $7.3 million in 1998 and 1997, respectively.
The decreases reflect the Company's continuing efforts to control
administrative expenditures.  The Company implemented a corporate
restructuring plan in September 1998 to reduce its operating expenses by
30 percent and focus more resources on its clinical stage programs.

Interest and other income was $3.1 million in 1999 compared to
$10.4 million and $3.8 million in 1998 and 1997, respectively.  The
higher income in 1998 reflects a $7.0 million gain recognized from sale
of Abgenix stock in November 1998.  The decrease from 1997 was due to
lower average cash balances.  Interest expense decreased to $824,000 in
1999 from $1.8 million in 1998 and $1.9 million in 1997.  High interest
expense in 1998 and 1997 was due to interest on a note payable to
GenPharm International commencing January 1997 which was paid in full in
September 1998.

Cell Genesys' gene therapy operations net loss was $8.9 million
in 1999, compared to $4.1 million in 1998 and $87.8 million in 1997. The
current year loss was primarily due to non-recurring merger termination
costs.  The loss in 1997 was primarily due to $78.9 million in non-
recurring charges for the acquisition of Somatix Therapy Corporation
Losses, excluding non-recurring charges, are expected to continue
and may increase in future years as operating expenses rise,
particularly as the Company incurs expenses related to manufacturing
and late stage human testing of its potential products.

At December 31, 1999, Cell Genesys had federal net operating loss
carryforwards of approximately $124.3 million.  The Company also had
federal research and development tax credit carryforwards of
approximately $2.9 million as of December 31, 1999.  The net operating
loss and credit carryforwards will expire in the years of 2000 through
2019, if not utilized.  In the first quarter of 2000, the Company recognized
a significant gain on the sale of a portion of their Abgenix stock holdings.
The gain is likely to require the use of all available net operating loss
carryovers and may cause the Company to have a significant income tax
liability in 2000.  The Company is in the process of determining what the
tax impact of this transaction will be.

**Liquidity and Capital Resources**

Cell Genesys has financed its operations primarily through the sale
of equity securities, funding under collaborative arrangements and
equipment financing. In February 2000, the Company received $194 million
in net proceeds from the sale of 966,000 shares of Abgenix common stock.
From inception through February 29, 2000, the Company received $181.6
million in net proceeds from equity financings, $150.4 million under
collaborative agreements and utilized $28.2 million of property and
equipment financings.

At December 31, 1999, Cell Genesys' cash, cash equivalents and
short-term investments totaled $50.3 million, compared to $53.2 million
at December 31, 1998.  This decrease was due to cash used in operating
activities of $2.2 million, including a non-recurring payment of
$15.0 million to Genzyme Corporation ("Genzyme") as a result of the
termination of the merger agreement.  These were partially offset by
receipts from JT of $24.3 million, a wind-down payment of $8.0 million
for the T cell AIDS gene therapy collaboration and gene activation revenues
of $4.0 million from Hoechst Marion Roussel.

Cell Genesys anticipates that the fiscal year 2000 cash usage will not exceed
$15 million, net of $194 million net proceeds from the sale of Abgenix stock,
anticipated tax payments and any potential acquisition of a late stage
product candidate.   The Company's capital requirements depend on
numerous factors, including: the progress of the Company's research and
development programs; preclinical and clinical trials; clinical and
commercial scale manufacturing requirements; the attraction of
collaborative partners; the acquisition of new products or technologies;
the cost of litigation; patent interference proceedings or other legal
proceedings or their resolution.

Cell Genesys believes that its available cash, cash equivalents and
short-term investments at December 31, 1999 together with payments to be
received under the Company's collaborative agreements, license agreements
and proceeds from the sale of Abgenix stock, during February 2000, will
be sufficient to meet the Company's currently planned operating expenses
in the near term.

Even though the Company's current cash and investments are
expected to meet the its near term expenditures, progress in the Company's
development programs and the likely increase in the number of programs
will lead deplete the current cash resources and lead to the need to
raise further capital.  Therefore the company may continue to consider
financing alternatives.

The Company anticipates that it will raise large amounts of capital
in advance of actual capital expenditures.  Therefore, liquidity and
volatility of capital markets play a significant role in the decision to
raise capital.   The type of financing available to the company includes
the sale of Abgenix securities and private or public placement of Cell
Genesys equity securities.  The company's evaluation processes regularly
consider the liquidity of capital markets, dilution, shareholder value
and tax consequences of each type of financing on shareholders.  Most of
the financing options available to the company have some type of negative
consequence to shareholders.  Given the volatile nature of the capital
markets, decisions to raise capital may require actions that would impose
a slightly negative consequence in order to reduce or minimize a more
significant negative consequence to shareholders.

**Risk Factors**

We may have a need for substantial additional funds. We may
need substantial additional funds for existing and planned preclinical and
clinical trials to continue research and development activities, and to
establish manufacturing and marketing capabilities for any products we
may develop. We expect that our existing capital resources, together with
payments to be received under existing collaborative agreements and
amounts available under existing equipment financing facilities, will
enable us to maintain our operations at least through 2001. Beyond 2001,
we may need to raise substantial additional capital to fund our
operations.

Our future capital requirements will depend on, and could
increase as a result of, many factors such as:

> continued scientific progress of research and development programsmagnitude of such programsprogress of preclinical and clinical testingtime and costs involved in obtaining regulatory approvalscosts involved in preparing, filing, prosecuting, maintaining, enforcing
>        and defending patent claimscompeting technological and market developmentschanges in collaborative relationships with Japan Tobacco and othersterms of any additional collaborative arrangements into which we may
>        enterour ability to establish research, development and commercialization
>        arrangements pertaining to products other than those covered by existing
>        collaborative arrangementscost of establishing manufacturing facilitiescost of commercialization activitiesdemand for our products, if and when approvedpotential redemption obligations in connection with conversion
>        of the Series B convertible preferred stock.  See "Notes to
>        Consolidated Financial Statements" Note 11, "-Shares Eligible
>        for Future Sale, Dilution" and "...Potential Redemption
>        Obligations."our ability to realize the carrying value at December 31, 1999 of
>        the Abgenix stock due to its volatility.

We expect to raise additional funds through collaborative
relationships, sales of some portion or all of our investment in Abgenix,
additional equity or debt financings, or otherwise. Because of our long-
term capital requirements, we may seek to access the public or private
equity markets whenever conditions are favorable, even if we do not have
an immediate need for additional capital at that time.  There can be no
assurance that any such additional funding will be available to us, or,
if available, that it will be on acceptable terms.  If we raise
additional funds by issuing equity securities, stockholders will incur
immediate dilution. There can be no assurance that opportunities for in-
licensing technologies or for third party collaborations will continue to
be available to us on acceptable terms.  If adequate funds are not
available, we may be required to delay, reduce the scope of, or eliminate
one or more of our research, development and clinical activities.
Alternatively, we may need to seek funds through arrangements with
collaborative partners or others that require us to relinquish rights to
certain of our technologies or product candidates that we would otherwise
seek to develop or commercialize ourselves. Either of these events could
have a material adverse effect on our business, results of operations,
financial condition or cash flow.

Our products are in developmental stage, are not approved
for commercial sale and might not receive regulatory approval or become
commercially viable. All of our potential cancer vaccine and gene
therapy products are in research and development. We have not generated
any revenues from the sale of products. We do not expect to generate any
revenues from product sales for at least the next several years. Our
products currently under development will require significant additional
research and development efforts, including extensive preclinical and
clinical testing and regulatory approval, prior to commercial use. There
can be no assurance that our research and development efforts will be
successful or that any of our future products will ultimately be
commercially successful. Even if developed, our products may not receive
regulatory approval or be successfully introduced and marketed at prices
that would permit us to operate profitably.

We have not been profitable and may not become profitable in the
future.  We have incurred annual net losses since our inception. At
December 31, 1999, our accumulated deficit was approximately $203.8
million. For the year ended December 31, 1999, we incurred a net loss of
$12.0 million. We expect to incur substantial operating losses for at
least the next several years due primarily to the expansion of research
and development programs, including preclinical studies, clinical trials,
manufacturing and to a lesser extent, from general and administrative
expenses. We expect that losses will fluctuate from quarter to quarter
and that these fluctuations may be substantial. We cannot guarantee that
we will successfully develop, commercialize, manufacture or market any
products.  We cannot guarantee that we will ever achieve or sustain
product revenues or profitability.

Our cancer vaccine and gene therapy programs depend on
new and unproven technologies.  Gene therapy is a new technology.  Existing
preclinical and clinical data on the safety and efficacy of gene therapy
are limited. Data relating to our specific gene therapy approaches are
also limited. Our GVAX® cancer vaccine is currently being tested in Phase
II and Phase I/II human clinical trials, to determine their safety and
efficacy. None of our other products or therapies under development are
in human clinical trials. The results of preclinical studies do not
predict safety or efficacy in humans. Possible side effects may be
serious and potentially life-threatening.  Unacceptable side effects may
be discovered during preclinical and clinical testing of our potential
products or thereafter. There are many reasons that potential products
that appear promising at an early stage of research or development do not
result in commercialization. Although we are testing proposed products or
therapies in human clinical trials, we cannot guarantee that we will be
permitted to undertake human clinical trials for any of our other
products.  Also, the results of this testing might not demonstrate the
safety or efficacy of these products. Even if clinical trials are
successful, we might not obtain regulatory approval for any indication.
Finally, even if our products proceed successfully through clinical
trials and receive regulatory approval, there is no guarantee that an
approved product can be produced in commercial quantities at reasonable
cost or that such a product will be successfully marketed.

We rely heavily on the development and protection of
our intellectual property portfolio. The patent positions of pharmaceutical
and biotechnology firms, including Cell Genesys, are generally uncertain
and involve complex legal and factual questions. Cell Genesys currently
has more than 220 issued or granted patents and more than 335 pending
applications.  Although we are prosecuting patent applications, we cannot
be certain whether any given application will result in the issuance of a
patent or, if any patent is issued, whether it will provide significant
proprietary protection or will be invalidated. Also, patent applications
in the United States are confidential until patents are issued.
Publication of discoveries in scientific or patent literature tends to
lag behind actual discoveries by several months. Accordingly, we cannot
be sure that we were the first creator of inventions covered by pending
patent applications or that we were the first to file patent applications
for these inventions.

Our commercial success will also depend in part on not
infringing the patents or proprietary rights of others and not breaching
licenses granted to us. We will be required to obtain licenses to certain
third party technology and genes necessary to conduct our business. Any
failure to license any technology or genes required to commercialize our
technologies or products at reasonable cost may have a material adverse
effect on our business, results of operations or financial condition.

We may also have to engage in litigation, which could
        We may also have to engage in litigation, which could result in
result in substantial cost to us, to enforce our patents, or to determine
the scope and validity of other parties' proprietary rights. To determine
the priority of inventions, the United States Patent and Trademark Office
frequently declares interference proceedings.  In Europe, other patents
can be revoked through opposition proceedings.  Such proceedings could
result in an adverse decision as to the priority of our inventions.

We are currently involved in four separate interference
and/or position proceedings with regard to:

> (i) gene activation technology(ii) ex vivo gene therapy(iii) certain retroviral vector technology(iv) chimeric receptor technology

While we believe our position in each proceeding is strong,
the outcome of each proceeding cannot be predicted.  An adverse result could
have a material adverse effect on our intellectual property position in
these areas. We may be involved in other interference and/or opposition
proceedings in the future. We believe that there will continue to be
significant litigation in the industry regarding patent and other
intellectual property rights.

