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, 2002

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)

500 Forbes Boulevard, South San Francisco, California   94080(Address of Principal Executive Offices including Zip Code)

(650) 266-3000(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
                         Preferred Shares Purchase Rights

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]

Indictae by check mark whether the registrant is an accelerated filer (as defined in Rule
12b-2 of the Act).  Yes [X]  No [ ]

As of June 28, 2002, the last business day of the Registrant's most recently completed
second fiscal quarter, there were 35,652,412 shares of the Registrant's voting stock outstanding,
and the approximate aggregate market value of such shares held by non-affiliates of the
Registrant (based on the closing sale price of such shares on the NASDAQ National Market on
June 28, 2002) was $443.8 million.  Shares of Common Stock held by each executive officer and
director and by each person known to the Registrant who owns 5% or more of the outstanding
voting 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 14, 2003, the number of outstanding shares of the Registrant's
Common Stock was 36,951,569.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Proxy Statement for the 2003 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.









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

> OverviewResults of OperationsLiquidity and Capital ResourcesOther Factors Affecting Future Operations

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. Disclosure Controls and Procedures

Item 15.  Exhibits, Financial Statement Schedules and Reports on Form 8-K

Signatures

Power of Attorney

Certifications

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 that are
based on innovative gene modification technologies.  The Company's strategic
objective is to develop and commercialize biological therapies, including cancer
vaccines, oncolytic virus therapies and cancer gene therapies, to treat multiple
types of cancer.  Cell Genesys' current clinical programs include
GVAX® cancer vaccines and oncolytic virus therapies.
GVAX® cancer vaccines are in Phase 2 studies for prostate cancer,
lung cancer, pancreatic cancer and leukemia and in Phase 1/2 studies for
multiple myeloma.  The Company expects to initiate Phase 3 trials for
GVAX® prostate cancer vaccine and lung cancer vaccine during the
next year.  Ongoing clinical programs evaluating the Company's oncolytic virus
therapies include CG7870, an intratumorally administered therapy for early-stage
prostate cancer.  In addition, Cell Genesys has preclinical oncolytic virus
therapy programs evaluating potential therapies for bladder cancer, liver cancer
and colon cancer as well as preclinical cancer gene therapy programs evaluating
potential therapies for multiple types of cancer.  The Company plans to file an
Investigational New Drug ("IND") application for CG8840, an oncolytic
virus therapy for the treatment of bladder cancer, during the next year.
Additionally, Cell Genesys has a majority-owned subsidiary, Ceregene, Inc.,
which is focused on gene therapies for neurological disorders, and Cell Genesys
continues to hold approximately 8.7 million shares of common stock of its former
subsidiary, Abgenix, Inc. (Nasdaq: ABGX), which is focused on the development
and commercialization of antibody therapies.

Cell Genesys was incorporated in the State of Delaware in
1988.  Our common stock trades on the NASDAQ National Market under the symbol
"CEGE".  Our principal executive offices are located at 500 Forbes
Boulevard, South San Francisco, California 94080, and our phone number is (650)
266-3000.  Our Internet home page is located at

http://www.cellgenesys.com; however, the
information in, or that can be accessed through, our home page is not part of
this report.  Our annual reports on Form 10-K, quarterly reports on Form 10-Q,
current reports on Form 8-K, and amendments to such reports are available, free
of charge, on or through our Internet home page as soon as reasonably
practicable after we electronically file such material with, or furnish it to,
the Securities and Exchange Commission, or SEC.

During 2002, Cell Genesys continued to increase its focus
on developing cancer therapies and establishing its manufacturing infrastructure
in preparation for Phase 3 clinical trials.  Cell Genesys' goal is to emphasize
"off-the-shelf" products and when possible, therapies that can be
administered in the outpatient setting.  However, the Company is also developing
a patient-specific vaccine product for lung cancer.

Cancer therapies based on biological therapy technologies
are currently being evaluated by Cell Genesys in human clinical studies.  These
include studies of GVAX® cancer vaccines, which employ
genetically modified tumor cells to induce the immune system and enhance an
immune response against malignant cells,
as well as studies of oncolytic virus therapies which employ genetically
modified adenoviruses engineered to selectively replicate in and kill targeted
cancer cells.  During 2002, encouraging data were obtained from clinical trials
of GVAX® prostate cancer vaccine and GVAX® lung
cancer vaccine.  Additionally, in 2002, encouraging data were obtained from
clinical trials of the Company's oncolytic virus therapy, CG7870, for the
treatment of prostate cancer, and positive preclinical studies were reported
with CG8840, an oncolytic virus therapy for the treatment of bladder cancer.

Product candidates based on in vivo gene therapy
technologies are at the preclinical stage of development at Cell Genesys.  With
in vivo cancer gene therapy, the treatment goals include stimulating
targeted cells to produce a protein or other substance needed to normalize key
biological processes, or otherwise inhibit the spread of cancer.  In 2002, the
Company continued preclinical studies in a number of therapeutic areas and
further developed its gene therapy technologies, with an emphasis on
antiangiogenesis, or preventing tumor blood vessel growth, for the treatment of
multiple types of cancer.  The Company's majority-owned subsidiary, Ceregene,
Inc., which was launched in January 2001, continues to conduct research
evaluating gene therapy for the treatment of Alzheimer's and Parkinson's
disease.

Cell Genesys ended 2002 with approximately $167 million
in cash, cash equivalents and short-term investments, including approximately
$67 million of restricted cash and investments.  The Company has maintained its
financial position through strategic management of its resources, including the
Company's holdings in Abgenix (of which Cell Genesys continues to hold
approximately 8.7 million shares of common stock) and by relying on funding from
various corporate collaborations and licensing agreements.  Additionally, in
February 2003, a shelf registration statement filed by Cell Genesys with the
Securities and Exchange Commission was declared effective, which enables the
Company to offer up to $150 million of securities on short notice in one or more
public offerings.  However, there can be no assurance the Company will be able
to issue such securities on acceptable terms, or at all.

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 lead to
successful products.  Failure to enter into new corporate relationships or
expand Cell Genesys' product and technological base may limit Cell Genesys'
success.

A major portion of the Company's operating expenses to
date is related to the research and development ("R&D") of
products either on its own behalf or under contracts.  During 2002, 2001 and
2000, the Company's R&D expenses were $75.1 million, $50.8 million and $30.4
million, respectively.  Cell Genesys intends to maintain its strong commitment
to R&D as an essential component of its oncology product development effort.
Licensed technology developed by outside parties is an additional source of
potential products.

Product Development

Cell Genesys' strategic objective is to develop and
commercialize biological cancer therapies.  In its clinical stage cancer
programs, Cell Genesys is genetically modifying selected cell types and viruses
outside of the body (ex vivo)to impart disease-fighting capabilities
that are not possible with conventional therapeutic agents.

Clinical Programs

Overview of GVAX® Cancer Vaccines
Program. GVAX® cancer vaccines, a type of biological
therapy, are treatment vaccines, not preventative vaccines, designed to
stimulate the patient's immune system to effectively fight cancer.  This program
was added to the product portfolio of Cell Genesys through its acquisition of
Somatix Therapy Corporation in 1997.  GVAX® cancer vaccines are
comprised of tumor cells that are genetically modified to secrete an immune-
stimulating hormone, granulocyte-macrophage colony stimulating factor ("GM-
CSF"), and then are lethally irradiated for safety.  The goal of
GVAX® cancer vaccines is to stimulate an antitumor immune
response that targets and destroys tumor cells which persist or recur following
surgery, radiation therapy and/or chemotherapy treatment.  Cell Genesys is
currently testing non patient-specific and patient-specific configurations of
GVAX® cancer vaccines in human clinical studies.  Cell Genesys
currently has clinical trials under way for GVAX® cancer vaccines
in prostate cancer, lung cancer, pancreatic cancer, leukemia and myeloma.
GVAX® cancer vaccines can be administered by intradermal (under
the skin) injection on an outpatient basis.  They have been administered to over
500 patients in multiple human trials to date and have been found to be safe and
well tolerated.  The most consistent treatment-related side effects appear to be
inflammation at the injection site and occasional low-grade fever.  Cell Genesys
expects to manufacture GVAX® cancer vaccines in its facilities
located in Hayward, California and Memphis, Tennessee.

GVAX®Prostate Cancer Vaccine.
GVAX®prostate cancer vaccine is an "allogeneic" (non
patient-specific) vaccine comprised of prostate cancer cells that have been
genetically modified to secrete GM-CSF and then 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, radiation and/or
hormone therapy for advanced-stage prostate cancer.  In September 2002, updated
data from the initial Phase 2 multicenter trial of GVAX® prostate
cancer vaccine in hormone-refractory patients were presented.  Thirty-four
patients entered in the trial had metastatic prostate cancer in the bone with
positive bone scans at the start of therapy and were assigned to receive either
low dose (24 patients) or high dose (10 patients) vaccine treatment as their
only therapy.  Five of 10 (50 percent) patients receiving the higher dose level
of the vaccine were reported to be alive 2.5 years after treatment (median
survival = 31 months), and seven of 22 patients (32 percent) receiving the lower
dose of the vaccine were reported to be alive 2.5 years after treatment (median
survival = 22 months). Two patients could not be located for follow-up. These
results compare favorably to the reported median survival for hormone-refractory
prostate cancer patients with bone metastases who are treated with chemotherapy,
the current standard of care for this patient group, although such a comparison
needs to be confirmed in a larger randomized controlled trial.  In addition,
post treatment follow-up of the 34 patients with positive bone scans prior to
treatment revealed a trend toward prolonged progression-free survival as
measured by bone scan in patients who received the higher dose of vaccine as
compared to patients who received the lower dose (median time to progression of
140 days v. 85 days).  Treatment with GVAX® prostate cancer
vaccine was safe and well tolerated.

Based on these data, Cell Genesys launched a series of
Phase 1/2 clinical trials in hormone-refractory prostate cancer patients to
evaluate the safety and efficacy of a higher potency form of
GVAX® prostate cancer vaccine.  The Company expects to initiate
its Phase 3 clinical trial with this form of GVAX® prostate
cancer vaccine in hormone-refractory patients.  Cell Genesys plans to
manufacture GVAX® prostate cancer vaccine for Phase 3 trials and
potential market launch in its manufacturing facility in Hayward,
California.

GVAX® Lung Cancer Vaccine.
Based on encouraging data from Cell Genesys' initial GVAX® lung
cancer vaccine trial, the Company initiated an additional multicenter clinical
trial of an "autologous" (patient-specific) GVAX®
cancer vaccine.  The vaccine is made directly from each treated patient's tumor
cells.  After surgical removal of a patient's tumor, the GVAX®
cancer vaccine is prepared by genetically modifying the patient's tumor cells to
secrete GM-CSF.  The cells are then irradiated for safety prior to vaccinating
the patient.  The multicenter trial was conducted on patients with advanced non
small-cell lung cancer who had failed surgery, radiation and/or chemotherapy.
In December 2002, updated data from this trial were presented at the
International Conference on Gene Therapy of Cancer.  Of the 33 patients who
received vaccination, three patients (9 percent) achieved a complete response
(complete disappearance of tumor at all disease sites) with a median duration of
17.8 months.  One of the complete responses was reported to be ongoing at 21.7
months.  Another seven patients (21 percent) had stable disease or minor
responses with an overall median duration of 7.7 months.  The median survival of
all 33 treated patients was 11.6 months (measured from the initiation of vaccine
manufacturing).  These data compare favorably to the reported median survival of
5.7 to 7.0 months for the approved second-line chemotherapy (docetaxel) for such
patients or 4.6 months for best supportive care.  Moreover, median survival was
significantly longer in patients whose vaccine products secreted higher levels
of GM-CSF, an immune stimulatory hormone that, all GVAX® vaccines
are genetically engineered to produce.  Patients whose vaccines secreted greater
than 40 nanograms of GM-CSF per million
cells per 24 hours had a median survival
time of 17.1 months compared to a median survival time of 7.4 months in patients
whose vaccines secreted less than 40 nanograms of GM-CSF.  The results of
this trial also suggested that one type of non small-cell lung cancer,
bronchioalveolar carcinoma ("BAC") may be particularly
responsive to GVAX®lung cancer vaccine in that two of the three
complete responses occurred in patients with this diagnosis.

During 2003, Cell Genesys plans to initiate two Phase 2
clinical trials of GVAX® lung cancer vaccine-one which is
expected to be sponsored and partially funded by the Southwest Oncology Group
("SWOG"), a cooperative clinical trials group of the National Cancer
Institute ("NCI"), and the other which will be sponsored by Cell
Genesys.  The SWOG-sponsored trial will focus on patients with BAC, and the Cell
Genesys-sponsored trial will enroll patients with all subtypes of non small-cell
lung cancer.  The two trials are expected to enroll approximately 75 patients
each.

In May 2002, the Company announced preliminary data at the
American Society of Clinical Oncology Annual Meeting regarding an additional
trial of an alternative form of GVAX® lung cancer vaccine.  The
Phase 1/2 multicenter trial for patients with advanced-stage lung cancer was
designed to evaluate the safety and efficacy a non patient-specific
GVAX® product that is mixed with the patient's irradiated lung
tumor cells.  Preliminary data from this trial indicate that this form of the
patient-specific vaccine could be efficiently manufactured in 87 percent of the
patients entered on the trial.  Vaccine treatment was well tolerated and
demonstrated evidence of antitumor immunity, and evaluations for tumor response
are ongoing.  While the Company may continue to evaluate this alternate form of
vaccine in future clinical trials, Phase 3 trials of GVAX® lung
cancer vaccine will be conducted with the patient-specific form of the vaccine
which is made entirely from patient's tumor cells.

GVAX® Pancreatic Cancer Vaccine.
GVAX® pancreatic cancer vaccine is comprised of
"allogeneic" (non patient-specific) pancreatic cancer cells that have
been genetically modified to secrete GM-CSF and then irradiated for safety.  The
Company is currently conducting two clinical trials of GVAX®
pancreatic cancer vaccine-a Phase 2 clinical trial of GVAX®
pancreatic cancer vaccine in combination with surgery and standard adjuvant
radiation and chemotherapy, and a multicenter Phase 2 clinical trial of
GVAX® pancreatic cancer vaccine in patients with inoperable or
metastatic pancreatic cancer.  These trials, which are expected to enroll 60 and
40 patients, respectively, were prompted by compelling results from an initial
Phase 1 clinical trial conducted at the Sidney Kimmel Comprehensive Cancer
Center at Johns Hopkins.  Data from this trial, which evaluated
GVAX® pancreatic cancer vaccine in combination with surgery and
standard adjuvant radiation and chemotherapy, demonstrated prolongation of
disease-free survival in three of eight patients who received the two highest
vaccine doses following surgery and adjuvant radiation and chemotherapy.
Additionally, these data, updated in June 2002, revealed that these three
patients remained disease-free at an average of approximately 4.5 years after
their respective diagnoses.

GVAX® Vaccines for Hematologic
Malignancies.  Cell Genesys is also currently conducting clinical trials
utilizing GVAX® cancer vaccine in combination with bone
marrow stem cell transplantation for the treatment of hematologic malignancies,
including multiple myeloma and acute myelogenous leukemia.  In these trials, the
patient's tumor cells are collected and mixed with a non patient-specific
GVAX® cancer vaccine product manufactured at Cell Genesys.  In
February 2001, Cell Genesys initiated a multicenter Phase 1/2 clinical trial,
which is now fully enrolled, evaluating GVAX® cancer vaccine in
patients with multiple myeloma.  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 bone marrow stem cell transplantation.  In November 2001, the Company
initiated a similar multicenter Phase 2 trial in patients with acute myelogenous
leukemia.  This trial, which is expected to enroll up to approximately 50
patients, was prompted by encouraging results published in the May 2000 issue of
the journal, Blood, demonstrating 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.  Bone marrow
stem cell 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.
Overview of Oncolytic Virus Therapies Program.
Cell Genesys added the oncolytic virus technology platform to its
portfolio in September 2001 through its acquisition of Calydon, Inc., a private
Sunnyvale, California-based biotechnology company.  The proprietary oncolytic
virus therapy program utilizes adenovirus, one of the viruses responsible for
the common cold, to create cancer cell-killing viruses.  The virus, which is
administered primarily by injection into tumors or body cavities containing
tumors, is engineered to selectively replicate in and kill targeted cancer
cells, leaving healthy normal cells largely unharmed.  The virus replicates in
cancer cells until the cancer cell can no longer contain the virus and bursts.
The tumor cell is destroyed and the newly created viruses spread to neighboring
cancer cells to repeat the cycle.  Following treatment, excess virus is
cleared by the patient's immune system.  Compared with traditional therapies,
oncolytic virus therapies have a high therapeutic index with respect to their
ability to kill tumor cells.  In some instances, the tissue selectively index of
oncolytic viruses has been found to be as high as 10,000 to 1, i.e., for every
10,000 tumor cells that are killed, only one normal cell is killed.  This is
significantly higher than the selectively index commonly seen with chemotherapy
and may result in greater efficacy with fewer side effects.  Cell
Genesys expects to manufacture oncolytic virus therapies and other viral-based
products in its Good Manufacturing Practices ("GMP") facility
located in San Diego, California.

In August 2002, Cell Genesys announced that it had been
issued a broad patent (U.S. Patent No. 6,432,700) that includes specific
composition of matter claims pertaining to the Company's proprietary oncolytic
virus therapies.  The patent covers adenovirus-derived oncolytic viruses that
are genetically engineered to have at least two different, cell type-specific
gene switches referred to as transcriptional regulatory elements (TREs),
elements that serve a key role in restricting viral replication to certain,
desired cell types.  Additionally, in December 2002, the Company announced the
formation of a three-year research collaboration with VectorLogics, Inc., in
which Cell Genesys' oncolytic virus therapies will be evaluated in combination
with novel methods to further enhance the viruses' cell targeting abilities.

CG7870 Oncolytic Virus Therapy for Early-stage Prostate
Cancer.CG7870, an oncolytic virus therapy for prostate cancer,
has demonstrated encouraging results in Phase 1/2 studies, both by
intraprostatic and intravenous administration.  In December 2002, encouraging
data from a Phase 1/2 trial of intraprostatically administered CG7870 in
patients with localized, recurrent prostate cancer were announced at the
International Conference on Gene Therapy of Cancer.  Data demonstrated antitumor
activity as measured by reductions in serum levels of prostate-specific antigen
(PSA) in 75 percent of patients (9 of 12) who had elevated PSA levels at baseline.
In the nine responding patients, PSA levels decreased by 25-50 percent, and eight
patients remained progression-free at a median follow-up time of six months.

During this year, the Company expects to initiate a Phase 2
trial of intraprostatic CG7870 in combination with external beam radiation in
early-stage, high risk prostate cancer patients.  Additionally, preclinical
studies of CG7870 in combination with chemotherapy, the current standard of care
for patients with prostate cancer, demonstrated significant synergistic
antitumor activity in mouse tumor models of prostate cancer-complete elimination
of tumors within four weeks of treatment without dose-limiting toxicity.  In
2002, the Company decided to advance CG7870 rather than CG7060, a second
prostate cancer-specific oncolytic virus therapy, as the lead oncolytic virus
therapy product candidate.

Cell Genesys' GVAX® cancer vaccines and
oncolytic virus therapies are novel therapies which must undergo rigorous human
testing regulated by the United States Food and Drug Administration
("FDA").  There is no assurance that GVAX® cancer
vaccines or oncolytic virus therapies will be proven safe or efficacious, or if
approved by the FDA, that such products can be successfully commercialized.
Although preliminary results reported to date from Cell Genesys' clinical trials
of GVAX® vaccines for prostate cancer, lung cancer and pancreatic
cancer as well as clinical trials of oncolytic virus therapy, CG7870, 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 in later stage testing.  There also can be no assurance that the
initial studies of GVAX® vaccines for the treatment of
hematologic malignancies will demonstrate clinical efficacy.  Any conclusion as
to whether the Company's GVAX® cancer vaccines and oncolytic
virus therapies 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 2 and Phase 3 studies.

