<PAGE>   1

================================================================================
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K
                    ANNUAL REPORT PURSUANT TO 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997
                        COMMISSION FILE NUMBER: 0-19117

                      IMMULOGIC PHARMACEUTICAL CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                                      <C>
                        DELAWARE                                                13-3397957
              (STATE OR OTHER JURISDICTION                                   (I.R.S. EMPLOYER
           OF INCORPORATION OR ORGANIZATION)                              IDENTIFICATION NUMBER)
</TABLE>

                610 LINCOLN STREET, WALTHAM, MASSACHUSETTS 02154
                                 (781) 466-6000
    (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                  OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

        SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT: NONE

 SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: COMMON STOCK, PAR
                                   VALUE $.01
                        PREFERRED STOCK PURCHASE RIGHTS
                                 PAR VALUE $.01
                                (TITLE OF CLASS)

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].

     Indicate by a check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to the Form 10-K. [X]

     The aggregate market value of the Common Stock held by non-affiliates of
the registrant, based on the last sale price of the Common Stock reported on the
Nasdaq National Market on March 12, 1998 was $39,496,033.

     The number of shares of Common Stock outstanding as of March 12, 1998 was
20,358,780.

                      DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the ImmuLogic Pharmaceutical Corporation definitive Proxy
Statement for the 1998 Annual Meeting of Stockholders incorporated by reference
in Part III.
================================================================================
<PAGE>   2

                                     PART I

ITEM 1.  BUSINESS

GENERAL

     ImmuLogic Pharmaceutical Corporation (ImmuLogic or the Company) is a
biopharmaceutical company, incorporated under the laws of the State of Delaware
on March 26, 1987, developing novel products with a primary emphasis on the
immunological treatment of addiction and the diagnosis and treatment of
allergies. ImmuLogic's technological approach is based on proprietary
discoveries and an advanced understanding of the molecular events controlling
the human immune system.

     In 1997, the Company worked closely with the United States Food and Drug
Administration (the "FDA") responding to questions regarding the Company's
ALLERVAX(R) CAT and RAGWEED clinical programs. As a result of these discussions
and the Company's assessment of the associated significant costs and time
necessary to commercialize the products, the Company decided to discontinue the
programs.

     Accordingly, in 1997, the Company restructured its operations to focus its
efforts on the clinical development of vaccines for the management of cocaine
and nicotine addiction and research around its recombinant protein therapeutics
for the diagnosis and treatment of allergic diseases. In addition, the Company
continued research on a nonparental product for the treatment of multiple
sclerosis in collaboration with Schering AG (Schering) which will end on March
31, 1998. Total employees of the Company decreased from 151 at December 31, 1996
to 27 at March 12, 1998.

     In addition, the Company sub-leased one-third of its facilities effective
February 27, 1998, with the entire facility to be sub-leased effective October
1, 1998. The Company is planning for the sale of the majority of the equipment
and furniture located in its facility and is in the process of locating new
space to accommodate its current level of operations.

     The Company is considering various strategic alternatives with respect to
its business including further restructuring of operations, acquisition of
additional technology, strategic alliances, sale or merger or dissolution of the
Company. There can be no assurance that the Company will be successful in
implementing any further restructuring, strategic alliance, acquisition of
additional technology, merger or sale in a timely manner or at all, or that any
such action would enhance the competitive position or future success of the
Company.

TECHNOLOGY AND PRODUCT CANDIDATES

     Vaccines for the treatment of substance abuse: Cocaine and
Nicotine.  ImmuLogic is pursuing a novel strategy for the treatment of cocaine
addiction through the development of a therapeutic cocaine vaccine. Cocaine
abuse is a major medical and public health concern in the United States, with
2.1 million people estimated to be dependent on cocaine. The cumulative effects
of cocaine-associated violent crime, loss in individual productivity, illness
and death, has led the National Institute on Drug Abuse to identify the
development of an effective treatment for cocaine addiction as its top priority.
Despite the intense interest in this area, no effective long-term therapies are
yet available. The cocaine vaccine being developed at ImmuLogic is designed to
induce anti-cocaine antibodies that bind to cocaine in the bloodstream. The
purpose of the antibodies is to limit the amount of cocaine that can enter the
brain; as a result, the patient would not receive the stimulation associated
with cocaine use and is less likely to continue to take it. The vaccine is
intended to be used as part of a comprehensive treatment program aimed at
relapse prevention. The Company's cocaine vaccine IND application has been
cleared by the FDA, and clinical evaluation is planned to begin in mid-1998.

     In May, 1997, the Company received a $2.2 million cooperative award from
the National Institute on Drug Abuse (NIDA) to partially fund development of a
cocaine vaccine for the treatment of cocaine addiction. This funding was
received through the Institute's Strategic Program for Innovative Research on
Cocaine Addiction Pharmacotherapy (SPIRCAP) program. The purpose of the SPIRCAP
program is to provide funds to bridge the preclinical and clinical evaluation of
cocaine abuse treatments. The funds will be

                                        2
<PAGE>   3

directed to preclinical research and subsequent clinical studies to evaluate the
safety and efficacy of the vaccine. The funds from this grant will be available
over 4 years ending in April, 2001.

     ImmuLogic also is developing a nicotine vaccine based on similar
technology. Smoking is an enormous worldwide health problem and few
pharmacotherapies are available to help people to quit smoking. Overcoming
nicotine addiction is central to smoking cessation. The nicotine vaccine being
developed at the Company is designed to induce in vaccinated subjects
anti-nicotine antibodies that bind to nicotine in the bloodstream. The presence
of the antibodies should inhibit the entry of nicotine into the brain and reduce
both the psychological effects of nicotine and its addictiveness. Thus, if a
vaccinated subject smokes a cigarette, little or no effect of the nicotine
should be experienced which should reduce the risk that the subject would fall
back into a regular smoking habit. As with the cocaine vaccine, the nicotine
vaccine is intended to be used as part of a comprehensive treatment program
aimed at relapse prevention. The Company's nicotine vaccine is currently in
preclinical research. A vaccine candidate has been synthesized and shown to
induce nicotine-specific antibodies in animal models. Clinical evaluation is
currently scheduled to begin in 1999.

     Reagents for the Diagnosis of Allergic Diseases.  The Company has cloned
and sequenced relevant allergenic proteins of cat dander, ragweed pollen, house
dust mite, Japanese Cedar pollen, and certain grass pollens. The potential
applications for the Company's recombinant protein allergens is based on the
observation that those with strong immuno-globulin E (IgE) reactivity may have
the greatest diagnostic potential and those with little or no reactivity have
more immediate therapeutic prospects. With current molecular techniques and
immunochemical methods the Company believes these properties can be easily
modified to optimize each recombinant protein for either alternative.

     Recombinant allergens that have the full IgE reactivity profile equivalent
to the native forms can be used to identify allergic individuals in both human
and animal populations. These recombinant protein preparations could replace or
be used in combination with extracts in in vitro tests or other commercially
applied formats in which the allergen is affixed to a matrix for direct IgE
binding analysis. The advantages of recombinant proteins are: 1) unequivocal
specificity; 2) theoretically limitless supply through recombinant expression
techniques; 3) ability to modify the proteins through molecular biology
techniques. These forms could be applied to the presently practiced skin testing
diagnostic regimens in the U.S. as well as the in vitro diagnostic methods in
Europe, Japan and the U.S.

     Recombinant Proteins as Therapeutic Agents.  Purified recombinant protein
allergens could be used in conventional immunotherapy treatments. The advantages
over extracts are specificity, improved quantitation and characterization of
delivered product. Since IgE reactivity may be a disadvantage in conventional
immunotherapy, recombinant allergens may have a distinct advantage. Those
recombinant allergens that possess IgE reactivity can be modified to eliminate
the IgE binding sites but without loss of the T cell epitopes which are crucial
for effecting the decrease in allergic reactivity.

     ALLERVAX(R).  ImmuLogic was developing allergy therapeutic products to be
administered via subcutaneous injection which it believed would provide
substantial improvement in effectiveness, safety and convenience over existing
immunotherapy. The Company's approach was to identify the proteins that cause
the allergic response and to define the relevant T cell epitopes from each of
these proteins. From 1992 to 1996, the Company completed a number of Phase I and
Phase II clinical studies for its ALLERVAX(R) CAT and ALLERVAX(R) RAGWEED
programs. The Company worked closely with the United States Food and Drug
Administration (the "FDA") in 1997 responding to questions regarding the
Company's ALLERVAX(R) CAT and ALLERVAX(R) RAGWEED clinical programs. As a result
of these discussions and the Company's assessment of the associated significant
costs and time necessary to commercialize the products, the Company decided to
discontinue the programs.

     Multiple Sclerosis.  The Company's primary effort in the autoimmune disease
area was in developing a peptide-based therapeutic to treat multiple sclerosis.
In December 1996, ImmuLogic filed an IND application to begin clinical trials of
an injectable peptide immunotherapeutic to treat multiple sclerosis. In
connection with the reorganization of the Company's development plans in March
1997, the Company reviewed the plans for its injectable multiple sclerosis
product and decided to discontinue further development internally. During

                                        3
<PAGE>   4

1997, the Company continued research on a nonparental product for the treatment
of multiple sclerosis in collaboration with Schering. This collaboration will
end on March 31, 1998.

COLLABORATION AGREEMENTS

     Schering AG, Germany.  In March 1995, the Company signed a collaboration
agreement with Schering AG for the joint development and commercialization of
the Company's peptide therapeutic to treat multiple sclerosis. Under this
agreement, the Company would have received up to $7,500,000 in research support
($5,625,000 of which had been received through December 31, 1997) and up to
$20,000,000 in milestone payments. The Company would pay one-third of the costs
associated with clinical development and would receive a substantial royalty on
net sales, if any. During 1996, the parties agreed in concept to changes in the
collaboration agreement under which milestone payments were restructured to
payments made after successful product demonstration. Annual research funding
from Schering AG during 1997 was reduced from $2,500,000 to $1,250,000. This
funding was dedicated exclusively to the development of a nonparentally
administered therapeutic product for multiple sclerosis. During 1998, the
Company is expected to receive $312,500 in research funding from Schering AG.
The research funding due under the collaboration agreement between the Company
and Schering AG will end on March 31, 1998.

     Schering AG has the right, at its election, to participate in the
development and commercialization of the injectable dosage form of this
therapeutic should such development and commercialization occur. The Company has
no plans to develop this product in the future. If Schering AG elects to develop
this product, it will be required to reimburse the Company for a significant
portion of development costs incurred to date by the Company and will be
obligated to make certain milestones payments to the Company. Schering AG has
the right to terminate the collaboration agreement upon 30 days prior written
notice to the Company.

     In addition, Schering Berlin Venture Corporation purchased 1,042,345 shares
of the Company's Common Stock for $8,000,000 at the time of entering into the
agreement in 1995. In April 1996, ImmuLogic registered these shares under the
Securities Act of 1933 pursuant to the registration rights granted to Schering
Berlin Venture Corporation in the stock purchase agreement. Upon registration,
Schering Berlin Venture Corporation sold these shares on the open market.

COMPETITION

     The pharmaceutical and biotechnology industries are characterized by
rapidly evolving technology and intense competition. Some companies are engaged
in activities similar to those of the Company. Certain of these have greater
financial and other resources, larger research and development staffs, and more
extensive marketing and manufacturing organizations. Many of these companies
have significantly more experience than the Company in preclinical testing,
conducting human clinical trials and other regulatory approval procedures. In
addition, colleges, universities, governmental agencies and other public and
private research organizations conduct research and may market commercial
products on their own or through joint ventures. These institutions are becoming
more active in seeking patent protection and licensing arrangements to collect
royalties for use of technology that they have developed. These institutions
also compete with the Company in recruiting and retaining highly qualified
scientific personnel.

     The Company faces substantial competition in the treatment of substance
abuse. Many pharmaceutical, biotechnology and academic institutions are
exploring a variety of approaches for the treatment of cocaine addiction. In the
area of smoking cessation, a variety of products including nicotine replacement
products and antidepressants have been approved for smoking cessation and would
compete with the Company's proposed nicotine vaccine. In addition, new products
may be in development which may compete with the Company's proposed nicotine
vaccine. There can be no assurance, that the Company's products in the area of
substance abuse will be successfully developed or if they are successfully
developed, that they would have advantages over current or future available
treatments.

