<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                    FORM 10-Q

(Mark One)

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

        For the quarterly period ended September 30, 2001

                                       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 0-20815

                                     AVIRON
             (Exact name of registrant as specified in its charter)

                DELAWARE                                    77-0309686
   (State or other jurisdiction of                       (I.R.S. Employer
    incorporation or organization)                      Identification No.)

           297 North Bernardo Avenue, Mountain View, California 94043
           (Address of principal executive offices including zip code)

                                 (650) 919-6500
              (Registrant's telephone number, including area code)

--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

  Common Stock $.001 par value                    31,160,390 shares
  ----------------------------                    -----------------
            (Class)                       (Outstanding at November 6, 2001)

<PAGE>


                                     AVIRON

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                PAGE
                                                                               NUMBER
                                                                               ------
<S>          <C>                                                               <C>
PART I.      FINANCIAL INFORMATION                                                3

   ITEM 1.   CONSOLIDATED FINANCIAL STATEMENTS AND NOTES
               (UNAUDITED)                                                        3

             Condensed Consolidated Balance Sheets as of September 30,
             2001 and December 31, 2000                                           3

             Condensed Consolidated Statements of Operations for the three
             and nine-month periods ended September 30, 2001 and 2000             4

             Condensed Consolidated Statements of Cash Flows for the
             nine-month periods ended September 30, 2001 and 2000                 5

             Notes to Condensed Consolidated Financial Statements                 6

   ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
               CONDITION AND RESULTS OF OPERATIONS                                9

   ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
               MARKET RISK                                                       14

PART II.     OTHER INFORMATION                                                   15

   ITEM 1.   LEGAL PROCEEDINGS                                                   15

   ITEM 2.   CHANGES IN SECURITIES                                               15

   ITEM 3.   DEFAULTS UPON SENIOR SECURITIES                                     15

   ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                 15

   ITEM 5.   OTHER INFORMATION                                                   15

   ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K                                    16

SIGNATURES                                                                       17

EXHIBIT INDEX                                                                    18
</TABLE>



                                       2
<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.     CONSOLIDATED FINANCIAL STATEMENTS AND NOTES (UNAUDITED)

                                     AVIRON
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)


<TABLE>
<CAPTION>
                                                                       SEPTEMBER 30,     DECEMBER 31,
                                                                           2001             2000
                                                                       -------------     ------------
                                                                        (UNAUDITED)        (NOTE 1)
<S>                                                                    <C>               <C>
                                     ASSETS

Current Assets:
  Cash and cash equivalents .........................................    $ 156,596        $  64,662
  Short-term investments ............................................      252,737           67,651
  Accounts receivable ...............................................        5,115           23,288
  Inventory .........................................................        5,971            4,264
  Prepaid expenses and other current assets .........................        5,277            2,691
                                                                         ---------        ---------
    Total current assets ............................................      425,696          162,556
Long-term investments ...............................................       37,843            4,506
Property and equipment, net .........................................       38,205           27,707
Intangible assets, net ..............................................       43,284           48,046
Deposits and other assets ...........................................       10,561            5,924
                                                                         ---------        ---------

TOTAL ASSETS ........................................................    $ 555,589        $ 248,739
                                                                         =========        =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:
  Accounts payable ..................................................    $   6,794        $   5,106
  Accrued compensation ..............................................        4,602            4,978
  Accrued clinical trial costs ......................................          414            1,974
  Accrued interest ..................................................        1,750              695
  Accrued expenses and other liabilities ............................        4,900            7,654
  Current portion of long-term obligations ..........................        3,792            5,954
  Deferred revenue ..................................................       10,000               --
                                                                         ---------        ---------
    Total current liabilities .......................................       32,252           26,361
Deferred rent .......................................................        1,831            2,095
Deferred revenue ....................................................        7,500            9,750
Long-term obligations, less current portion .........................      227,681           89,947
Commitments and contingencies
Stockholders' Equity:
  Preferred stock, $0.001 par value; 5,000,000 shares authorized,
    issuable in series; none outstanding at September 30, 2001 and
    December 31, 2000 ...............................................           --               --
  Common stock, $0.001 par value; 100,000,000 shares authorized;
    31,141,107 and 25,181,051 shares issued and outstanding at
    September 30, 2001 and December 31, 2000, respectively ..........           31               25
  Additional paid-in capital ........................................      647,346          394,012
  Notes receivable from stockholders ................................          (50)             (50)
  Unrealized gain (loss) on investments .............................        1,534              (34)
  Accumulated deficit ...............................................     (362,536)        (273,367)
                                                                         ---------        ---------
    Total stockholders' equity ......................................      286,325          120,586
                                                                         ---------        ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..........................    $ 555,589        $ 248,739
                                                                         =========        =========
</TABLE>

                             See accompanying Notes.


