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

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**FORM 10-K**

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(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, 2000**

**OR**

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

**For the transition period from ________to _________**

**Commission file number 0-19986**

**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, 2001, the approximate market value of voting stock held by
nonaffiliates of the Registrant was $447,939,897. 3,632,932 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, 2001, the number of outstanding shares of the Registrant's
Common Stock was 34,261,301.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the 2001 Annual Meeting of Stockholders
are incorporated by reference into Part III of this Annual Report on Form 10-K.  Such Proxy
Statement will be filed within 120 days of the fiscal year covered by this Annual Report
on Form 10-K.







**CELL GENESYS, INC.
                                   FORM 10-K**
                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

**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 Factors

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**

Statements made in this document other than statements of historical
fact, including statements about the Company's and its subsidiaries'
progress and results of preclinical studies, clinical trials,
marketability of potential products and nature of  product pipelines,
corporate partnerships, licenses and intellectual property 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.

**ITEM 1. BUSINESS**

**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 cancer vaccines and gene therapies to treat
cancer and other major, life-threatening diseases. Cell Genesys' current
clinical programs include GVAX® cancer vaccines in Phase II studies for
prostate cancer, Phase I/II studies for lung cancer and a Phase I/II
study for multiple myeloma. The Company expects to initiate additional
GVAX® cancer vaccine trials for prostate cancer and lung cancer as well
as pancreatic cancer and leukemia during the next year.  GVAX® vaccines
for prostate cancer and 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 cancer, hemophilia and
cardiovascular disorders. In January 2001, Cell Genesys launched a
majority-owned subsidiary, Ceregene, Inc. ("Ceregene") which is focused
on gene therapies for central nervous system disorders.  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' ownership of
approximately 10.5 percent 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
for therapeutic proteins.

During 2000, 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 licensing agreements for its gene
therapy technologies.  During 2000, Cell Genesys' financial position
significantly increased as a result of the appreciation in value of the
Company's holdings in Abgenix.  Additionally, Cell Genesys participated
in two Abgenix stock sales in 2000, raising approximately $250 million to
strengthen the Company's cash position.  Cell Genesys' financial
resources will enable the Company to aggressively pursue products within
its portfolio and to potentially acquire product candidates or
technologies to create further shareholder value.

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 manufactured as nonpatient specific products at Cell Genesys
and combined with patients' cells during treatment.

Ex vivo gene therapies currently are being evaluated by Cell Genesys
in human clinical studies. These include studies of GVAX® therapeutic
vaccines which are designed to impart new disease-fighting capabilities
to the patient's immune system in order to enhance an immune response
against malignant cells. Encouraging data were obtained from clinical
trials of GVAX® prostate cancer vaccine, GVAX® lung cancer vaccine and
GVAX® pancreatic cancer vaccine in 2000.  Based on these encouraging
results and encouraging results from a preclinical study for GVAX®
vaccine in leukemia, Cell Genesys has launched a Phase I trial in
multiple myeloma and expects to launch new clinical trials for prostate
cancer, lung cancer, leukemia and pancreatic cancer during the coming
year.

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 2000, 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 cancer,
hemophilia and cardiovascular disorders.  The company's preclinical gene
therapy program in Parkinson's disease will be pursued further in the
future by Cell Genesys' majority-owned subsidiary, Ceregene, Inc., which
was launched in January 2001.

Cell Genesys ended 2000 with approximately $260 million in cash, cash
equivalents 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 including the Company's holdings in Abgenix.
Revenues for 2000 were derived primarily from the above-mentioned GVAX®
collaboration and payments received in connection with the Company's
gene activation technology licensing program.  In the first quarter of
2000, Cell Genesys received net proceeds of approximately $194 million
from the sale of 966,000 (pre-stock splits) shares of Abgenix common stock.  The
transaction was related to a secondary Abgenix offering in which a total
of 3,450,000 (pre-stock splits) Abgenix shares were sold with 966,000 of
the shares sold on behalf of Cell Genesys.  After the transaction, Cell
Genesys held 2,426,034 shares (pre-stock splits), or approximately 12 percent of
Abgenix common stock.  In the fourth quarter of 2000, Cell Genesys participated
in a separate secondary Abgenix offering which was a private placement
of 4,050,000 (post-stock splits) shares, of which 750,000 (post-stock splits) sold
on behalf of Cell Genesys.  Net proceeds of approximately $50 million were
received by Cell Genesys from this transaction, and the company held
8,954,136 (post-stock splits) shares of Abgenix stock or approximately 10.5 percent after
the sale.

The Company may finance certain of its operations 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.

A major portion of our operating expenses to date are related to the
R&D of products either on our own behalf or under contracts.  During
2000, 1999, and 1998, our R&D expenses were $30.4 million, $24.5 million
and $37.9 million, respectively.  Our R&D efforts have been the primary
source of our products.  We intend to maintain our strong commitment to
R&D as an essential component of our product development effort.
Licensed technology developed by outside parties is an additional source
of potential products.

**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 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 latter
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 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 vaccines
are 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.  GVAX® cancer vaccines are
comprised of 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 three configurations
of GVAX® cancer vaccines in human clinical studies of which two are non
patient-specific formats and one is a patient-specific format.  The
Company expects to emphasize the non patient-specific formats in future
trials for economic and practical reasons.

GVAX® Prostate Cancer Vaccine. This product candidate is comprised
of an "allogeneic" (non-patient specific) vaccine which employs prostate
cancer cell lines that have been genetically modified to secrete 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. Two
Phase II trials for GVAX® prostate cancer vaccine are currently under way
evaluating two groups of patients-55 patients who have become refractory
to hormone therapy and 35 patients who have had prostatectomies and are at
high risk for prostate cancer recurrence. In December 2000, it was
reported that post treatment follow-up of the hormone refractory patients
with positive bone scans prior to treatment revealed a trend toward
prolonged progression-free survival as measured by bone scan in 10
patients who received the higher dose of vaccine compared to 24 patients
who received the lower dose (median time to progression of 140 days v. 85
days).  In addition, earlier studies showed a high degree of correlation
between antitumor activity as measured by PSA and antitumor immunity as
measured by antibody formation.  Additional data from the GVAX® prostate
cancer vaccine trials are expected to be reported during the next year,
and a clinical trial utilizing a higher potency version of the prostate
cancer vaccine is expected to be initiated in early 2001.

GVAX® Pancreatic Cancer Vaccine. In May 2000, initial results were
reported for GVAX® pancreatic cancer vaccine.  In a Phase I clinical trial
employing a non patient-specific GVAX® pancreatic cancer vaccine,
prolongation of disease-free survival was demonstrated in three of eight
patients who received the two highest vaccine doses following surgery and
adjuvant radiation and chemotherapy.  Updated data, reported in connection
with a January 2001 publication in the Journal of Clinical Oncology,
revealed that the three responders remain disease-free at 38, 35 and 33
months after their respective diagnoses.  These data have prompted the
initiation of a Phase II pancreatic cancer clinical trial in approximately
60 patients during the next year.  GVAX® Pancreatic vaccine is comprised of
allogeneic (non patient-specific) pancreatic cancer cells genetically
modified to secrete granulocyte-macrophage colony stimulating factor (GM-
CSF), an immune stimulatory hormone, and then irradiated for safety. The
vaccine was administered as an intradermal (under the skin) injection and
as with other GVAX® clinical trials, vaccine treatment was safe and
generally well tolerated.

GVAX® Lung Cancer Vaccine. Based on encouraging data from Cell
Genesys' initial GVAX® lung cancer vaccine trial, the company is
currently conducting a multicenter Phase I/II trial evaluating a
patient-specific form of GVAX® cancer vaccine focusing on patients with
advanced lung cancer who have failed chemotherapy.   The trial, which is
being conducted at eight clinical trial sites, is expected to enroll 40
patients.  The vaccine is prepared from the patient's own tumor cells in
a process that can be completed at the hospital site within 24 hours.
After surgical removal of a patient's tumor, the vaccine is prepared by
genetically modifying the tumor cells to secrete GM-CSF and then
irradiating the cells prior to vaccinating the patient. Data from the
initial lung cancer GVAX® trial demonstrated encouraging clinical and
immunologic data in patients with advanced lung cancer, the majority of
whom had failed prior treatment with surgery, radiation and/or
chemotherapy.  Eighteen of 25 patients who received the complete course
of vaccinations demonstrated enhanced antitumor immunity, and at the
time the data were reported in September 2000, two patients were
disease-free more than two years after treatment and three other
patients were reported to have stable disease without evidence of tumor
progression after 15, eight and four months respectively.  Cell Genesys
expects to report data from its on-going multi-center GVAX® lung cancer
vaccine trial in mid-2001.  In the future Cell Genesys expects to
develop an "off the shelf" version of GVAX® lung cancer vaccine.

GVAX® Vaccine for Hematalogic Malignancies. Cell Genesys is also
currently conducting clinical trials utilizing GVAX® cancer vaccines in
combination with bone marrow transplantation for the treatment of
hematologic malignancies.  In the GVAX® vaccine trial for multiple
myeloma, which was initiated in February 2001, patients are being treated
with chemotherapy to induce remission and are then vaccinated before and
after autologous bone marrow transplantation.  The form of GVAX® vaccine
used in this trial is a non patient-specific GVAX® product which will be
mixed with the patient's irradiated tumor cells collected prior to
chemotherapy.  The goal of GVAX® vaccine therapy in this setting is to
stimulate an immune response directed against the patient's tumor cells
and prolong the remission induced by standard chemotherapy and
transplantation.  The Company expects to initiate a similar trial in
patients with leukemia during 2001.  It was reported in the May 2000 issue
of the journal, Blood, that in animal studies of GVAX® vaccine for acute
leukemia, GVAX® vaccine administered following bone marrow transplantation
significantly prevented tumor relapse and increased the therapeutic
benefit of transplantation.  Autologous (patient-specific) bone marrow
transplantation is currently being used to treat hematologic cancers in
order to reduce the bone marrow toxicity of high dose chemotherapy and to
enhance antitumor immunity.

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 GVAX® cancer vaccines will be proven safe or efficacious,
or if approved, that the vaccines can be successfully commercialized.
Although preliminary results reported to date from Cell Genesys'
clinical testing of GVAX® vaccines for prostate cancer, pancreatic
cancer and lung cancer are encouraging, and the therapies appear to be
both safe and well tolerated by patients, there can be no assurance that
the therapies will be tolerated over an extended period of time or that
the clinical efficacy of the vaccines will be demonstrated. There also
can be no assurance that Phase I studies of GVAX® vaccines for the
treatment of hematalogic malignancies will demonstrate clinical
efficacy.  Any conclusion as to whether the Company's GVAX® cancer
vaccines can potentially play a role in the treatment of multiple types
of cancer will be based on both the results of ongoing clinical trials
as well as future Phase II and Phase III studies.

