FORM 10-Q  
  
               SECURITIES AND EXCHANGE COMMISSION  
                      Washington, D.C.  20549  
  
  
            Quarterly Report Under Section 13 or 15(d)  
              of the Securities Exchange Act of 1934  
  
  
  
  
 For Quarter Ended:          September 30, 1996     
                    ____________________________________________
  
 Commission File Number:        0-19529  
                        ________________________________________
   
  
                              Alteon Inc.  
________________________________________________________________
        (Exact name of registrant as specified in its charter)  
  
  
    Delaware                                     13-3304550  
________________________________________________________________
(State or other jurisdiction of              (I.R.S. Employer   
incorporation or organization)               identification No.) 
  
  
  170 Williams Drive, Ramsey, New Jersey            07446  
________________________________________________________________
  (Address of principal executive offices)      (Zip Code)  
 
  
                            (201) 934-5000  
________________________________________________________________
        (Registrant's telephone number, including area code)  
  
  
     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:    *     NO:           
                            ________     ________ 

On November 1, 1996, 15,702,825 shares of Registrant's Common Stock
were outstanding.  

                              -1-  

<PAGE>

                         Alteon Inc.    


                           Index




PART I.  FINANCIAL INFORMATION                                   

                                                               Page


     Item 1 - Financial Statements:

          Balance sheets as of December 31, 1995
          and September 30, 1996 ...............................3
                                
          Statements of operations for the three 
          and nine months ended September 30, 1995 and 1996.....4

          Statements of cash flows for the nine 
          months ended September 30, 1995 and 1996..............5

          Notes to financial statements.........................6

     Item 2 - Management's Discussion and 
     Analysis of Financial Condition and
     Results of Operations......................................7


PART II.  OTHER INFORMATION

     Item 6 - Exhibits and Reports on Form 8-K.................10


SIGNATURES.....................................................11







                             -2-

<PAGE>

                         Alteon  Inc.          

                       BALANCE  SHEETS
                         (Unaudited)


                                December 31,        September 30,
                                    1995                 1996
                                ____________        _____________

                            ASSETS

Current Assets:

  Cash and cash equivalents....    $980,010          $27,277,400
  Short-term investments.......  44,216,701           11,589,970
  Receivables from corporate
   partner.....................     602,999               83,848
  Other current assets.........     667,385              994,351
                                 __________           __________ 
      Total current assets.....  46,467,095           39,945,569
                                       
Property and equipment,net.....   4,668,651            4,009,806
Deposits and other assets......     253,297              267,323
Restricted cash................     827,200              827,200
                                 __________          ___________
  Total assets................. $52,216,243          $45,049,898
                                                              

                LIABILITIES AND STOCKHOLDERS' EQUITY

Current Liabilities:

  Accounts payable...........      $230,953             $335,610
  Accrued expenses...........     1,519,665            4,585,979 
  Obligations under capital 
   leases....................       282,989              299,578
                                  _________            _________
  Total current liabilities..     2,033,607            5,221,167
                                  _________            _________
Obligations under capital lease     466,899              240,096
                                                               
                                       
Stockholders' Equity:                                           
                                       
  Preferred stock, $.01 par value; 
  1,998,329 shares authorized, 
  none issued..................       ---                 ---

  Common stock, $.01 par value; 
  30,000,000 shares authorized 
  and 15,387,985 and 15,680,293 
  shares issued and outstanding     153,880             156,803
                                       
  Additional paid-in capital..   83,607,054          83,960,630
                                       
  Accumulated deficit.........  (34,037,491)        (44,518,050)

  Unrealized losses on 
  short-term investments......       (7,706)            (10,748)
                                                                
     Total stockholders' equity  49,715,737          39,588,635
                                ____________        ____________
  Total liabilities and 
  stockholders' equity........  $52,216,243         $45,049,898
                                                              

        See accompanying notes to financial statements

                             -3-



<PAGE>
                           Alteon Inc.                
      

