SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

|X|           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                     For fiscal year ended December 31, 2001

                                       OR

      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                 For the transition period from _____ to _____.

                        Commission File Number: 000-21589

                         TRIANGLE PHARMACEUTICALS, INC.
             (Exact name of Registrant as specified in its charter)

             DELAWARE                                            56-1930728
  (State or other jurisdiction                                (I.R.S. Employer
of incorporation or organization)                            Identification No.)

4 University Place, 4611 University Drive, Durham, North Carolina  27707
               (Address of principal executive offices)          (zip code)

       Registrant's telephone number, including area code: (919) 493-5980

               Securities registered pursuant to Section 12(b) of
                                  the Act: None

                 Securities registered pursuant to Section 12(g)
                    of the Act: Common Stock, $.001 par value

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

      Indicate by 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 this
Form 10-K. |X|

      The aggregate market value of the voting stock held by non-affiliates of
the registrant as of January 31, 2002, was approximately $158 million. For the
purposes of this calculation, shares owned by officers, directors and 10%
stockholders known to the registrant have been excluded. Such exclusion is not
intended, nor shall it be deemed, to be an admission that such persons are
affiliates of the registrant.

      The number of shares of the registrant's Common Stock outstanding as of
January 31, 2002, was 76,828,854.
<Page>

DOCUMENTS INCORPORATED BY REFERENCE
-----------------------------------

      Portions of Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders (the "Proxy Statement") are incorporated by reference as provided
in Part III of this Annual Report on Form 10-K.

      TRIANGLE PHARMACEUTICALS(R), TRIANGLE PHARMACEUTICALS (AND DESIGN)(R) AND
COVIRACIL(R) ARE TRADEMARKS OF THE REGISTRANT. THIS ANNUAL REPORT ALSO INCLUDES
NAMES AND TRADEMARKS OF COMPANIES OTHER THAN THE REGISTRANT.

                                     PART I

ITEM 1. BUSINESS
        --------

      THIS ANNUAL REPORT ON FORM 10-K MAY CONTAIN PROJECTIONS, ESTIMATES AND
OTHER FORWARD-LOOKING STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND
UNCERTAINTIES, INCLUDING THOSE DISCUSSED BELOW AT "RISK AND UNCERTAINTIES."
WHILE THIS OUTLOOK REPRESENTS OUR CURRENT JUDGMENT ON THE FUTURE DIRECTION OF
THE BUSINESS, SUCH RISK AND UNCERTAINTIES COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM ANY FUTURE PERFORMANCE SUGGESTED BELOW. WE UNDERTAKE NO
OBLIGATION TO RELEASE PUBLICLY THE RESULTS OF ANY REVISIONS TO THESE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES ARISING AFTER THE
DATE HEREOF.

OVERVIEW

      We develop new drug candidates primarily in the antiviral area, with a
particular focus on therapies for HIV, including AIDS, and the hepatitis B
virus. Our existing portfolio consists of several licensed drug candidates in
clinical trials and others that are in a preclinical stage. Members of our
senior management team, prior to joining Triangle, played instrumental roles in
developing and commercializing several leading antiviral therapies. Our goal is
to capitalize on our management team's expertise, as well as on advances in
virology and immunology, to identify, develop and commercialize new drug
candidates that can be used alone or in combination to treat serious diseases.

      Treating HIV infection with combination therapy has shown significant
clinical benefits, including reduced virus levels and increased patient
longevity. Triangle was founded based in part on our belief that the prolonged
use of combination therapy will generate demand for new anti-HIV drugs with
favorable activity, resistance, compliance and/or tolerance profiles. We believe
the use of anti-HIV drugs will increase because:

      o     the use of multiple drugs by individual patients on combination
            therapy will continue to increase,
      o     previously untreated patients will seek medical care as the benefits
            of combination therapy become more widely understood, and
      o     the number of patients and the duration of drug therapy will
            increase as patient mortality continues to decrease.

      We believe that hepatitis B, like HIV, due to its complexity and
demonstrated ability to develop resistance, may be more effectively and safely
treated with combination therapy.

      We are actively developing the following drug candidates which we believe
may become valuable tools in the combination treatment of serious viral
diseases:

      DRUG CANDIDATES TO TREAT HIV

            COVIRACIL(R) (EMTRICITABINE), FORMERLY KNOWN AS FTC. A nucleoside
            analogue, Coviracil has been shown to be a potent inhibitor of HIV
            and hepatitis B virus replication in laboratory studies. Against
            HIV, the potency of Coviracil in laboratory studies is 4 to 10 times
            greater than that of lamivudine, a member of the same nucleoside
            class as Coviracil. Coviracil is a potent antiviral agent against
            HIV strains obtained from a geographically diverse set of
            HIV-infected patients. Laboratory studies have also shown that
            Coviracil shares cross-resistance patterns with


                                       2
<Page>

            lamivudine. The most common resistance mutation to these two agents
            also reverses resistance of the virus to AZT in some cases. We have
            completed two Phase III clinical studies comparing once-a-day dosage
            of Coviracil to twice-a-day dosage of lamivudine in combination with
            other antiviral agents in the treatment of HIV. An additional Phase
            III clinical study, FTC-301, comparing Coviracil (200 mg once-a-day)
            to stavudine (40 mg twice-a-day) in combination with didanosine (400
            mg once-a-day) and efavirenz (600 mg once-a-day) in antiretroviral
            therapy naive patients has completed enrollment with 564 patients.
            We intend to submit a New Drug Application, an NDA, for Coviracil in
            the third quarter of 2002.

            AMDOXOVIR, FORMERLY KNOWN AS DAPD. Amdoxovir, a purine dioxolane
            nucleoside, may offer advantages over other nucleosides currently in
            the market because of its activity against drug resistant viruses as
            exhibited in laboratory studies. This type of activity has also been
            demonstrated in naive patients and multiple drug failure patients.
            DAPD-101 was a two-week dose ranging study of amdoxovir either alone
            or added to the antiviral medications the patient was already
            receiving. Both drug naive patients and multiple drug failure
            patients were enrolled in DAPD-101. In treatment naive patients,
            amdoxovir produced maximum decreases in plasma HIV RNA ranging from
            0.54 log(10) to 1.9 log(10) at doses ranging from 25 mg twice-a-day
            to 500 mg twice-a-day. In 24 patients who had received multiple
            antiviral therapies, a median viral suppression of 0.66 log(10) was
            observed when amdoxovir 500 mg twice-a-day was added to the failing
            antiretroviral regimen.

            We are planning to initiate a multi-study Phase II program in 2002
            for amdoxovir which is intended to include the following:

            o     Study DAPD-150, a 96-week randomized trial comparing amdoxovir
                  at 500 mg twice-a-day to 300 mg twice-a-day in combination
                  with best available drug regimen as determined by the
                  patient's physician,

            o     A 48-week Phase II pilot study of amdoxovir, tenofovir, T20
                  and Kaletra(R) in highly treatment-experienced patients
                  conducted by the AIDS Clinical Trial Group, ACTG, in the
                  United States,

            o     A Phase II study, conducted in collaboration with the ACTG, to
                  explore the combination of amdoxovir and mycophenolic acid,
                  which has been shown to significantly enhance the antiviral
                  activity of amdoxovir in the laboratory, and

            o     A Phase II study, conducted in collaboration with the French
                  Agence Nationale de Recherches sur le Sida, the ANRS, to
                  compare amdoxovir to placebo in patients who have experienced
                  multi-drug failure.

      DRUG CANDIDATES TO TREAT HEPATITIS B

            EMTRICITABINE, FORMERLY KNOWN AS FTC. We are currently conducting
            Phase II and Phase III clinical trials with emtricitabine for the
            treatment of hepatitis B. Some of the development activities we have
            undertaken with Coviracil for the treatment of HIV will also be used
            in the assessment of emtricitabine for the treatment of hepatitis B.
            Emtricitabine has been shown to be a potent inhibitor of hepatitis B
            virus replication in patients chronically infected with this virus.

            Study FTCB-102 is a Phase II randomized, double blind, dose
            comparison 48-week trial with an additional 48-week open label
            phase. Enrollment has been completed and 98 patients, 32 or 33 per
            cohort, have received 25, 100 or 200 mg of emtricitabine once-a-day
            for 48 weeks. Patients continued to receive 200 mg emtricitabine
            once-a-day in the open label phase for an additional 48 weeks and
            have completed their six-month post-treatment follow-up visits.
            Hepatitis B virus DNA suppression in plasma was measured using the
            sensitive Digene Hybrid Capture II(R) Assay, with the lower limit of
            detection of 4,700 copies/mL. Following 48 weeks of treatment, the
            proportion of patients with undetectable viremia was 38%, 42%, and
            61% for the 25 mg, 100 mg, and


                                       3
<Page>

            200 mg cohorts, respectively. The development of antibodies to and
            the disappearance of a viral envelope protein, known as Hbe, is
            evidence of improvement of the condition of a hepatitis B infected
            patient. This process is called seroconversion and the specific
            antibody formed is called anti-Hbe. Seroconversion to anti-Hbe
            occurred in 23% of the patients across all dosage groups. At 48
            weeks, Hbe antigen loss occurred in 32%, 38% and 50% of Hbe antigen
            positive patients in the 25 mg, 100 mg, and 200 mg cohorts,
            respectively. Accordingly, a 200 mg once-a-day dose was selected for
            our Phase III studies.

            Study FTCB-301 is our first Phase III clinical trial for hepatitis
            B. It is a randomized, double blind placebo controlled trial
            comparing 200 mg emtricitabine to placebo in 240 patients. As of
            March 1, 2002, 182 patients have been randomized in the study.
            Enrollment is targeted for completion in the second quarter of 2002.

            Study FTCB-201 is a 48-week Phase II study comparing a combination
            of 200 mg emtricitabine and 10 mg adefovir to 10 mg adefovir
            monotherapy in 30 patients with chronic hepatitis B infections. The
            study is planned for initiation at one site in Asia in the first
            quarter of 2002.

            CLEVUDINE, FORMERLY KNOWN AS L-FMAU. A pyrimidine nucleoside
            analogue, clevudine has been shown to be a potent inhibitor of
            hepatitis B virus replication in laboratory studies, having an EC50
            value (the concentration required to inhibit virus by 50%) ranging
            from 0.02 to 0.15 uM with a mean of 0.08 uM. Clevudine produced an 8
            log(10) decrease in the woodchuck model of chronic hepatitis and in
            three of four animals, woodchuck hepatitis virus DNA remained below
            the limit of detection for one year following a three-month
            treatment period. Chronic toxicology studies have been completed and
            reproductive toxicology studies are in progress.

            We have completed a single-dose, dose escalation Phase I study,
            L-FMAU-101, with clevudine. Cohorts at 10 mg, 50 mg, and 100 mg
            once-a-day in Study L-FMAU-102, an ongoing dose escalation Phase
            I/II one-month monotherapy trial initiated in France, Canada, Hong
            Kong and South Korea, have completed the 28-day dose period. Median
            hepatitis B virus DNA decreases at the end of the treatment period
            were 2.48, 2.74, and 2.95 log(10), respectively. At 20 weeks after
            the treatment period, the median decrease in hepatitis B virus DNA
            was 1.92 log(10) at the 10 mg dose and 2.01 log(10) at the 50 mg
            dose.

            Study FTCB-204 is a 48-week Phase II trial being conducted in the
            United States, Bulgaria, the Czech Republic, Canada and Singapore to
            evaluate the efficacy of a combination of clevudine and
            emtricitabine with a 24-week dose period. We expect to enroll
            approximately 150 patients who were participants in the FTCB-301
            study into this trial. We will begin enrolling patients in the
            second quarter of 2002.

            IMMUNOSTIMULATORY SEQUENCES CANDIDATE. In March 2000, we entered
            into an agreement with Dynavax Technologies Corporation to license
            immunostimulatory sequencing technology and to test
            immunostimulatory sequences, ISS, in the treatment of hepatitis B
            virus. By mixing these shortened strands of DNA with surface
            antigens, we hope to induce the immune system to develop antibodies
            against the hepatitis B virus.

            o     During 2001, Dynavax conducted a double-blind Phase I trial
                  using ISS for hepatitis B virus prophylaxis in 48 patients.
                  The study compared hepatitis B virus surface antigen (HbsAg)
                  alone and co-administered with ISS in doses ranging from 300
                  to 3,000 micrograms. At the highest dose of ISS tested, the
                  co-administered vaccine produced protective antibody titers in
                  88% of subjects after one dose. Over all dose levels, 31 of 32
                  subjects had protective antibody levels after two doses
                  delivered in a two-month regimen.

            o     During 2002, Triangle plans to test ISS conjugated to
                  hepatitis B surface antigen in animals as a therapeutic
                  vaccine for the treatment of hepatitis B virus. This vaccine
                  is designed to recognize and kill (using a Th1 immune
                  response) hepatitis B virus-infected liver cells that


                                       4
<Page>

                  remain after a patient has been treated with antiviral drugs.
                  We believe that such a response would make ISS a very
                  important component in optimal combination therapy for
                  hepatitis B.

      We have not generated any revenue from sales of our drug products and,
therefore, are a development stage company. We do not expect to generate any
significant revenue from the sale of our drug products before the year 2003. As
of December 31, 2001, our accumulated deficit was $406.9 million. We may never
achieve profitable operations or generate positive cash flow.

      Triangle was incorporated in Delaware in July 1995. Our principal
executive offices are located at 4 University Place, 4611 University Drive,
Durham, North Carolina 27707, and our telephone number is (919) 493-5980.

STRATEGY

      Our goal is to create a portfolio of commercialized drugs primarily for
serious viral diseases. We intend to achieve this goal through the following
strategies:

      FOCUS ON VIRAL DISEASES. The expertise of our management team lies in
identifying, developing and commercializing drugs for the treatment of viral
diseases. We are targeting the viral disease markets because we believe the
significant unmet medical need and the rapid pace of scientific advances
occurring in the treatment of these diseases give these significant markets
attractive growth potential. We also believe that the relatively high
concentration of prescribers that treat patients with HIV and hepatitis B
infections will enable us to promote most drug candidates through a small,
specialized sales force.

      FOCUS ON DRUG DEVELOPMENT, NOT DRUG DISCOVERY. We do not currently intend
to engage in a significant level of basic drug discovery, thereby we expect to
avoid much of the significant investment of time and capital that is generally
required before a compound is identified and brought to clinical trials. We
intend to use our expertise to perform internally what we believe are the most
critical aspects of the drug development process, such as the design of clinical
trials and the optimization of drug synthesis. We outsource many aspects of our
clinical trials and the manufacture of drug substance to carefully selected
third parties.

      APPLY SELECTIVE CRITERIA TO DRUG CANDIDATES. When we evaluate drug
candidates for our product development programs, we seek to in-license drug
candidates for which favorable preclinical, and where possible, clinical data
already exist. We intend to use our expertise to identify drug candidates that
we judge to have attractive preclinical profiles. In addition, we prefer, where
practical, to in-license drug candidates that have either undergone some testing
in humans, such as Coviracil, or share characteristics with drugs that are
currently approved for use in humans. We intend to apply these selection
standards where feasible in evaluating potential drug candidates for
in-licensing.

      LEVERAGE RELATIONSHIPS. As a result of our instrumental roles in the
identification, clinical development and commercialization of antiviral
therapies, our management team and scientific consultants have extensive
contacts in academia and industry. These contacts were instrumental in the
acquisition of our existing drug candidates, and we believe they will be
valuable in our efforts to develop and to commercialize existing and future drug
candidates.

      DEVELOP DRUGS FOR USE IN COMBINATION THERAPY. Combination therapy is the
accepted method to treat viral diseases such as HIV infection. We seek to
identify and develop drug candidates for use in combination therapy that have
resistance, compliance and/or tolerance profiles that are complementary to the
profiles of existing drugs. In addition, in contrast to the competitive
marketing of single drug regimens, we believe that any drug we develop as part
of a combination regimen will benefit from the promotional efforts of the
marketers of the other drugs in the regimen.

      FOCUS ON SMALL MOLECULE DRUGS. Our management team is well known for its
successful development of and expertise in small molecule drugs, and nucleosides
in particular. Small molecule drugs have several advantages over large molecule
drugs such as proteins, polypeptides and polynucleotides. For example, small
molecule drugs are often simpler to scale-up and manufacture than large molecule
drugs, and are more likely to be orally


                                       5
<Page>

bioavailable (taken by mouth) which is a significant advantage in treating
long-term chronic illnesses where patients prefer not to be subjected to
injections over extended periods of time.

      STRATEGICALLY OUTSOURCE ROUTINE ASPECTS OF DRUG DEVELOPMENT. Our strategy
is to remain focused on drug development. Much of the drug development process
consists of routine elements that may be outsourced to high quality, high
capacity contractors. Accordingly, we intend to focus our corporate resources on
the aspects of drug development that require particular expertise. For example,
we intend to concentrate on the design of clinical trials and the optimization
of drug synthesis, and to outsource many aspects of the conduct of clinical
trials and the manufacture of drug substance. We believe this strategy enables
us to respond rapidly to certain changing events, such as clinical trial results
and the availability of funds, by increasing or decreasing expenditures on
particular drug development projects or by shifting our emphasis among projects.

      LEVERAGE STRATEGIC ALLIANCE ADVANTAGES. Since our inception, our strategy
has been to develop third party relationships to enhance our drug development
process and to commercialize our drug candidates thereby reducing the amount of
internal infrastructure to develop and successfully commercialize our drug
candidates. Our worldwide strategic alliance with Abbott Laboratories, the
Abbott Alliance, provides us with access to Abbott's international and domestic
infrastructure to market and distribute products receiving regulatory approval,
global manufacturing capability, drug development assistance, United States
co-promotion rights to Kaletra, one of Abbott's compounds, as well as financial
support to help fund the continued development of our portfolio of drug
candidates. We believe that the high concentration of major prescribers of
anti-HIV and anti-hepatitis B therapies in the United States will enable us to
promote most drug candidates that we may successfully develop to these
prescribers through a small sales force or through arrangements or
collaborations with third parties. In the United States, we intend to market our
drug candidates covered by the Abbott Alliance in collaboration with Abbott and
to market other drug candidates we may successfully develop, that do not become
part of the Abbott Alliance, through a small sales force or through arrangements
or collaborations with third parties. Outside of the United States, we expect
Abbott to market drug candidates covered by the Abbott Alliance and, for any
other drug candidates we successfully develop that do not become part of the
Abbott Alliance, we intend to market and sell through arrangements or
collaborations with third parties. As part of the ordinary course of our
business, we may consider arrangements or collaborations with third parties
associated with the acquisition, development, marketing and sales of our
products both within and outside of the United States.


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<Page>

DRUG CANDIDATES IN CLINICAL DEVELOPMENT

<Table>
<Caption>
==================================================================================================
DRUG CANDIDATES                      INDICATION         STATUS(1),(2)     TERRITORY(3)
--------------------------------------------------------------------------------------------------
<S>                                  <C>                <C>               <C>
Coviracil(R) (emtricitabine),        HIV                Phase III         Worldwide
FORMERLY KNOWN AS FTC                hepatitis B        Phase III         Worldwide
--------------------------------------------------------------------------------------------------
Amdoxovir, FORMERLY KNOWN AS DAPD    HIV                Phase II          Worldwide
--------------------------------------------------------------------------------------------------
Clevudine, FORMERLY KNOWN AS         hepatitis B        Phase II          Worldwide, except Korea
L-FMAU
--------------------------------------------------------------------------------------------------
Immunostimulatory sequences          hepatitis B        Phase I           Worldwide
candidate
--------------------------------------------------------------------------------------------------
</Table>

(1)   Neither the Food and Drug Administration, FDA, nor any foreign regulatory
      agencies have approved our drug candidates for commercial sale.

(2)   "Phase I" means that we are testing a drug candidate for preliminary
      indications of safety, pharmacokinetics and tolerance in a limited number
      of patients or volunteers. "Phase II" means that we are testing a drug
      candidate for safety, efficacy and, in some cases, optimal dosage in a
      limited number of patients. "Phase III" means that we are conducting
      expanded clinical studies intended to support a submission for regulatory
      approval of a drug candidate.

(3)   Indicates the geographic territory in which we have licensed the right to
      commercialize the particular product. Coviracil, amdoxovir and clevudine
      are drug candidates under the Abbott Alliance. Our ability to
      commercialize products in each country in the licensed territory may be
      limited by proprietary rights of third parties other than our licensors.


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<Page>

VIRAL DISEASE PROGRAM

      HIV

      BACKGROUND. The Joint United Nations Programme on HIV/AIDS (UNAIDS)
estimates that as of the end of 2001, 40 million people worldwide were living
with HIV or AIDS. It is generally believed that, in the absence of therapeutic
intervention, the vast majority of individuals infected with HIV will ultimately
develop AIDS, which if untreated has a mortality rate approaching 100%. There
are an estimated 900,000 persons living with HIV/AIDS in North America, with
nearly 40,000 new infections annually in the United States, and approximately
one third are receiving antiviral therapy. Sales of antiretroviral therapies in
the United States for the 12 months ended December 2001 totaled over $4 billion,
which represents a 19% increase as compared to 2000.

      Experts believe a key factor in how quickly a person infected with HIV
develops AIDS is the amount of HIV in the body at any one time, known as the
viral load. The failure of vaccines and other immunotherapy to control the virus
has led current researchers to focus on halting HIV replication and reducing
viral load by blocking one or both of two key enzymes required for viral
replication.

      The first enzyme, reverse transcriptase, is active early in the
replication cycle and allows the virus, which is made of RNA, to transform to
its DNA form necessary for continued replication. This enzyme can be inhibited
by two general classes of drugs defined both by their structure as well as their
mechanism of action. The first general class, nucleoside analogue reverse
transcriptase inhibitors, NRTIs, such as AZT, ddI, d4T and lamivudine, bears a
strong chemical resemblance to the natural building blocks (nucleotides) of DNA
and interferes with the function of the enzyme by displacing the natural
nucleotides used by the enzyme. The second general class, non-nucleoside reverse
transcriptase inhibitors, NNRTIs, such as nevirapine, delavirdine and efavirenz,
is composed of an extremely diverse group of chemicals that act by attaching to
the reverse transcriptase enzyme and modifying it so that it functions less
efficiently. The second enzyme, protease, is required to permit full virus
maturation. Inhibitors of this enzyme are represented by drugs such as
saquinavir, ritonavir, indinavir and nelfinavir.

      The genetic material responsible for the production of both enzymes is
extremely prone to mutations that can produce resistance to drugs targeted at
these enzymes. If antiviral therapy does not halt all viral replication, then
mutant strains of virus continue to replicate. Depending upon the particular
mutations that occur, these virus strains may be resistant to only one of the
drugs used in therapy or may be resistant to some or all of the drugs in the
same chemical or functional class. This latter phenomenon is known as
cross-resistance.

      Initially, HIV was treated only with AZT, a NRTI, which was first
introduced in 1987. Three other NRTIs--ddI, ddC and d4T --were introduced to the
market in the early 1990's. These drugs, when used alone, provided only
short-term clinical benefit, could be toxic and were often considered expensive
relative to their clinical benefits. As a result, the use of anti-HIV therapy
was limited (less than 25% of the infected population in the United States).

      More recently, clinical research in HIV has been facilitated by the
introduction in the mid-1990's of tests that can reliably determine the viral
load in the blood at any given time. As a result, it became possible to rapidly
evaluate potential therapeutic agents and combinations of agents and to
determine accurately the potency and resistance profiles of these agents. This
has led to the accelerated development of a number of new therapeutic agents and
their use in combination therapy. The use of combination therapy, including
combinations of protease inhibitors or NNRTIs with two NRTIs, has demonstrated
significant therapeutic benefit, sometimes rendering the virus undetectable in
the blood of certain patients for over several years. Additional combinations
may be possible as new therapeutic agents are developed.

      In spite of these significant advances, numerous challenges remain in the
treatment of HIV. In the absence of a cure, the disease is life long. Although
combination therapy has demonstrated the ability to markedly slow resistance
development, mutants have been identified which are resistant to the drugs
currently used during the course of combination therapy studies, and
cross-resistance among many agents, including protease inhibitors, has been
increasingly recognized. Present combination treatments are also often complex
and expensive. Adverse


                                       8
<Page>

reactions to many of the drugs used in combination therapy are common and may
limit adherence to the therapeutic regimen or even preclude use in some
patients. Even brief instances of non-adherence can reduce or eliminate the
ability of the combination therapy to suppress the virus, and may thus
accelerate the development of resistance. We believe that these challenges
present an opportunity to develop additional drugs that have attractive safety,
pharmacokinetic and/or resistance profiles.

      DEVELOPMENT STATUS. We have two drug candidates for the treatment of HIV:
Coviracil and amdoxovir.

      COVIRACIL (EMTRICITABINE), FORMERLY KNOWN AS FTC. We are currently
conducting Phase III clinical trials with Coviracil for the treatment of HIV. We
have licensed worldwide rights to Coviracil for the treatment of HIV and
hepatitis B from Emory University.

      Coviracil is a fluorinated nucleoside analog and is a member of the same
nucleoside series as lamivudine, the most commonly prescribed drug for HIV
disease. Against HIV, the potency of Coviracil in laboratory studies is 4 to 10
times greater than that of lamivudine, and is a potent antiviral agent against
HIV strains obtained from a geographically diverse set of HIV-infected patients.
Laboratory studies have also shown that Coviracil shares cross-resistance
patterns with lamivudine. In some cases, the most common resistance mutation to
these two agents also reverses resistance of HIV to AZT.

      A Phase I single dose study evaluated the pharmacokinetics and tolerance
of Coviracil in 12 HIV-infected volunteers. The volunteers received six single
oral doses of Coviracil at six-day intervals ranging from 100 mg to 1,200 mg.
Coviracil was well tolerated by all subjects in the dose range studied.
Coviracil was absorbed rapidly into the blood stream following oral
administration and was excreted primarily through the kidneys. While food intake
slightly delayed absorption, it did not affect the overall oral bioavailability.
The absorption, metabolism and excretion of Coviracil were generally consistent
among the subjects.