**Preclinical Programs**

During 2000, Cell Genesys conducted preclinical studies in four in
vivo gene therapy programs including cancer, hemophilia, cardiovascular
disorders and Parkinson's disease.  Encouraging results have been
achieved in preclinical studies for each of these programs.  With the
Company's increasing focus on cancer, however, Cell Genesys expects to
pursue its Parkinson's disease gene therapy program through its
majority-owned subsidiary, Ceregene, and expects to seek partners to
complete the development and commercialization of its hemophilia and
cardiovascular gene therapy program in the future.

Cancer Gene Therapy.  Cell Genesys is exploring a variety of gene
therapy strategies to block tumor growth.  One strategy is to inhibit
blood vessel growth to tumors, thereby starving the tumor of its blood
supply.  This method of treatment is known as antiangiogenesis.  Cell
Genesys is collaborating with EntreMed, Inc. to evaluate 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 ("Rigel") in which 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 addition to antiangiogenesis, Cell Genesys is
evaluating other cancer gene therapy strategies.  In 2000, the Company
conducted preclinical studies in cancer with the p27/p16 gene, a cell
cycle inhibitor gene exclusively licensed from GPC Biotech (formerly
Mitotix, Inc.).  In the August 2000 issue of the journal, Molecular
Therapy, it was reported that p27/p16 gene therapy demonstrated the
ability to kill multiple cancer cell types in preclinical cancer
studies.

Hemophilia Gene Therapy.  Cell Genesys' scientists and academic
collaborators have evaluated gene therapy using an
(AAV) vector to deliver the factor IX gene into the liver of both small
and large animals with hemophilia. In a canine hemophilia model,
scientists observed an 85 percent reduction in bleeding episodes following
a single administration of factor IX gene therapy.  Additionally, two
years after the single injection, the treated animals continued to produce
the factor IX protein (the protein deficient in hemophilia B patients)
which was deficient in these animals prior to treatment.  These studies
utilized the company's proprietary AAV vector system which has the ability
to insert the therapeutic gene into the DNA of the patient's cells,
thereby allowing potential long-term therapeutic benefit.  In Cell
Genesys' preclinical program for hemophilia B, an AAV vector system is
employed since the factor IX gene is small enough to fit in this vector.
For hemophilia A, the company has the option of employing an AAV vector
system if a truncated form of the factor VIII gene can be successfully
applied, or its proprietary lentiviral vector system if the full length
gene is required for optimal production of the deficient clotting factor
protein.  Additionally, Cell Genesys has more than 150 patent filings for
AAV and lentiviral gene therapies and has large scale manufacturing
capabilities in this area.  Cell Genesys expects to initiate human
clinical trials for hemophilia during the next year.

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 GPC
Biotech for use in cardiovascular gene therapy.

Parkinson's Disease Gene Therapy. Cell Genesys' scientists and
academic collaborators are testing 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 were able to survive during
the study without daily L-dopa treatments.  The Company expects that
further studies of Parkinson's disease gene therapy will be pursued
through its Ceregene subsidiary.

Ceregene, Inc., A Majority-Owned Subsidiary of Cell Genesys. In
January 2001, Cell Genesys launched a new majority-owned subsidiary,
Ceregene, Inc., which will focus on gene therapies for central nervous
system (CNS) disorders such as Alzheimer's disease and Parkinson's
disease.  Ceregene was formed through the acquisition of Neurologic Gene
Therapeutics, a private San Diego-based start-up company.  Cell Genesys
contributed $10 million to Ceregene together with access to technology
and patents in the CNS gene therapy area, in exchange for approximately
60 percent ownership of the new company.  Ceregene was launched with two
key product development programs already under way as a result of the
efforts of Neurologic Gene Therapeutics.  These include both a Phase I
clinical trial for Alzheimer's disease gene therapy, as well as
successful preclinical studies for Parkinson's disease gene therapy.
Ceregene's operations, which will be based in San Diego, Calif., are
expected to expand significantly in 2001 following the recruiting of key
senior management.  Neurologic Gene Therapeutics, which previously
operated through limited private funding and research grants, was
founded by a group of leading neuroscientists including Mark Tuszynski,
M.D., Ph.D. and Armin Blesch, Ph.D. of the University of California, San
Diego, and Jeffrey Kordower, Ph.D. of Rush Presbyterian-St. Lukes
Medical Center in Chicago, all of whom serve as scientific advisors to
Ceregene.  Cell Genesys has majority representation on Ceregene's board
and Stephen A. Sherwin, M.D., chairman and chief executive officer of
Cell Genesys, serves as chairman.

**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 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 positions
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.  Cell Genesys has
signed agreements 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 deals with two genomics companies including a collaboration with
Rigel, Inc., which is providing access to genes for cancer, as well as
an earlier agreement with GPC Biotech, formerly 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.  Cell Genesys anticipates that
additional agreements of these types will be signed in the future.

**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 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. This facility, which is
approximately 5,000 square feet, is currently being used to manufacture
clinical product for the Company's GVAX® cancer vaccine clinical trials.
In late 2000, Cell Genesys announced that it launched construction of a
41,000 square foot leased GMP manufacturing facility in Hayward,
California, which it expects will begin operating in mid-2002.  In
addition, the Company announced in early 2001 that it had acquired for
$4.8 million, the operating assets of Chiron Corporation's gene therapy
business, including a staffed and operating 48,000 square foot leased
GMP manufacturing facility in San Diego, California.  Cell Genesys'
5,000 square foot manufacturing facility is expected to be converted to
research and development space, and the other two manufacturing
facilities will be used to manufacture products for the Company's
future clinical trials including GVAX® cancer vaccine trials and gene
therapy trials for hemophilia and cancer.  The Company believes that
both facilities have the capacity to manufacture products for Phase III
trials and market launch.

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

Minority-Owned Abgenix, Inc. ("Abgenix") Subsidiary.Abgenix is
developing antibody therapies for inflammation, cancer and transplant
disorders.  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
$14.0 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 (pre-stock splits) shares of Abgenix stock,
decreased Cell Genesys' holdings to approximately 12 percent ownership
of Abgenix.  In the fourth quarter of 2000, Cell Genesys participated in
a separate secondary Abgenix offering which was a private placement of
4,050,000 (post-stock splits) shares of which 750,000 were sold on
behalf Cell Genesys.  Net proceeds of approximately $50 million were
received from this transaction, and the company held 8,954,136 (post-stock
splits) shares Abgenix stock or approximately 10.5 percent after the sale.
The Company expects to sell additional shares of Abgenix common stock
over time to provide additional funding for Cell Genesys' cancer vaccine
and gene therapy programs.

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 $25 million in
revenues to Cell Genesys through February 2001.  In February 1997, Cell
Genesys executed a license agreement with Hoechst Marion Roussel, now
Aventis Pharmaceuticals, Inc. ("Aventis"), for gene-activated EPO and a second undisclosed
protein.  In late 2000, Aventis informed the Company of its intention to
terminate this license agreement as it relates to a second undisclosed
protein. As of February 2001, Cell Genesys had received over $17
million under this license agreement, which included certain milestone
payments relating to the development of gene-activated EPO which Aventis
is developing in collaboration with Transkaryotic Therapies, Inc.. The
agreement also provides for royalties on future sales of gene-activated
EPO anywhere in the world.

**Corporate Collaborations**

Pharmaceutical Division Of Japan Tobacco.In December 1998, Cell
Genesys signed a worldwide collaboration agreement with the
pharmaceutical division of Japan Tobacco Inc. ("JT") for selected
product candidates from the Company's GVAX® cancer vaccine program. The
collaboration is focused 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.
As of February 2001, Cell Genesys has received over $49 million in
milestone and other one time payments and 50 percent reimbursement for
research and development costs.  The agreement provides for future 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 GVAX® product for kidney cancer, 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.
None of the payments involve an additional equity investment in Cell
Genesys by JT, which currently owns approximately three 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.

Gene Therapy Rights Agreement with Abgenix.
In November 1997, Cell Genesys entered into the gene therapy rights
agreement (the "GTRA") with Abgenix.  The GTRA provides Cell Genesys
with certain rights to commercialize products based on antibodies
generated with Abgenix's XenoMouse technology
in the field of gene therapy. Under the GTRA, we have certain rights
to direct Abgenix to make antibodies to two antigens per year.  In
addition, we have an option to enter into a license to commercialize
antibodies binding to such antigens in the field of gene therapy. Cell
Genesys is obligated to make certain payments to Abgenix for these
rights including reimbursement of license fees and royalties on future
product sales.  The GTRA also prohibits Abgenix from granting any
third-party licenses for antibody products based on antigens nominated
by Abgenix for its own purposes where the primary field of use is gene
therapy.  In the case of third-party licenses granted by Abgenix where
gene therapy is a secondary field, Abgenix is obligated to share with
us a portion of the cash milestone payments and royalties resulting
from any products in the field of gene therapy.

Other Collaborations. Cell Genesys has signed agreements with six
different companies relating to its gene therapy technologies.  In
December 1998, Cell Genesys agreed to provide its adenoviral gene
delivery system to Collateral Therapeutics for preclinical studies of
cardiovascular gene therapy.  Cell Genesys and GPC Biotech (formerly
Mitotix, Inc.) 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 this 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
research 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 that are 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 Cell Genesys, are generally uncertain and involve complex
legal and factual questions. Cell Genesys currently has approximately
295 issued or granted patents and more than 330 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.

**Competition**

The Company encounters substantial competition in the development of
cancer products.  This competition, from other manufacturers of the same
products and from manufacturers of different products designed for the
same uses, is expected to continue in both U.S. and ex-U.S. markets.
Gene therapy and cancer vaccines, the two primary focus areas of the
Company, are rapidly evolving areas of the biotechnology industry and
are expected to undergo many changes in the coming years as a result of
the technological advances expected in this area.  We are aware of a
number of groups that are developing cancer vaccines and gene therapies
including early-stage and established biotechnology companies,
pharmaceutical companies, academic institutions, government agencies and
research institutions.  The Company faces competition from these groups
in areas such as enrolling patients in clinical trials, recruiting
employees, acquiring technologies that might enhance the Company's
ability to market products, establishing relationships with certain
research or academic institutions and in partnering certain of its
programs with larger pharmaceutical companies.  It is possible that our
competitors could achieve earlier market commercialization, could have
superior patent protection, or could have safer, more effective or more
cost-effective products.  These factors could render the Company's
potential products less competitive, which could have a material adverse
effect on the business.

**Human Resources**

As of December 31, 2000, Cell Genesys employed 162 persons, of whom
26 hold Ph.D. degrees and 4 hold M.D. degrees. Approximately 125
employees are engaged in research and development, and 37 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.  In January 2001, the company acquired the
principal operating assets of Chiron Corporation's gene therapy business
that then included 19 employees in the San Diego-based facility.