                    STATEMENTS OF OPERATIONS
                           (Unaudited)



                    For the Three Months     For the Nine Months
                    Ended September 30,      Ended September 30,
                    ____________________    _____________________
                      1995        1996         1995        1996  
                    __________ _________    __________ __________
                                                                 
      

Revenues:
                                               
  Investment 
    income.....    $430,650    $587,989   $1,268,306   $1,773,318
                                               
Expenses:

  Research and 
   development..  2,035,351   4,999,154   6,343,002    9,554,197
  General and 
   administrative   908,030     923,492   2,757,367    2,662,107
  Interest.....      16,500      11,190      53,276       37,573
                  _________  _________    _________    _________

     Total 
      expenses    2,959,881   5,933,836   9,153,645   12,253,877
                  _________  _________    _________    __________

Net loss.......  ($2,529,231)($5,345,847)($7,885,339)($10,480,559)
                 ___________ __________    _________ ____________
                                                                 

Net loss 
 per share.....      ($0.20)     ($0.34)     ($0.62)      ($0.67)
                     _______     _______     _______      _______ 
                                                               
Weighted average 
 common shares and 
 common equivalent 
 shares 
 outstanding...  12,824,448  15,679,313  12,637,732   15,620,842
                 __________ ___________ ____________  __________


                                                                 
           See accompanying notes to financial statements
                               -4-



<PAGE>

                       Alteon Inc.                  
 
                STATEMENTS OF CASH FLOWS  
                      (Unaudited) 
 
 
                                        For the Nine Months Ended
                                               September 30,
                                        _________________________

                                            1995         1996 
                                       ___________    ____________
                                                       
Cash Flows from Operating Activities: 
  Net loss..........................    ($7,885,339) ($10,480,559)

  Adjustments to reconcile net loss 
   to net cash used in operating
   activities:

    Depreciation and amortization....      645,498        592,745 
    Changes in operating assets and 
     liabilities:
      Receivables from corporate 
       partner.......................     (200,337)      519,151
      Other current assets...........      (520,872)     (326,966)
      Other assets...................        (1,917)      (14,026)
      Accounts payable and accrued 
       expenses......................      465,953     3,170,971
                                         _________      _________
 
      Net cash used in operating 
       activities....................   (7,497,014)    (6,538,684)

Cash Flows from Investing Activities:
  Capital Expenditures...............     (159,607)      (188,877)
  Purchases of marketable 
   securities........................  (45,050,699)   (61,488,903)
  Sales and maturities of 
   marketable securities.............   51,271,317    94,112,594
                                        __________    ___________

      Net cash (used in) provided by 
       investing activities..........    6,061,011    32,434,814
                                                      
Cash Flows from Financing Activities: 
  Proceeds from issuance of common
   stock.............................      468,140       356,499
  Principal payments under capital 
   lease obligations.................     (199,880)      (210,214)
  Proceeds from sales-leaseback
   financing.........................        ----        254,975
                                                      
      Net cash (used in) provided by 
       financing activities..........      268,260       401,260
                                         __________     _________
                                                      
Net (decrease)/increase in 
 cash and cash equivalents..........    (1,167,743)   26,297,390
Cash and cash equivalents, 
 beginning of period................     3,049,256       980,010
                                          __________   __________

Cash and cash equivalents, 
 end of period......................    $1,881,513   $27,277,400
                                         _________   ___________

Supplemental disclosures of 
 cash flow information:

     Cash paid for interest.........      $ 53,276      $ 37,573
                                           ________     ________
                                                      



         See accompanying notes to financial statements

                               -5-



<PAGE>

                         Alteon Inc.

                NOTES TO FINANCIAL STATEMENTS
                         (Unaudited)


1.  Basis of Presentation - The accompanying unaudited financial
statements have been prepared in accordance with generally
accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X.  Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements.  In the
opinion of Management, all adjustments (consisting of only normal
recurring accruals) considered necessary for a fair presentation
have been included.  Operating results for the nine months ended
September 30, 1996, are not necessarily indicative of the results
that may be expected for the year ending December 31, 1996.  For
further information refer to the financial statements and
footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1995.

2.  Cash, Cash Equivalents and Short-term Investments - Cash and
cash equivalents include highly liquid investments which have a
maturity of less than ninety days. Short-term investments are
recorded at fair market value. As of September 30, 1996, short-
term investments were invested in debt instruments of the U.S.
Government, government agencies and financial institutions and
corporations with strong credit ratings.

At September 30, 1996, $11,589,970 of the Company's short term
investments are classified as available for sale. A net
unrealized loss of $10,748 relating to the available for sale
securities has been recorded as a separate component of
stockholders' equity at September 30, 1996.