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<PAGE>   5

     The Company also faces substantial competition in the allergy area. Many
pharmaceutical companies have programs focused on enhancing current therapies,
such as non-sedating antihistamines, and on developing products which affect
immune system mediators further down the allergic cascade. Most of these
approaches are aimed at relieving symptoms, reducing side effects, and
addressing the inconvenience to the patient. While the Company believes that its
recombinant protein products, if successfully developed, would have advantages
over currently available treatments, there can be no assurance that such
products will be developed or that advantages will materialize.

PATENTS, TRADEMARKS, AND PROPRIETARY RIGHTS

     The Company's patent strategy has been to pursue a strong patent portfolio.
As of March 12, 1998, the Company had ownership or exclusive rights to
approximately 71 patent applications (including divisional applications) in the
United States. The Company's pending patent applications cover general
immunotherapy, allergy, autoimmune and drug abuse therapy. The Company has 36
issued patents worldwide, and has received another 8 notices of allowance for
the Company's US applications which will mature into issued patents within the
next several months. The Company is in the process of a critical review of the
above patent portfolio to maximize prosecution strategy given the Company's
current technology focus, and will discontinue patent applications which are not
in line with the Company's current programs planned for product development.

     The Company has entered into a number of licensing arrangements pursuant to
which it has obtained exclusive rights to certain technologies. In 1987,
ImmuLogic licensed a patent application from MIT claiming methods and
compositions for modulating the immune response of a cellular system. One United
States patent was issued in May, 1991, with claims related to methods for use of
compositions as vaccines and therapeutics. A United States patent application
covering other aspects of the original MIT patent application is pending. The
issued claims relate to potential approaches to vaccine therapy and are
unrelated to the Company's current research programs in allergy and autoimmune
diseases. Under its agreement with MIT, as amended, ImmuLogic is required to
make certain benchmark and royalty payments to MIT, including a $750,000 patent
allowance fee due in installments.

     In addition, the Company has obtained exclusive licenses from the
University of North Carolina, TVW Telethon ICHR (Perth, Australia) and the
University of Melbourne covering inventions and patent applications relating to
therapeutic uses of allergenic proteins and peptides of ragweed, house dust mite
and grasses, respectively. Under these license agreements, the Company is
required to pay royalties based on sales of products derived from the licensed
inventions. The Company cannot at this time make a meaningful estimate of its
total future costs under the MIT license and its other licensing arrangements
because such costs depend on several factors, including the level of future
product sales.

     ImmuLogic has filed or licensed patent applications on the protein
sequences for specific allergenic proteins and portions thereof, use of the
sequences, and the use of certain T cell epitopes from these sequences in
therapeutic compositions. This work was primarily based on extensive in vitro
studies using human samples, as well as in vivo animal work, to determine the
manner in which T cells respond to allergens and their epitopes.

     ImmuLogic has licensed patents pertaining to the drugs of abuse therapeutic
program for which it pays license fees and may have to pay royalties. In
addition, it has filed its own patents.

     There can be no assurance that patent applications owned by or licensed to
the Company will issue or that, if issued, they will provide the Company with
significant protection against competitors. In addition, the Company is aware of
one issued European patent and one pending European patent application belonging
to third parties which may adversely affect the Company's ability to
commercialize its multiple sclerosis therapeutic candidate. If the claims
contained in these patents are sustained, the Company may need to acquire
licenses to those technologies in order to commercialize its multiple sclerosis
therapeutic candidate in Europe. The cost or availability of licenses for these
technologies is unknown. There may be additional domestic and foreign patent
applications pending of which the Company is unaware at this time and which may
affect the Company's ability to commercialize any of its products if
corresponding patents are issued. There can be no assurance that ImmuLogic will
not need to acquire licenses under patents belonging to others


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<PAGE>   6

for technology potentially useful or necessary to ImmuLogic and the cost or
availability of such potential licenses is currently unknown. Moreover, there
can be no assurance that any patents issued to or licensed by the Company will
not be infringed upon or designed around by others.

     Some of the Company's know-how and technology is not patentable. To protect
its rights, the Company requires all employees, consultants, advisors and
collaborators to enter into confidentiality agreements with ImmuLogic. There can
be no assurance, however, that these agreements will provide meaningful
protection for the Company's trade secrets, know-how or other proprietary
information in the event of any unauthorized use or disclosure. Further, in the
absence of patent protection, the Company's business may be adversely affected
by competitors who independently develop substantially equivalent technology.

GOVERNMENT REGULATION

     The production and marketing of the Company's products and its research and
development activities are subject to regulation for safety and effectiveness by
numerous governmental authorities in the United States and other countries.
Pharmaceutical products intended for therapeutic or diagnostic use in humans are
governed by FDA regulations in the United States and by comparable regulations
in foreign countries. The process of completing clinical testing and obtaining
FDA approval for a new human drug or biological product requires a number of
years and the expenditure of substantial resources.

     The steps required before a new human pharmaceutical product may be
marketed in the United States include (1) preclinical laboratory and animal
tests, (2) the submission to the FDA of an application for an IND, (3) adequate
and well-controlled human clinical trials to establish the safety and
effectiveness of the drug, (4) the submission of a Biological License
Application (BLA) or a New Drug Application (NDA) to the FDA, and (5) FDA
approval of the BLA or NDA prior to any commercial sale or shipment of the drug.

     Preclinical studies are commonly conducted in a laboratory in animal models
or on human samples in vitro. The results of these studies are submitted to the
FDA as part of the IND application prior to commencement of clinical testing in
humans. Clinical trials are characterized by three stages. Phase I trials are
designed to provide information about product safety and pharmacology. Phase II
trials are designed to provide additional information on safety, preliminary
evidence of clinical efficacy and definition of an effective dosing regimen.
Phase III trials are large-scale studies designed to provide statistical
evidence of effectiveness and safety in humans at the designated dose and dosing
regimen. Upon completion of clinical testing, which must demonstrate that the
product is safe and effective for a specific indication, a BLA or NDA may be
filed with the FDA. This application includes details of the manufacturing and
testing processes, preclinical studies and clinical trials. FDA approval of the
application is required before the applicant may market the new product.

     Even after initial FDA approval has been obtained, further studies may be
required to provide additional data on safety or effectiveness. Also, the FDA
may require post-marketing and surveillance programs to monitor the drug's
effects.

     In addition to obtaining FDA approval for each product, each manufacturing
establishment for new drugs and biologics must receive some form of approval by
the FDA. Under current rules for biologics, the facility must obtain an approved
Established License Application (ELA) from the FDA. The facility must be
inspected by the FDA, and the approval obtained, prior to interstate marketing
of any product. Among the conditions for such approval is the requirement that
the prospective manufacturer's quality control and manufacturing procedures
conform to the FDA's Good Manufacturing Practice (GMP) regulations, which must
be followed at all times. Manufacturing establishments, both foreign and
domestic, also are subject to inspections by or under the authority of the FDA
and by other federal, state or local agencies.

     In addition to regulations enforced by the FDA, the Company also is subject
to regulation relating to occupational health and safety, environmental
protection, hazardous substance control, radioactive materials control and waste
management and disposal. Although the Company believes that its safety
procedures for handling and disposing of hazardous and radioactive materials
comply with federal, state and local regulations, the risk of accidental
contamination or injury from these materials cannot be eliminated.

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<PAGE>   7

     For marketing outside the United States, the Company will be subject to
foreign regulatory requirements governing human clinical trials and marketing
approval for drugs and devices. The requirements relating to the conduct of
clinical trials, product licensing, pricing and reimbursement vary widely from
country to country, and may differ from requirements in the United States.
Results of clinical trials conducted outside the United States, if any, may have
bearing on the U.S. regulatory processes.

     There can be no assurance that FDA approval of any ELA, NDA or BLA
submitted by the Company will be obtained, or that if obtained, that any such
approval will be obtained in a timely manner.

EMPLOYEES

     As of March 12, 1998, the Company had 27 full-time employees, 7 of whom
hold Ph.D. degrees. The Company considers its relations with its employees to be
good. No Company employee is covered by a collective bargaining agreement.

ITEM 2.  PROPERTIES

     The Company's 85,000 square foot headquarters and research and development
facility is located in Waltham, Massachusetts under a lease agreement which
expires in August 2002. Due to the discontinuation of the Company's ALLERVAX(R)
program and the recent downsizing of its workforce, the Company sub-leased
one-third of this facility under a sub-lease agreement effective February 27,
1998, with the entire facility being subleased under the above mentioned
sublease agreement effective October 1, 1998. The sublease agreement covers the
Company's future obligations due after September 30, 1998 under this lease. The
Company is currently in the process of locating new space to accommodate its
current level of operations. The Company's operating lease for its former Palo
Alto, California facility which expires in March 1999, was sub-leased under two
agreements which cover the Company's future obligations under this lease.

ITEM 3.  LEGAL PROCEEDINGS

     None.

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

     None.

EXECUTIVE OFFICERS OF THE REGISTRANT

     The executive officers of the Company and their respective ages and
positions with the Company as of March 27, 1998 are as follows:

NAME                               AGE   POSITION WITH THE COMPANY
----                               ---   -------------------------

J. Joseph Marr, M.D..............  59    President and Chief Operating Officer,
                                         Executive Vice President, Research and
                                         Development and Chief Scientific
                                         Officer

J. Richard Crowley...............  42    Chief Financial Officer, Treasurer

     Dr. J. Joseph Marr was appointed President and COO in March 1997. He joined
ImmuLogic in July 1996 as Executive Vice President Research and Development,
Chief Scientific Officer, a position he retained upon his appointment as
President and COO. In addition, Dr. Marr served as the Company's Acting
President and Acting Chief Executive Officer from December 1996 to March 1997.
From 1993 to 1996, Dr. Marr held the position of Vice President, Research and
Development at Ribozyme Pharmaceuticals. From 1989 to 1993, Dr. Marr was Senior
Vice President, Discovery Research at Monsanto/Searle Research and Development
where he managed a group of 240 scientists. Dr. Marr also was a consultant with
the World Health Organization (WHO) from 1982 to 1992 during which time he
designed and implemented certain late stage clinical trials for WHO. Dr. Marr
held academic positions from 1982 to 1990 including Professor, Department of
Medicine and Department of Biochemistry and Director of Infectious Diseases and
Clinical Laboratories at

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the University of Colorado Health Sciences Center. From 1970 to 1982 he was on
the faculty of Washington University School of Medicine where he was Associate
Professor of Medicine and Director, Microbiology Laboratories and at St. Louis
University School of Medicine where he was Vice Chairman, Department of
Medicine, Professor of Medicine and Microbiology. Dr. Marr received his B.S.
degree from Xavier University and M.D. degree from Johns Hopkins University
School of Medicine.

     J. Richard Crowley is consulting with ImmuLogic in the position of interim
Chief Financial Officer. Mr. Crowley is President of Keystone Consulting, a
contract financial and operational management services firm. Mr. Crowley's
experience from 1983 to 1995 includes senior financial and operational positions
with the LittlePoint Corporation, TransNational Financial Services and the
Crosby Vandenburgh Group. From 1979 to 1983, Mr. Crowley was with Price
Waterhouse, during which time he obtained his C.P.A. Mr. Crowley holds a B.A. in
Economics from Providence College.

     Executive officers of the Company are elected by the Board of Directors on
an annual basis and serve at the discretion of the Board of Directors. There is
no family relationship among any of the officers or directors.

                                    PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     The Company's Common Stock is traded in the over-the-counter market on the
Nasdaq National Market under the symbol IMUL. The following table sets forth for
the periods indicated the range of high and low closing sale prices per share of
the Common Stock as reported by the Nasdaq National Market.