We also rely on unpatented trade secrets, know-how and
continuing technological innovation to develop and maintain our competitive
position.  Our competitors may independently develop similar or better
proprietary information and techniques and disclose them publicly.  Also,
there can be no assurance that others will not gain access to our trade
secrets, or that we can meaningfully protect our rights to our unpatented
trade secrets.

We require our employees and consultants to execute a
confidentiality agreement upon the commencement of an employment or
consulting relationship with us. These agreements provide that all
confidential information developed by or made known to an individual
during the course of the employment or consulting relationship generally
must be kept confidential. In the case of employees, the agreements
provide that all inventions conceived by the employee while employed by
us, relating to our business are our exclusive property. These agreements
may not provide meaningful protection for our trade secrets in the event
of unauthorized use or disclosure of such information.

The fields of cancer vaccines and gene therapy are highly
competitive.  Competition in the fields of cancer vaccines and gene
therapy from other biotechnology and pharmaceutical companies and from
research and academic institutions is intense and expected to increase.
In many instances, we compete with other commercial entities in acquiring
products or technology from universities.  There are numerous competitors
working on products to treat each of the diseases for which we are
seeking to develop therapeutic products. Some competitors are pursuing a
product development strategy competitive with ours, particularly with
respect to our cancer vaccine program. Certain of these competitive
products are in substantially more advanced stages of product development
and clinical trials. Our competitors may develop technologies and
products that are more effective than ours, or that would render our
technology and products less competitive or obsolete.

Many of our competitiors have substantially greater financial
resources and larger research and development staffs than we do. Some of
these competitors have significantly greater experience than we do in
developing products, in undertaking preclinical testing and human
clinical trials of new pharmaceutical products, in obtaining United
States Food and Drug Administration ("FDA") and other regulatory approvals of
products, and in manufacturing and marketing such products.  Accordingly,
our competitors may obtain patent protection or FDA approval and
commercialize products more rapidly than we do. There can be no assurance
that we will be able to obtain certain biological materials necessary to
support our research, development or manufacturing of any of our planned
therapies. If we are permitted to commence commercial sales of products,
we will also be competing with respect to marketing capabilities and
manufacturing efficiency, areas in which we have limited or no
experience. We expect to build additional clinical scale and commercial
scale manufacturing facilities and/or use contract facilities to
commercialize our products. We also expect to secure funding for these
and other product development activities through our partners and future
potential partners.

We expect that competition among products approved for sale
will be based, among other things, on:

> product efficacypricesafetyreliabilityavailabilitypatent protectionsales, marketing and distribution capabilities

Our competitive positions also depend upon our ability to attract
and retain qualified personnel, obtain patent protection or otherwise
develop proprietary products or processes and secure sufficient funding
for the often lengthy period between product conception and commercial
sales.

Our stock price has flucturated in the past and is likely
 to continue to be volatile in the future. The stock prices of
biopharmaceutical and biotechnology companies (including Cell Genesys and
Abgenix) have historically been highly volatile.  The market has from time to
time experienced significant price and volume fluctuations that are unrelated
to the operating performance of particular companies. The following
factors may affect our stock price:

> fluctuations in our financial resultsannouncements of technological innovations or new therapeutic products
>        by us or our competitorsannouncements of changes in governmental regulation affecting us or our
>        competitorsannouncements of regulatory approvals or disapprovals of our or our
>        competitors' productsdevelopments in patent or other proprietary rights affecting us or our
>        competitorspublic concern as to the safety of products developed by us or other
>        biotechnology and pharmaceutical companiesgeneral market conditionsfluctuations in the price of Abgenix stocksevere fluctuations in price and volume in stock market in general which are
>        unrelated to our operating perfromanceinssuance of common stock upon conversion of the Series B preferred stock or
>        exercise of outstanding warrantsfuture sales of such common stock or other shares of common stock by existing
>        stockholdersthe perception that such issuances or sales could occur

Our business is subject to extensive regulation and any
failure to obtain required regulatory approvals could prevent or delay
the commercialization of our products. Regulation by governmental
authorities in the United States and foreign countries is important in
the manufacture and marketing of our proposed products and our research
and development activities. All of our products will require regulatory
approval by governmental agencies prior to commercialization. In
particular, human therapeutic products must undergo rigorous preclinical
and clinical testing and other premarket approval procedures by the FDA
and similar authorities in foreign countries. Since our potential
products involve the application of new technologies, regulatory
approvals may take longer than for products produced using more
conventional methods. Various federal and, in some cases, state laws also
govern or influence the manufacturing, safety, labeling, storage, record
keeping and marketing of these products. The lengthy process of seeking
these approvals, and the subsequent compliance with applicable federal
laws, requires significant expenditures. Any delay or failure by us or
our collaborators or licensees to obtain regulatory approvals could
hinder the marketing of our products and our ability to receive product
or royalty revenue.

In responding to a new drug application, or a product
license application, the FDA may grant marketing approvals, request additional
information or further research, or deny the application if it determines
that the application does not satisfy its regulatory approval criteria.
Approvals may not be granted on a timely basis, if at all, or if granted
may not cover all the clinical indications for which we are seeking
approval.  Also, an approval might contain significant limitations in the
form of warnings, precautions or contraindications with respect to
conditions of use.

In addition to laws and regulations enforced by the FDA,
we are also subject to regulation under:

> Occupational Safety and Health ActEnvironmental Protection ActToxic Substances Control ActResource Conservation and Recovery ActOther present and potential future federal, state or local laws and
>        regulations

Our manufacturing facilities are subject to licensing requirements
of the California Department of Health Services. While not subject to
license by the FDA, these facilities are subject to inspection by the FDA
as well as by the California Department of Health Services. A separate
license from the FDA is required for commercial manufacture of any
product. Failure to maintain these licenses or to meet the inspection
criteria of the FDA and the California Department of Health Services
would disrupt our manufacturing processes and have a material adverse
effect on our business, results of operations, financial condition and
cash flow.

For marketing outside the United States, we are subject to foreign
regulatory requirements governing human clinical trials and marketing
approval for drugs and devices. The requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary
greatly from country to country. Failure to comply with these regulatory
requirements or obtain required approvals could impair our ability to
develop these markets and have a material adverse effect on our results
of operations and financial condition.

Our product development activities involve the use of
hazardous materials and we may incur significant costs as a result of the
need to comply with environmental laws. Our research and development activities
involve the controlled use of hazardous materials, chemicals, viruses and
radioactive compounds. We are subject to federal, state and local laws
and regulations governing the use, manufacture, storage, handling and
disposal of these materials and waste products. Although we believe that
our safety procedures for handling and disposing of these materials
comply with the standards prescribed by applicable laws and regulations,
we cannot completely eliminate the risk of accidental contamination or
injury from these materials.  In the event of an accident, we could be
held liable for any damages that result, and any resulting liability
could exceed our resources. We may also be required to incur significant
costs to comply with environmental laws and regulations in the future.

We expect to depend on our strategic partner for the sales,
marketing and distribution of our future products.  We have no experience
in sales, marketing or distribution of biopharmaceutical products. We
expect to rely on sales and marketing expertise of potential corporate
partners for our initial products. The decision to market future products
directly or through corporate partners will be based on a number of
factors, including:

> market size and concentrationsize and expertise of the partner's sales force in a particular marketthe Company's overall strategic objectives

We may in the future be exposed to product liability claims
and may be unable to obtain sufficient insurance coverage.Clinical trials
or marketing of any of our potential products may expose us to liability
claims resulting from the use of our products. These claims might be made
by consumers, health care providers or by others selling our products. We
currently maintain product liability insurance with respect to each of
our clinical trials. There can be no assurance that we will be able to
maintain insurance or that sufficient coverage can be acquired at a
reasonable cost. An inability to maintain insurance at acceptable cost,
or at all, could prevent or inhibit the clinical testing or
commercialization of our products or otherwise affect our financial
condition. A product liability claim or recall could have a material
adverse effect on our business, results of operations, financial
condition and cash flow.

Sales of our future products will be influenced by the
willingness of third-party payers to provide reimbursement.  In both
domestic and foreign markets, sales of our potential products will depend in
part upon coverage and reimbursement from third-party payers, including:

> government agenciesprivate health care insurers and other health care payers such as health
>        maintenance organizationsself-insured employee plansBlue Cross/Blue Shield and similar plans

There is considerable pressure to reduce the cost of
biotechnology and pharmaceutical products. In particular, reimbursement from
government agencies, insurers and large health organizations may become more
restricted in the future.  Our potential products represent a new mode of
therapy and, while the cost-benefit ratio of the products may be
favorable, we expect that the costs associated with our products will be
substantial. There can be no assurance that our proposed products, if
successfully developed, will be considered cost-effective by third-party
payers.  Insurance coverage might not be provided by third-party payers
at all or without substantial delay. Even if such coverage is provided,
the approved reimbursement might not provide sufficient funds to enable
us to become profitable.

The pricing of our future products may be influenced in part
by government controls. The continuing efforts of governmental and third-
party payers to contain or reduce the costs of healthcare may impair
future revenues and profitability of biotechnology companies. For
example, in certain foreign markets, pricing or profitability of
prescription pharmaceuticals is subject to government control. In the
United States, there have been, and we expect that there will continue to
be, a number of federal and state proposals to implement similar
government control. While we cannot predict whether the government will
adopt any such legislative or regulatory proposals, the announcement or
adoption of these proposals could have a material adverse effect on our
business, results of operations, financial condition and cash flow.

We depend on our key technical and management personnel
and collaborative partners to advance our technology, and the loss of these
personnel or partners could impair the development of our products.  We
rely and will continue to rely on our key management and scientific
staff. The loss of key personnel or the failure to recruit necessary
additional qualified personnel could have a material adverse effect on
our business and results of operations.  There is intense competition
from other companies, research and academic institutions and other
organizations for qualified personnel. There is no assurance that we will
be able to continue to attract and retain the qualified personnel
necessary for the development of our business. We will need to continue
to recruit experts in the areas of clinical testing, manufacturing,
marketing and distribution and develop additional expertise in our
existing personnel. If we do not succeed in recruiting such personnel or
developing such expertise, our business could suffer significantly.

We have clinical trial agreements with a number of public
and private medical institutions relating to the conduct of human clinical
trials for our GVAX® cancer vaccine programs.  The early termination of
any of these clinical trial agreements would hinder the progress of our
clinical trials including trials of GVAX® cancer vaccine for prostate
cancer and lung cancer.  If any of these relationships are terminated,
the clinical trials might not be completed and the results might not be
evaluated.

> University of California, San FranciscoDana-Farber Partners Cancer CareThe Johns Hopkins Medical InstitutionsUS Oncology, Inc.University of Tokyo, IMSUTProvidence Portland Medical CenterAffiliated Research CentersEmory UniversityUniversity of Michigan

We rely on the continued availability of outside scientific
collaborators performing research. These relationships generally may be
terminated at any time by the collaborator, typically by giving 30 days
notice. These scientific collaborators are not our employees. As a
result, we have limited control over their activities and can expect that
only limited amounts of their time will be dedicated to our activities.
Our agreements with these collaborators, as well as those with our
scientific consultants, provide that any rights we obtain as a result of
their research efforts will be subject to the rights of the research
institutions in such work. In addition, some of these collaborators have
consulting or other advisory arrangements with other entities that may
potentially conflict with their obligations to us. For these reasons,
there can be no assurance that inventions or processes discovered by our
scientific collaborators or consultants will become our property.