Preclinical Programs
Cell Genesys' preclinical programs are focused on
oncolytic virus therapies and gene therapies for multiple types of cancer.
Moreover, with the Company's increasing focus on cancer, Cell Genesys continues
to execute its plan to pursue gene therapies for neurologic disorders, such as
Alzheimer's and Parkinson's disease, through its majority-owned subsidiary,
Ceregene, Inc.
Oncolytic Virus Therapies.  In addition to
prostate cancer, Cell Genesys' oncolytic virus technology is demonstrating
encouraging results in preclinical studies of bladder cancer (CG8840), liver
cancer (CG8900) and colon cancer (CG7980) when used alone as well as in
combination with chemotherapy or radiation.  For example, at the American
Association for Cancer Research Annual Meeting in April 2002, Cell Genesys
reported that significant antitumor activity was demonstrated when evaluating
CG8840 alone and in combination with docetaxel in mouse models for bladder
cancer.  The Company plans to file an IND for CG8840 for bladder cancer in late
2003.

Cancer Gene Therapy.  Cell Genesys is
developing a pipeline of potential in vivo cancer gene therapy products.
The goal of in vivo cancer gene therapy is to deliver genes to the tumor
cells in order to interfere with cancer cell growth or spread either directly or
indirectly by blocking tumor blood vessel or lymphatic vessel growth (antiangiogenesis).
In early 2003, Cell Genesys entered into an exclusive worldwide research and license
agreement with the Ludwig Institute for Cancer Research for gene therapy rights
to vascular endothelial growth factor receptor-3 (VEGFR-3), a novel protein
believed to play a key role in the spread of cancer to lymph glands.  Under the
terms of the research agreement, Cell Genesys' proprietary adeno-associated
viral (AAV) gene delivery system will be used in preclinical studies to evaluate
the inhibition of VEGFR-3 with the goal of reducing the metastasis (spread) of
tumors.  This strategy is based on the concept that delivering a gene which
results in long-term expression of an anticancer protein may be a more efficient
and practical way to deliver such therapy than repeated protein injections over
a long period of time.  During 2002, Cell Genesys also entered into a research
collaboration with the National Institutes of Health ("NIH"), which
focuses on the development of an initial AAV-based gene therapy for glioblastoma
(brain cancer).  Also during 2002, the Company discontinued its collaborations
with Rigel Pharmaceuticals, Inc. and EntreMed, Inc. in antiangiogenesis gene
therapy for cancer to focus on other preclinical cancer gene therapy
programs.

Proprietary Gene Therapy Technologies

Cell Genesys' proprietary gene delivery technologies
include, among others, AAV and adenoviral vectors.  The breadth of Cell Genesys'
vector portfolio 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® lung cancer vaccine. 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 preclinical cancer gene
therapy program and previously in the Company's Parkinson's disease research now
being conducted by Ceregene, Inc. (see Cell Genesys' Assets Outside of its Core
Business in Gene Therapy).

Cell Genesys has signed license agreements with companies
that are commercializing these technologies for the scientific research market.
These include agreements in which Cell Genesys is receiving payments from these
companies, including Invitrogen Corporation and Clontech Laboratories, Inc., a
division of Becton Dickinson.

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 IND 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 IND
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 NIH.

Typically, clinical testing involves a three-phase
process. In Phase 1, clinical trials are conducted with a small number of
subjects to determine the early safety profile and pharmacology of the new
therapy.  In Phase 2, 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 3, 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 2 trials.  These trials are
frequently referred to as Phase 1/2 trials. Although the preliminary Phase 1/2
and Phase 2 clinical trials of Cell Genesys' GVAX® cancer vaccine
and oncolytic virus therapies have shown a favorable safety profile to date,
there can be no assurance that such therapies or products will be tolerated at
higher doses or that the clinical efficacy of such therapy or product will be
demonstrated in later stage testing.

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 ("NDA") for a pharmaceutical
product, and in the form of a biologic license application ("BLA") for
a biologic product in order to obtain approval to commence commercial sales.  In
responding to an NDA or a BLA, 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 Regulations.  In addition
to laws and regulations enforced by the FDA, Cell Genesys is also subject to
regulation under National Institutes of Health guidelines, as well as
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.

Manufacturing

Manufacture of clinical quantities of Cell Genesys'
products does not require an FDA license, although the FDA may at any time
inspect the Company's manufacturing facilities. Cell Genesys has three leased
manufacturing facilities including a 41,000 square-foot facility in Hayward,
California, a 35,000 square-foot facility in Memphis, Tennessee, and a 48,000
square-foot facility in San Diego, California, all of which were constructed
according to ("GMP") standards.  Cell
Genesys believes that its three manufacturing facilities will have the capacity
to manufacture products for Phase 3 trials and market launch.  The Company
expects to manufacture patient-specific GVAX® lung cancer
vaccines in its Memphis facility, viral-based products in its San Diego
facility and non patient-specific GVAX®cancer vaccineproducts in its Hayward facility.



Cell Genesys' Assets Outside of its Core Business



Investment in Abgenix, Inc.
("Abgenix")  Abgenix is developing antibody therapies for
inflammation, cancer, transplant disorders, cardiovascular disease and
infectious disease.  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.  Abgenix completed its initial
public offering (Nasdaq-ABGX) in July 1998.  The Company currently holds
approximately 8.7 millionshares of Abgenix stock, or approximately 9.9 percent of outstanding
shares as of December 31, 2002.  The Company expects to sell these shares of
Abgenix common stock over time to provide additional funding for Cell Genesys'
cancer vaccine, oncolytic virus therapy and gene therapy programs.



Ceregene, Inc. ("Ceregene"), A Majority-
Owned Subsidiary of Cell Genesys.  In January 2001, Cell Genesys
launched a new majority-owned subsidiary, Ceregene, Inc., located in San Diego,
California, which is focused on gene therapies for central nervous system (CNS)
disorders such as Alzheimer's disease and Parkinson's disease.  Ceregene's goal
is to use gene therapy as a "drug delivery" strategy to deliver
neurologic growth factors to specific sites in the brain to prevent the nerve
degeneration associated with diseases such as Alzheimer's 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.  Cell Genesys has majority representation on
Ceregene's board, and Stephen A. Sherwin, M.D., chairman and chief executive
officer of Cell Genesys, also serves as chairman of Ceregene since early 2001.
Ceregene's operations significantly expanded in 2001 and 2002, and included the
appointment of Dr. Jeffrey M. Ostrove, Ph.D., as president and chief operating
officer.  During 2001, the first-ever study of Alzheimer's disease gene therapy
was initiated at the University of California, San Diego (UCSD) School of
Medicine based on technology exclusively licensed to Ceregene.  The Phase 1
clinical trial is fully enrolled and involves eight patients.  All patients have
completed treatment, and patients are now being monitored for improvement in
their disease using cognitive function and brain imaging.  Preliminary results
from this trial indicate that the gene therapy treatment is well tolerated and
biologically active.  A complete report on this trial is expected later in 2003.
Additionally, Ceregene announced in March 2003 that it signed a licensing
agreement with Genentech, Inc. (NYSE: DNA) for exclusive worldwide rights to
genes expressing two nervous system growth factors for use in neurological gene
therapies such as Alzheimer's disease and gene therapy.  These patented
neurotrophic factor genes, coding for the proteins known as nerve growth factor
and neurotrophic factor 4/5 have demonstrated therapeutic potential in the
treatment of neurodegenerative disorders, among other applications.



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 licensing agreements have
provided more than $50 million in revenues to Cell Genesys to date.  Since
February 1997, Cell Genesys has had a license agreement with Hoechst Marion
Roussel, now Aventis Pharmaceuticals, Inc. ("Aventis"), for gene-
activated erythropoietin ("EPO").  To date, Cell Genesys has received
over $17 million under this license agreement, which includes certain milestone
payments relating to the development of gene-activated EPO, which Aventis is
developing in collaboration with Transkaryotic Therapies, Inc.
("TKT").  The agreement also provides for royalties on future sales of
gene-activated EPO anywhere in the world.  In June 2002, Cell Genesys announced
the completion of a separate licensing agreement under which Cell Genesys
exclusively licensed to TKT intellectual property relating to its gene
activation technology for certain therapeutic proteins.  In exchange, Cell
Genesys received an up-front license fee of $26 million, which was to have been
comprised of $11 million in cash and $15 million in shares of TKT common stock.
In early 2003, the companies mutually agreed to an amendment to the original
license agreement substituting a cash payment of $15 million in lieu of the TKT
stock.



Corporate Collaborations



Pharmaceutical Division of Japan Tobacco.
In October 2002, Cell Genesys announced that it had reacquired full commercial
rights to GVAX® lung cancer vaccines following the termination of
its remaining license agreement with the pharmaceutical division of Japan
Tobacco ("JT").  Cell Genesys now holds all worldwide commercial
rights to its entire portfolio of GVAX® cancer vaccine products.
This agreement was originally signed in December 1998 and later modified in
November 2001 to focus only on GVAX® lung cancer vaccines.  As of
December 31, 2002,Cell Genesys has received over $81 million in
milestone and other payments and reimbursement for research and development
costs.  This was 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 transferred to Abgenix.



Gene Therapy Rights Agreement with Abgenix.
In November 1997, Cell Genesys entered into a gene therapy rights agreement (the
"GTRA") with Abgenix.  The GTRA provides Cell Genesys with certain
rights to utilize Abgenix's XenoMouse® technology in the field of
gene therapy for two antigen targets per year.  Cell Genesys is obligated to
make certain payments to Abgenix for these rights including 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 Cell Genesys a
portion of the cash milestone payments and royalties resulting from any products
in the field of gene therapy.



Other Collaborations.  Cell Genesys has
licensing agreements relating to its proprietary viral vector
technologies.  These collaborations enable Cell Genesys to either acquire
commercial rights to therapeutic genes or to receive monetary reimbursement for
providing viral vector technologies to companies that commercialize these
technologies for the research market.   Examples include agreements
with the Clontech division of Becton Dickinson and Invitrogen for specific
vector technologies.  In 2002, the Company discontinued its research
collaborations with EntreMed, Inc., and Rigel, Inc. for antiangiogenesis gene
therapy to focus on other preclinical cancer gene therapy programs.



In December 2002, the Company announced the formation of a
three-year research collaboration with VectorLogics, Inc., in which Cell
Genesys' oncolytic virus therapies will be evaluated in combination with novel
methods to further enhance the viruses' cell targeting abilities.



In early 2003, Cell Genesys entered into an exclusive
worldwide research and license agreement with the Ludwig Institute for Cancer
Research for gene therapy rights to vascular endothelial growth factor receptor-
3 (VEGFR-3), a novel protein believed to play a key role in the spread of cancer
to lymph glands.  Under the terms of the research agreement, Cell Genesys'
proprietary adeno-associated viral (AAV) gene delivery system will be used in
preclinical studies to evaluate the inhibition of VEGFR-3 with the goal of
reducing the metastasis (spread) of tumors.  This strategy is based on the
concept that delivering a gene which results in long-term expression of an
anticancer protein may be a more efficient and practical way to deliver such
therapy than repeated protein injections over a long period of time.  The VEGFR-
3 collaboration complements Cell Genesys' other programs in cancer gene therapy,
which currently focus on blocking tumor angiogenesis, or tumor blood vessel
growth, as a potential cancer treatment strategy.



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 330 issued or
granted patents and over 390 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 not
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 is aware of competing
intellectual property relating to both its programs in cancer vaccines and
oncolytic viruses.  While the Company currently believes it has freedom to
operate in these areas, there can be no assurance that its position will not be
challenged by others in the future.  The Company may be required to obtain
licenses to certain third-party technologies or genes necessary in order to
market our products.  Any failure to license any technologies or genes required
to commercialize our technologies or products at reasonable cost may have a
material adverse effect on the Company's business, results of operations or
financial condition.



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 and Trademark Office, which 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
multiple interference and/or opposition proceedings with regard to: (i) gene
activation technology, (ii) certain ex vivo gene therapies, (iii)
chimeric receptor technology and (iv) certain vector technologies.  The outcomes
of these proceedings cannot be predicted, but are not expected to have a
material adverse effect on the Company's intellectual property position or our
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 confidentiality agreements upon the commencement of employment and
consulting relationships 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 faces substantial competition in the
development of products for cancer and other diseases.  This competition, from
other manufacturers of the same type of products and from manufacturers of
different types of products designed for the same uses, is expected to continue
in both U.S. international markets.  Cancer vaccines, oncolytic virus therapies
and cancer gene therapies, the three 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 technological advances.  Cell
Genesys is aware of a number of groups that are developing cancer vaccines,
oncolytic virus therapies and cancer 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 recruiting employees, acquiring
technologies that might enhance the Company's ability to market products,
establishing relationships with certain research or academic institutions,
enrolling patients in clinical trials and in partnering certain of its programs
with larger pharmaceutical companies.  It is possible that the Company's
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 our business.



Human Resources

As of December 31, 2002, Cell Genesys employed 336
persons, of whom 39 hold Ph.D. degrees and five hold M.D. degrees.
Approximately 269 employees are engaged in research, development and
manufacturing, and 67 employees support business development, intellectual
property, finance and other administrative functions.  Many of Cell Genesys'
management have had prior product development experience in the biotechnology
and pharmaceutical industries.



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



Executive Officers



The executive officers of Cell Genesys and their ages
as of March 31, 2003, are as follows:



|Name                     | Age | Positon with Cell Genesys                        
|------------------------ | --- | -------------------------------------------------
|Stephen A. Sherwin, M.D  | 54  | Chairman of the Board and Chief Executive Officer
|Joseph J. Vallner, Ph.D. | 56  | President and Chief Operating Officer            
|Matthew J. Pfeffer       | 45  | Vice President and Chief Financial Officer       
|Dale G. Ando M.D.        | 49  | Vice President -- Clinical Research              
|Christine McKinley       | 49  | Vice President -- Human Resources                
|Michael W. Ramsay        | 46  | Senior Vice President -- Manufacturing Operations
|Robert H. Tidwell        | 59  | Senior Vice President -- Corporate Development   
|Peter K. Working, Ph.D.  | 55  | Senior Vice President -- Research and Development

Dr. Sherwin has served as chief executive officer and a
director of Cell Genesys since March 1990.  Dr. Sherwin also served as president
until July 2001, at which time Joseph J. Vallner, Ph.D. was appointed president.
In March 1994, Dr. Sherwin 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.  He is also a
director of Neurocrine Biosciences, Inc., Rigel Pharmaceuticals, Inc. and
privately-owned Calyx Therapeutics, Inc.  Dr. Sherwin, who also serves as a
board member of the Biotechnology Industry Organization, 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.  Effective July 2001, Dr.
Vallner was appointed president of the Company.  He currently manages the
research, development, clinical, regulatory, manufacturing and operations
departments at Cell Genesys.  Prior to joining Cell Genesys, Dr. Vallner was
with SEQUUS Pharmaceuticals from 1992 to 1999 where he was instrumental in the
product launch of two products including Doxil®, a liposome-based
cancer therapeutic.  In addition, Dr. Vallner helped transition SEQUUS through
its merger with ALZA Corporation.  Prior to that, he held various positions with
Syntex Corporation and G.D. Searle and Company from 1983 to 1986, and was an
associate professor of pharmaceutics at the University of Georgia.  Dr. Vallner,
who serves as a board member of the California Healthcare Institute, 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 previously served as director of clinical gene
therapy for Chiron Technologies at Chiron, where he served from 1992 to 1997
His experience includes clinical development of biological therapeutics and gene
therapy for both cancer and HIV infection.  From 1988 to 1990, Dr. Ando was with
Cetus Corporation, where the last position he held was Physician, Clinical
Research and Development.  Dr. Ando began his career as a faculty member at the
UCLA School of Medicine in the division of rheumatology from 1983 to 1988.  He
received his M.D. and Internal Medicine training at the University of Michigan
and a B.S. in Chemistry from Stanford University.



Ms. McKinley, vice president, human resources, joined
Cell Genesys 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. from1985 to 1994 in various human resource positions.  She
received a B.A. in psychology from the University of California, Santa
Barbara.

Mr. Ramsay joined Cell Genesys in January 2002 and serves
as senior vice president, manufacturing operations.  Prior to joining Cell
Genesys, Mr. Ramsay served as a vice president of manufacturing at ALZA
Corporation from 1999 to 2001.  Mr. Ramsay also held various positions between
1992 to 1999 with SEQUUS Pharmaceuticals, including vice president of
manufacturing operations, as well as various positions at Syntex Corporation
focusing on manufacturing, product development and regulatory affairs from 1978
to 1991.  Mr. Ramsay holds a Bachelor of Pharmacy from the University of
Nottingham in the United Kingdom.



Mr. Tidwell, senior vice president,
corporate development, has been with Cell Genesys since August 2000.  Prior to
joining Cell Genesys, Mr. Tidwell was vice president of business development at
Calydon, Inc. from 1998 to 2000.  Mr. Tidwell has also held various management
positions with such companies as Boston Life Sciences, where he served as chief
operating officer from 1993 to 1994, Genetics Institute, where he was vice
president of marketing and business development from 1988 to 1993, and Eli Lilly
and Company, where he held various positions including director of worldwide
pharmaceutical licensing, between 1969 and 1985.  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.



Dr. Working joined Cell Genesys in
September 2001 and serves as senior vice president, research and development.
Prior to joining Cell Genesys, from 1999 to 2001, Dr. Working served as vice
president of analytical and non-clinical sciences and principal scientist at
ALZA Corporation.  Dr. Working has also held various positions with SEQUUS
Pharmaceuticals, where from 1997 to 1999 he served as vice president of research
and development, as well as Genentech, Inc. where he served from 1988 to 1992 as
a senior toxicologist and head of the Experimental Toxicology Group in the
Department of Safety Evaluation.  Dr. Working holds Ph.D., M.S. and B.S. degrees
from the University of California, Davis and an M.A. degree from the University
of California, San Francisco.



Medical Advisory Board

Cell Genesys has established a
prominent Medical Advisory Board ("MAB") that includes several leaders
in the field of oncology.  As of March 31, 2003, the board consists of the
following individuals:

`NAME                                 SCIENTIFIC POSITION
-------------------------------   ---------------------------------------------------
Bruce Chabner, M.D.............   Chief of Hematology/Oncology,
                                  Massachusetts General Hospital
                                  Clinical Director, Massachusetts
                                  General Hospital Cancer Center
                                  Professor of Medicine,
                                  Harvard Medical School

Jordan U. Gutterman, M.D.......   Department of Molecular Therapeutics
                                  Professor of Medicine
                                  University of Texas
                                  M.D. Anderson Cancer Center

Craig Henderson, M.D...........   Adjunct Professor of Hematology/Oncology
                                  University of California, San Francisco

Ronald Levy, M.D...............   Robert K. Summy and Helen K. Summy
                                  Professor of Medicine
                                  Chief of the Division of Oncology
                                  Stanford University School of Medicine

William Nelson, M.D., Ph.D.....   Associate Professor of Oncology, Pathology,
                                  Pharmacology and Medicine, and Urology
                                  Sidney Kimmel Comprehensive Cancer Center
                                  Johns Hopkins University

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`

Dr. Potts, who is also a member of the Cell Genesys Board of Directors,
serves as a liaison between the MAB and the Board of Directors and makes
periodic reports on the findings of the MAB to the Board.