      In a Phase I/II monotherapy study in 41 HIV-infected patients, doses of
Coviracil ranging from 25 mg twice-a-day to 200 mg twice-a-day were given for
two weeks. A brief duration of monotherapy exposure was selected to limit the
development of viral resistance, but allowed a preliminary assessment of drug
candidate tolerance and antiviral activity. At each dose regimen containing
doses of 200 mg/day or more, a 98% (1.75 log(10)) or greater viral suppression
was observed. A single, once-a-day, 200 mg dose reduced the viral load by an
average of 99% (1.92 log(10)). The drug was generally well tolerated, with the
most frequently observed adverse experiences being headache, nausea/vomiting,
and diarrhea.

      In an additional monotherapy study used to determine the optimum dose of
Coviracil, 80 patients were randomized to receive one of three doses of
Coviracil, 25, 100 or 200 mg, once-a-day or the standard dose of lamivudine, 150
mg twice-a-day. Patients were treated for ten days and followed for an
additional two days after the completion of dosing. All regimens were active,
but the dose of 200 mg of Coviracil exhibited superior antiviral suppression.
This effect was determined by a number of variables including calculations of
absolute changes in viral load, average area under the curve minus baseline, and
the slope of viral RNA decay. Of those receiving 200 mg of Coviracil, at the end
of therapy 58% (11/19) had either a 2 log(10) drop in viral load or a reduction
in virus below the level of detection and, of these, 21% (4/19) had both. Even
two days after the completion of this short course of therapy, the absolute
decrease in viral load was 1.63 log(10) (43-fold decrease).

      In a Phase II study, known as the Montana Study, sponsored by the ANRS in
France, 40 antiretroviral naive HIV-infected patients received a once-a-day
regimen of Coviracil (200 mg), ddI and efavirenz. The median plasma HIV RNA
level at baseline was approximately 60,000 copies/mL. The once-a-day combination
was generally well tolerated and demonstrated strong antiviral and favorable
immunologic effects that were sustained during the 96-week observation period.
After 96 weeks of therapy, 85% of patients (34/40) maintained plasma HIV RNA
levels below 400 copies/mL and 80% of patients (32/40) maintained plasma HIV-1
RNA levels below 50 copies/mL on an intent-to-treat basis. The median baseline
CD4 count was 373 cells/mL, increasing by a median of 259 cells/mL at week 96.
The most common treatment-related adverse events were reported during the first
24 weeks of the study. Two patients developed elevated triglycerides that may
have been treatment related; only three patients stopped trial treatment because
of adverse events.


                                       9
<Page>

      Based on the favorable results of the Montana Study, we have conducted a
Phase III study in collaboration with the ANRS comparing two treatment
strategies for patients with HIV-1 infection. In this study, the ALIZE study,
patients were randomized to stay on their pre-existing triple combination
regimen or replace it with the once-a-day regimen of Coviracil (200 mg), ddI,
and efavirenz. Three hundred fifty-five patients were enrolled in the ALIZE
study with the last patient reaching the week 48 visit in March 2002.

      We have also completed two randomized, controlled Phase III studies,
FTC-302 and FTC-303, and have completed enrollment for a third randomized,
controlled Phase III clinical study, FTC-301. FTC-302 and FTC-303 compared
Coviracil (200 mg once-a-day) to lamivudine (150 mg twice-a-day) in triple
therapy combination regimens. FTC-303 was an open-label switch study of 440
HIV-infected patients in the United States whose viremia had been
fully-suppressed (< 400 copies/mL) with a lamivudine-containing regimen.
Patients were required to have been on lamivudine for at least 12 weeks at study
entry and were randomly selected to switch in a two to one ratio from
twice-a-day lamivudine to once-a-day Coviracil or remain on twice-a-day
lamivudine. FTC-302 was a randomized, double-blind study that compared Coviracil
to lamivudine in a background of stavudine (d4T) and either nevirapine (in
patients with baseline HIV-1 RNA levels less than or equal to 100,000 copies/mL)
or efavirenz (in patients with baseline HIV-1 RNA levels greater than 100,000
copies/mL) in 468 antiretroviral treatment naive HIV-infected patients. In April
2000, the South African Medicines Control Council terminated FTC-302 and the FDA
issued a clinical hold on the study. Subsequently, the FDA advised us that
FTC-302 will not be considered a pivotal study in support of an NDA. FTC-301 is
a randomized, double-blind study that has completed enrollment of 564
antiretroviral naive patients. FTC-301 is designed to compare Coviracil (200 mg
once-a-day) to stavudine (40 mg twice-a-day) in combination with didanosine (400
mg once-a-day) and efavirenz (600 mg once-a-day). We expect this study to
complete its 48 weeks end point in October 2002. Upon obtaining and analyzing
24-week data, we plan to submit an NDA for Coviracil for the treatment of HIV in
the third quarter of 2002. The FDA will require that 48 weeks of data from
FTC-301 be incorporated into our NDA submission during the review process.

      Antiviral effect was measured in FTC-302 and FTC-303 by a number of
different analyses. Data from FTC-302 indicate that 60% and 64% of patients in
the Coviracil and lamivudine groups, respectively, had fewer than 50 copies/mL
of HIV RNA in their plasma at week 48 on an intent-to-treat, missing equals
failure basis. The incidence of virologic failure associated with resistance
development was the same in both groups (approximately 9.6%). In FTC-303, loss
of virologic suppression at any time during the 48-week observation period
occurred in only 8% of patients in each treatment arm.

      Both Coviracil and lamivudine were generally well tolerated by the
majority of patients in both studies. Adverse reactions were predominantly mild
to moderate in both groups with the exception of some episodes of severe liver
toxicity in FTC-302. In this study, severe liver toxicity was seen in 17% of the
patients receiving nevirapine (15% in the Coviracil arm and 19% in the
lamivudine arm), whereas none of the patients receiving efavirenz concomitantly
with Coviracil or lamivudine developed such hepatotoxicity. The overall rate of
liver toxicity observed in FTC-302 is consistent with the frequency observed in
other published studies with nevirapine, including those where neither Coviracil
nor lamivudine was part of the regimen.

      Estimated subsequent costs necessary to get through the FDA approval
process and launch Coviracil as a commercial product to treat HIV are projected
to be $33 million to $38 million, excluding the cost of pre-launch inventory.
These costs include completing FTC-301 and the ALIZE study, additional chemical
development work, production of additional clinical trial material, salaries for
development personnel, other unallocated development costs and regulatory
preparation and filing costs. These costs are difficult to estimate and actual
costs could be higher than our estimates, for example, if the clinical trials
for Coviracil do not proceed as planned, if our NDA is delayed or on the
occurrence of other events described under the caption "Risk and Uncertainties."

      AMDOXOVIR, FORMERLY KNOWN AS DAPD. We have initiated Phase I/II clinical
trials with amdoxovir for the treatment of HIV. We have licensed worldwide
rights to amdoxovir for the treatment of HIV and hepatitis B from Emory and the
University of Georgia Research Foundation, Inc., University of Georgia.

      Amdoxovir may offer advantages over other nucleosides currently in the
market and may offer benefit to patients because of its unique structure which
leads to activity in the laboratory against certain resistant strains of HIV.
Amdoxovir is synergistic with a number of antivirals, such as Coviracil and AZT,
in laboratory studies. HIV


                                       10
<Page>

strains that are resistant to AZT, lamivudine or Coviracil are not
cross-resistant to amdoxovir. Studies in animals and humans have demonstrated
the majority of amdoxovir is rapidly converted to dioxolane guanosine, DXG, the
active anti-HIV agent. Preliminary analyses of these pharmacokinetic studies
indicate that DXG serum concentrations decline with a half-life of seven to nine
hours. The analysis of urine samples from this study indicate the presence of
DXG with no other metabolites detected. We presented initial results from a
Phase I/II 14-day monotherapy study. Thirty-four antiviral drug-naive patients
received monotherapy doses of 25, 100, 200, 300 and 500 mg of amdoxovir
twice-a-day. The maximum median viral load decreases were 0.54 log(10), 1.0
log(10), 1.14 log(10), 1.49 log(10) and 1.9 log(10), respectively. At all doses
tested, viral suppression was observed and suggested a dose effect relationship.
The drug was well tolerated at all doses tested with no significant or
consistent adverse effects during the dosing period. In addition, 26 patients
with extensive prior antiretroviral therapy (5.8 - 6.5 prior drugs for 3.7 - 4.6
years) received monotherapy doses of 200, 300 and 500 mg twice-a-day. The
maximum median viral load decreases were 0.5 log(10), 0.5 log(10), and 1.1
log(10), respectively. Twenty-four patients who had experienced multiple drug
failure experienced a median viral load decrease of 0.66 log(10) when amdoxovir
was added to the failing regimen at 500 mg twice-a-day.

      We are planning to initiate a multi-study Phase II program in 2002 for
amdoxovir which is intended to include the following:

      o     Study DAPD-150, a 96-week randomized trial comparing amdoxovir at
            500 mg twice-a-day to 300 mg twice-a-day in combination with best
            available drug regimen as determined by the patient's physician,

      o     A 48-week Phase II pilot study of amdoxovir, tenofovir, T20 and
            Kaletra(R) in highly treatment-experienced patients conducted by the
            ACTG in the United States,

      o     A Phase II study, conducted in collaboration with the ACTG, to
            explore the combination of amdoxovir and mycophenolic acid, which
            has been shown to significantly enhance the antiviral activity of
            amdoxovir in the laboratory, and

      o     A Phase II study, conducted in collaboration with the ANRS to
            compare amdoxovir to placebo in patients who have experienced
            multi-drug failure.

      In order to submit an NDA for amdoxovir, we will need to complete the
ongoing trials, the Phase II program as described above and a Phase III program
to be developed based on the clinical profile of the compound indicated by the
Phase II data. Estimated subsequent costs necessary to get through the
regulatory approval process and launch the drug candidate are projected to be
$67 million to $97 million. These costs, excluding the cost of pre-launch
inventory, would include a Phase III clinical program, manufacturing amdoxovir
and providing medications for combination therapy to clinical trial
participants, additional chemical development work, production of qualification
lots consistent with current Good Manufacturing Practice standards, salaries for
development personnel, other unallocated development costs and regulatory
preparation and filing costs. These costs are difficult to estimate and actual
costs could be higher than our estimates, for example, if the clinical trials
for amdoxovir do not proceed as planned, if our ability to file an NDA is
delayed or on the occurrence of other events described under the caption "Risk
and Uncertainties."

      The FDA has notified us that amdoxovir qualifies for "fast track"
designation under provisions of the Food and Drug Administration Modernization
Act of 1997. A fast track designation may expedite the FDA's review of our NDA
for amdoxovir.

      HEPATITIS B

      BACKGROUND. Hepatitis B virus is the causative agent of both the acute and
chronic forms of hepatitis B, a liver disease that is a major cause of illness
and the ninth leading cause of death throughout the world. It is estimated that
over two billion individuals worldwide have been infected with hepatitis B
virus, of which approximately 300-350 million are considered chronic carriers of
the disease. Many chronic carriers of the virus show no signs of disease;
however 25-30% experience symptomatic disease, which may lead to the development
of cirrhosis or liver cancer. Hepatitis B virus infection is prevalent in
Southern Europe, Africa, South America, and


                                       11
<Page>

particularly, Asia. Over two-thirds of the world's chronic carriers are thought
to reside in Asia, with China representing over half of these infections. In the
United States, it is estimated that over one million individuals are chronic
carriers of hepatitis B virus, and despite the availability and aggressive use
of vaccines against the virus, the number of infected individuals continues to
grow, with 1.7 million chronic carriers in the United States projected by the
year 2010.

      Vaccines are currently available that can prevent the transmission of
hepatitis B virus; however, these vaccines have no efficacy in those already
infected. Alpha interferon (a commercially available drug approved for the
treatment of hepatitis B) is administered by injection, is not always successful
in controlling the virus and is associated with significant side effects, the
most common being severe "flu-like" symptoms. While other compounds have
activity in the treatment of hepatitis B virus infection, we believe additional
drugs will be necessary to effectively treat the disease. For example,
lamivudine (a commercially available drug approved for the treatment of
hepatitis B) has shown good tolerance and effective suppression of hepatitis B
virus replication during the course of treatment. However, virus replication can
return during prolonged therapy. Studies of more prolonged therapy are in
progress, and antiviral resistance has been observed with certain patients.

      We believe that hepatitis B, like HIV, may be treated more effectively
with combination therapy. Therefore, even if other drugs are approved for the
treatment of hepatitis B, we believe there will still be a need for additional
safe and effective oral therapies for chronic hepatitis B that can be used in
combination therapies.

      EMTRICITABINE, FORMERLY KNOWN AS FTC. We are currently conducting Phase II
and Phase III clinical trials with emtricitabine for the treatment of hepatitis
B. Some of the development activities we have undertaken with Coviracil for the
treatment of HIV will also be used in the development of emtricitabine for the
treatment of hepatitis B.

      Emtricitabine has been shown to be a potent inhibitor of hepatitis B
replication in laboratory studies, and is synergistic in laboratory studies in
combination with several other compounds intended for the treatment of hepatitis
B. The anti-hepatitis activity of emtricitabine has been demonstrated in a
chimeric mouse model and against woodchuck hepatitis virus, WHV, in naturally
infected woodchucks. The hepatitis infection of the woodchuck results in a
disease state closely resembling that found in humans infected with hepatitis B.
In the woodchuck model at doses above 3 mg/kg, all treated animals had
significantly reduced levels of WHV DNA in their blood. One week after treatment
was stopped, WHV levels returned to pretreatment levels, as is seen with
lamivudine.

      A Phase I/II dose-response trial of emtricitabine has been completed in
patients with chronic hepatitis B infection from the United States and Hong
Kong. Patients received non-randomized, escalating doses of emtricitabine of 25
mg to 300 mg once-a-day for eight weeks. Emtricitabine was generally well
tolerated throughout the trial. At 56 days of treatment, the median change from
baseline in plasma hepatitis B virus DNA ranged from -1.7 to -3.3 log(10).

      Study FTCB-102 is a Phase II randomized, double blind, dose comparison
48-week trial with an additional 48-week open label phase. Enrollment has been
completed and 98 patients, 32 or 33 per cohort, have received 25, 100 or 200 mg
emtricitabine once-a-day for 48 weeks. Patients continued to receive 200 mg
emtricitabine once-a-day in the open label phase for an additional 48 weeks and
have completed their six-month post therapy follow-up visits. Hepatitis B virus
DNA suppression in plasma was measured by the Digene Hybrid Capture II Assay.
Following 48 weeks of treatment, the proportion of patients with undetectable
viremia was 38%, 42%, and 61% for the 25 mg, 100 mg, and 200 mg cohorts,
respectively. Seroconversion to anti-Hbe occurred in 23% of the patients across
all dosage groups. At 48 weeks, Hbe antigen loss occurred in 32%, 38% and 50% of
Hbe antigen positive patients in the 25 mg, 100 mg, and 200 mg cohorts,
respectively. Accordingly, a 200 mg once-a-day dose was selected for our Phase
III development.

      Study FTCB-301 is a Phase III clinical trial. It is a 48-week randomized,
double blind, placebo controlled trial comparing 200 mg emtricitabine to placebo
in 240 patients. As of March 1, 2002, 182 patients have been randomized in the
study. Enrollment is targeted for completion in the second quarter of 2002.


                                       12
<Page>

      Study FTCB-201 is a 48-week Phase II study comparing a combination of 200
mg emtricitabine and 10 mg adefovir to 10 mg adefovir monotherapy in 30 patients
with chronic hepatitis B infections. The study is planned for initiation at one
site in Asia in the first quarter of 2002.

      Excluding the cost of pre-launch inventory, estimated subsequent costs
necessary to obtain regulatory approval and launch emtricitabine as a commercial
product to treat hepatitis B are projected to be $38 million to $44 million.
These costs include completing all ongoing studies (including FTCB-301), at
least one additional Phase III clinical trial, additional chemical development
work, production of qualification lots consistent with current Good
Manufacturing Practice standards, salaries for development personnel, other
unallocated development costs and regulatory preparation and filing costs. These
costs are difficult to estimate and actual costs could be higher than our
estimates, for example, if the clinical trials for emtricitabine for the
treatment of hepatitis B do not proceed as planned, if regulatory filings are
delayed or on the occurrence of other events described under the caption "Risk
and Uncertainties."

      CLEVUDINE, FORMERLY KNOWN AS L-FMAU. Clevudine is a pyrimidine nucleoside
analogue that has been shown to be a potent inhibitor of hepatitis B replication
in laboratory studies. The effective concentration of clevudine required to
inhibit virus growth by 50% (EC(50)) ranges from 0.02 to 0.15 uM with a mean of
0.08 uM. Laboratory studies have also shown that clevudine has activity against
the Epstein Barr virus. We have licensed worldwide rights to clevudine, except
in Korea, from Bukwang Pharm. Ind. Co., Ltd., for all human antiviral
applications and are developing it as a treatment for chronic hepatitis B
infections.

      In laboratory studies, the efficacy of clevudine has been demonstrated in
woodchucks chronically infected with WHV. Within seven days of initial
treatment, large reductions in serum WHV DNA were observed over a range of
doses. A once-a-day dose of 10 mg/kg clevudine decreased WHV DNA by 8 logs; the
virus did not return for one year after cessation of dosing in the majority of
animals dosed for four and 12 weeks, respectively. Chronic toxicology studies
have been completed and reproductive toxicology studies are in progress.

      We have completed a single-dose, dose escalation Phase I study,
L-FMAU-101, with clevudine in which kinetics were linear over the 150 to 1,200
mg dose range. Study L-FMAU-102 is a dose escalation 28-day monotherapy Phase
I/II trial in progress in France, Canada, Hong Kong and South Korea. Cohorts at
10 mg, 50 mg, and 100 mg once-a-day have completed the 28-day dose period.
Median hepatitis B virus DNA decreases at the end of the treatment period were
2.48, 2.74, and 2.95 log(10), respectively. At 20 weeks after the treatment
period, the median decrease in hepatitis B virus DNA remained at 1.92 log(10) at
the 10 mg dose and 2.01 log(10) at the 50 mg dose.

      Study FTCB-204 is a Phase II trial to evaluate the efficacy of a
combination of 10 mg clevudine and 200 mg emtricitabine in approximately 150
patients who complete the FTCB-301 trial. The study is being conducted in the
United States, Bulgaria, the Czech Republic, Canada and Singapore and patients
will begin enrolling in the second quarter of 2002.

      We will need to analyze data from ongoing studies to develop additional
clinical trials for this compound. We expect that we will be required to
complete one or two additional Phase II trials and a Phase III program.
Estimated subsequent costs necessary to obtain regulatory approval and launch
clevudine as a commercial product to treat hepatitis B virus are projected to be
$67 million to $92 million. These costs, excluding the cost of pre-launch
inventory, include completing all ongoing and additionally required clinical
trials, manufacturing clevudine and providing medications for combination
therapy to clinical trial participants, additional chemical development work,
production of qualification lots consistent with current Good Manufacturing
Practice standards, salaries for development personnel, other unallocated
development costs and regulatory preparation and filing costs. These costs are
difficult to estimate and actual costs could be higher than our estimates, for
example, if the clinical trials for clevudine do not proceed as planned, if
regulatory filings are delayed or on the occurrence of other events described
under the caption "Risk and Uncertainties."

      IMMUNOSTIMULATORY SEQUENCES CANDIDATE.

      ISS are short sequences of synthetic single-strand DNA which induce the
immune system to fight pathogens and counterbalance allergic responses. Dynavax
is currently using ISS in three ways to exploit their numerous potential
therapeutic applications: linked to allergens for the treatment of allergies and
asthma, linked to


                                       13
<Page>

antigens to enhance prophylactic and therapeutic vaccines and cancer
immunotherapy, and administered in an unlinked form as a drug for therapeutic
intervention in infection and inflammatory diseases.

      In March 2000, we entered into an agreement with Dynavax to license
immunostimulatory sequencing technology and to test ISS in the treatment of HIV,
hepatitis B virus and hepatitis C virus. By mixing these shortened strands of
DNA with surface antigens, we hope to induce the immune system to develop
antibodies against the hepatitis B virus.

      o     During 2001, Dynavax conducted a double-blind Phase I trial using
            ISS for hepatitis B virus prophylaxis in 48 patients. The study
            compared hepatitis B virus surface antigen (HbsAg) alone and
            co-administered with ISS in doses ranging from 300 to 3,000
            micrograms. At the highest dose of ISS tested, the co-administered
            vaccine produced protective antibody titers in 88% of subjects after
            one dose. Over all dose levels, 31 of 32 subjects had protective
            antibody levels after two doses delivered in a two-month regimen.

      o     During 2002, Triangle plans to test ISS conjugated to hepatitis B
            surface antigen in animals as a therapeutic vaccine for the
            treatment of hepatitis B virus. This vaccine is designed to
            recognize and kill (using a Th1 immune response) hepatitis B
            virus-infected liver cells that remain after a patient has been
            treated with antiviral drugs. We believe that such a response would
            make ISS a very important component in optimal combination therapy
            for hepatitis B.

      Based on preclinical data, we believe we may be in a position to file an
Investigational New Drug Application, IND, and begin Phase I clinical trials in
2003. Given the limited data available for this drug candidate, we are unable to
project the scope and cost of future clinical development of ISS.

LICENSE AND OTHER MATERIAL AGREEMENTS

      ABBOTT LABORATORIES. In August 1999, we completed a worldwide strategic
alliance with Abbott which now covers four antiviral compounds. Under the terms
of the Abbott Alliance, Triangle and Abbott will collaborate with respect to the
clinical development, registration, distribution and marketing of various
proprietary pharmaceutical products for the prevention and treatment of HIV and
hepatitis B virus. In the United States, Triangle and Abbott will co-promote
three Triangle drug candidates currently in active development for HIV and/or
hepatitis B, Coviracil, amdoxovir and clevudine, and Abbott's HIV protease
inhibitor Kaletra. Outside the United States, Abbott has exclusive sales and
marketing rights to promote the three Triangle antiviral compounds and Kaletra.
Triangle and Abbott will share profits and losses for the three Triangle drug
candidates. Triangle will receive detailing fees and commissions on incremental
sales we generate for Kaletra. In addition, Abbott will have the right of first
discussion to market future Triangle compounds until 2005. The Abbott Alliance
provides for non-contingent research funding of $31.7 million, $25.0 million of
which was received in 1999 and $6.7 million of which was received in 2000, and
up to $120 million of contingent development milestone payments and the sharing
of future commercialization costs. In addition, Abbott initially purchased
approximately 6.57 million shares of Triangle common stock at $18.00 per share
with net proceeds to us of approximately $115.9 million. Under the terms of the
Abbott Alliance, Abbott has the right to purchase additional amounts of our
common stock up to a maximum aggregate percentage of 21% of our outstanding
common stock and in several situations has rights to purchase shares directly
from us in order to maintain its existing level of ownership. Abbott has
subsequently purchased an additional 1.37 million shares with net proceeds to us
of approximately $8.2 million. The Abbott Alliance provides us with access to
Abbott's international and domestic infrastructure to market and distribute
products receiving regulatory approval, global manufacturing capabilities, drug
development assistance, United States co-promotion rights to Kaletra, as well as
financial support to help fund the continued development of our portfolio of
drug candidates.

      We have licensed Coviracil from Emory; amdoxovir from Emory and the
University of Georgia; clevudine from Bukwang; and the immunostimulatory
sequences candidate from Dynavax.


                                       14
<Page>

EMORY UNIVERSITY AND UNIVERSITY OF GEORGIA RESEARCH FOUNDATION, INC.

      COVIRACIL. In April 1996, we entered into a license agreement with Emory
pursuant to which we received an exclusive worldwide license to all of Emory's
rights to purified forms of emtricitabine for use in the HIV and the hepatitis B
fields. As consideration for the exclusive license of the emtricitabine
technology, we issued 500,000 shares of common stock to Emory and agreed to pay
certain license fees, all of which have been paid to Emory. In addition, we
agreed to make certain milestone and royalty payments to Emory. Beginning the
third year after the first FDA registration is granted for an anti-HIV product
incorporating the emtricitabine technology in the United States and the third
year after the first registration is granted for an anti-hepatitis B product
incorporating the emtricitabine technology in certain major market countries, we
will be required to pay Emory minimum annual royalties for the HIV and hepatitis
B indications, respectively. Under the license agreement, Emory is primarily
responsible for prosecuting all patents related to the emtricitabine technology.
We agreed to reimburse Emory for the patent prosecution costs it incurs after
December 1996. We have the right to pursue any actions against third parties for
infringement of the emtricitabine technology at our expense. Upon the conclusion
of any such infringement action we pursue, we are entitled to offset unrecovered
expenses incurred in connection with the infringement action against a
percentage of the aggregate milestone payments and royalties owed to Emory
during the time the infringement action was pending. In addition, we are
obligated to defend, indemnify and hold harmless Emory and certain of its
representatives against any claims or losses incurred as a result of our
manufacturing, testing, design, use and sale of products utilizing the
emtricitabine technology. Emory has the right to terminate the license agreement
or to convert the exclusive license to a nonexclusive license in the event we do
not satisfy certain milestone obligations. Emory may also terminate the license
agreement upon an uncured breach of the agreement by us. In the event of a
termination or conversion for our breach or failure to meet milestone
obligations, we will grant Emory certain nonexclusive, royalty-free license
rights in all intellectual property under our control relating to the
emtricitabine technology necessary for the marketing of products incorporating
the emtricitabine technology. The termination of the license agreement or the
conversion from an exclusive to a nonexclusive agreement would adversely affect
our business.

      In May 1999, Emory and GlaxoSmithKline plc, Glaxo, settled their
litigation pending in the United States District Court relating to Coviracil,
and we became the exclusive licensee of the United States and all foreign patent
applications and patents filed by Burroughs Wellcome Co. on the use of
emtricitabine to treat hepatitis B. Pursuant to the license and settlement
agreements, Emory and Triangle were also given access to development and
clinical data and drug substance held by Glaxo relating to emtricitabine.