3.  Net Loss Per Share - Net loss per share is calculated using
the weighted average number of common shares and common stock
equivalents, as applicable, outstanding during the period.  In
1995 and 1996 common stock equivalents are excluded from the
computation of loss per share since their inclusion would be
antidilutive.

4.  Events Concerning Collaborative Partners - In 1990, the
Company and Marion Merrell Dow, Inc. (MMD) formed a strategic
alliance to develop and commercialize the Company's A.G.E.-
formation and cross-linking technology for therapeutics in the
areas of diabetes and age-related diseases.  The arrangements
included a research and development collaboration to conduct
clinical trials jointly, including those on pimagedine, an
agreement for joint promotion and sale of drugs developed
pursuant to the collaboration and a manufacturing supply
agreement.  In 1995, MMD was acquired by an affiliate of Hoechst
AG and renamed Hoechst Marion Roussel, Inc. (HMRI).  Effective
August 10, 1996, HMRI and the Company ended their collaboration,
and the Company regained all rights granted to HMRI covering the
Company's core technology.  This includes pimagedine, which is in
Phase III clinical trials for diabetic nephropathy. HMRI's decision
to withdraw from the collaboration was a result of its continuing
prioritization of HMRI's new product pipeline.  The Company is in
active collaboration discussions with other pharmaceutical
companies. The Company received reimbursement of research and
development expenses from HMRI of $537,000, $587,000, $1,217,000,
$894,000 and $1,015,000 for the years ended December 31, 1993,
1994, 1995, and the nine months ended September 30, 1995, and 1996,
respectively.  In addition to the reimbursement of certain of the
Company's research and development expenses, HMRI also had
incurred the significant portion of the expenses of the Company's
clinical trials.  The estimated cost of these clinical trials,
which is now the responsibility of the Company, is $1.5 million per
month.
                              -6-
<PAGE>

5.  Other Related Party Transactions - In 1993, a Company officer
received a loan which bore interest at a rate equal to the prime
rate, adjusted quarterly, for the purpose of purchasing a home. 
The principal amount of the loan together with the interest is
included in deposits and other assets.  The loan and related
interest are payable at the end of five years or upon termination
of employment.  The loan and accrued interest balance is $257,000
as of September 30, 1996.

Item 2.  Management's Discussion and Analysis of Financial
Condition and Results of Operations.

OVERVIEW

     Since its inception in October 1986, Alteon has devoted
substantially all of its resources to its research, drug
discovery and development programs.  To date, Alteon has not
generated any revenues from the sale of products and does not
expect to generate any such revenues for several years, if at
all.  Alteon has incurred a cumulative net loss of $44,518,000 as
of September 30, 1996, and expects to incur operating losses,
potentially greater than losses in prior years, for a number of
years.

     Alteon has financed its operations through proceeds from an
initial public offering of Common Stock in 1991, a follow-on
offering of Common Stock completed in October and November 1995,
private placements of preferred equity securities, revenue from
its collaborations with Hoechst Marion Roussel, Inc. ("HMRI"),
Yamanouchi Pharmaceutical Co., Ltd. ("Yamanouchi"), reimbursement
of certain of Alteon's research and development expenses by its
collaborative partners, and investment income earned on cash
balances and short-term investments.

     Effective August 10, 1996, HMRI and Alteon ended their
collaboration, and Alteon regained all rights granted to
HMRI covering the Company's core technology and assumed full
responsibility for the continuation of clinical trials which had
been funded by HMRI.  HMRI's decision to withdraw from the
collaboration was a result of its continuing prioritization of
its new product pipeline.  The Company is in active collaboration
discussions with other pharmaceutical companies.  There is no
assurance that the Company will be able to enter into such an
agreement or that if such an agreement is reached, it will
provide the level of funding which had been provided by HMRI.

     Although the Company anticipates increased expenditures in
research and development expenses as it develops products and
extends its clinical trials, a portion of such development
expenses is expected to be reimbursed by Alteon's collaborative
partners.  Yamanouchi has agreed to fund preclinical studies,
including most toxicology studies, on pimagedine and any other
products that the parties jointly agree to develop including a
second generation A.G.E.-formation inhibitor and a macrophage
stimulator.  Gamida for Life ("Gamida") has agreed to conduct, at
its own expense, a Phase II clinical trial in Israel to evaluate
pimagedine in patients with diabetes and elevated serum
cholesterol levels.  Yamanouchi and Gamida do not fund Alteon's
research or early product development expenses.