<TABLE>
<CAPTION>
                                                  HIGH          LOW
                                                  ----          ---
<S>                                               <C>           <C>
1996
First Quarter...................................  $21           $10 5/8
Second Quarter..................................   13 1/4         8 5/8
Third Quarter...................................    9 1/16        6 1/2
Fourth Quarter..................................   10 1/2         6 3/8

1997
First Quarter...................................  $ 6 11/16     $ 3 9/16
Second Quarter..................................    4 3/8         3 1/8
Third Quarter...................................    4 7/64        2 3/4
Fourth Quarter..................................    3 1/2         1 17/32
</TABLE>

     On December 31, 1997, there were approximately 304 holders of record of the
Company's Common Stock. The Company has never declared or paid any cash
dividends on its capital stock. The Company currently intends to retain all
earnings, if any, for use in its business and does not anticipate paying any
cash dividends in the foreseeable future.

                                        8
<PAGE>   9

ITEM 6.  SELECTED FINANCIAL DATA

     The following selected financial data of the Company as of and for the five
years ended December 31, 1997 are derived from the financial statements of the
Company. The information set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included as Item 7 and the financial statements and related
footnotes included as Item 8 in this Form 10-K.

<TABLE>
<CAPTION>
                                                      YEAR ENDED DECEMBER 31,
                                      --------------------------------------------------------
                                        1997        1996        1995        1994        1993
                                      --------    --------    --------    --------    --------
                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                   <C>         <C>         <C>         <C>         <C>
Consolidated Statement of Operations
  Data:
Total revenues......................  $  2,049    $  9,239    $  7,758    $  6,335    $  7,971
Research and development expenses...    17,103      25,882      24,709      27,074      23,096
General and administrative
  expenses..........................     6,390       6,830       6,433       7,381       6,592
Net loss............................   (18,119)    (18,870)    (19,151)    (25,306)    (18,837)
Basic and diluted net loss per
  share.............................     (0.89)      (0.93)      (1.12)      (1.70)      (1.30)
Weighted average number of common
  shares outstanding................    20,273      20,206      17,035      14,843      14,451
</TABLE>

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                      --------------------------------------------------------
                                        1997        1996        1995        1994        1993
                                      --------    --------    --------    --------    --------
                                                           (IN THOUSANDS)
<S>                                   <C>         <C>         <C>         <C>         <C>
Consolidated Balance Sheet Data:
Cash and cash equivalents and short-
  and long-term investments.........  $ 52,293    $ 70,047    $ 85,960    $ 55,912    $ 79,504
  Total assets......................    59,588      79,654      97,579      70,026      94,123
Long-term obligations...............       325         375         425         475         525
Stockholders' equity................    54,019      71,926      89,535      62,284      87,052
</TABLE>

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

OVERVIEW

     Since inception, the Company has focused on the research and clinical
development of products to treat allergies, autoimmune diseases and in 1994,
added a program for vaccines for the management of drugs of abuse. No revenues
have been derived from the sale of any products, and the Company does not expect
to receive revenues from product sales for a number of years. The Company may
continue to expend substantial funds for further research and development,
establishment of commercial-scale manufacturing capabilities, and the marketing
of its products. The Company has incurred substantial annual operating losses
since inception and expects to incur substantial operating losses in the future.
At December 31, 1997, the Company's accumulated deficit was $131,435,000. As a
result, the Company is dependent upon existing cash resources, external
financing from equity and debt offerings, or collaborative research,
development, manufacturing, and marketing arrangements with corporate partners
to finance its operations. To date, the Company's primary sources of working
capital have been from the sale of equity securities, interest earned on
invested capital and sponsored research funding from collaboration agreements.

     The Company worked closely with the FDA during 1997, responding to
questions raised regarding the Company's ALLERVAX(R) CAT and RAGWEED clinical
programs. As a result of these discussions, and the Company's assessment of the
associated significant additional costs necessary to commercialize the products,
the Company decided to discontinue the programs.

     During 1997, the Company restructured its operations to focus its efforts
on the clinical development of vaccines for the management of cocaine and
nicotine addiction and research around its recombinant protein therapeutics for
the diagnosis and treatment of allergic diseases. In addition, the Company
continued research

                                        9
<PAGE>   10

on a nonparental product for the treatment of multiple sclerosis in
collaboration with Schering which will end on March 31, 1998.

     Total employees of the Company decreased from 151 at December 31, 1996 to
27 at March 12, 1998. Total severance paid and accrued during 1997 was
$3,147,000, which is included in the statement of operations for the year ended
December 31, 1997. In addition, the Company subleased its facilities under a
sublease effective February 27, 1998 resulting in a non-cash charge of $444,000
for the writedown of all of the Company's leasehold improvements to net
realizable value.

     The Company is considering various strategic alternatives with respect to
its business including further restructuring of operations, acquisition of
additional technology, strategic alliances, sale or merger or dissolution of the
Company. There can be no assurance that the Company will be successful in
implementing any further restructuring, strategic alliance, acquisition of
additional technology, merger or sale in a timely manner or at all, or that any
such action would enhance the competitive position or future success of the
Company.

     In May, 1997, the Company received a $2.2 million cooperative award from
the National Institute on Drug Abuse (NIDA) to partially fund development of a
cocaine vaccine for the treatment of cocaine addiction. This funding was
received through the Institute's Strategic Program for Innovative Research on
Cocaine Addiction Pharmacotherapy (SPIRCAP) program. The purpose of the SPIRCAP
program is to provide funds to bridge the preclinical and clinical evaluation of
cocaine abuse treatments. The funds will be directed to preclinical research and
subsequent clinical studies to evaluate the safety and efficacy of the vaccine.
The funds from this grant will be available over 4 years ending in April, 2001.
A Phase I clinical trial for the cocaine vaccine is due to begin in mid-1998.

RESULTS OF OPERATIONS

  Years Ended December 31, 1997 and 1996

     Total revenues in 1997 were $2,049,000 compared to $9,239,000 in 1996. The
decrease in total revenues from 1996 was primarily due to the fact that the
Company received a one-time $7,000,000 payment in 1996 from Hoechst Marion
Roussel, Inc. (HMR) resolving all obligations related to the collaboration
agreement between the Company and HMR, which was terminated by HMR on September
7, 1996. Sponsored research funding from Schering AG was $1,250,000 and
$1,875,000 in 1997 and 1996, respectively. Revenue received from the NIH under
the Company's SBIR and SPIRCAP grants was $615,000 and $364,000 in 1997 and
1996, respectively.

     Total operating expenses were $23,492,000 in 1997 compared to $32,712,000
in 1996. Research and development expenses were $17,103,000 in 1997 compared to
$25,882,000 in 1996, a decrease of $8,779,000 or 33.9%. The decrease in
operating and research and development expenses was primarily due to reduced
headcount and related costs due to the discontinuation of the clinical
development of the ALLERVAX(R) CAT and ALLERVAX(R) RAGWEED products. Offsetting
this decrease was increased severance costs related to the Company's
restructuring totaling $1,221,000 and a non-cash charge of $355,000 for the
writedown of all of the Company's leasehold improvements to net realizable
value.

     General and administrative expenses were $6,390,000 in 1997 compared to
$6,830,000 in 1996, a decrease of $440,000 or 6.4%. The decrease in general and
administrative costs was due primarily to reduced headcount and related costs
resulting from the Company's restructuring, offset by severance paid to the
former chairman of the board of the Company during 1997 totaling $1,054,000 and
additional severance costs related to the Company's restructuring totaling
$882,000 and a non-cash charge of $89,000 for the writedown of all of the
Company's leasehold improvements to net realizable value.

     Net interest income was $3,325,000 in 1997 compared to $4,603,000 in 1996,
a decrease of $1,278,000 or 27.8%. The decrease resulted primarily from a lower
average investable cash and investment balance resulting from cash used in
operations during 1997. In addition, the Company received interest payments from
HMR during 1996 related to capital expenditures made by the Company with respect
to the joint manufacture of the ALLERVAX(R) family of allergy therapeutics.

                                       10
<PAGE>   11

  Years Ended December 31, 1996 and 1995

     Total revenues in 1996 were $9,239,000 compared to $7,758,000 in 1995. The
increase in total revenues in 1996 was primarily due to a $7,000,000 payment
received resolving all obligations related to the collaboration agreement
between the Company and HMR, which was terminated by HMR on September 7, 1996.
Revenues in 1995 included a license and milestone payment from HMR in the amount
of $5,000,000. Offsetting this increase, in part, was lower sponsored research
funding received under a license and collaboration agreement with Schering AG.
Sponsored research funding from Schering AG was $1,875,000 and $2,500,000 in
1996 and 1995, respectively.

     Total operating expenses were $32,712,000 in 1996 compared to $31,142,000
in 1995. Total 1995 expenses included $2,130,000 for exit costs relating to the
closing of the Company's Palo Alto facility. Research and development expenses
were $25,882,000 in 1996 compared to $24,709,000 in 1995, an increase of
$1,173,000 or 4.7%. The increase in research and development expenses was
primarily due to increased headcount and related costs in the development,
clinical, and regulatory areas to support the continuing clinical development of
the ALLERVAX(R) CAT and ALLERVAX(R) RAGWEED products. In addition, research and
development costs increased due to severance payments made and other costs
incurred in connection with the resignation of two executive officers of the
Company during 1996. Clinical trial costs increased over the prior year,
primarily as a result of the 1996 seasonal ALLERVAX(R) RAGWEED trial. Partially
offsetting these increases in research and development were savings from reduced
headcount and related costs as a result of the closing of the Company's Palo
Alto research facility in May 1995.

     General and administrative expenses were $6,830,000 in 1996 compared to
$6,433,000 in 1995, an increase of $397,000 or 6.2%. The increase in general and
administrative costs was due primarily to severance payments made and other
costs incurred in connection with the resignation of three additional executive
officers of the Company during 1996. This was offset in part by lower headcount
and related costs as a result of closing the Company's Palo Alto research
facility in May 1995.

     Net interest income was $4,603,000 in 1996 compared to $4,233,000 in 1995,
an increase of $370,000 or 8.7%. The increase resulted primarily from a higher
average investable cash and investment balance which was due to the sale of
equity securities through two public offerings during the third quarter of 1995.
This was offset in part by cash spent on operations during 1996. In addition,
increased interest received from HMR related to capital expenditures made by the
Company with respect to the joint manufacture of the ALLERVAX(R) family of
allergy therapeutics contributed to the increase in interest income.

LIQUIDITY AND CAPITAL RESOURCES

     Since inception, ImmuLogic has financed its operations through the sale of
equity securities, sponsored research revenues, license and milestone payments,
and interest earned on invested capital. The Company's total cash and
investments balance at December 31, 1997 was $52,293,000, which included cash
and cash equivalents of $8,437,000, short-term investments of $19,068,000 and
long-term investments of $24,788,000. The Company has raised $134,100,000 from
public equity offerings, received $24,000,000 from HMR in payments related to
the joint collaboration agreement for its ALLERVAX(R) products, $7,000,000 from
HMR for a final settlement payment upon the termination of the collaboration
agreement between the Company and HMR, and $19,163,000 from HMR related to a
Common Stock and a stock option purchase. In addition, the Company has received
research support payments of $5,625,000 from Schering AG under a joint
collaboration agreement for its multiple sclerosis peptide therapeutic product
and $8,000,000 in equity financing from Schering Berlin Venture Corporation. The
Company also received a SBIR grant during 1996 from NIDA totaling approximately
$700,000 to complete the preclinical development of the Company's therapy to
treat cocaine addiction. In addition, the Company received a SPIRCAP grant
during 1997 totaling approximately $2,200,000 to partially fund the clinical
development of the Company's therapy to treat cocaine addiction which will be
received over four years beginning May 1, 1997. Net cash used in operating
activities was $17,194,000 in 1997 compared to $16,156,000 and $14,802,000 in
1996 and 1995, respectively. As of December 31, 1997, the Company had invested
$19,899,000 in property and equipment primarily in facility

                                       11
<PAGE>   12

renovations, laboratory equipment, and the buildout of a GMP-grade manufacturing
facility at the Company's Waltham, Massachusetts headquarters.

