<PAGE>

RISK FACTORS THAT MAY AFFECT RESULTS

    This Annual Report on Form 10-K, together with the accompanying letter to
shareholders, contains forward-looking statements. For this purpose, any
statements contained herein that are not statements of historical fact may be
considered to be forward-looking statements. Although not a complete list of
words that might identify forward-looking statements, we use the words
"believes," "anticipates," "plans," "expects," "intends" and similar expressions
to identify forward-looking statements. There are a number of important factors
that could cause Millennium's actual results to differ materially from those
indicated by forward-looking statements. Factors that could cause or contribute
to such differences include those discussed below, as well as those discussd
elsewhere in this Form 10-K.

REGULATORY RISKS

CLINICAL TRIALS OF OUR PRODUCT CANDIDATES MAY NOT BE SUCCESSFUL

    In order to obtain regulatory approvals for the commercial sale of any
products, we or our alliance partners will be required to demonstrate through
preclinical testing and clinical trials that the product is safe and
efficacious. Prior to our merger with LeukoSite in December 1999, neither we nor
any of our alliance partners had initiated human clinical trials with respect to
any product or service based upon our discoveries or filed an investigational
new drug application with the United States Food and Drug Administration, or
FDA, to do so.

    The results from preclinical testing of a product that is under development
may not be predictive of results that will be obtained in human clinical trials.
In addition, the results of early human clinical trials may not be predictive of
results that will be obtained in larger scale, advanced stage clinical trials.
Furthermore, we, our collaborators or the FDA may suspend clinical trials at any
time if the subjects or patients participating in such trials are being exposed
to unacceptable health risks or for other reasons.

    The rate of completion of any clinical trials that we conduct will be
dependent on the rate of patient enrollment. Patient enrollment is a function of
many factors, including the size of the patient population, the nature of the
protocol, the availability of alternative treatments, the proximity of patients
to clinical sites and the eligibility criteria for the study. Delays in planned
patient enrollment may cause us to incur increased costs and program delays.

RELIANCE ON THIRD PARTIES TO CONDUCT TRIALS

    To date, all of our clinical trials have been conducted by third parties
under contract to us. Although we acquired certain clinical trial capabilities
in our merger with LeukoSite, for the foreseeable future we expect to rely
primarily on our strategic alliance partners and other third parties to conduct
clinical trials of our products in most circumstances. We will have less control
over such clinical trials than if we were conducting the trials directly. As a
result, these trials may not begin or be completed as planned.

WE MAY NOT OBTAIN REGULATORY APPROVALS; THE APPROVAL PROCESS IS COSTLY AND
  LENGTHY

    We must obtain regulatory approvals for our ongoing development activities
and before marketing or selling any product or service. We may not receive
regulatory approvals to conduct clinical trials of our products or to
manufacture or market our products and services. In particular, we may not
receive regulatory approval from the FDA or any other regulatory authority to
market CAMPATH-Registered Trademark- monoclonal antibody, our most advanced
product candidate. In addition, regulatory agencies may not grant such approvals
on a timely basis or may revoke previously granted approvals.

    The process of obtaining FDA and other required regulatory approvals,
including approvals in other countries, is lengthy and expensive. The time
required for FDA and other clearances or approvals

                                       22
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is uncertain and typically takes a number of years, depending on the complexity
and novelty of the product. Any delay in obtaining or failure to obtain required
clearance or approvals could materially adversely affect our ability to generate
revenues from the affected product or service. We have only limited experience
in filing and prosecuting applications necessary to gain regulatory approvals.

    Certain of the products that are likely to result from our research and
development programs may be based on new technologies and new therapeutic
approaches that have not been extensively tested in humans. One example of such
a technology is gene therapy. The regulatory requirements governing these types
of products may be more rigorous than for conventional products. As a result, we
may experience a longer regulatory process in connection with any products that
we develop based on these new technologies or new therapeutic approaches.

    Our analysis of data obtained from preclinical and clinical activities is
subject to confirmation and interpretation by regulatory authorities, which
could delay, limit or prevent regulatory approval. Any regulatory approval to
market a product may be subject to limitations on the indicated uses for which
we may market the product. These limitations may limit the size of the market
for the product.

    We also are subject to numerous and varying foreign regulatory requirements
governing the design and conduct of clinical trials and the manufacturing and
marketing of our future products and services. The approval procedure varies
among countries. The time required to obtain foreign approvals often differs
from that required to obtain FDA approval. Approval by the FDA does not ensure
approval by regulatory authorities in other countries.

    All of these regulatory risks also are applicable to development,
manufacturing and marketing undertaken by our alliance partners or other
collaborators.