Cell Genesys stockholders may be diluted by the exercise
 of outstanding stock options or warrants, the conversion of outstanding
Series B preferred stock, or other issuances of our common stock.
Substantially all the outstanding shares of Cell Genesys common stock are
eligible for sale in the public market. Conversion of the Series B
preferred stock or exercise of outstanding warrants would result in
issuance of additional shares of common stock, diluting existing
investors.  The number of shares of common stock issued, and therefore
the dilution of existing investors, would increase as a result of either
(i) an event triggering the antidilution rights of any outstanding shares
of Series B preferred stock, or (ii) a decline in the market price of the
Company's common stock below the fixed conversion prices of $14.53 and
$11.02 per share immediately prior to conversion of the Series B
preferred stock.

The holders of the Series B preferred stock may choose at
any time to convert their shares into common stock.  In that event, the
number of shares of common stock issued would be based on the lower of:

> a fixed conversion price or,the average of certain trading prices during the 10 trading days preceding such
>        date of conversion (the "Floating Conversion Price").

If the market price of the common stock trades below
the fixed conversion price the conversion rate of the Series B preferred
stock would be based on the market price.  Under such circumstances, the
greater the decline in the market price, the greater the number of shares
issuable upon conversion of the Series B preferred stock.

During the past year, the majority of the outstanding
Series B preferred shares were converted into common shares.  Of the total
original issue of $20 million face value of Series B preferred shares,
approximately $7.7 million remain outstanding as of December 31, 1999.
The fixed conversion price for these shares is $11.02.

On January 18, 2000, the Company received approximately
$8.8 million from the issuance of 875 new Series B Convertible Preferred
shares following the exercise of call options for these shares.  The
newly issued preferred shares have a Fixed Conversion Price of $14.53 and
other terms as defined by the Series B Preferred Stock agreements dated
November 14, 1997.  The call option right which was available under the
terms of these agreements was triggered by the recent appreciation of
Cell Genesys' stock price.  Following the issuance of the new preferred
shares, no further call options remain outstanding.

We may be subject to a redemption obligation in connection
with requests by the holders of Series B preferred stock to convert their
shares into common stock. If the holders of the Series B preferred stock
decide to convert their shares into common stock, we would not be
required to issue more than 5,624,000 shares of common stock (which is
19.99 percent of the outstanding shares of common stock on November 14, 1997,
or the "Share Limit"), unless we first obtained stockholder approval. If
we did not obtain prior stockholder approval or an exemption from the
requirement for stockholder approval from the Nasdaq-AMEX  (the "Nasdaq-
AMEX exemption"), we would not be required to issue shares of common
stock in excess of the Share Limit pursuant to requests for conversion of
the Series B preferred stock.  However, in such event, the holders of the
Series B preferred stock could require us to redeem the unconverted
shares of Series B preferred stock, and the amount of these redemption
obligations could become material if the common stock price declined
below approximately $3.50 per share.  Under such circumstances, we could
become subject to a material redemption obligation if the number of
shares of common stock issuable upon conversion of the Series B preferred
stock exceeds the Share Limit.  The amount of the redemption obligation
will increase as the common stock price decreases because we are limited
in the number of shares we can issue upon conversion.  Consequently,
volatility in the price of the common stock could magnify the amount of
any redemption obligation.

Impact of the Year 2000.  In prior years, the Company
had undertaken various initiatives to ensure that its information technology
(IT) and non-IT systems are Year 2000 ready. In late 1999, the
Company completed its remediation and testing of systems.  As a result of
those planning and implementation efforts the Company had not identified
any systems currently in use which require modification or replacement as
a result of its Year 2000 initiatives.  The Company has expensed
approximately $80,000 in connection with its Year 2000 identification,
assessment, remediation activities (including repairing or replacing
identified systems), testing and contingency planning.  The
Company is not aware of any material problems resulting from Year 2000
issues either with its research and development, its internal systems or
the products or services of third parties.  The Company will continue to
monitor its mission critical computer applications and those of its
suppliers and vendors throughout the year 2000 to ensure that any latent
Year 2000 matters that may arise are addressed promptly.

**ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK**

In the normal course of business, the financial position
of the Company is subject to a variety of risks, including market risk
associated with interest rate movements.  The Company regularly assesses
these risks and has established policies and business practices to
protect against these and other exposures.  As a result, the Company does
not anticipate material potential losses in these areas.

The following table provides information about the
Company's financial instruments that are sensitive to changes in interest
rates.  For investment securities and debt obligations, the table presents
principal cash flows and related weighted-average interest rates by
expected maturity dates.  Additionally, the Company has assumed its
available for sale securities, comprised of corporate notes and
commercial paper, are similar enough to aggregate those securities for
presentation purposes.  The average interest rate was calculated using
the weighted average fixed rates under all contracts with Wells Fargo
Bank, Transamerica Business Credit Corporation, FINOVA Credit Corporation
and Silicon Valley Bank.

**INTEREST RATE SENSITIVITY
                                             PRINCIPAL AMOUNT BY EXPECTED MATURITY
                                                    AVERAGE INTEREST RATE**

`(in thousands)
                                                                                                       Fair
                                                                                  There-               Value
                                 2000      2001      2002      2003      2004      after     Total   12/31/99
                               --------- --------- --------- --------- --------- --------- --------- ---------
Total Investments
  Securities.................    $1,649   $44,083       --        --        --        --    $45,732   $45,132
  Average Interest Rate......      6.23%     6.91%      --        --        --        --       6.88%
Long-term Debt, including
  Current Portion............    $3,130    $2,070      $746      $540      $253       --     $6,738    $6,739
  Average Interest Rate......     10.91%    10.34%    10.51%     9.92%     9.92%      --      10.32%`

**ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA**

**REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS**

The Board of Directors and Stockholders
Cell Genesys, Inc.

We have audited the accompanying consolidated balance sheets of Cell
Genesys, Inc. as of December 31, 1999 and 1998, and the related
consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999.
These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Cell Genesys, Inc. at December 31, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years
in the period ended December 31, 1999, in conformity with accounting
principles generally accepted in the United States.

Palo Alto, California
January 21, 2000

/S/  ERNST & YOUNG LLP

---

**CELL GENESYS, INC.**
                          CONSOLIDATED BALANCE SHEETS(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

`December 31,
                                                          --------------------
                                                            1999       1998
                                                          --------- ----------
                           ASSETS
Current assets:
  Cash and cash equivalents including restricted cash
  of $369 for 1999 and 1998...............................  $5,300    $14,455
  Short-term investments..................................  44,987     38,788
  Investment in Abgenix common stock...................... 433,324         --
  Prepaid expenses and other current assets...............   1,465        801
                                                          --------- ----------
          Total current assets............................ 485,076     54,044
Property and equipment, net...............................   4,198      6,079
Deposits and other assets.................................     409        596
Investment in unconsolidated subsidiary...................       --     5,080
                                                          --------- ----------
                                                          $489,683    $65,799
                                                          ========= ==========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable........................................  $1,124     $1,103
  Accrued compensation and benefits.......................   2,056      1,288
  Deferred revenue .......................................   4,195        703
  Accrued legal expenses..................................     712        651
  Accrued acquisition and related costs...................   1,068        932
  Accrued clinical trial costs............................     715        448
  Other accrued liabilities...............................     883      1,273
  Current portion of property and equipment financing.....   2,677      3,566
                                                          --------- ----------
          Total current liabilities.......................  13,430      9,964

Noncurrent portion of property and equipment financing....   3,198      4,860

Commitments and Contingencies

Redeemable convertible preferred stock, $.001 par value:
  5,000,000 shares authorized; 694 and 1,156 shares
  issued and outstanding in 1999 and 1998, respectively...   7,679     12,083


Stockholders' equity:
  Common stock, $.001 par value: 80,000,000 shares
     authorized; 32,645,675 and 30,866,610 shares
     issued and outstanding in 1999 and 1998,
     respectively.........................................      33         31
  Additional paid-in capital.............................. 248,255    230,557
  Accumulated comprehensive income, principally
     unrealized gains on investment in Abgenix............ 420,891        113
  Accumulated deficit.....................................(203,803)  (191,809)
                                                          --------- ----------
          Total stockholders' equity...................... 465,376     38,892
                                                          --------- ----------
                                                          $489,683    $65,799
                                                          ========= ==========`

**See accompanying notes.**

---

---

**CELL GENESYS, INC.**
                     CONSOLIDATED STATEMENTS OF OPERATIONS(IN THOUSANDS, EXCEPT PER SHARE DATA)

`Year Ended December 31,
                                                 ------------------------------
                                                   1999      1998       1997
                                                 --------- --------- ----------
Revenue under collaborative agreements.........   $33,607   $24,146    $23,806
Operating expenses:
  Research and development.....................    24,538    37,932     36,830
  General and administrative...................     4,833     8,204     10,659
  Charge for purchased in-process technology...       --        --      72,270
  Restructuring charge related to acquisition..       --        --       6,576
  Charge for cross-license and settlement......       --        --      22,500
  Merger termination costs.....................    15,382       --        --
                                                 --------- --------- ----------
         Total operating expenses..............    44,753    46,136    148,835
Equity in loss of Abgenix......................    (3,083)   (2,917)      --
Gain on sale of stock of Abgenix...............       --      7,020       --
Interest and other income.......................     3,059     3,725      3,953
Interest expense...............................      (824)   (2,158)    (2,453)
                                                 --------- --------- ----------
Loss before minority interest in Abgenix.......   (11,994)  (16,320)  (123,529)
Loss attributed to minority interest
   in Abgenix..................................       --      4,192       --
                                                 --------- --------- ----------
Net loss.......................................   (11,994)  (12,128)  (123,529)
Deemed dividend to preferred stockholders......       392     1,088       --
                                                 --------- --------- ----------
Net loss attributed to common stockholders.....  ($12,386) ($13,216) ($123,529)
                                                 ========= ========= ==========

Basic and diluted net loss per common share....    ($0.39)   ($0.46)    ($5.33)
                                                 ========= ========= ==========
Shares used in computing net loss per
   common share................................    31,682    28,607     23,172
                                                 ========= ========= ==========`