     In March 1995, to help the Company support its capital requirements, the
Company signed a collaboration agreement with Schering AG for the joint
development and commercialization of the Company's peptide therapeutic to treat
multiple sclerosis. Under this agreement, the Company would have received up to
$7,500,000 in research support ($5,625,000 of which had been received through
December 31, 1997) and up to $20,000,000 in milestone payments. The Company
would pay one-third of the costs associated with clinical development and would
receive a royalty on net sales, if any. During 1996, the parties agreed in
concept to changes in the collaboration agreement under which milestone payments
were restructured to payments made after successful product demonstration and
annual research support funding from Schering AG during 1997 was reduced from
$2,500,000 to $1,250,000. This funding was dedicated exclusively to the
development of a nonparentally administered therapeutic product for multiple
sclerosis. During 1998, the Company is expected to receive $312,500 in research
funding from Schering AG. The research funding due under the collaboration
agreement between the Company and Schering AG will end on March 31, 1998.
Schering AG has the right, at its election, to participate in the development
and commercialization of the injectable dosage form of this therapeutic should
such development and commercialization occur. The Company has no plans to
develop this product in the future. If Schering AG elects to develop this
product, it will be required to reimburse the Company for a significant portion
of development costs incurred to date and will be obligated to make certain
milestones payments to the Company upon achievement of development milestones.
Schering AG has the right to terminate the collaboration agreement upon 30 days
prior written notice to the Company. There can be no assurance that Schering AG
will not terminate the collaboration agreement or that it will devote the
resources necessary to develop and commercialize any products resulting from the
collaboration.

     The Company has expended substantial funds for the research and development
of its products, and will continue to expend substantial funds for further
research and development, establishment of commercial-scale manufacturing
capabilities, and the marketing of its products. The Company may seek to obtain
additional funds for these purposes through equity or debt financings,
collaborative arrangements with corporate partners, or from other sources. No
assurance can be given that such additional funds will be available to the
Company for such purposes on acceptable terms, if at all. Insufficient funds
could require the Company to delay, scale back, or eliminate certain of its
research and development programs or to license third parties to commercialize
products or technologies that the Company would otherwise develop or
commercialize itself. The Company anticipates that its existing capital
resources will enable it to maintain its current and planned operations through
at least December 31, 2000.

FUTURE OPERATING RESULTS

     This Annual Report on Form 10-K contains forward-looking statements. For
this purpose, any statements contained herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "anticipates," "plans," expects," intends"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. These factors include, without limitation, those set forth below, in
the section titled "Business -- Factors Which May Affect Future Results" and
elsewhere in this Annual Report on Form 10-K for the year ended December 31,
1997.

FACTORS WHICH MAY AFFECT FUTURE RESULTS

     Restructuring of Operations.  In 1997, in connection with the
reorganization of the Company's development plans, the Company suspended its
ALLERVAX(R) CAT, ALLERVAX(R) RAGWEED and its injectable multiple sclerosis
program. The Company announced that it would continue its technical efforts in
two programs: vaccines for drugs of abuse and recombinant proteins directed to
the diagnosis and treatment of allergic diseases. In addition, the Company
continued research on a nonparental product for the treatment of multiple
sclerosis in collaboration with Schering which will end on March 31, 1998. The
Company is


                                       12
<PAGE>   13

considering various strategic alternatives with respect to its business,
including further restructuring of operations, acquisition of additional
technology, strategic alliances, merger or sale or dissolution of the Company.
There can be no assurance that the Company will successfully complete any
further restructuring of operations, acquisition of additional technology,
strategic alliance, merger or sale in a timely manner or at all, or that any
such action would enhance the competitive position or future success of the
Company. The Company would be required to resolve any claims of creditors before
a distribution of all of the assets of the Company to stockholders.

     Development Stage of the Company's Products.  None of the Company's product
candidates have completed human clinical testing. All of the Company's product
candidates will require significant additional research, development,
preclinical and/or clinical testing, regulatory approval and an additional
commitment of resources prior to their successful development and
commercialization.

     Government Regulation.  The production and marketing of the Company's
products and its ongoing research and development activities are subject to
regulation by numerous governmental authorities in the United States and other
countries. The rigorous preclinical and clinical testing requirements and
regulatory approval process can take a number of years and require the
expenditure of substantial resources. Delays in obtaining regulatory approvals
would adversely affect the marketing of products developed by the Company and
the Company's ability to receive product revenues or royalties. In addition, the
Company cannot predict the extent to which government regulations might have an
adverse effect on the production and marketing of the Company's products. See
"Business -- Government Regulation".

     Competition.  The biotechnology and pharmaceutical industries are subject
to rapid and significant technological change. Competitors of the Company in the
United States and abroad are numerous and include, among others, major
pharmaceutical and chemical companies, specialized biotechnology firms,
universities and other research institutions. There can be no assurance that the
Company's competitors will not succeed in developing technologies and products
that are more effective than any which are being developed by the Company or
which would render the Company's technology and products obsolete and
noncompetitive. Many of these competitors have substantially greater financial
and technical resources and production and marketing capabilities than the
Company. In addition, many of the Company's competitors have significantly
greater experience than the Company in preclinical testing and human clinical
trials or pharmaceutical products and obtaining the United States Food and Drug
Administration (FDA) and other regulatory approvals of products for use in
health care. Accordingly, the Company's competitors may succeed in obtaining FDA
approval for products more rapidly than the Company. If the Company commences
significant commercial sales of its products, it will also be competing with
respect to manufacturing efficiency and marketing capabilities, areas in which
it has limited or no experience. See "Business -- Competition".

     Patents and Proprietary Rights.  The patent position of biotechnology and
pharmaceutical firms is highly uncertain and involves complex legal and factual
questions. There is no consistent policy regarding the breadth of claims allowed
in biotechnology patents. Accordingly, there can be no assurance that patent
applications relating to the Company's products or technology will result in
patents being issued or that, if issued, the patents will afford protection
against competitors with similar technology. In addition, companies that obtain
patents claiming products or processes that are necessary for or useful to the
development of the Company's products can bring legal actions against the
Company claiming infringement. The Company may be required to obtain licenses
from others to develop, manufacture or market its products. There can be no
assurance that the Company will be able to obtain such licenses on commercially
reasonable terms, if at all, or that the patents underlying the licenses will be
valid and enforceable.

     In addition, the Company is aware of one issued European patent and one
pending European patent application belonging to third parties which may
adversely affect the Company's ability to commercialize, license, or sell its
multiple sclerosis therapeutic candidate. If the claims contained in these
patents are sustained, the Company may need to acquire licenses to those
technologies in order to develop its multiple sclerosis therapeutic candidate in
Europe. The cost or availability of licenses for these technologies is unknown.
There may be additional domestic and foreign patent applications pending, of
which the Company is unaware, and which may affect its ability to commercialize
any of its products.

                                       13
<PAGE>   14

     Some of the Company's know-how and technology is not patentable. To protect
its rights, the Company requires all employees, consultants, advisors and
collaborators to enter into confidentiality agreements. There can be no
assurance, however, that these agreements will provide meaningful protection for
the Company's trade secrets, know-how or other proprietary information in the
event of any unauthorized use or disclosure. Further, in the absence of patent
protection, the Company's business may be adversely affected by competitors who
independently develop substantially equivalent technology. See
"Business -- Patents and Proprietary Rights".

     Manufacturing and Marketing.  The Company currently has no manufacturing,
direct sales or marketing capability. If the Company elects to commercialize and
market its products itself, the Company will need to develop these capabilities,
and there can be no assurance that the Company will be successful in doing so.
If the Company elects to commercialize any products with third parties, there
can be no assurance that the Company will be successful in reaching satisfactory
arrangements with such parties.

     Additional Financing Requirements and Access to Capital.  ImmuLogic has
funded its operations to date primarily through the sale of equity securities,
sponsored research revenues, license payments and earnings on invested capital.
The Company has expended substantial funds for the research and development of
its products, and may in the future expend substantial funds for further
research and development, establishment of commercial-scale manufacturing
capabilities, and the marketing of its products. The Company may seek to obtain
additional funds for these purposes through equity or debt financings,
collaborative arrangements with corporate partners or from other sources.
However, such additional funds may not be available to the Company for such
purposes on acceptable terms, if at all. Insufficient funds could require the
Company to delay, scale back or eliminate certain of its research and
development programs or to license third parties to commercialize products or
technologies that the Company would otherwise develop or commercialize itself.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources".

     Product Liability.  The testing, marketing and sale of human health care
products entail an inherent risk of allegations of product defects, and there
can be no assurance that substantial product liability claims will not be
asserted against the Company. To manage its potential liability, the Company
maintains clinical trial liability insurance coverage (although it does not
currently maintain product liability coverage) and seeks to include indemnity
provisions in its contracts with clinical investigators. These indemnities
generally do not protect the Company against certain of its own actions such as
those involving its negligence or misconduct. In some cases, the Company is
required to indemnify its investigators and others against its own actions. All
such indemnities are subject to negotiation and their terms and scope may vary.

     The Company bears the risk that an indemnifying party may not have the
financial resources to fulfill its obligations. In addition, the Company could
be materially and adversely affected if it were required to pay damages or incur
defense expenses in connection with an indemnity claim or beyond the level of
its insurance coverage. There is also no assurance that adequate product
liability insurance will be available at acceptable cost, if at all, if and when
the Company's products are commercialized.

     Attraction and Retention of Key Employees and Consultants.  As the Company
continues its research, development and clinical testing and expands into areas
and activities requiring additional expertise such as production and marketing,
recruiting and retaining qualified scientific and other personnel will be
critical to the Company's success. There can be no assurance that the Company
will be able to attract and retain such personnel on acceptable terms. The
failure to attract and retain management personnel or to develop additional
expertise could adversely affect the Company's business.

     Relationship with Schering AG.  The Company has entered into a
collaboration agreement with Schering AG for the joint development and
commercialization of the Company's peptide therapeutic to treat multiple
sclerosis. All funding from Schering AG will be dedicated to the development of
a nonparentally administered therapeutic product for multiple sclerosis. The
Company will fund all clinical costs for the development of the injectable
therapeutic product, including any clinical trials. Although Schering AG has the
right, at its election, to participate in the development and commercialization
of the injectable dosage form (in which event it would be required to provide
additional research funding and make milestone payments after


                                       14
<PAGE>   15

successful product demonstration relating to the injectable product), there can
be no assurance that Schering AG will elect to participate. The research funding
due under the collaboration agreement between the Company and Schering AG is due
to end on March 31, 1998. Furthermore, Schering AG has the right to terminate
the collaboration agreement upon 30 days prior written notice to the Company.
There can be no assurance that Schering AG will not terminate the collaboration
agreement, or that it will devote the resources necessary to develop and
commercialize any products resulting from the collaboration.

     Third-Party Reimbursement.  In both the domestic and foreign markets, sales
of the Company's proposed products will depend in part on the availability of
reimbursement from third-party payers such as government health administration
authorities, private health insurers and other organizations. Third-party payers
are increasingly challenging the price and cost effectiveness of medical
products and services. Significant uncertainty exists as to the reimbursement
status of newly approved health care products. Legislation and regulations
affecting the pricing of pharmaceuticals may change before any of the Company's
proposed products are approved for marketing. Adoption of such legislation could
further limit reimbursement for medical products and services.

NEW ACCOUNTING PRONOUNCEMENTS

     The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive Income" in June
1997. The statement requires changes in comprehensive income to be shown in a
financial statement that is displayed with the same prominence as other
financial statements and is effective for fiscal years beginning after December
31, 1997. The Company believes that the implementation of this statement will
not have a material impact on the results of operations.

     SFAS 131 "Disclosures about Segments of an Enterprise and Related
Information" was issued in June 1997 and is effective for fiscal years beginning
after December 31, 1997. SFAS 131 establishes standards for reporting financial
and descriptive information about an enterprise's operating segments in its
annual financial statements and selected segment information in interim
financial reports. The Company believes that the implementation of this
statement will not have a material impact on the financial statements.

                                       15
<PAGE>   16

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
  of ImmuLogic Pharmaceutical Corporation

     We have audited the accompanying consolidated balance sheets of ImmuLogic
Pharmaceutical Corporation (the "Company") as of December 31, 1997 and 1996, and
the related consolidated statements of operations, cash flows and changes in
stockholders' equity for each of the three years in the period ended December
31, 1997. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

     We conducted our audits in accordance with generally accepted auditing
standards. These standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

     In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
ImmuLogic Pharmaceutical Corporation as of December 31, 1997 and 1996, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997 in conformity with generally
accepted accounting principles.