     The Company's business is subject to significant risks
including, but not limited to, the Company's ability to adequately
finance its operations, the risks inherent in its research and
development efforts, including clinical trials, uncertainties
associated both with obtaining and enforcing its patents and with
the patent rights of others, the lengthy, expensive and uncertain
process of seeking regulatory approvals, uncertainties regarding
government reforms and of product pricing and reimbursement
levels, technological change and competition, manufacturing
uncertainties and dependence on third parties, and its ability to 
obtain a corporate partner for marketing and distribution purposes.
Even if the Company's product candidates appear promising at an
early stage of development, they may not reach the market for
numerous reasons.  Such reasons include the possibilities that the
products will be ineffective or unsafe during clinical trials, will

                             -7-
<PAGE>

fail to receive necessary regulatory approvals, will be difficult
to manufacture on a large scale, will be uneconomical to market or
will be precluded from commercialization by proprietary rights of
third parties.

RESULTS OF OPERATIONS

Three Months Ended September 30, 1996 and 1995

     Total revenues for the three months ended September 30, 1996,
and the three months ended September 30, 1995, were $588,000 and
$431,000, respectively, and were derived from interest earned on
cash, cash equivalents and short-term investments.  The 36.5%
increase in investment income was attributed to the increase in
cash, cash equivalents and short-term investments from a follow-
on offering of Common Stock which was completed in October and
November 1995.

     The Company's total expenses increased to $5,934,000 for the
three months ended September 30, 1996, from $2,960,000 for the
three months ended September 30, 1995, and consisted primarily of
research and development expenses.  Research and development
expenses were $4,999,000 for the three months ended September 30,
1996, and $2,035,000 for the three months ended September 30,
1995, a 145.6% increase.  This increase was primarily the result
of funding the clinical trials due to the termination of the
Company's collaborative agreement with HMRI on August 10, 1996. 
(See-LIQUIDITY AND CAPITAL RESOURCES.)

     General and administrative expenses increased to $923,000 for
the three months ended September 30, 1996, from $908,000 for the
three months ended September 30, 1995, an 1.7% increase.  This
increase is due primarily to an increase in legal and patent
expenses offset by decreased personnel related costs.

     The Company's net loss increased to $5,346,000 for the three
months ended September 30, 1996, from $2,529,000 in the same
period in 1995, an increase of 111.4%, as a result of increased
research and development expenses and increased general and
administrative expenses offset by increased investment income.

Nine Months Ended September 30, 1996 and 1995

     Total revenues for the nine months ended September 30, 1996,
and the nine months ended September 30, 1995, were $1,773,000 and
$1,268,000, respectively.  The 39.9% increase in investment
income was attributed to higher cash, cash equivalents and short-
term investment balances, during the nine months in 1996 which
occurred from a follow-on offering of Common Stock which was
completed in October and November 1995.

     The Company's total expenses increased to $12,254,000 for the
nine months ended September 30, 1996, from $9,154,000 for the
nine months ended September 30, 1995, and consisted primarily of
research and development expenses.  Research and development
expenses were $9,554,000 for the nine months ended September 30,
1996, and $6,343,000 for the nine months ended September 30,
1995, a 50.6% increase.  This increase was primarily the result
of funding the clinical trials due to the termination of the
Company's  collaborative agreement with HMRI on August 10, 1996. 
The increase was also related to increased research and clinical
program studies.  (See-LIQUIDITY AND CAPITAL RESOURCES.)

     General and administrative expenses decreased to $2,662,000
for the nine months ended September 30, 1996, from $2,757,000 for
the nine months ended September 30, 1995, a 3.4% decrease.  This

                             -8-


<PAGE>

decrease is due primarily to a decrease in personnel related
costs offset by an increase in corporate expenses including legal
and insurance expenses.

     The Company's net loss increased to $10,481,000 for the nine
months ended September 30, 1996, from $7,885,000 in the same
period in 1995, an increase of 32.9%, as a result of increased
research and development expenses and offset by increased
investment income and decreased general and administrative
expenses.