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 31,
2001 are as follows:



|**Name**                 | **Age** | **Positon with Cell Genesys**                               
|------------------------ | ------- | ------------------------------------------------------------
|Stephen A. Sherwin, M.D  | 52      | Chairman of the Board, President and Chief Executive Officer
|Joseph J. Vallner, Ph.D. | 54      | Executive Vice President and Chief Operating Officer        
|Matthew J. Pfeffer       | 43      | Vice President and Chief Financial Officer                  
|Dale G. Ando M.D.        | 47      | Vice President -- Clinical Research                         
|Malcolm J. McKay Ph.D.   | 45      | Vice President -- Quality and Regulatory Affairs            
|Robert H. Tidwell        | 57      | Vice President -- Corporate Development                     
|Christine McKinley       | 47      | 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, he was
elected to the additional position of chairman of the board. 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 was on the staff of the National
Cancer Institute.  Dr. Sherwin currently serves as the chairman of the
board of Ceregene, Inc., a majority-owned subsidiary of Cell Genesys,
Inc.  He is also a director of Abgenix, Inc., Neurocrine Biosciences,
Inc., Rigel Pharmaceuticals, Inc. and privately owned Calyx
Therapeutics, Inc.  Dr. Sherwin holds a B.A. in biology from Yale
University, an M.D. from Harvard Medical School and is board-certified
in internal medicine and medical oncology.

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 Doxilr, 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.
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, 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. McKay joined Cell Genesys in November of 2000 as vice president,
quality and regulatory affairs.  Prior to joining Cell Genesys, Dr.
McKay was vice president of regulatory affairs at Celtrix
Pharmaceuticals.  Dr. McKay has also held various management positions
in the regulatory affairs and quality assurance areas with other
biotechnology companies including COR Therapeutics, Berlex Biosciences
and Triton Biosciences.  Dr. McKay holds a Ph.D. in biochemistry from
the University of London and a B.S. in biology from the University of
Portsmouth in Hampshire, UK.

Mr. Tidwell joined Cell Genesys in August 2000 as vice president,
corporate development.  Prior to joining Cell Genesys, Mr. Tidwell was
vice president of business development at Calydon, Inc..  Mr. Tidwell has
also held various management positions with such companies as Boston
Life Sciences where he served as chief operating officer, Genetics
Institute where he was vice president of marketing and business
development, and Eli Lilly and Company where he held various positions
including director of worldwide pharmaceutical licensing.  Mr. Tidwell
holds an M.B.A from The Ohio State Graduate School of Business and a
Bachelor of Pharmacy from The Ohio State School of Pharmacy.

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 fields of cancer immunotherapy and gene
therapy.  As of March 31, 2001, the board consists of the 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 91,635 square feet of space in a
research and development office park located in Foster City, California.
In February 2001, the Company extended the lease agreement in the Foster
City location to January 31, 2006, providing for an additional 14,000
square feet of space in the use of research and development. Cell
Genesys' laboratories are equipped for biochemical and tissue culture
research and development.  An additional 41,000 square feet of leased
facility in Hayward, California was acquired in the fourth quarter of
2000 to become a manufacturing facility for the clinical production
requirements for Phase III studies and potential product launches.
This Good Manufacturing Practices ("GMP") manufacturing facility
is being constructed and expected to be fully
validated and on-line by mid-2002.  In addition, the Company has
signed a new build-to-suit lease for a two-story building consisting of
approximately 50,000 square feet in the Hayward location with a fifteen-
year term.  The lease in the existing Hayward location will be
co-terminus with this new lease.  The second building in the Hayward
location is being constructed to provide support services for the
Company's GMP facility.

On January 8, 2001, the Company announced that it had acquired the
principal operating assets of Chiron Corporation's gene therapy business,
including a fully equipped and staffed manufacturing facility, at a cost
of approximately $4.8 million.  The San Diego-based leased facility is
approximately 48,000 square feet, includes a validated GMP
manufacturing facility and is equipped to
handle large-scale production of gene therapy products for Phase I to
Phase III clinical trials and potential product launch.

Cell Genesys has previously leased certain other facilities, including
facilities in Alameda, California assumed as part of its acquisition of
Somatix Therapy Corporation in 1997.  These facilities are not currently
occupied by Cell Genesys, and have been sublet to other companies under
sub-leasing arrangements.  In January 2001, the leases for the Alameda
facilities expired except for one location that is under a sub-leasing
arrangement and will expire in January 2002.

In March 2001, the Company signed a new build-to-suit lease with purchase
option for a new building to be constructed in South San Francisco, California.
The agreement is contingent upon the developer obtaining various permits and
other approvals prior to beginning construction.  The proposed building is
expected to contain approximately 155,000 square feet of research and
development and administrative space, and is planned to serve as the
Company's future corporate headquarters.  Should the project go forward,
construction is currently expected to be completed in late 2003.

**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 National Market under the symbol "CEGE".  The
following table sets forth, for the periods indicated, the high and low
closing prices per share of Cell Genesys Common Stock as reported by The
Nasdaq 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 1999
  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 2000
  First Quarter......................................    $52.00     $11.81
  Second Quarter.....................................    $28.50     $14.75
  Third Quarter......................................    $33.56     $21.31
  Fourth Quarter.....................................    $28.48     $19.63

Calendar Year 2001
  First Quarter (through March 15, 2001).............    $22.44     $13.94`

As of March 15, 2001, there were approximately 33,000 holders of record of
the Company's common stock. On March 15, 2001 the last reported sales price on
the Nasdaq-AMEX National Market for the common stock was $14.63. The market for
the Company's common stock is highly volatile.

**ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA**

`Year Ended December 31,
                                                  ------------------------------------------------------
                                                    2000       1999        1998       1997       1996
                                                  ---------  ---------  ----------  ---------  ---------
                                                              (in thousands, except per share data)
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Revenue under collaborative agreements-
  principally from related parties.............. $  24,209  $  33,607  $   24,146  $  23,806  $  22,505
Operating expenses:
  Research and development......................    30,474     24,538      37,932     36,830     27,587
  General and administrative....................     6,984      4,833       8,204     10,659      7,469
  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..............    37,458     44,753      46,136    148,835     35,056
                                                  ---------  ---------  ----------  ---------  ---------
Operating loss..................................   (13,249)   (11,146)    (21,990)  (125,029)   (12,551)
Equity in loss of Abgenix.......................       --      (3,083)     (2,917)       --         --
Gain on sale of stock of Abgenix................   239,660        --        7,020        --         --
Interest income, net............................    13,172      2,235       1,567      1,500      3,277
                                                  ---------  ---------  ----------  ---------  ---------
Income (loss) before minority interest,
   income tax and cumulative effect of
   change in accounting........................... 239,583    (11,994)    (16,320)  (123,529)    (9,274)
Loss attributed to minority interest............       --         --        4,192        --         --
                                                  ---------  ---------  ----------  ---------  ---------
Net income (loss) before income tax
   and cumulative effect of accounting change..... 239,583    (11,994)    (12,128)  (123,529)    (9,274)
Provision for income tax........................   (64,203)       --         --          --         --
                                                  ---------  ---------  ----------  ---------  ---------
Income (loss) before cumulative effect of
   change in accounting.........................   175,380    (11,994)    (12,128)  (123,529)    (9,274)
Cumulative effect of change in accounting
   principle, net of tax (1)....................    (6,460)       --         --          --         --
                                                  ---------  ---------  ----------  ---------  ---------
Net income (loss)............................... $ 168,920  $ (11,994) $  (12,128) $(123,529) $  (9,274)

Deemed dividend to preferred shareholders.......       756        392       1,088        --         --
                                                  ---------  ---------  ----------  ---------  ---------
Net income (loss) attributed to common
   shareholders................................. $ 168,164  $ (12,386) $  (13,216) $(123,529) $  (9,274)

Basic income (loss) per common share before
   cumulative effect of accounting
   change and after deemed dividend............. $    5.18  $   (0.38) $    (0.46) $   (5.33) $   (0.57)
Cumulative effect of change in
   accounting principle.........................     (0.19)       --          --         --         --
                                                  ---------  ---------  ----------  ---------  ---------
Basic income (loss) per common share............ $    4.99  $   (0.38) $    (0.46) $   (5.33) $   (0.57)

Diluted income (loss) per common share before
   cumulative effect of accounting
   change and after deemed dividend............. $    4.73  $   (0.39) $    (0.46) $   (5.33) $   (0.57)
Cumulative effect of change in
   accounting principle.........................     (0.18)       --          --         --         --
                                                  ---------  ---------  ----------  ---------  ---------
Diluted income (loss) per common share.......... $    4.55  $   (0.39) $    (0.46) $   (5.33) $   (0.57)
                                                  =========  =========  ==========  =========  =========
Weighted average shares of common stock
   outstanding -- basic.........................    33,716     31,682      28,607     23,172     16,373
                                                  =========  =========  ==========  =========  =========
Weighted average shares of common stock
   outstanding -- diluted.......................    36,952     31,682      28,607     23,172     16,373
                                                  =========  =========  ==========  =========  =========


(1) Reflects the impact of the adoption of SAB 101 on revenue recognition effective
January 1, 2000.  Pro forma amounts of net income (loss) and related diluted per
share amounts, assuming retroactive application of the change in accounting
principle for the years ended 2000, 1999, 1998, 1997 and 1996 (previous amounts
were not material) are as follows (in thousands, except per share amounts):

Pro forma:                                2000         1999          1998         1997         1996
Net income (loss)                     $175,380     $(10,649)     $(22,277)   $(122,729)    $(13,241)
Earnings (loss) per share diluted     $   4.73     $  (0.35)     $  (0.82)   $   (5.30)    $  (0.81)


                                                                      December 31,
                                                  ------------------------------------------------------
                                                    2000       1999        1998       1997       1996
                                                            (restated)
                                                  ---------  ---------  ----------  ---------  ---------
                                                                      (in thousands)
CONSOLIDATED BALANCE SHEET DATA:
Cash, cash equivalents and short-term                       (restated)
  investments................................... $ 259,647  $  50,287  $   53,243  $  88,816  $  85,584
Working capital.................................   549,985    334,646      44,080     51,804     64,137
Total assets....................................   793,716    489,683      65,799    106,887     99,809
Note payable and other current
  obligation....................................   239,002    150,430       9,964     39,955     22,612
Long-term obligations...........................     1,350      3,198       4,860     11,082      6,133
Redeemable convertible preferred stock..........    17,185      7,679      12,083     19,817        --
Accumulated deficit.............................   (34,883)  (203,803)   (191,809)  (179,563)   (56,270)
Stockholders' equity............................   536,179    328,376      38,892     18,641     71,064



QUARTERLY RESULTS OF OPERATIONS (1)
(unaudited)
                                                   3/31/00     6/30/00     9/30/00    12/31/00   Total

                      2000                              (in thousands, except per share amounts)