                                             /s/ COOPERS & LYBRAND L.L.P.
                                          --------------------------------------
                                                 COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
February 3, 1998, except for the information
in the last paragraph of Note D as to which the date is
February 27, 1998

                                       16
<PAGE>   17

                      IMMULOGIC PHARMACEUTICAL CORPORATION

                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                       DECEMBER 31,
                                                              ------------------------------
                                                                  1997             1996
                                                              -------------    -------------
<S>                                                           <C>              <C>
                                           ASSETS
Current assets:
  Cash and cash equivalents.................................  $   8,436,836    $  23,742,140
  Short-term investments....................................     19,068,242       30,880,824
  Prepaid expenses and other current assets.................        561,132          625,128
                                                              -------------    -------------
          Total current assets..............................     28,066,210       55,248,092
Property and equipment, net.................................      6,684,801        8,932,660
Long-term investments.......................................     24,788,175       15,423,981
Other assets................................................         48,790           48,790
                                                              -------------    -------------
          Total assets......................................  $  59,587,976    $  79,653,523
                                                              =============    =============

                                        LIABILITIES
Current liabilities:
  Accounts payable..........................................  $     539,243    $     789,331
  Accrued expenses (Note F).................................      4,654,593        6,513,391
  Other current liabilities.................................         50,000           50,000
                                                              -------------    -------------
          Total current liabilities.........................      5,243,836        7,352,722
Long-term liabilities.......................................        325,000          375,000
                                                              -------------    -------------
          Total liabilities.................................  $   5,568,836    $   7,727,722
                                                              -------------    -------------
Commitments(Notes D, E, J, K)

                                    STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 1,000,000 shares
  authorized; no shares issued or outstanding...............             --               --
Common stock, $.01 par value; 40,000,000 shares authorized;
  20,340,727 and 20,224,516 shares issued and outstanding at
  December 31, 1997 and 1996, respectively..................  $     203,407    $     202,245
Additional paid-in-capital..................................    185,250,346      185,039,606
Accumulated deficit.........................................   (131,434,613)    (113,316,050)
                                                              -------------    -------------
          Total stockholders' equity........................     54,019,140       71,925,801
                                                              -------------    -------------
          Total liabilities and stockholders' equity........  $  59,587,976    $  79,653,523
                                                              =============    =============
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.


                                       17
<PAGE>   18

                      IMMULOGIC PHARMACEUTICAL CORPORATION

                     CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                   --------------------------------------------
                                                       1997            1996            1995
                                                   ------------    ------------    ------------
<S>                                                <C>             <C>             <C>
Revenues:
  License fees...................................            --              --    $  5,000,000
  Sponsored research revenues....................  $  2,048,672    $  2,239,340       2,758,121
  Other revenues.................................            --       7,000,000              --
                                                   ------------    ------------    ------------
          Total revenues.........................     2,048,672       9,239,340       7,758,121
                                                   ------------    ------------    ------------
Operating expenses:
  Proprietary research and development...........    14,615,582      24,061,291      22,096,555
  Sponsored research and development.............     2,486,984       1,820,929       2,612,061
  General administrative.........................     6,389,593       6,829,889       6,433,344
                                                   ------------    ------------    ------------
          Total operating expenses...............    23,492,159      32,712,109      31,141,960
                                                   ------------    ------------    ------------
Operating loss...................................   (21,443,487)    (23,472,769)    (23,383,839)
Interest income..................................     3,324,924       4,602,884       4,233,191
                                                   ------------    ------------    ------------
Net loss.........................................  $(18,118,563)   $(18,869,885)   $(19,150,648)
                                                   ============    ============    ============
Basic and diluted net loss per common share......  $      (0.89)   $      (0.93)   $      (1.12)
                                                   ============    ============    ============
Weighted average number of common shares
  outstanding....................................    20,273,315      20,206,004      17,034,565
                                                   ============    ============    ============
</TABLE>

   The accompanying notes are an integral part of the consolidated financial
                                  statements.



                                       18
<PAGE>   19

                      IMMULOGIC PHARMACEUTICAL CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                             YEARS ENDED DECEMBER 31,
                                                   --------------------------------------------
                                                       1997            1996            1995
                                                   ------------    ------------    ------------
<S>                                                <C>             <C>             <C>
Cash flows for operating activities:
  Net loss.......................................  $(18,118,563)   $(18,869,885)   $(19,150,648)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization...............     2,447,378       2,786,851       3,050,605
     Write-off of leasehold improvements.........       443,881              --         945,000
     Shares issued for 401(k) employer match.....       134,515         150,963         144,360
     Compensation expense........................         7,557              --              --
     Gain on sale of equipment...................       (13,765)        (18,828)        (48,842)
Changes in assets and liabilities:
  Prepaid expenses and other current assets......        63,996         106,374          22,302
  Other assets...................................            --           4,800           3,694
  Accounts payable and accrued expenses..........    (2,108,886)       (266,438)        281,457
  Other current and long-term liabilities........       (50,000)        (50,000)        (50,000)
                                                   ------------    ------------    ------------
          Total adjustments......................       924,676       2,713,722       4,348,576
                                                   ------------    ------------    ------------
Net cash used in operating activities............   (17,193,887)    (16,156,163)    (14,802,072)
Cash flows from investing activities:
  Purchase of equipment..........................      (629,104)       (653,613)       (898,151)
  Purchase of leasehold improvements.............       (15,661)        (27,368)       (978,506)
  Proceeds from sale of equipment................        15,130          18,828         608,500
  Purchase of short-term investments.............   (39,206,494)    (59,995,778)    (76,530,629)
  Redemption of short-term investments...........    51,019,076      71,036,259      70,711,444
  Purchase of long-term investments..............   (24,294,056)     (5,965,026)    (24,809,476)
  Redemption of long-term investments............    14,929,862      15,513,339       6,039,556
                                                   ------------    ------------    ------------
Net cash provided by (used in) investing
  activities.....................................     1,818,753      19,926,641     (25,857,262)
Cash flows from financing activities:
  Issuance of common stock.......................            --              --      45,701,500
  Exercise of stock options......................        69,830         904,869         416,633
                                                   ------------    ------------    ------------
Net cash provided by financing activities........        69,830         904,869      46,118,133
                                                   ------------    ------------    ------------
Net (decrease) increase in cash and cash
  equivalents....................................   (15,305,304)      4,675,347       5,458,799
Cash and cash equivalents at beginning of
  period.........................................    23,742,140      19,066,793      13,607,994
                                                   ------------    ------------    ------------
Cash and cash equivalents at end of period.......  $  8,436,836    $ 23,742,140    $ 19,066,793
                                                   ============    ============    ============
</TABLE>



   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       19
<PAGE>   20

                      IMMULOGIC PHARMACEUTICAL CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                 NO. OF SHARES OF    COMMON      ADDITIONAL        DEFERRED      ACCUMULATED
                                   COMMON STOCK      STOCK     PAID-IN CAPITAL   COMPENSATION      DEFICIT       TOTAL STOCK-
                                 ----------------   --------   ---------------   ------------   -------------   ---------------
<S>                              <C>                <C>        <C>               <C>            <C>             <C>
BALANCE AT DECEMBER 31, 1994...     15,020,459      $150,205    $137,653,747      $(224,324)    $ (75,295,517)    $62,284,111
                                    ----------      --------    ------------      ---------     -------------     -----------
Issuance of common stock.......      4,802,345       48,023       45,653,477                                       45,701,500
Exercise of common stock
  options......................         92,363          924          415,709                                          416,633
401(k) employer match..........          9,304           93           73,175                                           73,268
Amortization of deferred
  compensation.................                                                     210,324                           210,324
Net loss.......................                                                                   (19,150,648)    (19,150,648)
                                    ----------      --------    ------------      ---------     -------------     -----------
BALANCE AT DECEMBER 31, 1995...     19,924,471      199,245      183,796,108        (14,000)      (94,446,165)     89,535,188
                                    ----------      --------    ------------      ---------     -------------     -----------
Exercise of common stock
  options......................        287,599        2,876          901,993                                          904,869
401(k) employer match..........         12,446          124          150,839                                          150,963
Acceleration of stock
  options......................                                      190,666       (190,666)
Amortization of deferred
  compensation.................                                                     204,666                           204,666
Net loss.......................                                                                   (18,869,885)    (18,869,885)
                                    ----------      --------    ------------      ---------     -------------     -----------
BALANCE AT DECEMBER 31, 1996...     20,224,516      202,245      185,039,606             --      (113,316,050)     71,925,801
                                    ----------      --------    ------------      ---------     -------------     -----------
Exercise of common stock
  options......................         85,947          859           68,971                                           69,830
401(k) employer match..........         30,264          303          134,212                                          134,515
Compensation expense...........                                        7,557                                            7,557
Net loss.......................                                                                   (18,118,563)    (18,118,563)
                                    ----------      --------    ------------      ---------     -------------     -----------
BALANCE AT DECEMBER 31, 1997...     20,340,727      $203,407    $185,250,346             --     $(131,434,613)    $54,019,140
                                    ==========      ========    ============      =========     =============     ===========
</TABLE>



   The accompanying notes are an integral part of the consolidated financial
                                  statements.

                                       20
<PAGE>   21

                      IMMULOGIC PHARMACEUTICAL CORPORATION

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A.  NATURE OF BUSINESS

     ImmuLogic Pharmaceutical Corporation (ImmuLogic or the Company) is a
biopharmaceutical company developing novel products with a primary emphasis on
the immunological treatment of addiction and the diagnosis and treatment of
allergies. ImmuLogic's technological approach is based on proprietary
discoveries and an advanced understanding of the molecular events controlling
the human immune system. Since inception, the Company has not derived any
revenues from the sale of products and has incurred significant operating
losses. The Company recently redefined its priorities for product development
and plans to focus most of its resources in 1998 on the clinical development of
vaccines for the management of cocaine and nicotine addiction research and
research around its recombinant protein therapeutics for the diagnosis and
treatment of allergic diseases. The Company is subject to risks common to
companies in the biotechnology industry including, but not limited to,
development by the Company or its competitors of new technological innovations,
dependence on key personnel, protection of proprietary technology, and
compliance with FDA government regulations and approval requirements.

     The Company is considering various strategic alternatives with respect to
its business including further restructuring of operations, acquisition of
additional technology, strategic alliances, sale or merger or dissolution of the
Company. There can be no assurance that the Company will be successful in
implementing any further restructuring, strategic alliance, acquisition of
additional technology, merger or sale in a timely manner or at all, or that any
such action would enhance the competitive position or future success of the
Company.

B.  ACCOUNTING POLICIES

  Basis of Presentation

     The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, ImmuLogic Securities Corporation.
All intercompany accounts and transactions have been eliminated.

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the reported
period. Actual results could differ from those estimates.

  Cash and Cash Equivalents

     Cash and cash equivalents consist of short-term interest-bearing
instruments, primarily U.S. government sponsored agency notes, commercial paper,
and money market accounts with original maturities of three months or less at
the date of purchase. These investments are carried at cost plus accrued
interest, which approximates market value.

  Short-term Investments

     Short-term investments, with a maturity of more than three months but less
than twelve months when purchased, consisted of high-grade commercial paper
($12,649,000), and U.S. government sponsored agency notes ($6,419,000) at
December 31, 1997, and high-grade commercial paper ($28,437,000) and a U.S.
government treasury bill ($2,444,000) at December 31, 1996. Short-term
investments are stated at amortized cost plus accrued interest, which
approximates market value.

                                       21
<PAGE>   22
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Long-term Investments

     Long-term investments, with a maturity of more than twelve months when
purchased, consisted of high-grade commercial paper ($20,415,000) and
highly-liquid bank certificates of deposit ($4,373,000) at December 31, 1997 and
highly-liquid bank certificates of deposit ($6,188,000), high-grade commercial
paper ($5,182,000) and U.S. government sponsored agency notes ($4,054,000) at
December 31, 1996. Long-term investments are stated at amortized cost plus
accrued interest, which approximates market value.