      In February 2002, Shire Pharmaceuticals Group, plc issued a press release
announcing that Shire Pharmaceuticals and Glaxo have agreed to the material
terms of a settlement agreement with Emory resolving the worldwide patent
disputes between the parties relating to lamivudine and the disputes between
Shire Pharmaceuticals and Emory relating to Coviracil. The settlement would
provide a license to Emory under Shire Pharmaceuticals' patent rights covering
the manufacture, use and sale of Coviracil. Under the terms of our license with
Emory, Shire Pharmaceuticals' patent rights on Coviracil flow from Emory to us
by sublicense. The settlement has not been finalized and the definitive
settlement may differ from the material terms disclosed.

      AMDOXOVIR. In March 1996, we entered into a license agreement with Emory
and University of Georgia pursuant to which we received an exclusive worldwide
license to all of Emory's and University of Georgia's rights to a series of
nucleoside analogues including amdoxovir and DXG (i.e., the active anti-HIV
agent) for use in the HIV and hepatitis B fields. As consideration for the
exclusive license of the amdoxovir technology, we issued an aggregate of 150,000
shares of common stock to Emory and University of Georgia. In addition, we
agreed to make certain milestone and royalty payments to Emory and University of
Georgia. In March 1999, we began paying license maintenance fees because certain
development milestones had not yet been achieved. Beginning the third year after
the first FDA registration is granted for an FDA-approved product incorporating
the amdoxovir technology, we will be required to pay Emory and University of
Georgia a minimum annual royalty. Under the license agreement, Emory and
University of Georgia are primarily responsible for prosecuting all patents
related to the amdoxovir technology. We agreed to reimburse Emory and University
of Georgia for the patent prosecution costs they incur after the date of the
license agreement. We have the right to pursue any actions against third parties
for infringement of the amdoxovir technology at our expense. Upon the conclusion
of any such infringement action we bring, we are entitled to offset unrecovered
expenses incurred in connection with the infringement action against a
percentage of the aggregate milestone payments and royalties owed to Emory and
University of Georgia during the


                                       15
<Page>

time the infringement action was pending. In addition, we are obligated to
defend, indemnify and hold harmless Emory, University of Georgia and certain of
their representatives against any claims or losses incurred as a result of our
manufacturing, testing, design, use and sale of products utilizing the amdoxovir
technology. Emory and University of Georgia have the right to terminate the
license agreement or to convert the exclusive license to a nonexclusive license
in the event we do not satisfy certain milestone obligations. Emory and
University of Georgia may also terminate the license agreement upon an uncured
breach of the agreement by us. In the event of such termination or conversion,
we will grant Emory and University of Georgia certain nonexclusive, royalty-free
license rights in all intellectual property under our control relating to the
amdoxovir technology necessary for the marketing of products incorporating the
amdoxovir technology. The termination of the license agreement or the conversion
from an exclusive to a nonexclusive agreement could adversely affect our
business.

BUKWANG PHARM. IND. CO., LTD.

      In February 1998, we entered into a license agreement with Bukwang
pursuant to which we received an exclusive license to all of Bukwang's rights to
clevudine for use in the hepatitis B field as well as all other human antiviral
applications. Bukwang obtained its rights to clevudine through an exclusive
license from Yale University and University of Georgia. Our license includes all
countries of the world except Korea. As consideration for the exclusive license
of the clevudine technology, we paid a license initiation fee and agreed to pay
development and sales milestones. We also agreed to pay a royalty on the net
sales of any licensed products. Beginning the third year after the first FDA
registration is granted for an FDA-approved product incorporating the clevudine
technology, we will be required to pay an annual minimum royalty. Under the
license agreement, Yale and University of Georgia are primarily responsible for
prosecuting all patents related to the clevudine technology which they licensed
to Bukwang, at our expense.

      We are primarily responsible for prosecuting all patents related to any
clevudine technology that may be acquired by Bukwang or us at our own expense.
In addition, Yale and University of Georgia have the first right to pursue any
actions against third parties for infringement of the clevudine technology,
either jointly with us (with expenses shared equally) or, if not jointly with
us, solely at their expense. Upon the conclusion of any infringement action we
alone brought, we are entitled to offset unrecovered expenses incurred in
connection with the infringement action against a percentage of the aggregate
milestone payments and royalties owed to Bukwang during the time the
infringement action is pending. We are obligated to indemnify Bukwang against
any claims or losses incurred in connection with our breach of the license
agreement or our manufacture, testing, design, use, sale and labeling of
products utilizing the clevudine technology. Bukwang has the right to terminate
the license agreement in the event we do not achieve milestone obligations or on
an uncured breach of the agreement by us. In the event of termination by Bukwang
for a failure to meet milestones or our breach of the agreement, we will grant
Bukwang certain nonexclusive, royalty free license rights in all intellectual
property under our control relating to the clevudine technology necessary for
marketing products which contain clevudine. The termination of the license
agreement could adversely affect our business.

DYNAVAX TECHNOLOGIES CORPORATION

      In April 2000, our licensing and collaborative agreement with Dynavax to
develop immunostimulatory pharmaceutical candidates for the prevention and/or
treatment of serious viral diseases, became effective. Under this agreement, we
purchased $2.0 million of Dynavax Series T Preferred Stock. The license
agreement grants Triangle exclusive worldwide rights to Dynavax' ISS for the
treatment of HIV and the prevention and treatment of hepatitis B infection and
hepatitis C infection. With regard to the treatment of HIV, the license
agreement does not include conjugated ISS, where the antigen is chemically bound
to the ISS. We will collaborate with Dynavax in the development of
immunostimulatory pharmaceutical candidates and we will be responsible for
funding specific development activities, as well as paying development
milestones and royalty payments. Under the agreement, we will indemnify Dynavax
against any claim or loss resulting from our manufacture, testing, design, use,
sale or labeling of products which use the technology licensed from Dynavax,
except for claims or losses resulting from Dynavax' negligence, intentional
misconduct or breach of contract. We and Dynavax have agreed to indemnify each
other against any claims or losses resulting from a breach of our respective
representations and warranties contained in the license agreement. If Dynavax
does not terminate an infringement by a third party of the licensed technology
or does not bring suit to do so, we may pursue action for infringement. We may
offset our expenses in bringing suit against a percentage of the royalty
payments due to Dynavax under the agreement. Either party may


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terminate the agreement if the other party has not corrected, or where
correction in such timeframe is impossible, taken reasonable steps to correct, a
material breach or default within 60 days of written notice of the breach or
default from the other party.

TERMINATED LICENSE AND COLLABORATION AGREEMENTS

      In June 1997, we entered into a license agreement with Mitsubishi Pharma
Corporation pursuant to which we received an exclusive license to all of
Mitsubishi's rights to Coactinon(R) for use in the HIV field in all countries
expect Japan. In January 2002, we terminated this license agreement.

      In August 1997, we acquired Avid Corporation by merger. Avid had worldwide
license rights to mozenavir dimesylate for use in the HIV field pursuant to a
license agreement with The Dupont Pharmaceuticals Company, now Bristol-Myers
Squibb Company, BMS. Avid also had proprietary assays to screen compounds for
the treatment of hepatitis B. In November 2001, we terminated the license
agreement with BMS.

      In July 2000, we entered into a licensing and collaborative agreement with
Arrow Therapeutics Limited to identify and develop novel anti-viral agents for
the treatment of hepatitis C virus. We terminated this agreement in September
2001.

PATENTS AND PROPRIETARY RIGHTS

      Our success will depend on our ability and the ability of our licensors to
obtain and maintain patents and proprietary rights for our drug candidates and
to avoid infringing the proprietary rights of others, both in the United States
and in foreign countries. We have no patents solely in our own name and we have
a small number of patent applications of our own pending. We have two patent
filings which are jointly owned with other entities. We have licensed or have an
option to license, patents, patent applications and other proprietary rights
from third parties for each of our drug candidates. If we breach our licenses we
may lose rights to important technology and drug candidates.

      The patents we have licensed covering the drug Coviracil will expire in
the United States in 2015, and outside the United States in 2011-2012. The
patents we have licensed covering the drug amdoxovir will expire in the United
States in 2015 and outside the United States, if issued, in 2013. The patents
that we have licensed covering the drug clevudine will expire in the United
States in 2014 and outside the United States in 2015. These patents can expire
earlier if they are allowed to abandon or are not adequately maintained. The
patent terms of one United States patent covering each drug may be extended
under the Patent Term Restoration Act to compensate for some amount of the time
spent in the process of drug approval. We do not know the length of the
patent-term extension that we may be granted on these drugs, if any.

      Our patent position on some of our drug candidates, like that of many
pharmaceutical companies, is uncertain and involves complex legal and factual
questions for which important legal principles are unresolved. We may not
develop or obtain rights to products or processes that are patentable. Even if
we do obtain patents, they may not adequately protect the technology we own or
have licensed. In addition, others may challenge, seek to invalidate, infringe
or circumvent any patents we own or license. If they do so successfully, rights
we receive under those patents may not provide competitive advantages to us.
Further, the manufacture, use or sale of our products or processes may infringe
the patent rights of others.

      Several pharmaceutical and biotechnology companies, universities and
research institutions have filed patent applications or received patents that
cover our technologies or technologies similar to ours. Others have filed patent
applications and received patents that conflict with patents or patent
applications we own or have licensed, either by claiming the same methods or
compounds or by claiming methods or compounds that could dominate those owned by
or licensed to us. In addition, we may not be aware of all patents or patent
applications that may impact our ability to make, use or sell any of our drug
candidates. For example, United States patent applications are confidential
while pending in the Patent and Trademark Office and patent applications filed
in foreign countries are often first published six months or more after filing.
Any conflicts resulting from third party patent applications and patents could
significantly reduce the coverage of our patents and limit our ability to obtain
meaningful patent protection. If other companies obtain patents with conflicting
claims, we may be required to obtain licenses to these


                                       17
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patents or to develop or obtain alternative technology. We may not be able to
obtain any license on acceptable terms or at all. Any failure to obtain licenses
could delay or prevent us from pursuing the development or commercialization of
our drug candidates, which would adversely affect our ability to achieve
profitability.

      There are significant risks regarding the patent rights of one of our
licensed drug candidates. We may not be able to commercialize amdoxovir due to
patent rights held by third parties other than our licensors. Third parties have
filed numerous patent applications and have received numerous issued patents in
the United States and many foreign countries that relate to this drug candidate
and its use alone or in combination to treat HIV and hepatitis B. As a result,
our patent position regarding the use of amdoxovir to treat HIV and/or hepatitis
B is highly uncertain and involves numerous complex legal and factual questions
that are unknown or unresolved. If any of these questions is resolved in a
manner that is not favorable to us, we would not have the right to commercialize
amdoxovir in the absence of a license from one or more third parties, which may
not be available on acceptable terms or at all. Even if any of these questions
is resolved in our favor, we may still attempt to obtain licenses from one or
more third parties to reduce the risks of challenges to our patent positions.
These licenses may not be available on acceptable terms or at all.

      With respect to any of our drug candidates, litigation, patent opposition
and adversarial proceedings, including the currently pending proceedings, could
result in substantial costs to us. The costs of the currently pending
proceedings are significant and may increase significantly during the next
several years. We anticipate that additional litigation and/or proceedings will
be initiated to enforce any patents we own or license, or to determine the
scope, validity and enforceability of our or other parties' proprietary rights
and the priority of an invention. Any of these activities could result in
substantial costs and/or delays to us. The outcome of any of these proceedings
may significantly affect our rights to develop and commercialize drug candidates
and technology.

      United States patents carry a presumption of validity and generally can be
invalidated only through clear and convincing evidence. A court or
administrative body may not hold our licensed patents valid or may not find an
alleged infringer to be infringing. Further, the license and option agreements
with Emory, University of Georgia and Dynavax provide that each of these
licensors is primarily responsible for any patent prosecution activities, such
as litigation, patent conflict proceedings, patent opposition or other actions,
for the technology licensed to us. These agreements also provide that we
generally must reimburse these licensors for the costs they incur in performing
these activities. Similarly, Yale and University of Georgia, the licensors of
clevudine to Bukwang, are primarily responsible for patent prosecution
activities with respect to clevudine at our expense. As a result, we generally
do not have the ability to institute or determine the conduct of any patent
proceedings unless our licensors elect not to institute or to abandon the
proceedings. If our licensors elect to institute and prosecute patent
proceedings, our rights will depend in part on the manner in which these
licensors conduct the proceedings. In any proceedings they elect to initiate and
maintain, these licensors may not vigorously pursue or defend or may decide to
settle on terms that are unfavorable to us. An adverse outcome of these
proceedings could subject us to significant liabilities to third parties,
require disputed rights to be licensed from third parties or require us to cease
using technology, any of which could adversely affect our business. Moreover,
the mere uncertainty resulting from the initiation and continuation of any
technology related litigation or adversarial proceeding could adversely affect
our business pending resolution of the disputed matters.

      We also rely on unpatented trade secrets and know-how to maintain our
competitive position, which we seek to protect, in part, by confidentiality
agreements with employees, consultants and others. These parties may breach or
terminate these agreements, and we may not have adequate remedies for any
breach. Our trade secrets may also be independently discovered by competitors.
We rely on technologies to which we do not have exclusive rights or which may
not be patentable or proprietary and thus may be available to competitors. We
have filed applications for, but have not obtained, trademark registrations for
various marks in the United States and other jurisdictions. We have received
U.S. trademark registrations for our corporate name and our corporate name and
logo, as well as the mark Coviracil(R). We have received a Canadian trademark
registration for the mark Coviracil(R). We have also received a registration in
the European Union for our corporate logo. Our pending application in the
European Union for the mark Coviracil(TM) has been opposed by Orsem, based on
registrations for the mark Coversyl in various countries, and Les Laboratories
Serveir, based on a French registration for the mark Coversyl. We do not believe
that the marks Coviracil and Coversyl are confusingly similar, but, in the event
they are found to be confusingly similar, we may need to adopt a different
product name for emtricitabine in the applicable jurisdictions.


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Several other companies use trade names that are similar to our name for their
businesses. If we are unable to obtain any licenses that may be necessary for
the use of our corporate name, we may be required to change our name. Our
management personnel were previously employed by other pharmaceutical companies.
The prior employers of these individuals may allege violations of trade secrets
and other similar claims relating to their drug development activities for us.

GOVERNMENT REGULATION

      The development of our drug candidates and the manufacturing and marketing
of any drug candidates we successfully develop are subject to extensive
regulation by numerous governmental authorities in the United States and other
countries.

FDA APPROVAL

      In the United States, pharmaceuticals are subject to rigorous FDA
regulation. The Federal Food, Drug, and Cosmetic Act governs the testing,
manufacture, approval, labeling, storage, record keeping, reporting, advertising
and promotion of our drug candidates and any products that we may successfully
develop. Product development and approval within this regulatory framework takes
a number of years and involves the expenditure of substantial resources. The
steps required before a new prescription drug may be marketed in the United
States include:

      o     preclinical laboratory and animal tests,
      o     the submission to the FDA of an IND, which must be evaluated and
            found acceptable by the FDA before human clinical trials may
            commence,
      o     adequate and well-controlled human clinical trials to establish the
            safety and effectiveness of the drug,
      o     the submission of an NDA to the FDA,
      o     FDA review of the NDA, which usually includes review by an Advisory
            Committee to the FDA, and
      o     FDA approval of the NDA.

      Prior to obtaining FDA approval of an NDA, the facilities that will be
used to manufacture the drug must undergo a preapproval inspection to ensure
compliance with good manufacturing practices regulations. A company must also
pay a one-time user fee for each NDA submission and pay annual user fees for
each approved product and manufacturing establishment.

      Preclinical tests include laboratory evaluation of the drug candidate and
animal studies to assess the safety and effectiveness of the drug candidate and
its formulation. Preclinical test results are submitted to the FDA as part of an
IND, and unless the FDA objects, the IND will become effective 30 days following
its receipt. If the FDA has concerns about a proposed clinical trial, it may
delay the trial and require modifications to the trial protocol before
permitting the trial to begin. There are no guarantees that the FDA will permit
a proposed IND to become effective.

      Clinical trials involve administering a drug candidate to normal, healthy
volunteers or to patients identified as having the condition for which the drug
candidate is being tested. The drug candidate is administered under the
supervision of a qualified principal investigator. Clinical trials are conducted
in accordance with protocols previously submitted to the FDA as part of the IND.
These protocols detail the objectives of the trial, the parameters used to
monitor safety and the efficacy criteria that are being evaluated. Each clinical
trial is conducted under the auspices of a local Institutional Review Board
which considers among other things:

      o     the clinical trial plan,
      o     ethical factors,
      o     safety of the human subjects, and
      o     possible liability risk for the institution.


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      Clinical trials are typically conducted in three sequential phases that
      may overlap.

      o     Phase I involves the initial closely monitored introduction of the
            drug candidate in normal volunteers or patients, where the emphasis
            is on testing for safety (adverse effects), dosage tolerance,
            metabolism, distribution, excretion, clinical pharmacology and early
            evidence of effectiveness.

      o     Phase II involves trials in a limited patient population to
            determine the effectiveness of the drug candidate for specific
            targeted indications, to determine dosage tolerance and optimal
            dosage and to identify possible short-term side effects and safety
            risks. After a drug candidate demonstrates an acceptable safety
            profile and probable effectiveness, Phase III trials are initiated.

      o     Phase III trials are undertaken to further evaluate clinical
            effectiveness and to further test for safety within an expanded
            patient population at multiple clinical study sites.

      Pivotal clinical trials are those expanded studies intended to support a
submission for regulatory approval of a drug candidate. Pilot clinical trials
are those involving a small number of patients. The FDA reviews both the
clinical trial plans and the results of the trials at each phase, and any safety
reports and other information submitted during the clinical trial. The FDA may
discontinue the trials at any time if there are significant safety issues.

      The results of the preclinical tests and clinical trials are submitted to
the FDA in the form of an NDA for marketing approval. The testing and approval
process requires substantial time and effort and approvals may not be granted on
a timely basis or at all. The approval process is affected by a number of
factors, including the severity of the disease, the availability of alternative
treatments and the risks and benefits demonstrated in clinical trials.
Additional animal studies or clinical trials may be requested during the FDA
review process and may delay marketing approval. Upon approval, a drug may be
marketed only for the approved indications in the approved dosage forms. Further
clinical trials are required to gain approval for the use of the product for any
additional indications or dosage forms. The FDA may also require post-marketing
testing, such as monitoring for adverse effects, which can involve significant
expense.

      A company may conduct clinical trials outside of the United States, using
a product manufactured outside the country, and in some circumstances
manufactured within the United States, without an IND. The FDA will accept data
from foreign clinical trials to support clinical investigations in the United
States and/or approval of an NDA only if the agency determines that the trials
are well-designed, well-conducted, performed by qualified investigators, and
conducted in accordance with internationally recognized ethical principles and
any applicable foreign requirements. We may, in the future, conduct clinical
trials with other drug candidates in various foreign countries without an IND
and have done so in the case of clevudine. Clinical trials we conduct in either
the United States or foreign countries may not demonstrate that any of our drug
candidates under development are safe and effective, and the FDA may require
additional clinical trials to support approval of an NDA.

      As part of its IND regulations, the FDA has developed several regulatory
procedures to accelerate the clinical testing and approval of drugs intended to
treat life-threatening or seriously debilitating illnesses under certain
circumstances. For example, in 1988, the FDA issued regulations to expedite the
development, evaluation and marketing of drugs for life-threatening and severely
debilitating illnesses, especially where no alternative therapy exists. These
procedures encourage early consultation between the IND sponsors and the FDA in
the preclinical testing and clinical trial phases to determine what evidence
will be necessary for marketing approval and to assist the sponsors in designing
clinical trials. Under this program, the FDA works closely with the IND sponsors
to accelerate and condense Phase II clinical trials, which may, in some cases,
either eliminate the need to conduct Phase III trials or limit the scope of
Phase III trials. Under these regulations, the FDA may require post-marketing
(Phase IV) clinical trials to obtain additional information on the drug's risks,
benefits and optimal use.

      The FDA has also issued regulations establishing an accelerated NDA
approval procedure for certain drugs under Subpart H of the agency's NDA
approval regulations. The Subpart H regulations provide for accelerated NDA
approval for new drugs intended to treat serious or life-threatening diseases
where the drugs provide a meaningful therapeutic advantage over existing
treatment. Under this accelerated approval procedure, the FDA may approve a drug
based on evidence from adequate and well-controlled studies of the drug's effect
on a surrogate endpoint that is reasonably likely to predict clinical benefits,
or on evidence of the drug's effect on a clinical


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endpoint other than survival or irreversible morbidity. This approval is
conditional on the favorable completion of post-marketing (Phase IV) trials to
establish and define the degree of clinical benefits to the patient. These
clinical trials would usually be underway when the product obtains this
accelerated approval. The FDA may also impose distribution restrictions where
necessary to assure safe use of the drug. If, after approval, a post-marketing
clinical study establishes that the drug does not perform as expected, or if
post-marketing restrictions are not adhered to or are not adequate to ensure the
safe use of the drug, or other evidence demonstrates that the product is not
safe and/or effective under its conditions of use, the FDA may withdraw
approval. The Subpart H accelerated approval regulations can complement other
accelerated approval regulations. These two procedures for expediting the
clinical evaluation and approval of certain drugs may shorten the drug
development process by as much as two to three years.

      The Food and Drug Administration Modernization Act of 1997 also contains
statutory provisions designed to expedite the review of new drugs intended to
treat serious or life-threatening conditions. This Act amended the Federal Food,
Drug, and Cosmetic Act to provide for the designation of a "fast track" product.
This Act also establishes procedures to facilitate development and expedite FDA
review of a drug intended for treatment of a serious or life-threatening
condition that demonstrates the potential to address unmet medical needs.
Approval of a fast track product may be subject to conditions, including
requirements to conduct post-approval clinical trials and to presubmit
promotional materials. Approval of a fast track product can be withdrawn, using
expedited procedures, for reasons similar to those specified in the Subpart H
Regulations.

      Once the sale of a product is approved, the FDA regulates the
manufacturing, marketing, safety reporting and other activities. The FDA
periodically inspects both domestic and foreign drug manufacturing facilities to
ensure compliance with applicable good manufacturing practice regulations, NDA
conditions of approval and other requirements. In addition, manufacturers must
register with the FDA and submit a list of every drug in commercial
distribution. We do not have or currently intend to develop the facilities to
manufacture our drug candidates in commercial quantities and, therefore, we
intend to establish relationships with contract manufacturers for the commercial
manufacture of any products that we successfully develop. Some of these contract
manufacturers may be located outside the United States. Our contract
manufacturers may not be able to attain or maintain compliance with good
manufacturing practice regulations and NDA conditions. Changes in contract
manufacturers may result in the need for new NDA submissions or delays in the
availability of product. Post-marketing reports are also required, for purposes
such as monitoring the product's usage and any adverse effects. Product
approvals may be withdrawn, or other actions may be ordered, or criminal or
other sanctions imposed if we do not maintain compliance with regulatory
requirements.

FOREIGN REGULATORY APPROVAL AND SALE

      Many foreign countries also regulate the clinical testing, manufacturing,
reporting, marketing and use of pharmaceutical products. The requirements
relating to the conduct of clinical trials, product approval, manufacturing,
marketing, pricing and reimbursement vary widely from country to country and we
can give no assurance that Triangle or any third parties with whom we may
establish collaborative relationships will be able to attain or maintain
compliance with such requirements.

      In addition to the import requirements of foreign countries, a company
must also comply with United States laws governing the export of FDA regulated
products. Pursuant to the FDA Export Reform and Enhancement Act of 1996, a drug
that has not obtained FDA approval may be exported to any country in the world
without FDA authorization if the product both complies with the laws of the
importing country and has obtained valid marketing authorization in one of the
following countries: Australia, Canada, Israel, Japan, New Zealand, Switzerland,
South Africa, the European Union, or a country in the European Economic Area.
The FDA is authorized to add countries to this list in the future. Among other
restrictions, a drug that has not obtained FDA approval may be exported under
the new law only if it is not adulterated, accords to the specifications of the
foreign purchaser, complies with the laws of the importing country, is labeled
for export, is manufactured in substantial compliance with good manufacturing
practice regulations and is not sold in the United States.


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OTHER REGULATIONS

      In addition to regulations enforced by the FDA, we are also subject to
regulation under:

      o     the Occupational Safety and Health Act,
      o     the Controlled Substances Act,
      o     the Toxic Substances Control Act,
      o     the Resource Conservation and Recovery Act, and
      o     other similar federal, state and local regulations governing
            permissible laboratory activities, waste disposal, handling of
            toxic, dangerous or radioactive materials and other matters.

      We believe we are in compliance, in all material respects, with all
applicable regulations. These regulations are subject to change and may in the
future require substantial effort and cost to us to comply with each of the
regulations, and may possibly restrict our business activities.

COMPETITION

      We are engaged in segments of the drug industry that are highly
competitive and rapidly changing. Any of our current drug candidates that we
successfully develop will compete with numerous existing therapies. In addition,
many companies are pursuing novel drugs that target the same diseases we are
targeting. We believe that a significant number of drugs are currently under
development and will become available in the future for the treatment of HIV and
hepatitis B. We anticipate that we will face intense and increasing competition
as new products enter the market and advanced technologies become available. Our
competitors' products may be more effective, or more effectively marketed and
sold, than any of our products. Competitive products may render our products
obsolete or noncompetitive before we can recover the expenses of developing and
commercializing our drug candidates. Furthermore, the development of a cure or
new treatment methods for the diseases we are targeting could render our drug
candidates noncompetitive, obsolete or uneconomical. Many of our competitors:

      o     have significantly greater financial, technical and human resources
            than we have and may be better equipped to develop, manufacture and
            market products,
      o     have extensive experience in preclinical testing and clinical
            trials, obtaining regulatory approvals and manufacturing and
            marketing pharmaceutical products, and
      o     have products that have been approved or are in late stage
            development and operate large, well-funded research and development
            programs.

      Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical and
biotechnology companies. Academic institutions, governmental agencies and other
public and private research organizations are also becoming increasingly aware
of the commercial value of their inventions and are more actively seeking to
commercialize the technology they have developed.