Scientific Advisory Board

Cell Genesys has established a prominent Scientific Advisory Board
("SAB") that includes several leaders in the fields of cancer
immunotherapy and gene therapy.  As of March 31, 2003, 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
                                  National Institutes of Health
                                  National Institute of Allergy and Infectious Diseas

Raju S. Kucherlapati, Ph.D.....   Scientific Director
                                  Harvard-Partners Center for Genetics and Genomics
                                  Paul C. Cabot Professor of Genetics
                                  Professor of Medicine
                                  Harvard Medical School

John T. Potts, Jr., M.D........   Director of Research
                                  Massachusetts General Hospital
                                  Physician-in-chief Emeritus Jackson
                                  Distinguished Professor of Clinical Medicine
                                  Havard Medical School

Thomas E. Shenk, Ph.D..........   Elkins Professor
                                  Chiarman 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



On November 7, 2002, Cell Genesys announced that it
had completed construction of the portion of its Hayward, California
manufacturing facility necessary to support the Company's Phase 3 clinical trial
of GVAXâ
prostate cancer vaccine.  Cell production, a key portion of the
vaccine manufacturing process, has begun at the site in preparation for Phase 3
manufacturing.



During 2002, Cell Genesys completed modifications to its
viral-based product manufacturing facility in San Diego, California.  The
Company acquired this 48,000 square-foot facility from Chiron Corporation in
January 2001.



On February 12, 2002, Cell Genesys announced that it had
leased a 35,000 square-foot manufacturing facility in Memphis, Tennessee.  Cell
Genesys plans to use the Memphis facility to manufacture patient-specific
GVAX® lung cancer vaccines for both Phase 3 clinical trials and
potential market launch.  The facility provides Cell Genesys with a centrally
located facility to receive and process tumor cells obtained from patient
biopsies, manufacture the patient-specific vaccine products, carry out quality
control testing and ship the vaccine products back to the patient treatment
centers.  In December 2002, the Company announced that it had completed the
construction of the facility necessary for the initiation of Phase 3 trials.



Cell Genesys maintains its headquarters in South San
Francisco, California. The facility consists of approximately 154,000 square
feet of research and development and administrative space.  Cell Genesys moved
to this location in March 2003 from its previous facilities in Foster City,
California.  The Company is actively pursuing sublease alternatives for its
facilities in Foster City.  In December 2002, the Company recorded an accrual
for lease exit costs in the amount of approximately $6.2 million in association
with the estimated remaining lease obligation for the Foster City facilities.
The lease agreements for the Foster City facilities are expected to continue
through the contractual termination of January 2006.



Ceregene, Inc., a majority-owned subsidiary of Cell
Genesys, is currently subleasing approximately 20,000 square feet for its
headquarters and research laboratory space in San Diego, California.  The lease
commenced in March 2002 and has a five year duration.

Cell Genesys has other leased facilities, including
facilities in Alameda, California that were acquired in connection with its
acquisition of Somatix Therapy Corporation in 1997.  Cell Genesys had been
subleasing these facilities to other companies under sub-leasing arrangements.



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
                                                        ---------  ---------
2001
  First Quarter....................................... $   22.44  $   12.50
  Second Quarter...................................... $   20.50  $   12.61
  Third Quarter....................................... $   20.97  $   13.79
  Fourth Quarter...................................... $   24.80  $   15.60

2002
  First Quarter....................................... $   22.99  $   15.00
  Second Quarter...................................... $   17.73  $   12.02
  Third Quarter....................................... $   14.35  $   10.68
  Fourth Quarter...................................... $   13.03  $   10.47`



As of March 14, 2003, there were 961 holders of
record and approximately 29,000 beneficial holders of the Company's Common
Stock.  On March 14, 2003, the last reported sales price on the Nasdaq National
Market for the Common Stock was $6.82.  The market for the Company's Common
Stock is highly volatile.



The Company has 665 shares of Series B redeemable
convertible preferred stock outstanding, held by 8 holders of record.  The
preferred stock is convertible into shares of common stock at the option of the
holder, as of December 31, 2002 the carrying value was approximately $7.6
million.  No established public trading market exists for the preferred stock
itself.  For a description of the terms of the preferred stock, see Note 9 of
Notes to Consolidated Financial Statements included under Item 8 of this Annual
Report on Form 10-K.



The information required by this item regarding
equity compensation plans is incorporated by reference to the information set
forth in Item 12 of this Annual Report on Form 10-K.



Item 6.  SELECTED CONSOLIDATED FINANCIAL DATA

`Year Ended December 31,
                                                    ------------------------------------------------------
                                                      2002       2001        2000       1999       1998
                                                    ---------  ---------  ----------  ---------  ---------
CONSOLIDATED STATEMENT OF OPERATIONS DATA:                 (in thousands, except per share amounts)


Revenue........................................... $  39,141  $  28,317  $   24,209  $  33,607  $  24,146
Operating expenses:
  Research and development........................    75,138     50,752      30,474     24,538     37,932
  General and administrative (1)..................    20,697     11,850       6,984      4,833      8,204
  Charge (credit) for purchased in-process
   technology.....................................      (186)    18,042         --         --         --
  Merger termination costs........................                                      15,382
                                                    ---------  ---------  ----------  ---------  ---------
Total operating expenses..........................    95,649     80,644      37,458     44,753     46,136
                                                    ---------  ---------  ----------  ---------  ---------
Operating loss....................................   (56,508)   (52,327)    (13,249)   (11,146)   (21,990)
Equity in loss of Abgenix, Inc....................       --          --         --      (3,083)    (2,917)
Gain on sale of stock of Abgenix, Inc. common stoc     2,246         --     239,660        --       7,020
Interest and other income, net....................     8,931     17,878      13,172      2,235      1,567
                                                    ---------  ---------  ----------  ---------  ---------
Income (loss) before minority interest, income
   taxes and cumulative effect of change
   in accounting................................     (45,331)   (34,449)    239,583    (11,994)   (16,320)
Loss attributed to minority interest..............        96        264         --         --       4,192
                                                    ---------  ---------  ----------  ---------  ---------
Income (loss) before income taxes and cumulative
   effect of change in accounting ..........         (45,235)   (34,185)    239,583    (11,994)   (12,128)
Benefit (provision) for income taxes..............    18,636      5,512     (64,203)       --         --
                                                    ---------  ---------  ----------  ---------  ---------
Income (loss) before cumulative effect of
   change in accounting...........................   (26,599)   (28,673)    175,380    (11,994)   (12,128)
Cumulative effect of change in accounting
   principle, net of taxes (2)....................        --        --       (6,460)       --         --
                                                    ---------  ---------  ----------  ---------  ---------
Net income (loss) ................................ $ (26,599) $ (28,673) $  168,920  $ (11,994) $ (12,128)

Deemed dividend to preferred stockholders.........       702        785         756        392      1,088
                                                    ---------  ---------  ----------  ---------  ---------
Income (loss) attributed to common stockholders... $ (27,301) $ (29,458) $  168,164  $ (12,386) $ (13,216)
                                                    =========  =========  ==========  =========  =========
Basic income (loss) per common share ............. $   (0.76) $   (0.85) $     4.99  $   (0.39) $   (0.46)
                                                    =========  =========  ==========  =========  =========
Diluted income (loss) per common share............ $   (0.76) $   (0.85) $     4.55  $   (0.39) $   (0.46)
                                                    =========  =========  ==========  =========  =========
Weighted average shares of common stock
   outstanding -- basic.............................  35,889     34,746      33,716     31,682     28,607
                                                    =========  =========  ==========  =========  =========
Weighted average shares of common stock
   outstanding -- diluted.........................    35,889     34,746      36,952     31,682     28,607
                                                    =========  =========  ==========  =========  =========`

(1) The year ended December 31, 2002 includes accrued facility exit costs of $6.2 million.

       (2) 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 duluted per share amounts, excluding the effects of deemed dividends
        to preferred stockholders and assuming retroactive application of the change in accounting principle for
        the years ended 2000, 1999, and 1998 are as follows (in thousands, except per share amounts):

`Pro forma:                                                                     2000       1999       1998
      Net income (loss)..................................................$  175,380  $ (10,257) $ (22,277)
      Income (loss) per common share-diluted.............................$     4.75  $   (0.32) $   (0.78)


                                                                        December 31,
                                                    ------------------------------------------------------
                                                      2002       2001        2000       1999       1998
                                                    ------------------------------------------------------
CONSOLIDATED BALANCE SHEET DATA:                                       (in thousands)

Cash, cash equivalents and short-term investments,
  including restricted cash and investments....... $ 166,905  $ 258,649  $  259,647  $  50,287  $  53,243
Working capital...................................   178,948    420,779     549,985    334,646     44,080
Total assets......................................   405,848    615,310     793,716    489,683     65,799
Total current liabilities.........................    68,373    149,690     239,002    150,430      9,964
Long-term obligations.............................    98,695     60,000       1,350      3,198      4,860
Redeemable convertible preferred stock............     7,632     17,970      17,185      7,679     12,083
Accumulated deficit...............................   (90,156)   (63,557)    (34,883)  (203,803)  (191,809)
Stockholders' equity..............................   231,148    387,554     536,179    328,376     38,892



QUARTERLY RESULTS OF OPERATIONS                                    2002
(unaudited)                                         ---------------------------------------------
                                                    March 31    June 30   September 30December 31
                                                    ---------------------------------------------
                                                        (in thousands, except per share amounts)
Revenue (1)....................................... $   4,595  $  31,102  $    1,479  $   1,968
Research and development..........................    16,563     17,800      19,490     21,285
General and administrative........................     3,658      4,348       3,370      9,321
Charge (credit) for purchased in-process
   technology.......................................      --         --        (186)        --
Net income (loss) (2)............................. $  (8,818) $   6,481  $  (12,712) $ (12,252)
Basic income (loss) per common share.............. $   (0.25) $    0.18  $    (0.35) $   (0.34)
Diluted income (loss) per common share............ $   (0.25) $    0.17  $    (0.35) $   (0.34)`

(1) The quarter ended June 30, 2002 includes an upfront fee in the amount
       of $26.0 million related to the TKT license agreement.
(2) The quarter ended December 31, 2002 includes a gain on sale of Abgenix, Inc. common stock of
       approximately $2.2 million and accrued facility exit costs of $6.2 million.

`QUARTERLY RESULTS OF OPERATIONS                                    2001
(unaudited)                                         ---------------------------------------------
                                                    March 31    June 30   September 30  December 31
                                                    ---------------------------------------------
                                                        (in thousands, except per share amounts)
Revenue (3)....................................... $   5,973  $   4,036  $    4,635  $  13,673
Research and development..........................    10,726     11,010      12,362     16,654
General and administrative........................     2,700      2,839       2,786      3,525
Charge for purchased in-process technology (4)....        --         --      18,042         --
Net income (loss) ................................ $    (203) $  (4,678) $  (22,384) $  (1,408)
Basic income (loss) per common share.............. $   (0.01) $   (0.14) $    (0.64) $   (0.06)
Diluted income (loss) per common share............ $   (0.01) $   (0.14) $    (0.64) $   (0.06)`

(3) The quarter ended December 31, 2001 includes milestone revenue from the collaboration with Japan Tobacco.
 (4) The quarter ended September 30, 2001 includes a charge for the acquisition of Calydon, Inc.

Statements made in this Item other than statements of
historical fact, including statements about the Company's and its subsidiaries'
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 "Other Factors Affecting Future
Operations" below. The Company does not undertake any obligation to update
forward-looking statements. The following should be read in conjunction with the
Company's consolidated financial statements located elsewhere in this Company's
Annual Report on Form 10-K for the year ended December 31, 2002 and other
documents filed by the Company from time to time with the Securities and
Exchange Commission.



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

Overview

Since its inception in April 1988, Cell Genesys has
focused its research and product development efforts on human disease therapies
that are based on innovative gene modification technologies.  The Company's
strategic objective is to develop and commercialize biological therapies,
including cancer vaccines, oncolytic virus therapies and cancer gene therapies,
to treat multiple types of cancer. Cell Genesys' current clinical programs
include GVAX® cancer vaccines and oncolytic virus therapies.
GVAX® cancer vaccines are in Phase 2 studies for prostate cancer,
lung cancer, pancreatic cancer and leukemia and in Phase 1/2 studies for
multiple myeloma.  The Company expects to initiate Phase 3 trials for
GVAX® prostate cancer vaccine and GVAX® lung
cancer vaccine during the next year.  Ongoing clinical programs evaluating the
Company's oncolytic virus therapies include a Phase 2 study of CG7870, an
intratumorally administered therapy for early-stage prostate cancer.  In
addition, Cell Genesys has preclinical oncolytic virus therapy programs
evaluating potential therapies for bladder cancer, liver cancer and colon cancer
as well as preclinical cancer gene therapy programs evaluating potential
therapies for multiple types of cancer.  The Company plans to file an IND for
CG8840, an oncolytic virus therapy for the treatment of bladder cancer, during
the next year.  Additionally, Cell Genesys has a majority-owned subsidiary,
Ceregene, Inc., which is focused on gene therapies for neurological disorders,
and continues to hold approximately 8.7 million shares of common stock of its
former subsidiary, Abgenix, Inc. (Nasdaq: ABGX), which is focused on the
development and commercialization of antibody therapies.



Critical Accounting Policies



We consider certain accounting policies related to
revenue recognition, lease accounting, income taxes and use of estimates to
to be critical policies.



Revenue recognition



Since the Company's inception, a substantial portion
of our revenues has been generated from research and licensing agreements with
collaborators. Revenue under such collaboration agreements typically include
upfront payments, cost reimbursements and milestone payments.   Revenue under
these agreements from non-refundable upfront license fees and other payments
where the Company continues involvement through development is recognized
ratably over the development period.  The Company recognizes cost reimbursement
revenue under collaborative agreements as the related research and development
costs are incurred.  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.
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.  As such, the incentive milestones are substantially at risk at the
inception of the contract and the values assigned thereto are commensurate with
the milestone achieved.  Upon the achievement of an incentive milestone event,
the Company has no future performance obligations related to that payment.
Deferred revenue represents the portion of research payments received that has
not been earned.





Lease Accounting



During the three month period ended December 31, 2002, the
Company recorded a charge of approximately $6.2 million for lease exit costs
associated with the Company's move to the South San Francisco, California
headquarters in March 2003.
Cell Genesys utilized current market conditions to
estimate the charge for lease exit costs related to the move of its corporate
headquarters to South San Francisco, California and the related vacancy in
Foster City, California.  Total rent payments for the Company's Foster City
location are $16.8 million.

The charge will be adjusted as necessary based on our
ability to sub-lease the facilities and then current market conditions.



Use of estimates

The preparation of financial statements in conformity
with accounting principles generally accepted in the United States 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.  Estimates in the financial statements
include, but are not limited to, accrued but unbilled expenses in clinical
trials, expenses for certain outside experts and consultants useful lives of
property and equipment, and other items.



Income taxes





Significant management judgment is required in developing
our provision for income taxes, including the determination of deferred tax
assets and liabilities and any valuation allowances that might be required
against the deferred tax assets.  We record valuation allowances to reduce
deferred tax assets to the amounts that are more likely than not to be realized.
 We have considered future taxable income and ongoing prudent and feasible
tax planning strategies in assessing the need for valuation allowances.  If
we determined that we would be able to realize our deferred tax assets in the
future in excess of our net deferred tax assets, adjustments to the deferred tax
assets would increase income by reducing tax expense in the period that we made
such determination.  Likewise, if we determined that we would not be able
to realize all or part of our net deferred tax assets in the future, adjustments
to the deferred tax assets would decrease income by increasing tax expense in
the period that we made such determination.





Results of Operations



Revenue



Revenue increased to $39.1 million in 2002 from $28.3
million in 2001 and $24.2 million in 2000.  The increase in revenues in 2002 can
be attributed primarily to the receipt of an upfront fee of $26.0 million
associated with a license agreement with Transkaryotic Therapies, Inc.
("TKT") for the Company's gene activation technology.



Revenue from the Company's GVAX®
collaboration agreement with the pharmaceutical division of Japan Tobacco
("JT") for 2002 was $11.6 million compared to $25.1 million in 2001
and $21.3 million in 2000.  Of the revenue from JT in 2002, $9.8 million, or 84
percent was related to cost reimbursement. The decrease in revenue under the JT
agreement is attributed to the termination of the license agreement with JT in
October 2002 which pertained to GVAX® lung cancer vaccines.
Previously during 2001, the Company had restructured its GVAX®
collaboration with JT to regain full rights to its GVAX® prostate
cancer vaccine program and converted its GVAX® lung cancer
vaccine program to a reciprocal royalty arrangement.  Under the October 2002
termination agreement, full commercial rights to the entire GVAX®
cancer vaccine portfolio was reverted to Cell Genesys.  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 SAB 101, 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).



The Company's gene activation technology agreement with
Aventis for gene activated erythropoietin ("EPO") provides for
milestone payments and annual maintenance fees, in addition to royalties on
future sales of gene-activated EPO products.  The Company recognized revenue of
$1.1 million, $3.2 million and $2.8 million in 2002, 2001 and 2000,
respectively, pursuant to the Aventis agreement.  Of the revenue from Aventis
during 2002, $1 million, or 91 percent was related to an annual maintenance.



Research and development expenses



Research and development costs increased to $75.1
million in 2002 from $50.8 million during 2001, and $30.5 million in 2000.  The
increase can be attributed primarily to the Company's expanding clinical trials
for both its GVAX® cancer vaccines and oncolytic virus therapy
programs.  During 2002, the Company advanced its clinical trial programs,
including trials of GVAX® vaccines in multiple cancers and
oncolytic virus therapies, as well as its preclinical cancer gene therapy
programs.  The Company expects that its research and development expenditures
will continue to increase in future years to support expanded, more advanced 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 the results of clinical trials.



Biopharmaceutical products such as those developed by Cell
Genesys generally take 10 to 15 years to research, develop and bring to market
in the United States. Drug development in the U.S. is a process that includes
several steps regulated by the FDA.  The process begins with the filing of an
IND which, if successful, allows opportunity for clinical study of the potential
new medicine.  Clinical development typically involves three phases of study:
Phase 1, 2, and 3.  Costs for each phase are generally larger than the preceding
phase, as the size of the clinical trial (number of patients) grows.  The most
significant costs associated with clinical development are the Phase 3 trials as
they tend to be the longest and largest studies conducted during the drug
development process. We currently have two products in development that have
been targeted for Phase 3 studies.  However, the successful development of our
products is highly uncertain.  Estimates of product completion dates and
completion costs can vary significantly for each product and are difficult to
predict. Completion of clinical trials may take several years or more.  The
length of time generally varies substantially according to the type, complexity,
novelty and intended use of the product candidate.  However, we estimate that
clinical trials of the type we generally conduct are usually completed over the
following timelines:

`Clinical Phase         Estimated Completion Period

         Phase 1                    1-3 years
         Phase 2                    1-3 years
         Phase 3                    2-5 years`

Many factors may delay our commencement and speed of
completion of clinical trials, including the size/number of patients
participating in the trial, the duration of patient follow-up required, the
number of clinical sites at which the trial is conducted, and the length of time
required to locate and enroll suitable patient subjects.  Various statutes and
regulations also govern or influence the manufacturing, safety, labeling,
storage, record keeping and marketing of each product.  The lengthy process of
seeking these approvals, and the subsequent compliance with applicable statutes
and regulations, require the expenditure of substantial resources.  Any failure
by us to obtain, or any delay in obtaining, regulatory approvals could
materially adversely affect our business. In responding to a BLA, the FDA may
grant marketing approval, request additional information or deny the application
if it determines that the application does not provide an adequate basis for
approval.  There can be no assurance that any approval required by the FDA or
other regulatory body will be obtained on a timely basis, if at all.  For
additional discussion of the risks and uncertainties associated with completing
development of potential products, see "Other Factors Affecting Future
Operations" below.