EVEN IF WE OBTAIN MARKETING APPROVAL, OUR PRODUCTS WILL BE SUBJECT TO ONGOING
  REGULATORY REVIEW

    The manufacturer of products for which we obtain marketing approval and the
manufacturing facilities used to make such products will be subject to continual
review and periodic inspections by the FDA. The subsequent discovery of
previously unknown problems with the product, manufacturer or facility may
result in restrictions on the product or manufacturer, including withdrawal of
the product from the market.

    If we fail to comply with applicable regulatory requirements, we may be
subject to fines, suspension or withdrawal of regulatory approvals, product
recalls, seizure of products, operating restrictions and criminal prosecutions.

RISKS RELATING TO OUR INDUSTRY, BUSINESS AND STRATEGY

THE GENOMICS INDUSTRY IS NEW; WE HAVE NOT COMMERCIALIZED ANY PRODUCTS

    The genomics industry is new and evolving rapidly. To date, we have not
commercialized any products. In addition, relatively few products based on gene
discoveries have been developed and commercialized by others. Rapid
technological development by us or others may result in compounds, products or
processes becoming obsolete before we recover our development expenses.

    We have completed development of only one product,
CAMPATH-Registered Trademark- monoclonal antibody, and have only recently
applied to the FDA for approval to market this product. All of the other
products that we are developing will require additional research and
development, extensive preclinical studies and clinical trials and regulatory
approval prior to any commercial sales. We may need to successfully address a
number of technological challenges in order to complete development of any of
our products. Moreover, these products may not be effective in treating any
disease or may prove to have undesirable or unintended side effects, toxicities
or other characteristics that may prevent or limit commercial use.

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<PAGE>

WE PLAN TO EXPAND RAPIDLY; IF WE CANNOT MANAGE OUR GROWTH SUCCESSFULLY, OUR
  GROWTH MAY SLOW OR STOP

    We have rapidly expanded our operations and expect to continue to expand.
Our growth has placed, and will continue to place, a significant strain on our
management, operating and financial systems. If we cannot manage our expanding
operations, we may not be able to continue to grow or we may grow at a slower
pace. Furthermore, our operating costs may escalate faster than planned. In
order to manage our growth successfully, we must:

    - Maintain close coordination among our executive, finance, operations,
      research and development organizations;

    - Improve our operating, financial and accounting systems, procedures and
      controls;

    - Expand, train and manage our employee base effectively; and

    - Acquire and lease significant additional equipment and facilities.

THE ACQUISITIONS WE MAKE MAY NOT BE SCIENTIFICALLY OR COMMERCIALLY SUCCESSFUL

    We completed our merger with LeukoSite on December 22, 1999. We may not be
able to successfully integrate or profitably manage LeukoSite's businesses. In
addition, the combination of our businesses with LeukoSite's may not achieve
revenues, net income or loss levels, efficiencies or synergies that justify the
merger. The combined company may experience slower rates of growth as compared
to the historical rates of growth of Millennium and LeukoSite independently.

    All acquisitions, including our merger with LeukoSite, involve a number of
operational risks, including:

    - Difficulty and expense of assimilating the operations, technology and
      personnel of the acquired business;

    - Inability to retain the management, key personnel and other employees of
      the acquired business;

    - Inability to maintain the acquired company's relationships with key third
      parties, such as alliance partners;

    - Exposure to legal claims for activities of the acquired business prior to
      acquisition;

    - Diversion of management attention; and

    - Amortization of substantial goodwill and write-off of in-process research
      and development costs, adversely affecting our reported results of
      operations.

    If we make additional significant acquisitions in which the consideration
paid includes stock or other securities, our outstanding common stock may be
significantly diluted. If we make one or more significant acquisitions in which
the consideration paid includes cash, we may be required to use a substantial
portion of our available cash.

OUR GROWTH COULD BE LIMITED IF WE ARE UNABLE TO ATTRACT AND RETAIN KEY PERSONNEL

    Our success is substantially dependent on the ability, experience and
performance of our senior management and other key personnel. If we lose one or
more of the members of our senior management or other key employees, our
business and operating results could be seriously harmed.

    In addition, our future success will depend heavily on our ability to
continue to hire, train, retain and motivate additional skilled managerial and
scientific personnel. The pool of personnel with the skills that we require is
limited. Competition to hire from this limited pool is intense.

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    The stock options held by LeukoSite employees became fully vested upon the
closing of our acquisition of LeukoSite. This acceleration may adversely affect
our ability to retain former LeukoSite employees.

