<PAGE>   1
                                  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 June 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 Identification No.)
    incorporation or organization)


           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.

<TABLE>
<CAPTION>

<S>                                 <C>
   Common Stock $.001 par value              31,128,452 shares
   ----------------------------     ----------------------------------
              (Class)                 (Outstanding at August 7, 2001)

</TABLE>

<PAGE>   2
                                     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 June 30, 2001 and
                         December 31, 2000                                                 3

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

                     Condensed Consolidated Statements of Cash Flows for the six-month
                          periods ended June 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                  16

        ITEM 5.      OTHER INFORMATION                                                    16

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

     SIGNATURES                                                                           17

     EXHIBIT INDEX                                                                        18

</TABLE>


                                       2
<PAGE>   3

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>
                                                                                                JUNE 30,      DECEMBER 31,
                                                                                                 2001            2000
                                                                                               ---------       ---------
                                                                                              (UNAUDITED)      (NOTE 1)
                                     ASSETS
<S>                                                                                            <C>             <C>
Current Assets:
  Cash and cash equivalents ..............................................................     $ 165,886       $  64,662
  Short-term investments .................................................................       252,025          67,651
  Accounts receivable ....................................................................         4,200          23,288
  Inventory ..............................................................................         5,656           4,264
  Prepaid expenses and other current assets ..............................................         5,102           2,691
                                                                                               ---------       ---------
    Total current assets .................................................................       432,869         162,556
Long-term investments ....................................................................        75,833           4,506
Property and equipment, net ..............................................................        32,279          27,707
Intangible assets, net ...................................................................        45,491          48,046
Deposits and other assets ................................................................        11,314           5,924
                                                                                               ---------       ---------
TOTAL ASSETS .............................................................................     $ 597,786       $ 248,739
                                                                                               =========       =========

                   LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Accounts payable .......................................................................     $   3,817       $   5,106
  Accrued compensation ...................................................................         4,053           4,978
  Accrued clinical trial costs ...........................................................         1,094           1,974
  Accrued interest .......................................................................         4,345             695
  Accrued expenses and other liabilities .................................................         7,027           7,654
  Current portion of long-term obligations ...............................................        10,055           5,954
  Deferred revenue .......................................................................        10,000               -
                                                                                               ---------       ---------
    Total current liabilities ............................................................        40,391          26,361
Deferred rent ............................................................................         1,729           2,095
Deferred revenue .........................................................................         8,250           9,750
Long-term obligations, less current portion ..............................................       246,257          89,947
Commitments and contingencies
Stockholders' Equity:
  Preferred stock, $0.001 par value; 5,000,000 shares authorized, issuable in
    series; none outstanding at June 30, 2001 and
    December 31, 2000 ....................................................................             -               -
  Common stock, $0.001 par value; 100,000,000 shares authorized;
    30,640,956 and 25,181,051 shares issued and outstanding at
    June 30, 2001 and December 31, 2000, respectively ....................................            31              25
  Additional paid-in capital .............................................................       632,054         394,012
  Notes receivable from stockholders .....................................................           (50)            (50)
  Accumulated deficit ....................................................................      (330,876)       (273,401)
                                                                                               ---------       ---------
Total stockholders' equity ...............................................................       301,159         120,586
                                                                                               ---------       ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...............................................     $ 597,786       $ 248,739
                                                                                               =========       =========
</TABLE>

                             See accompanying Notes




                                       3
<PAGE>   4
                                     AVIRON
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                   JUNE 30,                     JUNE 30,
                                                            ------------------------       ----------------------
                                                              2001           2000           2001           2000
                                                            --------       --------       --------       --------
<S>                                                         <C>            <C>            <C>            <C>
REVENUES:
       Contract revenues and grants ..................      $  4,714       $  3,128       $  7,929       $  6,535
                                                            --------       --------       --------       --------

OPERATING EXPENSES:
  Research and development ...........................        31,924         17,476         60,018         35,070
  Acquisition of in-process research
      and development ................................             -              -              -         10,904
  General, administrative and marketing ..............         4,859          3,369          9,332          5,937
                                                            --------       --------       --------       --------