                                       3
<PAGE>

                                     AVIRON
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)


<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED          NINE MONTHS ENDED
                                                     SEPTEMBER 30,              SEPTEMBER 30,
                                                 ---------------------     ----------------------
                                                   2001         2000         2001          2000
                                                 --------     --------     ---------     --------
<S>                                              <C>          <C>          <C>           <C>
REVENUES:
    Contract revenues and grants ..............  $  3,736     $  3,619     $  11,665     $ 10,154
                                                 --------     --------     ---------     --------

OPERATING EXPENSES:
  Research and development ....................    31,452       18,966        91,470       54,036
  Acquisition of in-process research
    and development ...........................        --           --            --       10,904
  General, administrative and marketing .......     4,895        3,387        14,227        9,324
                                                 --------     --------     ---------     --------

TOTAL OPERATING EXPENSE .......................    36,347       22,353       105,697       74,264
                                                 --------     --------     ---------     --------

LOSS FROM OPERATIONS ..........................   (32,611)     (18,734)      (94,032)     (64,110)
                                                 --------     --------     ---------     --------

OTHER INCOME (EXPENSE):
  Interest income .............................     4,870        1,981        16,123        4,351
  Interest expense ............................    (3,359)      (2,033)      (12,346)      (6,177)
                                                 --------     --------     ---------     --------
    Net interest income (expense) .............     1,511          (52)        3,777       (1,826)

  Gain on investment ..........................        --           --         1,086           --
                                                 --------     --------     ---------     --------

TOTAL OTHER INCOME (EXPENSE), net .............     1,511          (52)        4,863       (1,826)
                                                 --------     --------     ---------     --------

LOSS, before cumulative effect of change in
  accounting principle ........................   (31,100)     (18,786)      (89,169)     (65,936)
Cumulative effect of change in accounting
  principle ...................................        --           --            --      (12,750)
                                                 --------     --------     ---------     --------

NET LOSS ......................................  $(31,100)    $(18,786)    $ (89,169)    $(78,686)
                                                 ========     ========     =========     ========

BASIC AND DILUTED NET LOSS PER SHARE:
  Loss, before cumulative effect of change in
    accounting principle ......................  $  (1.00)    $  (0.87)    $   (2.97)    $  (3.31)

  Cumulative effect of change in accounting
    principle .................................        --           --            --        (0.64)
                                                 --------     --------     ---------     --------

  Net loss ....................................  $  (1.00)    $  (0.87)    $   (2.97)    $  (3.95)
                                                 ========     ========     =========     ========

Shares used in computing basic and diluted
  net loss per share ..........................    31,050       21,625        30,054       19,920
                                                 ========     ========     =========     ========
</TABLE>

                             See accompanying Notes.


                                       4
<PAGE>

                                     AVIRON
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                           NINE MONTHS ENDED
                                                                             SEPTEMBER 30,
                                                                        ------------------------
                                                                          2001           2000
                                                                        ---------      ---------
<S>                                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss ..........................................................     $ (89,169)     $ (78,686)

Adjustment to reconcile net loss to net cash used in operating
  activities:
    Depreciation and amortization of property and equipment .......         5,233          4,335
    Amortization of intangible assets .............................         6,597             --
    Other amortization ............................................           961            494
    Accretion of interest on long-term obligation .................           969             --
    Issuance of warrant for acquisition of in-process research
      and development .............................................            --         10,904
    Cumulative effect of change in accounting principle ...........            --         12,750
    Charge on exchange of convertible debt into common  stock .....         1,599             --
    Gain on investment ............................................        (1,086)            --
    Other .........................................................            95             --
Changes in assets and liabilities:
    Accounts receivable ...........................................        18,202           (737)
    Inventory .....................................................        (1,707)        (1,227)
    Prepaid expenses and other current assets .....................        (2,586)            19
    Deposits and other assets .....................................           130             73
    Accounts payable ..............................................         1,688           (753)
    Accrued expenses and other liabilities ........................        (2,799)         3,563
    Deferred revenue ..............................................         7,750         (2,250)
    Deferred rent .................................................          (264)          (202)
                                                                        ---------      ---------
Net cash used in operating activities .............................       (54,387)       (51,717)
                                                                        ---------      ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of investments ......................................      (400,965)      (408,853)
    Maturities of investments .....................................       185,197        370,089
    Loans to officers .............................................           (50)          (500)
    Expenditures for property and equipment .......................       (15,731)        (3,371)
                                                                        ---------      ---------
Net cash used in investing activities .............................      (231,549)       (42,635)
                                                                        ---------      ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
  Principal payments on long-term obligations .....................       (19,271)        (2,069)
  Proceeds from issuance of:
    Common stock, net .............................................       201,645        127,350
    Convertible debt, net .........................................       193,283             --
    Notes payable .................................................         2,213             --
                                                                        ---------      ---------
Net cash provided by financing activities .........................       377,870        125,281
                                                                        ---------      ---------

Net increase in cash and cash equivalents .........................        91,934         30,929

CASH AND CASH EQUIVALENTS, at beginning of period .................        64,662         28,081
                                                                        ---------      ---------
CASH AND CASH EQUIVALENTS, at end of period .......................     $ 156,596      $  59,010
                                                                        =========      =========

Supplement schedule of non-cash financing and investing activities:
    Warrants issued in connection with intangible assets ..........     $   1,836             --
    Warrant issued for legal settlement ...........................            --      $     313
    Exchanges of convertible notes due 2005 for common stock ......     $  49,765             --
</TABLE>

                             See accompanying Notes.


                                       5
<PAGE>

                                     AVIRON
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2001
                                   (UNAUDITED)

   1. Summary of Significant Accounting Policies

   Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the
United States for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X.

The condensed consolidated financial statements include the accounts of Aviron
and its wholly owned subsidiaries. All significant inter-company accounts and
transactions have been eliminated.

The financial information as of September 30, 2001 and for the three-month and
nine-month periods ended September 30, 2001 and 2000 are unaudited, but includes
all adjustments (consisting only of normal recurring adjustments) which Aviron
considers necessary for a fair presentation of the financial position at such
date and the operating results and cash flows for those periods. The balance
sheet data at December 31, 2000 is derived from the audited consolidated
financial statements at that date, but does not include all of the information
and footnotes required by accounting principles generally accepted in the United
States for complete financial statements. The accompanying condensed
consolidated financial statements should be read in conjunction with the
financial statements and notes thereto included in our Annual Report on Form
10-K, as amended, for the year ended December 31, 2000. The results of our
operations for any interim period are not necessarily indicative of the results
of our operations for a full fiscal year.