**See accompanying notes.**

---

**CELL GENESYS, INC.**
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)

`Accumulated
                                                                           Comprehensive
                                                                           Income(loss),
                                                                            Principally                  Total
                                                     Additional Deferred   Unrealized Gai               Stock-
                                            Common    Paid-in    Compen-   on Investment Accumulated   holders'
                                             Stock    Capital    sation     of Abgenix     Deficit      Equity
                                           --------- ---------- ---------  ------------- ------------ -----------
Balances at December 31, 1996.                  $16   $127,318     $ --           ($118)    ($56,152)    $71,064
                                                                                                      -----------
  Net loss.................................     --         --        --             --      (123,529)   (123,529)
  Change in net unrealized
    holding loss on available
    for sale securities....................     --         --        --             236          --          236
                                                                                                      -----------
  Comprehensive income(loss)..................                                                          (123,293)
                                                                                                      -----------
  Issuance of 11,089,706
   shares of common stock
   to Somatix stockholders.................      11     67,913       --             --           --       67,924
  Issuance of 564,060
   shares of common stock
   upon exercise of stock
   options and pursuant to
   the 1992 Employee Stock
   Purchase Plan...........................       1      2,561       --             --           --        2,562
  Deferred compensation
   related to the issuance
   of certain stock options
   of subsidiary...........................     --       1,703    (1,703)           --           --          --
  Amortization of deferred
   compensation recognized
   by subsidiary...........................     --         --        384            --           --          384
                                           --------- ---------- ---------  ------------- ------------ -----------
Balances at December 31, 1997..............      28    199,495    (1,319)           118     (179,681)     18,641
                                                                                                      -----------
  Net loss.................................     --         --        --             --       (12,128)    (12,128)
  Change in net unrealized
    holding loss on available
    for sale securities....................     --         --        --              (5)         --           (5)
                                                                                                      -----------
  Comprehensive income(loss)..................                                                           (12,133)
                                                                                                      -----------
  Adjustment to carrying
    amount of Abgenix
    investment as a result
    of IPO.................................     --      22,209     1,319            --           --       23,528
  Issuance of 245,856
   shares of common stock
   upon exercise of stock
   options and pursuant to
   the 1992 Employee Stock
   Purchase Plan...........................       1      1,089       --             --           --        1,090
  Issuance of 66,512 shares
   of common stock upon
   exercise of warrants....................     --          33       --             --           --           33
  Conversion of 844 shares
   of Series B redeemable
   preferred into 2,385,783
   shares of common stock .................       2      8,360       --             --           --        8,362
  Deemed Dividend to
   preferred stockholders  ................     --        (629)      --             --           --         (629)
                                           --------- ---------- ---------  ------------- ------------ -----------
Balances at December 31, 1998.                   31    230,557       --             113     (191,809)     38,892

  Net loss.................................     --         --        --             --       (11,994)    (11,994)
  Change in net unrealized
    holding loss on available
    for sale securities....................     --         --        --            (713)         --         (713)

  Unrealized gain on
    investment of Abgenix..................     --         --        --         421,491          --      421,491
                                                                                                      -----------
  Comprehensive income(loss)...............     --         --        --             --           --      408,784
                                                                                                      -----------
  Adjustment to carrying
    amount of Abgenix
    investment as a result
    of March 4, 1999 Abgenix
    common stock offering..................     --       9,835       --             --           --        9,835
  Issuance of 516,970
   shares of common stock
   upon exercise of stock
   options and pursuant to
   the 1992 Employee Stock
   Purchase Plan...........................       1      3,332       --             --           --        3,333
  Issuance of 34,780 shares
   of common stock upon
   exercise of warrants....................     --         127       --             --           --          127
  Conversion of 462 shares
   of Series B redeemable
   preferred into 1,149,081
   shares of common stock .................       1      4,796       --             --           --        4,797
  Deemed Dividend to
   preferred stockholders  ................     --        (392)      --             --           --         (392)
                                           --------- ---------- ---------  ------------- ------------ -----------
Balances at December 31, 1999.                  $33   $248,255     $ --        $420,891    ($203,803)   $465,376
                                           ========= ========== =========  ============= ============ ===========`

**See accompanying notes.**

---

**CELL GENESYS, INC.**
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

`Year Ended December 31,
                                                  ------------------------------
                                                    1999       1998      1997
                                                  --------- ---------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss........................................($11,994)  ($12,128)($123,529)
  Adjustments to reconcile net loss to net
     cash used by operating activities:
     Depreciation and amortization................   2,986      4,549     5,433
     Gain on disposal of property and equipment...     (34)       --         --
     Amortization of deferred compensation
       of subsidiary..............................      --        528       384
     Minority interest in net loss................      --     (4,192)       --
     Equity in losses of Xenotech joint venture...      --        118       897
     Equity in losses of Abgenix..................   3,083      2,917        --
     Gain on sale of shares of Abgenix............      --     (7,020)       --
     Charge for purchased in-process technology...      --        --     72,270
     Restructuring charges........................      --        --      4,021
     Charge for cross-license and settlement......      --        --     22,500
  Changes, excluding effect of acquisition, to:
     Prepaid expenses and other assets............    (645)     1,239    (1,000)
     Accounts payable.............................      21        (55)   (1,280)
     Accrued compensation and benefits............     768        704    (1,520)
     Deferred revenue from related parties........   3,492     (5,290)   (6,170)
     Accrued legal expenses.......................      61        592      (446)
     Accrued acquisition and related costs........     136       (716)   (3,203)
     Other accrued liabilities....................    (123)    (3,597)   (2,551)
                                                  --------- ---------- ---------
          Net cash provided by (used in)
            operating activities..................  (2,249)   (22,351)  (34,194)
                                                  --------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of short-term investments............. (55,628)   (40,071)  (79,282)
  Maturities of short-term investments............  48,716     14,831     9,607
  Sales of short-term investments.................      --     57,614    56,375
  Purchase of subsidiary, net of cash acquired....      --        --      2,842
  Contributions to Xenotech joint venture.........      --         (8)   (4,647)
  Capital expenditures............................     (13)      (703)   (2,460)
  Proceeds from disposal of property and equipment      82        --         --
  Cash effect of applying equity method of
     accounting to the investment in
     Abgenix......................................      --       (642)       --
  Net proceeds from sale of Abgenix shares........      --      9,008        --
                                                  --------- ---------- ---------
          Net cash provided by (used in)
            investing activities..................  (6,843)    40,029   (17,565)
                                                  --------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible
    preferred stock.....                                --        --     19,817
  Proceeds from minority investment in subsidiary.      --      3,944    17,392
  Proceeds from issuances of common stock.........   3,461      1,121     2,563
  Proceeds from property and equipment financing..      --        --      5,735
  Payment of convertible note.....................      --    (15,000)       --
  Payments under equipment financing obligations..  (3,524)    (4,288)   (3,683)
                                                  --------- ---------- ---------
          Net cash provided by (used in)
            financing activities..................     (63)   (14,223)   41,824
                                                  --------- ---------- ---------
Net increase (decrease) in cash and cash
  equivalents.....................................  (9,155)     3,455    (9,935)
Cash and cash equivalents at beginning of year....  14,455     11,000    20,935
                                                  --------- ---------- ---------
Cash and cash equivalents at end of year..........  $5,300    $14,455   $11,000
                                                  ========= ========== =========`

**See accompanying notes**

---

**CELL GENESYS, INC.**

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES**

**Organization and basis of presentation**

Cell Genesys, Inc. ("Cell Genesys" or the "Company"), a Delaware
corporation, is focused on the development and commercialization of gene therapies
to treat cancer and other major, life-threatening diseases.

**Revenue recognition**

Revenue under collaborative agreements, is recorded
when earned as defined under the terms of the respective collaborative
agreements.  Nonrefundable signing or licensing fees that are not dependent
on future performance under collaborative agreements are recognized as
revenue when received.  Payments for research and development performed by the
Company under contractual arrangements are recognized as revenue ratably over
the period in which the related work is performed.  Revenue from the achievement
of milestone events is recognized when the funding party agrees that the
scientific or clinical results stipulated in the agreement have been achieved.
Deferred revenue arises principally due to timing of cash payments received
under research and development contracts.

**Research and development**

Research and development expenses, including direct and allocated expenses,
expenses, consist of independent research and development costs and costs
associated with sponsored research and development.

**Depreciation and amortization**

Cell Genesys records property and equipment at cost and depreciates
it using the straight-line method over the estimated useful lives of the assets,
generally five years. Furniture and equipment leased under capital leases is
amortized over the shorter of the useful lives or the lease term. Amortization
of leased assets is included in depreciation and amortization expense and is
combined with accumulated depreciation and amortization of the Company's owned
assets.  Intangible assets are amortized using the straight-line method over the
estimated useful lives of the assets, generally three years.

**Cash, cash equivalents and short-term investments**

Cell Genesys places its cash, cash equivalents and short-term investments
with high credit quality U.S. and foreign financial institutions, government and
corporate issuers and limits the amount of credit exposure to any one issuer.
The Company considers all highly liquid investments with insignificant interest
rate risk with a maturity of less than three months when purchased to be cash
equivalents. Cash and cash equivalents include $369,000 restricted cash for both
years at December 31, 1999 and 1998.  All investments are denominated in U. S.
dollars.

The Company's debt securities are classified as available-for-sale
and carried at fair value.  The cost of securities sold is based on the specific
identification method.  Realized gains and losses and declines in value, judged
to be other than temporary, on available for sale securities are included in
interest income. Unrealized holding gains and losses on securities classified as
available-for-sale are recorded in accumulated deficit.  The Company determines
the appropriate classification of debt securities at the time of purchase and
re-evaluates such designation as of each balance sheet date.

**Reclassifications**

Certain prior year balances have been reclassified to conform with
the current year presentation.

**Net loss per share**

With effect from December 1997, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128")
and restated all prior periods.  Under the provisions of SFAS 128, basic earnings
per share is calculated based on the weighted average number of common shares
outstanding during the period.  Diluted earnings per share also give effect to
the dilutive effect of stock options warrants and convertible preferred stock
(calculated based on the treasury stock method).  The Company does not present
diluted earnings per share as the effect of potentially dilutive shares from
stock options, warrants and preferred stock, is antidilutive.

**Use of estimates**

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes.  Actual results could differ from those
estimates.

**Comprehensive Income**

As of January 1, 1997, the Company adopted the provisions of Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income"
("SFAS 130").  SFAS 130 establishes new rules for the reporting and display of
comprehensive income and its components.  Comprehensive income (loss) is
comprised of net income (loss) and other comprehensive income (loss).  The
measurement and presentation of net income (loss) does not change.  Other
comprehensive income (loss) includes certain changes to stockholders' equity of
the Company that are excluded from net income (loss).  Specifically, SFAS 130
requires unrealized gains or losses on the Company's available-for-sale
securities, including the Company's investment in Abgenix, Inc., which prior to
adoption were reported separately in stockholder's equity, to be included
in other comprehensive income (loss).

**Segment Reporting**

Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 131.  "Disclosures About Segments of an Enterprise and
Related Information"("SFAS 131").  SFAS 131 superseded SFAS 14, "Financial Reporting
for Segments of a Business Enterprise."  SFAS 131 establishes standards for the
way that public business enterprises report selected information about operating
segments in interim financial reports.  SFAS 131 also establishes standards for
related disclosures about products and services, geographic areas and major
customers.

**Employer's Disclosures about Pensions and Other Postretirement Benefits**

In March 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 132.  "Employers' Disclosures about Pensions
and Other Postretirement Benefits" ("SFAS 132").  SFAS 132 does not change
the recognition of measurement of pension of postretirement benefit plans, but
revises and standardizes disclosure requirement for pensions and other
postretirement benefits.  The adoption of SFAS 132 has no impact on the
Company's results of operations or financial condition.

**Accounting for Derivative Financial Instruments and for Hedging Activities**

In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 133.  "Accounting for Derivative
Financial Instruments and for Hedging Activities" ("SFAS 133") which provides a
comprehensive and consistent standard for the recognition and measurement of
derivatives and hedging activities.  SFAS 133, as delayed, is effective for years
beginning after June 15, 1999 and is not anticipated to have an impact on the
Company's results of operations or financial condition when adopted.