WE FACE SUBSTANTIAL COMPETITION, WHICH MAY RESULT IN OTHERS DISCOVERING,
DEVELOPING OR COMMERCIALIZING PRODUCTS AND SERVICES BEFORE OR MORE SUCCESSFULLY
THAN WE DO

    The fields of genomics, biotechnology and pharmaceuticals are highly
competitive. We will not succeed if we cannot compete effectively in these
fields. Many of our competitors are substantially larger than we are and have
substantially greater capital resources, research and development staffs and
facilities than we have. Furthermore, many of our competitors are more
experienced than we are in drug discovery, development and commercialization,
obtaining regulatory approvals and product manufacturing and marketing. As a
result, our competitors may identify genes associated with diseases or discover,
develop and commercialize products or services based on such genes before we do.
In addition, our competitors may discover, develop and commercialize products or
services which render non-competitive or obsolete the products or services that
we or our strategic alliance partners are seeking to develop and commercialize.

    Under the Orphan Drug Act, a sponsor of an application to the FDA may seek
to obtain a seven-year period of marketing exclusivity for a drug intended to
treat a rare disease or condition, which is defined as a disease or condition
that occurs in fewer than 200,000 patients. In the event that a competitor
receives orphan drug designation and obtains the FDA marketing exclusivity for a
drug intended to treat the same rare disease or condition before we obtain such
approval, we would not be permitted by the FDA to market our product in the
United States for the same use during the exclusivity period. If we receive an
orphan drug designation, it may be very expensive to assert our rights under the
Orphan Drug Act. In addition, if we receive seven-year marketing exclusivity,
the FDA may rescind the period of exclusivity under certain circumstances,
including our failure to assure a sufficient quantity of the drug.

RISKS RELATING TO OUR FINANCIAL RESULTS AND NEED FOR FINANCING

WE HAVE INCURRED SUBSTANTIAL LOSSES, WE EXPECT TO CONTINUE TO INCUR LOSSES AND
WE WILL NOT BE SUCCESSFUL UNLESS WE REVERSE THIS TREND

    We have incurred losses in four of the last six years including losses in
the year ended December 31, 1999. We expect to continue to incur substantial
operating losses in future periods.

    To date, substantially all of our revenues have resulted from payments from
strategic alliance partners. We have not received any revenues from the sale of
products.

    We expect to increase our spending significantly as we continue to expand
our infrastructure, research and development programs and commercialization
activities. As a result, we will need to generate significant revenues to
achieve profitability. We cannot be certain whether or when this will occur
because of the significant uncertainties that affect our business.

WE MAY NEED ADDITIONAL FINANCING, WHICH MAY BE DIFFICULT TO OBTAIN

    We will require substantial funds to conduct research and development,
including preclinical testing and clinical trials of our potential products,
meet our obligations to our strategic alliance partners and manufacture and
market any products and services that are approved for commercial sale. Our
future capital requirements will depend on many factors, including the
following:

    - Our ability to establish and maintain strategic alliances

    - Continued progress in our discovery and development programs

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<PAGE>

    - The number and scope of our discovery and development programs

    - The progress of the development efforts of our strategic partners

    - The scope and results of clinical trials initiated by us

    - The time and costs involved in obtaining regulatory approvals

    - The cost of acquisitions of businesses, products and technologies

    - The cost of manufacturing and commercialization activities

    - The cost of continuing to build our infrastructure, including additional
      requirements for facilities and costs of recruiting personnel

    - The timing, receipt, and amount of milestones and other payments from our
      alliance partners

    - The timing, receipt and amount of sales and royalties from our potential
      products and services in the market

    - The costs involved in preparing, filing, prosecuting, maintaining and
      enforcing patent claims and other patent-related costs, including
      litigation costs and the costs of obtaining any required licenses to
      technologies

    - Competing technological and market developments

    We may seek to raise additional financing through public or private equity
offerings, debt financings or additional strategic alliance and licensing
arrangements. Such additional financing may not be available when we need it or
may not be available on terms that are favorable to us.

    If we raise additional funds by issuing equity securities, further dilution
to our then existing stockholders will result. In addition, the terms of the
financing may adversely affect the holdings or the rights of such stockholders.
If we are unable to obtain adequate funding on a timely basis, we may be
required to significantly curtail one or more of our discovery or development
programs. We could be required to seek funds through arrangements with
collaborative partners or others that may require us to relinquish rights to
certain of our technologies, product candidates or products which we would
otherwise pursue on our own.

RISKS RELATING TO DEVELOPMENT OF GENOMICS AND GENETICS BASED TECHNOLOGY AND
  PRODUCTS

IF OUR TECHNOLOGICAL APPROACHES ARE NOT SUCCESSFUL, WE MAY NOT BE ABLE TO
DEVELOP AND COMMERCIALIZE ANY PRODUCTS AND SERVICES

    Our genomics research is focused primarily on diseases that may be linked to
several or many genes working in combination. Both we and the general scientific
and medical communities have a limited understanding relating to the role of
genes and their products in these diseases. Our technological approaches to drug
target identification and validation may not enable us to successfully identify
and characterize genes and their products that predispose individuals to
diseases. If we do not identify such drug targets, we may not be able to
successfully develop and commercialize any products or services. Even if we do
identify such drug targets, we will have to do substantial additional work to
translate these discoveries into products.