   Inventory

Inventory is comprised principally of sprayer components that will be used in
the manufacture of commercial batches of FluMist for sale. Inventory is stated
at the lower of cost (FIFO) or market value.

   Comprehensive Income (Loss)

Comprehensive income (loss) is not presented separately as it approximates the
net loss presented in the statement of operations for the three-month and
nine-month periods ended September 30, 2001 and 2000. The principal item of
other comprehensive income is the change in unrealized gain (loss) on
investments, which approximated $973,000 and $1.6 million, respectively, for the
three-month and nine-month periods ended September 30, 2001, as compared with
approximately $40,000 and $99,000 for the respective periods ended September 30,
2000.

   Net Loss Per Share

We calculate net loss per share in accordance with Statement of Financial
Accounting Standards No. 128, Earnings Per Share, or SFAS 128. SFAS 128 requires
the presentation of basic earnings (loss) per share and diluted earnings (loss)
per share, if more dilutive, for all periods presented. Basic net loss per share
is computed using the weighted-average number of common shares outstanding
during the period. Diluted net loss per share has not been presented separately
as, given our net loss position, the result would be anti-dilutive.

    New Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued Statement No. 133,
Accounting for Derivative Instruments and Hedging Activities, or SFAS 133, which
was required to be adopted as of January 1, 2001. The adoption of SFAS 133 did
not have a significant effect on our results of operations or financial
position.

   Change in Accounting Principle

Effective January 1, 2000, we changed our method of accounting for
non-refundable up-front license fees to recognize such fees over the research
and development period of the agreements. We believe the change in accounting
principle is preferable based on guidance provided by the Securities and
Exchange Commission in Staff


                                       6
<PAGE>

Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, or SAB
101. Previously, in the first quarter of 1999, we had recognized as revenue the
$15.0 million up-front payment we received from Wyeth Lederle Vaccines, or
Wyeth, a business unit of American Home Products Corporation, or AHP, under our
collaboration agreement for FLUMIST(TM). FluMist is Aviron's investigational
intranasal influenza vaccine. In accordance with SAB 101, this $15.0 million
up-front license fee has been deferred and is now being recognized as revenue
over the five-year estimated development period of FluMist.

The results for the nine-month period ended September 30, 2000 reflect a charge
for the $12.8 million cumulative effect of the change in accounting principle,
calculated as of January 1, 2000, and an adjustment to previously reported
contract revenues to reflect revenue recognition of $750,000 for the third
quarter and $2.3 million for the nine-month period ended September 30, 2000. The
cumulative effect was initially recorded as deferred revenue and is being
recognized as revenue over the five-year estimated development period of
FluMist.

    2. Debt Transactions During the Nine Months Ended September 30, 2001

    Convertible Debt

In February 2001, we completed a public offering of $200.0 million in aggregate
principal amount of 5 1/4 percent convertible subordinated notes due 2008, or
the 2008 Notes. Net proceeds to us were approximately $193.3 million, after
deducting expenses and underwriters' discounts and commissions. The 2008 Notes
are convertible into common stock at any time after the original issuance
through maturity, unless previously redeemed or repurchased, at a conversion
price of $62.50 per share. Interest on the 2008 Notes is paid semi-annually in
arrears in February and August. We can redeem the 2008 Notes on or after
February 5, 2004.

During the first quarter of 2001, we exchanged approximately $33.5 million in
aggregate principal amount of our 5 3/4 percent convertible subordinated notes
due 2005, or the 2005 Notes, for approximately 1.1 million shares of our common
stock in a number of privately negotiated transactions. Additional non-cash
interest expense related to these exchanges was approximately $1.6 million.
Approximately $801,000 of unamortized debt issue costs related to the 2005 Notes
exchanged was charged to additional paid-in capital during that quarter.

On June 18, 2001, we issued a notice to call for redemption on July 18, 2001 the
remaining $14.7 million in aggregate principal amount of our outstanding 2005
Notes. Bondholders chose to convert the entire amount of the outstanding notes
into shares of our common stock prior to the date set for the redemption, with
the majority of the notes being converted in July 2001. These notes converted
into approximately 478,000 shares of our common stock, with no cash being paid
on the conversion. Approximately $208,000 of unamortized debt issue costs
related to the 2005 Notes converted was charged to additional paid-in capital
in July 2001.

    Asset Backed Loans

During June 2001, we initiated activities for the early payoff of all of our
asset backed loans, with interest rates ranging from 11.63 percent to 13.76
percent. In June, we prepaid loan balances totaling approximately $7.2 million
and in July we prepaid additional loan balances totaling $6.5 million. These
early payoffs resulted in the recognition, in June 2001, of additional expense
of approximately $640,000 related to the fees and costs of termination of these
loans.

    3. Equity Financing Transactions During the Nine Months Ended September 30,
2001

On January 25, 2001, we sold 161,060 shares to Acqua Wellington North America
Equity Funds Ltd., or Acqua Wellington, for total proceeds of $8.0 million,
resulting in an average price per share of $49.67. This price was based on the
volume-weighted average market price for the 18-day trading period ending on
January 23, 2001. With this purchase, Acqua Wellington completed its financing
commitment.