**Recent Accounting Pronouncements**

In December 1999, the Securities and Exchange Commission ("SEC") issued
SEC Staff Accounting Bulletin No. 101 (SAB 101).  "Revenue Recognition in
Financial Statements." SAB 101 summarizes certain of the SEC's views in
applying generally accepted accounting principles to revenue recognition
in financial statements.  The Company is evaluating the impact that the
adoption of SAB 101, in the second quarter of 2000, may have on the
Company's financial statements.

**Statement of cash flows**

Supplemental disclosure to the Consolidated Statements of Cash Flows
is as follows for the years ended December 31 (in thousands):

`1999       1998      1997
                                                  --------- ---------- ---------
Cash paid for interest..........................      $824     $2,158    $2,224`

Supplemental disclosure regarding noncash investing and financing
activities is as follows for the years ended December 31 (in thousands):

`1999       1998      1997
                                                  --------- ---------- ---------
Furniture and equipment acquired under
  financing......................................      973     $1,268    $3,652
Deferred compensation related to grant of stock
  options by subsidiary..........................       --       $298    $1,703
Shares issued to Somatix stockholders............     $ --      $ --    $67,924`

**2. Investment in Abgenix and Minority Interest**

Since 1996, the Company has maintained an investment in Abgenix, Inc
("Abgenix"). In December 1997 and January 1998, Abgenix completed private
placements of securities reducing Cell Genesys' percentage ownership from
approximately 100 percent to approximately 54 percent.

On July 2, 1998, Abgenix completed an initial public offering ("IPO")
reducing Cell Genesys' percentage ownership to approximately 40 percent.  Prior to
the IPO, Abgenix was a consolidated subsidiary and its financial results were
presented accordingly.  From July 2, 1998 forward, the Company's investment in
Abgenix is accounted for under the equity method of accounting as a result of
the reduced ownership position.  On March 4, 1999, Abgenix completed the sale of
an additional 3,000,000 shares of common stock in a public offering resulting in
approximately $45 million in gross proceeds, which further reduced the Company's
ownership percentage in Abgenix to approximately 22 percent. The difference
between the cost of the investment (the carrying value of the net assets less
the equity in loss of Abgenix immediately prior to the public offering) and the
amount of the underlying equity in net assets of Abgenix immediately following
each of the public offerings was accounted for in accordance with APB Opinion
No. 18 "The Equity Method of Accounting for Investment in Common Stock" and
Staff Accounting Bulletin No. 51. "Accounting for Sales of Stock by a Subsidiary."
Accordingly, the Company recognized $9.8 million as a contribution to
stockholders' equity upon completion of the Abgenix March 1999 public offering.

On November 19, 1999, Abgenix completed a private placement of 1.8 million
shares of its common stock resulting in gross proceeds of approximately $75
million.  Cell Genesys' ownership was further reduced to approximately 19
percent and accordingly, the Company no longer accounts for Abgenix's losses
under the equity method of accounting.  The Company's investment in Abgenix is
now treated as an available for sale investment and accounted for in accordance
with SFAS 115, "Accounting for Certain Investments in Debt and Equity
Securities." as the Company has a demand right to register the shares of
Abgenix stock, the investment is carried at market value based on a value
of $132.50 per share at December 31, 1999.  The total carrying amount of
the Company's investment in Abgenix at December 31, 1999 was $433 million.
Cell Genesys has recorded equity loss in Abgenix of $3.1 million for the
year ended December 31, 1999.

**3. Business Combination and Related Restructuring**

On May 30, 1997, Cell Genesys acquired Somatix Therapy Corporation.
Under the terms of the merger agreement, Somatix became a subsidiary of Cell
Genesys in a tax-free reorganization and stock-for-stock merger.  Somatix
stockholders received 0.385 shares of Cell Genesys stock for each share of
Somatix stock. A total of 11,089,706 shares were issued to Somatix stockholders.
The acquisition was accounted for under the purchase method of accounting.  The
purchase price of approximately $70.9 million, comprised of $67.9 million of
common stock and $3.0 million of transaction costs, was allocated to the
acquired assets and assumed liabilities based upon their estimated fair value.
The fair value of the net assets acquired, including in-process technology, was
determined by management based on a forecast of future results management
believes are likely to occur.  However, no assurance can be given that
deviations from these projections will not occur.  The purchase price was
allocated as follows:

`Purchased in-process technology.....................     $72,270
Purchased intangibles...............................         500
Liabilities assumed in excess of assets acquired....      (1,870)
                                                       ----------
                                                         $70,900
                                                       ==========`

The amount allocated to purchased in-process technology was charged to
operations in 1997.  The purchased intangible, assembled workforce, is being
amortized over the period of three years using the straight-line method.
Accumulated amortization of purchased intangibles at December 31, 1999 was
$431,000.  The operations of Somatix are included in the Company's consolidated
operating results from May 31, 1997 forward.

In addition, Cell Genesys recognized $6.6 million in 1997 for restructuring
and integration expenses related to the acquisition. The current status of the
accrued restructuring charges is summarized below:

`AMOUNT OF    AMOUNT     AMOUNT     AMOUNT    AMOUNT
                                              TOTAL    UTILIZED   UTILIZED   UTILIZED    TO BE
                                             RESTRUC-   THROUGH    THROUGH    THROUGH   UTILIZED
                                              TURING    DECEMBER   DECEMBER   DECEMBER  IN FUTURE
                                              CHARGE    31, 1997   31, 1998   31, 1999   PERIODS
                                            ---------- ---------- ---------- ---------- ---------
Employee-related costs..................       $2,880    ($2,730)     ($150)     $ --       $ --
Facility shut-down......................        1,991       (918)      (312)       307     1,068
Duplicate equipment.....................          537       (537)       --         --         --
Other...................................        1,170       (745)      (251)      (174)       --
                                            ---------- ---------- ---------- ---------- ---------
                                               $6,578    ($4,930)     ($713)      $133    $1,068
                                            ========== ========== ========== ========== =========`

**4. Termination of Merger Agreement between Cell Genesys and Genzyme**

On October 18, 1999, Genzyme General and the Company announced that
they had entered into a definitive agreement under which Genzyme General
was to acquire Cell Genesys for approximately $350 million in a tax-free
stock-for-stock exchange. Under the terms of the agreement, Cell Genesys
shareholders were to receive a fraction of a share of Genzyme General
common stock for each share of Cell Genesys common stock owned.  The
exchange ratio was to be determined by dividing $10.00 by the average
closing price of Genzyme General shares during the 20 trading days ending
on the fifth trading day prior to completion of the merger.  In no event
would the exchange ratio be greater than 0.318 share of Genzyme General
or less than 0.181 share of Genzyme General for each Cell Genesys share.

The definitive merger agreement between the two companies was
terminated by Genzyme General on December 21, 1999 following the decision
announced by Cell Genesys that its board of directors had withdrawn its
recommendation of the merger with Genzyme and recommended that
stockholders not approve the merger.  Cell Genesys noted that the value
of its equity ownership of Abegnix had increased by approximately $240
million since the merger agreement was announced on October 18, 1999.  In
accordance with the terms of the merger agreement, the Company made a
payment of $15 million on December 21, 1999 to Genzyme General as a
result of the termination of the merger agreement which was charged to
expense in the statement of operations for the year ended December 31,
1999.

**5. Collaborative and License Agreements**

**Collaborative agreement with Japan Tobacco Inc.**

On December 17, 1998, Cell Genesys entered into a worldwide collaboration
agreement with the pharmaceutical division of Japan Tobacco Inc. (JT) for the
Company's GVAX® cancer vaccine program.  The Company received initial payments
under the agreement of $12.7 million in December 1998.  During 1999, the Company
received $12.8 million in research and development funding, $9.0 million for
two product milestone achievements and a $2.5 million anniversity payment.
Under the terms of this agreement, the Company could receive up to $27.5 million
in research and development funding in the first three years and approximately
$80 million in milestone payments if JT continues in the collaboration through
the regulatory approvals of the two products.  None of the payments involve
an additional equity investment in Cell Genesys by JT, which currently owns
approximately 3 percent of the Company.

**Collaborative agreement with Aventis Pharmaceuticals (formerly Hoechst Marion Roussel)**

On September 15, 1999, Cell Genesys reacquired product rights to its AIDS
gene therapy program following the termination of a collaboration agreement with
Hoechst Marion Roussel, Inc.  Since October 1995, the agreement has provided
total funding of $51.6 million for the Company's AIDS gene therapy program
including the Phase II human clinical trials conducted to date.  The total
funding includes a payment of $8 million received as final wind-down payment
following the termination of the collaborative agreement and does not include
a $20 million equity investment in Cell Genesys common stock.

**Gene Activation Technology Licenses**

In 1997, the Company entered into an agreement to license the Company's
gene activation technology to Hoechst Marion Roussel ("Aventis") for gene-activated
erythropoietin (EPO) and a second undisclosed protein.  The agreement provides
for milestone payments and fees, in addition to royalties on future sales of
these two potential gene-activated protein products.  The Company recognized
revenue of $4.0, $4.1 and $5.1 million in 1999, 1998 and 1997, respectively,
pursuant to the agreement.

In 1994, the Company entered into a license agreement for gene-activated
follicle-stimulating hormone for infertility with Organon, a business unit
of Akzo Nobel Pharma Group.  In November 1996, the Company renegotiated
the license agreement. The Company recognized revenue of $2.5 million in
fiscal 1997 pursuant to the agreement.

**6. Charge for Cross-license and Settlement**

In February 1994, the Company filed a complaint against GenPharm
International, Inc. ("GenPharm") alleging that GenPharm and its agents
misappropriated Cell Genesys' proprietary technology used to develop strains of
mice which produce human antibodies and that GenPharm unlawfully filed patent
applications covering this technology.  One aspect of the technology at issue
related to a method for inactivating a mouse's antibody genes. On January 7,
1997, GenPharm received a patent (the "'669 patent") which includes claims
related to transgenic mice whose antibody genes have been inactivated. On that
same date, GenPharm filed suit alleging that the Company's subsidiary, Abgenix,
was infringing the '669 patent. In light of these developments, the Company
dismissed without prejudice its state court action against GenPharm in January
1997.  In February 1996, GenPharm filed an antitrust suit against the Company
alleging that Cell Genesys violated the Federal antitrust laws when it filed the
state court action against GenPharm in February 1994. GenPharm sought treble
damages, attorneys' fees and costs for suit. The Court granted Cell Genesys'
motion to dismiss this lawsuit and entered a judgment of dismissal without
prejudice in December 1996. In January 1997, GenPharm filed an appeal of this
judgment.

On March 27, 1997, the Company announced that, along with Abgenix,
Xenotech and Japan Tobacco, it had signed a comprehensive patent cross-license
and settlement agreement with GenPharm that resolved all related litigation and
claims between the parties. The cross-license agreement includes a worldwide
royalty free cross-license to all issued and related patent applications
pertaining to the generation of fully human monoclonal antibody technologies in
genetically modified strains of mice. The Company also obtained a license to
certain technology in the field of gene therapy held by GenPharm. As
consideration for the cross-license and settlement agreement, Cell Genesys
issued a note for $15 million bearing interest at a rate of 7 percent per annum,
which came due and was paid on September 30, 1998.  Total interest paid for the note
was $805,000 and $787,500 in 1998 and 1997, respectively.  Of this note, $3.75
million was contributed to, then paid by Xenotech.  The entire amount of the
note was recognized as expense by Abgenix in the first quarter of 1997.  In
addition, Japan Tobacco also made a cash payment to GenPharm.  During 1997, two
milestones contemplated under the cross license and settlement agreement related
to the issuance of specified patents of $7.5 million each were met.  Xenotech
recognized an expense of $15 million, $7.5 million of which was paid in cash in
the fourth quarter of 1997 and the remainder was paid in the fourth quarter of
1998. During 1997, Abgenix recognized an expense of $7.5 million for its
contribution due to Xenotech for its share of the patent milestones which was
paid in two equal installments in 1997 and 1998.  No additional milestone
payments will accrue under this agreement.