     The amortized cost plus accrued interest, which approximates market value,
of securities "held-to-maturity" by contractual maturity at December 31, 1997 is
as follows:

<TABLE>
<CAPTION>
                                                              HELD-TO-MATURITY
                                                              ----------------
<S>                                                           <C>
Due within one year.........................................    $30,759,000
Due after one year through five years.......................     18,924,000
                                                                -----------
Total cash and cash equivalents and investments.............    $49,683,000
                                                                ===========
</TABLE>

     Actual maturities may differ from contractual maturities because the
issuers of these securities may have the right to prepay obligations without
prepayment penalties.

  Revenue Recognition

     Payments associated with rights to license or sublicense the Company's
technology are recognized as revenue when payments are received. Payments in
connection with sponsored research are recognized as revenue is earned under the
terms of the agreements.

  Property and Equipment

     Property and equipment are recorded at cost. Depreciation is calculated
using the straight-line method over the estimated useful lives of the related
assets, generally three years for office equipment and five years for laboratory
equipment, furniture, and fixtures. Leasehold improvements are stated at cost
and are amortized over the lesser of the life of the lease or their estimated
useful lives. Maintenance and repairs are charged to expense as incurred, while
major betterments are capitalized. When assets are retired or otherwise disposed
of, the assets and related allowances for depreciation and amortization are
eliminated from the accounts and any resulting gain or loss is reflected in
income.

  Research and Development

     All research and development costs are expensed as incurred.

  Income Taxes

     The Company follows the liability method of accounting for income taxes
whereby a deferred tax liability is measured by the enacted tax rates which will
be in effect when any differences between the financial statements and tax basis
of assets reverse. The deferred tax liability can be reduced by net operating
losses being carried forward for tax purposes.

     The measurement of deferred tax assets is reduced by a valuation allowance
if, based upon weighted available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized.

  Net Loss per Common Share

     Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No. 128 (SFAS) "Earnings Per share," which requires the
disclosure of Basic Earnings per Common Share

                                       22
<PAGE>   23
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

and Diluted Earnings per Common Share for all periods presented. The basic loss
per common share is computed based upon the weighted average number of common
shares outstanding. The Company had 1,993,218, 2,750,000 and 2,852,000 options
outstanding at December 31, 1997, 1996 and 1995, respectively. These options
have not been included in the calculation of dilutive common equivalent shares
however, since the effect of their inclusion would be anti-dilutive. As a
result, adoption of SFAS 128 has not affected the amounts previously reported in
any period.

  Reclassifications

     Certain amounts in 1996 and 1995 have been reclassified to conform to the
1997 presentation.

  New Accounting Pronouncements

     The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards No. 130 (SFAS 130) "Reporting Comprehensive Income" in June
1997. The statement requires changes in comprehensive income to be shown in a
financial statement that is displayed with the same prominence as other
financial statements and is effective for fiscal years beginning after December
31, 1997. The Company believes that the implementation of this statement will
not have a material impact on the financial statements.

     SFAS 131 "Disclosures about Segments of an Enterprise and Related
Information" was issued in June 1997 and is effective for fiscal years beginning
after December 31, 1997. SFAS 131 established standards for reporting financial
and descriptive information about an enterprise's operating segments in its
annual financial statements and selected segment information in interim
financial reports. The Company believes that the implementation of this
statement will not have a material impact on the financial statements.

  Year 2000

     The Company does not expect costs incurred with the Year 2000 conversion to
be material.

C.  PROPERTY AND EQUIPMENT

     At December 31, 1997 and 1996, property and equipment consisted of:

<TABLE>
<CAPTION>
                                                              1997            1996
                                                          ------------    ------------
<S>                                                       <C>             <C>
Leasehold improvements..................................  $  9,650,314    $  9,634,653
Laboratory equipment....................................     8,585,267       8,012,674
Furniture and fixtures..................................       719,310         700,931
Office equipment........................................       944,063         943,551
                                                          ------------    ------------
                                                          $ 19,898,954    $ 19,291,809
Less accumulated depreciation and amortization..........   (13,214,153)    (10,359,149)
                                                          ------------    ------------
Property and equipment, net.............................  $  6,684,801    $  8,932,660
                                                          ============    ============
</TABLE>

     Depreciation and amortization expense associated with property and
equipment was approximately $2,447,000, $2,582,000, and $2,840,000 in 1997,
1996, and 1995, respectively.

D.  RESTRUCTURING OF OPERATIONS

     During 1997, the Company restructured its operations, discontinuing further
clinical trials of its ALLERVAX(R) CAT and RAGWEED programs and concentrating
future efforts on the clinical development of vaccines for the management of
cocaine and nicotine addiction and research around its recombinant protein
therapeutics for the diagnosis and treatment of allergic diseases.

                                       23
<PAGE>   24
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     As a result of this action, the Company downsized its workforce during 1997
and incurred $3,147,000 in severance costs for the termination of 66 employees,
including $1,054,000 paid in accordance with the severance agreement entered
into with the Former Chairman of the Board and scientific founder of the
Company. Total employees of the Company decreased from 151 at December 31, 1996
to 27 as of March 1, 1998 as a result of the above mentioned 66 terminations and
an additional 58 voluntary terminations. At December 31, 1997, remaining accrued
expenses related to unpaid severance liabilities totaled $1,725,000, the
majority of which will be paid out in 1998.

     In addition, as a result of the downsizing, the Company entered into a
sub-lease agreement for its Waltham, Massachusetts facility effective February
27, 1998, with the entire facility being subleased effective October 1, 1998.
The sublease agreement covers the Company's future obligations due after
September 30, 1998 under this lease. A non-cash charge of $444,000 was incurred
during 1997 for the writedown of all of the Company's leasehold improvements to
net realizable value in accordance with the provisions of SFAS 121 "Impairment
of Long-Lived Assets". The Company is currently planning for the sale of the
majority of the equipment and furniture contained in the Waltham, Massachusetts
facility and is in the process of locating new space to accommodate its current
level of operations.

E.  PALO ALTO FACILITY CONSOLIDATION

     In 1995, the Company consolidated its research operations resulting in the
closure of the Company's research facility in Palo Alto, California. The closure
of the Palo Alto facility resulted in exit costs of $2,130,000, consisting of
$430,000 for termination benefits, $945,000 for the write-down of leasehold
improvements, $610,000 for rent payments and expenses during shutdown, and
$145,000 for other exit costs. Exit costs related to non-cash items were
$1,050,000, primarily for the writedown of leasehold improvements to estimated
net realizable value. In addition, the Company has entered into sub-lease
agreements for the Palo Alto, California facility that cover its remaining lease
obligations which expire in March 1999. At December 31, 1997 amounts remaining
in accrued expenses relating to the shutdown totaled $353,000, primarily for the
loss resulting from subtenant lease payments to be received over the remainder
of the lease.

F.  ACCRUED EXPENSES

     At December 31, 1997 and 1996, accrued expenses consisted of:

<TABLE>
<CAPTION>
                                                        1997          1996
                                                     ----------    ----------
<S>                                                  <C>           <C>
Payroll and payroll taxes..........................  $1,796,047    $1,239,791
Rent...............................................   1,015,756     1,063,448
Clinical trials....................................     535,524     1,355,450
Consulting.........................................     278,216       308,935
Legal and audit....................................     203,195       424,924
Drug supply........................................      72,117       457,295
Other..............................................     753,738     1,663,548
                                                     ----------    ----------
Total accrued expenses.............................  $4,654,593    $6,513,391
                                                     ==========    ==========
</TABLE>

G.  AGREEMENT WITH HOECHST MARION ROUSSEL

     In February 1992, the Company entered into a collaboration agreement with
Hoechst Marion Roussel, Inc. (HMR) (formerly Marion Merrell Dow, Inc.) relating
to the worldwide development and commercialization of the Company's family of
five injectable ALLERVAX(R) allergy therapeutic products (the Collaboration
Agreement). In March 1995, the Company and HMR signed a letter agreement for the
joint manufacture of ALLERVAX(R) products. On March 7, 1996, HMR notified the
Company that it was withdrawing from the

                                       24
<PAGE>   25
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Collaboration Agreement, effective September 7, 1996. The Company and HMR worked
together to effect an orderly transition of responsibilities as the ALLERVAX(R)
program shifted entirely to the Company. On October 30, 1996, the Company
received a payment in the amount of $7,000,000, resolving all obligations
relating to the program in a manner agreeable to both the Company and HMR. In
addition, HMR transferred ALLERVAX(R) CEDAR and MITE peptide inventories to the
Company to be used in future product development activities. No value has been
attributed to these peptides as the Company is still considering plans to
develop these programs beyond the research stage. Under the terms of the
Collaboration Agreement, upon termination of the collaboration, the Company
regained all rights to the Company's ALLERVAX(R) allergy program including all
injectable and oral therapeutics and complimentary recombinant allergy
diagnostics.

     At the time of execution of the Collaboration Agreement, HMR made a
$7,000,000 payment to the Company and through December 31, 1996 had made license
and milestone payments of $17,000,000 and a final settlement payment of
$7,000,000 which is recorded as other revenues in the Company's 1996 statement
of operations. In addition, HMR purchased, in December 1991, 1,000,000 shares of
the Company's Common Stock for $18,000,000. As of March 22, 1996, HMR had sold
these shares on the open market.

H.  AGREEMENT WITH SCHERING AG

     In March 1995, the Company signed a collaboration agreement with Schering
AG for the joint development and commercialization of the Company's peptide
therapeutic to treat multiple sclerosis. Under this agreement, the Company would
have received up to $7,500,000 in research support ($5,625,000 of which had been
received through December 31, 1997) and up to $20,000,000 in milestone payments.
The Company would pay one-third of the costs associated with clinical
development and would receive a royalty on net sales, if any. During 1996, the
parties agreed in concept to changes in the collaboration agreement under which
milestone payments were restructured to payments made after successful product
demonstration and research support funding from Schering AG during 1997 was
reduced from $2,500,000 to $1,250,000. This funding was dedicated exclusively to
the development of a nonparenterally administered therapeutic product for
multiple sclerosis. If the Company decides to move forward, the Company will
fund all clinical development costs for the injectable therapeutic product for
multiple sclerosis. During 1998, the Company is expected to receive $312,500 in
research funding from Schering AG. The research funding due under the
collaboration agreement between the Company and Schering AG will end on March
31, 1998. Schering AG has the right, at its election, to participate in the
development and commercialization of the injectable dosage form of this
therapeutic should such development and commercialization occur. The Company has
no plans to develop this product in the future. If Schering AG elects to develop
this product, it will be required to reimburse the Company for a significant
portion of development costs incurred to date and will be obligated to make
certain milestone payments to the Company upon achievement of development
milestones. Schering AG has the right to terminate the collaboration agreement
upon 30 days prior written notice to the Company.

     In addition, Schering Berlin Venture Corporation purchased 1,042,345 shares
of the Company's Common Stock for $8,000,000 at the time of entering into the
agreement. In April 1996, ImmuLogic registered these shares under the Securities
Act of 1933 pursuant to the registration rights granted to Schering Berlin
Venture Corporation in the stock purchase agreement. Upon registration, Schering
Berlin Venture Corporation sold these shares on the open market.

I.  STOCKHOLDERS' EQUITY

  Common Stock

     At December 31, there were 20,340,727 and 20,224,516 common shares
outstanding for the years 1997 and 1996, respectively.

                                       25
<PAGE>   26
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Preferred Stock

     The Company has authorized a single class of preferred stock, par value
$.01, consisting of 1,000,000 shares. This preferred stock may be issued in
series with such rights, preferences and privileges as the Board of Directors
may determine.

  Shareholder Rights Plan

     On July 11, 1995, the Board of the Company declared a dividend of one
preferred stock purchase right (a Right) for each outstanding share of the
Company's Common Stock to stockholders of record at the close of business on
August 1, 1995. The Company adopted the plan to protect shareholders against
unsolicited attempts to acquire control of the Company that do not offer what
the Company believes to be an adequate price to all shareholders. Each Right
entitles the registered holder to purchase from the Company a unit consisting of
one one-thousandth of a share of Series A Junior Participating Preferred Stock,
$.01 par value (the Preferred Stock), at a purchase price of $75 in cash per
unit subject to adjustment.