Total Revenue................................... $   4,600  $   4,985  $    5,112  $   9,512  $  24,209
Research and development........................     6,400      7,747       7,448      8,879     30,474
General and administrative......................     1,659      1,574       1,860      1,891      6,984
Cumulative effect of change in accounting.......    10,767        --         --          --      10,767
Net income (loss) attributed to common stock.... $ 130,037  $    (434) $     (308) $  38,889  $ 168,164
Basic income (loss) per common share............ $    3.92  $   (0.01) $    (0.01) $    1.14  $    4.99
Diluted income (loss) per common share.......... $    3.56  $   (0.01) $    (0.01) $    1.05  $    4.55


CONSOLIDATED BALANCE SHEET DATA
(unaudited)                                   (restated)(2)  (restated)(2)  (restated)(2)

Working capital................................. $ 390,468      $ 538,123     $  660,809    $ 549,985
Total assets....................................   591,541        824,646      1,021,222      793,716
Total current liabilities.......................   196,857        282,453        356,155      239,002
Stockholders' equity............................   376,137        523,866        646,941      536,179





QUARTERLY RESULTS OF OPERATIONS
(unaudited)


                      1999
Total Revenue................................... $   6,076  $   7,223  $   10,233  $  10,075  $  33,607
Research and development........................     5,537      6,277       5,918      6,806     24,538
General and administrative......................     1,095      1,253       1,072      1,413      4,833
Merger termination costs........................       --         --          --      15,382     15,382
Net income (loss) attributed to common stock.... $  (1,099) $    (590) $    3,443  $ (14,140) $ (12,386)
Basic income (loss) per common share............ $   (0.04) $   (0.02) $     0.11  $   (0.44) $   (0.39)
Diluted income (loss) per common share.......... $   (0.04) $   (0.02) $     0.10  $   (0.44) $   (0.39)


CONSOLIDATED BALANCE SHEET DATA
(unaudited)
                                                                                         (retated)(2)
Working Capital................................. $  44,387     $  44,334     $   49,353    $ 334,646
Total assets....................................    73,389        74,866         78,907      489,683
Total current liabilities.......................     9,146        11,942         11,822      150,430
Stockholders' equity............................    48,087        47,151         56,357      328,376

(1) Quarterly amounts previously reported reflect the adoption of SAB 101.
(2) The balance sheets have been restated to record a deferred tax liability on
the unrealized gain on Abgenix shares.  The change resulted in a reduction in
stockholder's equity and a corresponding increase in current liabilities.
Revenue is being recognized over the term of the agreements.  The increase (decrease)
in revenues, net income (loss) and earnings (loss) per diluted shares reflect
the impact of this adoption.`

**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 technologies, 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 financial
statements for the year ended December 31, 2000, contained under item 8
herein.

**Overview**

Since its inception in April 1988, Cell Genesys, Inc. 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 cancer
vaccines and gene therapies to treat cancer and other major, life-
threatening diseases. Cell Genesys' current clinical programs include
GVAX® cancer vaccines in Phase II studies for prostate cancer, Phase
I/II studies for lung cancer and a Phase I/II study for multiple
myeloma. The Company expects to initiate additional GVAX® cancer vaccine
trials for prostate cancer and lung cancer as well as pancreatic cancer
and leukemia during the next year.  GVAX® vaccines for prostate cancer
and 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 cancer, hemophilia and cardiovascular
disorders.  In January 2001, Cell Genesys launched a new majority-owned
subsidiary, Ceregene, Inc., which will be focused on gene therapies for
central nervous system disorders. 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., which is focused on the
development and commercialization of antibody therapies and a licensing
program in gene activation technology for therapeutic proteins.

During 2000, 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 licensing agreements for its gene
therapy technologies.  During 2000, Cell Genesys' financial position
significantly increased as a result of the appreciation in value of the
Company's holdings in Abgenix.  Additionally, Cell Genesys participated
in two Abgenix stock sales in 2000, raising approximately $250 million to
strengthen the Company's cash position.  Cell Genesys' financial
resources will enable the Company to aggressively pursue products within
its portfolio and to potentially acquire product candidates or
technologies to create further shareholder value.

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 manufactured as non-patient specific products at Cell Genesys
and combined with patients' cells during treatment.

Ex vivo gene therapies currently are being evaluated by Cell Genesys
in human clinical studies. These include studies of GVAX® therapeutic
vaccines that are designed to impart new disease-fighting capabilities
to the patient's immune system, in order to enhance an immune response
against malignant cells. Encouraging data were obtained from clinical
trials of GVAX® prostate cancer vaccine, GVAX® lung cancer vaccine and
GVAX® pancreatic cancer vaccine in 2000.  Based on these encouraging
results and encouraging results from a preclinical study for GVAX®
vaccine in leukemia, Cell Genesys has launched a Phase I trial in
multiple myeloma and expects to launch clinical trials for prostate
cancer, lung cancer, leukemia and pancreatic cancer during the coming
year.

In vivo gene 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 2000, 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 cancer,
hemophilia and cardiovascular disorders.  The Company's preclinical gene
therapy program in Parkinson's disease will be pursued in the future by
Cell Genesys' majority - owned subsidiary, Ceregene, Inc., which was
launched in January 2001.

Cell Genesys ended the year of 2000 with approximately $260 million in cash,
cash equivalents 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 2000 were derived primarily
from the above-mentioned GVAX® collaboration and payments received in
connection with the Company's gene activation technology licensing
program.  In the first quarter of 2000, Cell Genesys received net
proceeds of approximately $194 million for the sale of 966,000 (pre-stock
splits) 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 held 2,426,034 shares (pre-stock splits),
or approximately 12 percent of Abgenix common stock.  In the fourth quarter
of 2000, Cell Genesys participated in a separate secondary Abgenix
offering which was a private placement of 4,050,000 (post-stock splits)
shares of which 750,000 were sold by Cell Genesys.  Net proceeds of
approximately $50 million were received from this transaction, and the
company held 8,954,136 shares (post-stock splits) of Abgenix stock or
approximately 10.5 percent after the sale.

**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 from that date to
November 1999.  In November 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.

Revenue decreased to $24.2 million in 2000, from $33.6 million and
$24.1 million in 1999 and 1998, respectively.    Revenues for 2000 were
derived primarily from the Company's GVAX® collaboration and payments
received in connection with the Company's gene activation technology
licensing program. Revenues for 2000 were impacted by the adoption of  SAB
101 and the resulting change in the Company's revenue recognition policy.
As a result of the adoption of SAB101 a cumulative effect of a change in
accounting of $6.5 million, net of taxes was recorded in 2000.  (see the
revenue recognition note in the notes to the consolidated financial statements
for further information on our adoption of SAB 101).  Revenues for 1999
included a one-time payment of
$8 million received in connection with a former collaboration
agreement that was terminated in September 1999.  During 2000, the Company
recognized and received $6 million in milestone payments for the GVAX®
prostate and lung programs.  In February 1997, Cell Genesys entered into
an agreement to license the Company's gene activation technology to
Aventis (formerly 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
one potential gene-activated protein products.  The Company recognized
revenue of $2 million, $4 million and $4.1 million in 2000, 1999 and
1998, respectively, pursuant to the Aventis agreement.

Research and development expenses increased to $30.5 million during
2000, from $24.5 million and $37.9 million in 1999 and 1998, respectively.
The increase can be attributed in part to the Company's expanding clinical
trials for GVAX® cancer vaccine and hemophilia programs.  The decrease in
1999 was primarily the result of a corporate restructuring plan
implemented in the fourth quarter of 1998.  The 1999 decrease 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 and more numerous clinical trials and
additional product development activities.  The rate of increase depends
on a number of factors including progress in research and development and
clinical trials.

General and administrative expenses were $7 million during 2000,
compared to $4.8 million and $6 million in 1999 and 1998, respectively.
The increase resulted from additional headcount and facility
infrastructure to support expanding preclinical and clinical programs.

In December 1999, the Company terminated an agreement with Genzyme
under which the Company would be acquired, resulting in a one-time non-
recurring cost of $15.4 million that was paid in December, 1999.

During 2000, the Company had sold shares of Abgenix that resulted in
realized gain of $239.7 million.  In 1998, the sale of Abgenix stock
resulted in $7 million realized gain.

Interest and other income was $13.6 million in 2000 compared to $3.1
million and $3.4 million in 1999 and 1998, respectively.  The higher
income in 2000 is resulting from the sale of Abgenix stock in February and
November 2000.  Interest expense decreased to $0.4 million in 2000 from
$0.8 million in 1999 and $1.8 million in 1998.  The decrease reflects
expired capital leases and repayment of a $1.6 million tenant improvement
loan in March 2000. Interest expense in 1998 included interest on a note
payable to GenPharm International commencing January 1997, which was paid
in full in September 1998.

Cell Genesys' net income in its "Gene Therapy Operations" was $168.2
million in 2000, compared to net losses of $8.9 million in 1999 and $4.1
million in 1998. The increase in income for 2000 was primarily due to
$180 million gain realized on sales of Abgenix common stock, net of tax,
partially offset by a $6.5 million, net of tax, revenue adjustment under
the cumulative effect of accounting change following the adoption of SEC
Staff Accounting Bulletin No. 101 ("SAB 101") during the first quarter of
2000.  The loss in 1999 was primarily due to a one-time merger termination
charge of $15.4 million in December 1999.  Losses, excluding non-recurring
charges and gains from sales of Abgenix stock, 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, 2000, Cell Genesys had federal net operating loss
carryforwards of approximately $57 million and federal research and
development tax credit carryforwards of approximately $1 million.  The
net operating loss and credit carryforwards will expire in the years of
2008 through 2012, if not utilized.  The large capital gains associated
with the sale of a portion of the Company's investment in Abgenix during
February and November 2000 are have consumed a large portion of
these net operating loss carryovers and tax credits.

**Liquidity and Capital Resources**

Cell Genesys has financed its operations primarily through the sale of
equity securities, funding under collaborative arrangements, sale of
Abgenix common stock and equipment financing. In February and November
2000, the Company received $244 million in net proceeds for the sale of
shares of Abgenix common stock.  From inception through February 28, 2001,
the Company received $181.6 million in net proceeds from equity financings
and $168.6 million under collaborative agreements.

At December 31, 2000, Cell Genesys' cash, cash equivalents and
short-term investments totaled $259.6 million, compared to $50.3 million at
December 31, 1999.  The increase was due primarily to net proceeds from
the sale of Abgenix common stock.  At December 31, 2000, the Company held
approximately 8.9 million shares of Abgenix common stock.