TOTAL OPERATING EXPENSE ..............................        36,783         20,845         69,350         51,911
                                                            --------       --------       --------       --------

LOSS FROM OPERATIONS .................................       (32,069)       (17,717)       (61,421)       (45,376)
                                                            --------       --------       --------       --------

OTHER INCOME (EXPENSE):
  Interest income ....................................         6,006          1,648         11,253          2,370
  Interest expense ...................................        (4,594)        (2,056)        (8,987)        (4,145)
                                                            --------       --------       --------       --------
  Net interest income (expense) ......................         1,412           (408)         2,266         (1,775)

  Gain on investment .................................            54              -          1,086              -
                                                            --------       --------       --------       --------

TOTAL OTHER INCOME (EXPENSE), net ....................         1,466           (408)         3,352         (1,775)
                                                            --------       --------       --------       --------

LOSS, before cumulative effect of change in
   accounting principle ..............................       (30,603)       (18,125)       (58,069)       (47,151)
Cumulative effect of change in accounting principle ..             -              -              -        (12,750)
                                                            --------       --------       --------       --------

NET LOSS, after cumulative effect of change in
   accounting principle ..............................      $(30,603)      $(18,125)      $(58,069)      $(59,901)
                                                            ========       ========       ========       ========

BASIC AND DILUTED NET LOSS PER SHARE:
   Loss, before cumulative effect of change in
     accounting principle ............................      $  (1.00)      $  (0.86)      $  (1.96)      $  (2.47)

   Cumulative effect of change in accounting principle             -              -              -          (0.67)
                                                            --------       --------       --------       --------

   Net loss, after cumulative effect of change in
     accounting principle ............................      $  (1.00)      $  (0.86)      $  (1.96)      $  (3.14)
                                                            ========       ========       ========       ========

Shares used in computing basic and diluted
 net loss per share ..................................        30,607         21,039         29,555         19,067
                                                            ========       ========       ========       ========

</TABLE>

                            See accompanying Notes.




                                       4
<PAGE>   5

                                     AVIRON
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                                     SIX MONTHS ENDED
                                                                                                          JUNE 30,
                                                                                               ----------------------------
                                                                                                  2001              2000
                                                                                               -----------       ----------
<S>                                                                                           <C>                  <C>
     CASH FLOWS FROM OPERATING ACTIVITIES:

     Net loss................................................................................ $   (58,069)       $  (59,901)

     Adjustment to reconcile net loss to net cash used
       in operating activities:
            Depreciation and amortization of property and equipment..........................        3,285            2,770
            Amortization of intangible assets................................................        4,391                -
            Other amortization...............................................................          663              304
            Accretion of interest on long-term obligation....................................          646                -
            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............................................................................           81                -
     Changes in assets and liabilities:
            Accounts receivable..............................................................       19,118             (527)
            Inventory........................................................................       (1,393)               -
            Prepaid expenses and other current assets........................................       (2,411)             (70)
            Deposits and other assets........................................................         (117)             765
            Accounts payable.................................................................       (1,289)          (1,445)
            Accrued expenses and other liabilities...........................................        1,808             (724)
            Deferred revenue.................................................................        8,500           (1,500)
            Deferred rent....................................................................         (366)            (326)
                                                                                               -----------       ----------
     Net cash used in operating activities...................................................      (24,640)         (37,000)
                                                                                               -----------       ----------

     CASH FLOWS FROM INVESTING ACTIVITIES:
            Purchases of investments.........................................................     (352,706)        (232,689)
            Maturities of investments........................................................       98,686          219,551
            Loan to officer..................................................................          (50)            (500)
            Expenditures for property and equipment..........................................       (7,857)          (1,935)
                                                                                               -----------       ----------
     Net cash used in investing activities...................................................     (261,927)         (15,573)
                                                                                               -----------       ----------