Included below is a summary of products and the related
stage of development for each product in clinical development.  The information
in the column labeled "Estimated Completion of Phase" contains
forward-looking statements regarding timing of completion of product development
phases.  Timing of completion of these trials is based on typical times to
completion for trials of that type at such phases of development.  The actual
timing of completion of these phases of clinical trials could differ materially
from the estimates provided in the table due to the number of patients enrolled
in the trial, the number of clinical trial sites involved, the time needed to
fully enroll the trial, the time required for patient follow-up and other
factors.  In addition, it is possible that any of these ongoing clinical trials
may never be completed due to the occurrence of unacceptable treatment-related
side effects, lack of clinical efficacy, insufficient supply of product for
these clinical trials and other factors.  For a discussion of the risks and
uncertainties associated with the timing of completing a product development
phase, see ""Other Factors Affecting Future Operations" below.

`Phase of      Estimiated Completion
     Product                 Indication            Development         of Phase
     ------------------------------------------------------------------------------------
  GVAXreg; Prostate    Prostate cancer              Phase 2          2003
  GVAXreg; Lung        Non small-cell lung cancer   Phase2         2003 - 2004
  GVAXreg; Pancreatic  Pancreatic cancer            Phase 2        2003 - 2004
  GVAXreg; Leukemia    Acute Leukemia               Phase 2        2003 - 2004
  GVAXreg; Myeloma     Multiple Myeloma             Phase 1/2        2003
  CV7870 Oncolytic Virus          Prostate cancer              Phase 1          2003`

General and Administrative Expenses



General and administrative expenses were $20.7 million during
2002, compared to $11.9 million and $7.0 million in 2001 and 2000, respectively.
During 2002, Cell Genesys recorded a charge of approximately $6.2 million for
lease exit costs for its facilities in Foster City, California, in association
with the move to its new facilities in South San Francisco.  In addition, the
remaining increase in 2002 was primarily attributed to approximately $1.1
million related to increased headcount costs and increased facility related
costs of $1.1 million.  Of the increase in 2001 compared to 2000, approximately
$1.6 million was related to headcount costs, $1.2 million increased facility
costs and $0.7 increased consulting services.
Excluding the impact of the $6.2 million lease exit charge, future
spending for general and administrative costs is expected to continue to
increase in future years to support the growing infrastructure needs of the
Company, particularly in the area of facilities.



Purchased in-process technology



During 2002, Cell Genesys recorded a credit of $186,000 to
purchased in-process technology related to its acquisition of Calydon, Inc. in
2001.  The adjustment related to the return to Cell Genesys of a portion of the
purchase price held in escrow in accordance with the terms of the purchase
agreement.  In 2001, Cell Genesys recorded a charge of $18 million for the
purchased in-process technology from the acquisition of Calydon, and does not
anticipate that there is any alternative future use for the in-process
technology that was expensed.  Cell Genesys continues research in the technology
acquired in the acquisition of Calydon.



Interest income, interest expense and other income



Interest and other income was $9.9 million in 2002,
compared to $18.4 million and $13.6 million in 2001 and 2000, respectively.  The
higher income in 2001 compared to 2002 and 2000 is a result of higher average
cash balances, plus $8.0 million of realized gains earned from the sale of
certain tax-free securities during the first quarter of 2001.  Also, interest
rates in 2002 and the latter part of 2001 were lower compared to rates in 2000.
In 2002, the Company realized $2.2 million gain on the sale of Abgenix stock.
In 2000, the Company realized $239.7 million gain on the sale of Abgenix common
stock.  The Company did not sell any Abgenix common stock during 2001.



Interest expense increased to $1.0 million in 2002 from
$0.5 million in 2001 and $0.4 million in 2000.  The increase in 2002 is a result
of a $60 million liquid collateral debt financing completed in December 2001 in
connection with the construction of the Company's manufacturing facility in
Hayward, California.  The Company capitalized interest expense in 2002 of
approximately $751,000 as part of the construction costs.



Income taxes



The Company recorded a tax benefit for 2002 of $18.6
million and $5.5 for 2001, which primarily represents the estimated refund
available from the carryback of losses to offset taxable income in 2000.  In
2000, Cell Genesys recorded a tax provision of $64.2 million primarily as a
result of gains from its sale of Abgenix stock.   At December 31, 2002, Cell
Genesys had federal net operating loss carryforwards of approximately $65
million.  The 2002 net operating losses will expire in the years 2011 through
2021, 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
were substantially offset by utilizing a large portion of the Company's
previously available net operating loss carryforwards and tax credits.



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.



Liquidity and Capital Resources



Cell Genesys ended 2002 with approximately $166.9
million in cash, cash equivalents and short-term investments, of which $67.3
million is classified as restricted cash primarily related to the Company's debt
financing.  Information regarding the classification of these assets is included
in Notes to Financial Statements, "Fair Value of Financial
Instruments."  The Company has maintained its financial position through
strategic management of its resources including the Company's holdings in
Abgenix of which Cell Genesys continues to hold approximately 8.7 million shares
of common stock and by relying on funding from various corporate collaborations
and licensing agreements.  Additionally, in December 2002, the Company filed a
shelf registration statement with the Securities and Exchange Commission (SEC)
pursuant to Rule 415 under the Securities Act of 1933, as amended, which, once
effective, would allow the company to offer up to $150 million of securities on
short notice in subsequent public offerings.  However, there can be no assurance
the Company will be able to issue such securities on acceptable terms, or at
all.



Cell Genesys has financed its operations primarily
through the sale of equity securities, funding under collaborative arrangements,
sales of Abgenix common stock and secured financing.  In 2002 and 2000, Cell
Genesys received approximately $2.5 million and $243.9 million, respectively, in
net proceeds from the sale of shares of Abgenix common stock.  Cell Genesys did
not sell any Abgenix stock in 2001.



In connection with the gain on sale of Abgenix common
stock in 2000, the Company paid $41.5 million in federal and state income tax.
The Company recorded a tax benefit for 2002 of $18.6 million, which represents
the estimated refund available primarily from the carryback of losses in 2002 to
offset taxable income in 2000.  Since 2001 the Company has received $19 million
in tax refunds from the carryback of losses.  The Company has additional
unutilized net operating loss ("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 that 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 carryforwards allowed under Section 382.  In addition, the Company has
certain research and development tax credits which it may utilize to offset the
tax effects of 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.

Future minimum payments under non-cancelable operating
leases, capital leases and debt financing at December 31, 2002, were (in
thousands):

`Operating     Capital       Debt
                                               Leases       Leases      Financing
                                             -------------------------------------
Years ending December 31:
  2003..................................... $    10,699  $     5,514  $    10,532
  2004.....................................      10,822        6,171       10,275
  2005.....................................      11,168        6,332       10,017
  2006.....................................       4,410        6,406        9,759
  2007 and beyond..........................      18,127       87,289       25,057
                                             -----------  -----------  -----------
  Total minimum payments (1)............... $    55,226  $   111,712  $    65,639
                                             ===========

Less: Amount representing interest
      and executory costs..................                 ($58,520)      (5,639)
                                                          ------------------------
Present value of future debt payments......              $   $53,192  $    60,000
                                                          ------------------------
Less: Current portion of future payments...                   (5,608)      (8,889)
                                                          ------------------------
Non-current portion of payments.............             $    47,584  $    51,111
                                                           ========================`

(1) Total operating lease commitments include rent payments for the Company's
    Foster City facilities of $16.8 million, of which $6.2 million was accrued as of December 31,
    2002 as part of the estimated facility exit costs associated with our move
    to the South San Francisco, California headquarters in March 2003.

Cell Genesys leases certain of its facilities and
equipment under non-cancelable operating leases.  These leases, including the
Hayward, Foster City, San Diego and Memphis facilities expire at various dates
through 2017 and contain options for renewal.  The South San Francisco facility
lease is recorded as a capital lease as a result of certain amendments which
required Cell Genesys to fund the costs of certain structural components of the
facility.  The Company's debt financing was obtained in conjunction with the
construction of its
Hayward manufacturing facility.  For 2002, the debt financing bears an interest rate
of LIBOR (London InterBank Offering Rate) plus 1.0 percent, and a term of six
years.  In January 2003, the rate was reduced to Libor plus 0.75 percent.
Cell Genesys paid interest only for the first year, and will make
quarterly payments of principle and interest and approximately a 30 percent
balloon payment at the end of the six year term.  Ceregene, a subsidiary of Cell
Genesys, also maintains capital leases to fund the purchases of furniture and
machinery equipment.

The Company has completed construction of its
manufacturing facility for non patient specific cell-based vaccines in Hayward,
California.  Expenditures associated with the completion and validation of this
facility during 2003 are expected to total approximately $5 million.  In
addition, the Company has completed the construction of its new manufacturing
facility in Memphis, Tennessee that will be devoted to the manufacturing of
patient-specific vaccines for lung cancer.  Total additional costs for equipment
and improvements for this facility are expected to approximate $1 million in
2003.  Cell Genesys moved to its new headquarters facility in South San
Francisco in March 2003.  The headquarters include both the Company's research
and development laboratories and administrative offices.  Total additional costs
for build-out of tenant improvements for this facility during 2003 are expected
to be approximately $12 million.

Cell Genesys anticipates that its net operating use of
cash during 2003 will be approximately $60-65 million.  Net operating use of
cash does not include capital expenditures or the cost of any potential
acquisitions, nor does it reflect the potential offset by future sales of
Abgenix stock or equity or debt financings.  The Company's capital requirements
depend on numerous factors, including: the progress of the Company's research
and development programs and its preclinical and clinical trials; clinical and
commercial scale manufacturing requirements; the extent of funding from
collaborative partners; the acquisition of new products or technologies; and the
cost and outcome of litigation, patent interference proceedings or other legal
proceedings.  The Company's ongoing development programs and any increase in the
number and size of programs and trials will reduce the Company's current cash
resources and potentially create the need to raise further capital.  Therefore,
the Company may continue to consider financing alternatives, including potential
equity and debt financings in addition to periodic sales of the Company's
holdings of Abgenix stock.

A substantial portion of the Company's working capital
consists of holdings of shares its former subsidiary, Abgenix.  These shares are
carried at market value and have been subject to extreme fluctuations in recent
quarters due to the highly volatile nature of the market price of Abgenix stock.
To the extent that the Company continues to hold a substantial amount of these
shares, the Company's working capital position can be expected to continue to
fluctuate in future periods. The value of the Company's investment in Abgenix
common stock holdings was approximately $64.1 million at December 31, 2002 and
approximately $301.2 million at December 31, 2001.  In June 2002, the Company
completed a license agreement with TKT under which it was to receive a portion
of the consideration in the form of TKT common stock, the number of shares of
which was to be determined when the shares became freely tradable, such that the
shares would have a market value of $15 million at that time.  In January 2003,
the Company, under an amended agreement with TKT, received $15 million in cash
in lieu of the TKT stock that was to be issued under the original license
agreement.  Based on this amended agreement, the Company has reclassified the
"investment in TKT" as previously reported in the Company's quarterly
report on Form 10-Q for the quarter ended September 30, 2002, to
"receivable from TKT" at December 31, 2002.

While Cell Genesys believes that its current liquidity
position will be sufficient to meet its cash needs for at least the next year,
the Company may entertain the possibility of raising additional capital to
preserve its liquidity, depending on a number of conditions, including
conditions in the capital markets.  The sources of liquidity available to the
Company include the sale of Abgenix securities, asset-backed debt financing,
private or public placement of Cell Genesys equity securities, warrants, debt
securities or depositary shares.  The Company's evaluation processes regularly
consider the liquidity of capital markets, dilution, stockholder value and tax
consequences of each type of financing on stockholders.  Certain of the
financing options available to the Company may have negative consequences to
stockholders such as dilution.  Given the volatile nature of the capital
markets, decisions to raise capital may require actions that would impose a
negative consequence in order to reduce or minimize a more significant negative
consequence to stockholders.

Recent Accounting Pronouncements

Business combinations

In July 2001, the Financial Accounting Standards
Board ("FASB") issued Statements of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets."  SFAS 141 requires that all
business combinations be accounted for by the purchase method of accounting and
changes the criteria for recognition of intangible assets acquired in a business
combination.  The provisions of SFAS 141 apply to all business combinations
initiated after June 30, 2001, including the Company's acquisition of Calydon,
Inc. in September 2001.  SFAS 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized; however, these assets must
be reviewed at least annually for impairment.  Intangible assets with finite
useful lives will continue to be amortized over their respective useful lives.
The standard also establishes specific guidance for testing for impairment of
goodwill and intangible assets with indefinite useful lives.  As the Company
does not have goodwill recorded from previous acquisitions, the transitional
impairment test was not applicable and the adoption of SFAS 142 did not impact
the Company's consolidated financial condition or results of operations.

Asset retirement obligations

In August 2001, the FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligation."  SFAS 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated retirement costs.
The adoption of SFAS 143 in 2002 did not impact the Company's consolidated
financial condition or results of operations.

Asset impairments

In October 2001, the FASB issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets."
SFAS 144 addresses financial accounting and reporting for the impairment of
long-lived assets and for long-lived assets to be disposed of.   The adoption of
SFAS 144 in 2002 did not impact the Company's consolidated financial position or
results of operations.

Exit or disposal activities

In June 2002, the FASB issued SFAS 146,
"Accounting for Costs Associated with Exit or Disposal Activities"
which addresses accounting for restructuring, discontinued operations, plant
closing, or other exit or disposal activity.  SFAS 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS 146 is to be applied prospectively to exit or disposal activities initiated
after December 31, 2002, and earlier adoption is encouraged.  The Company
intends to adopt SFAS 146 as of January 1, 2003.

Guarantor's accounting and disclosure requirements for
guarantees, including direct guarantees of indebtedness of others

In November 2002, the FASB issued Interpretation No.
45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others" ("The Interpretation").
The Interpretation applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset, liability, or an
equity security of the guaranteed party.    The Company adopted the disclosure
provisions of this Interpretation in 2002 and does not expect the adoption of
the recognition and measurement requirements to impact Cell Genesys' financial
position or results of operations.

Revenue arrangements with multiple deliverables

In November 2002, the FASB issued Emerging Issues Task
Force ("EITF") Issue No. 00-21, "Revenue Arrangements with
Multiple Deliverables."  EITF 00-21 addresses certain aspects of the
accounting by a company for arrangements under which it will perform multiple
revenue-generating activities.  EITF 00-21 addresses when and how an arrangement
involving multiple deliverables should be divided into separate units of
accounting.  EITF 00-21 provides guidance with respect to the effect of certain
customer rights due to company nonperformance on the recognition of revenue
allocated to delivered units of accounting.  EITF 00-21 also addresses the
impact on the measurement and/or allocation of arrangement consideration of
customer cancellation provisions and consideration that varies as a result of
future actions of the customer or the company.  Finally, EITF 00-21 provides
guidance with respect to the recognition of the cost of certain deliverables
that are excluded from the revenue accounting arrangement.  The provisions of
EITF 00-21 will apply to revenue arrangements entered into in fiscal periods
beginning after June 15, 2003.  Cell Genesys is currently evaluating the effect
that the adoption of EITF 00-21 will have on its financial condition and results
of operations.

Consolidation of variable interest entities

In January 2003, the FASB issued Financial Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("FIN
46").  The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003.  The consolidation
requirements apply to older entities in the first fiscal year or interim periods
beginning after June 15, 2003.  Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of when the
variable entity was established.  Cell Genesys does not have variable interest
entities and does not expect the adoption of FIN 46 to have a material effect on
its financial condition or results of operations.


OTHER FACTORS AFFECTING FUTURE OPERATIONS
Investors should carefully consider the risks
described below before making an investment decision. The risks described below
are not the only ones facing our company. Additional risks not currently known
to us or that we currently believe are immaterial may also impair our business
operations. Our business could be harmed by any of these risks. The trading
price of our common stock could decline due to any of these risks, and investors
may lose all or part of their investment. In assessing these risks, investors
should also refer to the other information contained or incorporated by
reference in this Annual Report on Form 10-K, including our consolidated
financial statements and related notes.

Risks Related to Our Company

Our products are in developmental stage, are not approved for
commercial sale and might not ever receive regulatory approval or become
commercially viable.  All of our potential cancer vaccines, oncolytic virus
therapies and cancer 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.  Our research and
development efforts may not be successful and any of our future products may not
be ultimately 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.

Our cancer vaccine, oncolytic virus therapies and cancer
gene therapy programs must undergo exhaustive clinical testing and may not prove
to be safe or effective. If any of our proposed products are delayed or fail, we
may have to curtail our operations.  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 and oncolytic virus
therapies are currently being tested in 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.  Unacceptable side effects may be discovered
during preclinical and clinical testing of our potential products or thereafter.
Possible side effects of gene therapy may be serious and potentially life-
threatening. There are many reasons that potential products that appear
promising at an early-stage of research or development do not result in
commercially successful products.  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 or
that adequate numbers of patients can be recruited for our clinical trials.
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 manufactured in commercial
quantities at reasonable cost or that such a product will be successfully
marketed.

We have not been profitable in our operations (absent the
gains on sales of Abgenix stock and certain upfront or non-recurring license
fees). We expect to continue to incur substantial losses and negative cash flow
from operations and may not become profitable in the future.  We have
incurred an accumulated deficit since our inception. At December 31, 2002, our
accumulated deficit was approximately $90.2 million, compared with $63.6 million
at December 31, 2001.  Our accumulated deficit would be substantially higher
absent the gains we have realized on sales of our Abgenix stock. For the year
ended December 31, 2002, we recorded a net loss attributed to common
stockholders of $27.3 million, which included revenue of $26.0 million from an
upfront fee in connection with the Company's license agreement with TKT in June
2002.  We expect to incur substantial operating losses for at least the next
several years.  This is due primarily to the expansion of research and
development programs, clinical trials and manufacturing activities and, to a
lesser extent, general and administrative expenses. We also have substantial
lease obligations related to our new manufacturing and headquarter facilities
impacting operating 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, manufacture, commercialize or market any
products. We cannot guarantee that we will ever achieve or sustain product
revenues or profitability.

We will need substantial additional funds to continue
operations, and our ability to generate funds depends on many factors beyond our
control.  We will need substantial funds for existing and planned
preclinical and clinical trials, to continue research and development
activities, for lease obligations related to our manufacturing and headquarter
facilities, and to establish manufacturing and marketing capabilities for any
products we may develop.  At some point in the future, we will also need to
raise additional capital just to fund our operations.  Our future capital
requirements will depend on, and could increase as a result of, many factors,
such as:






the progress and scope of our internally funded research, development
and commercialization activities;

our ability to establish new collaborations and the terms of those
collaborations;

competing technological and market developments;

the time and cost of regulatory approval;

the extent to which we choose to commercialize our future products
through our own sales and marketing capabilities;

the costs we incur in obtaining and enforcing patent and other
proprietary rights or gaining the freedom to operate under the patents of
others; and

our success in acquiring and integrating complementary products,
technologies or businesses.We plan 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, but we may not be able to do
any of the foregoing on favorable terms, or at all.  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.  Additional funding may not be
available to us, and, if available, may not be on acceptable terms.  If we raise
additional funds by issuing equity securities, stockholders will incur immediate
dilution.  Opportunities for in-licensing technologies or for third-party
collaborations may not continue to be available to us on acceptable terms, or at
all.  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
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.
Currently, we have no collaborative partners for the development of our
GVAX® cancer vaccines or oncolytic virus therapy products.  In
October 2002, our remaining license agreement with the pharmaceutical division
of Japan Tobacco for GVAX® lung cancer vaccine was terminated,
and we will not receive any additional payments under this collaboration for the
future development costs of this product.