WE MAY NOT BE ABLE TO OBTAIN BIOLOGICAL MATERIAL, INCLUDING HUMAN AND ANIMAL DNA
SAMPLES REQUIRED FOR OUR GENETIC STUDIES

    Our gene identification strategy includes genetic studies of families and
populations prone to particular diseases. These studies require the collection
of large numbers of DNA samples from

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affected individuals, their families and other suitable populations as well as
animal models. The availability of DNA samples and other biological material is
important to our ability to discover the genes responsible for human diseases
through human genetic approaches and other studies. Competition for these
resources is intense; and access to suitable populations, materials and samples
could be limited by forces beyond our control, including governmental actions.
Some of our competitors may have obtained access to significantly more family
and population resources and biological materials than we have obtained. As a
result, we may not be able to obtain access to DNA samples necessary to support
our human gene discovery programs.

RISKS RELATING TO STRATEGIC ALLIANCE PARTNERS

WE DEPEND ON STRATEGIC ALLIANCE PARTNERS; OUR BUSINESS MAY SUFFER IF ANY OF OUR
STRATEGIC ALLIANCE PARTNERS BREACHES THEIR AGREEMENT OR FAILS TO SUPPORT OR
TERMINATES THEIR ALLIANCE WITH US

    We conduct most of our discovery and development activities through
strategic alliances. The success of these programs is heavily dependent on the
efforts and activities of our strategic alliance partners. Our agreements with
our alliance partners allow them significant discretion in determining the
efforts and resources that they will apply to the alliance. Our existing and any
future alliances may not be scientifically or commercially successful.

    The risks that we face in connection with these alliances include:

    - If any of our alliance partners were to breach or terminate an agreement
      with us, reduce its funding or otherwise fail to conduct its collaborative
      activities successfully, we could be required to devote additional
      internal resources to the program that is the subject of the alliance,
      scale back or terminate the program, seek an alternative partner or
      license or otherwise secure intellectual property rights previously
      associated with the alliance in order to continue the program.

    - All of our strategic alliance agreements are subject to termination under
      various circumstances, including in many cases on short notice without
      cause. Some of our alliance agreements provide that if we fail to meet
      specified performance criteria, our alliance partner may terminate the
      agreement while maintaining rights and licenses to certain of our
      discoveries. If an alliance partner terminates its alliance with us, it
      may adversely affect the perception of us in the business and financial
      communities.

    - In our strategic alliance agreements, we generally agree not to conduct
      certain research and development in the field that is the subject of the
      alliance. These agreements may have the effect of limiting the areas of
      research and development we may pursue, either alone or in collaboration
      with third parties.

    - Our alliance partners may develop and commercialize, either alone or with
      others, products and services that are similar to or competitive with the
      products and services that are the subject of the alliance with us. Such
      competing products and services may result in our alliance partner
      withdrawing financial and related support for our product and service
      candidates.

    - Reductions in marketing or sales efforts or a discontinuation of marketing
      or sales efforts of our products or services by our alliance partners
      would reduce our revenues, which in many cases will be based on a
      percentage of net sales by our alliance partner. Our alliance partners may
      change the focus of their development and commercialization efforts.
      Pharmaceutical and biotechnology companies historically have re-evaluated
      their priorities following mergers and consolidations, which have been
      common in recent years in these industries.

    - We will rely on our alliance partners to manufacture most products covered
      by our alliances. For example, Becton Dickinson has the sole right to
      manufacture Melastatin-TM-.

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<PAGE>

WE MAY NOT BE SUCCESSFUL IN ESTABLISHING ADDITIONAL STRATEGIC ALLIANCES

    An important element of our business strategy is entering into strategic
alliances for the development and commercialization of products and services
based on our discoveries. We face significant competition in seeking appropriate
alliance partners. We may not be successful in our efforts to establish
additional strategic alliances or other alternative arrangements. The terms of
any additional strategic alliances or other arrangements that we establish may
not be favorable to us. Moreover, such strategic alliances or other arrangements
may not be successful.

CONFLICTS MAY ARISE BETWEEN US AND OUR MAJORITY-OWNED SUBSIDIARY

    We have a subsidiary, Millennium Predictive Medicine, Inc., or MPMx, in
which minority equity interests are held by third parties. In addition, we may
establish additional subsidiaries in the future in which the subsidiary sells
minority equity interests to third parties. Conflicts may arise between us and
such subsidiaries, including with respect to:

    - the allocation of business opportunities;

    - the sharing of rights, technologies, facilities, personnel and other
      resources; and

    - the fiduciary duties owed by officers and directors who provide services
      to both us and one or more of these subsidiaries.