     CASH FLOWS FROM FINANCING ACTIVITIES:
         Principal payments on long-term obligations ........................................       (8,836)          (1,372)
         Proceeds from issuance of:
              Common stock, net..............................................................      201,131          101,999
              Convertible debt, net..........................................................      193,283                -
              Notes payable..................................................................        2,213                -
                                                                                               -----------       ----------
     Net cash provided by financing activities...............................................      387,791          100,627
                                                                                               -----------       ----------

     Net increase in cash and cash equivalents...............................................      101,224           48,054

     Cash and cash equivalents, at beginning of period.......................................       64,662           28,081
                                                                                               -----------       ----------
     CASH AND CASH EQUIVALENTS, at end of period.............................................  $   165,886       $   76,135
                                                                                               ===========       ===========

     Supplement schedule of non-cash financing and investing activities:
        Warrant issued in connection with intangible assets..................................  $     1,836       $        -
        Exchange of convertible notes due 2005 into common stock.............................  $    35,001       $        -
        Warrant issued for legal settlement..................................................  $         -       $      313

</TABLE>
                             See accompanying Notes.



                                       5
<PAGE>   6

                                     AVIRON
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 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 June 30, 2001 and for the three-month and
six-month periods ended June 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.

       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
six-month periods ended June 30, 2001 and 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 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.


                                       6
<PAGE>   7


The results for the six-month period ended June 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 second
quarter and $1.5 million for the six- month period ended June 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. Financial Transactions During the Six Months Ended June 30, 2001

         Convertible Debt

In February 2001, we completed a public offering of $200.0 million 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
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 have been charged to additional paid-in capital.

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 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 will be 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 Six Months Ended
          June 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.


         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


                                       7
<PAGE>   8

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 will be 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>   9


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, the risk that the United States
Food and Drug Administration, or FDA, will determine that our license
application for FluMist 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(TM) 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 devastating 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. 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.

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, aged 1 to 64 years.

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 are adequate data to support the efficacy of
FluMist for the prevention of influenza in healthy children and healthy adults
ages 1 - 64. The committee also recommended that the data analysis completed to
date is not sufficient to support the safety of the vaccine at this time. The
BLA for FluMist is currently under review by the FDA, which will ultimately
decide whether to approve the license application. Given the committee's
recommendation, we do not currently expect to begin commercialization of FluMist
for the 2001-2002 influenza season.



                                       9
<PAGE>   10

                       FLUMIST(TM)--Liquid Formulation

The current formulation of FluMist requires freezer storage throughout
distribution. 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.

                       Cooperative Research and Development Agreement

On July 16, 2001, we amended our cooperative research and development agreement,
or CRADA, for the development of FluMist with the National Institute of Allergy
and Infectious Diseases, or NIAID, of the National Institutes of Health, or NIH.
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.


      Other Products in Development

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

o     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.

o     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.

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

o     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.


      Board of Directors

On May 21, 2001, we announced that former U.S. Secretary of Commerce Barbara
Hackman Franklin was elected to Aviron's board of directors.


      Financial Activities

On June 18, 2001, we issued a notice to call for redemption on July 18, 2001 the
remaining $14.7 million of our outstanding 5 3/4 percent Convertible
Subordinated Notes due 2005. 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. These
notes converted into approximately 478,000 shares of our common stock.

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 loan 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.


                                       10
<PAGE>   11


         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 $330.9 million as of June
30, 2001. We expect to incur substantial operating losses at least through the
third quarter of 2002 and may incur losses after 2002.


         Business Outlook

We continue to anticipate our operating expenditures will be between $130 and
$145 million in 2001. This increase from 2000 operating expenses is due
primarily to an increase in the size of our operations in the United Kingdom 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.

Our outlook for operating expenses in 2001 does not include a one-time non-cash
charge associated with the vesting of employee stock options for approximately
438,000 shares of stock in the event of a 2001 licensure of FluMist by the FDA.
In the event FluMist is not licensed in 2001, these options will expire.