Our ability to manufacture our products is uncertain,
which may delay or impair our ability to develop, test and commercialize our
products.  We are building our own manufacturing facilities in compliance
with FDA Good Manufacturing Practices regulatory requirements for the
manufacture of products for clinical trials and to support the potential
commercial launch of our product candidates.  We are under significant lease
obligations for each of our facilities.  Completion of these facilities could
take longer than expected, and our inability to establish and maintain the
facilities within our planned time and budget could materially affect our
product development timelines.  Our manufacturing facilities will be subject to
ongoing, periodic inspection by the FDA and state agencies to ensure compliance
with Good Manufacturing Practices. We also may encounter problems with the
following:






achieving consistent production yield and costs;

meeting product release specifications;

quality control and assurance;

shortages of qualified manufacturing personnel;

shortages of raw materials;

shortages of key contractors; and

ongoing compliance with FDA and other regulations.Developing advanced manufacturing techniques and process
controls is required to fully utilize our expanded facilities.  We may not be
able to develop these techniques and process controls to manufacture our
products effectively to meet demands of clinical testing and production.

If we are unable to manufacture our products for any reason,
our options for outsourcing manufacturing are currently limited.  We are unaware
of available contract manufacturing facilities on a worldwide basis in which our
product candidates can be manufactured under Good Manufacturing Practices
regulations, a requirement for all pharmaceutical products.  It would take a
substantial period of time for a contract manufacturing facility that has not
been producing our particular products to begin producing them under Good
Manufacturing Practices regulations.

Our manufacturing facilities are subject to licensing
requirements of the California Department of Health Services and the Tennessee
Department of Commerce and Insurance, Board of Pharmacy, referred to as the
Tennessee Board of Pharmacy.  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 and the Tennessee Board of Pharmacy.  Failure to
maintain these licenses or to meet the inspection criteria of the FDA, the
California Department of Health Services or the Tennessee Board of Pharmacy
would disrupt our manufacturing processes and have a material adverse effect on
our business, results of operations, financial condition and cash flow.

If our proposed products are not effectively protected by
issued patents or if we are not otherwise able to protect our proprietary
information, we will be more vulnerable to competitors and our business could be
adversely affected.  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.  As of December 31, 2002, we had
approximately 330 issued or granted patents and approximately 390 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.  In addition, to the extent we
license our intellectual property to other parties, we may incur expenses as a
result of contractual agreements in which we indemnify these licensing parties
against losses incurred if our intellectual property infringes upon the rights
of others.

Our intellectual property may be challenged by our
competitors in the future, which may have a material adverse effect on our
business, results of operations, financial condition and cash flow.  Our
commercial success depends in part on not infringing the patents or proprietary
rights of others and not breaching licensees granted to us.  We are aware of
competing intellectual property relating to both our programs in cancer vaccines
and oncolytic virus therapies.  While we currently believe we have freedom to
operate in these areas, our position may be challenged by others in the future.
We may be required to obtain licenses to third-party technologies or genes
necessary in order to market our products.  Any failure to license any
technologies or genes required to commercialize our technologies or products at
reasonable cost may have a material adverse effect on our business, results of
operations, financial condition and cash flow.

We may have to engage in litigation, which could result in
substantial cost, 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, patents can be revoked through opposition
proceedings.  These proceedings could result in an adverse decision as to the
priority of our inventions.

We are currently involved in multiple interference and/or opposition
proceedings with regard to:




gene activation technology;

certain ex vivogene therapies;

certain vector technologies; and

chimeric receptor technology.We cannot predict the outcome of these proceedings.  An
adverse result could have a material adverse effect on our intellectual property
position in these areas and on our business as a whole.  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.

Our competitive positions may be adversely affected by our
limited ability to protect and control unpatented trade secrets, know-how and
other technological innovation.  Our competitors may independently develop
similar or better proprietary information and techniques and disclose them
publicly.  Also, others may gain access to our trade secrets, and we may not be
able to meaningfully protect our rights to our unpatented trade secrets.

We require our employees and consultants to execute
confidentiality agreements upon the commencement of employment or consulting
relationships 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 relating to
our business conceived by the employee while employed by us 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.

Our competitors may commercialize products more rapidly
than we do, which may adversely affect our competitive position.  There are
approximately 50 companies worldwide pursuing cancer programs with similar
technology to ours.  Some of these competitors are large pharmaceutical
companies, such as Aventis and GlaxoSmithKline, which have greater experience
and resources than we do in developing products, in undertaking preclinical
testing and human clinical trials of new pharmaceutical products, in obtaining
FDA and other regulatory approvals of products, and in manufacturing and
marketing new therapies.  We are also competing with other biotechnology
companies with similar experience and resources to ours, but who may have
programs which are in a later stage of clinical testing than ours, such as
Dendreon Corporation.  However, our competitive position and that of our
competitors can vary based on the performance of products in clinical trials.
In addition, our competitors may obtain patent protection or FDA approval and
commercialize products more rapidly than we do, which may impact future sales of
our products.  We also may not have the access that some of our competitors have
to biological materials necessary to support the research, development or
manufacturing of planned therapies.  If we are permitted by the FDA 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 that competition among products approved
for sale will be based, among other things, on:





product efficacy;

price;

safety;

reliability;

availability;

patent protection; and

sales, marketing and distribution capabilities.Our competitive position also depends upon our ability to
attract and retain qualified personnel, develop proprietary products or
processes, and secure sufficient funding for the often lengthy period between
product conception and commercial sales.

To the extent we depend on strategic partners to sell,
market or distribute our products, we will have reduced control over the success
of the sales, marketing and distribution of our future products.  We have no
experience in sales, marketing or distribution of biopharmaceutical products.
We may in the future 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 concentration;

size and expertise of the partner's sales force in a particular market;
and

our overall strategic objectives.We may in the future be exposed to product liability
claims, which could adversely affect our business, results of operation,
financial condition and cash flow.  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 sellers of our products.  We currently maintain product liability insurance
with respect to each of our clinical trials.  We may not be able to maintain
insurance or obtain sufficient coverage at a reasonable cost, given the
increasing cost of insurance in today's insurance market.  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 claim, particularly resulting from a clinical trial,
on any of our insurance policies or a product recall could have a material
adverse effect on our business, results of operations, financial condition and
cash flow.

Our business, financial condition and results of
operations could suffer as a result of our strategic acquisitions and
investments.  In January 2001, we acquired the principal operating assets of
Chiron Corporation's gene therapy business, a fully equipped and staffed
manufacturing facility.  Also in January 2001, we launched Ceregene, Inc.,
formed through the acquisition of Neurologic Gene Therapeutics, a private San
Diego-based start-up company.  Finally, in September 2001, we acquired Calydon,
Inc., a private biotechnology company focused on the treatment of cancer using
genetically engineered oncolytic virus therapies.  We may not be able to fully
integrate all these companies and their intellectual property or personnel.  Our
attempts to do so will place additional burdens on our management and
infrastructure.  These acquisitions will also subject us to a number of risks,
including:




the loss of key personnel and business relationships;

difficulties associated with assimilating and integrating the new
personnel and operations of the acquired companies;

the potential disruption of our ongoing business;

the expense associated with maintenance of diverse standards, controls,
procedures, employees and clients;

the diversion of resources from the development of our own proprietary
technology; and

our inability to generate revenue from acquired technology sufficient to
offset associated acquisition and maintenance costs.We may not be successful in overcoming these risks or any
other problems encountered in connection with our acquisitions.  Moreover, we
may engage in future acquisitions or investments that could dilute our existing
stockholders or cause us to incur contingent liabilities, debt or significant
expense.  From time to time, in the ordinary course of business, we may evaluate
potential acquisitions or investments in related businesses, products or
technologies.  We may not be successful with any strategic acquisition or
investment.  Any future acquisition or investment could harm our business,
financial condition and results of operations.


Our operations are vulnerable to interruption by fire,
earthquake, power loss, telecommunications failure, terrorist activity and other
events beyond our control, which could result in a material adverse effect on
our business.  Our facilities in California have, in the past, been subject
to electrical blackouts as a result of a shortage of available electrical power.
Future blackouts could disrupt the operations of our facilities.  In addition,
we do not carry sufficient business interruption insurance to compensate us for
actual losses from interruption of our business that may occur, and any losses
or damages incurred by us could have a material adverse effect on our
business.

We depend on our key technical and management personnel
and clinical investigative sites 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.  We may not 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 to develop additional expertise in our existing
personnel.  If we do not succeed in recruiting necessary personnel or developing
this expertise, our business could suffer significantly.

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

Inventions or processes discovered by our outside
scientific collaborators may not become our property, which may affect our
competitive position.  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 for which they work.  In addition,
some of these collaborators have consulting or other advisory arrangements with
other entities that may conflict with their obligations to us.  For these
reasons, inventions or processes discovered by our scientific collaborators or
consultants may not become our property.

Our stock price is influenced by the market price of
Abgenix stock, which has been highly volatile.  Our retained ownership of
Abgenix common stock represents a material portion of the total assets on our
balance sheet. Abgenix stock price has proven to be highly volatile.  The value
of our of Abgenix common stock was approximately $64.1 million at December 31,
2002 versus approximately $301.2 million at December 31, 2001.  Movements in the
price of Abgenix stock, up or down, may exert corresponding influences on the
market price of our stock.

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.  Our stock price has fluctuated during the
past two years between a high close price of $24.80 on December 6, 2001 and a
low close price of $7.00 on March 12, 2003.  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 results;

announcements of technological innovations or new therapeutic products
by us or our competitors;

announcements of changes in governmental regulation affecting us or our
competitors;

announcements of regulatory approval or disapproval of our or our
competitors' products;

developments in patent or other proprietary rights affecting us or our
competitors;

public concern as to the safety of products developed by us or other
biotechnology and pharmaceutical companies;

general market conditions;

fluctuations in the price of Abgenix stock, as described above;

severe fluctuations in price and volume in the stock market in general
(or in the trading of the stock of biopharmaceutical and biotechnology companies
in particular) that are unrelated to our operating performance;

issuances of common stock upon conversion of our Series B preferred
stock;

sales of common stock by us or by existing stockholders; and

the perception that such issuances or sales could occur.Our stockholders may be diluted by the conversion of
outstanding Series B redeemable convertible preferred stock.  As of December
31, 2002, 665 shares of Series B redeemable convertible preferred stock issued
in January 2000 remained outstanding and were convertible into an aggregate of
approximately 654,000 shares of common stock as of that date.  The holders of
the Series B preferred may choose at any time to convert their shares into
common stock. Conversion of the Series B preferred would result in issuance of
additional shares of common stock, diluting existing stockholders.  The number
of shares of common stock issuable upon conversion of the Series B preferred is
determined by dividing the market value of the shares to be converted by the
lower of:




a fixed conversion price of $14.53 per share (subject to antidilution
provisions); or

the average of certain trading prices during the 10 trading days
preceding such date of conversion.The market value of the Series B preferred is based on the
outstanding carrying value from the original issuance plus the deemed dividend
earned over the holding period.  As of December 31, 2002, the aggregate market
value for all outstanding Series B preferred was approximately $7.6 million.
The number of shares of common stock issuable upon conversion of the Series B
preferred, and therefore the dilution of existing investors, would increase as a
result of either an event triggering the antidilution rights of the Series B
preferred or a decline in the market price of our common stock immediately prior
to conversion of the Series B preferred.

In the event the holders of the remaining outstanding Series
B preferred do not convert their shares, the shares will automatically be
converted on January 18, 2005 according to the formula described above.

Our stockholders may be diluted by the exercise of
outstanding stock options or other issuances of our common stock.
Substantially all our outstanding shares of common stock are eligible for sale
in the public market. Issuance of common stock or the exercise of stock options
would dilute existing investors.

We have adopted anti-takeover defenses that could make it
difficult for another company to acquire control of us or limit the price
investors might be willing to pay for our stock.  Certain provisions of our
Certificate of Incorporation, Bylaws, and Delaware law could make it more
difficult for a third party to acquire us, even if doing so would benefit our
stockholders.  These provisions include the adoption of a Stockholder Rights
Plan, commonly known as a "poison pill."  Under the Stockholders
Rights Plan, stockholders of record on August 21, 1995 received one preferred
share purchase right for each outstanding share of our common stock.  In July
2000, we made certain technical changes to amend the plan and extended the term
of such plan until 2010.  The rights are exercisable only if an acquirer
purchases 15 percent or more of our common stock or announces a tender offer for
15 percent or more of our common stock.  Upon exercise, holders other than the
acquirer may purchase our stock at a discount.  The Board of Directors may
terminate the rights plan at any time or under certain circumstances redeem the
rights.  Because the rights may substantially dilute the stock ownership of a
person or group attempting to take us over with out the approval of the Board of
Directors, the plan could make it more difficult for a third party to acquire us
(or a significant percentage of our outstanding capital stock) with out first
negotiating with our Board of Directors regarding such acquisition.  These
provisions and certain provisions of the Delaware General Corporation Law may
have the effect of deterring hostile takeovers or otherwise delaying or
preventing changes in the control or management of Cell Genesys, including
transactions in which our stockholders might otherwise receive a premium over
the fair market value of our common stock.

Risks Related to Our Industry

In order for our products to be offered to the public, they
must undergo extensive clinical testing and receive approval from the Food and
Drug Administration, which could delay or prevent the commercialization of our
products.  Human therapeutic products must undergo rigorous preclinical and
clinical testing and other premarket approval procedures by the FDA and similar
authorities in foreign countries.  Preclinical tests include laboratory
evaluation of potential products and animal studies to assess the potential
safety and efficacy of the product and its formulations.  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 FDA 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.  The developer
of the drug must provide information relating to the characterization of the
product after administration to the patients participating in the clinical
trials.  This requires developing approved assays of the product to test before
and after administration to the patient.  The results of the preclinical testing
and clinical testing, together with chemistry, manufacturing and controls
information, are submitted to the FDA in the form of a new drug application for
a pharmaceutical product, and in the form of a biologics license application for
a biological product, requesting approval to commence commercial sales.

In responding to a new drug application or a biologics
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, and 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.

We are subject to federal, state and local laws and
regulations, and complying with these may cause us to incur significant costs.
We are subject to laws and regulations enforced by the FDA, the California
Department of Health Services, the Tennessee Board of Pharmacy and other
regulatory statutes including:





Occupational Safety and Health Act;

Environmental Protection Act;

Toxic Substances Control Act;

Resource Conservation and Recovery Act; and

other current and potential future federal, state or local laws and
regulations.In particular with respect to environmental laws, product
development activities involve the use of hazardous materials, and we may incur
significant costs as a result of the need to comply with these 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 contamination or injury,
by accident or as the results of intentional acts of terrorists, 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.

Failure to comply with foreign regulatory requirements
governing human clinical trials and marketing approval for drugs and devices
could prevent us from selling our products in foreign markets, which may
adversely affect our operating results and financial condition.  For
marketing outside the United States, 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 competitors may develop therapies for the diseases
that we are targeting that are more advanced or more effective than ours, which
could adversely affect our competitive position.  Competition in the field
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 and oncolytic virus
therapy programs.  Certain of these competitive products are in more advanced
stages of product development and clinical trials. We compete with other
clinical-stage companies and institutions for clinical study participants, which
could reduce our ability to recruit participants for our clinical trials.  Delay
in recruiting clinical study participants could adversely affect our ability to
bring a product to market prior to our competitors. 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.

Reimbursement from third-party payers may become more
restricted in the future, which may reduce demand for our products.  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 agencies;

private health care insurers and other health care payers such as health
maintenance organizations;

self-insured employee plans; and

Blue Cross/Blue Shield and similar plans.There is considerable pressure to reduce the cost of
biotechnology and pharmaceutical products. 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.  Our proposed products,
if successfully developed, may not 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 continuing efforts of governmental and third-party
payers to contain or reduce the costs of healthcare may impair our future
revenues and profitability.  The pricing of our future products may be
influenced in part by government controls.  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.


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.  However, as mentioned under "Liquidity and Capital
Resources" and the "Other Factors Affecting Future Operations"
sections of the Company's Management Discussion and Analysis of Financial
Condition and Results of Operations above, 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 or commodity pricing
risk.  The Company has exposure related to the value of the number of shares of
Abgenix common stock it holds, which was approximately 8.7 million  and  9.0
million shares as of December 31, 2002 and 2001, respectively.

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 these
instruments with Wells Fargo Bank, Sterling Capital Management, JP Morgan Chase
H & Q, Fleet National Bank and General Electric Capital Corporation.

The Company does not currently hold any derivative financial
instruments nor has it entered into hedging transactions or activities.



Interest Rate Sensitivity
                  Principal Amount by Expected Maturity
                  Average Interest Rate(dollars in thousands)


Fair Value
                                                                       2007              December 31,
As of December 31, 2002           2003      2004     2005     2006   Thereafter  Total       2002
                                --------  --------  -------  -------  -------  --------  ----------
Total Investment Securities... $ 66,284  $ 47,251  $22,930  $ 6,747  $ 8,024  $ 151,236  $ 153,129
  Average Interest Rate.........   4.03%     3.67%    4.48%    5.33%    4.61%     4.42%        --

Long-term Debt, including
  Current Portion............. $  9,128  $  9,146  $ 9,119  $ 8,993  $24,444  $ 60,830  $   60,830
  Average Interest Rate (1)...     2.81%     2.81%    2.81%    2.81%    2.81%     2.81%        --

                                                                                         Fair Value
                                                                       2006              December 31,
As of December 31, 2001           2002      2003     2004     2005   Thereafter  Total       2001
                                --------  --------  -------  -------  -------  --------  ----------
Total Investment Securities... $ 66,766  $ 52,082  $43,326  $12,883  $ 2,586  $ 177,643  $ 179,287
  Average Interest Rate.........   1.93%     3.75%    3.92%    4.30%    5.83%     3.08%        --

Long-term Debt, including
  Current Portion............. $    --   $ 12,000  $12,000  $12,000  $24,000  $ 60,000  $   60,000
  Average Interest Rate (1)...      --       2.90%    2.90%    2.90%    2.90%     2.90%        --

(1) Interest rate based upon libor rate index plus a spread of one percent,
and can be reset on a quarterly or semi-annual basis.

Item 8.  Financial Statements and supplementary data

Report of Ernst & Young LLP,
Independent AuditorsThe Board of Directors and Stockholders
   Cell Genesys, Inc.

We have audited the accompanying consolidated balance sheets
of Cell Genesys, Inc. as of December 31, 2002 and 2001, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the three years in the period ended December 31, 2002.  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, 2002 and 2001, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2002, in conformity with accounting principles
generally accepted in the United States.

As discussed in the Note 1 to the consolidated financial
statements, in 2000 the Company changed its method of revenue recognition.