RISKS RELATING TO INTELLECTUAL PROPERTY

WE MAY NOT BE ABLE TO OBTAIN PATENT PROTECTION FOR OUR DISCOVERIES, THE PATENT
PROTECTION WE HAVE OR MAY OBTAIN MAY BE INADEQUATE AND WE MAY INFRINGE PATENT
RIGHTS OF THIRD PARTIES

    The patent positions of pharmaceutical and biotechnology companies,
including us, are generally uncertain and involve complex legal, scientific and
factual questions.

    Our success depends in significant part on our ability to:

    - Obtain patents;

    - Obtain licenses to the proprietary rights of others on commercially
      reasonable terms;

    - Operate without infringing upon the proprietary rights of others;

    - Prevent others from infringing on our proprietary rights; and

    - Protect trade secrets.

THERE IS SIGNIFICANT UNCERTAINTY ABOUT THE VALIDITY AND PERMISSIBLE SCOPE OF
  GENOMICS PATENTS

    The validity and permissible scope of patent claims in the pharmaceutical
and biotechnology fields, including the genomics field, involve important
unresolved legal principles. For example, there is significant uncertainty both
in the United States and abroad regarding the patentability of gene sequences in
the absence of functional data and the scope of patent protection available for
full-length genes and partial gene sequences. Moreover, certain groups have made
certain gene sequences available in publicly accessible databases. These and
other disclosures may adversely affect our ability to obtain patent protection
for gene sequences claimed by us in patent applications that we file subsequent
to such disclosures. There is also some uncertainty as to whether human clinical
data will be required for issuance of patents for human therapeutics. If such
data are required, our ability to obtain patent protection could be delayed or
otherwise adversely affected.

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OUR COLLABORATORS MAY PUBLISH DATA THAT WILL LIMIT OUR ABILITY TO OBTAIN PATENT
  PROTECTION

    Our collaborators have certain rights to publish data and information in
which we have rights. While we believe that the limitations on publication of
data developed by our collaborators pursuant to our collaboration agreements
will be sufficient to permit us to apply for patent protection, there is
considerable pressure to publish discoveries. Such publication could affect our
ability to obtain patent protection for some inventions in which we may have an
interest.

THE PROTECTION THAT OUR PATENTS AND PATENT APPLICATIONS AFFORD US MAY BE LIMITED

    United States and foreign patents may not issue from any patent applications
that we own or license. If patents do issue, the claims granted may not be
sufficiently broad to protect our technology. Any rights we may have under any
issued patents that we own or have licensed may not provide us with sufficient
protection against competitive products or otherwise cover commercially valuable
products or processes. In addition, issued patents that we own or license may be
challenged, infringed upon, invalidated, found to be unenforceable or
circumvented by others. Our patents also may not afford us protection against
competitors with similar technology. Because patent applications in the United
States may be maintained in secrecy until patents issue, third parties may have
issued patents or have filed or maintained patent applications for technology
used by us or covered by our pending patent applications without our being aware
of these patents or patent applications. We cannot be certain that the
applicants or inventors of subject matter covered by patent applications or
patents that we own or have licensed were the first to invent or the first to
file patent applications for such inventions.

DISPUTES REGARDING PATENT RIGHTS MAY BE COSTLY TO RESOLVE AND WE COULD LOSE OUR
  RIGHTS

    If another party claims the same subject matter or subject matter
overlapping with subject matter that we have claimed in a United States patent
application or patent, we may decide or be required to participate in
interference proceedings in the United States Patent and Trademark Office in
order to determine priority of invention. Loss of such an interference
proceeding would deprive us of patent protection sought or previously obtained.
Participation in such proceedings could result in substantial costs, whether or
not the eventual outcome is favorable. Similarly, patents or applications that
we have licensed could become the subject of interference proceedings in the
United States Patent and Trademark Office, and loss of such an interference
proceeding would deprive us of licensed rights under patent protection sought or
previously obtained.

OTHERS MAY OWN OR CONTROL PATENTS OR PATENT APPLICATIONS AND REQUIRE US TO SEEK
LICENSES OR BLOCK OUR COMMERCIALIZATION EFFORTS

    We may not have rights under certain patents or applications related to our
proposed products, processes or services. These patents and patent applications
in the United States and abroad may be owned or controlled by third parties.
Therefore, in some cases, such as those detailed below, to develop, manufacture,
sell or import certain of our proposed products, processes or services, we or
our alliance partners may choose to seek or be required to seek licenses under
third party patents issued in the United States and abroad or those which might
issue from United States and foreign patent applications. If licenses are not
available to us on acceptable terms, we or our alliance partners may not be able
to develop, manufacture, sell or import these products, processes or services.