During 2000, the Company made estimated federal income tax payments of
$39.0 million and in March 2001 made an estimated state income tax
payment of $11.5 million.  These payments represent tax payable on our
2000 taxable income, including the net gains of $239.7 million on Abgenix
stock sales, net of available net operating loss ("NOL") carryfowards and
other applicable tax credits. The Company has additional unutilized NOL
carryforwards, although the future utilization of these NOL
carryforwards is limited by IRS regulation Section 382, which imposes an
annual limitation on taxable income which can be offset by NOLs following
a change in control.   The Company, for IRS purposes, experienced a
change in control during its acquisition of Somatix in 1997.  It is the
Company's current intention to minimize future tax liabilities on sales
of Abgenix stock by offsetting gains against current operating losses and
the NOL carryfowards allowed under Section 382. In addition, the Company
has certain research and development tax credits which it may utilize to
offset such gains.  However, under some circumstances the Company may
sell more Abgenix stock and consequently recognize more gain than it may
be able to shelter from tax using these methods.

Cell Genesys anticipates that fiscal year 2001 cash usage will not
exceed $30 million, net of tax payments, sales of Abgenix stock, or
build-out costs of manufacturing facilities 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; and patent interference proceedings
or other legal proceedings or their resolution.  Nonetheless, progress in
the Company's development programs and/or the increase in the number of
programs will reduce the current cash resources and potentially create the
need to raise further capital.  Therefore, the Company may continue to
consider financing alternatives, including the potential sale of
additional shares of Abgenix stock.

While the Company believes that its current liquidity position will be
sufficient to meet near future needs it  anticipates that it will
entertain the possibility of raising additional capital in advance of
actual capital expenditures to preserve its liquidity.  Therefore
liquidity and volatility of capital markets play a significant role in the
decision to raise capital.   The types 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.  Certain 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.

**Recent Accounting Pronouncements**

In March 2000, FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation-An Interpretation of APB Opinion
No. 25", (FIN 44), was issued.  FIN 44 clarifies the application of APB
No. 25 for certain stock-based compensation issues.  FIN 44 clarifies the
definition of employee for purposes of applying APB No. 25, the criteria
for determining whether a plan qualifies as a non-compensatory plan, the
accounting consequences of various modifications to the terms of a
previously fixed option or award, and the accounting for an exchange of
share compensation awards in a business combination, among others.  FIN 44
was effective July 1, 2000, but certain conclusions in this interpretation
cover specific events that occurred after either December 15, 1998 or
January 12, 2000.  The implementation of FIN 44 did not have a significant
impact on the Company's financial position.

**Risk Factors**

**We may have a need for substantial additional funds.** We may need
substantial 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.
At some point in the future, we may need to raise 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.our ability to realize the carrying value  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 in our operations (absent the gains on
sales of Abgenix stock) and may not become profitable in the future.**We
have incurred an accumulated deficit since our inception. At December 31,
2000, our accumulated deficit was approximately $34.9 million, down from
$203.8 million from December 31, 1999. For the year ended December 31,
2000, we recorded a net income of $168.9 million primarily from the gain
on sale of Abgenix common stock.  Absent this sale, 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 vaccines are currently being tested in Phase I/II and Phase
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 of gene therapy 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 have
approximately 295 issued or granted patents and more than 330 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 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 separate interference
and/or opposition 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 field of 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 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 fluctuated 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) 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 other
>        biotechnology and pharmaceutical companiespublic 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 stockfuture 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
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 marketour 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 an 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 our GVAX® cancer vaccines.
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 CenterAmericasDoctor.com, Inc.Emory UniversityUniversity of MichiganUniversity of PennsylvaniaStanford University

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, the conversion of outstanding Series B redeemable
convertible 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 stock options 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 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 of $11.02 per share for the 694 remaining
>        shares from the original issue of $20 million face value preferred
>        stock, and $14.53 per share for the 875 shares issued January 2000 from
>        call options (see below) or,the average of certain trading prices during the 10 trading days preceding such
>        date of conversion (the "Floating Conversion Price").

During 2000, the market price of the common stock traded above the
fixed conversion price of $11.02 and $14.53 per share and consequently the
conversion rate of the Series B preferred stock is currently based on the
fixed conversion price.  Should the market price decline below the fixed
conversion rate, the greater the decline in the market price, the greater
the number of shares issuable upon conversion of the Series B preferred
stock.

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 appreciation of Cell Genesys' stock price.
Following the issuance of the new preferred shares, no further call
options remain outstanding.

**Our operations are vulnerable to interruption of fire, earthquake,
power loss, telecommunications failure and other events beyond our
control.**  We do not have a detailed disaster recovery plan.  Our
facilities in the State of California are currently subject to electrical
blackouts as a consequence of a shortage of available electrical power.
In the event these blackouts continue to increase in severity, they could
disrupt the operations of our affected facilities.  In addition, we do not
carry sufficient business interruption insurance to compensate us for
losses that may occur and any losses or damages incurred by us, could have
a material adverse effect on our business.

**Our stock price is greatly influenced by the market price of Abgenix
stock, which has been highly volatile.** Our retained ownership of 8.9
million Abgenix shares represents a very material portion of the total
assets on our balance sheet.  Abgenix stock prices have proven to be
highly volatile.  Movements in the price of Abgenix stock up or down,
exert strong corresponding influeces on the market price of our stock.

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.

**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. As mentioned under risk factors,
the Company is subject to risk associated with its retained ownership in
Abgenix shares.

The Company has not entered into any financial instruments that would
give rise to foreign currency exchange risk, commodity pricing risk and
equity pricing risk.

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, Sterling Capital
Management, JP Morgan H & Q, Transamerica Business Credit Corporation and
FINOVA Credit Corporation.

**Interest Rate Sensitivity
                                             Principal Amount by Expected Maturity
                                                    Average Interest Rate**

`(in thousands)
                                                                                                    Fair
                                                                             There-                 Value
                                  2001       2002       2003       2004       after      Total    12/31/00
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------
Total Investments
  Securities.................. $  31,120  $ 220,148  $     --   $     --   $     --   $ 251,268  $ 253,745
  Average Interest Rate.......      5.59%      5.29%       --         --         --        5.23%
Long-term Debt, including
  Current Portion............. $     985  $     640  $     492  $     260  $     --   $   2,377  $   2,377
  Average Interest Rate.......     10.95%     10.46%      9.92%      9.92%       --       10.31%`

**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, 2000 and 1999 (restated), and the related
consolidated statements of operations, stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 2000.
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, 2000 and 1999 (restated), and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 2000, in conformity with
accounting principles generally accepted in the United States.

As discussed in the revenue recognition note to the consolidated financial
statements, in 2000 the Company changed its method of revenue recognition.

Palo Alto, California
January 19, 2001

/S/  ERNST & YOUNG LLP

---

**CELL GENESYS, INC.**
                          Consolidated Balance Sheets(in thousands, except share and per share data)

`December 31,
                                                           ---------------------
                                                             2000        1999
                                                           ---------  ----------
                           ASSETS
Current assets:
  Cash and cash equivalents including restricted cash of
  $349,000 and $369,000 for 2000 and 1999, respectively.. $  21,747  $    5,300
  Short-term investments.................................   237,900      44,987
  Investment in Abgenix common stock.....................   528,858     433,324
  Prepaid expenses and other current assets..............       482       1,465
                                                           ---------  ----------
          Total current assets...........................   788,987     485,076
Property and equipment, net..............................     4,439       4,198
Deposits and other assets................................       290         409
                                                           ---------  ----------
                                                          $ 793,716  $  489,683
                                                           =========  ==========

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable....................................... $     520  $    1,124
  Accrued compensation and benefits......................     1,323       2,056
  Deferred revenue from related parties..................     5,503       4,195
  Accrued legal expenses.................................       492         712
  Accrued acquisition and related costs..................        -        1,068
  Accrued clinical trial costs...........................       418         715
  Other accrued liabilities..............................       599         883
  Income tax payable.....................................    24,820          -
  Deferred tax liability.................................   204,300     137,000
  Current portion of property and equipment financing....     1,027       2,677
                                                           ---------  ----------
          Total current liabilities......................   239,002     150,430

Noncurrent portion of property and equipment financing...     1,350       3,198

Commitments and Contingencies

Redeemable convertible preferred stock, $.001 par value:
  5,000,000 shares authorized; 1,569 and 694 shares
  issued and outstanding in 2000 and 1999, respectively..    17,185       7,679


Stockholders' equity:
  Common stock, $.001 par value: 80,000,000 shares
     authorized; 34,123,771 and 32,645,675 shares
     issued and outstanding in 2000 and 1999,
     respectively........................................        34          33
  Additional paid-in capital.............................   256,007     248,255
  Accumulated comprehensive income, principally unrealized
  gain on investment in Abgenix..........................   315,021     283,891
  Accumulated deficit....................................   (34,883)   (203,803)
                                                           ---------  ----------
          Total stockholders' equity.....................   536,179     328,376
                                                           ---------  ----------
                                                          $ 793,716  $  489,683
                                                           =========  ==========`

**See accompanying notes.**

---

**CELL GENESYS, INC.**
                     Consolidated Statements of Operations(in thousands, except per share data)

`Year Ended December 31,
                                                  --------------------------------
                                                    2000       1999        1998
                                                  ---------  ---------  ----------

Revenue under collaborative agreements.......... $  24,209  $  33,607  $   24,146
Operating expenses:
  Research and development......................    30,474     24,538      37,932
  General and administrative....................     6,984      4,833       8,204
  Merger termination costs......................       --      15,382         --
                                                  ---------  ---------  ----------
         Total operating expenses...............    37,458     44,753      46,136
Equity in loss of Abgenix.......................       --      (3,083)     (2,917)
Gain on sale of stock of Abgenix................   239,660        --        7,020
Interest and other income.......................    13,558      3,059       3,725
Interest expense................................      (386)      (824)     (2,158)
                                                  ---------  ---------  ----------
Income (loss) before minority interest, income
   tax and cumulative effect of change in
   accounting...................................   239,583    (11,994)    (16,320)
Loss attributed to minority interest............       --         --        4,192
                                                  ---------  ---------  ----------
Income (loss) before income tax and cumulative
   effect of accounting change..................   239,583    (11,994)    (12,128)
Provision for income tax........................   (64,203)       --         --
                                                  ---------  ---------  ----------
Income (loss) before cumulative effect of
   change in accounting.........................   175,380    (11,994)    (12,128)
Cumulative effect of change in accounting
   principle, net of tax........................    (6,460)       --         --
                                                  ---------  ---------  ----------
Net income (loss)...............................   168,920    (11,994)    (12,128)
Deemed dividend to preferred shareholders.......       756        392       1,088
                                                  ---------  ---------  ----------
Net income (loss) attributed to
   common shareholders.......................... $ 168,164  $ (12,386) $  (13,216)
                                                  =========  =========  ==========
Basic income (loss) per common share before
   cumulative effect of accounting
   change and after deemed dividend............. $    5.18  $   (0.39) $    (0.46)
Cumulative effect of change in accounting princi     (0.19)       --          --
                                                  ---------  ---------  ----------
Basic income (loss) per common share.............$    4.99  $   (0.39) $    (0.46)
                                                  =========  =========  ==========
Diluted income (loss) per common share before
   cumulative effect of accounting
   change and after deemed dividend............. $    4.73  $   (0.39) $    (0.46)
Cumulative effect of change in accounting princi     (0.18)       --          --
                                                  ---------  ---------  ----------
Diluted income (loss) per common share.......... $    4.55  $   (0.39) $    (0.46)
                                                  =========  =========  ==========
Weighted average shares of common stock
   outstanding -- basic.........................    33,716     31,682      28,607
                                                  =========  =========  ==========
Weighted average shares of common stock
   outstanding -- diluted.......................    36,952     31,682      28,607
                                                  =========  =========  ==========