In February 2001, we completed a public offering of 4,000,000 shares of our
common stock at $50.00 per share concurrent with our debt offering of the 2008
Notes. Aggregate net proceeds from this public equity offering were
approximately $189.2 million, after deducting expenses and underwriters'
discounts and commissions.


                                       7
<PAGE>

    4. Warrants

We have licensed certain technology related to our FluMist product from the
University of Michigan in exchange for consideration including warrants to the
University to purchase our common stock.

In February 2000, we amended our stock transfer agreement with the University of
Michigan to accelerate the issuance of a warrant to the University. As a result
of this amendment, we granted the University a warrant to purchase 340,000
shares of Aviron common stock at an exercise price of $10.00 per share. The
warrant was valued using the Black-Scholes option valuation model and, as the
related FluMist technology was under development, we recorded a one-time
non-cash charge of approximately $10.9 million in the first quarter of 2000.

In March 2001, we further amended our stock transfer agreement with the
University of Michigan to accelerate the issuance of a warrant to the
University. As a result of this second amendment, we granted to the University a
warrant to purchase 50,000 shares of our common stock at an exercise price of
$10.00 per share. This warrant was valued at approximately $1.8 million using
the Black-Scholes option valuation model and, given the stage of the development
of FluMist, was recorded as an intangible asset and is being amortized over 20
years, which represents the initial term of the Michigan Agreement.

Upon the date of the first commercial sale of FluMist, if we have more than 31.2
million shares of common stock then outstanding, we will issue additional
warrants allowing the University of Michigan to purchase 1.25 percent of the
excess shares on the same terms. Should we be required to issue additional
warrants upon the date of the first commercial sale of FluMist, the warrants
would be valued at that time using the Black-Scholes option valuation model,
capitalized as a developed technology asset and amortized to expense over 20
years.

    5. Lease Obligation

In March 2001, we completed the transfer of a 25-year lease from Celltech Group
Plc., or Celltech, of approximately eight acres of land in Speke, U.K., which
includes an existing 45,000 square foot structure. Under the terms of the
agreement, we paid Celltech 1.5 million British Pounds Sterling and assumed
the obligations for the remaining 24 years of the 25-year land lease. The
annual lease obligation is expected to be 333,000 British Pounds Sterling
during the term of the lease.

    6. NeuroVir/MediGene

In July 1996, we licensed a portion of our patent rights covering or related to
the use of HSV-2 to NeuroVir Therapeutics Inc., or NeuroVir, formerly NeuroVir
Research, Inc. In exchange, we received shares of capital stock and warrants to
purchase shares of capital stock representing a minority interest in the
outstanding equity securities of NeuroVir on a fully diluted basis. Since
NeuroVir was a private company and, at the date of the exchange, realization of
the investment in NeuroVir was uncertain we had not reflected a value to our
ownership position in our financial statements.

During the fourth quarter of 2000, NeuroVir agreed to be acquired by MediGene, a
German public company. In connection with this merger, we agreed to the exercise
of our warrant and the exchange of our ownership interest in NeuroVir for shares
of MediGene. As a result of NeuroVir's merger with a public company, which
became effective during the first quarter of 2001, we recorded a gain on our
investment in the amount of approximately $1.0 million, based on the approximate
market value of the shares of MediGene that were obtained when the merger was
completed.


                                       8
<PAGE>

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

Some of the statements in the following Management's Discussion and Analysis of
Financial Condition and Results of Operations, and elsewhere in this Form 10-Q,
constitute forward-looking statements. These statements, which reflect
management's current beliefs and expectations, are subject to risks and
uncertainties that may cause actual results to differ materially from those
projected in the forward-looking statements. Factors that could cause actual
results to differ include, without limitation, risks relating to the outcome and
timing of the regulatory process, such as the risk that the United States Food
and Drug Administration, or FDA, will determine that we need to conduct
additional clinical trials and/or provide additional data in order to obtain
licensure or otherwise determine that our license application for FLUMIST(TM) is
incomplete or inadequate to approve the product for marketing to one or more
target populations or that our manufacturing facilities are not adequate. See
the discussion of regulatory matters in the sections entitled "Regulatory
Activities" and "Business Outlook" below. Additional risks include potential
difficulties that we may have with our manufacturing process, the risk that we
are unable to perform the complex annual update of the FluMist formulation for
new influenza strains in a timely manner, our dependence on our partner, Wyeth
Lederle Vaccines, or Wyeth, a business unit of American Home Products
Corporation, or AHP, for marketing, promotion, sales and distribution
activities, the risk that medical advisory bodies, doctors and other health care
providers do not recommend FluMist, the risk that the market does not accept
FluMist, and the other business risks identified in the "Business Risks" section
below and in our Annual Report on Form 10-K, as amended, for the fiscal year
ended December 31, 2000.

OVERVIEW

We are a biopharmaceutical company focused on developing and commercializing
innovative vaccine technologies to prevent infectious disease and improve
quality of life in the general population. We currently are focusing our efforts
on our lead product candidate, FluMist, an investigational live attenuated
vaccine delivered as a nasal mist for the prevention of influenza. Our goal is
to become a leader in the discovery, development, manufacture and marketing of
innovative vaccines that are safe, effective and suitable for widespread use.
Our vaccine development programs are based on proprietary genetic engineering
technologies and novel, convenient delivery systems.