/s/ERNST & YOUNG LLP



Palo Alto, California
   January 21, 2003

CELL GENESYS, INC.
                        CONSOLIDATED BALANCE SHEETS
                     (in thousands, except shares and per share data) 
December 31,
                                                                -------------------------
                                                                   2002          2001
                                                                -----------  ------------
                           ASSETS
Current assets:
  Cash and cash equivalents................................... $    39,072  $     76,722
  Short-term investments......................................      60,555       115,594
  Current portion of restricted cash and investments..........      16,166         6,333
  Receivable from Transkaryotic Therapies, Inc................      15,000            --
  Investment in Abgenix common stock..........................      64,076       301,217
  Prepaid expenses and other current assets...................       1,340        10,603
                                                                -----------  ------------
          Total current assets................................     196,209       510,469

Restricted cash and investments...............................      51,112        60,000
Property and equipment, net...................................     157,215        43,217
Deposits and other assets.....................................       1,312         1,624
                                                                -----------  ------------
                                                               $   405,848  $    615,310
                                                                ===========  ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable............................................ $     3,980  $      1,978
  Accrued compensation and benefits...........................       3,611         2,637
  Deferred revenue............................................       5,871         3,756
  Accrued acquisition and related costs.......................          --         1,535
  Accrued facility exit cost..................................       6,178            --
  Other accrued liabilities...................................       6,870         8,882
  Income tax payable..........................................       4,219        13,094
  Deferred tax liability......................................      23,147       117,808
  Current portion of debt financing...........................       8,889            --
  Current portion of capital leases...........................       5,608            --
                                                                -----------  ------------
          Total current liabilities...........................      68,373       149,690

Non-current portion of debt financing.........................      51,111        60,000
Non-current portion of capital leases.........................      47,584

Commitments

Minority interest in equity of Ceregene.......................          --            96
Redeemable convertible preferred stock, $0.001 per value:
   5,000,000 shares authorized; 665 and 1,569 shares
   issued and outstanding in 2002 and 2001, respectively......       7,632        17,970

Stockholders' equity:
  Common stock, $.001 per value: 80,000,000 shares
    authorized; 36,882,428 and 35,596,445 shares issued
     and outstanding in 2002 and 2001, respectively...........          37            36
  Additional paid-in capital..................................     286,548       274,365
  Accumulated other comprehensive income......................      34,719       176,710
  Accumulated deficit.........................................     (90,156)      (63,557)
                                                                -----------  ------------
          Total stockholders' equity..........................     231,148       387,554
                                                                -----------  ------------
                                                               $   405,848  $    615,310
                                                                ===========  ============See accompanying notes.

CELL GENESYS, INC.
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   (in thousands, except per share data)Year Ended December 31,
                                                    ----------------------------------
                                                      2002        2001         2000
                                                    ----------------------------------
                                                     (in thousands, except per share d


Revenue........................................... $  39,141  $   28,317   $   24,209
Operating expenses:
  Research and development........................    75,138      50,752       30,474
  General and administrative .....................    20,697      11,850        6,984
  Charge (credit) for purchased in-process
   technology.....................................      (186)     18,042           --
                                                    ---------  ----------   ----------
          Total operating expenses................    95,649      80,644       37,458
                                                    ---------  ----------   ----------
Operating loss....................................   (56,508)    (52,327)     (13,249)

Gain on sale of stock of Abgenix, Inc.common stock     2,246         --       239,660
Interest and other income.........................     9,942      18,378       13,558
Interest expense..................................    (1,011)       (500)        (386)
                                                    ---------  ----------   ----------
Income (loss) before minority interest,
   income taxes and cumulative effect of
   change in accounting...........................   (45,331)    (34,449)     239,583
Loss attributed to minority interest..............        96         264           --
                                                    ---------  ----------   ----------
Income (loss) before income taxes and
   cumulative effect of change in accounting .....   (45,235)    (34,185)     239,583
Benefit (provision) for income taxes..............    18,636       5,512      (64,203)
                                                    ---------  ----------   ----------
Income (loss) before cumulative effect of
   change in accounting...........................   (26,599)    (28,673)     175,380
Cumulative effect of change in accounting
   principle, net of taxes........................        --          --       (6,460)
                                                    ---------  ----------   ----------
Net income (loss) ........                         $ (26,599) $  (28,673)  $  168,920

Deemed dividend to preferred stockholders.........       702         785          756
                                                    ---------  ----------   ----------
Income (loss) attributed to common stockholders... $ (27,301) $  (29,458)  $  168,164
                                                    =========  ==========   ==========
Basic income (loss) per common share ............. $   (0.76) $    (0.85)  $     4.99
                                                    =========  ==========   ==========
Diluted income (loss) per common share............ $   (0.76) $    (0.85)  $     4.55
                                                    =========  ==========   ==========
Weighted average shares of common stock
   outstanding -- basic...........................    35,889      34,746       33,716
                                                    =========  ==========   ==========
Weighted average shares of common stock
   outstanding -- diluted.........................    35,889      34,746       36,952
                                                    =========  ==========   ==========

Pro forma amounts assuming the new revenue recognition
    policy was applied retroactively (unaudited)

Income (loss) attributed to common stockholders....                         $ 175,380
Diluted income (loss) per common share.............                         $    4.75

See accompanying notes.

CELL GENESYS, INC.
                  CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                            (in thousands, except share data)Accumulated
                                                            Additional    Other                     Total
                                                  Common     Paid-in  Comprehensive  Accumulated  Stockholders'
                                                   Stock     Capital    Income(loss)   Deficit     Equity
                                                 ---------  ----------  ----------  ---------  -----------
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 gain
    on available for sale securities...........       --          --       31,130        --        31,130
                                                                                               -----------
  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
  Dividend to preferred stockholders...........       --         (756)        --         --          (756)
                                                 ---------  ----------  ----------  ---------  -----------
Balances at December 31, 2000..................        34     256,007     315,021    (34,883)     536,179

  Net loss.....................................       --          --          --     (28,673)     (28,673)
  Change in net unrealized holding gain
    on available for sale securities...........       --          --     (138,311)       --      (138,311)
                                                                                               -----------
  Comprehensive loss...........................                                                  (166,984)
  Issuance of 909,199 shares of common
    stock upon acquisition of Calydon..........         1      16,421         --         --        16,421
  Issuance of 563,476 shares of common
    stock upon exercise of stock options
    and pursuant to the 1992 Employee
    Stock Purchase Plan........................         1       2,722         --         --         2,723
  Dividend to preferred stockholders...........       --         (785)        --         --          (785)
                                                 ---------  ----------  ----------  ---------  -----------
Balances at December 31, 2001..................        36     274,365     176,710    (63,557)     387,554

  Net loss.....................................       --          --          --     (26,599)     (26,599)
  Change in net unrealized holding gain
    on available for sale securities...........       --          --     (141,991)       --      (141,991)
                                                                                               -----------
  Comprehensive loss...........................                                                  (168,590)
  Cancellation of 10,043 shares of common
    stock in settlement of outstanding
    Calydon acquisition........................       --         (186)        --         --          (186)
  Issuance of 148,867 shares of common
    stock upon exercise of stock options
    and pursuant to the 1992 Employee
    Stock Purchase Plan..........................     --        1,202         --         --         1,202
  Issuance of 99,105 shares of common
    stock related to the 1997 Somatix
    acquisition............                           --          396         --         --           396
  Income tax benefit from stock option deduction.     --          196         --         --           196
  Non-employee stock-baed compensation expense...     --          238         --         --           238
  Conversion of 904 preferred shares into
    1,047,503 shares of commons stock............       1      11,039         --         --        11,040
  Dividend to preferred stockholders.............     --         (702)        --         --          (702)
                                                 ---------  ----------  ----------  ---------  -----------
Balances at December 31, 2002.................. $      37  $  286,548  $   34,719  $ (90,156) $   231,148
                                                 =========  ==========  ==========  =========  ===========

See accompanying notes.

CELL GENESYS, INC.
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                     (in thousands)Year ended December 31,
                                                           -------------------------------------
                                                                2002         2001         2000
                                                           -------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)...................................... $   (26,599)     (28,673) $   168,920
  Adjustments to reconcile net income (loss) to net
   cash used by operating activities:
     Depreciation and amortization.......................       4,366        3,410        2,211
     Gain on disposal of property and equipment..........          50           --           --
     Gain on sale of Abgenix common stock..................    (2,246)          --     (239,660)
     Issuance of common stock related to Somatix acquisit         396           --           --
     Charge (credit) for purchased
       in-process technology.......................              (186)      18,042           --
     Non-employee stock based compensation expense.......         238           --           --
  Changes to:
     Prepaid expenses and other current assets...........       9,489      (10,546)         991
     Receivable from Transkaryotic Therapies, Inc........     (15,000)          --           --
     Accounts payable....................................       2,002        1,458         (574)
     Accrued compensation and benefits...................         974          796         (733)
     Deferred revenue....................................       2,115       (1,747)       1,308
     Accrued acquisition and related costs...............      (1,535)       1,535       (1,068)
     Accrued facility exit costs.........................       6,178           --           --
     Other accrued liabilities...........................      (1,799)       9,732         (832)
     Minority interest in equity of subsidiary...........         (96)          96           --
     Income taxes payable................................      (8,677)     (11,726)      21,120
                                                           -----------  -----------  -----------
          Net cash used in operating activities..........     (30,330)     (17,623)     (48,317)
                                                           -----------  -----------  -----------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of short-term investments....................    (235,669)    (333,640)    (347,396)
  Maturities of short-term investments...................          --       20,433       30,844
  Sales of short-term investments........................     290,741      434,652      126,759
  Capital expenditures...................................     (66,074)     (42,188)      (2,373)
  Purchases of restricted cash and investments...........        (945)     (66,333)          --
  Proceeds from disposal of property and equipment.......         107           --           31
  Exercise of Abgenix warrants...........................          --           --         (730)
  Net proceeds from sale of Abgenix common stock.........       2,487           --      243,860
                                                           -----------  -----------  -----------
          Net cash provided by (used in)
            investing activities.........................      (9,353)      12,924       50,995
                                                           -----------  -----------  -----------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of convertible preferred stock..          --           --        8,750
  Proceeds from issuances of common stock................       1,202        2,772        8,517
  Proceeds from long-term debt financing.................         926       60,000            --
  Payments under property and equipment
    financing obligations................................         (95)      (3,098)      (3,498)
                                                           -----------  -----------  -----------
          Net cash provided by financing activities......       2,033       59,674       13,769
                                                           -----------  -----------  -----------
Net increase (decrease)in cash and cash equivalents......     (37,650)      54,975       16,447
Cash and cash equivalents at beginning of year...........      76,722       21,747        5,300
                                                           -----------  -----------  -----------
Cash and cash equivalents at end of year................. $    39,072       76,722  $    21,747
                                                           ===========  ===========  ===========

See accompanying notes

Cell GENESYS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS1.  Organization and Summary of Significant Accounting Policies

Organization and basis of presentation

Cell Genesys, Inc. ("Cell Genesys" or "the
Company") has focused its research and product development efforts on human
disease therapies that are based on innovative gene modification technologies.
The Company's objective is to develop and commercialize cancer vaccines,
oncolytic virus therapies and cancer gene therapies to treat multiple types of
cancers.  Cell Genesys' current clinical programs include GVAX®
cancer vaccines and oncolytic virus therapies.

The consolidated financial statements include the
accounts of Cell Genesys and its wholly-owned and majority- owned subsidiaries.
All significant inter-company balances and transactions have been eliminated.

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 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.

Incentive milestone payments
under collaborative arrangements are recognized as revenue upon the achievement
of the milestone event and upon the agreement between the Company and
collaborative partners.  As such, the incentive milestone payments are
substantially at risk at the inception of the contract, and the values assigned
thereto are commensurate with the milestone achieved.  Upon achievement of an
incentive milestone event, 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.

Amounts received under license agreements relating to the
Company's intellectual property are recognized as revenue upon execution of the
technology licensing agreement, if the Company has no future performance
obligations.

In 2002, Cell Genesys received approximately 66 percent
of its revenue from Transkaryotic Therapies, Inc, and 30 percent of its revenue
from Japan Tobacco.
For 2001 and 2000, Cell Genesys received revenue of approximately 89
percent and 88 percent, respectively, from Japan Tobacco and 11 percent and 12
percent, respectively, from Aventis.

Cell Genesys previously recognized non-refundable license
fees as revenue when received and when all significant contractual obligations
of Cell Genesys relating to the fees had been met.  Effective January 1, 2000,
Cell Genesys changed its method of accounting for non-refundable license fees to
recognize such fees ratably over the research and development period of the
applicable agreement.  Cell Genesys believes the change in accounting principle
is preferable based on guidance provide 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 2001 and 2000 exclusive of
the cumulative effect amount and net of income taxes was to
increase net income by $5.4 million, or $.016 per share,
and $3.3 million or $0.10 per share, respectively, which represents the
cumulative effect amount recognized as revenue in 2001 and 2000 based on the
new accounting method.

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. Computer equipment is depreciated over a life
of three 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, which consist of patents, are amortized using the
straight-line method over the estimated useful lives of the assets, generally 10
years.
Cash, cash equivalents and short-term investments

Cell Genesys places its cash, cash equivalents and short-
term investments, including restricted cash and investments, with high credit
quality United States 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.  All investments are denominated in U.S. dollars.  Short-term
investments include equity securities classified as available-for-sale.  The
Company records its investments at fair market value, based on quoted market
prices.

The Company's debt and equity 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 and other income (loss).  Unrealized holding
gains and losses on securities classified as available-for-sale are recorded in
accumulated other comprehensive income, net of tax.  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 (see Note 6 on fair
value of financial instruments).

Restricted cash and investments relate to the Company's $60
million secured credit agreement with a financial institution (see Note 8 on
commitments and contingencies).

Reclassifications

Certain prior year balances have been reclassified to
conform with the current year presentation.  In 2002, Cell Genesys reclassified
certain cash, cash equivalents and investments related to the collateral
restriction of its debt financing for 2001.  In addition, for 2000, Cell Genesys
reclassified the amount pertaining to the change in accounting principle for
revenue recognition to reflect this amount net of income taxes.

Stock-based compensation

In accordance with the provisions of Statement of
Financial Accounting Standards ("SFAS") 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 25") and related interpretations and
to adopt the "disclosure only" alternative described in SFAS 123.
Under APB 25, when 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.

The following table illustrates, pursuant to SFAS 123, as
amended by SFAS No. 148, the effect on net income (loss) and related net income
(loss) per common share, had compensation costs for stock-based employee compensation
plans been determined based upon the fair value method prescribed under SFAS
123: (see note 10 on stockholder's equity)

Year Ended December 31,
                                            ----------------------------------
                                                 2002        2001        2000
                                            ----------------------------------
                                          (in thousands, except per share data)
Net income (loss)                           $  (26,599) $  (28,673) $  168,920
Deduct:
   Stock-based employee
     compensation expense
      determined under SFAS 123............ $  (14,957)    (11,957)     (6,566)
                                             ----------------------------------
Pro forma net income (loss).................$  (41,556) $  (40,630) $  162,354
                                              ==================================

Basic net income (loss) per common
    share as reported...................... $    (0.76) $    (0.85) $     4.99
Diluted net income (loss) per common
    share as reported...................... $    (0.76) $    (0.85) $     4.55

Basic pro forma net income (loss)
     per common share.......................$    (1.16) $    (1.17) $     4.82
Diluted pro forma net income (loss)
     per common share...................... $    (1.16) $    (1.17) $     4.39

Net income (loss) per share

Basic earnings (loss) per common share is calculated using
the weighted average number of shares of common stock outstanding during the
period, less shares subject to repurchase.  Diluted earnings per share includes
the impact of potentially dilutive securities.  As the Company's potentially
dilutive securities (stock options, warrants, and redeemable convertible
preferred stock) were anti-dilutive for the years ended December 31, 2002 and
2001, they have been excluded from the computation of shares used in computing
diluted net loss per common share for those years.

The following table presents the calculation of basic and
diluted income (loss) per common share (in thousands, except per share
data):

Year ended December 31,
                                                           ----------------------------------
                                                              2002        2001        2000
                                                           ----------------------------------
Net income (loss) attributed to common stockholders...... $  (27,301) $  (29,458) $  168,164
                                                           ==================================
Weighted average shares outstanding:
  Denominator for basic earnings (loss) per common share      35,889      34,746      33,716
  Potential common shares:
     - stock options.......................................       --          --       2,000
     - convertible preferred stock.........................       --          --       1,236
                                                           ----------------------------------
  Denominator for diluted earnings (loss) per share......     35,889      34,746      36,952
Net income (loss) per commons share:                       ==================================
  Basic...................................................$    (0.76) $    (0.85) $     4.99
                                                          =========== =========== ==========
  Diluted.................................................$    (0.76) $    (0.85) $     4.55
                                                           ==================================

Use of estimates
The preparation of financial statements in conformity
with accounting principles generally accepted in the United States 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 (loss)

Comprehensive income (loss) is comprised of net income (loss)
and other comprehensive income (loss).  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 included in other comprehensive
income (loss), net of tax


Year ended December 31,
                                                           ----------------------------------
(in thousands)                                                2002        2001        2000
                                                           ----------------------------------
Net income (loss)........................................ $  (26,599) $  (28,673) $  168,920
Other comprehensive income (loss):
   Increase (decrease) in unrealized gain on investments,
    net of change in tax of approximately ($94.7) million,
   ($90.2) million and $(71.0) million in 2002,
    2001, and 2000, respectively.........................   (139,973)   (133,531)    174,926
Less: reclassification adjustment for gains recognized
      in income (loss), net of tax effect of
      approximately $1.3 million, $3.2 million, and $95.9
      million in 2002, 2001, and 2000, repectively.......     (2,018)     (4,780)   (143,796)
                                                           ----------------------------------
Comprehensive income (loss)...............................$ (168,590) $ (166,984)    200,050
                                                           ==================================


Segment reporting
Our operations are treated as one operating segment, as we
report profit and loss information only on an aggregate basis to our chief
operating decision-makers.

Recent accounting pronouncements

Business combinations

In July 2001, the Financial Accounting Standards
Board ("FASB") issued Statements of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations" and SFAS No. 142,
"Goodwill and Other Intangible Assets."  SFAS 141 requires that all
business combinations be accounted for by the purchase method of accounting and
changes the criteria for recognition of intangible assets acquired in a business
combination.  The provisions of SFAS 141 apply to all business combinations
initiated after June 30, 2001, including the Company's acquisition of Calydon,
Inc. in September 2001.  SFAS 142 requires that goodwill and intangible assets
with indefinite useful lives no longer be amortized; however, these assets must
be reviewed at least annually for impairment.  Intangible assets with finite
useful lives will continue to be amortized over their respective useful lives.
The standard also establishes specific guidance for testing for impairment of
goodwill and intangible assets with indefinite useful lives.  As the Company
does not have goodwill recorded from previous acquisitions, the transitional
impairment test was not applicable and the adoption of SFAS 142 did not impact
the Company's consolidated financial condition or results of operations.

Asset retirement obligations

In August 2001, the FASB issued SFAS No. 143,
"Accounting for Asset Retirement Obligation."  SFAS 143 addresses
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated retirement costs.
The adoption of SFAS 143 in 2002 did not impact the Company's consolidated
financial condition or results of operations.

Asset impairments

In October 2001, the FASB issued SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets."
SFAS 144 addresses financial accounting and reporting for the impairment of
long-lived assets and for long-lived assets to be disposed of.   The adoption of
SFAS 144 in 2002 did not impact the Company's consolidated financial position or
results of operations.

Exit or disposal activities

In June 2002, the FASB issued SFAS 146,
"Accounting for Costs Associated with Exit or Disposal Activities"
which addresses accounting for restructuring, discontinued operations, plant
closing, or other exit or disposal activity.  SFAS 146 requires companies to
recognize costs associated with exit or disposal activities when they are
incurred rather than at the date of a commitment to an exit or disposal plan.
SFAS 146 is to be applied prospectively to exit or disposal activities initiated
after December 31, 2002, and earlier adoption is encouraged.  The Company
intends to adopt SFAS 146 as of January 1, 2003.


Guarantor's accounting and disclosure requirements for
guarantees, including direct guarantees of indebtedness of others


In November 2002, the FASB issued Interpretation No.
45, "Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Other" ("The Interpretation").
The Interpretation applies to contracts or indemnification agreements that
contingently require the guarantor to make payments to the guaranteed party
based on changes in an underlying that is related to an asset, liability, or an
equity security of the guaranteed party.    The Company adopted the disclosure
provisions of this Interpretation in 2002 and does not expect the adoption of
the recognition and measurement requirements to impact Cell Genesys' financial
position or results of operations.