Pro forma amounts assuming the new
   revenue recognition policy was
   applied retroactively (unauidted):
   Net income (loss)............................ $ 175,380  $ (10,649)  $ (22,277)
                                                  =========  =========   =========`

**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 Gain                Stock-
                                             Common     Paid-in     Compen-   on Investment  Accumulated    holders'
                                              Stock     Capital     sation     of Abgenix      Deficit       Equity
                                            ---------  ----------  ---------  -------------  ------------  -----------
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
    in Abgenix, net of taxes of
    $137,000 (restated)...................       --          --         --         284,491           --       284,491
                                                                                                           -----------
  Comprehensive income(loss)..............       --          --         --             --            --       271,784
                                                                                                           -----------
  Adjustment to carrying
    amount of Abgenix
    investment as a result
    from 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        --         283,891      (203,803)     328,376

  Net income..............................       --          --         --             --        168,920      168,920
  Change in net unrealized
    holding loss on available
    for sale securities...................       --          --         --           3,118           --         3,118

  Unrealized gain on investment of
    Abgenix, net of taxes of $208,000.....       --          --         --          28,012           --        28,012
                                                                                                           -----------
  Comprehensive income....................       --          --         --             --            --       200,050
                                                                                                           -----------
  Issuance of 1,537,515
   shares of common stock
   upon exercise of stock
   options and pursuant to
   the 1992 Employee Stock
   Purchase Plan..........................         1       8,508        --             --            --         8,509
  Deemed Dividend to
   preferred stockholders  ...............       --         (756)       --             --            --          (756)
                                            ---------  ----------  ---------  -------------  ------------  -----------
Balances at December 31, 2000............. $      34  $  256,007  $     --   $     315,021  $    (34,883) $   536,179
                                            =========  ==========  =========  =============  ============  ===========`

---

**CELL GENESYS, INC.**
                     Consolidated Statements of Cash Flows(in thousands)

`Year Ended December 31,
                                                   --------------------------------
                                                     2000        1999       1998
                                                   ---------  ----------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss).............................. $ 168,920  $  (11,994) $ (12,128)
  Adjustments to reconcile net loss to net
     cash used by operating activities:
     Depreciation and amortization...............     2,211       2,986      4,549
     Gain on disposal of property and equipment..        --         (34)        --
     Amortization of deferred compensation
       of subsidiary.............................        --          --        528
     Minority interest in net loss...............        --          --     (4,192)
     Equity in losses of Xenotech joint venture..        --          --        118
     Equity in losses of Abgenix.................        --       3,083      2,917
     Gain on sale of shares of Abgenix...........  (239,660)         --     (7,020)
  Changes to:
     Prepaid expenses and other assets...........       991        (645)     1,239
     Accounts payable............................      (574)         21        (55)
     Accrued compensation and benefits...........      (733)        768        704
     Deferred revenue from related parties.......     1,308       3,492     (5,290)
     Accrued legal expenses......................      (220)         61        592
     Accrued acquisition and related costs.......    (1,068)        136       (716)
     Other accrued liabilities...................      (612)       (123)    (3,597)
     Income tax payable..........................    21,120
                                                   ---------  ----------  ---------
          Net cash used in operating activities..   (48,317)     (2,249)   (22,351)
                                                   ---------  ----------  ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of short-term investments............  (347,396)    (55,628)   (40,071)
  Maturities of short-term investments...........    30,844      48,716     14,831
  Sales of short-term investments................   126,759          --     57,614
  Contributions to Xenotech joint venture........        --          --         (8)
  Capital expenditures...........................    (2,373)        (13)      (703)
  Proceeds from disposal of property and equipmen        31          82         --
  Exercise of Abgenix warrants.....................    (730)         --         --
  Cash effect of applying equity method of
     accounting to the investment in
     Abgenix.....................................        --          --       (642)
  Net proceeds from sale of Abgenix shares.......   243,860          --      9,008
                                                   ---------  ----------  ---------
          Net cash provided by (used in)
            investing activities.................    50,995      (6,843)    40,029
                                                   ---------  ----------  ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible
    preferred stock..............................     8,750          --         --
  Proceeds from minority investment in subsidiary        --          --      3,944
  Proceeds from issuances of common stock........     8,517       3,461      1,121
  Payment of convertible note....................        --          --    (15,000)
  Payments under equipment financing obligations.    (3,498)     (3,524)    (4,288)
                                                   ---------  ----------  ---------
          Net cash provided by (used in)
            financing activities.................    13,769         (63)   (14,223)
                                                   ---------  ----------  ---------
Net increase (decrease) in cash and cash
  equivalents....................................    16,447      (9,155)     3,455
Cash and cash equivalents at beginning of year...     5,300      14,455     11,000
                                                   ---------  ----------  ---------
Cash and cash equivalents at end of year......... $  21,747  $    5,300  $  14,455
                                                   =========  ==========  =========`

**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.

Concentration of Risk

Cash and cash equivalents, short term investments, and accounts
receivables are financial  instruments, which potentially subject the
company to concentrations of credit risk.  The Company maintains and
invests excess cash in money market funds and repurchase agreements which
bear minimal risk.  The Company has not experienced any significant
credit losses and does not generally require collateral on receivables.

Revenue recognition

Research payments under collaborative arrangements and grants are
recognized as revenue based on research expenses incurred as provided for
under the terms of the arrangements.

The Company previously recognized non-refundable license fees as
revenue when received and when all significant contractual obligations of
the Company relating to the fees had been met. Effective January 1, 2000,
the Company changed its method of accounting for non-refundable license
fees to recognize such fees over the research and development period of
the agreement. The Company believes the change in accounting principle is
preferable based on guidance provided in SEC Staff Accounting Bulletin No.
101 - Revenue Recognition in Financial Statements.  The $6.5 million, net
of taxes, cumulative effect of the change in accounting principle,
calculated as of January 1, 2000, was reported as a charge in the year
ended December 31, 2000.  The cumulative effect was initially recorded as
deferred revenue and is being recognized as revenue over the estimated
research and development periods of the agreements.  The impact of the
accounting change in 2000 was to increase net income by $5.4 million, or
$0.16 per share, which represents the portion of the cumulative effect
amount recognized in 2000 based on the new accounting method. The
remainder of the related deferred revenue will be recognized in revenue in
2001.  The pro forma amounts presented in the statement of operations were
calculated assuming the accounting change was made retroactive to prior
periods.

Pro forma amounts of net income (loss) and related per share amounts,
assuming retroactive application of the accounting change for all
periods (in thousands, except per share amounts):

`As Reported:                                     2000         1999          1998

Net income (loss).........................    $168,164    $ (12,386)    $ (13,216)
Net income (loss) per share-diluted.......    $   4.55    $   (0.39)    $   (0.46)

Pro forma amounts with change in accounting related
to revenue recognition aplied retroactively (unaudited):

Net income (loss).........................    $175,380    $ (10,649)    $ (22,277)
Net income (loss) per share-diluted.......    $   4.73    $   (0.35)    $   (0.82)`

Incentive milestone payments under collaborative arrangements are
recognized as revenue upon achievement of the incentive milestone events,
which represent the culmination of the earnings process because the
Company has no future performance obligations related to the payment.
Incentive milestone payments are triggered either by the results of our
research efforts or by events external to Cell Genesys, such as regulatory
approval to market a product or the achievement of specified sales levels
by a marketing partner.

Amounts received in advance are recorded as deferred revenue until the
related revenue is recognized.

Research and development

Research and development expenses, including direct and allocated
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 $349,000 and $369,000 restricted cash at December 31, 2000 and
1999, respectively.  All investments are denominated in U.S. dollars.
Short term investments include equity securities classified as available-
for-sale. The company recorded its investment at fair market value net of
income taxes in accordance with Statement of Financial Accounting
Standards No. 115.

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.

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.

Restatements and reclassifications

The balance sheet as of December 31, 1999 has been restated to record a
deferred tax liability on the unrealized gain on Abgenix shares.  The
change resulted in a $137 million reduction in stockholders' equity and a
corresponding increase in the deferred tax liability.  Deferred taxes have been
provided under the assumption that Abgenix shares were sold at fair market
value at year-end and that taxes would be payable on the gain at that time,
net of currently available net operating loss carryforwards and tax credits.
The amount of the gain ultimately realized as well as taxes ultimately paid
will vary from this assumption as a result of numberous factors including
the market price of Abgenix shares on the date of sale as well as the taxes
payable on the gain, if any, and such amounts could differ materially from
the estimates made at December 31, 2000 and 1999.

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

Stock-based compensation

In accordance with the provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation" (SFAS 123),
the Company has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" (APB No. 25) and related
interpretations, and to adopt the "disclosure only" alternative described
in SFAS 123.  Under APB 25, if the exercise price of the Company's
employee stock options equals or exceeds the fair market value on the date
of the grant or the fair value of the underlying stock on the date of the
grant as determined by the Company's Board of Directors, no compensation
expense is recognized.

Net loss per share

Basic earnings (loss) 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 for years on which it incurred net losses 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

In accordance with Statement of Financial Accounting Standard No. 130
"Reporting Comprehensive Income",  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, unrealized gains or losses on the Company's available-for-
sale securities are to be included in other comprehensive income (loss).

Income taxes

Income taxes are computed using the asset and liability method,
under which deferred income tax assets and liabilities are determined
based on the differences between the financial reporting and tax bases of
assets and liabilities, and are measured using the currently enacted tax
rates and laws.  A valuation allowance is provided for the amount of
deferred tax assets that, based on available evidence, are not expected to
be realized.

Segment reporting

Statement of Financial Accounting Standards No. 131 "Disclosures about
segments on Enterprise and Related Information" (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.  The adoption
of SFAS 131 had no impact on the Company's results of operations,
financial position or disclosure of segment information.

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 Post-retirement Benefits" ("SFAS
132").  SFAS 132 does not change the recognition of measurement of pension
of post-retirement benefit plans, but revises and standardizes disclosure
requirement for pensions and other post-retirement 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 ("FASB") issued


of Financial Accounting Standards No. 133.  "Accounting for Derivative
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133
requires the Company to recognize all derivatives on the balance sheet at
fair value. Derivatives that are not hedges must be adjusted to fair value
through net income. If the derivative is a hedge, depending on the nature
of the hedge, changes in the fair value of the derivative are either
offset against the change in fair value of assets, liabilities, or firm
commitments through earnings or recognized in the other comprehensive
income until the hedged item is recognized in earnings. The ineffective
portion of the derivative's change in fair value will be immediately
recognized in earnings. SFAS 133 is effective for the Company's year
ending December 31, 2001. The Company does not currently hold any
derivatives and does not expect this pronouncement to materially impact
results of operations at this time.