    With respect to our product candidate LDP-01, we are aware of third party
patents and patent applications which relate to certain anti-CD18 antibodies and
their use in various methods of treatment including methods of reperfusion
therapy and methods of treating focal ischemic stroke. In addition, our LDP-01,
LDP-02, and CAMPATH-Registered Trademark- product candidates are humanized
monoclonal antibodies. We are aware of third party patents and patent
applications which relate to certain humanized or modified

                                       29
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antibodies, products useful for making humanized or modified antibodies, and
processes for making and using humanized or modified antibodies. We are also
aware of third party patents and patent applications relating to certain
manufacturing processes, products thereof and materials useful in such
processes.

    Our product candidates LDP-977, LDP-341, and LDP-519 are all small molecule
drug candidates. With respect to LDP-341, we are aware of third party patents or
patent applications which relate to either intermediates or synthetic processes
used in the synthesis of these compounds. Additionally, for the use of LDP-341
and LDP-519 in the treatment of infarctions we are aware of the existence of a
potentially interfering patent application filed by one of our former
consultants.

OUR RIGHT TO USE CERTAIN TECHNOLOGIES IS DEPENDENT ON LICENSES WHICH COULD BE
  TERMINATED OR LOST

    We are a party to various license agreements that give us rights under
certain intellectual property rights of third parties. We cannot assure you that
we will be able to continue to license these rights on commercially reasonable
terms, if at all. These licenses impose various commercialization, sublicensing,
royalty, insurance and other obligations on us. Our failure to maintain rights
under any license could have a material adverse effect on our business,
financial condition and results of operations.

WE MAY NOT BE ABLE TO KEEP OUR TRADE SECRETS CONFIDENTIAL

    We also rely significantly upon unpatented proprietary technology,
information, processes and know-how, including proprietary software and
databases of proprietary gene sequences and biological information. We seek to
protect this information by confidentiality agreements with our respective
employees, consultants and other third party contractors as well as through
other security measures. These confidentiality agreements may be breached, and
we may not have adequate remedies for any such breach. In addition, our trade
secrets may otherwise become known or be independently developed by competitors.

WE MAY BECOME INVOLVED IN EXPENSIVE PATENT LITIGATION OR OTHER PROCEEDINGS WHICH
COULD RESULT IN LIABILITY FOR DAMAGES OR STOP OUR DEVELOPMENT AND
COMMERCIALIZATION EFFORTS

    There has been substantial litigation and other proceedings regarding the
patent and other intellectual property rights in the pharmaceutical and
biotechnology industries. We may become a party to patent litigation or other
proceedings regarding intellectual property rights. For example, we believe that
we hold patent applications that cover genes that are also claimed in patent
applications filed by others. Interference proceedings before the United States
Patent and Trademark Office may be necessary to establish which party was the
first to invent these genes.

    Other types of situations in which we may become involved in patent
litigation or other proceedings include:

    - We may initiate litigation or other proceedings against third parties to
      enforce our patent rights or licensed patent rights.

    - We may initiate litigation or other proceedings against third parties to
      seek to invalidate the patents they hold or to obtain a judgment that our
      products, processes or services do not infringe their patents.

    - If third parties file patent applications that claim inventions also
      claimed by us, we may participate in interference or opposition
      proceedings to determine the priority of invention or entitlement to a
      patent.

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<PAGE>

    - If third parties initiate litigation or other proceedings claiming that
      our processes, products or services infringe their patent or other
      intellectual property rights, we will need to defend ourselves against
      such claims.

    There can be no assurance that any of the patents that we own or have
licensed will ultimately be held valid and enforceable or that efforts to assert
or defend any patents or other intellectual property rights would be successful.
Similarly, there can be no assurances that products or processes used by us or
our alliance partners will not be held to infringe patents or other intellectual
property rights of others.

    The cost to us of any patent litigation or other proceeding, even if
resolved in our favor, could be substantial. Some of our competitors may be able
to sustain the cost of such litigation or proceedings more effectively than we
can because of their substantially greater financial resources. If a patent
litigation or other proceeding is resolved against us, we or our alliance
partners may be enjoined from developing, manufacturing, selling or importing
our products, processes or services without a license from the other party and
we may be held liable for significant damages. We may not be able to obtain any
required license on commercially acceptable terms or at all.

    Uncertainties resulting from the initiation and continuation of patent
litigation or other proceedings could have a material adverse effect on our
ability to compete in the marketplace. Patent litigation and other proceedings
may also absorb significant management time.