**7. Fair Value of Financial Instruments**

The following is a summary of the Company's available-for-sale securities
at December 31, 1999 and 1998, respectively (in thousands):

`GROSS      GROSS
                                  AMORTIZED UNREALIZED UNREALIZED ESTIMATED
                                    COST      GAINS      LOSSES   FAIR VALUE
                                  --------- ---------- ---------- ---------
1999
U.S. Government and its agencies.   $8,621     $ --        ($139)   $8,482
Corporate notes..................   31,107       --         (387)   30,720
Commercial paper.................    6,004       --          (74)    5,930
Abgenix common stock.............   11,833    421,491         --   433,324
                                  --------- ---------- ---------- ---------
                                   $57,565   $421,491      ($600) $478,456
                                  ========= ========== ========== =========


Classified as:
Cash equivalents.................     $145     $ --         $ --      $145
Short-term investments...........   45,587       --         (600)   44,987
Investment in Abgenix
   common stock..................   11,833    421,491         --   433,324
                                  --------- ---------- ---------- ---------
                                   $57,565   $421,491      ($600) $478,456
                                  ========= ========== ========== =========


1998
U.S. Government and its agencies.  $16,327        $51     $ --     $16,378
Corporate notes..................   17,293         27       --      17,320
Commercial paper.................   16,900         35       --      16,935
                                  --------- ---------- ---------- ---------
Short-term investments...........  $50,520       $113     $ --     $50,633
                                  ========= ========== ========== =========`

The unrealized holding gains (losses) on these securities at December
31, 1999 and 1998 are ($600,000) and $113,000, respectively, and are included in
the Company's accumulated deficit. Gross realized gains and losses for 1999 were
$156,000 and gross realized gains recorded on sales of available-for-sale
securities were immaterial for the year ended December 31,1998.

The amortized cost and estimated fair value of available-for-sale
securities at December 31, 1999, by contractual maturity, are shown below (in
thousands):

`AMORTIZED  ESTIMATED
                                               COST    FAIR VALUE
                                            ---------- ----------
Due in one year or less...............        $13,482   $434,950
Due after one through two years.......         44,083     43,506
                                            ---------- ----------
                                              $57,565   $478,456
                                            ========== ==========`

**7. PROPERTY AND EQUIPMENT**

Property and equipment consists of the following at December 31 (in
thousands):

`1999      1998
                                                       ---------- ---------
Furniture and equipment under equipment financing..       $8,893   $12,141
Machinery and equipment............................        7,788     4,574
Leasehold improvements under financing.............        5,463     5,129
Leasehold improvements.............................        2,561     3,929
Construction in progress...........................          126       165
                                                       ---------- ---------
                                                          24,831    25,938
Accumulated depreciation and amortization..........      (20,633)  (19,859)
                                                       ---------- ---------
                                                          $4,198    $6,079
                                                       ========== =========`

The Company recognized depreciation expense of $2,819,000, $4,567,000
and $5,281,000 for the years ended December 31, 1999, 1998 and 1997, respectively.

**9. Debt Obligations**

**Property and equipment financing**

As of December 31, 1998 the Company has $13.4 million of property and
equipment financed through long-term obligations.  These obligations bear an
average interest rate ranging from 10 to 14 percent, have up to 5 year terms and
contain various buy-out provisions at term expiration.  These obligations are
secured by certain fixed assets at the Company and by certain deposits.  Under
these obligations, the Company is required to meet various financial covenants
with which it was in compliance at December 31, 1999.  $966,000 is available
under these leaselines for future financings.

Future minimum principal payments under property and equipment financing as
of December 31, 1999 were (in thousands):

`Years ending December 31:
  2000.....................................................         $3,130
  2001.....................................................          2,070
  2002.....................................................            746
  2003.....................................................            540
  2004 and beyond..........................................            253
                                                                  ---------
  Total minimum lease payment..............................          6,739
Less: Amount representing interest.........................           (864)
                                                                  ---------
Present value of future lease payments.....................          5,875
Current portion                                                     (2,677)
                                                                  ---------
Non-current portion                                                 $3,198
                                                                  =========`

**10. Commitments and Contingencies**

**Rental Commitments**

The Company leases its facilities and certain equipment under non-
cancelable operating leases.  The leases expire at various dates through 2007
and some contain options for renewal. Rent expense under operating leases was
$1.7 million in 1999, $2.7 million in 1998 and $2.2 million in 1997.  Included
in accrued liabilities was $1.1 million at December 31, 1999, for future lease
payments, net of expected sublease income, related to the closed Alameda
facility assumed through the Somatix acquisition in May 1997.

Future minimum payments under noncancelable operating and capital leases,
excluding the Alameda facility, at December 31, 1999 were (in thousands):

`Operating
                                                          Leases
                                                        -----------
Years ending December 31:
  2000.................................................     $1,488
  2001.................................................      1,568
  2002.................................................        162
  2003.................................................          6
  2004 and beyond......................................       --
                                                        -----------
  Total minimum lease payment..........................     $3,224
                                                        ===========`

**11. Redeemable Convertible Preferred Stock**

On November 14, 1997, the Company completed a private placement of 2,000
shares of Series B redeemable convertible preferred stock ("preferred
stock") for aggregate proceeds of $20 million. The Company, subject to certain
conditions, may exercise a put option to sell up to an additional $10 million
of preferred stock and investors, subject to certain conditions, may exercise a
call option to purchase up to an additional $10 million of preferred stock.
Each of the preferred shares is convertible, at the option of the holder, into
shares of common stock of the Company based upon a conversion price of $11.02
per share or, if lower, 100 percent of the average of specified trading prices during
the ten trading days preceding a conversion.  Any shares not converted prior to
November 2002 are automatically converted into shares of the Company's common
stock.  The convertible preferred stock bears a dividend of 5 percent, payable in
kind upon conversion.  If the Company enters into a "major transaction" or effects
a "triggering event" as defined in the private placement agreement, the stock
may be redeemed at the option of the holders.  Examples of such transactions or
events would include a change in control of the Company or delisting of the
Company's stock.  The preferred stock is non-voting.  At December 31, 1999,
1,306 shares of Series B preferred stock had been converted into common stock
and 694 shares remained outstanding.

During the past year, the majority of the outstanding Series B
preferred shares were converted into common shares.  Of the total
original issue of $20 million face value of Series B preferred shares,
approximately $7.7 million remain outstanding as of December 31, 1999.
The fixed conversion price for these shares is $11.02.

Subsequent to year end, the Company received approximately $8.8
million from the issuance of 875 new Series B Convertible Preferred
shares following the exercise of call options for these shares.  The
newly issued preferred shares have a Fixed Conversion Price of $14.53 and
other terms as defined by the Series B Preferred Stock agreements dated
November 14, 1997.  The call option right which was available under the
terms of these agreements was triggered by the rise of Cell Genesys'
stock price.  Following the issuance of the new preferred shares, no
further call options remain outstanding.

**12. Stockholder's Equity**

**Accounting for Stock Issued to Employees**

The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" (APB 25) and
related Interpretations in accounting for its employee stock options
because, as discussed below, the alternative fair value accounting
provided for under FASB Statement No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") requires use of option
valuation models that were not developed for use in valuing employee
stock options.  Under APB 25, because the exercise price of the Company's
employee stock options equals the market price of the underlying stock on
the date of grant, no compensation expense is recognized.

**Incentive Stock Plans**

The Company's 1989 Incentive Stock Plan and the 1998 Incentive Stock Plan
("the Plans") provide for the issuance of common stock and granting of options
for common stock to employees, officers, directors and consultants of the
Company. The Company grants shares of common stock for issuance under the Plans
at no less than the fair market value of the stock (85 percent of fair market value
for non-qualified options). Options granted under the Plans have a maximum term of
ten years and generally vest over four years at the rate of 25 percent one year
from the grant date and 1/48 monthly thereafter.

Effective November 6, 1998, Cell Genesys offered employees holding
outstanding options the opportunity to exchange each option share for one option
share priced at $4.125 (the deemed fair market value).  The new options are
not eligible for exercise prior to May 6, 1999, after which vesting continues in
accordance with the previous options' vesting schedule.  All other terms
remained unchanged.  As a result of the offer, 1,765,835 options were exchanged
which are included in the table below.

The following table summarizes information about the plan:

`Outstanding Options
                                                  -----------------------
                                                               Weighted-
                                                                Average
                                        Shares     Number of    Exercise
                                       Available     Shares      Price
                                      ----------- ------------ ----------
Balances, December 31, 1996.........       1,367        2,335      $6.36
     Authorized.....................       1,750
     Granted........................      (2,410)       2,410      $6.99
     Exercised......................                     (442)     $4.48
     Canceled.......................       1,372       (1,372)     $8.52
                                      ----------- ------------
Balances, December 31, 1997.........       2,079        2,931      $6.13
     Authorized.....................         800
     Granted........................      (2,940)       2,940      $5.46
     Exercised......................                     (177)     $4.32
     Canceled.......................       2,419       (2,419)     $7.14
                                      ----------- ------------
Balances, December 31, 1998.........       2,358        3,275      $4.88
     Authorized.....................        --
     Granted........................      (1,296)       1,296      $7.65
     Exercised......................                     (296)     $4.08
     Expired........................      (1,289)
     Canceled.......................         424         (424)     $6.41
                                      ----------- ------------
Balances, December 31, 1999.........         197        3,851      $5.69
                                      =========== ============

Exercisable at December 31, 1999....                    1,997      $4.77
                                                  ============

Exercisable at December 31, 1998....                    1,038      $5.43
                                                  ============

Exercisable at December 31, 1997....                    1,425      $5.68
                                                  ============

Weighted average fair value of options granted during 1999.....    $4.77
Weighted average fair value of options granted during 1998.....    $3.55
Weighted average fair value of options granted during 1997.....    $3.78`

The following table summarizes information about stock options outstanding
at December 31, 1999:

`Options Outstanding            Options Exercisable
                   ----------------------------------  ---------------------
                                Weighted-
                                 Average    Weighted-              Weighted-
                     Number     Remaining    Average     Number     Average
    Range of       Outstanding Contractual  Exercise   Exercisable Exercise
   Exercise Prices    (000)    Life (Years)   Price       (000)      Price
------------------ ----------- ------------ ---------  ----------- ---------
  $0.30 -   $1.50         113          1.7     $1.29          113     $1.29
  $3.00 -   $4.38       1,673          8.2      4.01        1,250     $3.98
  $4.75 -   $6.75       1,025          8.3      5.75          440     $5.80
  $7.00 -  $10.13         999          9.4      8.73          153     $7.64
 $11.00 -  $11.75          41          3.4     11.19           41    $11.19
--------           -----------                         -----------
                        3,851                               1,997
                   ===========                         ===========`

**Somatix 1992 Stock Option Plan**

Under the terms of the merger agreement with Somatix, the Company adopted
the 1992 Stock Option Plan. Information with respect to the plan activity from
the date of acquisition, May 30, 1997 to December 31, 1999 follows:

`Outstanding Options
                                                  -----------------------
                                                               Weighted-
                                                   Number of    Average
                                                     Shares     Exercise
                                                     (000)       Price
                                                  ------------ ----------
Outstanding at acquisition.......................       1,018      $8.94
  Granted........................................       --          --
  Exercised......................................         (44)     $4.69
  Canceled.......................................        (137)    $10.15
                                                  ------------
Authorized and Outstanding at December 31, 1997..         837      $8.97
  Granted........................................       --          --
  Exercised......................................       --          --
  Canceled.......................................        (108)    $16.04
                                                  ------------
Authorized and Outstanding at December 31, 1998..         729      $9.01
  Granted........................................       --          --
  Exercised......................................        (221)     $7.92
  Canceled.......................................         (14)    $15.83
                                                  ------------
Authorized and Outstanding at December 31, 1999..         494      $9.30
                                                  ============

Exercisable at December 31, 1999.................         491      $9.26
Exercisable at December 31, 1998.................         719      $8.92
Exercisable at December 31, 1997.................         810      $8.73


Weighted average remaining contractual
  life at December 31, 1999......................              5.05 years`

**1992 Employee Stock Purchase Plan**

The 1992 Employee Stock Purchase Plan allows eligible employees to
participate and purchase common stock at 85 percent of its fair value at certain
specified dates.  Employee contributions are limited to 10 percent of compensation.
A total of 500,000 shares of common stock have been reserved for issuance under
the Purchase Plan.  As of December 31, 1999, 393,993 shares have been issued
pursuant to the Purchase Plan.