Recent accounting pronouncements

In March 2000, FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation-An Interpretation of APB Opinion
No. 25," (FIN 44), was issued.  FIN 44 clarifies the application of APB
No. 25 for certain stock-based compensation issues.  FIN 44 clarifies the
definition of employee for purposes of applying APB No. 25, the criteria
for determining whether a plan qualifies as a non-compensatory plan, the
accounting consequences of various modifications to the terms of a
previously fixed option or award, and the accounting for an exchange of
share compensation awards in a business combination, among others.  FIN 44
was effective July 1, 2000, but certain conclusions in this interpretation
cover specific events that occurred after either December 15, 1998 or
January 12, 2000.  The implementation of FIN 44 did not have a significant
impact on the Company's financial position.

Statement of cash flows

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

`2000        1999       1998
                                                   ---------  ----------  ---------
Cash paid for interest..........................  $     386  $      824  $   2,158
Cash paid for taxes.............................  $  39,000  $       --  $      --`

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

`2000        1999       1998
                                                   ---------  ----------  ---------
Furniture and equipment acquired under
  financing...................................... $     --   $      973  $   1,268
Deferred compensation related to grant of stock
  options by subsidiary.......................... $     --   $       --  $     298`

**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 through November
19, 1999, the Company's investment in Abgenix was 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 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, and Cell Genesys' ownership was
further reduced to approximately 19 percent.  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
available-for-sale securities and accounted for in accordance with SFAS 115,
"Accounting for Certain Investments in Debt and Equity Securities".

During 2000, the Company sold shares of Abgenix common stock resulting
in $243.9 million in net proceeds.  As of December 31, 2000, the Company
retains approximately 8.9 million shares, or 10.5 percent, ownership in
Abgenix.   Based on Abgenix common stock's market value of $59.06 per
share as of December 31, 2000, the total carrying amount of the Company's
investment in Abgenix was $528.9 million.

**3. Business Combination and Related Restructuring**

On May 30, 1997, Cell Genesys acquired Somatix Therapy Corporation.
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: (in thousands)

`AMOUNT OF     AMOUNT      AMOUNT      AMOUNT      AMOUNT     AMOUNT
                                               TOTAL      UTILIZED    UTILIZED    UTILIZED    UTILIZED    TO BE
                                              RESTRUC-    THROUGH     THROUGH     THROUGH     THROUGH    UTILIZED
                                               TURING     DECEMBER    DECEMBER    DECEMBER    DECEMBER   IN FUTURE
                                               CHARGE     31, 1997    31, 1998    31, 1999    31, 2000    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)        --          --
                                             ----------  ----------  ----------  ----------  ----------  ---------
Totals                                      $    6,578  $   (4,930) $     (713) $      133  $   (1,068)        --
                                             ==========  ==========  ==========  ==========  ==========  =========`

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

In October 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. The agreement was then 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 Abgenix had
increased by approximately $240 million since the merger agreement was
announced in October  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, 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 an initial payment under the agreement of $12.7 million in
December 1998.  Inception-to-date, the Company received $19.2 million in
research and development funding, $15 million for three product milestone
achievements and a $2.5 million anniversary 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, Inc. (formerly Hoechst Marion Roussel, Inc.)

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.  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
during 1999 as final wind-down payment following the termination of the
collaborative agreement.

Gene Activation Technology Licenses

Cell Genesys executed a license agreement with Hoechst Marion
Roussel, now Aventis Pharmaceuticals, in February 1997 for gene-
activated erythropietin ("EPO") and a second undisclosed protein.  In late 2000, Aventis
informed the Company of its intention to terminate this license
agreement as it relates to a second undisclosed protein.  The agreement
provided for up to $26 million in milestone payments and fees, in
addition to any royalties on future
sales gene-activated EPO anywhere in the world. As of December 31, 2000,
Cell Genesys had received over $17 million under this license
agreement, which included certain milestone payments relating to the
development of gene-activated EPO which Aventis is developing in
collaboration with Transkaryotic Therapies, Inc.  The Company recognized
revenue of $2, $4 and $4.1 million in 2000, 1999 and 1998,
respectively, pursuant to the agreement.

Gene Therapy Rights Agreement with Abgenix

In November 1997, Cell Genesys entered into the gene therapy rights
agreement (the "GTRA") with Abgenix.  The GTRA provides Cell Genesys
with certain rights to commercialize products based on antibodies
generated with Abgenix's XenoMouse technology
in the field of gene therapy. Under the GTRA, we have certain rights
to direct Abgenix to make antibodies to two antigens per year.  In
addition, we have an option to enter into a license to commercialize
antibodies binding to such antigens in the field of gene therapy. Cell
Genesys is obligated to make certain payments to Abgenix for these
rights including reimbursement of license fees and royalties on future
product sales.  The GTRA also prohibits Abgenix from granting any
third-party licenses for antibody products based on antigens nominated
by Abgenix for its own purposes where the primary field of use is gene
therapy.  In the case of third-party licenses granted by Abgenix where
gene therapy is a secondary field, Abgenix is obligated to share with
us a portion of the cash milestone payments and royalties resulting
from any products in the field of gene therapy.

Other Collaborations

Cell Genesys has signed agreements with six
different companies relating to its gene therapy technologies.  In
December 1998, Cell Genesys agreed to provide its adenoviral gene
delivery system to Collateral Therapeutics for preclinical studies of
cardiovascular gene therapy.  Cell Genesys and GPC Biotech (formerly
Mitotix, Inc.) 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 this 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
research 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.  The Company's chief
executive officer and president is a member of the Board of Directors
of Rigel and the chief executive officer and president of Rigel is a
member of the Company's Board of Directors.  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 that are  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.

**6. Fair Value of Financial Instruments**

The following is a summary of the Company's available-for-sale securities
at December 31, 2000 and 1999, respectively (in thousands):

`GROSS       GROSS
                                    AMORTIZED  UNREALIZED  UNREALIZED   ESTIMATED
                                       COST       GAINS      LOSSES     FAIR VALUE
                                   ------------  --------  -----------  ---------
2000
Commercial paper..................$     22,975  $    --   $      --    $  22,975
Corporate notes....................     24,725       224         --       24,949
Municipal bonds....................    186,288     2,164         --      188,452
U.S. government and its agencies...     17,281        88         --       17,369
Abgenix common stock.............        8,287   520,571         --      528,858
                                   ------------  --------  -----------  ---------
Short-term investments........... $    259,556  $523,047  $      --    $ 782,603
                                   ============  ========  ===========  =========


Classified as:
Cash equivalents................. $     15,845  $    --   $      --    $  15,845
Short-term investments...........      235,424     2,476         --      237,900
Abgenix common stock...............      8,287   520,571         --      528,858
                                   ------------  --------  -----------  ---------
                                  $    259,556  $523,047  $      --    $ 782,603
                                   ============  ========  ===========  =========


1999
Commercial paper................. $      6,004  $     --  $       (74) $   5,930
Corporate notes..................       31,107        --         (387)    30,720
U.S. government and its agencies.        8,621        --         (139)     8,482
Abgenix common stock.............       11,833   421,491         --      433,324
                                   ------------  --------  -----------  ---------
Short-term investments........... $     57,565  $421,491  $      (600) $ 478,456
                                   ============  ========  ===========  =========`

The unrealized holding gains (losses) on these securities at December 31, 2000
and 1999 are $523 million and $420.9 million respectively, and are principally unrealized gains on
the investment of Abgenix common stock.  These are reflected in the consolidated statement of stockholder's equity
and are included in the Company's accumulated comprehensive inocme (loss), net of income taxes.
Gross realized gains for 2000 were $17,000 and $156,000 for the year ended December 31, 1999.
The investment in Abgenix is marked-to-market based on the current fair value at the end of each
reporting accounting period.

The amortized cost and estimated fair value of available-for-sale
debt securities at December 31, 2000, by contractual maturity, are shown below (in
thousands):

`AMORTIZED   ESTIMATED
                                                   COST     FAIR VALUE
                                               ----------   ----------
Due in one year or less........................ $ 39,408     $559,976
Due in one to seven years......................  220,148      222,627
                                               ----------   ----------
                                                $259,556     $782,603
                                               ==========   ==========`

**7. Property and Equipment**

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

`2000        1999
                                                           -----------  ---------
Furniture and equipment under equipment financing........ $     4,872  $   8,893
Machinery and equipment..................................      12,902      7,788
Leasehold improvements under financing...................       5,463      5,463
Leasehold improvements...................................       3,420      2,561
Construction in progress.................................         271        126
                                                           -----------  ---------
                                                               26,928     24,831
Accumulated depreciation and amortization................     (22,489)   (20,633)
                                                           -----------  ---------
                                                          $     4,439  $   4,198
                                                           ===========  =========`

The Company recognized depreciation expense of $2,191,000, $2,819,000
and $4,567,000 for the years ended December 31, 2000, 1999 and 1998,
respectively.

**8. Commitments and Contingencies**

Rental commitments

The Company leases its facilities and certain equipment under non-
cancelable operating leases.  The leases, including the Hayward facility,
expire at various dates through 2009 and some contain options for renewal.
Rent expense under operating leases was  $2 million in 2000, $1.7
million in 1999 and $2.7 million in 1998.

Property and equipment financing

As of December 31, 2000, the Company has $4.9 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, 2000.

Future minimum payments under non-cancelable operating and capital
leases, excluding the Alameda facility, at December 31, 2000, were (in
thousands):

`Operating    Capital
                                                             Leases      Leases
                                                           -----------  ---------
Years ending December 31:
  2001................................................... $     2,020  $   1,228
  2002...................................................         724        745
  2003...................................................         618        540
  2004...................................................         534        273
  2005 and beyond........................................       3,549         --
                                                           -----------  ---------
  Total minimum lease payment............................ $     7,445  $   2,786
                                                           ===========  =========
Less: Amount representing interest.......................                   (409)
                                                                        ---------
Present value of future lease payments...................              $   2,377
Current portion..........................................                 (1,027)
                                                                        ---------
Non current portion......................................              $  $1,350
                                                                        =========`

**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.  During 1999, 1,306 shares of Series B
preferred stock had been converted into common stock and 694 shares of the
total original issue of $20 million face value of Series B preferred
shares, approximately $7.7 million, remain outstanding.  The fixed
conversion price for these shares is $11.02, and there was no conversion
activity during 2000.