Revenue arrangements with multiple deliverables

In November 2002, the FASB issued Emerging Issues Task
Force ("EITF") Issue No. 00-21, "Revenue Arrangements with
Multiple Deliverables."  EITF 00-21 addresses certain aspects of the
accounting by a company for arrangements under which it will perform multiple
revenue-generating activities.  EITF 00-21 addresses when and how an arrangement
involving multiple deliverables should be divided into separate units of
accounting.  EITF 00-21 provides guidance with respect to the effect of certain
customer rights due to company nonperformance on the recognition of revenue
allocated to delivered units of accounting.  EITF 00-21 also addresses the
impact on the measurement and/or allocation of arrangement consideration of
customer cancellation provisions and consideration that varies as a result of
future actions of the customer or the company.  Finally, EITF 00-21 provides
guidance with respect to the recognition of the cost of certain deliverables
that are excluded from the revenue accounting arrangement.  The provisions of
EITF 00-21 will apply to revenue arrangements entered into in fiscal periods
beginning after June 15, 2003.  Cell Genesys is currently evaluating the effect
that the adoption of EITF 00-21 will have on its financial condition and results
of operations.

Consolidation of variable interest entities

In January 2003, the FASB issued Financial Interpretation
No. 46, "Consolidation of Variable Interest Entities" ("FIN
46").  The consolidation requirements of FIN 46 apply immediately to
variable interest entities created after January 31, 2003.  The consolidation
requirements apply to older entities in the first fiscal year or interim periods
beginning after June 15, 2003.  Certain of the disclosure requirements apply in
all financial statements issued after January 31, 2003, regardless of when the
variable entity was established.  Cell Genesys does not have variable interest
entities and does not expect the adoption of FIN 46 to have a material effect on
its financial condition or results of operations.

2.  Statement of Cash Flows

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


-------------------------------------
                                                              2002         2001         2000
                                                           -------------------------------------
Cash paid for interest.................................   $     1,762  $       500  $       386
Cash paid (refunded) for income taxes..................   $   (10,161) $    (6,487) $    40,000

The Company capitalized interest expense of $751,000 in 2002 as part of the
construction costs in connection  with its Hayward, California manufacturing
facility.

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

-------------------------------------
                                                              2002         2001         2000
                                                           -------------------------------------
Facility, furniture and equipment acquired
  under lease obligations.................................$    52,361        --           --

3.  Investment in Abgenix

Since 1996, the Company has maintained an investment in
Abgenix, Inc. ("Abgenix").  On July 2, 1998, Abgenix completed an
initial public offering ("IPO"), reducing Cell Genesys' percentage
ownership to approximately 40 percent.  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 classified as available-
for-sale and carried at fair value

During 2000, the Company sold shares of Abgenix common
stock resulting in $243.9 million in net proceeds.  During 2001, the Company did
not sell any of the Abgenix common stock.

In 2002, the Company sold approximately 260,000 shares
of Abgenix stock resulting in $2.5 million in net proceeds and further reduced
the Company's ownership to approximately 9.9 percent.  Based on Abgenix common
stock's market value of $7.37 per share as of December 31, 2002, the total
carrying amount of the Company's investment in Abgenix was $64.1 million.

4.  Acquisitions

In January 2001, the Company acquired the principal
operating assets of Chiron Corporation's gene therapy business located in San
Diego, California, at a cost of approximately $4.8 million.  The transaction was
accounted for as a purchase.  The cost of the acquisition was allocated among
the principal assets, leasehold improvements and machinery and equipment.  The
allocation was based on information on construction costs of similar type
facilities for leasehold improvements and machinery and equipment.  The $4.8
million purchase price was allocated entirely to tangible assets and no material
intangible assets were purchased.
In January 2001, the Company created
a new subsidiary, Ceregene, Inc., ("Ceregene") through the acquisition
of Neurologic Gene Therapeutics, a private San Diego-based start-up company.
The Company contributed $10 million in cash and access to technology and patents
in the central nervous system ("CNS") gene therapy area, in exchange
for approximately 60 percent ownership of the new company.  Ceregene's financial
statements are consolidated into the operations of the Company.
In September 2001, the Company completed the acquisition of
Calydon, Inc., a private biotechnology company focused on the treatment of
cancer using genetically engineered oncolytic virus therapies, for approximately
$17.4 million in Cell Genesys stock and other consideration and assumption of
approximately $2.6 million in liabilities, for a total purchase price of
approximately $20 million.  The acquisition provided Cell Genesys with a third
product platform in addition to cancer vaccines and cancer gene therapies as
well as a product candidate, CG7870, for early-stage prostate cancer.  The
Company engaged the services of an outside consulting firm to value the acquired
assets. In relation to the acquisition, the Company recognized approximately an
$18 million charge for in-process research and development and
approximately $1 million in intangible assets related to
patents.  The acquisition was accounted for as a purchase business combination
using the guidance contained in Statement of Financial Accounting Standards No.
141 ("SFAS 141") issued by the Financial Accounting Standards Board
("FASB").

In 2002, Cell Genesys recorded a credit of $186,000 to the
original purchased in-process technology charge in 2001  as a result of the
claim made by Cell Genesys against the portion of the purchase price held in
escrow  The claim resulted from undisclosed liabilities assumed in the purchase.
Additionally in 2002, Cell Genesys recorded a non-cash purchase price adjustment
in the amount of $396,000 related to common stock issued to former shareholders
of a subsidiary of Somatix, Inc.

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.  Through December 31, 2002, the Company has
received $41.6 million in research and development funding, $22 million for
product milestone achievements, $2.5 million anniversary payment and $8.5
million in manufacturing facility build-out cost reimbursement.  In October
2002, full commercial rights to GVAX® lung cancer vaccines
reverted to Cell Genesys following the termination of the license agreement with
JT, resulting in Cell Genesys' reacquisition of full commercial rights to the
entire GVAX® cancer vaccine portfolio.
Gene activation technology licenses

Cell Genesys executed a license agreement with Aventis in
February 1997 for gene-activated erythropoietin ("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 the second
undisclosed protein.  The agreement provides for up to $26 million in milestone
payments and fees, in addition to any royalties on future sales of gene-
activated EPO anywhere in the world. As of December 31, 2002, Cell Genesys had
received approximately $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
("TKT").  The Company recognized revenue of $1.1 million, $3.2 million
and $2.8 million in 2002, 2001 and 2000, respectively, pursuant to the
agreement.

In June of 2002, Cell Genesys completed a license agreement
with TKT under which Cell Genesys exclusively licensed intellectual property
relating to the development of gene-activated EPO.  In exchange, Cell Genesys
received an upfront license fee of $26 million, which was to have been comprised
of $11 million in cash and $15 million in shares of TKT common stock.  As per an
amendment to the original license agreement substituting a cash payment in lieu
of the TKT stock, Cell Genesys received a cash payment of $15 million in January
2003. In addition, Cell Genesys may receive additional payments, in an aggregate
amount of up to $17 million in cash and TKT common stock, upon the achievement
of certain patent-related milestones, but Cell Genesys can make no assurances
that any of these patent-related milestones will ever be achieved or that any
additional payments will be received.  No ongoing royalty payments will be made
by TKT to Cell Genesys under the terms of this agreement.
Gene therapy rights agreement with Abgenix

In November 1997, Cell Genesys entered into a gene
therapy rights agreement (the "GTRA") with Abgenix.  The GTRAprovides
Cell Genesys with certain rights to Abgenix's XenoMouse®
technology in the field of gene therapy for two antigen targets per year.  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 Cell Genesys a portion of the cash milestone payments
and royalties resulting from any products in the field of gene therapy.







Other collaborations
Cell Genesys has licensing
agreements relating to its proprietary viral vector technologies.  These
collaborations enable Cell Genesys to either acquire commercial rights to
therapeutic genes or to receive monetary reimbursement for providing viral
vector technologies to companies that commercialize these technologies for the
research market. Examples include agreements with the Clontech division of
Becton Dickinson and Invitrogen.  In 2002, the Company discontinued its research
collaboration with EntreMed, Inc. and Rigel, Inc., which focused on
antiangiogenesis gene therapy for cancer.

In December 2002, the Company announced
the formation of a three-year research collaboration with VectorLogics, Inc., in
which Cell Genesys' oncolytic virus therapies will be evaluated in combination
with novel methods to further enhance the viruses' cell targeting abilities.

6.  Fair Value of Financial Instruments
The following is a summary of the Company's available-
for-sale securities at December 31, 2002 and 2001, respectively (in
thousands):

GROSS
                                   AMORTIZED UNREALIZED     ESTIMATED
                                     COST       GAINS       FAIR VALUE
                                   --------  -----------   ------------
2002
Commercial paper..................$ 15,654  $      --    $     15,654
Corporate notes.................... 67,595          810        68,405
Municipal bonds.................... 11,068           70        11,138
U.S. government and its agencies... 56,919        1,013        57,932
Abgenix common stock.............    8,046       56,030        64,076
                                   --------  -----------  -----------
Short-term investments........... $159,282  $    57,923  $    217,205
                                   ========  ===========  ===========


Classified as:
Cash equivalents................. $ 32,574  $      --    $     32,574
Restricted cash and investments.... 60,000         --          60,000
Short-term investments...........   58,662        1,893        60,555
Abgenix common stock...............  8,046       56,030        64,076
                                   --------  -----------  -----------
                                  $159,282  $    57,923  $    217,205
                                   ========  ===========  ===========

                                                GROSS
                                   AMORTIZED UNREALIZED    ESTIMATED
                                     COST       GAINS      FAIR VALUE
                                   --------  -----------  -----------
2001
Commercial paper..................$ 70,944  $       109  $     71,053
Corporate notes.................... 53,864        1,085        54,949
U.S. government and its agencies... 52,836          449        53,285
Abgenix common stock.............    8,287      292,930       301,217
                                   --------  -----------  -----------
Short-term investments........... $185,931  $   294,573  $    480,504
                                   ========  ===========  ===========


Classified as:
Cash equivalents................. $  3,693  $      --    $      3,693
Restricted cash and investments.... 60,000         --          60,000
Short-term investments...........  113,951        1,643       115,594
Abgenix common stock...............  8,287      292,930       301,217
                                   --------  -----------  -----------
                                  $185,931  $   294,573  $    480,504
                                   ========  ===========  ===========

The net unrealized holding gains on these securities at
December 31, 2002 and 2001 are $57.9 million and $294.6 million, respectively,
and are principally unrealized gains on the investment of Abgenix common stock.
Gross realized gains for sale of investment securities were $3.4 million,  $8.0
million, and $239.7 million for the years ended December 31, 2002, 2001, and
2000, respectively.  The realized gain in 2000 primarily resulted from the sale

of Abgenix common stock.  In 2002, the Company sold approximately 260,000
shares of Abgenix stock, resulting in net proceeds of $2.5 million. The Company
did not sell any Abgenix common stock in 2001.

The amortized cost and estimated fair value of available-for-sale debt
securities at December 31, 2002, by contractual maturity, are shown below (in
thousands):

AMORTIZED    ESTIMATED
                                                COST      FAIR VALUE
                                             -----------  -----------
Due in one year or less.................... $    66,284  $    66,489
Due in one to seven years..................      84,951       86,640
                                             -----------  -----------
                                            $   151,236  $   153,129
                                             ===========  ===========


7.  Property and Equipment

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

`2002         2001
                                                          ------------------------
Furniture and equipment under capital lease............. $       745  $        --
Machinery, furniture and equipment......................      24,935       23,003
Leasehold improvements .................................      19,402       12,945
Construction in process under capital lease.............      52,617           --
Construction in process.................................      89,454       34,856
                                                          ------------------------
                                                             187,153       70,804
Accumulated depreciation and amortization...............     (29,938)     (27,587)
                                                          ------------------------
                                                         $   157,215  $    43,217
                                                          ========================`

The increase in the construction in process reflects the
leasehold improvements in connection with the Hayward facility.



8.  Debt and Leases

Capital Lease

During 2002, Cell Genesys amended the facility lease
previously classified as an operating lease for its new headquarter facilities
in South San Francisco, California requiring the Company to fund the costs of
certain structural components of the facility.  As a result, Cell Genesys is
considered, for accounting purposes, to be the owner of the construction
project, requiring the Company to account for the lease as a capital, lease
obligation.  Approximately $52.4 million of property and equipment assets, as
well as capital lease liabilities have been recorded on the consolidated balance
sheet at December 31, 2002.  The future cash payments under the lease obligation
were not impacted by the amendment.



In 2002, Ceregene entered into capital lease obligations to
fund the acquisition of property and equipment.

Operating Leases

The Company leases certain of its facilities and
equipment under non-cancelable operating leases.  The leases, including the
Hayward facilities, Foster City facilities, San Diego facilities, and the
Memphis facility, expire at various
dates through 2017 and some contain options for renewal. Rent
expense under operating leases was $9.6 million in 2002, $7.9 million in 2001
and $2.0 million in 2000.  The Company moved to the South San Francisco facility
in March 2003 and expects to sublease its facilities in Foster City.  In
December 2002, the Company recorded a lease exit cost to general and
administrative expense in the amount of approximately $6.2 million in
association with the estimated lease obligation related to the Foster City
facilities.  The lease exit costs is based on current market assumptions for
lease rental rates, as well as the amount of time needed to sublease the
facility.  These estimates will be adjusted as necessary based on the Company's
ability to sub-lease the facilities and then current market conditions.  No
payments have been made to offset this obligation as of December 31, 2002. The

lease agreements for the Foster City facilities are expected to continue through
the contractual termination of January 2006.



In 2002, Cell Genesys recorded a deferred rent liability
in connection with the rent escalation clauses of its new operating leases for
the Hayward facility.  The rent escalation clauses

represent the annual increase in rent according to the lease agreements for each
facility.



Property and equipment financing



In December 2001, the Company completed a $60 million asset-
backed debt financing in connection with the construction of the Company's
manufacturing facility in Hayward, California. The financing obligation is
secured by liquid financial instruments, including cash and marketable
securities, which are classified as restricted cash and investments on the
consolidated balance sheet.  Under the terms of the obligation, the Company is
required to meet various financial reporting covenants with which it was in
compliance at December 31, 2002.

The $60 million asset-backed debt
financing entered in connection with the construction of the Company's
manufacturing facility in Hayward, California. For 2002, the interest rate
was LIBOR
(London InterBank Offering Rate) plus 1.0 percent and a term of six years.
In January 2003, the interest rate was reduced to Libor plus 0.75 percent.
Based upon the floating rate nature of this debt financing, the carrying
value approximates the fair value. Cell
Genesys paid only interest for the first year, followed by quarterly payments
and approximately a 30 percent balloon payment at the end of the six-year
period.



Future minimum payments under non-cancelable operating
leases, capital leases and debt financing at December 31, 2002, were (in
thousands):

`Operating     Capital       Debt
                                               Leases       Leases      Financing
                                             -------------------------------------
Years ending December 31:
  2003..................................... $    10,699  $     5,514  $    10,532
  2004.....................................      10,822        6,171       10,275
  2005.....................................      11,168        6,332       10,017
  2006.....................................       4,410        6,406        9,759
  2007 and beyond..........................      18,127       87,289       25,057
                                             -----------  -----------  -----------
  Total minimum payments (1)............... $    55,226  $   111,712  $    65,639
                                             ===========

Less Amount representing interest
     and executory costs...................                 ($58,520)      (5,639)
                                                          ------------------------
Present value of future debt payments................... $   $53,192  $    60,000
                                                          ------------------------
Less: Current portion of future payments...                   (5,608)      (8,889)
                                                          ------------------------
Non-current portion of payments.............             $    47,584  $    51,111
                                                           ========================`

* Total operating lease commitments include rent payments for
the Company's Foster City location of $16.8 million, of which
$6.2 million was accrued as of December 31, 2002 as part of the
estimated facility exit costs associated with the Company's move to the South
San Francisco, California headquarters in March 2003.



9.  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 for
aggregate proceeds of $20 million.  As of November 2002, all shares of Series B
preferred under this placement have been converted into common stock of Cell
Genesys.  Each Series B preferred share was 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 10 trading days preceding a conversion.

Investors in Cell Genesys' preferred stock in 1997 were
initially granted a call option, triggered upon certain conditions, to purchase
up to an additional $10 million of Series B preferred stock.  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 such call
options for these shares.  The call option right, which was available under the
term 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 number of shares of common stock issuable upon
conversion of theses shares of Series B preferred is determined by dividing the
market value of the shares to be converted by the lower of a fixed conversion
price of $14.53 per share (subject to antidilution provisions); or the average
of certain trading prices during the 10 trading days preceding such date of
conversion.



In August 2002, 210 shares of these 875 Series B
preferred stock were converted  into 216,961 shares of the Company's common
stock at the then-effective conversion price of $10.895 per share.

As of December 31, 2002, 665 shares
remained outstanding and were convertible into aggregate of approximately
654,000 shares of common stock, and the aggregate market value for all
outstanding Series B preferred stock was approximately $7.6 million as of that
date.  The number of shares of common stock issuable upon conversion of the
Series B preferred, and therefore the dilution of existing investors, would
increase as a result of either an event triggering the antidilution rights of
the Series B preferred or a decline in the market price of our common stock
immediately prior to conversion of the Series B preferred.



The preferred stock bears a dividend of 5 percent,
payable in kind upon conversion.  If Cell Genesys 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 Cell Genesys or delisting of Cell Genesys stock.  The preferred stock
is non-voting.



In the event the holders of the remaining outstanding Series
B preferred do not elect to convert their shares prior to January 18, 2005, the
shares will automatically convert.



10.  Stockholders' Equity

Stock Option Plans

Under the Cell Genesys 1989, 1992 and
1998 Incentive Stock Option Plans ("the ISO Plans"), 15,877,858 shares
of common stock were authorized for issuance as of December 31, 2002.  The 1992
ISO Plan was retired in 2002 and 4,273,354 shares expired. The ISO Plans provide
for the issuance of common stock and granting of options for common stock to
employees, officers and consultants of the Company.  Cell Genesys generally
grants options to purchase shares of common stock for issuance under the ISO
Plans at no less than the fair market value of the stock as of the date of grant
Options granted under the ISO Plans have a maximum term of 10 years and
generally vest over four years at the rate of 25 percent one year from the grant
date and 1/48 monthly thereafter.  As of December 31, 2002, the number of shares
reserved for future issuance was 3,964,176.



Under the
Company's 2001 Non-Statutory Option Plan ("2001 Plan"), 5,000,000
shares of common stock have been authorized for issuance as of December 31,
2002.  The 2001 Plan provides for the issuance of common stock and granting of
options for common stock to employees (excluding executive officers) and
consultants of the Company.  The Company generally grants options to purchase
shares of common stock for issuance under the 2001 Plan at no less than the fair
market value of the stock as of the date of grant.  Options granted under the
2001 Plan have a maximum term of 10 years and generally vest over four years at
the rate of 25 percent one year from the grant date and 1/48 monthly thereafter.
As of December 31, 2002, the number of shares reserved for future issuance was
4,992,902.

Under the Company's 2001 Non-Employee
Directors Stock Option Plan ("the DIR Plan"), 300,000 shares of common
stock have been authorized for issuance as of December 31, 2002.  The DIR Plan
provides for the issuance of common stock and granting of options for common
stock to non-employee directors of the Company.  The Company grants options to
purchase common stock for issuance under the DIR Plan at no less than the fair
market value of the stock as of
the date of grant.  Options granted under the DIR Plan have a
maximum term of 10 years.  Each non-employee director is automatically granted
an option to purchase 30,000 shares upon initial appointment or election to the
Board and an option to purchase 7,500 shares each year thereafter.  Stock
options granted upon appointment or election to the Board vest at the rate of 25
percent annually on each anniversary of the date of grant. Subsequent grants for
continued service on the Board vest fully on date of grant.  As of December 31,
2002, the number of shares reserved for future issuance was 300,000.