      If we successfully develop and obtain approval for our drug candidates, we
will face competition based on the safety and effectiveness of our products, the
timing and scope of regulatory approvals, the availability of supply, marketing
and sales capability, reimbursement coverage, price, patent position and other
factors. Our competitors may develop or commercialize more effective or more
affordable products, or obtain more effective patent protection, than we do.
Accordingly, our competitors may commercialize products more rapidly or
effectively than we do, which could hurt our competitive position and adversely
affect our business.

MANUFACTURING

      We do not have any internal manufacturing capacity and we rely on third
party manufacturers for the manufacture of all of our clinical trial material.
We plan to use our existing relationships or to establish relationships with
additional third party manufacturers for products that we develop. The terms of
the Abbott Alliance provide that Abbott will manufacture all or a portion of our
product requirements for those products that are or become covered by the Abbott
Alliance. We may be unable to maintain our relationship with Abbott or to


                                       22
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establish or maintain relationships with other manufacturers on acceptable
terms, and manufacturers may be unable to manufacture products in commercial
quantities on a cost effective basis. Our dependence on third parties for the
manufacture of our products may adversely affect our profit margins and our
ability to develop and commercialize products on a timely and competitive basis.
Further, third party manufacturers may encounter manufacturing or quality
control problems in manufacturing our products and may be unable to maintain the
necessary governmental licenses and approvals to continue manufacturing our
products. Our business could be adversely affected if we fail to establish or
maintain relationships with third parties for our manufacturing requirements on
acceptable terms.

SALES AND MARKETING

      In the United States, we currently intend to market the drug candidates
covered by the Abbott Alliance in collaboration with Abbott and to market other
drug candidates that we successfully develop, that do not become part of the
Abbott Alliance, through a small sales force or through arrangements or
collaborations with third parties. Outside of the United States, we expect
Abbott to market drug candidates covered by the Abbott Alliance and, for any
other drug candidates that we successfully develop that do not become part of
the Abbott Alliance, we intend to market and sell through arrangements or
collaborations with third parties. In addition, we expect Abbott to handle the
distribution and sale of drug candidates covered by the Abbott Alliance both
inside and outside the United States. With respect to the United States, our
ability to market the products that we successfully develop may be contingent on
recruitment, training and deployment or outsourcing of a sales and marketing
force as well as the performance of Abbott under the Abbott Alliance. We may be
unable to establish marketing or sales capabilities or to maintain arrangements
or enter into new arrangements with third parties to perform those activities on
favorable terms. In addition, third parties may have significant control or
influence over important aspects of the commercialization of our drug
candidates, including market identification, marketing methods, pricing,
composition of sales force and promotional activities. We may have limited
control over the amount and timing of resources that a third party devotes to
our products. Our business may never achieve profitability if we fail to
establish or maintain a sales force and marketing, sales and distribution
capabilities.

HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT

      The efforts of governments and third party payors to contain or reduce the
cost of health care will continue to affect the business and financial condition
of drug companies. A number of legislative and regulatory proposals to change
the health care system have been considered in recent years. In addition, an
increasing emphasis on managed care in the United States has and will continue
to increase pressure on drug pricing. Legislative or regulatory proposals or
changes in managed care systems may be adopted that may have a negative effect
on our business. The announcement and/or adoption of proposals could have an
adverse effect on our ability to earn profits and financial condition. Sales of
prescription drugs depend significantly on the availability of reimbursement to
the consumer from third party payors, such as government and private insurance
plans. These third party payors frequently require that drug companies give them
predetermined discounts from list prices, and they are increasingly challenging
the prices for medical products and services. Present combination treatment
regimens for the treatment of HIV are expensive and costs may increase as new
combinations are developed. These costs have resulted in limitations in the
reimbursement available from third party payors for the treatment of HIV
infection, and we expect these limitations will continue in the future. Third
party payors may not consider products we may bring to the market cost effective
and may not reimburse the consumer sufficiently to allow us to sell our products
on a profitable basis.

HUMAN RESOURCES

      As of December 31, 2001, Triangle had approximately 115 employees,
including approximately 85 in development and approximately 30 in
administration. Of these employees, 44 hold advanced degrees, of which 27 are
M.D.s or Ph.D.s. In addition, we routinely engage the services of contractors
and consultants to supplement our employees in the completion of our normal
business operations. Our future success will depend in large part upon our
ability to attract and retain highly qualified personnel. Due to the unexpected
death of Dr. David W. Barry, we are currently conducting a search to fill the
position of chief executive officer. Our employees are not represented by any
collective bargaining agreements, and we have never experienced a work stoppage.
All of our employees have signed confidentiality agreements and certain of our
employees, including all of our officers, have entered into employment
agreements.


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RISK AND UNCERTAINTIES

      IN ADDITION TO THE OTHER INFORMATION CONTAINED HEREIN, THE FOLLOWING RISKS
AND UNCERTAINTIES SHOULD BE CAREFULLY CONSIDERED IN EVALUATING TRIANGLE AND ITS
BUSINESS.

ALL OF OUR DRUG CANDIDATES ARE IN DEVELOPMENT AND WE MAY NEVER SUCCESSFULLY
COMMERCIALIZE THEM.

      Some of our drug candidates are at an early stage of development and all
of our drug candidates will require expensive and lengthy testing and regulatory
clearances before we may commercialize them. We do not expect any of our drug
candidates to be commercially available before the year 2003. There are many
reasons that we may fail in our efforts to develop our drug candidates,
including that:

      o     our drug candidates may be ineffective, toxic or may not receive
            regulatory clearances,
      o     our drug candidates may be too expensive to manufacture or market or
            may not achieve broad market acceptance,
      o     third parties may hold proprietary rights that preclude us from
            developing or marketing our drug candidates, or
      o     third parties may market equivalent or superior products.

      The success of our business depends on our ability to successfully develop
and market our drug candidates.

WE HAVE INCURRED LOSSES SINCE INCEPTION AND MAY NEVER ACHIEVE PROFITABILITY.

      We formed Triangle in July 1995 and have incurred losses since our
inception. At December 31, 2001, our accumulated deficit was $406.9 million. Our
historical costs relate primarily to the acquisition and development of our drug
candidates and selling, general and administrative costs. We have not generated
any revenue from the sale of our drug candidates to date, and do not expect to
do so before the year 2003. In addition, we expect annual losses to continue
over the next several years as a result of our drug development and
commercialization efforts. To become profitable, we must successfully develop
and obtain regulatory approval for our drug candidates and effectively
manufacture, market and sell any products we develop. We may never generate
significant revenue or achieve profitability.

IF WE NEED ADDITIONAL FUNDS AND ARE UNABLE TO RAISE THEM, WE WILL HAVE TO
CURTAIL OR CEASE OPERATIONS.

      Our drug development programs and our efforts to commercialize our drug
candidates require substantial working capital, including expenses for:

      o     preclinical testing,
      o     chemical synthetic scale-up,
      o     manufacture of drug substance for clinical trials,
      o     toxicology studies,
      o     clinical trials of drug candidates,
      o     sales and marketing,
      o     payments to our licensors, and
      o     potential commercial launch of our drug candidates.

      Our future working capital needs will depend on many factors, including:

      o     the progress, magnitude and success of our drug development
            programs,
      o     the scope and results of preclinical testing and clinical trials,
      o     the cost, timing and outcome of regulatory filings and reviews,
      o     the costs under current and future license and option agreements for
            our drug candidates, including the costs of obtaining and enforcing
            patent protection for our drug candidates,


                                       24
<Page>

      o     the costs of acquiring any additional drug candidates,
      o     the out-licensing of existing drug candidates,
      o     the rate of technological advances by us and other companies,
      o     the commercial potential of our drug candidates,
      o     the magnitude of our administrative and legal expenses,
      o     the costs of establishing sales and marketing functions, and
      o     the costs of establishing third party arrangements for
            manufacturing.

      We have incurred negative cash flow from operations since we incorporated
Triangle and do not expect to generate positive cash flow from our operations
for at least the next several years. We believe that our existing cash, cash
equivalents and investments, considering our recent steps to reduce cash usage
and completed financings, will be adequate through the second quarter of 2003.
We expect that we will need additional future financings to fund our operations.
We may not be able to obtain adequate financing to fund our operations, and any
additional financing we obtain may be on terms that are not favorable to us. In
addition, we may not receive the contingent development milestone payments under
the Abbott Alliance. In addition, any future financings could substantially
dilute our stockholders. If adequate funds are not available, we will be
required to delay, reduce or eliminate one or more of our drug development
programs, to enter into new collaborative arrangements or to modify the Abbott
Alliance on terms that may not be favorable to us. These collaborative
arrangements or modifications could result in the transfer of valuable rights to
third parties. In addition, we may acquire technologies and drug candidates that
would increase our working capital requirements.

PROJECTED DEVELOPMENT COSTS ARE DIFFICULT TO ESTIMATE AND MAY CHANGE FREQUENTLY
PRIOR TO REGULATORY APPROVAL.

      While all new compounds require standard regulated phases of testing, the
actual type and scope of testing can vary significantly among different drug
candidates which may result in significant disparities in the total costs
required to complete the respective development programs.

      The number and type of studies that may be required by the FDA for a
particular compound are based on the compound's clinical profile compared to
existing therapies for the targeted patient population. Factors that affect the
costs of a clinical trial include:

      o     the number of patients required to participate in clinical trials to
            demonstrate statistical significance for a drug's safety and
            efficacy,
      o     the time required to enroll the targeted number of patients in
            clinical trials, which may vary depending on the size and
            availability of the targeted patient population and the perceived
            benefit to study participants, and
      o     the number and type of required laboratory tests supporting clinical
            trials.

      Other activities required before filing an NDA include regulatory
preparation for submission, biostatistical analyses, scale-up synthesis, and the
production of a required amount of commercial grade drug product inventory which
meets current Good Manufacturing Practice standards.

      In addition, ongoing development programs and associated costs are subject
to frequent, significant and unpredictable changes due to a number of factors,
including:

      o     data collected in preclinical or clinical studies may prompt
            significant changes or enhancements to an ongoing development
            program,
      o     the FDA may direct the sponsor to change or enhance its ongoing
            development program based on developments in the testing of similar
            compounds or related compounds,
      o     unexpected regulatory requirements or interim reviews by regulatory
            agencies may cause delays or changes to development programs, and
      o     anticipated manufacturing costs may change significantly due to
            required changes in manufacturing processes or variances from
            anticipated manufacturing process yields.


                                       25
<Page>

BECAUSE WE MAY NOT SUCCESSFULLY COMPLETE CLINICAL TRIALS REQUIRED FOR REGULATORY
APPROVAL OF OUR DRUG CANDIDATES, OUR BUSINESS MAY NEVER ACHIEVE PROFITABILITY.

      No regulatory authority has approved any of our drug candidates. To obtain
regulatory approvals needed for the sale of our drug candidates, we must
demonstrate through preclinical testing and clinical trials that each drug
candidate is safe and effective. The clinical trial process is complex and
uncertain and the regulatory environment varies widely from country to country.
Positive results from preclinical testing and early clinical trials do not
ensure positive results in pivotal clinical trials. Many companies in our
industry have suffered significant setbacks in pivotal clinical trials, even
after promising results in earlier trials. Any of our drug candidates may
produce undesirable side effects in humans. These side effects, or side effects
from other drugs in a trial, could cause us or regulatory authorities to
interrupt, delay or halt clinical trials of a drug candidate, as occurred with
our study FTC-302 in South Africa, or could result in regulatory authorities
refusing to approve the drug candidate for any and all targeted indications. We,
the FDA, or foreign regulatory authorities may suspend or terminate clinical
trials at any time if we or they believe the trial participants face
unacceptable health risks.

CLINICAL TRIALS MAY TAKE LONGER TO COMPLETE AND COST MORE THAN WE EXPECT, WHICH
WOULD ADVERSELY AFFECT OUR ABILITY TO COMMERCIALIZE DRUG CANDIDATES AND ACHIEVE
PROFITABILITY.

      Clinical trials are lengthy and expensive. They require adequate supplies
of drug substance and sufficient patient enrollment. Patient enrollment is a
function of many factors, including:

      o     the size of the patient population,
      o     the nature of the protocol,
      o     the proximity of patients to clinical sites,
      o     the eligibility criteria for the clinical trial, and
      o     the perceived benefit of participating in a clinical trial.

      Delays in patient enrollment can result in increased costs and longer
development times. Even if we successfully complete clinical trials, we may not
be able to file any required regulatory submissions in a timely manner and we
may not receive regulatory approval for the drug candidate. In addition, if the
FDA or foreign regulatory authorities require additional clinical trials we
could face increased costs and significant development delays.

      We conduct clinical trials in many countries around the world and are
subject to the risks and uncertainties of doing business internationally.
Disruptions in communication and transportation, civil unrest and currency
exchange rates may affect the time and costs required to complete clinical
trials in other countries.

      Changes in regulatory policy or new regulations could also result in
delays or rejections of our applications for approval of our drug candidates.
Drug candidates designated as "fast track" products may not, however, continue
to qualify for expedited review and our other drug candidates may fail to
qualify for fast track development or expedited review. Even though some of our
drug candidates have qualified for expedited review, the FDA may not approve
them at all or any sooner than other drug candidates that do not qualify for
expedited review.

IF WE OR OUR LICENSORS ARE NOT ABLE TO OBTAIN AND MAINTAIN ADEQUATE PATENT
PROTECTION FOR OUR DRUG CANDIDATES, WE MAY BE UNABLE TO COMMERCIALIZE OUR DRUG
CANDIDATES OR PREVENT OTHER COMPANIES FROM USING OUR TECHNOLOGY IN COMPETITIVE
PRODUCTS.

      Our success will depend on our ability and the ability of our licensors to
obtain and maintain patents and proprietary rights for our drug candidates and
to avoid infringing the proprietary rights of others, both in the United States
and in foreign countries. We have no patents solely in our own name and we have
a small number of patent applications of our own pending. We have two patent
filings which are jointly owned with other entities. We have licensed, or have
an option to license, patents, patent applications and other proprietary rights
from third parties for each of our drug candidates. If we breach our licenses we
may lose rights to important technology and drug candidates.


                                       26
<Page>

      Our patent position on some of our drug candidates, like that of many
pharmaceutical companies, is uncertain and involves complex legal and factual
questions for which important legal principles are unresolved. We may not
develop or obtain rights to products or processes that are patentable. Even if
we do obtain patents, they may not adequately protect the technology we own or
have licensed. In addition, others may challenge, seek to invalidate, infringe
or circumvent any patents we own or license. If they do so successfully, rights
we receive under those patents may not provide competitive advantages to us.
Further, the manufacture, use or sale of our products or processes may infringe
the patent rights of others.

      Several pharmaceutical and biotechnology companies, universities and
research institutions have filed patent applications or received patents that
cover our technologies or technologies similar to ours. Others have filed patent
applications and received patents that conflict with patents or patent
applications we own or have licensed, either by claiming the same methods or
compounds or by claiming methods or compounds that could dominate those owned by
or licensed to us. In addition, we may not be aware of all patents or patent
applications that may impact our ability to make, use or sell any of our drug
candidates. For example, United States patent applications are confidential
while pending in the Patent and Trademark Office, and patent applications filed
in foreign countries are often first published six months or more after filing.
Any conflicts resulting from third party patent applications and patents could
significantly reduce the coverage of our patents and limit our ability to obtain
meaningful patent protection. If other companies obtain patents with conflicting
claims, we may be required to obtain licenses to these patents or to develop or
obtain alternative technology. We may not be able to obtain any license on
acceptable terms or at all. Any failure to obtain licenses could delay or
prevent us from pursuing the development or commercialization of our drug
candidates, which would adversely affect our ability to achieve profitability.

      There are significant risks regarding the patent rights of one of our
licensed drug candidates. We may not be able to commercialize amdoxovir due to
patent rights held by third parties other than our licensors. Third parties have
filed numerous patent applications and have received numerous issued patents in
the United States and many foreign countries that relate to this drug candidate
and its use alone or in combination to treat HIV and hepatitis B. As a result,
our patent position regarding the use of amdoxovir to treat HIV and/or hepatitis
B is highly uncertain and involves numerous complex legal and factual questions
that are unknown or unresolved. If any of these questions is resolved in a
manner that is not favorable to us, we would not have the right to commercialize
amdoxovir in the absence of a license from one or more third parties, which may
not be available on acceptable terms or at all. Even if any of these questions
is resolved in our favor, we may still attempt to obtain licenses from one or
more third parties to reduce the risks of challenges to our patent positions.
These licenses may not be available on acceptable terms or at all.

      There are also risks regarding our rights to Coviracil. We license our
rights to Coviracil from Emory. Emory and Shire Pharmaceuticals have been
disputing several issues related to the rights to Coviracil. Shire
Pharmaceuticals recently announced an agreement as to material terms of a
settlement with Glaxo and Emory regarding these disputes. This settlement has
not been finalized and the definitive settlement may differ from the material
terms disclosed.

      AMDOXOVIR (FORMERLY KNOWN AS DAPD)

      We obtained our rights to amdoxovir under a license from Emory and the
University of Georgia. Our rights to amdoxovir include a number of issued United
States patents that cover:

      o     composition of matter,
      o     a method for the synthesis of amdoxovir,
      o     methods for the use of amdoxovir alone or in combination with
            several other agents for the treatment of hepatitis B, and
      o     a method to treat HIV with amdoxovir.

      We also have rights to several foreign patents and patent applications
that cover methods for the use of amdoxovir alone or in combination with other
anti-hepatitis B agents for the treatment of hepatitis B. Additional foreign
patent applications are pending which contain claims for the use of amdoxovir to
treat HIV. Emory and the University of Georgia filed patent applications
claiming these inventions in the United States in 1990 and 1992.

      Shire Pharmaceuticals filed a patent application in the United States in
1988 on a group of nucleosides in the same general class as amdoxovir and their
use to treat HIV, and has filed corresponding patent applications in foreign
countries. The Patent and Trademark Office issued a patent to Shire
Pharmaceuticals in 1993 covering a class of nucleosides that includes amdoxovir
and its use to treat HIV. Corresponding patents have been issued to Shire
Pharmaceuticals in many foreign countries. Emory has filed an opposition to
patent claims granted to Shire


                                       27
<Page>

Pharmaceuticals by the European Patent Office based, in part, on Emory's
assertion that Shire Pharmaceuticals' patent does not disclose how to make
amdoxovir. In a patent opposition hearing held at the European Patent Office on
March 4, 1999, the Opposition Division ruled that the Shire Pharmaceuticals
European patent covering amdoxovir is valid. Emory has appealed this decision to
the European Patent Office Technical Board of Appeal. If the Technical Board of
Appeal affirms the decision of the Opposition Division, or if we or Emory do not
pursue the appeal, we would not be able to sell amdoxovir in Europe without a
license from Shire Pharmaceuticals, which may not be available on acceptable
terms or at all. Shire Pharmaceuticals has opposed patent claims granted to
Emory on both amdoxovir and DXG, the parent drug into which amdoxovir is
converted in the body, in the Australian Patent Office.

      In a decision dated November 8, 2000, the Australian Patent Office held
that Emory's patent claims directed to amdoxovir are not patentable over an
earlier Shire Pharmaceuticals patent. Emory has appealed this decision of the
Australian Patent Office to the Australian Federal Court. If Emory, the
University of Georgia or we are unsuccessful in the appeal, then we will not be
able to sell amdoxovir in Australia without a license from Shire
Pharmaceuticals, which may not be available on acceptable terms or at all. Shire
Pharmaceuticals' opposition to Emory's patent claims on DXG in Australia is
ongoing. If Emory, the University of Georgia or we do not challenge, or are not
successful in any challenge to, Shire Pharmaceuticals' issued patents, pending
patent applications, or patents that may issue from its applications, we will
not be able to manufacture, use or sell amdoxovir in the United States and any
foreign countries in which Shire Pharmaceuticals receives a patent without a
license from Shire Pharmaceuticals. We may not be able to obtain a license from
Shire Pharmaceuticals on acceptable terms or at all.

      IMMUNOSTIMULATORY SEQUENCE PRODUCT CANDIDATES

      In March 2000, we entered into a licensing and collaborative agreement
with Dynavax to develop immunostimulatory polynucleotide sequence product
candidates for the prevention and/or treatment of serious viral diseases, which
became effective in April 2000. ISS are polynucleotides which stimulate the
immune system, and could potentially be used in combination with our small
molecule product candidates to increase the body's ability to defend against
viral infection. ISS can be stabilized for use through internal linkages that do
not occur in nature, including phosphorothioate linkages.

      There are a number of companies which have patent applications and issued
patents, both in the United States and in other countries, that cover ISS and
their uses. Coley Pharmaceuticals, Inc. has filed several patent applications in
this area and has in addition exclusively licensed a number of patent
applications on this subject from the University of Iowa and Isis
Pharmaceuticals, Inc. A number of these patent applications have been issued. A
number of companies have also filed patent applications and have or are expected
to receive patents on a number of polynucleotides and methods for their use and
manufacture. These patents, if granted, could prevent us from making, using or
selling any ISS that is covered by a patent issued to a third party unless we
obtain a license from that party which may not be available on acceptable terms
or at all.

      With respect to any of our drug candidates, litigation, patent opposition
and adversarial proceedings, including the currently pending proceedings, could
result in substantial costs to us. The costs of the currently pending
proceedings are significant and may increase significantly during the next
several years. We anticipate that additional litigation and/or proceedings will
be initiated to enforce any patents we own or license, or to determine the
scope, validity and enforceability of our or other parties' proprietary rights
and the priority of an invention. Any of these activities could result in
substantial costs and/or delays to us. The outcome of any of these proceedings
may significantly affect our rights to develop and commercialize drug candidates
and technology.

      United States patents carry a presumption of validity and generally can be
invalidated only through clear and convincing evidence. A court or
administrative body may not hold our licensed patents valid or may not find an
alleged infringer to be infringing. Further, the license and option agreements
with Emory, the University of Georgia and Dynavax provide that each of these
licensors is primarily responsible for any patent prosecution activities, such
as litigation, patent conflict proceeding, patent opposition or other actions,
for the technology licensed to us. These agreements also provide that we
generally must reimburse these licensors for the costs they incur in performing
these activities. Similarly, Yale and the University of Georgia, the licensors
of clevudine to Bukwang, are primarily responsible for patent prosecution
activities with respect to clevudine at our expense. As a result, we generally
do not have the ability to institute or determine the conduct of any patent
proceedings unless our licensors elect not to


                                       28
<Page>

institute or to abandon the proceedings. If our licensors elect to institute and
prosecute patent proceedings, our rights will depend in part on the manner in
which these licensors conduct the proceedings. In any proceedings they elect to
initiate and maintain, these licensors may not vigorously pursue or defend or
may decide to settle on terms that are unfavorable to us. An adverse outcome of
these proceedings could subject us to significant liabilities to third parties,
require disputed rights to be licensed from third parties or require us to cease
using technology, any of which could adversely affect our business. Moreover,
the mere uncertainty resulting from the initiation and continuation of any
technology related litigation or adversarial proceeding could adversely affect
our business pending resolution of the disputed matters.

BECAUSE WE MAY NOT BE ABLE TO MAINTAIN THE CONFIDENTIALITY OF OUR TRADE SECRETS
AND KNOW-HOW, WE MAY LOSE A COMPETITIVE ADVANTAGE.

      We also rely on unpatented trade secrets and know-how to maintain our
competitive position, which we seek to protect, in part, by confidentiality
agreements with employees, consultants and others. These parties may breach or
terminate these agreements, and we may not have adequate remedies for any
breach. Our trade secrets may also be independently discovered by competitors.
We rely on technologies to which we do not have exclusive rights or which may
not be patentable or proprietary and may be available to competitors. We have
filed applications for, but have not obtained, trademark registrations for
various marks in the United States and other jurisdictions. We have received
U.S. trademark registrations for our corporate name and our corporate name and
logo, as well as the mark Coviracil(R). We have received a Canadian trademark
registration for the mark Coviracil(R). We have also received a registration in
the European Union for our corporate logo. Our pending application in the
European Union for the mark Coviracil(TM) has been opposed by Orsem, based on
registrations for the mark Coversyl in various countries, and Les Laboratories
Serveir, based on a French registration for the mark Coversyl. We do not believe
that the marks Coviracil and Coversyl are confusingly similar, but, in the event
they are found to be confusingly similar, we may need to adopt a different
product name for emtricitabine in the applicable jurisdictions. Several other
companies use trade names that are similar to our name for their businesses. If
we are unable to obtain any licenses that may be necessary for the use of our
corporate name, we may be required to change our name. Our management personnel
were previously employed by other pharmaceutical companies. The prior employers
of these individuals may allege violations of trade secrets and other similar
claims relating to their drug development activities for us.

THE COSTS AND TIME REQUIRED TO COMPLY WITH EXTENSIVE GOVERNMENT REGULATIONS
COULD PREVENT OR DELAY THE COMMERCIALIZATION OF OUR DRUG CANDIDATES.

      In addition to preclinical testing, clinical trials and other approval
procedures for human pharmaceutical products, we are subject to numerous
domestic and international regulations covering the development and registration
of pharmaceutical products. These regulations affect:

      o     manufacturing,
      o     safety,
      o     labeling,
      o     storage,
      o     record keeping,
      o     reporting, and
      o     marketing and promotion.

      We must also comply with regulations governing non-clinical and clinical
laboratory practices, safe working conditions, and the use and disposal of
hazardous substances, including radioactive compounds and infectious disease
agents we use in connection with our development work. The requirements vary
widely from country to country and some requirements may vary from state to
state in the United States. We expect the process of obtaining these approvals
and complying with appropriate government regulations to be time consuming and
expensive. Even if our drug candidates receive regulatory approval, we may still
face difficulties in marketing and manufacturing those drug candidates. Any
approval may be contingent on postmarketing studies or other conditions. The
approval of any of our drug candidates may limit the indicated uses of the drug
candidate. A marketed product, its manufacturer and the manufacturer's
facilities are subject to continual review and periodic


                                       29
<Page>

inspections. The discovery of previously unknown problems with a product,
manufacturer or facility may result in restrictions on the product or
manufacturer, including withdrawal of the product from the market. The failure
to comply with applicable regulatory requirements can, among other things,
result in:

      o     fines,
      o     suspended regulatory approvals,
      o     refusal to approve pending applications,
      o     refusal to permit exports from the United States,
      o     product recalls,
      o     seizure of products,
      o     injunctions,
      o     operating restrictions, and
      o     criminal prosecutions.