    FLUMIST(TM)

Influenza is a widespread and potentially very serious disease. Influenza
symptoms usually last for approximately one week, resulting in an average of
approximately three days of lost work or missed school. The Health Care
Financing Administration estimates that the cost of influenza in the United
States was $12.0 billion in 1992. The Centers for Disease Control and
Prevention, or CDC, estimates that each year approximately 10 to 20 percent of
the U.S. population develops influenza, more than 114,000 persons are
hospitalized from influenza-related complications and approximately 20,000
people die from the disease. According to the CDC, more than 90 percent of
influenza-related deaths occur in people over the age of 64. However, all age
groups share the burden of medically attended illness due to influenza. Children
are a major factor in spreading influenza to others, including those at high
risk of developing serious complications from the disease. Children under age
five are also at higher risk for serious complications and hospitalization.

FluMist, our lead product candidate, has shown a high protection rate against
influenza in Phase 3 clinical trials in healthy children and healthy adults and
generally has been well tolerated in clinical trials. FluMist recipients were
more likely than placebo recipients to report side effects such as sore throat,
runny nose and low-grade fever, but the side effects were generally mild and
transitory in nature. We are developing and intend to commercialize FluMist
primarily in collaboration with our partner, Wyeth.

         Regulatory Activities

We have submitted a Biologics License Application, or BLA, for FluMist to the
FDA. We are seeking U.S. licensure of FluMist to prevent influenza in healthy
children and healthy adults.

The Vaccines and Related Biological Products Advisory Committee, or VRBPAC, of
the FDA evaluated FluMist at its meeting on July 26-27, 2001. On July 27, VRBPAC
recommended that there were adequate data to support the efficacy of FluMist for
the prevention of influenza in healthy children (ages 1-17 years) and healthy
adults (ages 18 to 64 years). The committee also recommended that the data
analysis completed to date was not sufficient to support


                                       9
<PAGE>

the safety of the vaccine at that time. The BLA for FluMist is currently under
review by the FDA, which will ultimately decide whether to approve the license
application.

On August 31, 2001, we received a complete response letter from the FDA relating
to our FluMist BLA. In the complete response letter, the FDA requested
additional information and clarification regarding clinical and manufacturing
data from us in support of licensure of the product. We plan to respond to the
FDA letter by providing a complete response to the FDA by December 31, 2001.

         FLUMIST(TM)--Liquid Formulation

The current formulation of FluMist is frozen. Because many international markets
do not have distribution channels well-suited to the sale of frozen vaccines, we
are developing a second generation refrigerator-stable, or liquid, formulation
of FluMist, in conjunction with Wyeth. The liquid formulation is currently in
Phase 3 development.

         Agreements

On July 16, 2001, we amended our cooperative research and development agreement
for the development of FluMist with the National Institute of Allergy and
Infectious Diseases of the National Institutes of Health. This amendment extends
the term of the agreement to December 31, 2003 and provides for a fourth year of
vaccination in the AV012 Field Community Intervention study.

On September 28, 2001, we executed an agreement with the St. Jude Children's
Research Hospital of Memphis, Tennessee, providing us with license rights to
biological materials and intellectual property related to a technology for
rescuing influenza virus from a plasmid system. This technology may be used for
further development of FluMist.

    Other Products in Development

We also have a number of other vaccines in various stages of development:

-   A vaccine against Epstein-Barr virus, or EBV, a leading cause of infectious
    mononucleosis. In November 2000, SmithKline Beecham Biologicals, a division
    of GlaxoSmithKline, completed enrollment in Europe of a Phase 2 clinical
    trial of this subunit vaccine to evaluate its safety and immunogenicity in
    healthy adults.

-   A vaccine to prevent cytomegalovirus, or CMV, the leading infectious cause
    of birth defects in the United States. A clinical trial for this vaccine was
    begun during the second quarter of 2000.

-   A parainfluenza virus type 3, or PIV-3, vaccine to prevent a common cause of
    croup, a respiratory infection in children. We have performed initial
    clinical development work on PIV-3 and further clinical plans are under
    development.

-   We also are using our proprietary technologies to develop new vaccine
    candidates, including vaccines for herpes simplex virus type 2, or HSV, the
    virus responsible for genital herpes, and respiratory syncytial virus, or
    RSV, a virus that causes severe lower respiratory infection in infants and
    young children.

    Senior Management

During September 2001, Ed Arcuri, Ph.D. was appointed senior vice president and
chief operating officer, Carol Olson was appointed senior vice president and
chief commercial officer, Luc Hermans was named vice president and UK site
director and Michael Cowan was promoted to vice president, compliance. In
November 2001, Mike Makris was named vice president, controller.


                                       10
<PAGE>

    Cumulative Losses

Since our inception in April 1992, we have devoted substantially all of our
resources to our research and development programs and the preparation for the
potential commercialization of FluMist. To date, we have not generated any
revenues from the sale of products and do not expect to generate any revenues
from the sale of products until the third quarter of 2002 at the earliest. We
have incurred cumulative net losses of approximately $362.5 million as of
September 30, 2001.

    Business Outlook

We anticipate our operating expenditures will be between $140 and $145 million
in 2001. This increase from 2000 operating expenses is due primarily to an
increase in the size of our operations and expenses that we expect to incur as
we build infrastructure in support of potential commercialization of FluMist in
the U.S. This increase includes amortization expense associated with our
manufacturing activities in the United Kingdom. The portion of 2001 operating
expenses that is depreciation and amortization is expected to be approximately
$17.0 million, compared to $8.1 million for 2000. Net other income for the
fourth quarter of 2001 is expected to be near zero due primarily to declines in
interest rates.