The following table summarizes information about the plans (share numbers in
thousands):

`Outstanding Options
                                                    -----------------------------
                                         Shares      Number of    Weighted Average
                                        Available      Shares     Exercise Price
                                       -----------  ------------  ---------------
Balances, December 31, 1999..........       4,611         4,345  $          6.10
     Authorized......................       1,500            --                --
     Granted.........................        (792)          792  $         23.64
     Exercised.......................         --         (1,431) $          5.69
     Expired.........................        (118)           --                --
     Forfeited.......................         398          (398) $          7.81
                                       -----------  ------------
Balances, December 31, 2000..........       5,599         3,308  $         10.30
     Authorized......................       2,300            --               --
     Granted.........................      (1,834)        1,834  $         18.95
     Exercised.......................          --          (415) $          5.13
     Expired.........................        (178)           --               --
     Forfeited.......................         281          (281) $         17.23
                                       -----------  ------------
Balances, December 31, 2001..........       6,168         4,446  $         13.91
     Authorized......................       3,000            --               --
     Granted.........................      (1,807)        1,807  $         14.14
     Exercised.......................          --           (83) $          5.16
     Expired.........................      (4,273)           --               --
     Forfeited.......................         408          (408) $         18.09
                                       -----------  ------------
Balances, December 31, 2002..........       3,496         5,762  $         13.82
                                       ===========  ============

Exercisable at December 31, 2002..................        3,114  $         11.66
                                                    ============

Exercisable at December 31, 2001..................        2,197  $          9.48
                                                    ============

Exercisable at December 31, 2000..................        1,761  $          5.92
                                                    ============

Weighted average fair value of options granted during 2002...... $          8.21
Weighted average fair value of options granted during 2001...... $         14.26
Weighted average fair value of options granted during 2000...... $         18.34`

The following table summarizes information about stock options outstanding at
December 31, 2002:

`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
------------------ ----------- ------------  ---------  -----------  ---------
  $3.50 -   $5.88       1,138          5.4  $   $4.92        1,133  $   $4.91
  $6.44 -  $12.88       1,342          7.1       9.81          774       8.77
 $13.03 -  $16.00       1,330          9.1      15.10          302      15.21
 $16.06 -  $19.88       1,166          8.2      18.46          507      18.66
 $20.13 -  $42.63         786          8.1      24.49          398      24.83
                   -----------                          -----------
                        5,762                                3,114
                   ===========                          ===========`

Employee Stock Purchase Plans

The 1992 Employee Stock Purchase Plan ("1992
plan") expired in 2002. A total of 650,000 shares of common stock had been
reserved for issuance under the 1992 Plan.  As of December 31, 2002, 620,411
shares had been issued pursuant to the 1992 Plan and 29,589 shares expired.



The 2002 Employee Stock Purchase Plan ("the Purchase
Plan") was approved by shareholders in June 2002. This 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 200,000
shares of common stock have been reserved for issuance under the Purchase Plan.
This plan also allows for annual increases in the number of shares reserved for
issuance under the Purchase plan to be added on the first day of each of the
Company's fiscal years beginning in 2003, equal to the lesser amount of (a)
100,000 shares, (b) 1/2 percent of the outstanding shares on such date, or (c) an
amount determined by the board of directors.  The first purchase under the
Purchase Plan  is scheduled for February 3, 2003. As of December 31, 2002, no
shares have been issued pursuant to the plan.



Pro forma information

Pro forma information regarding net loss and net loss per
share is required by SFAS 123, and has been determined as if the Company had
accounted for options granted under its employee stock option plans and the
Purchase Plan under the fair value method of SFAS 123 (see Note 1. Organization
and Summary of Significant Accounting Policies).
The fair value of the
applicable options and shares was estimated at the date of grant using a Black-
Scholes option pricing model with the following assumptions for 2000, 2001 and
2002, respectively: risk-free interest rates of 6.14 percent, 4.08 percent and
1.70 percent; no dividend yields; volatility factors of the expected market
price of the Company's common stock of 1.0, 1.0 and .79; and an expected life of
the option of five, five and three years, respectively, under the stock option
plan and 0.5 years for shares issued 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



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 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.

Shares reserved



At December 31, 2002, the Company has reserved shares of
common stock for potential future issuance consisting 3,446,202 upon conversion
of preferred stock; and 9,457,078 for exercises under the employee stock option
plans or the stock purchase plan.

Non-employee stock-based compensation

In 2002, Cell Genesys recorded a charge for non-employee
stock-based compensation of $238,000 related to grants of stock options to
consultants, based upon the fair value of the vested portion of the grants.
Additional compensation will be recorded in future periods for the remaining
unvested portions of the grants.

11.    Income Taxes

The  benefit (provision) for income taxes primarily represents the
estimated refund available from the carryback of losses to offset taxable income
in 2000, and consists of the following (in thousands):

`Year ended December 31,
                                            2002        2001        2000
                                       ----------  ----------  ----------
Current:
Federal.............................. $   10,286  $    4,262  $  (52,707)
State................................        --          --      (15,196)
                                       ----------  ----------  ----------
                                          10,286       4,262     (67,903)

Deferred:
Federal..............................      8,350       1,250       3,700
State................................         --         --          --
                                       ----------  ----------  ----------
                                           8,350       1,250       3,700
Benefit (provision) for income taxes. $   18,636  $    5,512  $  (64,203)
                                       ==========  ==========  ==========


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

                                                   December 31,
                                            2002        2001        2000
                                       ----------  ----------  ----------
Tax at U.S. statutory rate of 35%.....$   15,832      11,965     (83,854)
State taxes, net of federal benefit....      --          --       (9,877)
Net operating losses utilized
   (not benefited).....................    7,576      (1,177)     25,585
Change in valuation allowance..........   (9,170)      1,250       3,700
Research and development tax
    credits utilized...................    4,350         --        1,300
In-process research and development....       74      (6,315)        --
Other..................................      (26)       (211)     (1,057)
                                       ----------  ----------  ----------
Benefit (provision) for income taxes. $   18,636  $    5,512  $  (64,203)
                                       ==========  ==========  ==========`

As of December 31, 2002, the Company had net operating loss
carryforwards for federal income tax purposes of approximately $65 million,
which will expire on various dates beginning in 2011 through 2021, if not
utilized.  The federal R&D tax credits of $2.5 million will expire on
various dates beginning in 2018 through 2021.  As of December 31, 2002, the net
operating loss for state income tax purposes of $15 million will expire on
various dates beginning with 2004 through 2001.  The state R&D tax credits
of $3.6 million do not expire.

Utilization of the net operating losses
and credits carryforwards 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.

Deferred income taxes reflect the net tax effects of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax liabilities are as follows
(in thousands):

`December 31,
                                                               ----------------------
Deferred Tax Assets:                                              2002        2001
                                                               ----------  ----------
Net operating loss carryforwards............................. $   23,400  $   15,000
Research credit carryforwards................................      4,850         500
Capitalized research and development.........................      2,310       1,000
Other accruals and reserves..................................      5,910       2,450
                                                               ----------  ----------
Net deferred tax assets......................................     36,470      18,950
Valuation allowance .........................................    (23,170)    (14,000)
                                                               ----------  ----------
Net deferred tax assets...................................... $   13,300  $    4,950
                                                               ----------  ----------

Deferred Tax Liabilities:
Unrealized gain on investment in Abgenix......................$  (23,440) $ (122,758)
                                                               ----------  ----------
Net deferred tax liability....................................$  (10,140) $ (117,808)
                                                               ==========  ==========`

Realization of deferred tax assets is
dependent upon future earnings, if any, the timing and amount of which are
uncertain.  The valuation allowance decreased by $9.2 million in 2002 and
increased by $9.3 million and $3.7 million during 2001 and 2000, respectively.

12.   401(k) Plan

Cell Genesys sponsors a defined-contribution savings
plan under Section 401(k) of the Internal Revenue Code covering all full time
employees ("Cell Genesys 401K Plan").  Participating employees may
contribute up to the annual Internal Revenue Service contribution limit.  The
Cell Genesys 401K Plan also provides for employer matching contributions up to a
limit of $3,000.  The Cell Genesys 401K Plan is intended to qualify under
Section 401 of the Internal Revenue Code so that contributions by the employees
or by Cell Genesys, and income earned on the contributions, are not taxable to
employees until withdrawn from the plan.  Contributions by Cell Genesys are
deductible by Cell Genesys when made.  At the discretion of each participant,
the assets of the Cell Genesys 401K Plan are invested in any of  12 different
investment options.



In January 2001, the board of directors of Cell
Genesys approved the matching contribution.  The matching contribution is
invested in the investment options selected by the employee for their
contributions.  The matching contributions vest ratably over three years.  The
matching contributions for 2002 and 2001 were $777,000 and $625,000,
respectively.





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 2003 Annual Meeting of Stockholders to be filed with the
Securities and Exchange Commission within 120 days after the end of the
Company's 2002 fiscal year (the "2003 Proxy Statement").

(b) The information required by this Item concerning the Company's executive
officers is set forth in the section entitled "Executive Officers" at
the end of 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 2003 Proxy Statement.



Item 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The information required by this item regarding security
ownership of certain beneficial owners and management, as well as equity
compensation plans, is incorporated by reference to the information set forth in
the sections "Beneficial Owners and Management's Ownership of Cell Genesys
Stock" and "Equity Compensation Plan Information" in our 2003
Proxy Statement.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information required by this Item is incorporated by reference to the
Company's 2003 Proxy Statement.

Item 14.  DISCLOSURE CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.

Based on their evaluation of our disclosure controls and
procedures, as that is defined by Rule 13a-14(c) promulgated under the
Securities Exchange Act of 1934, within 90 days of the filing date of this
report, our chief executive officer and our chief financial officer have
concluded that our disclosure controls and procedures are effective in ensuring
that all material information required to be included in this annual report and
on Form 10-K has been made known to them in a timely fashion.



Changes in internal controls.

There have
been no significant changes in our internal controls or in other factors that
could significantly affect these controls subsequent to the date of their
evaluation, nor were any corrective actions required to significant deficiencies
and material weaknesses subsequent to that date.



Item 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-
K

(a) 1. Index to Financial Statements

Consolidated Balance Sheets at December 31, 2002 and 2001

Consolidated Statements of Operations for the years ended December 31, 2002,
2001 and 2000

Consolidated Statement of Stockholders' Equity for the years ended December
31, 2002, 2001 and 2000

Consolidated Statements of Cash Flows for the years ended December 31, 2002,
2001 and 2000

Consolidated Notes 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

`Exhibit
  Number   Note                         Exhibit Description
-----------------------------------------------------------------------------------

Number     Note Description
     2.1   (7)Agreement and plan of merger and reorganization, dated as of January 12,
              1997, among Cell Genesys, S Merger Corp. and Somatix Therapy Corporation.
     2.2  (10)Asset Purchase Agreement dated January 8, 2001 between Cell Genesys and Chiron
              Corporation, pursuant to which Cell Genesys purchased operating assets of
              Chiron Corporation's gene therapy operations.
     2.3  (11)Series A Preferred Stock Purchase Agreement dated January 10, 2001, pursuant to
              which Cell Genesys purchased shares of Series A Preferred Stock of Ceregene, Inc.
     2.4  (16)Agreement and Plan of Reorganization dated as of August 1, 2001 by and among
              Cell Genesys, Satellite Acquisition Corporation, Calydon, Inc., Kenneth Socha
              as shareholder representative (with respect to Articles VII and IX only) and
              Chase Manhattan Bank and Trust Company, N.A., as escrow agent.
     3.1  (17)Restated Certificate of Incorporation.
     3.2  (17)Certificate of Amendment to Restated Certificate of Incorporation.
     3.3  (17)Certificate of Designation of Series A Participating Preferred Stock.
     3.4  (17)Certificate of Amendment to Certificate of Designation of Series A
              Participating Preferred Stock.
     3.5  (17)Certificate of Designation of Series B Convertible Preferred Stock.
     3.6  (17)Bylaws.
     4.1   (8)Amended and Restated Preferred Shares Rights Agreement, dated as of
              July 26, 2000 between Cell Genesys and Fleet National Bank.
    10.1+  (1)Form of Indemnification Agreement for Directors and Officers.
    10.2+  (5)Amended 1989 Incentive Stock Plan.
    10.3+  (5)Amended 1992 Employee Stock Purchase Plan.
    10.4   (1)Representative Preferred Stock Purchase Agreement.
    10.5   (4)Fourth Amended and Restated Stockholder Rights Agreement.
    10.6   (1)License Agreement dated August 13, 1990 between Cell Genesys and the
              University of North Carolinaat Chapel Hill.
    10.8   (2)License Agreement dated June 28, 1991 between Cell Genesys and the
              University of Utah Research Foundation.
    10.9+  (3)Amended Employment Agreement with Stephen A. Sherwin, M.D.
    10.10  (3)Research and Development Leases dated November 1, 1994 between Cell
              Genesys and Vintage Park Associates and Addendums thereto.
   10.11*  (6)Amendment No. 1 dated June 7, 1996 to Vintage Park Research and
              Development Lease.
   10.12+  (9)Amended 1998 Incentive Stock Plan.
   10.13  (12)Research and Development Leases Amendment dated February 12, 2001
              between Cell Genesys and Vintage Park Associates.
   10.14  (13)Research and Development Leases between Cell Genesys and Drawbridge/
              Forbes LLC, dated March 3, 2001.
   10.15  (14)Lease Agreement dated June 21, 2001, between Alexandria Real Estate
              Equities, Inc., and Cell Genesys for property located at 11055 Roselle
              Street in San Diego, California.
   10.16  (15)Lease Agreement dated June 21, 2001, between Alexandria Real Estate
              Equities, Inc., and Cell Genesys for property located at 11075 Roselle
              Street in San Diego, California.
   10.17*     Amended and Restated GVAXr Agreement by and between Japan Tobacco Inc.
              and Cell Genesys dated November 26, 2001.
   10.18      Credit Agreement between Cell Genesys and Fleet National Bank dated
              as of December 27, 2001.
   10.19      Lease Agreement dated February 1, 2002, between Shelby Drive Corporation,
              and Cell Genesys for property located at 4600 Shelby Drive, Suite 108,
              Memphis, Tennessee.
    10.2      Lease Agreement dated January 7, 2002, between F & S Hayward, LLC,
              and Cell Genesys for property located at the Adjacent Park of Bridgeview
              Tech Park of 24570 Clawiter Road, Hayward, California.
   10.21      License Agreement dated June 7, 2002 between Transkaryotic Therapies,
              Inc. and Cell Genesys, Inc.
   10.22      Termination of the GVAXreg; lung cancer vaccine license agreement with
              Japan Tobacco dated October 17, 2002.
   10.24  (18)2002 Employee Stock Purchase Plan.
   10.25  (18)2001 Nonstatutory Stock Option Plan.
   10.26      Change of Control Severance Agreement.
    23.1      Consent of Ernst & Young LLP, Independent Auditors.
    24.1      Power of Attorney, (Reference is made to page 59).
    99.1      Certification of Chief Executive Officer and Chief Financial Officer
              pursuant to 18 U.S.C. Section 1350.`



*	Confidential treatment has been granted with respect
to specific portions of this exhibit.

+	Management compensatory plan or arrangement required to be filed as an
exhibit pursuant to Item 15(c) of Form 10-K

(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 Annual Report on Form 10-K for the year ended December 31, 1994.

(4) 	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.

(5) 	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.

(6)	Incorporated by reference to Exhibit 10.40 filed
with The Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 1996.

(7) 	Incorporated by reference to Exhibit 2.1 filed with The Company's
Form 8-K dated January 12, 1997.

(8) 	Incorporated by reference to The Company's Form 8-A12G/A dated July
28, 2000.

(9) 	Incorporated by reference to Exhibit 4.1 filed with The Company's
Registration Statement Form S-8 filed July 31, 2000.

(10)	Incorporated by reference to Exhibit 10.3 filed with The Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.

(11)	Incorporated by reference to Exhibit 10.4 filed with The Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.

(12) 	Incorporated by reference to Exhibit 10.1 filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
2001.

(13)	Incorporated by reference to Exhibit 10.2 filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended March 31,
2001.

(14) 	Incorporated by reference to Exhibit 10.1 filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2001.

(15) 	Incorporated by reference to Exhibit 10.2 filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended June 30,
2001.

(16) 	Incorporated by reference to Exhibit 10.1 filed
with the Company's Quarterly Report on Form 10-Q for the quarter ended September
30, 2001.

(17)	Incorporated by reference to the same numbered
exhibit filed with the Company's Registration Statement on Form S-3/A (Reg. No.
333-102122) filed with the SEC on January 30, 2003.

(18)	Incorporated by reference to Exhibit 4 filed with
the Company's Registration Statement on Form S-8 filed with the SEC on July 2,
2002.

---

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,
2003:



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



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

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

Date:  March 31, 2003

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 or her attorneys-in-fact, each with the full power
of substitution, for him or her, in any and all capacities, to sign
any amendment to this Annual 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 or she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact or any of them, or their 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 and Chief    March 31, 2003
--------------------------------  Executive Officer (Principal
     Stephen A. Sherwin, M.D.     Executive Officer)



 /S/ MATTHEW J. PFEFFER           Vice President and Chief Financial March 31, 2003
--------------------------------  Officer (Principal Financial and
     Matthew J. Pfeffer           Accounting Officer)


 /s/ DAVID W. CARTER              Director                           March 31, 2003
--------------------------------
     David W. Carter


 /s/ NANCY M. CROWELL             Director                           March 31, 2003
--------------------------------
     Nancy M. Crowell


 /s/ JAMES M. GOWER               Director                           March 31, 2003
--------------------------------
     James M. Gower


 /s/ JOHN T. POTTS, JR., M.D.     Director                           March 31, 2003
--------------------------------
     John T. Potts, Jr., M.D.


 /s/ Thomas E. Shenk, Ph.D.       Director                           March 31, 2003
--------------------------------
     Thomas E. Shenk, Ph.D.


 /s/ EUGENE L. STEP               Director                           March 31, 2003
--------------------------------
     Eugene L. Step


 /s/ INDER M. VERMA, PH.D.        Director                           March 31, 2003
--------------------------------
     Inder M. Verma, Ph.D.`

---



CERTIFICATIONS



I, Stephen A. Sherwin, certify that:



1. I have reviewed this annual report on Form 10-K of Cell
Genesys, Inc.;
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this annual
report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
5. designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
6. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date");
and
7. presented in this annual report our conclusions about
the effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
8. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):
9. all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
10. any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
11. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Dated:  March 31, 2003

By: /s/ Stephen A. Sherwin, M.D

Name: Stephen A. Sherwin, M.D.

Title:   Chief Executive Officer



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CERTIFICATIONS



I, Matthew J. Pfeffer, certify that:



1. I have reviewed this annual report on Form 10-K of Cell
Genesys, Inc.;
2. Based on my knowledge, this annual report does not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by
this annual report;
3. Based on my knowledge, the financial statements, and
other financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this annual

report;
4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:
5. designed such disclosure controls and procedures to
ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this annual report is being
prepared;
6. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days prior to the
filing date of this annual report (the "Evaluation Date");
and
7. presented in this annual report our conclusions about the
effectiveness of the disclosure controls and procedures based on our evaluation
as of the Evaluation Date;
8. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the registrant's auditors and
the audit committee of registrant's board of directors (or persons performing
the equivalent function):
9. all significant deficiencies in the design or operation
of internal controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and
10. any fraud, whether or not material, that involves
management or other employees who have a significant role in the registrant's
internal controls; and
11. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were significant changes in
internal controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Dated:  March 31, 2003

By: /s/ Matthew J. Pfeffer

Name: Matthew J. Pfeffer

Title:   Chief Financial Officer



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