      In addition, adverse clinical results by others could negatively impact
the development and approval of our drug candidates. Some of our drug candidates
are intended for use as combination therapy with one or more other drugs, and
adverse safety, effectiveness or regulatory developments in connection with the
other drugs will also have an adverse effect on our business.

INTENSE COMPETITION MAY RENDER OUR DRUG CANDIDATES NONCOMPETITIVE OR OBSOLETE.

      We are engaged in segments of the drug industry that are highly
competitive and rapidly changing. Any of our current drug candidates that we
successfully develop will compete with numerous existing therapies. In addition,
many companies are pursuing novel drugs that target the same diseases we are
targeting. We believe that a significant number of drugs are currently under
development and will become available in the future for the treatment of HIV and
hepatitis B. We anticipate that we will face intense and increasing competition
as new products enter the market and advanced technologies become available. Our
competitors' products may be more effective, or more effectively marketed and
sold, than any of our products. Competitive products may render our products
obsolete or noncompetitive before we can recover the expenses of developing and
commercializing our drug candidates. Furthermore, the development of a cure or
new treatment methods for the diseases we are targeting could render our drug
candidates noncompetitive, obsolete or uneconomical. Many of our competitors:

      o     have significantly greater financial, technical and human resources
            than we have and may be better equipped to develop, manufacture and
            market products,
      o     have extensive experience in preclinical testing and clinical
            trials, obtaining regulatory approvals and manufacturing and
            marketing pharmaceutical products, and
      o     have products that have been approved or are in late stage
            development and operate large, well-funded research and development
            programs.

      Smaller companies may also prove to be significant competitors,
particularly through collaborative arrangements with large pharmaceutical and
biotechnology companies. Academic institutions, governmental agencies and other
public and private research organizations are also becoming increasingly aware
of the commercial value of their inventions and are more actively seeking to
commercialize the technology they have developed.

      If we successfully develop and obtain approval for our drug candidates, we
will face competition based on many factors including:

      o     the safety and effectiveness of our products,
      o     the timing and scope of regulatory approvals,
      o     the availability of supply,
      o     marketing and sales capability,
      o     reimbursement coverage,
      o     price, and
      o     patent position.


                                       30
<Page>

      Our competitors may develop or commercialize more effective or more
affordable products, or obtain more effective patent protection, than we do.
Accordingly, our competitors may commercialize products more rapidly or
effectively than we do, which could hurt our competitive position.

IF OUR LICENSORS TERMINATE THEIR AGREEMENTS WITH US, WE COULD LOSE OUR RIGHTS TO
OUR DRUG CANDIDATES.

      We have licensed or obtained an option to license our drug candidates
under agreements with our licensors. These agreements permit our licensors to
terminate the agreements in circumstances such as our failure to achieve
development milestones or the occurrence of an uncured material breach by us.
The termination of any of these agreements would result in the loss of our
rights to a drug candidate. On the termination of most of our license
agreements, we are required to return the licensed technology to our licensors.
In addition, most of these agreements provide that we generally must reimburse
our licensors for the costs they incur in performing any patent prosecution
activities such as litigation, patent conflict, patent opposition or other
actions, for the technology licensed to us. We believe that these costs as well
as other costs under our license and option agreements will be substantial and
may increase significantly during the next several years. Our inability or
failure to pay any of these costs with respect to any drug candidate could
result in the termination of the license or option agreement for the drug
candidate.

IF WE ARE NOT ABLE TO SUCCESSFULLY MANUFACTURE OUR DRUG CANDIDATES, OUR BUSINESS
MAY NEVER ACHIEVE PROFITABILITY.

      We do not have any internal manufacturing capacity and we rely on third
party manufacturers for the manufacture of all of our clinical trial material.
We plan to use our existing relationships or to establish relationships with
additional third party manufacturers for products that we develop. The terms of
the Abbott Alliance provide that Abbott will manufacture all or a portion of our
product requirements for those products that are or become covered by the Abbott
Alliance. We may be unable to maintain our relationship with Abbott or to
establish or maintain relationships with other manufacturers on acceptable
terms, and manufacturers may be unable to manufacture products in commercial
quantities on a cost effective basis. Our dependence on third parties for the
manufacture of our products may adversely affect our profit margins and our
ability to develop and commercialize products on a timely and competitive basis.
Further, third party manufacturers may encounter manufacturing or quality
control problems in manufacturing our products and may be unable to maintain the
necessary governmental licenses and approvals to continue manufacturing our
products.

BECAUSE WE DEPEND ON THIRD PARTIES, WE MAY BE UNABLE TO SUCCESSFULLY MARKET,
SELL OR DISTRIBUTE PRODUCTS WE DEVELOP.

      In the United States, we currently intend to market the drug candidates
covered by the Abbott Alliance in collaboration with Abbott and to market other
drug candidates that we successfully develop, that do not become part of the
Abbott Alliance, through a small sales force or through arrangements or
collaborations with third parties. Outside of the United States, we expect
Abbott to market drug candidates covered by the Abbott Alliance and, for any
other drug candidates that we successfully develop that do not become part of
the Abbott Alliance, we intend to market and sell through arrangements or
collaborations with third parties. In addition, we expect Abbott to handle the
distribution and sale of drug candidates covered by the Abbott Alliance both
inside and outside the United States. With respect to the United States, our
ability to market the products that we successfully develop may be contingent on
recruitment, training and deployment or outsourcing of a sales and marketing
force as well as the performance of Abbott under the Abbott Alliance. We may be
unable to establish marketing or sales capabilities or to maintain arrangements
or enter into new arrangements with third parties to perform those activities on
favorable terms. In addition, third parties may have significant control or
influence over important aspects of the commercialization of our drug
candidates, including market identification, marketing methods, pricing,
composition of sales force and promotional activities. We may have limited
control over the amount and timing of resources that a third party devotes to
our products. Our business may never achieve profitability if we fail to
establish or maintain a sales force and marketing, sales and distribution
capabilities.


                                       31
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BECAUSE WE DEPEND ON THIRD PARTIES FOR THE DISCOVERY AND DEVELOPMENT OF DRUG
CANDIDATES, WE MAY NOT SUCCESSFULLY ACQUIRE ADDITIONAL DRUG CANDIDATES OR
DEVELOP OUR CURRENT DRUG CANDIDATES.

      We do not currently intend to engage in drug discovery. Our strategy for
obtaining additional drug candidates is to utilize the relationships of our
management team and scientific consultants to identify drug candidates for
in-licensing from companies, universities, research institutions and other
organizations. We may not succeed in acquiring additional drug candidates on
acceptable terms or at all.

      Because we have engaged and intend to continue to engage third party
contract research organizations and other third parties to help us develop our
drug candidates, many important aspects of our drug development programs have
been and will continue to be outside of our direct control. In addition, the
contract research organizations may not perform all of their obligations under
arrangements with us. If the contract research organizations do not perform
clinical trials in a satisfactory manner or breach their obligations to us, the
development and commercialization of any drug candidate may be delayed or
precluded.

BECAUSE WE MAY NOT BE ABLE TO ATTRACT AND RETAIN KEY PERSONNEL AND ADVISORS, WE
MAY NOT SUCCESSFULLY DEVELOP OUR DRUG CANDIDATES OR ACHIEVE OUR OTHER BUSINESS
OBJECTIVES.

      We are highly dependent on our senior management and scientific staff. The
loss of the services of any member of our senior management or scientific staff
may significantly delay or prevent the achievement of product development and
other business objectives. In order to pursue our drug development programs and
marketing plans, we will need to hire additional qualified scientific and
management personnel. We are currently conducting a search to fill the position
of chief executive officer and it may prove difficult to find an appropriate
person to fill this position. Competition for qualified individuals is intense
and we face competition from numerous pharmaceutical and biotechnology
companies, universities and other research institutions. If we are not able to
attract and retain these individuals we may not be able to successfully
commercialize our drug candidates.

HEALTH CARE REFORM MEASURES AND THIRD PARTY REIMBURSEMENT PRACTICES ARE
UNCERTAIN AND MAY DELAY OR PREVENT THE COMMERCIALIZATION OF OUR DRUG CANDIDATES.

      The efforts of governments and third party payors to contain or reduce the
cost of health care will continue to affect the business and financial condition
of drug companies. A number of legislative and regulatory proposals to change
the health care system have been considered in recent years. In addition, an
increasing emphasis on managed care in the United States has and will continue
to increase pressure on drug pricing. Legislative or regulatory proposals or
changes in managed care systems may be adopted that may have a negative effect
on our business. The announcement and/or adoption of proposals could have an
adverse effect on our ability to earn profits and financial condition. Sales of
prescription drugs depend significantly on the availability of reimbursement to
the consumer from third party payors, such as government and private insurance
plans. These third party payors frequently require that drug companies give them
predetermined discounts from list prices, and they are increasingly challenging
the prices for medical products and services. Present combination treatment
regimens for the treatment of HIV are expensive and costs may increase as new
combinations are developed. These costs have resulted in limitations in the
reimbursement available from third party payors for the treatment of HIV
infection, and we expect these limitations will continue in the future. Third
party payors may not consider products we may bring to the market cost effective
and may not reimburse the consumer sufficiently to allow us to sell our products
on a profitable basis.

IF OUR DRUG CANDIDATES DO NOT ACHIEVE MARKET ACCEPTANCE, OUR BUSINESS MAY NEVER
ACHIEVE PROFITABILITY.

      Our success will depend on the market acceptance of any products we
develop. The degree of market acceptance will depend on a number of factors,
including:

      o     the receipt and scope of regulatory approvals,
      o     the establishment and demonstration in the medical community of the
            safety and effectiveness of our products and their potential
            advantages over existing treatment methods, and
      o     reimbursement policies of government and third party payors.


                                       32
<Page>

      Physicians, patients, payors or the medical community in general may not
accept or utilize any product that we may develop.

WE MAY NOT HAVE ADEQUATE INSURANCE PROTECTION AGAINST PRODUCT LIABILITY.

      Our business exposes us to potential product liability risks that are
inherent in the testing of drug candidates and the manufacturing and marketing
of drug products and we may face product liability claims in the future. We
currently have only limited product liability insurance. We may be unable to
maintain our existing insurance and/or obtain additional insurance in the future
at a reasonable cost or in sufficient amounts to protect against potential
losses. A successful product liability claim or series of claims brought against
us could require us to pay substantial amounts that would decrease our
profitability, if any.

WE MAY INCUR SUBSTANTIAL COSTS RELATED TO OUR USE OF HAZARDOUS MATERIALS.

      We use hazardous materials, chemicals, viruses and various radioactive
compounds in our drug development programs. Although we believe that our
handling and disposing of these materials comply with state and federal
regulations, the risk of accidental contamination or injury still exists. We
could be held liable for any damages or fines that result from any accidental
contamination or injury and the liability could exceed our resources.

OUR CONTROLLING STOCKHOLDERS MAY MAKE DECISIONS YOU DO NOT CONSIDER TO BE IN
YOUR BEST INTEREST.

      As of January 31, 2002, our directors, executive officers and their
affiliates, excluding Abbott and Warburg Pincus Private Equity VIII, L.P., owned
approximately 11.1% of our outstanding common stock. Abbott owned approximately
10.3% of our outstanding common stock and Warburg Pincus owned approximately
30.4% of our outstanding common stock. Under the terms of the Abbott Alliance,
Abbott has the right to purchase additional shares of our common stock up to a
maximum aggregate percentage of 21% of our outstanding common stock and has
rights to purchase shares directly from us in order to maintain its existing
level of ownership. For so long as Warburg Pincus continues to own at least
5,846,222 shares of our common stock and at least 10% of our outstanding common
stock, Warburg Pincus has the right to participate in any sales of equity
securities by Triangle, other than sales in connection with a registered
underwritten offering, a merger or similar transaction or a stock option or
similar plan, in proportion to the percentage of all outstanding securities of
Triangle held by Warburg Pincus at the time of the transaction. Abbott has the
right to designate one person to serve as a member of our Board of Directors and
Warburg Pincus has the right to designate two people to serve as members of our
Board of Directors. As a result, our controlling stockholders are able to
significantly influence all matters requiring stockholder approval, including
the election of directors and the approval of significant corporate
transactions. This concentration of ownership could also delay or prevent a
change in control of Triangle that may be favored by other stockholders.

THE MARKET PRICE OF OUR STOCK MAY FALL AS A RESULT OF MARKET VOLATILITY AND
FUTURE DEVELOPMENTS IN OUR INDUSTRY.

      The market price of our common stock is likely to be volatile and could
fluctuate widely in response to many factors, including:

      o     announcements of the results of clinical trials by us or our
            competitors,
      o     announcements of the timing of regulatory submissions and/or
            approvals by us or our competitors,
      o     developments with respect to patents or proprietary rights,
      o     announcements of technological innovations by us or our competitors,
      o     announcements of new products or new contracts by us or our
            competitors,
      o     actual or anticipated variations in our operating results, including
            targeted cash usage, due to the level of development expenses and
            other factors,
      o     changes in financial estimates by securities analysts and whether
            our earnings meet or exceed analysts' estimates,
      o     conditions and trends in the pharmaceutical and other industries,
      o     new accounting standards,


                                       33
<Page>

      o     general economic, political and market conditions and other factors,
            and
      o     the occurrence of any of the risks described in these "Risk and
            Uncertainties."

      In the past, following periods of volatility in the market price of the
securities of companies in our industry, securities class action law suits have
often been brought against those companies. If we face litigation in the future,
it would result in substantial costs and a diversion of management attention and
resources, which would negatively impact our business.

APPROXIMATELY 32,900,000 SHARES OF OUR COMMON STOCK MAY BE SOLD WITHOUT
RESTRICTION AND APPROXIMATELY 37,360,000 SHARES ARE REGISTERED FOR SALE. SALES
OF A LARGE NUMBER OF OUR SHARES MAY CAUSE OUR STOCK PRICE TO FALL EVEN IF OUR
BUSINESS IS DOING WELL.

      If our stockholders sell a substantial number of shares of our common
stock in the public market, the market price of our common stock could decline.
As of January 31, 2002, there were 76,828,854 shares of common stock
outstanding, of which approximately 32,900,000 were immediately eligible for
resale in the public market without restriction. Holders of approximately
37,360,000 shares have rights to cause us to register their shares for sale to
the public and we have filed registration statements to register the sale of
these shares. In addition, Abbott will have the right on or after June 30, 2002
to cause us to register for resale in the public market the 6,571,428 shares of
common stock purchased at the closing of the Abbott Alliance.

      Declines in our stock price might harm our ability to issue equity or
secure other types of financing arrangements. The price at which we issue shares
is generally based on the market price of our common stock and a decline in our
stock price would result in our needing to issue a greater number of shares to
raise a given amount of funds or acquire a given amount of goods or services.
For this reason, a decline in our stock price might also result in increased
ownership dilution to our stockholders.

PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD DELAY OR PREVENT A
CHANGE IN MANAGEMENT OR A TAKEOVER ATTEMPT THAT YOU CONSIDER TO BE IN YOUR BEST
INTEREST.

      We have adopted a number of provisions that could deter an acquisition of
Triangle which was not approved by our Board of Directors. We have adopted a
preferred stock purchase rights plan, commonly referred to as a "poison pill."
The rights plan is intended to deter an attempt to acquire Triangle in a manner
or on terms not approved by the Board of Directors. The rights plan will not
prevent an acquisition of Triangle which is approved by the Board of Directors.
Our charter authorizes the Board of Directors to determine the terms of any
shares of undesignated preferred stock and issue them without stockholder
approval. The issuance of preferred stock may make it more difficult for a third
party to acquire, or may discourage a third party from acquiring, voting control
of Triangle.

      Provisions in our charter and bylaws, as well as some provisions of
Delaware law could delay or prevent the removal of incumbent directors and could
make more difficult a merger, tender offer or proxy contest involving Triangle,
even if the events could be beneficial to our stockholders. For example, our
bylaws divide the Board of Directors into three classes of directors with each
class serving a three year term. These provisions could also limit the price
that investors might be willing to pay for our common stock.

FORWARD-LOOKING STATEMENTS

      Statements in this Annual Report on Form 10-K regarding the dates on which
we anticipate commencing clinical trials with, or commercializing, our drug
candidates, anticipated developments in the markets for anti-HIV and
anti-hepatitis B drugs, estimated development costs for our drug candidates and
estimates of the date through which we believe our working capital will satisfy
our capital requirements constitute forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. These statements are only predictions and
reflect our current beliefs and expectations. Actual events, results and timing
may differ materially. With respect to the dates on which we anticipate
commencing clinical trials, we have made assumptions regarding, among other
things, the successful and timely completion of preclinical tests, the approval
to conduct clinical trials by the FDA or other regulatory authorities, the
availability of adequate supplies of drug substance, the pace of patient
enrollment and the availability of the capital resources necessary to complete


                                       34
<Page>

preclinical tests and conduct clinical trials. With respect to
commercialization, we have made assumptions regarding, among other things, the
timing of our receipt of FDA marketing approval. With respect to future
developments in the markets for anti-HIV and anti-hepatitis B drugs, our
assumptions include, among other things, that the number of individuals infected
with HIV and hepatitis B will continue to increase, that current therapies will
continue to have only limited effectiveness in controlling the viruses, and that
additional drugs with improved safety or effectiveness will be developed. Our
estimate for the development costs of our drug candidates through regulatory
approval are based on assumptions regarding the number and size of clinical
trials, the cost and time to complete clinical trials, the cost to manufacture
clinical trial materials and the anticipated cost associated with regulatory
filings, among others. Our estimate of the date through which our working
capital will satisfy our capital requirements is based on assumptions regarding,
among other things, the progress of our drug development programs, the magnitude
of these programs, the scope and results of preclinical testing and clinical
trials, the cost, timing and outcome of regulatory reviews, costs under the
license and/or option agreements relating to our drug candidates (including the
costs of obtaining patent protection for our drug candidates), the timing and
the terms of the acquisition of any additional drug candidates, the magnitude of
administrative and legal expenses, the costs of establishing internal capacity
and third party arrangements for sales and marketing functions, the costs of
establishing third party arrangements for manufacturing, changes in interest
rates and foreign currency exchange rates, and losses on our investment
portfolio. Our ability to commence clinical trials on the dates anticipated,
commercialization, developments in the markets for anti-HIV and anti-hepatitis B
drugs, estimates for development costs and the date through which our working
capital will satisfy our capital requirements are subject to numerous risks,
including the risks discussed under the caption "Risk and Uncertainties"
contained elsewhere in this Form 10-K. You should not place undue reliance on
the dates on which we anticipate commencing clinical trials with respect to any
of our drug candidates, anticipated commercialization dates, anticipated
increases in the markets for anti-HIV and anti-hepatitis B drugs, our estimate
for development costs or our estimate of the date through which our working
capital will satisfy our capital requirements. These estimates are based on our
current expectations, which may change in the future due to a large number of
potential events, including unanticipated future developments.


                                       35
<Page>

ITEM 2. PROPERTIES
        ----------

      As of January 1, 2002, we occupied an approximately 101,000 square foot
administrative office and laboratory facility encompassed in two adjacent
buildings in Durham, North Carolina, of which we sublease approximately 21,000
square feet to third parties. We believe our facilities will be adequate to meet
our needs through September 2003 when our lease terminates.

ITEM 3. LEGAL PROCEEDINGS
        -----------------

      From time to time, we may be involved in litigation relating to claims
arising out of our operations in the normal course of business. As of the date
of this Annual Report on Form 10-K, we are not a party to any legal proceedings.
Emory, from which we have licensed several of our drug candidates, is a party to
several opposition proceedings and two lawsuits in Australia regarding certain
of the patents and patent applications related to amdoxovir. We cannot assure
you that Emory will prevail in any of these proceedings and any significant
adverse development with respect to Emory's claims could have a material adverse
effect on us and our ability to commercialize this drug candidate. Emory has
agreed with Shire Pharmaceuticals to the terms of a settlement relating to
Coviracil, though the settlement has not yet been finalized. Any development
adverse to our interests could have a material adverse effect on our future
consolidated financial position, results of operations and cash flow. In
addition, we are obligated to reimburse Emory for certain expenses related to
these proceedings and these expenses could be substantial.

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

a.    A Special Meeting of Stockholders of Triangle Pharmaceuticals, Inc. was
      held on October 10, 2001. The holders of 42,432,747 of the 58,009,920
      shares of Triangle's common stock outstanding on the record date were
      present at the Special Meeting in person or by proxy.

b.    At the Special Meeting, a proposal to approve the terms of the issuance of
      18,673,885 shares of common stock, par value $0.001 per share, in a
      two-stage private placement at a price per share of $2.65 was approved. On
      August 24, 2001, at the first closing of the private placement, Triangle
      issued 9,628,002 shares of common stock to Warburg Pincus Private Equity
      VIII, L.P. Upon the receipt of stockholder approval, Triangle issued an
      additional 18,673,885 shares of common stock in the second closing of the
      private placement to Warburg Pincus and additional investors. The number
      of votes cast for, against and to abstain on the proposal are indicated
      below:

<Table>
<Caption>
             FOR                      AGAINST                  ABSTENTIONS
      ------------------         -----------------         ------------------
<S>                                   <C>                        <C>
          42,159,558                  169,733                    103,456
</Table>

      At the Special Meeting, a proposal to amend Triangle's Second Restated
      Certificate of Incorporation was approved, increasing the number of
      authorized shares of capital stock to 175,000,000 shares of common stock
      and 10,000,000 shares of preferred stock. The number of votes cast for,
      against and to abstain on the proposal are indicated below:

<Table>
<Caption>
             FOR                      AGAINST                  ABSTENTIONS
      ------------------         -----------------         ------------------
<S>                                   <C>                        <C>
          41,808,500                  520,428                    103,819
</Table>


                                       36
<Page>

                                     PART II

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

      (a) Market Price of and Dividends on the Registrant's Common Equity.

      Our common stock is traded on the Nasdaq National Market under the symbol
"VIRS." The following table sets forth the high and low sale prices for the
common stock on the Nasdaq National Market in the last two fiscal years and
through March 20, 2002:

<Table>
<Caption>
                                                           HIGH         LOW
                                                          ------      ------
<S>                                                       <C>         <C>
YEAR ENDED DECEMBER 31, 2000:
1st Quarter............................................   $27.25      $11.50
2nd Quarter............................................    15.00        4.88
3rd Quarter............................................    11.06        5.00
4th Quarter............................................     9.44        4.50

YEAR ENDED DECEMBER 31, 2001:
1st Quarter............................................   $ 8.75      $ 4.50
2nd Quarter............................................     6.45        3.75
3rd Quarter............................................     4.75        2.25
4th Quarter............................................     4.50        2.90

YEAR ENDED DECEMBER 31, 2002:
1st Quarter (through March 20, 2002)...................   $ 5.95      $ 3.60
</Table>

      On March 20, 2002, the last reported sale price of our common stock was
$5.65 per share. As of January 31, 2002, there were approximately 500 holders of
record, and approximately 4,900 beneficial holders of our common stock. We have
never declared or paid any cash dividends on our capital stock. We currently do
not intend to pay any cash dividends on our common stock in the foreseeable
future.


                                       37
<Page>

ITEM 6. SELECTED FINANCIAL DATA
        -----------------------

      The selected consolidated statement of operations data with respect to the
years ended December 31, 2001, 2000, 1999, 1998 and 1997, and the consolidated
balance sheet data at December 31, 2001, 2000, 1999, 1998 and 1997, set forth
below are derived from our consolidated financial statements which have been
audited by PricewaterhouseCoopers LLP, independent accountants. The selected
consolidated financial data set forth below should be read in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" contained in Item 7, and our consolidated financial statements and
the notes thereto contained in Item 8. Historical results are not necessarily
indicative of our future consolidated results.

<Table>
<Caption>
                                                                         YEAR ENDED DECEMBER 31,
                                                    -----------------------------------------------------------------
                                                       2001          2000          1999          1998          1997
                                                    ---------     ---------     ---------     ---------     ---------
                                                                (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                 <C>           <C>           <C>           <C>           <C>
STATEMENT OF OPERATIONS DATA:
Revenue:
  Collaborative revenue ........................    $   5,795     $   7,294     $      --     $      --     $      --

Operating expenses:
  License fees .................................        1,691         4,530         9,965         6,500           610
  Development ..................................       71,601       101,364        85,336        55,117        22,240
  Purchased research and development (1)  ......          320         5,350         1,247            --        11,261
  Selling, general and administrative ..........        8,456        12,900        14,638         9,774         7,071
  Restructuring ................................        2,342            --            --            --            --
                                                    ---------     ---------     ---------     ---------     ---------
    Total operating expenses ...................       84,410       124,144       111,186        71,391        41,182
                                                    ---------     ---------     ---------     ---------     ---------
Loss from operations ...........................      (78,615)     (116,850)     (111,186)      (71,391)      (41,182)
(Loss)gain on investments, net .................         (924)         (334)          (62)           68          (110)
Interest income, net ...........................        3,613         7,659         6,627         4,052         3,624
                                                    ---------     ---------     ---------     ---------     ---------

Net loss .......................................    $ (75,926)    $(109,525)    $(104,621)    $ (67,271)    $ (37,668)
                                                    =========     =========     =========     =========     =========

Basic and diluted net loss per common
  share (2) ....................................    $   (1.40)    $   (2.87)    $   (3.18)    $   (2.93)    $   (2.00)
                                                    =========     =========     =========     =========     =========

Shares used in computing basic and diluted
  net loss per common share (2) ................       54,084        38,118        32,923        22,927        18,871
                                                    =========     =========     =========     =========     =========
</Table>

<Table>
<Caption>
                                                                               DECEMBER 31,
                                                    -----------------------------------------------------------------
                                                       2001          2000          1999          1998          1997
                                                    ---------     ---------     ---------     ---------     ---------
                                                                              (IN THOUSANDS)
<S>                                                 <C>           <C>           <C>           <C>           <C>
BALANCE SHEET DATA:
Cash and cash equivalents ......................    $  64,994     $  14,055     $  58,486     $  77,653     $  34,698
Working capital (3) ............................       54,148        15,727       123,649        79,807        50,247
Investments ....................................       43,161        48,876        99,265        41,039        23,098
Total assets ...................................      114,165        71,061       166,497       124,313        61,878
Long-term debt .................................        1,680            --             9           153           478
Deferred revenue ...............................       18,626        24,420        25,000            --            --
Accumulated deficit during development stage ...     (406,895)     (330,969)     (221,444)     (116,823)      (49,552)
Total stockholders' equity .....................       63,953        13,781       115,273       101,951        52,717
</Table>

----------
(1)   See note 10 of notes to consolidated financial statements for information
      concerning our acquisition of Avid on August 28, 1997. As a result of the
      acquisition, we recorded an in-process research and development charge of
      approximately $11.3 million in 1997, an additional charge of $1.2 million
      in 1999, an additional charge of $5.4 million in 2000 and an additional
      charge of $320,000 in 2001. The operating results of Avid have been
      included in our consolidated financial statements from the date of the
      acquisition.