     Initially, the Rights will be attached to all Common Stock certificates
representing shares then outstanding, and no separate Rights Certificates will
be distributed. The Rights will separate from the Common Stock and a
Distribution Date will occur upon the earlier of (i) 10 days following a public
announcement that a person or group of affiliated or associated persons (an
Acquiring Person) has acquired, or obtained the right to acquire, beneficial
ownership of 20% or more of the outstanding shares of Common Stock, or (ii) 10
business days following the commencement of a tender offer or exchange offer
that would result in a person or group beneficially owning 30% or more of such
outstanding shares of Common Stock.

     The Rights are not exercisable until the Distribution Date and will expire
at the close of business on August 1, 2005, unless earlier redeemed or exchanged
by the Company as described below.

     In the event that any stockholder becomes an Acquiring Person, except
pursuant to a Permitted Offer, each Right will thereafter entitle the holder
thereof to receive, upon exercise, that number of shares of Common Stock which
equals the exercise price of the Right divided by one-half of the current market
price (as defined in the Rights Agreement) of the Common Stock at the date of
the occurrence of the event.

     Preferred Stock purchasable upon exercise of the Rights will not be
redeemable. Each share of Preferred Stock will be entitled to a minimum
preferential quarterly dividend payment of $10 per share and will be entitled to
an aggregate dividend of 1,000 times the dividend declared per share on Common
Stock. In the event of liquidation, the holders of the Preferred Stock will be
entitled to a minimum preferential liquidation payment of $1,000 per share and
will be entitled to an aggregate payment of 1,000 times the payment made per
share of Common Stock. Each share of Preferred Stock will have 1,000 votes,
voting together with the Common Stock. Finally, in the event of any merger,
consolidation, or other transaction in which Common Stock is exchanged, each
share of Preferred Stock will be entitled to receive 1,000 times the amount
received per share of Common Stock. These rights are subject to adjustment for
any stock split, stock dividend, recapitalization, or similar event. At December
31, 1997, 20,340,727 preferred stock purchase rights were outstanding.

  Stock Options

     The Company has several stock option plans under which incentive and
nonqualified stock options to purchase a total of 3,969,169 shares (net of
expirations) shares of Common Stock may be granted to employees, outside
directors and consultants. The options are generally granted at fair market
value on the date of the grant, generally vest ratably over a three, four or
five year period and expire ten years from the date of grant. At December 31,
1997, there were 2,487,468 shares of Common Stock reserved for issuance under
all the Company's stock option plans.

                                       26
<PAGE>   27
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     SFAS 123, "Accounting for Stock-Based Compensation" requires that companies
either recognize compensation expense for grants of stock, stock options, and
other equity instruments based on fair value, or provide pro forma disclosure of
net income and earnings per share in the notes to the financial statements. The
Company has adopted the disclosure provisions of SFAS 123 in 1996 and has
applied APB Opinion 25 and related Interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for its employee and
outside director stock options. Had compensation costs for the Company's
employee and director stock-based compensation plans been determined based on
the fair value at the grant dates as calculated in accordance with SFAS 123, the
Company's net loss and basic and diluted net loss per share for the years ended
December 31, 1997, 1996 and 1995 would have been as follows:

<TABLE>
<CAPTION>
                                      1997                       1996                       1995
                             -----------------------    -----------------------    -----------------------
                                           NET LOSS                   NET LOSS                   NET LOSS
                              NET LOSS     PER SHARE     NET LOSS     PER SHARE     NET LOSS     PER SHARE
                             ----------    ---------    ----------    ---------    ----------    ---------
                             IN (000'S)                 IN (000'S)                 IN (000'S)
<S>                          <C>           <C>          <C>           <C>          <C>           <C>
As Reported................   $(18,119)     $(0.89)      $(18,870)     $(0.93)      $(19,151)     $(1.12)
                              ========      ======       ========      ======       ========      ======
Proforma...................   $(19,227)     $(0.95)      $(20,740)     $(1.03)      $(19,534)     $(1.15)
                              ========      ======       ========      ======       ========      ======
</TABLE>

     The effects of applying SFAS 123 in this proforma disclosure are not likely
to be representative of the effects on reported net income for future years.
SFAS 123 does not apply to awards granted prior to 1995 and additional awards
are anticipated in future years.

     The fair value of each stock option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions: an expected life of approximately 4 years, expected volatility of
63%, a dividend yield of 0% and a risk-free interest rate of 6.5%, 6.3% and 6.2%
for the years ended December 31, 1997, 1996 and 1995 respectively.

     From inception through December 31, 1997, the Company has granted options
for 3,474,919 shares (net of cancellations) under all its stock option plans, of
which options for 1,481,701 shares have been exercised. In 1996, 247,500 shares
under the stock option plans were accelerated in connection with the resignation
of three executive officers of the Company. Accordingly, an increase in deferred
compensation and additional paid-in-capital in the amount of $190,666 in total
for all officers to recognize the acceleration was recorded as of the
resignation date of each officer.

     The Company's stock option plan activity is summarized as follows:

<TABLE>
<CAPTION>
                                                                            WEIGHTED
                                                                            AVERAGE
                                                                NUMBER      EXERCISE
                                                              OF OPTIONS     PRICE
                                                              ----------    --------
<S>                                                           <C>           <C>
OUTSTANDING AT DECEMBER 31, 1994............................   2,175,573     $ 7.63
  Granted during 1995.......................................     993,500       9.72
  Exercised during 1995.....................................     (92,363)      4.51
  Canceled during 1995......................................    (224,238)     10.69
                                                              ----------     ------
OUTSTANDING AT DECEMBER 31, 1995............................   2,852,472       8.21
  Granted during 1996.......................................     596,250      10.07
  Exercised during 1996.....................................    (287,599)      3.72
  Canceled during 1996......................................    (410,900)      8.26
                                                              ----------     ------
OUTSTANDING AT DECEMBER 31, 1996............................   2,750,223       9.12
  Granted during 1997.......................................     549,650       4.09
  Exercised during 1997.....................................     (85,947)       .81
  Canceled during 1997......................................  (1,220,708)      8.87
                                                              ----------     ------
OUTSTANDING AT DECEMBER 31, 1997............................   1,993,218     $ 8.25
                                                              ==========     ======
</TABLE>

                                       27
<PAGE>   28
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     There were 1,524,870, 1,342,401, and 837,629 options exercisable for the
years ended December 31, 1997, 1996, and 1995, respectively. The weighted
average fair value of the options granted during 1997, 1996 and 1995, as
calculated using the Black-Scholes option pricing model, were estimated at
$2.20, $5.47 and $5.35, respectively.

     The following table summarizes information about stock options outstanding
at December 31, 1997:

<TABLE>
<CAPTION>
                   OPTIONS OUTSTANDING                                 OPTIONS
----------------------------------------------------------   ----------------------------
                              WEIGHTED-
                               AVERAGE
  RANGE OF                    REMAINING       WEIGHTED-                      WEIGHTED-
  EXERCISE       NUMBER      CONTRACTUAL       AVERAGE         NUMBER         AVERAGE
   PRICES      OUTSTANDING   LIFE (YEARS)   EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
-------------  -----------   ------------   --------------   -----------   --------------
<S>            <C>           <C>            <C>              <C>           <C>
$ 0.25-$ 5.00     474,018        9.21           $ 3.92          256,232        $ 3.86
  5.01- 10.00     971,500        6.78             7.79          814,398          7.73
 10.01- 15.00     495,700        6.95            12.12          403,315         12.16
 15.01- 20.25      52,000        7.76            19.24           50,925         19.25
                ---------        ----           ------        ---------        ------
$ 0.25-$20.25   1,993,218        7.43           $ 8.25        1,524,870        $ 8.64
                =========        ====           ======        =========        ======
</TABLE>

     Although the majority of the Company's stock options outstanding have an
exercise price in excess of the fair market value of the Company's stock at
December 31, 1997, total proceeds to the Company if all stock options were
exercised would be $13,170,000.

J.  LICENSE AGREEMENT

     In May 1987, the Company entered into an agreement with the Massachusetts
Institute of Technology (MIT) under which the Company was granted a worldwide,
exclusive license under certain patent applications. In connection with the
license grant, the Company issued 185,000 shares of its Common Stock at a price
of $.01 per share and made a payment of $250,000 to MIT. The license agreement,
as amended, calls for royalties to be paid on the sale of products using the
technology covered by the patents and for an additional payment of $750,000,
$125,000 of which was paid in April 1992 and the remainder to be paid in annual
installments of $50,000, beginning in April 1993 and ending in April 2005,
subject to an acceleration provision tied to the allowance of certain pending
patent claims. At December 31, 1997, the financial statements included $50,000
in other current liabilities and $325,000 in long-term liabilities related to
the license agreement.

K.  LEASE COMMITMENTS

     In September 1992, the Company entered into an operating lease agreement
for a headquarters and research and development facility in Waltham,
Massachusetts. This lease agreement expires in August 2002 and is renewable at
the Company's option for up to the three additional five-year periods. Under the
terms of this lease, the Company is obligated to pay its prorated share of
common operating expenses and real estate taxes as well as base rent (see Note
D).

     With respect to the Company's operating lease for its Palo Alto, California
research facility, which expires in March 1999, the Palo Alto research facility
was sub-leased under two agreements, which cover the Company's future
obligations under this lease.

     Rental expense incurred under all of the Company's operating lease
agreements was $1,704,000, $1,595,000 and $2,310,000 in 1997, 1996, and 1995,
respectively.

                                       28
<PAGE>   29
                      IMMULOGIC PHARMACEUTICAL CORPORATION

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

     Future minimum lease payments for the respective years ended December 31
are as follows:

<TABLE>
<CAPTION>
                                                OPERATING LEASES
                                                ----------------
<S>                                             <C>
1998..........................................    $ 1,931,076
1999..........................................      1,439,217
2000..........................................      1,282,876
2001..........................................      1,311,348
2002..........................................        874,232
After 2002....................................             --
                                                  -----------
Minimum lease payments........................    $ 6,838,749
Sub-leases for the Waltham facility...........     (5,374,970)
Sub-leases for the Palo Alto facility.........       (858,000)
                                                  -----------
Net minimum lease payments....................    $   605,779
                                                  ===========
</TABLE>

L.  EMPLOYEE BENEFITS

     The Company has a 401(k) savings plan (the Plan) which is available to all
of its qualified permanent employees. Participants may contribute up to 15
percent of their annual compensation to the Plan, subject to certain
limitations. The employer match to the Plan is in the form of Company Common
Stock and is calculated as the lesser of up to one-half of six percent of a
participant's total compensation or $2,000 annually in value of Common Stock.
The fair market value on the date of issuance of the Common Stock pursuant to
the matching contributions totaled approximately $90,000, $158,000 and $144,000
in 1997, 1996 and 1995, respectively.

M.  INCOME TAXES

     At December 31, 1997 the Company had available for federal income tax
purposes net operating loss carryforwards of approximately $130,000,000 expiring
in the years 2002 through 2012, which are available to reduce future federal
income taxes. The Company also has available research and experimentation tax
credits of approximately $3,700,000 at December 31, 1997, expiring in the years
2002 through 2012. The net operating loss carryforwards are subject to
limitation in any given year in the event of certain events, including
significant changes in ownership. The Company has established a valuation
reserve against the entire deferred tax asset arising from these carryforwards
due to the uncertainty of earning sufficient taxable income and accordingly, has
not given recognition to these tax benefits in the accompanying financial
statements. The Company has been in a tax loss position since inception. As a
result, the effective tax rate for the Company is 0%.

     Significant components of the Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                              DECEMBER 31,
                                                      ----------------------------
                                                          1997            1996
                                                      ------------    ------------
<S>                                                   <C>             <C>
Deferred tax assets:
     Net operating loss carryforwards...............  $ 51,879,838    $ 45,107,906
     Depreciation...................................     2,621,384       1,897,273
     Accrued expenses...............................       324,653         472,484
     MIT license agreement..........................       150,000         170,000
     Gain/loss on sale of equipment.................      (209,177)       (209,177)
     Other..........................................        31,132          30,064
                                                      ------------    ------------
Total deferred tax assets...........................    54,797,830      47,468,550
Valuation allowance.................................   (54,797,830)    (47,468,550)
                                                      ------------    ------------
Net deferred tax assets.............................  $         --    $         --
                                                      ============    ============
</TABLE>

                                       29
<PAGE>   30

ITEM 9.  CHANGES IN AND DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     The information required by this item is incorporated by reference from the
section titled "Election of Directors" in the definitive proxy statement for the
Company's 1998 Annual Meeting of Stockholders ("1998 Proxy Statement"), which
the Company intends to file with the Securities and Exchange Commission (the
"Commission") no later than April 30, 1998.