Our goal is to launch FluMist in 2002 and participate in the 2002-2003 influenza
season to the greatest extent possible. We already have begun manufacturing to
support a potential commercial launch in 2002. The outcome and timing of the
regulatory process will strongly influence product revenues during our first
commercial season, therefore, we have not made revenue projections for 2002, nor
do we expect to generate sufficient revenue to Aviron from FluMist sales to
achieve profitability in 2002. Any and all revenues will depend upon the outcome
and timing of the regulatory process, the labeled indications, the scope of any
expanded recommendations for influenza vaccination by important medical
organizations, the number of doses manufactured, the number of doses released
and sold and the price of FluMist.

We expect capital expenditures to increase substantially as we commence building
additional manufacturing facilities and commercialization systems. For the year
ending December 31, 2001, we forecast that capital expenditures will be between
$20 and $30 million.

    Business Risks

The most significant business risks we currently face are those related to the
development and commercialization of FluMist, including without limitation,
risks associated with the outcome and timing of the regulatory process, such as
the risk that the FDA will determine that we need to conduct additional clinical
trials and/or provide additional data in order to obtain licensure, determine
that our manufacturing facilities are not adequate or otherwise determine that
our license application for FluMist is incomplete or inadequate to approve the
product for marketing to one or more target populations.

All of our potential near-term revenues are dependent on the commercialization
of FluMist. Because of the seasonality of influenza, FluMist must be available
for sale in the third or fourth quarter of each year for us to achieve revenues
for that season. Delay in availability of FluMist in the initial year of
commercialization, or in subsequent years, could cause us to lose revenues for
an entire influenza season. Moreover, we may incur significant losses as a
result of our decision to begin manufacturing FluMist at commercial scale before
receipt of marketing approval from the FDA. Any of these risks may require us to
raise additional capital to cover the costs of additional research and
development, manufacturing and ongoing fixed costs.

For more information, including the VRBPAC's July 2001 recommendation that the
data analysis for FluMist completed to date is not sufficient to support the
safety of the vaccine at the time, and the August 31, 2001 receipt of a complete
response letter from the FDA, see the discussion under the sections entitled
"Regulatory Activities" and "Business Outlook" above. For other important risks
that we face, see also the section entitled "Business Risks" in our Annual
Report on Form 10-K, as amended, for the year ended December 31, 2000.

This Form 10-Q contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. When used herein, the words
"expects," "anticipates," "estimates," "intends," "plans" and similar
expressions are intended to identify such forward-looking statements. Our actual
results could differ materially from the results discussed in these
forward-looking statements.


                                       11
<PAGE>

RESULTS OF OPERATIONS

Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000

The results for the three-month and nine-month periods ended September 30, 2000
reflect the implementation of Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements, or SAB 101, as of January 1, 2000.

    Revenues

Revenues totaled $3.7 million and $11.7 million for the three and nine months
ended September 30, 2001, respectively, compared to $3.6 million and $10.2
million for the respective periods of 2000. Revenues during the first nine
months of 2001 and 2000 were comprised principally of revenue from Wyeth related
to the clinical development and commercialization of FluMist, under the terms of
our agreement.

    Operating Expenses

Operating expenses for the three and nine months ended September 30, 2001
totaled $36.3 million and $105.7 million, respectively, compared to $22.4
million and $74.3 million for the respective periods of 2000.

Research and development costs increased to $31.5 million and $91.5 million for
the three and nine months ended September 30, 2001, respectively, from $19.0
million and $54.0 million for the respective periods of 2000. The increase in
research and development costs was due primarily to increases in development
activities, clinical trials and commercial scale-up expenses associated with
FluMist. These commercial scale-up activities include increases in facilities,
staffing and support systems at all company locations to accommodate the
manufacture of FluMist at commercial scale volumes, the preparation for and
response to the FDA's review of the BLA and pre-license inspections of the
manufacturing facilities and clinical sites, and the manufacture of FluMist
at-risk in anticipation of a potential product launch. The first quarter of 2000
also included a one-time non-cash charge for the acquisition of in-process
research and development in the amount of $10.9 million due to the February 2000
amendment of our stock transfer agreement with the University of Michigan to
accelerate the issuance of a warrant to the University.

General, administrative and marketing costs increased to $4.9 million and $14.2
million in the three and nine months ended September 30, 2001, respectively,
from $3.4 million and $9.3 million in respective periods of 2000. The increase
was due to growth in infrastructure, marketing-related expenses and other costs
to support preparations for a potential commercial launch of FluMist. See the
discussion in "Business Outlook" above regarding the estimated level of
operating expenses for the full year of 2001.

    Other Income (Expense)

Net interest increased to net interest income of approximately $1.5 million and
$3.8 million, respectively, for the three and nine months ended September 30,
2001, as compared to net interest expense of $52,000 and $1.8 million for the
respective periods of 2000.

The increase in net interest is primarily the result of an increase in funds
available for investment as a result of the sale of equity and convertible debt
in February 2001 and savings of interest costs on debt that has been converted
into common stock. These costs were partially offset by increased interest costs
associated with the debt issued in February 2001 and the interest costs
associated with the obligations to Evans Vaccines Limited, or Evans, undertaken
in October 2000.

In addition, during the first quarter of 2001, we recorded a gain on our
investment in NeuroVir Therapeutics Inc., or NeuroVir, in the amount of
approximately $1.0 million, due to the merger of NeuroVir with MediGene, a
German public company.