(2)   See note 1 of notes to consolidated financial statements for information
      concerning the computation of basic and diluted net loss per common share
      and shares used in computing net loss per common share.

(3)   Working capital represents the difference between our current assets and
      current liabilities.


                                       38
<Page>

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

THIS ANNUAL REPORT ON FORM 10-K MAY CONTAIN PROJECTIONS, ESTIMATES AND OTHER
FORWARD-LOOKING STATEMENTS THAT INVOLVE A NUMBER OF RISKS AND UNCERTAINTIES,
INCLUDING THOSE DISCUSSED ABOVE AT "ITEM 1. BUSINESS--RISK AND UNCERTAINTIES"
AND "ITEM 1. BUSINESS--RISK AND UNCERTAINTIES--FORWARD-LOOKING STATEMENTS."
WHILE THIS OUTLOOK REPRESENTS MANAGEMENT'S CURRENT JUDGMENT ON THE FUTURE
DIRECTION OF THE BUSINESS, THESE RISKS AND UNCERTAINTIES COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM ANY FUTURE PERFORMANCE SUGGESTED BELOW. WE
UNDERTAKE NO OBLIGATION TO RELEASE PUBLICLY THE RESULTS OF ANY REVISIONS TO
THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES ARISING
AFTER THE DATE HEREOF.

OVERVIEW

      Triangle is engaged in the development of new drug candidates primarily
for serious viral diseases. Since our inception on July 12, 1995, our operating
activities have related primarily to developing our drug candidates, raising
working capital, negotiating license and option arrangements for our drug
candidates and recruiting personnel. We have not received any revenues from the
sale of products and do not believe it likely that any of our drug candidates
will be commercially available before the year 2003. As of December 31, 2001,
our accumulated deficit was approximately $406.9 million.

      We require substantial working capital to fund the development and
potential commercialization of our drug candidates. We will require significant
expenditures to fund preclinical testing, clinical research studies, drug
synthesis and manufacturing, license obligations, development of a sales and
marketing infrastructure and ongoing administrative support before receiving
regulatory approvals for our drug candidates. These approvals may be delayed or
not granted at all. We have been unprofitable since our inception and expect to
incur substantial losses for the next several years. Because of the nature of
our business, we expect that losses will fluctuate from period to period and
that fluctuations may be substantial.

      You should consider the operating and financial risks associated with drug
development activities when evaluating our prospects. To address these risks we
must, among other things, successfully develop and commercialize our drug
candidates, secure and maintain all necessary proprietary rights, respond to a
rapidly changing competitive market, obtain additional financing and continue to
attract, retain and motivate qualified personnel. We cannot assure you that we
will be successful in addressing these risks.

      Our operating expenses are difficult to predict and will depend on several
factors. Development expenses, including expenses for drug synthesis and
manufacturing, preclinical testing and clinical research activities, will depend
on the ongoing requirements of our drug development programs, availability of
capital and direction from regulatory agencies, which are difficult to predict.
Management may in some cases be able to control the timing of development
expenses in part by accelerating or decelerating preclinical testing and
clinical trial activities, but many of these expenditures will occur
irrespective of whether our drug candidates are approved when anticipated or at
all. As a result of these factors, we believe that period to period comparisons
are not necessarily meaningful and you should not rely on them as an indication
of future performance. Due to all of the foregoing factors, it is possible that
our consolidated operating results will be below the expectations of market
analysts and investors. In such event, the prevailing market price of our common
stock could be materially adversely affected.

RESULTS OF OPERATIONS

COLLABORATIVE REVENUE

      Collaborative revenue totaled $5.8 million in 2001 as compared to $7.3
million in 2000 and no revenue in 1999. Revenue in 2001 and 2000 is solely
related to $31.7 million of gross non-contingent research and development
expense reimbursements associated with the Abbott Alliance, which is being
amortized over the anticipated research and development arrangement period. The
decrease in revenue in 2001, as compared to 2000, reflects an extension of the
research and development period in which these reimbursements are to be
recognized.


                                       39
<Page>

LICENSE FEES

      License fees totaled $1.7 million in 2001, compared to $4.5 million in
2000 and $10.0 million in 1999. License fees in 2001 and 2000 related to the
recognition of milestone obligations and preservation fees under our license
agreements and license or option agreement initiation and/or preservation fees
for several of our drug candidates. License fees in 1999 related to achievement
of milestone obligations, license fees associated with the license and
settlement agreements with Glaxo on the use of emtricitabine to treat hepatitis
B, and license preservation fees for our drug candidate portfolio. The decrease
in 2001, as compared to 2000 and 1999, is related to the timing and magnitude of
milestone obligations, the magnitude of license or option preservation payments,
the timing of license initiation fees, and the termination of several licensing
arrangements associated with our portfolio of drug candidates. Future license
fees may consist of milestone payments or annual preservation payments under
existing licensing arrangements, the amount of which could be substantial and
the timing of which will depend on a number of factors that we cannot predict.
These factors include, among others, the success of our drug development
programs and the extent to which we may in-license additional drug candidates.

DEVELOPMENT EXPENSES

      Development expenses totaled $71.6 million in 2001, compared to $101.4
million in 2000 and to $85.3 million in 1999. Development expenses in 2001 were
primarily for drug synthesis and manufacturing, clinical trials, employee
compensation, consulting, patent related activity and preclinical testing.
Development expenses in 2000 were primarily for drug synthesis and
manufacturing, clinical trials, employee compensation, preclinical testing and
consulting. Development expenses in 1999 were primarily for drug synthesis and
manufacturing, preclinical testing, clinical trials, employee compensation and
consulting expenses. The decrease in 2001 development expenses as compared to
2000 and 1999 is due to the reduced development activities for Coactinon and
mozenavir dimesylate, and less development expense on Coviracil, due to
decreased manufacturing and clinical costs, as we approached completion of our
Phase III program. In addition, there was an overall reduction in indirect
development expenses correlating with decreased Coviracil, Coactinon and
mozenavir dimesylate project spending as well as our corporate restructuring
that occurred in August 2001. While overall 2001 development expenses decreased
from 2000, development spending on amdoxovir, clevudine, and ISS increased as
these projects are evolving into later and more costly stages of development.

      The termination of our license agreements for Coactinon in January 2002,
mozenavir dimesylate in November 2001, and the license and collaboration
agreement with Arrow in September 2001 eliminates any future license, milestone,
royalty, patent and development obligations to the respective licensors in the
underlying license and/or collaboration agreements. In addition, we are in the
process of terminating all development activities associated with those
initiatives.

Development expenses by major project for fiscal 2001 and 2000 are shown below
(dollars in thousands).

<Table>
<Caption>
-----------------------------------------------------------------------------------------------------------------------------
                  COMPOUND                     INDICATION    2001 COSTS       %   2000 COSTS        %    DIFFERENCE        %
-----------------------------------------------------------------------------------------------------------------------------
<S>                                            <C>            <C>           <C>    <C>            <C>    <C>             <C>
Coviracil                                      HIV            $ 23,700       33    $ 48,152        47    $(24,452)       (51)
-----------------------------------------------------------------------------------------------------------------------------
Amdoxovir                                      HIV              11,598       16       7,649         8       3,949         52
-----------------------------------------------------------------------------------------------------------------------------
Clevudine                                      Hepatitis B       2,391        3       1,775         2         616         35
-----------------------------------------------------------------------------------------------------------------------------
Emtricitabine                                  Hepatitis B       4,348        6       3,036         3       1,312         43
-----------------------------------------------------------------------------------------------------------------------------
ISS                                            Hepatitis B       2,063        3         752         1       1,311        174
-----------------------------------------------------------------------------------------------------------------------------
Coactinon                                      HIV               4,854        7      12,525        12      (7,671)       (61)
-----------------------------------------------------------------------------------------------------------------------------
Mozenavir dimesylate(1)                        HIV                 353        1       2,136         2      (1,783)       (83)
-----------------------------------------------------------------------------------------------------------------------------
Other drug candidates                                            1,247        2         938         1         309         33
-----------------------------------------------------------------------------------------------------------------------------
Indirect (unallocated) development costs                        21,047       29      24,401        24      (3,354)       (14)
-----------------------------------------------------------------------------------------------------------------------------
Total                                                         $ 71,601      100    $101,364       100    $(29,763)       (29)
-----------------------------------------------------------------------------------------------------------------------------
</Table>

(1) Excludes all purchased research and development expenses, which are solely
related to mozenavir dimesylate.


                                       40
<Page>

      We believe our 2002 development expenses may be slightly below those of
2001. Our future development expenses, however, will depend on the results and
magnitude of our clinical and preclinical activities, our targeted future cash
usage, availability of capital to simultaneously fund multiple drug candidate
development programs and requirements imposed by regulatory agencies.
Accordingly, our development expenses may fluctuate significantly from period to
period. In addition, if we in-license or out-license rights to drug candidates
our development expenses may fluctuate significantly from prior periods.

PURCHASED RESEARCH AND DEVELOPMENT EXPENSE

      Purchased research and development expense totaled $320,000 in 2001, $5.4
million in 2000 and $1.2 million in 1999. Purchased research and development
expense in 2001, 2000, and 1999 relates to the issuance of 100,000, 400,000 and
100,000 shares of our common stock, respectively, as consideration to the former
Avid shareholders for milestone obligations associated with our development of
mozenavir dimesylate. These in-process research and development charges are
based upon the fair market value of our common stock at the date on which an
obligation to the former Avid shareholders existed. The 2001 issuance of 100,000
shares satisfies all current and any future obligations for contingent
development milestones for mozenavir dimesylate. However, there remains a
contingency for the issuance of 250,000 shares of common stock if development
milestones are achieved regarding compounds for the treatment of hepatitis B,
although we are not currently developing these compounds. Issuance of any
additional contingent shares would be recorded as additional purchase price and
will be allocated on resolution of the underlying contingency.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

      Selling, general and administrative expenses totaled $8.5 million in 2001,
compared to $12.9 million in 2000 and $14.6 million in 1999. Selling, general
and administrative expenses in 2001 and 2000 consisted primarily of employee
compensation, third party marketing, legal, investor relations and other
professional services and rent expense. Selling, general and administrative
expenses in 1999 consisted primarily of third party marketing, legal, investor
relations and other professional services, employee compensation and rent
expense. The decrease in 2001 as compared to 2000 and 1999, is due to a
reduction in 2001 sales and marketing expenses, as well as reduced employee
compensation and related expenses which resulted from our August 2001
restructuring. Our selling, general and administrative expenses may fluctuate
from period to period and such fluctuations may be significant. Future selling,
general and administrative expenses will depend on the level of our future
development and commercialization activities and the commercial availability of
our products. We expect that our selling, general and administrative expenses
will increase in future periods that immediately precede and follow our first
product launch.

RESTRUCTURING EXPENSE

      Restructuring expense totaled $2.3 million in 2001 as compared to no
expense in 2000 and 1999. In August 2001, we announced and initiated a
restructuring of our development activities and overall operations designed to
lower our near-term monthly cash usage and to focus our financial and human
resources on activities that are expected to have the highest probability of
near-term regulatory approval and economic return. This focus included a
significant reduction in headcount, weighting our resources towards our drug
candidates in Phase III development, eliminating most resources dedicated to
basic research, and reducing resources dedicated to sales, marketing and general
administration.

LOSS ON INVESTMENTS, NET

      Loss on investments totaled $924,000 in 2001, compared to $334,000 in 2000
and $62,000 in 1999. Realized losses on our investment portfolio represent a
write-down of our strategic investment in 2001, and normal realized losses on
our general investment portfolio in 2000 and 1999. Generally, we hold
investments until they mature and, typically, do not incur significant realized
gains or losses on our portfolio. In 2001, we recorded a $1.0 million loss on
our strategic investment in Dynavax based upon the underlying estimated fair
market value of the investment.


                                       41
<Page>

INTEREST INCOME, NET

      Net interest income totaled $3.6 million in 2001, compared to $7.7 million
in 2000 and $6.6 million in 1999. The significant decrease in interest income in
2001, as compared to 2000 and 1999, is due to lower short-term, low-risk
interest rates and smaller average investment balances. Future interest income
will depend on our future cash and investment balances and the return on these
investments.

LIQUIDITY AND CAPITAL RESOURCES

      We have financed our operations since inception (July 12, 1995) primarily
with the net proceeds received from private placements of equity securities,
which have provided aggregate net proceeds of approximately $353.1 million, and
from public offerings of common stock, which have provided aggregate net
proceeds of approximately $97.7 million, as well as $31.5 million of net
non-contingent research and development reimbursement proceeds from the Abbott
Alliance.

      At December 31, 2001, we had net working capital of $54.1 million, an
increase of approximately $38.4 million over December 31, 2000. The increase in
working capital is principally the result of three separate private equity
financings, partially offset by use of funds for our normal operating expenses.
In 2001, we raised $124.9 million of net proceeds from equity financings. Our
principal sources of liquidity at December 31, 2001 were $65.0 million in cash
and cash equivalents, $42.2 million in investments which are considered
"available-for-sale," and $1.0 million of strategic corporate investments,
reflecting a $45.2 million increase of cash, cash equivalent and investment
balances over those at December 31, 2000.

      As part of our drug development strategy, we outsource significant amounts
of our preclinical and clinical programs and the manufacture of drug substance
used in those programs. Accordingly, we have entered into contractual
arrangements with selected third parties to provide these services. At December
31, 2001, we estimate the contractual commitment related to preclinical and
clinical testing to be approximately $20.6 million and the contractual
commitment to provide drug manufacturing to be approximately $5.0 million. These
estimates may change in the future depending on the outcome of several
project-related variables. Also at December 31, 2001, we have future contractual
commitments to repay $3.1 million of corporate debt obligations and $3.3 million
of lease obligations for our administrative office and laboratory facilities.

      Our working capital requirements may fluctuate in future periods depending
on many factors, including the efficiency of manufacturing processes developed
on our behalf by third parties, the cost of drugs supplied by third party
contractors (including Abbott), the magnitude, scope and timing of our drug
development programs, the cost, timing and outcome of regulatory reviews and
changes in regulatory requirements, costs under the license and/or option
agreements relating to our drug candidates, including the costs of obtaining
patent protection for our drug candidates, the timing and terms of business
development activities related to current and new drug candidates, the rate of
technological advances relevant to our operations, the timing, method and cost
of the commercialization of our drug candidates, the level of required
administrative and legal support, the availability of capital to support
multiple drug candidate development programs and the potential expansion of
facility space.

      Amounts payable by us in the future under our existing license and
research agreements are uncertain due to a number of factors, including the
progress of our drug development programs, our ability to obtain regulatory
approval to commercialize drug candidates and the commercial success of approved
drugs. Our existing license and research agreements, excluding any obligations
associated with Coactinon which was formally terminated in January 2002, may
require future cash payments of up to $57.3 million contingent on the
achievement of development milestones, up to $30.0 million on the achievement of
sales milestones, and $2.2 million of future research and development payments.
We are also obligated to issue 250,000 shares of common stock if development
milestones are achieved regarding compounds for the treatment of hepatitis B
obtained in the Avid acquisition, although we are not currently developing these
compounds. Additionally, we are obligated to pay royalties of 7.5% to 22% of net
sales of each licensed product incorporating drug candidates currently in our
portfolio. Most of our license agreements require minimum royalty payments
commencing three years after regulatory approval of the licensed compound.
Depending on our success and timing in obtaining regulatory approval, aggregate
annual minimum royalties and license preservation fees under our existing
license agreements could range from $50,000 if only a single drug candidate is
approved for one indication, to $47.0 million if all drug candidates are
approved for


                                       42
<Page>

all indications. In addition, we have license and collaboration agreements that
allow us to obtain licenses on additional drug candidates in the future. If
these collaborative arrangements identify additional drug candidates, our
license obligations would increase.

      We believe that our existing cash, cash equivalents and investments will
be adequate to satisfy our anticipated working capital requirements through the
second quarter of 2003. We are targeting a 2002 cash usage, excluding the effect
of any additional financings, of approximately $61 million. However, we expect
that we will be required to raise additional capital to fund our future
operations through equity or debt financings or from other sources. Our future
financing needs will depend on the results of clinical trials, size of drug
candidate portfolio, timing of regulatory filings and approvals, commercial
potential of our drug candidates and our ability to successfully commercialize
our drug candidates. We may also consider modifying the timing or scope of our
clinical programs or out-licensing one or more of our compounds which may impact
our anticipated capital requirements. Additional funding may not be available on
favorable terms from any of these sources or at all. Our ability to achieve our
cash usage target is subject to several risks including unanticipated cost
overruns, the need to expand the magnitude or scope of existing development
programs, the need to change the number or timing of clinical trials,
unanticipated regulatory requirements and other factors described under the
caption "Risk and Uncertainties" elsewhere in this Form 10-K.

EQUITY FINANCINGS

      In 2001, we completed three private equity financings which yielded $133.2
million in gross proceeds and significantly enhanced our liquidity and financial
position as we prepare for a third quarter 2002 Coviracil NDA submission for the
treatment of HIV. On March 1, 2001, we completed a private placement sale of 7.7
million shares of our common stock at $6.00 per share for net proceeds totaling
approximately $43.5 million to a limited number of qualified institutional
buyers and large institutional accredited investors. Abbott and QFinance, Inc.,
related parties of Triangle, participated in this financing. We completed the
sale of 200,000 shares of convertible Series B preferred stock for $60.00 per
share in a private offering to a small number of qualified institutional buyers
and large institutional accredited investors on March 9, 2001. This sale yielded
net proceeds of approximately $10.9 million. On May 18, 2001, our stockholders
approved the issuance of the Series B preferred stock, which triggered the
conversion of each preferred share into ten shares of our common stock. As part
of this transaction, we filed a registration statement covering the resale of
these common shares, which the Securities and Exchange Commission declared
effective on July 11, 2001.

      On August 24, 2001, we entered into a purchase agreement with Warburg
Pincus for the sale of 28,301,887 shares of common stock in a two-stage private
placement at a purchase price of $2.65 per share. On the same day, we issued
9,628,002 shares of common stock in the first closing of the private placement
for net proceeds totaling approximately $24.0 million. On October 10, 2001, the
second closing occurred, resulting in net proceeds totaling approximately $46.6
million from the sale of an additional 13,756,885 shares of our common stock to
Warburg Pincus and an additional 4,917,000 shares of common stock to other
investors. In the purchase agreement with Warburg Pincus, we agreed to register
the shares of common stock sold in both closings, agreed to cause two
individuals nominated by Warburg Pincus to be appointed to the Board of
Directors, and granted Warburg Pincus rights to participate in certain future
sales of common stock. Accordingly, we filed a registration statement with the
Securities and Exchange Commission on October 18, 2001 covering the resale of
28,301,887 shares of common stock by Warburg Pincus and the other investors in
the October private placement; two additional directors affiliated with Warburg
Pincus were elected to the Board of Directors; and Warburg Pincus has the right
to participate proportionally in future equity financings, as long as Warburg
Pincus owns approximately 5,846,000 shares of our outstanding common stock. The
Securities and Exchange Commission declared the registration statement effective
on February 13, 2002.

TERMINATED AGREEMENTS

      In conjunction with our restructuring and cash conservation initiatives,
we performed a critical evaluation of our development activities and projects,
which resulted in the termination of several license and collaboration
agreements. The elimination of these development projects was designed to
eliminate financial and human resources dedicated to basic research and to focus
our available resources on development initiatives we believe to have the
highest probability for success and most immediate economic return. In September
2001, we terminated


                                       43
<Page>

our licensing and collaborative agreement with Arrow. This collaboration had
been established to identify and develop novel antiviral agents for the
treatment of hepatitis C and required us to fund the screening program and to
pay development milestones and royalty payments on sales of products which
resulted from this collaboration. In November 2001, we terminated our licensing
agreement with The DuPont Pharmaceuticals Company for worldwide rights to
mozenavir dimesylate for use in the HIV field. Termination of this license
eliminated any future commitments to pay development milestones, patent and
royalty payments for mozenavir dimesylate. In January 2002, we terminated our
licensing agreement with Mitsubishi for worldwide rights, with the exception of
Japan, to Coactinon for use in the HIV field. Termination of this license
eliminated any future commitments to pay development milestones and royalty
payments for Coactinon. We are in the process of terminating, or have
terminated, all development activities associated with these initiatives.

      Additionally, in October 2001, we terminated a $100.0 million Firm
Underwritten Equity Facility that provided us the ability to sell our common
stock in the public market. We terminated this arrangement because of the added
liquidity provided by the financing led by Warburg Pincus.

LITIGATION AND OTHER CONTINGENCIES

      As discussed in note 14 of the Notes to Consolidated Financial Statements,
we are indirectly involved in several patent opposition and adversarial
proceedings and two lawsuits filed in Australia regarding the patent rights
related to our licensed drug candidate, amdoxovir. Although we are not a named
party in any of these proceedings, we are obligated to reimburse our licensors
for legal expenses associated with these proceedings. In one of these patent
opposition proceedings, on November 8, 2000, the Australian Patent Office held
that several patent claims of Emory directed to amdoxovir are not patentable
over an earlier Shire Pharmaceuticals patent. Emory has appealed this decision
of the Australian Patent Office to the Australian Federal Court. If Emory, the
University of Georgia or Triangle is unsuccessful in the appeal, then we will
not be able to sell amdoxovir in Australia without a license from Shire
Pharmaceuticals, which may not be available on reasonable terms or at all. We
cannot predict the outcome of this or any of the other proceedings. We believe
that an adverse judgment rendered against us would not result in a material
financial obligation, nor would we have to recognize an impairment under
Statement of Financial Accounting Standards, SFAS, No. 121 "ACCOUNTING FOR
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF" (as
amended by SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF
LONG-LIVED ASSETS) as no amounts have been capitalized related to this drug
candidate. However, any development in these proceedings adverse to our
interests, including any adverse development related to the patent rights
licensed to us for this drug candidate or our related rights or obligations,
could have a material adverse effect on our future operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

      Our consolidated financial statements, which have been prepared in
accordance with generally accepted accounting principles, require us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues, expenses and related disclosure of contingent assets and liabilities.
We evaluate our estimates, judgments and the policies underlying these estimates
on a periodic basis as the situation changes, and regularly discuss financial
events, policies, and issues with members of our audit committee and our
independent accountants. We routinely evaluate our estimates and policies
regarding clinical trial, preclinical and manufacturing liabilities; patent
related liabilities; license milestone obligations; revenue recognition;
inventory; intangible assets and deferred tax assets.

      We generally enter into contractual agreements with third-party vendors to
provide clinical, preclinical and manufacturing services in the ordinary course
of business. Many of these contracts are subject to milestone based invoicing
and the contract could extend over several years. We record liabilities under
these contractual commitments when we determine an obligation has been incurred,
regardless of the timing of the invoice. Patent related and license milestone
liabilities are recorded based upon various assumptions or events that we
believe are the most reasonable to each individual circumstance, as well as
based upon historical experience. License milestone liabilities and the related
expense are recorded when the milestone criterion achievement or license
preservation payment is probable. We have not recognized any assets for
inventory, intangible items or deferred taxes as we have yet to receive
regulatory approval for any of our drug candidates. Any potential asset that
could be recorded in regards to any of these items is fully reserved. We
currently recognize revenue based upon the amortization of non-contingent
reimbursed research and development payments that have been received in
accordance with terms of the


                                       44
<Page>

Abbott Alliance. The amortization period in which we recognize this revenue is
based upon the estimated time period to submit all drug candidates under the
Abbott Alliance for regulatory approval. This amortization period is
periodically evaluated and adjusted.

      In all cases, actual results may differ from our estimates under different
assumptions or conditions.

SUBSEQUENT EVENT

      In January 2002, our Chief Executive Officer and Chairman of the Board,
Dr. David W. Barry, died unexpectedly. The Board of Directors is currently
conducting a search for a qualified replacement. Additionally, we have filed a
claim under a keyman insurance policy and expect a $10.0 million settlement in
the first quarter of 2002.

RECENT ACCOUNTING PRONOUNCEMENTS

      In July 2001, the Financial Accounting Standards Board, FASB, issued SFAS
No. 141, "BUSINESS COMBINATIONS" and SFAS No. 142, "GOODWILL AND OTHER
INTANGIBLE ASSETS." SFAS No. 141 eliminates the pooling-of-interests method of
accounting for business combinations except for qualifying business combinations
that were initiated prior to July 1, 2001. SFAS No. 142 changes the accounting
for goodwill and indefinite lived intangible assets from an amortization method
to an impairment-only approach.

      In August 2001, the FASB issued SFAS No. 143, "ACCOUNTING FOR ASSET
RETIREMENT OBLIGATIONS." The objectives of SFAS No. 143 are to establish
accounting standards for the recognition and measurement of an asset retirement
obligation and its associated asset retirement cost. In October 2001, the FASB
issued SFAS No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS." This statement supersedes SFAS No. 121, "ACCOUNTING FOR THE IMPAIRMENT
OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF" and Accounting
Principles Board Opinion No. 30, "REPORTING THE RESULTS OF OPERATIONS -
REPORTING THE EFFECTS OF DISPOSAL OF A SEGMENT OF BUSINESS, AND EXTRAORDINARY,
UNUSUAL AND INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS."