RISKS RELATING TO PRODUCT MANUFACTURING, MARKETING AND SALES

THE MARKET MAY NOT BE RECEPTIVE TO OUR PRODUCTS AND SERVICES UPON THEIR
  INTRODUCTION

    The commercial success of our products and services that are approved for
marketing will depend upon their acceptance by the medical community and third
party payors as clinically useful, cost effective and safe. Many of the products
and services that we are developing are based upon new technologies or
therapeutic approaches. As a result, it may be more difficult for us to achieve
market acceptance of our products and services, particularly the first products
and services that we introduce to the market based on new technologies and
therapeutic approaches.

    Other factors that we believe will materially affect market acceptance of
our products and services include:

    - The timing of receipt of marketing approvals and the countries in which
      such approvals are obtained

    - The safety, efficacy and ease of administration of the product

    - The success of physician education programs

WE HAVE NO SALES, MARKETING OR DISTRIBUTION EXPERIENCE AND CAPABILITIES

    We have no sales, marketing or distribution experience and capabilities. We
plan to rely significantly on sales, marketing and distribution arrangements
with our strategic alliance partners and other third parties for the products
and services that we are developing. For example, our partnership that holds
CAMPATH-Registered Trademark- monoclonal antibody will rely solely upon Schering
AG and its U.S. affiliate, Berlex Laboratories, for the marketing, distribution
and sale of the CAMPATH-Registered Trademark- product throughout the world other
than the Far East. The terms of the arrangements that we enter into relating to
marketing and sales of our products may not be favorable to us. In addition, we
may have limited or no control over the sales, marketing and distribution
activities of third parties. Our future revenues will be materially dependent
upon the success of the efforts of these third parties with whom we enter into
these arrangements.

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    If in the future we determine to perform sales, marketing and distribution
functions ourselves, we would face a number of additional risks, including:

    - We may not be able to attract and build a sufficient marketing staff or
      sales force.

    - The cost of establishing a marketing staff or sales force may not be
      justifiable in light of any product or service revenues.

    - Our direct sales and marketing efforts may not be successful.

WE HAVE LIMITED MANUFACTURING CAPABILITIES AND WILL BE DEPENDENT ON THIRD PARTY
  MANUFACTURERS

    We have limited manufacturing experience and no commercial scale
manufacturing capabilities. In order to continue to develop products and
services, apply for regulatory approvals and, ultimately, commercialize any
products and services, we will need to develop, contract for or otherwise
arrange for the necessary manufacturing capabilities.

    We currently rely upon third parties to produce material for preclinical
testing purposes and expect to continue to do so in the future. We also expect
to rely upon other third parties, including our strategic alliance partners, to
produce materials required for clinical trials and for the commercial production
of certain of our products if we succeed in obtaining necessary regulatory
approvals. Our partnership with ILEX Oncology relies on Boehringer Ingleheim as
the sole source manufacturer of CAMPATH-Registered Trademark- monoclonal
antibody. There are a limited number of manufacturers that operate under the
FDA's good manufacturing practices regulations capable of manufacturing for us.
If we are unable to arrange for third party manufacturing of our products, or to
do so on commercially reasonable terms, we may not be able to complete
development of our products or market them.

    To the extent that we enter into manufacturing arrangements with third
parties, we will be dependent upon these third parties to perform their
obligations in a timely manner. If such third party suppliers fail to perform
their obligations, we may be adversely affected in a number of ways, including:

    - We may not be able to initiate or continue clinical trials of products
      that are under development.

    - We may be delayed in submitting applications for regulatory approvals for
      our products.

    - We may not be able to meet commercial demands for our products.

    We may in the future determine to manufacture certain of our products in our
own manufacturing facilities. We will require substantial additional funds and
need to recruit qualified personnel in order to build or lease and operate any
manufacturing facilities. We may not be able to successfully develop our own
manufacturing capabilities. Moreover, it may be very costly and time consuming
for us to develop such capabilities.

    The manufacture of products by us and our alliance partners and suppliers is
subject to regulation by the FDA and comparable agencies in foreign countries.
Delay in complying or failure to comply with such manufacturing requirements
could materially adversely affect the marketing of our products.

IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR FUTURE PRODUCTS
OR SERVICES BY THIRD PARTY PAYORS, THERE MAY BE NO COMMERCIALLY VIABLE MARKETS
FOR OUR PRODUCTS OR SERVICES

    The availability and levels of reimbursement by governmental and other third
party payors affects the market for any pharmaceutical product or service. These
third party payors continually attempt to contain or reduce the costs of
healthcare by challenging the prices charged for medical products and services.
In certain foreign countries, particularly the countries of the European Union,
the pricing of prescription pharmaceuticals is subject to governmental control.
We may not be able to sell our products profitably if reimbursement is
unavailable or limited in scope or amount.

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    In both the United States and certain foreign jurisdictions, there have been
a number of legislative and regulatory proposals to change the healthcare
system. Further proposals are likely. The potential for adoption of these
proposals affects or will affect our ability to raise capital, obtain additional
collaborative partners and market our products.