Our goal has been to generate sufficient revenue to Aviron from FluMist sales
during 2002 to achieve profitability. Following a complete response letter,
currently anticipated at the end of August, and further discussions with the
FDA, we will provide an update on our goal for 2002. Any and all FluMist sales
projections for 2002 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 for sale by the FDA and the price
paid to Aviron.

We expect capital expenditures to increase substantially as we commence building
additional manufacturing facilities and commercialization systems. During 2001,
we forecast that capital expenditures will be between $20.0 and $30.0 million,
which is a reduction of $10.0 million from previous guidance.


         Business Risks

The most significant 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 regulatory agencies will 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 and require us to raise
additional capital to cover the costs of additional research and development,
manufacturing and ongoing fixed costs. In addition, 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. For more information,
including VRBPAC's recent recommendation that the data analysis for FluMist
completed to date is not sufficient to support the safety of the vaccine at this
time, see the discussion under the sections entitled "Regulatory Activities" and
"Business Outlook" above. For other important risks that we face, see also
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>   12

RESULTS OF OPERATIONS

Three-Month and Six-Month Periods Ended June 30, 2001 and 2000

The results for the three-month and six-month periods ended June 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 $4.7 million and $7.9 million for the three and six months
ended June 30, 2001, respectively, compared to $3.1 million and $6.5 million for
the respective periods of 2000. Revenues during the first six 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 six months ended June 30, 2001 totaled
$36.8 million and $69.4 million, respectively, compared to $20.8 million and
$51.9 million for the respective periods of 2000. Research and development costs
increased to $31.9 million and $60.0 million for the three and six months ended
June 30, 2001, respectively, from $17.5 million and $35.1 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. 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 $9.3 million in the three and
six months ended June 30, 2001, respectively, from $3.4 million and $5.9 million
in respective periods of 2000. The increase was due to growth in infrastructure
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 $1.4 million and
$2.3 million, respectively, for the three and six months ended June 30, 2001, as
compared to net interest expense of $408,000 and $1.8 million for the respective
periods of 2000.

Interest income increased to $6.0 million and $11.3 million for the three and
six months ended June 30, 2001, respectively, as compared to $1.6 million and
$2.4 million for the respective periods of 2000, primarily as a result of the
increase in the average balances of cash, cash equivalents and investments due
to the receipt of funds from financings during 2000 and early 2001.

Interest expense for the three and six months ended June 30, 2001 was $4.6
million and $9.0 million, respectively, as compared to $2.1 million and $4.1
million for the respective periods of 2000. The increase in interest expense
reflects interest costs of $2.6 million for the second quarter and $4.1 million
for the first half of 2001 associated with the $200.0 million of our 5 1/4
percent convertible subordinated notes issued in February 2001 and a one-time
non-cash interest charge of approximately $1.6 million related to exchanges
during the first quarter of 2001 of approximately $33.5 million aggregate
principal amount of our 5 3/4 percent convertible subordinated notes, the 2005
Notes. These costs are partially offset by a decrease in interest expense
associated with the 2005 Notes of $1.2 million for the three months and $2.3
million for the six months ended June 30, 2001 due to the exchanges into common
stock in late 2000 and early 2001. Interest expense for the first six month of
2001 also includes approximately $323,000 for the three months and $646,000 for
the six months ended June 30, 2001 of interest accretion associated with our
obligation to Evans Vaccines Ltd. and approximately $640,000 of costs associated
with the early payoff of asset backed loans recorded in June 2001.

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>   13

LIQUIDITY AND CAPITAL RESOURCES

We had cash, cash equivalents and short- and long-term investments at June 30,
2001 of approximately $493.7 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.

On February 7, 2001, we completed a public offering of 4,000,000 shares of our
common stock at $50.00 per share and a concurrent public offering of $200.0
million of 5 1/4 percent convertible subordinated notes due 2008, or the 2008
Notes. 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. The sale of the securities under the
concurrent common stock and debt offerings resulted in net proceeds to the
company of approximately $382.5 million, after deducting expenses and
underwriters' discounts and commissions. During the six months ended June 30,
2001, we also generated $8.0 million through the sale of common stock in a
private transaction.