                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

We had cash, cash equivalents and short- and long-term investments at September
30, 2001 of approximately $447.2 million. In order to preserve principal and
maintain liquidity, our funds are invested primarily in United States Treasury
and agency obligations, highly rated corporate obligations and other liquid
investments.

During the nine months ended September 30, 2001, we generated net proceeds of
approximately $390.5 million from the sale of convertible debt and equity
securities, after deducting expenses and underwriters' discounts and
commissions.

During the first nine months of 2001, $54.4 million of cash was used in
operations, as compared to $51.7 million during the first nine months of 2000.
The increase in cash used in operating activities was primarily due to increased
expenditures for operating expenses, which are partially offset by the receipt
in January 2001 of a $15.5 million milestone in connection with the acceptance
of our BLA for review by the FDA and a $10.0 million advance from Wyeth to
support manufacturing activities. As indicated in "Business Outlook" above, we
anticipate that the amount of cash used in operating activities will increase in
2001 over that used in 2000 due to the scale-up of our operating expenditures in
connection with the preparations for the potential commercialization of FluMist.

Cash expended for capital additions was approximately $15.7 million for the
first nine months of 2001, as compared to approximately $3.4 million during the
first nine months of 2000. Capital expenditures increased in 2001 primarily due
to the completion of our acquisition of a lease in Speke, U.K., an expansion of
manufacturing support facilities in Pennsylvania, the relocation of development
laboratories and office space in California, increased expenditures for
equipment for all facilities, and the initiation of projects to implement
systems to support commercialization. As indicated in "Business Outlook" above,
we expect our capital expenditures during 2001 to range between $20 and $30
million.

Principal payments under capital lease arrangements and long-term obligations
were approximately $19.3 million during the first nine months of 2001, as
compared to approximately $2.1 million for the first nine months of 2000. The
increase is due principally to the early payoff of asset-backed loan balances in
the aggregate principal amount of $13.7 million and a payment of $3.8 million
under our long-term obligation to Evans.

During the first quarter of 2001, we exchanged approximately $33.5 million
aggregate principal amount of our 5 3/4 percent convertible subordinated notes
due 2005, or the 2005 Notes, for shares of our common stock in a number of
privately negotiated transactions. Additional non-cash interest expense related
to these exchanges was approximately $1.6 million.

On June 18, 2001, we issued a notice to call for redemption on July 18, 2001 the
remaining $14.7 million of our outstanding 2005 Notes. Bondholders chose to
convert the entire amount of the outstanding notes into shares of our common
stock prior to the date set for redemption, with the majority of the notes being
converted in July 2001. No cash was required to complete this conversion.

We anticipate that our existing cash, cash equivalents and short-term
investments, and proceeds from existing collaborations and recent financings
will enable us to maintain our current and planned operations through at least
2002. We anticipate using our cash resources for commercialization activities
related to FluMist and capital expenditures related to FluMist manufacturing.
However, our future cash requirements will depend on numerous factors, including
the factors set forth under the caption "Business Risks -- Risks Related to
FluMist," which is included in our Annual Report on Form 10-K, as amended, for
the year ended December 31, 2000.

Additionally, due to its seasonal nature, if FluMist is approved for marketing,
cash will not be generated from product sales until later in each calendar year
or early in the following calendar year. A significant amount of working capital
will be required each year to provide for the payment of expenditures associated
with the manufacturing of inventory and other operating and capital needs in
advance of any product sales. There can be no assurance that, should we require
outside funding through additional debt or equity financing, such funds would be
available on favorable terms, if 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 or development programs or obtain funds through collaborative
agreements with others that may require us to relinquish rights to our
technologies, product candidates or products that we would otherwise seek to
develop or commercialize ourselves.


                                       13
<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risk, including changes to interest rates and foreign
currency exchange rates.

Interest Rates. Our investment and interest income is sensitive to changes in
the general level of interest rates, primarily U.S. interest rates. In this
regard, changes in U.S. interest rates affect the interest earned on our cash
equivalents and investments. To mitigate the impact of fluctuations in U.S.
interest rates, we place our funds in investments that meet high credit
standards, as specified in our investment policy guidelines; the policy also
limits the amount of credit exposure to any one issue, issuer, or type of
investment and does not permit derivative financial instruments in its
investment portfolio. In addition, the average maturity of our portfolio is less
than one year. As a result, we do not expect any material loss with respect to
our investment portfolio.

As of September 30, 2001, we had cash and cash equivalents of $156.6 million,
with a weighted-average interest rate of 3.64 percent per year and short-term
investments with a basis of $251.3 million and a fair market value of $252.7
million, with a weighted-average interest rate of 4.33 percent per year. We also
had long-term investments with a basis of $37.2 million and a fair market value
of $37.8 million with a weighted-average interest rate of 4.88 percent per year.

Foreign Currency Exchange Rates. We pay for the costs of manufacturing and
development activities, equipment and facilities modifications at our facility
located in the U.K. in British Pounds Sterling. As a result, our financial
results could be affected by factors such as changes in foreign currency
exchange rates or weak economic conditions in the U.K. We are exposed to changes
in exchange rates in the U.K. When the U.S. dollar strengthens against the
British Pound Sterling, the U.S. dollar value of British Pound Sterling-based
expenses decreases; when the U.S. dollar weakens, the U.S. dollar value of
British Pound Sterling-based expenses increases. Accordingly, changes in
exchange rates, and in particular a weakening of the U.S. dollar, may adversely
affect our financial position as expressed in U.S. dollars. We currently do not
hedge our obligations in British Pounds Sterling.