     Information relating to the Company's executive officers as of March 12,
1998 is furnished in Part I hereof under a separate unnumbered caption titled
"Executive Officers of the Registrant."

ITEM 11.  EXECUTIVE COMPENSATION

     The information required by this item is incorporated by reference from the
section titled "Executive Compensation" in the Company's 1998 Proxy Statement,
which the Company intends to file with the Commission no later than April 30,
1998.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The information required by this item is incorporated by reference from the
section titled "Security Ownership of Certain Beneficial Owners and Management"
and "Election of Directors" in the Company's 1998 Proxy Statement, which the
Company intends to file with the Commission no later than April 30, 1998.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The information required by this item is incorporated by reference from the
section titled "Certain Transactions" in the Company's 1998 Proxy Statement,
which the Company intends to file with the Commission no later than April 30,
1998.

                                       30
<PAGE>   31

                                    PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

     (A)  Documents filed as part of this report:

     1. FINANCIAL STATEMENTS

     The following financial statements and supplementary data are included in
Part II Item 8 filed as part of this Form 10-K:

<TABLE>
<CAPTION>

<S>                                                           <C>
Report of Independent Accounts
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Operations for the years ended
  December 31, 1997, 1996 and 1995
Consolidated Statements of Cash Flows for the years ended
  December 31, 1997, 1996 and 1995
Consolidated Statements of Changes in Stockholders' Equity
  for the years ended December 31, 1997, 1996 and 1995
Notes to Consolidated Financial Statements
</TABLE>

     2. FINANCIAL STATEMENT SCHEDULES

     The Financial Statement Schedules have been omitted because they are either
not applicable or the required information is included in the Consolidated
Financial Statements or Notes thereto.

     3. EXHIBITS REQUIRED BY ITEM 601 OF REGULATION S-K

     The Exhibit Index is set forth on page 33 of this Form 10-K immediately
preceding the exhibits filed as part of this annual report on Form 10-K and is
incorporated by reference herein.

     (B) Reports filed on Form 8-K for the quarter ended December 31, 1997.

     On November 26, 1997, the Company filed with the Securities and Exchange
Commission a Current Report on Form 8-K relating to the restructuring of the
Company's operations.

                                       31
<PAGE>   32

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) 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.

                                          IMMULOGIC PHARMACEUTICAL CORPORATION

                                          By:      /s/ J. JOSEPH MARR
                                            ------------------------------------
                                                       J. Joseph Marr
                                             President, Chief Operating Officer

Date: March   , 1998

     Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
             SIGNATURE                      DATE                        TITLE
             ---------                      ----                        -----
<C>                                    <S>               <C>

        /s/ J. JOSEPH MARR             March 12, 1998    President, Chief Operating Officer
-----------------------------------                      (Principal Executive Officer)
          J. Joseph Marr

      /s/ J. RICHARD CROWLEY           March 12, 1998    Chief Financial Officer
-----------------------------------                      (Principal Financial Officer)
        J. Richard Crowley

      /s/ C. GARRISON FATHMAN          March 12, 1998    Director
-----------------------------------
        C. Garrison Fathman

       /s/ SAMUEL C. FLEMING           March 12, 1998    Director
-----------------------------------
         Samuel C. Fleming

       /s/ PAUL A. FRIEDMAN            March 12, 1998    Director
-----------------------------------
         Paul A. Friedman

      /s/ CARL S. GOLDFISCHER          March 12, 1998    Director
-----------------------------------
        Carl S. Goldfischer

     /s/ GERALDINE A. HENWOOD          March 12, 1998    Director
-----------------------------------
       Geraldine A. Henwood

        /s/ RICHARD F. POPS            March 12, 1998    Director
-----------------------------------
          Richard F. Pops
</TABLE>

                                       32
<PAGE>   33

                                 EXHIBIT INDEX

                      IMMULOGIC PHARMACEUTICAL CORPORATION
                                 ANNUAL REPORT
                               FORM 10-K -- 1997

<TABLE>
<CAPTION>
EXHIBIT NO.                           DESCRIPTION
-----------                           -----------
<C>           <S>
     3.01(16) Restated Certificate of Incorporation of the Registrant, as
              amended.
     3.02(1)  Amended and Restated By-laws of the Registrant.
     4.01(1)  Specimen certificate for shares of the Registrant's Common
              Stock.
     4.02(1)  Description of capital stock (contained in the Restated
              Certificate of Incorporation the Registrant, as amended,
              filed as Exhibit 3.01)
   +10.01(1)  License Agreement between the Registrant and Massachusetts
              Institute of Technology, dated as of April 3, 1987 (the "MIT
              Agreement").
    10.02(3)  Amendment, dated November 1, 1991, to MIT Agreement.
    10.03(5)  Amendment, dated October 1, 1992, to MIT Agreement.
   +10.04(7)  Amendment, dated April 1, 1994, to the MIT Agreement.
    10.05(1)  Research Collaboration and License Agreement between the
              Registrant and Merck & Co., Inc., dated September 29, 1989 (
              the "Merck Agreement").
    10.06(5)  Amendment, dated June 29, 1992, to the Merck Agreement.
    10.07(1)  Agreement between the Registrant and the University of North
              Carolina, dated July 27, 1989.
   +10.08(1)  License Agreement and Sponsored Research Agreement between
              the Registrant and the University of Melbourne, dated
              December 15, 1989.
    10.09(9)  Agreement to Vary Licensed and Sponsored Research Agreement,
              dated December 15, 1992, between the Registrant and The
              University of Melbourne.
   +10.10(1)  Agreement between the Registrant and Princess Margaret
              Children's Medical Research Foundation (Inc.) ("Princess
              Margaret"), dated June 1, 1990.
    10.11(1)  Series C Convertible Preferred Stock Purchase Agreement
              between the Registrant and certain Series C Preferred Stock
              Purchasers, dated October 4, 1989.
   *10.12(1)  Amended and Restated 1987 Stock Option Plan, as amended.
   *10.13(5)  1993 Director's Stock Option Plan.
    10.14(1)  Lease Agreement between the Registrant and 855 Cal
              Associates for the lease of premises at 855 California
              Avenue, Palo Alto, California, dated December 12, 1988.
    10.15(5)  Lease Agreement, dated March 12, 1992, between the
              Registrant and 855 Cal Associates for the lease of premises
              at 855 California Avenue, Palo Alto, California.
    10.16(3)  Office Lease, dated November 13, 1991, between the
              Registrant and Lincoln Street Trust.
    10.17(2)  Stock Purchase Agreement, dated November 20, 1991, between
              Registrant and Marion Merrell Dow, Inc.
    10.18(10) Amendment effective December 12, 1994 to the Stock Purchase
              Agreement, dated November 20, 1991, between the Registrant
              and Marion Merrell Dow, Inc.
   +10.19(4)  Research Collaboration Agreement, dated February 14, 1992,
              between the Registrant and Marion Merrell Dow, Inc.
   +10.20(10) Letter Agreement, dated March 2, 1995 between the Registrant
              and Marion Merrell Dow, Inc. relating to the joint
              manufacturing strategy.
    10.21(11) Amendment to the Collaboration Agreement between the
              Registrant and Marion Merrell Dow, Inc. effective October 3,
              1994.
   +10.22(5)  Agreement to Vary License Agreement, dated as of December
              18, 1991, among the Registrant, Princess Margaret and
              Western Australian Research Institute for Child Health Ltd.
              ("WARICH").
</TABLE>

                                       33
<PAGE>   34

<TABLE>
<CAPTION>
EXHIBIT NO.                           DESCRIPTION
-----------                           -----------
<C>            <S>

   10.23(9)    Amendment to License Agreement effective December 18, 1991
               among the Registrant, Princess Margaret and WARICH.
   10.24(6)    Amendment to License Agreement effective December 18, 1991
               among the Registrant, Princess Margaret and WARICH.
   10.25(11)   License and Collaboration Agreement dated as of March 17,
               1995 between the Registrant and Schering AG, Germany.
   10.26(11)   Stock Purchase Agreement dated as of March 17, 1995 between
               the Registrant and Schering Berlin Venture Corporation.
   10.27(14)   Rights Agreement dated as of August 1, 1995, between the
               Registrant and the First National Bank of Boston.
  *10.28(13)   Severance Plan for Executive Officers adopted July 11, 1995.
  *10.29(15)   Form of Employment Agreement, dated November 16, 1995
               between the Registrant and Executive Officers.
  *10.30(16)   Amendment to Registrant's 1993 Directors' Stock option Plan
  *10.31(17)   Severance and Settlement Agreement and Release dated as of
               December 4, 1996 between the Registrant and Robert J.
               Gerety.
  *10.32(17)   Severance and Settlement Agreement dated as of March 4, 1997
               between the Registrant and Malcolm L. Gefter.
   10.33(17)   Agreement dated October 25, 1996 between the Registrant and
               Hoechst Marion Roussel, Inc.
   10.34(17)   Amendment No. 1 to Rights Agreement dated as of April 3,
               1996.
  *10.35(17)   Consultation Agreement dated as of January 1, 1992 between
               the Registrant and C. Garrison Fathman.
  *10.36(7)    Amendment dated April 11, 1994 to the Consultation Agreement
               between the Registrant and C. Garrison Fathman.
  *10.37(10)   Amendment dated January 16, 1995 to the Consultation
               Agreement between the Registrant and C. Garrison Fathman.
  *10.38(17)   Letter Agreement dated December 8, 1995 extending the
               Consultation Agreement between the Registrant and C.
               Garrison Fathman.
   10.39(18)   Consultation Agreement dated May 13, 1997 between the
               Registrant and J. Richard Crowley.
   10.40       Sublease dated January 22, 1998 between the Registrant as
               sublandlord and Scriptgen Pharmaceuticals, Inc. as subtenant
               for the facility at 610 Lincoln Street, Waltham,
               Massachusetts.
   21.01(1)    Subsidiaries of the Registrant.
   23.01       Consent of Coopers & Lybrand L.L.P.
   27.01       Financial Data Schedule
</TABLE>

---------------
   + Confidential treatment requested as to certain portions.

   * Management contract or compensatory plan or arrangement filed as an exhibit
     to this Form 10-K pursuant to Items 14(a) and 14(c) of Form 10-K.

 (1) Incorporated by reference to the Company's Registration Statement on Form
     S-1 (File No. 33-39592).

 (2) Incorporated by reference to the Company's Current Report on Form 8-K,
     dated December 13, 1991, as amended on Form 8, dated January 16, 1992.

 (3) Incorporated by reference to the Company's Registration Statement on Form
     S-1 (File No. 33-44642).

 (4) Incorporated by reference to the Registrant's Annual Report on Form 10-K
     for the year ended December 31, 1991.

 (5) Incorporated by reference to the Company's Registration Statement on Form
     S-3 (File No. 33- 57138).

                                       34
<PAGE>   35

 (6) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended March 31, 1994.

 (7) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended June 30, 1994.

 (8) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended September 30, 1994.

 (9) Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 1993.

(10) Incorporated by reference to the Company's Annual Report of Form 10-K for
     the fiscal year ended December 31, 1994.

(11) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended March 31, 1995.

(12) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended June 30, 1995.

(13) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended September 30, 1995.

(14) Incorporated by reference to the Company's Form 8-K filed on July 27, 1995,
     as amended by Form 8-K/A on August 2, 1995, with respect to the adoption of
     the Rights Agreement.

(15) Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 1995.

(16) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended June 30, 1996.

(17) Incorporated by reference to the Company's Annual Report on Form 10-K for
     the fiscal year ended December 31, 1996.

(18) Incorporated by reference to the Company's Quarterly Report on Form 10-Q
     for the period ended June 30, 1997.

                                       35