In January 2000, the Company received approximately $8.8 million from
the issuance of 875 new Series B convertible preferred shares following
the exercise of the above mentioned 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 remained outstanding.  The total face value of Series B
preferred shares is approximately $17.2 million as of December 31, 2000.
Any of these 875 Series B preferred shares not converted prior to January
2005 are automatically converted into shares of the Company's common
stock.

**10. 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, when 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 on that date).
The new options were 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, 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
     Authorized......................       1,500
     Granted.........................        (792)          792  $    23.64
     Exercised.......................          --        (1,031) $     4.28
     Expired.........................        (118)
     Canceled........................         395          (395) $     7.75
                                       -----------  ------------
Balances, December 31, 2000..........       1,182         3,217  $    10.33
                                       ===========  ============

Exercisable at December 31, 2000..................        1,670  $     5.75
                                                    ============

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

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

Weighted average fair value of options granted during 2000...... $    18.34
Weighted average fair value of options granted during 1999...... $     4.77
Weighted average fair value of options granted during 1998...... $     3.55`

The following table summarizes information about stock options outstanding
at December 31, 2000:

`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
------------------ ----------- ------------  ---------  -----------  ---------
  $1.50 -   $4.81         869          7.0  $   $4.00          760  $   $3.98
  $5.00 -   $7.00         743          7.1       5.80          515       5.83
  $7.50 -  $11.75         861          8.1       8.73          378       8.51
 $17.38 -  $24.63         500          9.7      20.67           14      18.41
 $28.00 -  $42.63         244          9.6      31.15            3      42.63
--------           -----------                          -----------
                        3,217                                1,670
                   ===========                          ===========`

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 is as follows:

`Outstanding Options
                                                  ------------------------
                                                                Weighted-
                                                   Number of     Average
                                                     Shares      Exercise
                                                     (000)        Price
                                                  ------------  ----------
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
  Granted........................................       --           9.31
  Exercised......................................        (400)       9.31
  Canceled.......................................          (3)      15.44
                                                  ------------
Authorized and Outstanding at December 31, 2000..          91  $     9.07
                                                  ============

Exercisable at December 31, 2000.................          91  $     9.07
Exercisable at December 31, 1999.................         491  $     9.26
Exercisable at December 31, 1998.................         719  $     8.92


Weighted average remaining contractual
  life at December 31, 2000...................................  2.9 years`

1992 Employee Stock Purchase Plan

The 1992 Employee Stock Purchase Plan ("the 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 or $25,000, whichever is less.  A total of 650,000 shares
of common stock have been reserved for issuance under the Purchase Plan.
As of December 31, 2000, 473,071 shares have been issued pursuant to the
Purchase Plan.

Pro forma informationn

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
1998, 1999 and 2000, respectively: risk-free interest rates of 4.64%, 5.5%
and 6.14%; no dividend yields; volatility factors of the expected market
price of the Company's common stock of 0.68, 0.67 and 1.0; 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.
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.

`2000         1999          1998
                                                  ----------    ----------    ----------
                                                    in thousands (except per share data)

Net income (loss)               As reported        $168,920    $ (11,994)    $ (12,128)
                                Pro forma          $162,354    $ (16,274)    $ (14,463)
Net income (loss) per share     As reported        $   4.57    $   (0.39)    $   (0.46)
                                Pro forma          $   4.39    $   (0.51)    $   (0.51)`

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.  In July 2000, the Company made certain technical changes to
amend the plan and extend the life of the rights plan until 2010.  The
rights are exercisable only if an acquirer purchases 15 percent or more of
the Company's common stock or announces a tender offer for 15 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

The Company assumed various warrants issued by Somatix for the purchase
of common stock, of which 750,000 shares were cancelled during 2000.
There are no warrants outstanding at December 31, 2000.

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.

Shares reserved

At December 31, 1998, the Company has reserved shares of common stock
for potential future issuance consisting of  2,089,136 upon conversion of
preferred stock; and 4,576,804 for exercises under the employee stock
option plans or the stock purchase plan.

In January 2001, the company adopted an employee non-statutory stock
option plan.  Subject to the provisions of  the plan, the maximum
aggregate number of shares which may be optioned and sold under the plan
is two million (2,000,000) shares.

**11. Income Taxes**

The Company's provision for income taxes consists
of the following (in thousands):

`December 31,
                                         2000        1999        1998
                                    ----------  ----------  ----------
Current:
Federal............................$   52,708  $      --   $      --
State...............................   15,196         --          --
                                    ----------  ----------  ----------
                                       67,904

Deferred:
Federal.............................   (3,700)        --          --
State...............................       --         --          --
                                    ----------  ----------  ----------
                                   $   64,203  $           $
Provision for income taxes........  ==========  ==========  ==========

A reconciliation between our income tax provision and the U.S. statutory rate
follows (in thousands):

                                                      December 31,
                                             2000        1999        1998
                                         ----------  ----------  ----------
Tax at U.S. statutory rate of 35%.......$   83,854      (4,198)     (4,245)
State taxes, net of federal benefit......    9,877         --          --
Net operating losses utilized
   (not benefited).......................  (25,585)      4,198       4,245
Change in valuation allowance............   (3,700)        --          --
Research and development tax
    credits utilized.....................   (1,300)        --          --
Other....................................    1,057         --          --
                                         ----------  ----------  ----------
Income tax provision (benefit)..........$   64,203  $      --   $      --
                                         ==========  ==========  ==========`

As of December 31, 2000, the Company had federal net operating loss
carryforwards of approximately $57 million.  The Company also had federal
research and development tax credit carryforwards of approximately $1 million
as of December 31, 2000.  The federal net operating loss and research credit
carryforwards will expire in various dates beginning in 2008 through 2012, 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:                                       2000        1999
                                                        ----------  ----------
Net operating loss carryforwards...................... $   19,400  $   47,900
Research credit carryforwards.........................        800       3,000
Capitalized research and development..................      1,400       1,400
Other accruals and reserves...........................      5,400       5,700
                                                        ----------  ----------
Net deferred tax assets...............................     27,000      58,000
Valuation allowance ..................................    (23,300)    (27,000)
                                                        ----------  ----------
Net deferred tax assets............................... $    3,700  $   31,000
                                                        ----------  ----------
Deferred Tax Liabilities:

Unrealized gain on investment in Abgenix...............$  208,000  $  168,000
                                                        ----------  ----------
Net deferred tax liability.............................$  204,300  $  137,000
                                                        ==========  ==========`

The valuation allowance decreased by $22.6 million during the year
ended December 31, 1999 and decreased by $3.7 million during the year
ended December 31, 2000.  Approximately $3 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.

The balance sheet as of December 31, 1999 has been restated to
record a deferred tax liability on the unrealized gain on Abgenix shares.
The change resulted in a $137 million reduction in stockholders' equity and a
corresponding increase in the deferred tax liability.

**12. 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.

**13. Subsequent Events (unaudited)**

On January 8, 2001, the Company announced that it had acquired the
principal operating assets of Chiron Corporation's gene therapy business,
including a fully equipped and staffed manufacturing facility, at a cost
of approximately $4.8 million.  The San Diego-based leased facility is
approximately 48,000 square feet, includes a validated GMP (Good
Manufacturing Practices) manufacturing facility and is equipped to
handle large-scale production of gene therapy products for Phase I to
Phase III clinical trials and potential product launch.

On January 11, 2001, the Company announced that it had launched a new
subsidiary, Ceregene, Inc., which will focus on gene therapies for central
nervous system (CNS) disorders such as Alzheimer's disease and
Parkinson's disease.  Ceregene was formed through the acquisition of
Neurologic Gene Therapeutics, a private San Diego-based start-up company.
Cell Genesys contributed $10 million cash and access to technology and
patents in the CNS gene therapy area, in exchange for approximately 60
percent ownership of the new company.  Ceregene's financial statements will
be consolidated into the operations of Cell Genesys, Inc.

In January 2001, the company adopted an employee non-statutory stock
option plan.  Subject to the provisions of  the plan, the maximum
aggregate number of shares which may be optioned and sold under the plan
is two million (2,000,000) shares.

In February 2001, the Company extended the lease agreement at its
Foster City location to January 31, 2006, providing for an additional
14,000 square feet of space in the use of research and development
offices.  In addition, the Company has signed a new build-to-suit lease
for a two-story building consisting of approximately 50,000 square feet
in  Hayward with a fifteen-year term.  The lease for the existing
Hayward location will be co-terminus with this new lease.  Both
buildings in the Hayward location are being constructed for the
Company's "GMP" facility.

In March 2001, the Company signed a new build-to-suit lease with purchase
option for a new building to be constructed in South San Francisco, California.
The agreement is contingent upon the developer obtaining various permits and
other approvals prior to beginning construction.  The proposed building is
expected to contain approximately 155,000 square feet of research and
development and administrative space, and is planned to serve as the
Company's future corporate headquarters.  Should the project go forward,
construction is currently expected to be completed in late 2003.

**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 Definitive Proxy
Statement for the 2001Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission within 120 days after the end of the
Company's 2000 fiscal year (the "2001 Proxy Statement").

(b) (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 2001 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 2001 Proxy Statement.

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

The information required by this Item is incorporated by reference to the
Company's 2001 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, 2000 and 1999Statements of Operations for the years ended December 31, 2000, 1999 and 1998Statement of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998Notes 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.
     4.1     (21)  Amended Shareholder Rights Plan.
    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).`

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

> *  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.(21) Incorporated by reference to the Company's Form 8-A12G/A dated July 28, 2000.(21) Incorporated by reference to the Company's Form 10-Q dated June 30, 2000.

---

**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 31, 2001:



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



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

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

Date:  March 31, 2001

**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 31, 2001
--------------------------------    President and Chief
     Stephen A. Sherwin, M.D.     Executive Officer (Principal
                                  Executive Officer)


 /s/ MATTHEW J. PFEFFER           Vice President and             March 31, 2001
--------------------------------  Chief Financial Officer
     Matthew J. Pfeffer           (Principal Financial and
                                  Accounting Officer)


 /s/ DAVID W. CARTER              Director                       March 31, 2001
--------------------------------
     David W. Carter


 /s/ NANCY M. CROWELL             Director                       March 31, 2001
--------------------------------
     Nancy M. Crowell


 /s/ JAMES M. GOWER               Director                       March 31, 2001
--------------------------------
     James M. Gower


 /s/ JOHN T. POTTS, JR., M.D.     Director                       March 31, 2001
--------------------------------
     John T. Potts, Jr., M.D.


 /s/ EUGENE L. STEP               Director                       March 31, 2001
--------------------------------
     Eugene L. Step


 /s/ INDER M. VERMA, PH.D.        Director                       March 31, 2001
--------------------------------
     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.
     4.1     (21)  Amended Shareholder Rights Plan.
    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).`

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

> *  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.(21) Incorporated by reference to the Company's Form 8-A12G/A dated July 28, 2000.(21) Incorporated by reference to the Company's Form 10-Q dated June 30, 2000.

---