    If we or our alliance partners obtain marketing approvals for our products,
we expect to experience pricing pressure due to the trend toward managed health
care, the increasing influence of health maintenance organizations and
additional legislative proposals.

ETHICAL, LEGAL AND SOCIAL ISSUES RELATED TO GENETIC TESTING MAY CAUSE OUR
DIAGNOSTIC PRODUCTS TO BE REJECTED BY CUSTOMERS OR PROHIBITED OR CURTAILED BY
GOVERNMENTAL AUTHORITIES

    Diagnostic tests that evaluate genetic predisposition to disease raise
issues regarding the use and confidentiality of the information provided by such
tests. Insurance carriers and employers might discriminate on the basis of such
information, resulting in a significant barrier to the acceptance of such tests
by customers. Such discrimination could cause governmental authorities to
prohibit or limit the use of such tests.

RISKS RELATING TO OUR ONGOING OPERATIONS

WE MAY BE EXPOSED TO PRODUCT LIABILITY CLAIMS AND MAY NOT BE ABLE TO OBTAIN
ADEQUATE PRODUCT LIABILITY INSURANCE

    Our business exposes us to potential product liability risks which are
inherent in the testing, manufacturing, marketing and sale of human therapeutic
and diagnostic products. Product liability claims or product recalls, regardless
of the ultimate outcome, could require us to spend significant time and money in
litigation and to pay significant damages. We currently have a limited amount of
product liability insurance coverage. If we decide to increase our coverage, we
may not be able to obtain such additional product liability insurance at a
reasonable cost or in sufficient amounts to protect us against losses due to
liability claims.

WE COULD INCUR LIABILITIES RELATING TO HAZARDOUS MATERIALS THAT WE USE IN
RESEARCH AND DEVELOPMENT ACTIVITIES

    Our research and development activities involve the controlled use of
hazardous materials, chemicals and various radioactive materials. There is a
risk of accidental contamination or injury from these materials. In the event of
such an accident, we could be held liable for any damages that result. This type
of liability could exceed our resources.

RISKS RELATING TO OUR CONVERTIBLE SUBORDINATED NOTES

SUBSTANTIAL LEVERAGE AND DEBT SERVICE OBLIGATIONS MAY ADVERSELY AFFECT OUR CASH
  FLOW

    We have substantial amounts of outstanding indebtedness, primarily our 5.50%
Convertible Subordinated Notes due January 15, 2007. We also may obtain
additional long term debt and working capital lines of credit. As a result of
this indebtedness, our principal and interest payment obligations are
substantial. There is the possibility that we may be unable to generate cash
sufficient to pay the principal of, interest on and other amounts due in respect
of our indebtedness when due.

    Our substantial leverage could have significant negative consequences,
including:

    - increasing our vulnerability to general adverse economic and industry
      conditions;

    - limiting our ability to obtain additional financing;

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    - requiring the dedication of a substantial portion of our cash from
      operations to service our indebtedness, thereby reducing the amount of our
      cash available for other purposes, including capital expenditures;

    - limiting our flexibility in planning for, or reacting to, changes in our
      business and the industry in which we compete; and

    - placing us at a possible competitive disadvantage vis-a-vis less leveraged
      competitors and competitors that have better access to capital resources.

WE MAY BE UNABLE TO REPURCHASE OUR OUTSTANDING NOTES AS REQUIRED BY THEIR TERMS

    At maturity, the entire outstanding principal amount of our 5.5% convertible
subordinated notes will become due and payable. In addition, if a change in
control, as defined in the indenture relating to the notes, occurs, each holder
of the notes may require us to repurchase all or a portion of that holder's
notes. At maturity or if a change in control occurs, we may not have sufficient
funds or may be unable to arrange for additional financing to pay the principal
amount or repurchase price due. Under the terms of the indenture for the notes,
we may elect, if we satisfy certain conditions specified in the indenture, to
pay the repurchase price with shares of common stock. Our borrowing arrangements
or agreements relating to senior debt to which we become a party may contain
restrictions on, or prohibitions against, our repurchases of the notes. If the
maturity date or change in control occurs at a time when our other arrangements
prohibit us from repurchasing the notes, we could try to obtain the consent of
the lenders under those arrangements to purchase the notes, or we could attempt
to refinance these borrowings that contain the restrictions. If we do not obtain
the necessary consents or refinance these borrowings, we will be unable to
repurchase the notes. In that case, our failure to repurchase any tendered notes
or notes due upon maturity would constitute an event of default under the
indenture. Any such default, in turn, may cause a default under the terms of our
senior debt. As a result, in those circumstances, the subordination provisions
of the indenture would, absent a waiver, prohibit any repurchase of the notes
until we pay the senior debt in full.

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