      We adopted SFAS No. 142 and 144 as of January 1, 2002, and intend to adopt
SFAS No. 143 as of January 1, 2003, as required. Adoption of SFAS Nos. 141, 142,
143 and 144 are not expected to have a significant impact on our consolidated
financial position, results of operations or cash flows.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
         ----------------------------------------------------------

      Triangle is exposed to various market risks, including changes in foreign
currency exchange rates, investment market value and interest rates. Market risk
is the potential loss arising from adverse changes in market rates and prices,
such as foreign currency exchange and interest rates. We may enter into forward
foreign currency contracts or purchase investments in foreign currencies to
hedge foreign currency commitments. We have, however, established policies and
procedures for market risk assessment and the approval, reporting and monitoring
of derivative financial instrument activities. The following discusses our
exposure to risks related to changes in interest rates, foreign currency
exchange rates and investment market value.

INTEREST RATE SENSITIVITY

      Triangle is subject to interest rate risk on its investment portfolio. We
maintain an investment portfolio consisting primarily of high quality money
market instruments, and government and corporate bonds. Our portfolio has a
current average maturity of less than 12 months. We attempt to mitigate default
risk by investing in high credit quality securities and by monitoring the credit
rating of investment issuers. Our investment portfolio includes only marketable
securities with active secondary or resale markets to help ensure portfolio
liquidity and we have implemented guidelines limiting the duration of
investments. These available-for-sale securities are subject to interest rate
risk and will decrease in value if market interest rates increase. If market
rates were to increase by 10 percent from levels at December 31, 2001, we expect
that the fair value of our investment portfolio would decline by an immaterial
aggregate amount primarily due to the relatively short maturity of the
portfolio. At December 31, 2001, our portfolio consisted of approximately $21.3
million of investments maturing within one year and approximately $20.9 million
of investments maturing after one year but within 30 months. Additionally, we


                                       45
<Page>

generally have the ability to hold our fixed income investments to maturity and
therefore do not expect that our consolidated operating results, financial
position or cash flows will be affected by a significant amount due to a sudden
change in interest rates.

FOREIGN CURRENCY EXCHANGE RISK

      The majority of our transactions occur in U.S. dollars and we do not have
subsidiaries or investments in foreign countries. Therefore, we are not subject
to significant foreign currency exchange risk. We have, however, established
policies and procedures for market risk assessment, including a foreign
currency-hedging program. The goal of our hedging program is to establish fixed
exchange rates on firm foreign currency cash outflows and to minimize the impact
to Triangle of foreign currency fluctuations. These policies specifically
provide for the hedging of firm commitments and prohibit the holding of
derivative instruments for speculative or trading purposes. At December 31,
2001, we had no forward foreign currency contracts, but had investments in
foreign currencies totaling approximately $250,000 used to hedge foreign
currency commitments. The purchase and the holding of foreign currencies are
governed by established corporate policies and procedures and are entered into
when management determines this methodology to be in our best interests. These
investments are subject to both foreign currency risk and interest rate risk.
The hypothetical loss associated with a 10 percent devaluation of these foreign
currencies would not materially affect our consolidated operating results,
financial position or cash flow.

STRATEGIC INVESTMENT RISK

      In addition to our normal investment portfolio, we have a strategic
investment in Dynavax valued at $1.0 million. This investment represents
unregistered preferred stock and is subject to higher investment risk than our
normal investment portfolio due to the lack of an active resale market for the
investment. In 2001, we recorded a $1.0 million loss based upon the underlying
estimated fair market value of our Dynavax investment.


                                       46
<Page>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
        -------------------------------------------

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

                                                                         PAGE
                                                                         ----

Report of Independent Accountants.......................................   48

Consolidated Balance Sheets as of December 31, 2001 and 2000............   49

Consolidated Statements of Operations for the years ended December 31,
     2001, 2000, 1999 and the period from inception (July 12, 1995)
     through December 31, 2001..........................................   50

Consolidated Statements of Cash Flows for the years ended December 31,
     2001, 2000, 1999 and the period from inception (July 12, 1995)
     through December 31, 2001..........................................   51

Consolidated Statements of Stockholders' Equity for the period
     from inception (July 12, 1995) through December 31, 2001........... 52-53

Notes to Consolidated Financial Statements..............................   54


                                       47
<Page>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
of Triangle Pharmaceuticals, Inc.

      In our opinion, the accompanying consolidated balance sheets and the
related consolidated statements of operations, of cash flows and of
stockholders' equity present fairly, in all material respects, the financial
position of Triangle Pharmaceuticals, Inc. and its subsidiary, a development
stage company, (the "Company") at December 31, 2001 and 2000, and the results of
their operations and their cash flows for each of the three years in the period
ended December 31, 2001 and the period from inception (July 12, 1995) through
December 31, 2001, in conformity with accounting principles generally accepted
in the United States of America. 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 of these statements in accordance with auditing standards generally
accepted in the United States of America which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.


/s/ PricewaterhouseCoopers LLP

Raleigh, North Carolina
February 8, 2002


                                       48
<Page>
                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                           CONSOLIDATED BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<Table>
<Caption>
                                                                                     DECEMBER 31,
                                                                               -----------------------
ASSETS                                                                            2001          2000
------                                                                         ---------     ---------
<S>                                                                            <C>           <C>
Current assets:
     Cash and cash equivalents ............................................    $  64,994     $  14,055
     Investments ..........................................................       21,280        39,472
     Interest receivable ..................................................          798         1,081
     Receivable from collaborative partner ................................          480           413
     Prepaid expenses .....................................................          641           543
                                                                               ---------     ---------
        Total current assets ..............................................       88,193        55,564
                                                                               ---------     ---------
Property, plant and equipment, net ........................................        4,091         6,093
Investments ...............................................................       21,881         9,404
                                                                               ---------     ---------

        Total assets ......................................................    $ 114,165     $  71,061
                                                                               =========     =========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities:
     Accounts payable .....................................................    $  11,884     $   9,580
     Payable to collaborative partner .....................................        2,645         6,005
     Debt-current .........................................................        1,454             7
     Accrued expenses .....................................................       13,923        17,268
     Deferred revenue .....................................................        4,139         6,977
                                                                               ---------     ---------
        Total current liabilities .........................................       34,045        39,837
Debt-noncurrent ...........................................................        1,680            --
Deferred revenue ..........................................................       14,487        17,443
                                                                               ---------     ---------
        Total liabilities .................................................       50,212        57,280
                                                                               ---------     ---------
Commitments and contingencies (See notes 1, 3, 5, 8, 10, 14 and 16) .......           --            --
Stockholders' equity:
     Convertible Preferred Stock, $0.001 par value; 10,000 shares
        authorized; 0 shares issued and outstanding .......................           --            --
     Common Stock, $0.001 par value; 175,000 shares authorized;
        76,829 and 38,529 shares issued and outstanding, respectively .....           77            39
     Additional paid-in capital ...........................................      470,478       344,550
     Accumulated deficit during development stage .........................     (406,895)     (330,969)
     Accumulated other comprehensive income ...............................          293           161
                                                                               ---------     ---------
        Total stockholders' equity ........................................       63,953        13,781
                                                                               ---------     ---------

        Total liabilities and stockholders' equity ........................    $ 114,165     $  71,061
                                                                               =========     =========
</Table>

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


                                       49
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                                                                                   PERIOD FROM
                                                                                                    INCEPTION
                                                           YEAR ENDED DECEMBER 31,               (JULY 12, 1995)
                                               ----------------------------------------------        THROUGH
                                                   2001             2000             1999       DECEMBER 31, 2001
                                               ------------     ------------     ------------     ------------
<S>                                            <C>              <C>              <C>              <C>
Revenue:
  Collaborative revenue ...................    $      5,795     $      7,294     $         --     $     13,089

Operating expenses:
  License fees ............................           1,691            4,530            9,965           26,563
  Development .............................          71,601          101,364           85,336          340,624
  Purchased research and development ......             320            5,350            1,247           18,178
  Selling, general and administrative .....           8,456           12,900           14,638           57,402
  Restructuring ...........................           2,342               --               --            2,342
                                               ------------     ------------     ------------     ------------
    Total operating expenses ..............          84,410          124,144          111,186          445,109
                                               ------------     ------------     ------------     ------------
Loss from operations ......................         (78,615)        (116,850)        (111,186)        (432,020)
Loss on investments, net ..................            (924)            (334)             (62)          (1,361)
Interest income, net ......................           3,613            7,659            6,627           26,486
                                               ------------     ------------     ------------     ------------

Net loss ..................................    $    (75,926)    $   (109,525)    $   (104,621)    $   (406,895)
                                               ============     ============     ============     ============

Basic and diluted net loss per common
  share ...................................    $      (1.40)    $      (2.87)    $      (3.18)
                                               ============     ============     ============

Shares used in computing basic and
  diluted net loss per common share .......          54,084           38,118           32,923
                                               ============     ============     ============
</Table>

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


                                       50
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<Table>
<Caption>
                                                                                                             PERIOD FROM
                                                                                                              INCEPTION
                                                                    YEAR ENDED DECEMBER 31,                (JULY 12, 1995)
                                                         ----------------------------------------------        THROUGH
                                                             2001             2000             1999       DECEMBER 31, 2001
                                                         ------------     ------------     ------------   -----------------
<S>                                                      <C>              <C>              <C>              <C>
Cash flows from operating activities:
Net loss ............................................    $    (75,926)    $   (109,525)    $   (104,621)    $   (406,895)
Adjustments to reconcile net loss to net
  cash used by operating activities:
  Depreciation and amortization .....................           1,917            1,804            1,292            6,326
  Loss(gain) from disposal of property, plant
    and equipment ...................................             223                4              (73)             163
  Loss on investments ...............................             924              334               62            1,361
  Purchased research and development ................             320            5,350            1,247           18,178
  Stock-based compensation ..........................             183              348              200            2,070
  Change in assets and liabilities:
    Receivables .....................................             216              969           (1,851)          (1,278)
    Prepaid expenses ................................             (98)              12              214             (641)
    Accounts payable ................................          (1,056)           4,090             (283)          14,529
    Accrued expenses ................................          (3,345)           2,681            4,561           13,923
    Deferred revenue ................................          (5,794)            (580)          25,000           18,626
                                                         ------------     ------------     ------------     ------------
Net cash used by operating activities ...............         (82,436)         (94,513)         (74,252)        (333,638)
                                                         ------------     ------------     ------------     ------------
Cash flows from investing activities:
  Sale of restricted deposits .......................              --               27               49               --
  Purchase of investments ...........................         (35,762)         (90,223)        (102,126)        (346,271)
  Proceeds from sale and maturity of investments ....          40,685          140,574           43,685          302,042
  Proceeds from sale of property, plant and
    equipment .......................................             322               40              309              674
  Purchase of property, plant and equipment .........            (460)          (2,240)          (3,065)         (11,079)
  Acquisition of Avid Corporation, net of cash
    acquired ........................................              --               --               --           (3,053)
                                                         ------------     ------------     ------------     ------------
Net cash provided (used) by investing activities ....           4,785           48,178          (61,148)         (57,687)
                                                         ------------     ------------     ------------     ------------
Cash flows from financing activities:
  Sale of stock, net of related issuance costs ......         125,106            1,609          116,218          452,160
  Sale of options under salary investment option
    grant program ...................................              68               52               95              382
  Proceeds from stock options/warrants exercised ....             289              378              215              909
  Proceeds from notes payable .......................           3,419               --               --            3,793
  Equipment financing ...............................              --               --               --              354
  Principal payments on capital lease obligations
    and notes payable ...............................            (292)            (135)            (295)          (1,279)
                                                         ------------     ------------     ------------     ------------
Net cash provided by financing activities ...........         128,590            1,904          116,233          456,319
                                                         ------------     ------------     ------------     ------------
Net increase (decrease) in cash and cash
  equivalents .......................................          50,939          (44,431)         (19,167)          64,994
Cash and cash equivalents at beginning of year ......          14,055           58,486           77,653               --
                                                         ------------     ------------     ------------     ------------
Cash and cash equivalents at end of year ............    $     64,994     $     14,055     $     58,486     $     64,994
                                                         ============     ============     ============     ============
</Table>

Supplemental disclosure of noncash investing and financing activities:

      Cash payments for interest expense were $53, $5 and $33 in 2001, 2000 and
1999, respectively.

      In November 2000, the Company granted a purchase right to acquire 300
shares of Common Stock at $13.00 per share.

      In April 1999, March 2000 and September 2001, the Company issued 100
shares, 400 shares and 100 shares, respectively, of Common Stock valued at
$1,247, $5,350 and $320, respectively, in conjunction with the Avid Corporation
acquisition (see note 10).

      In 1999, 6 shares of Common Stock were issued to an officer of the Company
as compensation.

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


                                       51
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<Table>
<Caption>
                                               CONVERTIBLE
                                              PREFERRED STOCK                                 COMMON STOCK
                                        ---------------------------                    ---------------------------
                                          SHARES          AMOUNT         WARRANTS         SHARES         AMOUNT
                                       ------------    ------------    ------------    ------------   ------------
<S>                                    <C>             <C>             <C>             <C>            <C>
Initial sale of stock ..............            933    $          1    $         --           1,175   $          1
Additional sale of stock ...........          4,249               4              --           1,495              2
Stock-based compensation ...........             --              --              --              --             --
Comprehensive loss:
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 1995 .........          5,182               5              --           2,670              3
Sale of stock ......................          3,756               4              --           4,943              5
Stock-based compensation ...........             --              --             152             700              1
Stock options exercised ............             --              --              --             317             --
Conversion of Preferred to
  Common Stock .....................         (8,938)             (9)             --           8,938              9
Comprehensive loss:
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 1996 .........             --              --             152          17,568             18
Sale of stock ......................             --              --              --           2,014              2
Acquisition of Avid Corp. ..........             --              --              --             400             --
Sale of stock options ..............             --              --              --              --             --
Stock-based compensation ...........             --              --             (38)             --             --
Stock options exercised ............             --              --              --              13             --
Comprehensive loss:
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 1997 .........             --              --             114          19,995             20
Sale of stock ......................            170              --              --           8,868              9
Sale of stock options ..............             --              --              --              --             --
Stock-based compensation ...........             --              --              --              --             --
Stock options exercised ............             --              --              --               8             --
Comprehensive loss:
  Change in unrealized
    gains/(losses) on investments ..             --              --              --              --             --
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 1998 .........            170              --             114          28,871             29
Sale of stock ......................             --              --              --           6,605              7
Sale of stock options ..............             --              --              --              --             --
Stock-based compensation ...........             --              --              --               6             --
Stock options/warrants exercised ...             --              --            (114)            296             --
Conversion of Preferred to
  Common Stock .....................           (170)             --              --           1,700              2
Purchased in-process research and
  development costs ................             --              --              --             100             --
Comprehensive loss:
  Reclassification adjustment for
    gains/(losses) in net loss .....             --              --              --              --             --
  Change in unrealized
    gains/(losses) on investments ..             --              --              --              --             --
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 1999 .........             --    $         --    $         --          37,578   $         38

<Caption>
                                                                                       ACCUMULATED
                                        ADDITIONAL                    COMPREHENSIVE       OTHER
                                          PAID-IN       ACCUMULATED       INCOME      COMPREHENSIVE      DEFERRED
                                          CAPITAL         DEFICIT         (LOSS)      INCOME/(LOSS)    COMPENSATION        TOTAL
                                       ------------    ------------   -------------   -------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>             <C>             <C>
Initial sale of stock ..............   $        710    $         --    $               $         --    $         --    $        712
Additional sale of stock ...........          3,137              --                              --              --           3,143
Stock-based compensation ...........             12              --                              --             (12)             --
Comprehensive loss:
  Net loss .........................             --            (967)           (967)             --              --            (967)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 1995 .........          3,859            (967)           (967)             --             (12)          2,888
Sale of stock ......................         59,506              --                              --              --          59,515
Stock-based compensation ...........          1,127              --                              --            (141)          1,139
Stock options exercised ............             57              --                              --             (26)             31
Conversion of Preferred to
  Common Stock .....................             --              --                              --              --              --
Comprehensive loss:
  Net loss .........................             --         (10,917)        (10,917)             --              --         (10,917)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 1996 .........         64,549         (11,884)        (10,917)             --            (179)         52,656
Sale of stock ......................         29,521              --                              --              --          29,523
Acquisition of Avid Corp. ..........          8,117              --                              --              --           8,117
Sale of stock options ..............             70              --                              --              --              70
Stock-based compensation ...........             --              --                              --              48              10
Stock options exercised ............              3              --                              --               6               9
Comprehensive loss:
  Net loss .........................             --         (37,668)        (37,668)             --              --         (37,668)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 1997 .........        102,260         (49,552)        (37,668)             --            (125)         52,717
Sale of stock ......................        116,325              --                              --              --         116,334
Sale of stock options ..............             97              --                              --              --              97
Stock-based compensation ...........             --              --                              --              48              48
Stock options exercised ............              1              --                              --               7               8
Comprehensive loss:
  Change in unrealized
    gains/(losses) on investments ..             --              --              18              18              --              18
  Net loss .........................             --         (67,271)        (67,271)             --              --         (67,271)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 1998 .........        218,683        (116,823)        (67,253)             18             (70)        101,951
Sale of stock ......................        116,211              --                              --              --         116,218
Sale of stock options ..............             95              --                              --              --              95
Stock-based compensation ...........            101              --                              --              58             159
Stock options/warrants exercised ...            479              --                              --              12             377
Conversion of Preferred to
  Common Stock .....................             (2)             --                              --              --              --
Purchased in-process research and
  development costs ................          1,247              --                              --              --           1,247
Comprehensive loss:
  Reclassification adjustment for
    gains/(losses) in net loss .....             --              --             (21)            (21)             --             (21)
  Change in unrealized
    gains/(losses) on investments ..             --              --            (132)           (132)             --            (132)
  Net loss .........................             --        (104,621)       (104,621)             --              --        (104,621)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 1999 .........   $    336,814    $   (221,444)   $   (104,774)   $       (135)   $         --    $    115,273
</Table>

(CONTINUED)

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


                                       52
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<Table>
<Caption>
                                               CONVERTIBLE
                                              PREFERRED STOCK                                 COMMON STOCK
                                        ---------------------------                    ---------------------------
                                          SHARES          AMOUNT         WARRANTS         SHARES         AMOUNT
                                       ------------    ------------    ------------    ------------   ------------
<S>                                    <C>             <C>             <C>             <C>            <C>
(CONTINUED)
Sale of stock ......................             --    $         --    $         --             326   $          1
Sale of stock options ..............             --              --              --              --             --
Stock-based compensation ...........             --              --              --              --             --
Stock options/warrants exercised ...             --              --              --             225             --
Purchased in-process research and
  development costs ................             --              --              --             400             --
Comprehensive loss:
  Reclassification adjustment for
    gains/(losses) in net loss .....             --              --              --              --             --
  Change in unrealized
    gains/(losses) on investments ..             --              --              --              --             --
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 2000 .........             --              --              --          38,529             39
Sale of stock ......................            200              --              --          36,058             36
Sale of stock options ..............             --              --              --              --             --
Stock-based compensation ...........             --              --              --              --             --
Stock options/warrants exercised ...             --              --              --             142             --
Purchased in-process research and
  development costs ................             --              --              --             100             --
Conversion of Preferred to
  Common Stock .....................           (200)             --              --           2,000              2
Comprehensive loss:
  Reclassification adjustment for
    gains/(losses) in net loss .....             --              --              --              --             --
  Change in unrealized
    gains/(losses) on investments ..             --              --              --              --             --
  Net loss .........................             --              --              --              --             --
                                       ------------    ------------    ------------    ------------   ------------
Balance, December 31, 2001 .........             --    $         --    $         --          76,829   $         77
                                       ============    ============    ============    ============   ============

<Caption>
                                                                                       ACCUMULATED
                                        ADDITIONAL                    COMPREHENSIVE       OTHER
                                          PAID-IN       ACCUMULATED       INCOME      COMPREHENSIVE      DEFERRED
                                          CAPITAL         DEFICIT         (LOSS)      INCOME/(LOSS)    COMPENSATION        TOTAL
                                       ------------    ------------   -------------   -------------    ------------    ------------
<S>                                    <C>             <C>             <C>             <C>             <C>             <C>
Sale of stock ......................   $      1,608    $         --    $               $         --    $         --    $      1,609
Sale of stock options ..............             52              --                              --              --              52
Stock-based compensation ...........            348              --                              --              --             348
Stock options/warrants exercised ...            378              --                              --              --             378
Purchased in-process research and
  development costs ................          5,350              --                              --              --           5,350
Comprehensive loss:
  Reclassification adjustment for
    gains/(losses) in net loss .....             --              --             133             133              --             133
  Change in unrealized
    gains/(losses) on investments ..             --              --             163             163              --             163
  Net loss .........................             --        (109,525)       (109,525)             --              --        (109,525)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 2000 .........        344,550        (330,969)       (109,229)            161              --          13,781
Sale of stock ......................        125,070              --                              --              --         125,106
Sale of stock options ..............             68              --                              --              --              68
Stock-based compensation ...........            183              --                              --              --             183
Stock options/warrants exercised ...            289              --                              --              --             289
Purchased in-process research and
  development costs ................            320              --                              --              --             320
Conversion of Preferred to
  Common Stock .....................             (2)             --                              --              --              --
Comprehensive loss:
  Reclassification adjustment for
    gains/(losses) in net loss .....             --              --             (57)            (57)             --             (57)
  Change in unrealized
    gains/(losses) on investments ..             --              --             189             189              --             189
  Net loss .........................             --         (75,926)        (75,926)             --              --         (75,926)
                                       ------------    ------------    ------------    ------------    ------------    ------------
Balance, December 31, 2001 .........   $    470,478    $   (406,895)   $    (75,794)   $        293    $         --    $     63,953
                                       ============    ============    ============    ============    ============    ============
</Table>

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


                                       53
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION AND PRINCIPLES OF CONSOLIDATION

      Triangle Pharmaceuticals, Inc. and its wholly-owned subsidiary (the
"Company" or "Triangle"), a development stage company, was formed July 12, 1995,
as a Delaware corporation. The Company is engaged in the development of new drug
candidates primarily in the antiviral area and has not yet generated revenues
from operations. The consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary. All significant intercompany
accounts and transactions have been eliminated in consolidation.

      Triangle is a development stage company and has incurred losses and
negative cash flows from operations since inception. The Company has sufficient
liquidity to continue its planned operations through the second quarter of 2003,
but expects that additional capital will be required. Continuation of its
operations beyond that date will require the Company to raise additional capital
through equity or debt financings or from other sources.

CASH AND CASH EQUIVALENTS

      The Company considers all short-term deposits with an initial maturity at
date of purchase of three months or less to be cash equivalents. The carrying
amount of cash and cash equivalents approximates fair value.

INVESTMENTS

      Investments consist primarily of United States and municipal government
agency obligations, corporate bonds, notes and commercial paper, preferred stock
and other fixed or variable income investments. The Company invests in
high-credit quality investments in accordance with its investment policy which
minimizes the possibility of loss. Investments with original maturities at date
of purchase beyond three months and which mature at or less than twelve months
from the balance sheet date are classified as current. Investments with a
maturity beyond twelve months from the balance sheet date are classified as
long-term. Investments are considered to be available-for-sale and are carried
at fair value with unrealized gains and losses recognized in comprehensive
income/(loss). Realized gains and losses are determined using the specific
identification method and transactions are recorded on a settlement date basis.

      The Company has equity investments in non-public entities for which fair
values are not readily determinable. For those investments in which the Company
does not have significant influence and owns less than 20% of the entity, the
investments are carried at cost and are subject to a write-down for impairment
whenever events or changes in circumstance indicate that the carrying value may
not be recoverable. Investments for which the Company has the ability to
exercise significant influence are accounted for using the equity method.

PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment are recorded at cost and depreciated using
the straight-line method over the estimated useful lives as follows: laboratory
equipment - 5 years; office equipment - 4 to 7 years; and leasehold improvements
- the shorter of 7 years or lease-term.

REVENUE RECOGNITION

      Revenue for any products that are developed will be recognized when such
products are shipped. Collaborative revenue is related to non-contingent
research and development reimbursement received under the Company's strategic
alliance and is being recognized over the anticipated performance of research
and development in accordance with the Securities and Exchange Commission Staff
Accounting Bulletin No. 101, "REVENUE RECOGNITION IN FINANCIAL STATEMENTS."


                                       54
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

LICENSE FEES

      License initiation and preservation fees are evaluated as to whether the
underlying drug candidate has an alternative use, and if none, are recorded as
an expense. License milestone criteria are continuously evaluated and when
criterion achievement is probable, the Company records expense, or will
capitalize such amounts if commercial approval by a regulatory agency is
obtained for the licensed compound or if the compound has an alternate future
use. License preservation fees are recorded when payment is probable and the
Company records expense ratably over the period for which the payment pertains.

DEVELOPMENT EXPENSE

      Development expense includes all direct and indirect development costs
related to the development of the Company's portfolio of drug candidates. Direct
costs include services performed by outside consultants, preclinical and
toxicology testing, drug synthesis and manufacturing, patent related activity,
salaries for development personnel and costs incurred in conducting clinical
trials. These costs have been charged to operating expense as incurred. Costs
associated with obtaining and maintaining patents on the Company's drug
candidates are evaluated based on the stage of development and whether the
underlying drug candidate has an alternative use. If a drug candidate has not
been approved for commercial sale by a regulatory agency and/or does not have an
alternative use, patent related costs have been recorded as an expense. Once a
drug candidate has received commercial approval, patent related costs will be
capitalized and amortized over the expected life of the product.

ACCRUED EXPENSES

      The carrying value of accrued expenses approximates fair value because of
their short-term maturity.

DEBT

      The carrying value of the Company's notes payable approximates their fair
value.