**Pro forma information**

Pro forma information regarding net loss and net loss per share is
required by SFAS 123, and has been determined as if the Company had accounted
for options granted under its employee stock option plans, and the Purchase Plan
under the fair value method of that Statement.  The fair value of Cell Genesys'
options was estimated at the date of grant using a Black-Scholes option pricing
model with the following assumptions for 1997, 1998 and 1999, respectively:
risk-free interest rates of 6.46, 4.64 and 5.5 percent; no dividend yields;
volatility factors of the expected market price of the Company's common stock of
0.68, 0.68 and 0.67; and an expected life of the option of 5 years under the
stock option plan and 0.5 years for options granted under the Purchase Plan.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable.  In addition, option valuation models require the
input of highly subjective assumptions including the expected stock price
volatility.  Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in the
subjective input assumptions can materially affect the fair value estimate, in
management's opinion, the existing models do not necessarily provide a reliable
single measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The following
table illustrates what net loss would have been had the Company accounted for
its stock options under the provisions of FAS 123.  Because Statement 123 is
applicable only to options granted subsequent to December 31, 1994, its pro
forma effect will not be fully reflected until 1998.

`Year Ended December 31,
                               --------------------------------
                                  1999       1998       1997
                               ---------- ---------- ----------
Net loss:
  As reported..............     ($11,994)  ($12,128) ($123,529)
  Pro forma................     ($16,274)  ($14,463) ($126,549)

Net loss per share:
  As reported..............       ($0.39)    ($0.46)    ($5.33)
  Pro forma................       ($0.51)    ($0.51)    ($5.46)`

**Stockholder Rights Plan**

In July 1995, the Board of Directors approved a stockholder rights plan
under which stockholders of record on August 21, 1995 received one preferred
share purchase right for each outstanding share of the Company's common stock.
The rights are exercisable only if an acquirer purchases 20 percent or more of the
Company's common stock or announces a tender offer for 20 percent or more of the
Company's common stock.  Upon exercise, holders other than the acquirer may
purchase Cell Genesys stock at a discount.  The board of directors may terminate
the rights plan at any time or under certain circumstances redeem the rights.

**Warrants**

In connection with its collaboration agreement with Hoechst Marion
Roussel, the Company has a warrant outstanding for the purchase of 750,000 shares
of common stock at an exercise price of $13.00 per share, which expires in 2000.

The Company has assumed various warrants issued by Somatix for the
purchase of common stock, of which 34,780 shares were exercised during 1999, at
exercise prices ranging from $0.03 to $18.83 per share.  Remaining warrants
expired at various dates during 1999 and none remain outstanding at December 31,
1999.

During January 2000, the Company announced that it had acquired an
additional 121,667 shares of stock in Abgenix in connection with the
exercise of warrants.  The warrants had an exercise price of $6.00 per
share, resulting in payment of approximately $0.7 million to Abgenix.
The current market value of shares received in return from the exercise
of the warrants as of March 15, 2000, was approximately $33.6 million.

**Shares reserved**

At December 31, 1998, the Company has reserved shares of common stock
for potential future issuance consisting of (i) 2,089,136 upon conversion of
preferred stock; (ii) 750,000 upon exercises of warrants; and (iii) 4,647,363
for exercises under the employee stock option plans or the stock purchase plan.

**13. Income Taxes**

As of December 31, 1999, the Company had federal net operating loss
carryforwards of approximately $124.3 million.  The Company also had federal
research and development tax credit carryforwards of approximately $2.9 million
as of December 31, 1999.  The federal net operating loss and research credit
carryforwards will expire in various dates beginning in 2000 through 2019, if
not utilized.

Utilization of the net operating losses and credits may be
subject to substantial annual limitation due to ownership change provisions of
the Internal Revenue Code of 1986 and similar state provisions.  The annual
limitation may result in the expiration of net operating losses and credits
before utilization.

Significant components of the Company's deferred tax assets
are as follows (in thousands):

`December 31,
                                                     ---------------------
Deferred Tax Assets:                                    1999       1998
                                                     ---------- ----------
Net operating loss carryforwards.............          $42,300    $41,400
Research credit carryforwards................            3,700      3,200
Capitalized research and development.........            1,400      1,300
Other accruals & reserves....................            5,700      3,700
                                                     ---------- ----------
Net deferred tax assets......................           53,100     49,600
Valuation allowance .........................          (53,100)   (49,600)
                                                     ---------- ----------
Net deferred tax assets                                  $  --      $  --
                                                     ========== ==========`

The net valuation allowance decreased by $12.2 million during the year
ended December 31, 1997 and increased by $38 million during the year ended December
31, 1998.  Approximately $3.0 million of the valuation allowance for deferred tax
assets relates to benefits of stock option deductions which, when recognized, will be
allocated directly to contributed capital.

**14. Litigation and Contingencies**

The Company is party to various claims, investigations and legal
proceedings arising out of the normal course of its business.  These claims,
investigations and legal proceedings relate primarily to intellectual property
of which certain of them are the subject of ongoing interference or opposition
proceedings with patent authorities. While there can be no assurance that an
adverse determination of any such matters could not have a material adverse
impact in any future period, management does not believe, based upon
information known to it, that the final resolution of these matters will have
a material adverse effect upon the Company's business, financial position or
results of operations.

**15. Segment Information**

Cell Genesys, Inc. has one reportable segment: development and
commercialization of gene therapies to treat cancer and other major,
life-threatening diseases.

**16. Subsequent Events (unaudited)**

In the first quarter of 2000, Cell Genesys received net proceeds
of approximately $194 million for the sale of 966,000 shares of Abgenix
common stock.  The transaction was related to a secondary Abgenix
offering in which a total of 3,450,000 Abgenix shares were sold with
966,000 of the shares being sold by Cell Genesys.  After the
transaction, Cell Genesys retains 2,426,034 shares, or approximately
12 percent, of Abgenix common stock.

**ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE**

Not applicable

**PART III**

**ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**

(a) The information required by this Item concerning the Company's
directors is incorporated by reference to the Company's Proxy Statement related
to the 1999 Annual Meeting of Stockholders to be filed with the Securities and
Exchange Commission within 120 days after the Company's fiscal year end (the
"1999 Proxy Statement").

(b) The information required by this Item concerning the Company's
executive officers is set forth in Part I of this Form 10-K.

**ITEM 11. EXECUTIVE COMPENSATION**

The information required by this Item is incorporated by reference to the
Company's 1999 Proxy Statement.

**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT**

The information required by this Item is incorporated by reference to the
Company's 1999 Proxy Statement.

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**

The information required by this Item is incorporated by reference to the
Company's 1999 Proxy Statement.

**ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K**

(a) 1. INDEX TO FINANCIAL STATEMENTS

> Balance Sheets at December 31, 1999 and 1998Statements of Operations for the years ended December 31, 1999, 1998 and 1997Statement of Stockholders' Equity for the years ended December 31, 1999, 1998 and 1997Statements of Cash Flows for the years ended December 31, 1999, 1978 and 1997Notes to Financial Statements

2. INDEX TO FINANCIAL STATEMENT SCHEDULES

All financial statement schedules are omitted because they are not
applicable or not required or because the required information is included in
the financial statements or notes thereto.

(b) Reports on Form 8-K

Not applicable

(c) EXHIBITS

`NUMBER                                 DESCRIPTION
    ------                                 -----------
     2.1*     (9)  Stock Purchase Agreement, dated as of October 9, 1995,
                   between the Registrant and Hoechst Marion Roussel, Inc.
     2.2     (15)  Agreement and plan of merger and reorganization, dated as of
                   January 12, 1997, among Registrant, S Merger Corp. and
                   Somatix Therapy Corporation.
     3.1      (2)  Restated Certificate of Incorporation.
     3.2      (1)  Bylaws.
    10.1      (1)  Form of Indemnification Agreement for Directors and
                   Officers.
    10.2     (13)  Amended 1989 Incentive Stock Plan.
    10.3     (13)  Amended 1992 Employee Stock Purchase Plan.
    10.4      (1)  Representative Preferred Stock Purchase Agreement.
    10.5      (1)  Fourth Amended and Restated Stockholder Rights Agreement.
    10.6      (1)  License Agreement dated August 13, 1990 between Registrant
                   and the University of North Carolina at Chapel Hill.
    10.7      (1)  First page only of Exhibit 10.7.
    10.8*     (8)  Amended and Restated Exclusive License Agreement dated
                   September 5, 1995 between the Company and the Regents of the
                   University of California.
    10.9      (1)  License Agreement dated June 28, 1991 between Registrant and
                   the University of Utah Research Foundation.
    10.10*    (1)  First page only of Exhibit 10.9.
    10.11     (2)  Amended Employment Agreement with Stephen A. Sherwin, M.D.
    10.12     (3)  Master Loan and Security Agreement dated April 26, 1993
                   between Registrant and Financing for Science International,
                   Inc.
    10.13     (4)  Commitment Letter dated march 1, 1994 between Registrant and
                   Financing for Science International, Inc.
    10.14     (5)  Amendment dated April 25, 1994 to Commitment Letter with
                   Financing for Science International, Inc.
    10.15     (7)  Commitment Letter dated April 20, 1995 between the Company
                   and Financing for Science International, Inc.
    10.16    (13)  Amendment dated January 22, 1996 to Commitment Letter with
                   Financing for Science International, Inc.
    10.17     (6)  Research and Development Leases dated November 1, 1994
                   between Registrant and Vintage Park Associates and Addendums
                   thereto.
    10.18*   (10)  Collaboration Agreement, dated as of October 9,1995, by and
                   among the Registrant, Hoechst Aktiengesellschaft and Hoechst
                   Marion Roussel, Inc., including the letter agreement dated
                   as of October 9, 1995 between the parties.
    10.19*   (11)  Cross License Agreement. dated as of October 9, 1995,
                   between the Registrant and Hoechst Aktiengesellschaft.
    10.20*   (12)  Settlement Procedure Agreement, dated as of October 9, 1995,
                   by and among the Registrant, Hoechst Aktiengesellschaft and
                   Massachusetts General Hospital.
    10.21*   (14)  Amendment No. 1 dated June 7, 1996 to Vintage Park Research
                   and Development lease.
    10.22    (16)  Stock Option Agreement, dated as of January 12, 1997,
                   between Somatix Therapy Corporation, as grantor, and
                   Registrant, as grantee.
    10.23    (17)  Stock Option Agreement, dated as of January 12, 1997,
                   between Registrant, as grantor, and Somatix Therapy
                   Corporation, as grantee.
    10.24*   (18)  Release and Settlement Agreement, dated March 26, 1997,
                   among Cell Genesys, Inc., Abgenix. Inc., Xenotech, L.P.,
                   Japan Tobacco Inc. and GenPharm International. Inc.
    10.25*   (18)  Cross License Agreement, effective as of March 26, 1997,
                   among Cell Genesys, Inc. Abgenix, Inc., Xenotech, L.P.,
                   Japan Tobacco Inc. and GenPharm International, Inc.
    10.26*   (18)  Interference Settlement Procedure Agreement, effective as of
                   March 26, 1997, among Cell Genesys, Inc., Abgenix, Inc.,
                   Xenotech. L.P., Japan Tobacco Inc. and GenPharm
                   International, Inc.
    10.27    (18)  Convertible Note Purchase Agreement, dated as of March 26,
                   1997, between Cell Genesys, Inc. and GenPharm International,
                   Inc.
    10.28    (18)  Convertible Subordinated Promissory Note, dated March 26,
                   1997, made by Cell Genesys Inc. to the order of GenPharm
                   International, Inc.
    10.29*         GVAX® Agreement By and Between Japan Tobacco Inc. and
                   Cell Genesys, Inc. dated December 18, 1998.
    23.1           Consent of Ernst & Young LLP, Independent Auditors.
    24.1           Power of Attorney, (Reference is made to page 52).
    27.1           Financial Data Schedule.`