During the first six months of 2001, $24.6 million of cash was used in
operations, as compared to $37.0 million during the first six months of 2000.
The decrease in cash used in operating activities was primarily due to 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, which are partially offset by increased
expenditures for operating expenses. 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 $7.9 million for the first
six months of 2001, as compared to approximately $1.9 million during the first
six months of 2000. Capital expenditures increased in 2001 primarily due to the
completion of our acquisition of a lease in Speke, U.K. and expenditures for
equipment for our Pennsylvania facility. 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 debt were
approximately $8.8 million during the first six months of 2001, as compared to
approximately $1.4 million for the first six months of 2000. The increase is due
principally to the early payoff of $7.2 million of asset-backed loan balances in
June 2001. Additional loan balances in the aggregate principal amount of $6.5
million have been prepaid in July 2001.

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 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 have been charged to additional paid-in capital.

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


                                       13
<PAGE>   14

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.


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 June 30, 2001, we had cash and cash equivalents of $165.9 million, with a
weighted-average interest rate of 4.11 percent per year and short-term
investments with a basis of $251.7 million and a fair market value of $252.0
million, with a weighted-average interest rate of 4.53 percent per year. We also
had long-term investments with a basis of $75.4 million and a fair market value
of $75.8 million with a weighted-average interest rate of 4.98 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>   15

                                     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.


ITEM 2.   CHANGES IN SECURITIES

          None


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          None




                                       15
<PAGE>   16

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

The Company's Annual Meeting of Stockholders, or Annual Meeting, was held on
June 14, 2001. At the Annual Meeting, the stockholders of the registrant (i)
elected the three people listed below to serve as directors to hold office until
the 2004 Annual Meeting of Stockholders and until their successors are elected
and (ii) ratified the selection of Ernst & Young LLP as our Independent Auditors
for the fiscal year ending December 31, 2001.

The Company had 30,591,904 shares of common stock outstanding as of April 18,
2001, the record date for the Annual Meeting. At the Annual Meeting, holders of
the total of 22,515,749 shares of common stock were present in person or
represented by proxy. The following sets forth information regarding the results
of the voting at the Annual Meeting.

Proposal 1 -- Election of Directors

<TABLE>
<S>                                                                       <C>
C. Boyd Clarke

                  Votes in Favor......................................... 19,801,795
                  Votes Withheld.........................................  2,713,954

Wayne T. Hockmeyer, PhD.

                  Votes in Favor......................................... 22,464,961
                  Votes Withheld.........................................     50,788

Bernard Roizman, Sc.D.

                  Votes in Favor......................................... 19,537,882
                  Votes Withheld.........................................  2,977,867


Proposal 2  -- Ratification of Selection of Independent Auditors

                  Votes in Favor......................................... 22,481,664
                  Votes Against..........................................     25,746
                  Abstentions............................................      8,339
</TABLE>


ITEM 5.   OTHER INFORMATION

          None


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)    EXHIBITS

<TABLE>
<CAPTION>
          ITEM                      DESCRIPTION
          ----                      -----------
         <S>     <C>
         10.53   Real Estate Lease entered into between Aviron and The
                 Realty Associates Fund IV, L.P., dated May 8, 2001

</TABLE>


          (b)    REPORTS ON FORM 8-K

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

                   (i)  Current Report on Form 8-K, dated June 18, 2001,
                        disclosing Aviron's call for redemption of all of
                        its outstanding 5  3/4 percent Convertible
                        Subordinated Notes due 2005.


                                       16
<PAGE>   17

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

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




                                       17
<PAGE>   18

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
               ITEM     DESCRIPTION
               ----     -----------
               <S>      <C>
               10.53    Real Estate Lease entered into between Aviron and The
                        Realty Associates Fund IV, L.P., dated May 8, 2001

</TABLE>


                                       18