                                       14
<PAGE>

                                     AVIRON

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On June 30, 1999, the European Patent Office held oral proceedings in an
Opposition filed by American Cyanamid against our granted European Patent No.
0490972 relating to methods and compositions of recombinant negative-strand RNA
viruses. In April 2001, the European Patent Office issued a written opinion that
upholds claims limited to recombinant influenza and denies claims generically
encompassing negative-strand RNA viruses. This decision will not affect our
cold-adapted influenza product. We have appealed the decision insofar as it
relates to the denied claims; the appeal requested the Technical Board of
Appeals to reverse the decision with respect to the denial of the claims
encompassing recombinant negative-strand RNA viruses. There can be no assurance
that we will be successful in obtaining claims as originally granted as a result
of the appeal. If we do not succeed in the appeal of the claims which encompass
negative-strand RNA viruses, in particular non-segmented RNA viruses, it could
negatively impact our ability to exclude others from commercializing an RSV or
PIV-3 vaccine based on genetically engineered candidates in Europe.

On July 3, 2001, the United States Court of Appeals for the Federal Circuit, or
Court of Appeals, entered a judgment in the case of Joany Chou v. The University
of Chicago, ARCH Development Corp., Bernard Roizman and Aviron, originally filed
on July 8, 1999 in the U.S. District Court for the Northern District of
Illinois, or District Court. The Court of Appeals affirmed the District Court's
dismissal of all claims for monetary damages against Aviron. The Court of
Appeals also held that the plaintiff does have standing to sue for correction of
inventorship, and reversed and remanded this issue for adjudication against all
defendants, including Aviron. For background information on this lawsuit, see
our Annual Report on Form 10-K, as amended, for the fiscal year ended December
31, 2000.

On October 20, 2000 we terminated all rights and licenses to Sang-A
Pharmaceutical Co., Ltd., or Sang-A, a Korean company, relating to FluMist. On
August 21, 2001, Sang-A filed a lawsuit against Aviron in the United States
District Court for the Northern District of California challenging the
termination. The Complaint includes causes of action for breach of contract,
breach of the covenant of good faith and fair dealing, unfair and deceptive
business practices, injunctive relief, declaratory judgment, specific
performance and promissory estoppel. On September 21, 2001 we filed an Answer
and Counterclaim, in which we denied the allegations in Sang-A's Complaint. We
also asserted several causes of action against Sang-A, including breach of
contract, rescission, breach of the covenant of good faith and fair dealing and
declaratory judgment. While we believe that Sang-A's claims are without merit,
there can be no assurance that we will prevail in this litigation.

ITEM 2.  CHANGES IN SECURITIES

         None

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None

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

         None

ITEM 5.  OTHER INFORMATION

         None


                                       15
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  EXHIBITS

<TABLE>
<CAPTION>
                 ITEM       DESCRIPTION
                 ----       -----------
<S>                         <C>
               * 10.35      1999 Non-Officer Equity Incentive Plan, as amended
                            as of September 24, 2001(1)

              ++ 10.54      Amendment Number Three (3) to Cooperative Research
                            and Development Agreement AI-0062, by and between
                            NIAID and Aviron, dated as of July 16, 2001

              ++ 10.55      License Agreement by and between St. Jude's
                            Children's Research Hospital, Inc. and Aviron, dated
                            September 28, 2001
</TABLE>

              ----------

                *  Compensatory Plan or Agreement
               ++  Confidential treatment has been requested for portions of
                   this exhibit.
              (1)  Incorporated by reference to Exhibit 4.1 to the Company's
                   Registration Statement on Form S-8 (Commission File No.
                   333-72120) filed with the SEC on October 23, 2001.

         (b)  REPORTS ON FORM 8-K

              During the three months ended September 30, 2001, we filed the
              following reports on Form 8-K:

                  (i)  Current report on Form 8-K, dated July 30, 2001,
                       disclosing the FDA's Vaccines and Related Biological
                       Products Advisory Committee recommendations for FluMist.

                  (ii) Current report on Form 8-K, dated September 4, 2001,
                       disclosing receipt of a complete response letter on
                       August 31, 2001 from the FDA relating to our Biologics
                       License Application for FluMist.



                                       16
<PAGE>

                                     AVIRON

                                   SIGNATURES

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


AVIRON

Date:  November 13, 2001                By:  /s/ C. Boyd Clarke
     -----------------------                -----------------------------------
                                             C. Boyd Clarke
                                             Chairman, President and
                                             Chief Executive Officer

Date:  November 13, 2001                By:  /s/ Fred Kurland
     ----------------------                 -----------------------------------
                                             Fred Kurland
                                             Senior Vice President and
                                             Chief Financial Officer




                                       17
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
    ITEM       DESCRIPTION
    ----       -----------
<S>            <C>
 * 10.35       1999 Non-Officer Equity Incentive Plan, as amended as of
               September 24, 2001 (1)

++ 10.54       Amendment Number Three (3) to Cooperative Research and
               Development Agreement AI-0062, by and between NIAID and Aviron,
               dated as of July 16, 2001

++ 10.55       License Agreement by and between St. Jude's Children's Research
               Hospital, Inc. and Aviron, dated September 28, 2001
</TABLE>

----------

 *   Compensatory Plan or Agreement
++   Confidential treatment has been requested for portions of this exhibit.
(1)  Incorporated by reference to Exhibit 4.1 to the Company's Registration
     Statement on Form S-8 (Commission File No. 333-72120) filed with the SEC on
     October 23, 2001.




                                       18