LIQUIDITY AND CAPITAL RESOURCES

     Alteon had cash, cash equivalents and short-term investments
at September 30, 1996 of $38,867,000 compared to $45,197,000 at
December 31, 1995.  This is a decrease in cash, cash equivalents
and short-term investments for the nine months ended September
30, 1996, of $6,330,000.  This consisted of $6,540,000 of cash
used in operations consisting primarily of research and
development expenses, personnel and related costs and facility
expenses.  In addition, the Company incurred $190,000 for capital
expenditures and $11,000 of unrealized losses, offset by $411,000
of financing activities.  As of September 30, 1996, Alteon had
invested $7,330,000 in capital equipment and leasehold
improvements, of which a cumulative $1,395,000 had been funded
through capital leases.

     The Company's research and development expenses, to date, have
been funded primarily by research and development collaborative
arrangements and sales of equity securities.  In programs that
are subject to joint development agreements, the Company expects
to incur substantial additional research and development costs,
including costs related to drug discovery, preclinical research
and clinical trials.  In the past the Company has been able to
offset a portion of its research and development expenses and its
clinical development expenses with funding from its collaborative
partners.

     However, as described above, the Company and one of its
collaborative partners, HMRI, have terminated their collaboration. 
In addition to the reimbursement of certain of the Company's
research and development expenses, HMRI had also incurred the
significant portion of the expenses of the Company's clinical
trials.  The estimated cost of the clinical trials, which is now
the responsibility of the Company, is estimated to be $1.5 million
per month.

     Effective November 30, 1996, the Company will terminate its
funding of further research at The Picower Institute for Medical
Research ("The Picower Institute") because of Dr. Anthony Cerami's
retirement from The Picower Institute. In light of the number of
programs in its existing pipeline, the Company expects to devote
the funds previously targeted for The Picower Institute to
development of its existing projects.

     Alteon anticipates that its existing available cash and cash
equivalents and short-term investments, including the net
proceeds from the follow-on offering in 1995, will be adequate to
satisfy its working capital requirements for its current and
planned operations into the second quarter of 1997.  

     The Company's current and future capital needs depend on the
Company's ability to enter into a new collaborative agreement
with a new pharmaceutical company for the Company's core
technology or, in the absence of such an agreement, to find
alternative sources of funding. There is no assurance that the
Company will be able to enter into such an agreement or that if
such an agreement is reached, it will provide the level of funding
which had been provided by HMRI.  In addition, future capital
requirements will depend on numerous other factors, including the
progress of its research and development programs, the conduct of
preclinical tests and clinical trials, the development of
regulatory submissions, the costs associated with protecting its
patents and other proprietary rights, the development of marketing
and sales capabilities and the availability of third-party funding.

                             -9-


<PAGE>

     Because of the Company's long-term capital requirements, it
may seek access to the public or private equity markets whenever
conditions are favorable.  The Company may also seek additional
funding through corporate collaborations and other financing
vehicles, potentially including off-balance sheet financing
through limited partnerships or corporations.  There can be no
assurance that such funding will be available at all or on terms
acceptable to the Company.  If adequate funds are not available,
the Company may be required to curtail significantly one or more
of its research or development programs or obtain funds through
arrangements with collaborative partners or others.  This may
require the Company to relinquish rights to certain of its
technologies or product candidates.

     Alteon's commercial partners may develop, either alone or with
others, products that compete with the development and marketing
of the Company's products.  Competing products, either developed
by the commercial partners or to which the commercial partners
have rights, may result in their withdrawal of support with
respect to all or a portion of the Company's technology, which
would have a material adverse effect on the Company's business,
financial condition and results of operations.

Item 6.  Exhibits and Reports on Form 8-K.

a)  Exhibit 27: Financial Data Schedule

b)  The following report on Form 8-K was filed during the
quarter ended September 30, 1996:

    On August 14, 1996, the company filed a current report on Form
8-K which reported the Company's completion of enrollment in its
first Phase III clinical trial.



                              -10-


<PAGE>

                           SIGNATURES   

                                                                 
              

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



Date: November 11, 1996


                           Alteon Inc.

                            /s/ James J. Mauzey
                           ______________________________________
                           By:  James J. Mauzey
                                Chairman of the Board,
                                Chief Executive Officer         
                                 and Director
                                (principal executive officer)



                            /s/ Kenneth I. Moch
                           ______________________________________
                           By:  Kenneth I. Moch
                                Senior Vice President,
                                Finance and Business Development
                                and Chief Financial Officer
                                (principal financial officer)


                             -11-