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

> *  Confidential treatment has been granted with respect to specific portions
>      of this exhibit.(1) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Registration Statement on Form S-1 (Reg. No. 33-46452) as
>      amended.(2) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1992.(3) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
>      1993.(4) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1993.(5) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-K for the quarter ended March 31,
>      1994.(6) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1994.(7) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
>      1995.(8) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
>      1995.(9) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
>      1995.(10) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Form 8-K dated October 9, 1995.(11) Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K
>      dated October 9, 1995.(12) Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K
>      dated October 9, 1995.(13) Incorporated by reference to Exhibit 10.3 filed with the Company's Form 8-K
>      dated October 9, 1995.(14) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1995.(15) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
>      1996.(16) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
>      1996.(17) Incorporated by reference to Exhibit 2.1 filed with the Company's Form 8-K
>      dated January 12, 1997.(18) Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K
>      dated January 12, 1997.(19) Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K
>      dated January 12, 1997.(20) Incorporated by reference to the Company's Form 10-K/A for the fiscal year
>      ended December 31, 1996 as filed April 30, 1997.

---

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in Foster City,
California, on March 30, 2000:



| |                   
| | ------------------
| | CELL GENESYS, INC.



| |     |                       
| | --- | ----------------------
| | By: | /s/ MATTHEW J. PFEFFER

| |                                                                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                                                            
| | Matthew J. Pfeffer                                                                                                                                                         
| | Vice President and 
                                                  Chief Financial Officer
                                               (Principal Accounting Officer)

Date:  March 30, 2000

**POWER OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS,
that each person whose signature appears below constitutes and
appoints Stephen A. Sherwin, M.D. and Matthew J. Pfeffer, jointly and
severally, as his attorneys-in-fact, each with the full power
of substitution, for him , in any and all capacities, to sign
any amendment to this Report on Form 10-K, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting to said
attorneys-in-fact, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be
done in connection therewith, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact or any of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by
virtue hereof.  Pursuant to the requirements of the Securities Act of
1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated:

`Signature                          Title                   Date
--------------------------------  -----------------------------  --------------
 /s/ STEPHEN A. SHERWIN, M.D.     Chairman of the Board,         March 30, 2000
--------------------------------    President and Chief
     Stephen A. Sherwin, M.D.     Executive Officer (Principal
                                  Executive Officer)


 /s/ MATTHEW J. PFEFFER           Vice President and             March 30, 2000
--------------------------------  Chief Financial Officer
     Matthew J. Pfeffer           (Principal Financial and
                                  Accounting Officer)


 /s/ DAVID W. CARTER              Director                       March 30, 2000
--------------------------------
     David W. Carter


 /s/ JAMES M. GOWER               Director                       March 30, 2000
--------------------------------
     James M. Gower


 /s/ JOSEPH E. MAROUN             Director                       March 30, 2000
--------------------------------
     Joseph E. Maroun


 /s/ JOHN T. POTTS, JR., M.D.     Director                       March 30, 2000
--------------------------------
     John T. Potts, Jr., M.D.


 /s/ EUGENE L. STEP               Director                       March 30, 2000
--------------------------------
     Eugene L. Step


 /s/ INDER M. VERMA, PH.D.        Director                       March 30, 2000
--------------------------------
     Inder M. Verma, Ph.D.`

---

**INDEX TO EXHIBITS**

`NUMBER                                 DESCRIPTION
    ------                                 -----------
     2.1*     (9)  Stock Purchase Agreement, dated as of October 9, 1995,
                   between the Registrant and Hoechst Marion Roussel, Inc.
     2.2     (15)  Agreement and plan of merger and reorganization, dated as of
                   January 12, 1997, among Registrant, S Merger Corp. and
                   Somatix Therapy Corporation.
     3.1      (2)  Restated Certificate of Incorporation.
     3.2      (1)  Bylaws.
    10.1      (1)  Form of Indemnification Agreement for Directors and
                   Officers.
    10.2     (13)  Amended 1989 Incentive Stock Plan.
    10.3     (13)  Amended 1992 Employee Stock Purchase Plan.
    10.4      (1)  Representative Preferred Stock Purchase Agreement.
    10.5      (1)  Fourth Amended and Restated Stockholder Rights Agreement.
    10.6      (1)  License Agreement dated August 13, 1990 between Registrant
                   and the University of North Carolina at Chapel Hill.
    10.7      (1)  First page only of Exhibit 10.7.
    10.8*     (8)  Amended and Restated Exclusive License Agreement dated
                   September 5, 1995 between the Company and the Regents of the
                   University of California.
    10.9      (1)  License Agreement dated June 28, 1991 between Registrant and
                   the University of Utah Research Foundation.
    10.10*    (1)  First page only of Exhibit 10.9.
    10.11     (2)  Amended Employment Agreement with Stephen A. Sherwin, M.D.
    10.12     (3)  Master Loan and Security Agreement dated April 26, 1993
                   between Registrant and Financing for Science International,
                   Inc.
    10.13     (4)  Commitment Letter dated march 1, 1994 between Registrant and
                   Financing for Science International, Inc.
    10.14     (5)  Amendment dated April 25, 1994 to Commitment Letter with
                   Financing for Science International, Inc.
    10.15     (7)  Commitment Letter dated April 20, 1995 between the Company
                   and Financing for Science International, Inc.
    10.16    (13)  Amendment dated January 22, 1996 to Commitment Letter with
                   Financing for Science International, Inc.
    10.17     (6)  Research and Development Leases dated November 1, 1994
                   between Registrant and Vintage Park Associates and Addendums
                   thereto.
    10.18*   (10)  Collaboration Agreement, dated as of October 9,1995, by and
                   among the Registrant, Hoechst Aktiengesellschaft and Hoechst
                   Marion Roussel, Inc., including the letter agreement dated
                   as of October 9, 1995 between the parties.
    10.19*   (11)  Cross License Agreement. dated as of October 9, 1995,
                   between the Registrant and Hoechst Aktiengesellschaft.
    10.20*   (12)  Settlement Procedure Agreement, dated as of October 9, 1995,
                   by and among the Registrant, Hoechst Aktiengesellschft and
                   Massachusetts General Hospital.
    10.21*   (14)  Amendment No. 1 dated June 7, 1996 to Vintage Park Research
                   and Development lease.
    10.22    (16)  Stock Option Agreement, dated as of January 12, 1997,
                   between Somatix Therapy Corporation, as grantor, and
                   Registrant, as grantee.
    10.23    (17)  Stock Option Agreement, dated as of January 12, 1997,
                   between Registrant, as grantor, and Somatix Therapy
                   Corporation, as grantee.
    10.24*   (18)  Release and Settlement Agreement, dated March 26, 1997,
                   among Cell Genesys, Inc., Abgenix. Inc., Xenotech, L.P.,
                   Japan Tobacco Inc. and GenPharm International. Inc.
    10.25*   (18)  Cross License Agreement, effective as of March 26, 1997,
                   among Cell Genesys, Inc. Abgenix, Inc., Xenotech, L.P.,
                   Japan Tobacco Inc. and GenPharm International, Inc.
    10.26*   (18)  Interference Settlement Procedure Agreement, effective as of
                   March 26, 1997, among Cell Genesys, Inc., Abgenix, Inc.,
                   Xenotech. L.P., Japan Tobacco Inc. and GenPharm
                   International, Inc.
    10.27    (18)  Convertible Note Purchase Agreement, dated as of March 26,
                   1997, between Cell Genesys, Inc. and GenPharm International,
                   Inc.
    10.28    (18)  Convertible Subordinated Promissory Note, dated March 26,
                   1997, made by Cell Genesys Inc. to the order of GenPharm
                   International, Inc.
    10.29*         GVAX(TM) Agreement By and Between Japan Tobacco Inc. and
                   Cell Genesys, Inc. dated December 18, 1998.
    23.1           Consent of Ernst & Young LLP, Independent Auditors.
    24.1           Power of Attorney, (Reference is made to page 52).
    27.1           Financial Data Schedule.`

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

> *  Confidential treatment has been granted with respect to specific portions
>      of this exhibit.(1) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Registration statement on Form S-1 (Reg. No. 33-46452) as
>      amended.(2) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1992.(3) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
>      1993.(4) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1993.(5) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-K for the quarter ended March 31,
>      1994.(6) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1994.(7) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
>      1995.(8) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
>      1995.(9) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
>      1995.(10) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Form 8-K dated October 9, 1995.(11) Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K
>      dated October 9, 1995.(12) Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K
>      dated October 9, 1995.(13) Incorporated by reference to Exhibit 10.3 filed with the Company's Form 8-K
>      dated October 9, 1995.(14) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Annual Report on Form 10-K for the year ended December 31, 1995.(15) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
>      1996.(16) Incorporated by reference to the same numbered exhibit filed with the
>      Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
>      1996.(17) Incorporated by reference to Exhibit 2.1 filed with the Company's Form 8-K
>      dated January 12, 1997.(18) Incorporated by reference to Exhibit 10.1 filed with the Company's Form 8-K
>      dated January 12, 1997.(19) Incorporated by reference to Exhibit 10.2 filed with the Company's Form 8-K
>      dated January 12, 1997.(20) Incorporated by reference to the Company's Form 10-K/A for the fiscal year
>      ended December 31, 1996 as filed April 30, 1997.

---