INCOME TAXES

      Income taxes are computed using the asset and liability approach that
requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in the Company's
consolidated financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than enactment of changes in tax law or rates. If it is "more likely than not"
that some portion or all of a deferred tax asset will not be realized, a
valuation allowance is recorded.

NET LOSS PER COMMON SHARE

      Basic net loss per common share is computed using the weighted average
number of shares of Common Stock outstanding during the period. Diluted net loss
per common share is computed using the weighted average number of shares of
common and dilutive potential common shares outstanding during the period.
Potential common shares consist of stock options, warrants and convertible
preferred stock using the treasury stock method and are excluded if their effect
is antidilutive. At December 31, 2001, 2000 and 1999 had such potential common
shares not been antidilutive, their effect would be to increase the shares used
in computing diluted net loss per common share to 54,817, 38,793 and 34,459,
respectively.


                                       55
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

COMPREHENSIVE INCOME (LOSS)

      The Company calculates and discloses comprehensive income in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 130, "REPORTING
COMPREHENSIVE INCOME." The Company discloses comprehensive income (loss) as a
component in its consolidated statements of stockholders' equity.

USE OF ESTIMATES

      The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect 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
reporting period. Actual results could differ from those estimates.

STOCK-BASED COMPENSATION

      The Company records stock-based compensation in accordance with SFAS No.
123, "ACCOUNTING FOR STOCK-BASED COMPENSATION." As provided by SFAS 123, the
Company has elected to continue to account for its stock-based compensation
programs according to the provisions of Accounting Principles Board Opinion No.
25, "ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES" ("APB 25"). Accordingly,
compensation expense has been recognized to the extent of employee or director
services rendered based on the intrinsic value of compensatory options or shares
granted under the plans. The Company has adopted the disclosure provisions
required by SFAS 123.

      In March 2000, the Financial Accounting Standards Board ("FASB") issued
Interpretation No. 44, "ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK
COMPENSATION-AN INTERPRETATION OF APB 25." This interpretation clarifies the
definition of employee for purposes of applying APB 25, the criteria for
determining whether a plan qualifies as a noncompensatory plan, the accounting
consequence of various modifications to the terms of a previously fixed stock
option or award, and the accounting for an exchange of stock compensation awards
in a business combination.

DERIVATIVE FINANCIAL INSTRUMENTS

      The Company records its derivative financial instruments in accordance
with SFAS No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES" as deferred and amended by SFAS 137 and SFAS 138. SFAS 133, 137 and
138 establish accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities, and require the Company to recognize all derivatives as
either assets or liabilities on the balance sheet and measure them at fair
value. Gains and loses resulting from changes in fair value would be accounted
for based on the intended use of the derivative and whether it is designated and
qualifies for hedge accounting.

      Derivative financial instrument contracts are entered into and utilized by
the Company to manage foreign exchange risk by hedging certain transactions, or
firm commitments, which are denominated in a foreign currency. The Company has
established a control environment which includes policies and procedures for
risk assessment and the approval, reporting and monitoring of derivative
financial instrument activities. The Company's derivative activities are subject
to the management direction and control of the Risk Management Committee (the
"RMC"). The RMC is composed of the Chief Financial Officer and the Treasurer.

      To qualify for hedge accounting, the contracts must meet defined
correlation and effectiveness criteria, be designated as hedges and result in
cash flows and financial statement effects which substantially offset those of
the position being hedged. The Company formally documents all relationships
between hedging instruments and hedge


                                       56
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

items, as well as its risk-management objective and strategy for undertaking
various hedge transactions. This process includes linking all derivatives that
are designated as fair-value hedges to specific assets or liabilities or to
specific firm commitments or forecasted transactions. The Company also formally
assesses, both at the hedge's inception and on an ongoing basis, whether the
derivatives used in hedging transactions are highly effective in offsetting
changes in fair values of hedged items. The Company records these foreign
exchange contracts at fair value in its consolidated balance sheet and the
related gains or losses on these contracts as an offset to the hedged item. At
December 31, 2001, Triangle had no foreign currency forward contracts but did
have approximately $250 of investments in foreign currencies to hedge firm
foreign currency commitments. For the years ended December 31, 2001, 2000 and
1999, the Company realized net gains or (losses) on foreign currency
transactions of approximately $27, $46 and ($145), respectively.

RECLASSIFICATIONS

      Certain prior year amounts have been reclassified to conform with the
current year presentation.

OTHER RECENT ACCOUNTING PRONOUNCEMENTS

      In July 2001, the FASB issued SFAS No. 141, "BUSINESS COMBINATIONS" and
SFAS No. 142, "GOODWILL AND OTHER INTANGIBLE ASSETS." SFAS No. 141 eliminates
the pooling-of-interests method of accounting for business combinations except
for qualifying business combinations that were initiated prior to July 1, 2001.
SFAS No. 142 changes the accounting for goodwill and indefinite lived intangible
assets from an amortization method to an impairment-only approach. In August
2001, the FASB issued SFAS No. 143, "ACCOUNTING FOR ASSET RETIREMENT
OBLIGATIONS." The objectives of SFAS No. 143 are to establish accounting
standards for the recognition and measurement of an asset retirement obligation
and its associated asset retirement cost. In October 2001, the FASB issued SFAS
No. 144, "ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS." This
statement supersedes SFAS No. 121, "ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF" and Accounting Principles
Board Opinion No. 30, "REPORTING THE RESULTS OF OPERATIONS - REPORTING THE
EFFECTS OF DISPOSAL OF A SEGMENT OF BUSINESS, AND EXTRAORDINARY, UNUSUAL AND
INFREQUENTLY OCCURRING EVENTS AND TRANSACTIONS."

      The Company will adopt SFAS No. 142 and 144 as of January 1, 2002, and
intends to adopt SFAS No. 143 as of January 1, 2003, as required. Adoption of
SFAS Nos. 141, 142, 143 and 144 are not expected to have a significant impact on
the Company's consolidated financial position, results of operations or cash
flows.

2. INVESTMENTS

      A summary of the fair market value of investments securities by
classification is as follows:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                             -------------------
                                                               2001       2000
                                                             --------   --------
<S>                                                          <C>        <C>
United States Government obligations .....................   $  6,222   $ 10,684
Corporate bonds, notes and commercial paper ..............     30,573     29,934
Preferred stock ..........................................      1,000      2,000
Other ....................................................      5,366      6,258
                                                             --------   --------
         Total ...........................................   $ 43,161   $ 48,876
                                                             ========   ========
</Table>

      The Company owns 3,300 shares of TherapyEdge, Inc. (previously known as
Intelligent Therapeutic Solutions, Inc., "TherapyEdge") Series A Preferred Stock
and is accounting for its investment using the equity method. At December 31,
2001 and 2000, the carrying value of this investment was $0 and the Company has
no obligation to fund future TherapyEdge operations.


                                       57
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


2. INVESTMENTS (CONTINUED)

      Maturities of debt securities at fair market value are as follows:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                            --------------------
                                                              2001        2000
                                                            --------    --------
<S>                                                         <C>         <C>
Mature in one year or less .............................    $ 21,280    $ 39,472
Mature after one year through five years ...............      20,881       7,404
                                                            --------    --------
         Total .........................................    $ 42,161    $ 46,876
                                                            ========    ========
</Table>

      Gross realized and unrealized holding gains and losses for the years ended
December 31, 2001, 2000 and 1999 were not significant, with the exception of a
$1,000 realized loss on our strategic investment in Dynavax Technologies
Corporation ("Dynavax") in 2001.

3. PROPERTY, PLANT AND EQUIPMENT

      Property, plant and equipment consists of the following:

<Table>
<Caption>
                                                                        DECEMBER 31,
                                                                   --------------------
                                                                     2001        2000
                                                                   --------    --------
<S>                                                                <C>         <C>
Laboratory equipment ...........................................   $  5,678    $  5,791
Office equipment ...............................................      3,484       3,253
Leasehold improvements .........................................        481         465
Construction-in-progress (office and laboratory equipment) .....         --         826
                                                                   --------    --------
                                                                      9,643      10,335
Accumulated depreciation .......................................     (5,552)     (4,242)
                                                                   --------    --------
         Property, plant and equipment, net ....................   $  4,091    $  6,093
                                                                   ========    ========
</Table>

      The Company leases office and laboratory facilities and office equipment
under various operating leases. Rent expense totaled $2,138, $2,233 and $1,823
for 2001, 2000 and 1999, respectively.

      Future minimum lease payments under operating leases at December 31, 2001
are as follows:

<Table>
<Caption>
YEAR                                                                  AMOUNT
----                                                                ---------
<S>                                                                 <C>
2002.............................................................   $   1,904
2003.............................................................       1,427
                                                                    ---------
         Total...................................................   $   3,331
                                                                    =========
</Table>

      The Company has subleased office and laboratory facilities that it
currently leases to non-affiliated third parties and expects its future minimum
lease payments to be decreased by $384 and $293 in 2002 and 2003, respectively.


                                       58
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

4. ACCRUED EXPENSES

      Accrued expenses consist of the following:

<Table>
<Caption>
                                                                DECEMBER 31,
                                                           ---------------------
                                                             2001         2000
                                                           --------     --------
<S>                                                        <C>          <C>
Clinical studies .....................................     $  7,704     $ 13,233
Professional fees ....................................        2,755        1,056
Drug substance .......................................        1,120        1,088
Compensation and benefits ............................          895          664
Restructuring ........................................          544           --
Duties and taxes .....................................          145           95
Other ................................................          760        1,132
                                                           --------     --------
         Total .......................................     $ 13,923     $ 17,268
                                                           ========     ========
</Table>

      In August 2001, Triangle initiated a restructuring of its development
activities and overall operations to lower monthly cash usage and to focus
financial and human resources on activities that are expected to have the
highest probability of near-term regulatory approval and economic return. This
focus included weighting corporate resources towards drug candidates in Phase
III development, eliminating most resources dedicated to basic research, and
reducing resources dedicated to sales, marketing and general administration.
Accordingly, the Company recorded a restructuring charge of $2,342 of which
approximately $1,650 was for severance and other termination benefits related to
an approximate 35% reduction in the Company's total workforce, including
approximately fifty full-time employees. The remaining $692 represents a
write-down of net assets, the loss associated with underutilized lease
obligations and legal and other expenses associated with reducing the Company's
workforce. At December 31, 2001, approximately $544 of all restructuring costs
had yet to be paid, primarily because certain terminated employees had
employment agreements which provide for monthly severance benefits beyond 2001.

5. DEBT

      Debt consists of the following:

<Table>
<Caption>
                                                                             DECEMBER 31,
                                                                         --------------------
                                                                           2001        2000
                                                                         --------    --------
<S>                                                                      <C>         <C>
Secured note payable, thirty monthly payments with final payment
     due April 2004; interest payable at 10.2% .......................   $  2,799    $     --
Unsecured note payable, nine monthly payments with final payment
     due August 2002; interest payable at 5.4% .......................        335          --
Capital lease obligation, with final payment due May 2001 ............         --           7
Current portion ......................................................     (1,454)         (7)
                                                                         --------    --------
Non-current debt .....................................................   $  1,680    $     --
                                                                         ========    ========
</Table>

      The secured note payable is fully collateralized by the Company's
property, plant and equipment and contains a covenant requiring a minimum cash
and investment balance. At December 31, 2001, the Company was in compliance with
this covenant. Interest expense associated with debt obligations for 2001, 2000
and 1999 was $79, $5 and $34, respectively.

6. STOCKHOLDERS' EQUITY

      During 1996 and 1995, the Company issued 5,232 shares of convertible
Series A Preferred Stock with a par value of $0.001 per share for $3,900, net of
offering costs. During 1996, the Company issued 3,706 shares of convertible
Series B Preferred Stock with a par value of $0.001 per share for $18,400, net
of offering costs. No preferred dividends were declared or paid from the date of
inception (July 12, 1995) through the date of conversion


                                       59
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6. STOCKHOLDERS' EQUITY (CONTINUED)

of all Preferred Stock into Common Stock on a one-for-one basis in connection
with the closing of the Company's initial public offering (the "IPO"). The
Company's certificate of incorporation authorizes the Board of Directors,
without further action by the stockholders, to issue Preferred Stock, in one or
more series and to fix the rights, priorities, preferences, qualifications,
limitations and restrictions, including dividend rights, conversion rights,
voting rights, terms of redemption, terms of sinking funds and liquidation
preferences of each series of Preferred Stock issued.

      On November 6, 1996, the Company completed its IPO of 4,533 shares of
Common Stock at $10.00 per share. The net proceeds of this offering, after
underwriting discounts and costs in connection with the sale and distribution of
the securities, were approximately $41,000.

      On June 6, 1997, the Company issued 2,000 shares of Common Stock for
$30,000, or a price of $15.00 per share. Net proceeds to the Company from this
private offering were approximately $29,400. Pursuant to the purchase agreement,
these shares were registered on January 23, 1998 with the Securities and
Exchange Commission.

      On April 15, 1998, the Company completed registration of 4,025 shares of
Common Stock at $15.00 per share with the Securities and Exchange Commission.
The total proceeds of this public offering, net of offering costs, were
approximately $55,800.

      On December 24, 1998, the Company issued 170 shares of convertible Series
A Preferred Stock with a par value of $0.001 per share for $100.00 per share in
a private offering to accredited institutional investors. The total proceeds of
this offering, net of offering costs, were approximately $15,600. On May 14,
1999, all 170 shares were converted to 1,700 shares of Common Stock upon the
approval of the issuance of preferred shares by the stockholders of the Company.

      On December 30, 1998, the Company issued 4,800 shares of Common Stock for
$10.00 per share in a private offering to accredited investors. The total
proceeds of this offering, net of offering costs, were approximately $44,400.
Pursuant to the terms of this offering, a registration statement covering the
resale of these shares was declared effective by the Securities and Exchange
Commission on December 31, 1998.

      On August 3, 1999, the Company completed its worldwide strategic alliance
(the "Abbott Alliance") with Abbott Laboratories ("Abbott") resulting in Abbott
purchasing 6,571 shares of Common Stock at $18.00 per share. Net proceeds to the
Company were approximately $115,861.

      On March 1, 2001, the Company issued 7,700 shares of Common Stock for
$6.00 per share in a private offering to a limited number of qualified
institutional buyers and large institutional accredited investors. The total
proceeds of this offering, net of offering costs, were approximately $43,475.
Additionally, the Company issued 200 shares of convertible Series B Preferred
Stock for $60.00 per share in a private offering to a small number of qualified
institutional buyers and large institutional accredited investors on March 9,
2001. This sale yielded total net proceeds of approximately $10,900. On May 18,
2001, Triangle's stockholders' approved the issuance of the Series B preferred
stock, which triggered the conversion of each preferred share into ten shares of
our Common Stock. Pursuant to the terms of this offering, a registration
statement covering the resale of these shares was declared effective by the
Securities and Exchange Commission on July 11, 2001.

      On August 24, 2001, the Company entered into a purchase agreement with
Warburg Pincus Private Equity VIII, L.P. ("Warburg Pincus") for the sale of
28,302 shares of Common Stock in a two-stage private placement at a purchase
price of $2.65 per share. On the same day, the first closing of the private
placement occurred and the Company issued 9,628 shares of Common Stock for net
proceeds totaling approximately $23,975. On October 10, 2001, the second closing
of the remaining 18,674 shares of Common Stock occurred, resulting in net
proceeds


                                       60
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6. STOCKHOLDERS' EQUITY (CONTINUED)

totaling approximately $46,550. On the same day, the Company's certificate of
incorporation was amended to modify the number of authorized capital stock to
175,000 shares of Common Stock, $0.001 par value per share, and 10,000 shares of
Preferred Stock, $0.001 par value per share. Pursuant to the purchase agreement,
the Company registered the Common Stock sold in both closings, elected two
individuals nominated by Warburg Pincus to the Board of Directors, and granted
Warburg Pincus rights to participate in certain future sales of Common Stock, as
long as Warburg Pincus owns approximately 5,846 shares of Common Stock.

      At December 31, 2001 and 2000, the Company had outstanding warrants
entitling the holder to acquire 300 shares of Common Stock at $13.00 per share.

7. EMPLOYEE BENEFIT PLANS

EMPLOYEE STOCK PURCHASE PLAN

      The Company's Employee Stock Purchase Plan (the "Purchase Plan") became
effective November 1, 1996. The Purchase Plan is designed to allow eligible
employees of the Company to purchase shares of Common Stock, at semi-annual
intervals, through periodic payroll deductions under the Purchase Plan. A
reserve of 300 shares of Common Stock has been established for this purpose. The
Purchase Plan is implemented in a series of successive offering periods, each
with a maximum duration of twenty-four (24) months. Payroll deductions may not
exceed 10% of the participant's base salary for each semi-annual period of
participation nor exceed $25 per annum, and the accumulated payroll deductions
will be applied to the purchase of shares on the participant's behalf on each
semi-annual purchase date (the last business day of February and August each
year, at a purchase price per share not less than 85% of the lower of (i) the
fair market value of the Common Stock on the participant's entry date into the
offering period or (ii) the fair market value of the Common Stock on the
semi-annual purchase date). Should the fair market value of the Common Stock on
any semi-annual purchase date be less than the fair market value of the Common
Stock on the first day of the offering period, then the current offering period
will automatically end and a new twenty-four month offering period will begin,
based on the lower fair market value. The shares vest immediately upon issuance.

      During 2001, 2000 and 1999, the Company issued 57, 45 and 39 shares,
respectively, under the Purchase Plan. At December 31, 2001, the Company held
payroll deductions of approximately $45 which will be used to purchase shares of
Common Stock in 2002. The Purchase Plan had an insignificant impact on the
Company's 2001, 2000 and 1999 pro forma fair value disclosure as required under
SFAS 123.

SALARY INVESTMENT OPTION GRANT PROGRAM

      The Company's Salary Investment Option Grant Program (the "Investment
Plan") allows executive officers and other highly compensated employees of the
Company to reduce their base salary for that calendar year by a specified dollar
amount not less than $10 nor more than $50. Participants are issued a
non-statutory option to purchase that number of shares of Common Stock
determined by dividing the total salary reduction amount by an amount equal to
one-third of the fair market value per share of Common Stock on the grant date.
The option will be exercisable at a price per share equal to the difference
between the amount paid by the optionee for the option and the fair market value
of the option shares on the grant date. As a result, upon exercise of the
options issued under the Investment Plan, the optionee will have paid 100% of
the fair market value of the option shares as of the grant date. The option will
vest and become exercisable in a series of twelve (12) equal monthly
installments over the calendar year for which the salary reduction is in effect
and will vest and become fully exercisable on specified changes in the ownership
or control of the Company. Options have a maximum term of ten years from the
date of grant.


                                       61
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

DIRECTOR COMPENSATION

      All eligible non-employee directors received an option to purchase 7.5
shares of Common Stock for each year of the director's Board of Directors term
plus an additional 7.5 shares for those directors who have not served
previously. These options have an exercise price equal to 100% of the fair
market value of the Common Stock on the grant date and will become exercisable
in annual installments after the completion of each year of service following
such grant. Options vest on the day immediately preceding the next annual Board
of Directors meeting and have a maximum term of ten years from the date of
grant, or one year from the cessation of Board of Directors service.

401(K) PENSION PLAN

      The Company sponsors a qualified defined contribution pension plan which
is available to substantially all full-time employees. This 401(k) plan provides
for employer matching contributions based on employee participation. The total
expense under this plan was $261, $260 and $184 for 2001, 2000 and 1999,
respectively.

1996 STOCK INCENTIVE PLAN

      The Company's 1996 Stock Incentive Plan (the "1996 Plan") serves as the
successor equity incentive program to the Company's 1996 Stock Option/Stock
Issuance Plan. The 1996 Plan became effective on August 30, 1996 and 2,200
options of Common Stock were authorized for issuance. On May 15, 1998, an
additional 1,000 options were authorized for issuance with an automatic increase
provision whereby on January 1, 1999, 2000 and 2001 four percent of the total
number of shares of Common Stock issued and outstanding, as of December 31 of
the preceding year, will be authorized for issuance up to an annual maximum
limitation of 1,000. On May 18, 2001, an additional amendment to the 1996 Plan
was approved, whereby the number of shares of Common Stock reserved for issuance
increases automatically by 1,500 shares on January 1, 2002 and on January 1,
2003. In no event may any one participant receive option grants or direct stock
issuances for more than 500 shares in the aggregate per calendar year. Options
generally vest over a four-year period and have a maximum term of ten years from
the date of grant.

      In accordance with the provisions of SFAS 123, the Company has chosen to
continue to account for stock-based compensation using the intrinsic value
method required by APB 25.

      The following table summarizes the stock option activity for the Company's
plans:

<Table>
<Caption>
                                               NUMBER OF      WEIGHTED AVERAGE    WEIGHTED AVERAGE
                                                 SHARES        EXERCISE PRICE        FAIR VALUE
                                              ------------    ----------------    ----------------
<S>                                                  <C>        <C>                 <C>
Options outstanding, December 31, 1998 ....          2,481      $     10.895
Granted at fair value .....................            991            13.774        $      9.146
Exercised .................................           (256)            0.754
Forfeited .................................            (83)           17.406
                                              ------------      ------------
Options outstanding, December 31, 1999 ....          3,133            12.460
Granted below fair value ..................             24             8.865        $      1.858
Granted at fair value .....................          1,321             7.563        $      5.362
Granted above fair value ..................            213            16.712        $      0.936
Exercised .................................           (225)            1.683
Forfeited .................................           (621)           14.853
                                              ------------      ------------
Options outstanding, December 31, 2000 ....          3,845            11.234
Granted at fair value .....................          1,555             3.609        $      2.435
Exercised .................................           (141)            2.040
Forfeited .................................           (675)           10.516
                                              ------------      ------------
Options outstanding, December 31, 2001 ....          4,584      $      9.037
                                              ============      ============
</Table>


                                       62
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)

      The following table summarizes information concerning options outstanding
at December 31, 2001 and 2000:

<Table>
<Caption>
                                                                                    WEIGHTED AVERAGE
                                                                                       REMAINING
                                                    NUMBER      WEIGHTED AVERAGE    CONTRACTUAL LIFE
                                                  OF SHARES      EXERCISE PRICE        (IN YEARS)
                                                  ----------    ----------------    ----------------
<S>                                                    <C>         <C>                       <C>
Options outstanding-
Price range:
     $0.075 - $3.600 ........................          1,349       $    2.548                8.86
     $3.620 - $6.313 ........................            973            5.651                8.68
     $6.875 - $13.250 .......................          1,265           11.120                7.47
     $13.406 - $20.750 ......................            743           16.718                6.21
     $23.625 - $23.625 ......................            254           23.625                5.48
                                                  ----------       ----------          ----------
Options outstanding, December 31, 2001 ......          4,584       $    9.037                7.82
                                                  ==========       ==========          ==========

Exercisable options outstanding-
Price range:
     $0.075 - $3.600 ........................            231       $    0.279
     $3.620 - $6.313 ........................            376            5.701
     $6.875 - $13.250 .......................            801           10.988
     $13.406 - $20.750 ......................            690           16.678
     $23.625 - $23.625 ......................            254           23.625
                                                  ----------       ----------
Exercisable options outstanding, December
     31, 2001 ...............................          2,352       $   12.123
                                                  ==========       ==========
Exercisable options outstanding, December
     31, 2000 ...............................          1,842       $   12.428
                                                  ==========       ==========
</Table>

      To determine the impact of SFAS 123, the fair value of each option grant
is estimated on the date of grant using the Black-Scholes valuation model with
the following assumptions:

<Table>
<Caption>
                                                       DECEMBER 31,
                                        ------------------------------------------
                                           2001            2000             1999
                                        ----------     -----------      ----------
<S>                                        <C>         <C>              <C>
Expected dividend yield ...........           0.00%           0.00%           0.00%
Expected stock price volatility ...          93.00%          92.00%          80.00%
Risk-free interest rate ...........           4.01%    5.17%-5.22%      6.14-6.19%
Expected life of options ..........        4 years       4-5 years       4-5 years
</Table>

      For purposes of pro forma disclosures, the estimated fair value of equity
instruments is amortized to expense over their respective vesting period. If the
Company had elected to recognize compensation expense based on the fair value of
stock-based instruments at the grant date, as prescribed by SFAS 123, its pro
forma net loss and net loss per common share would have been as follows:

<Table>
<Caption>
                                                 2001           2000           1999
                                             -----------    -----------    -----------
<S>                                          <C>            <C>            <C>
Net loss - as reported ...................   $   (75,926)   $  (109,525)   $  (104,621)
Net loss - pro forma .....................   $   (81,543)   $  (117,238)   $  (109,078)
Net loss per common share - as reported ..   $     (1.40)   $     (2.87)   $     (3.18)
Net loss per common share - pro forma ....   $     (1.51)   $     (3.08)   $     (3.31)
</Table>


                                       63
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

8. LICENSING AGREEMENTS

      As of December 31, 2001, the Company has multiple license agreements for
its drug candidates as well as collaborative agreements with specific third
parties to assist in the identification and development of other novel drug
candidates. In the aggregate, these agreements, with the exception of Coactinon
which was formally terminated in January 2002, may require future payments of up
to $57,250 contingent upon the achievement of development milestones, up to
$30,000 upon the achievement of sales milestones, and $2,188 of future research
and development payments. The Company is also obligated to issue 250 shares of
Common Stock if development milestones are achieved regarding compounds for the
treatment of hepatitis B obtained in the Avid Corporation ("Avid") acquisition.
Additionally, the Company will pay royalties based upon 7.5% to 22% of net sales
of each licensed product depending on drug candidate and net sales volume. The
Company's license agreements also require minimum royalty payments commencing
three years after regulatory approval of the licensed compound. Milestone
payments are typically contingent on completing phases of clinical trials and
receiving registrations for compounds. Depending on the Company's success and
timing in obtaining regulatory approval, aggregate annual minimum royalties and
annual license preservation fees could range from $50 (if only a single drug
candidate is approved for one indication) to $47,000 (if all drug candidates are
approved for all indications) under the Company's existing license agreements.

9. INCOME TAXES

      There is no current income tax provision or benefit recorded in any period
as the Company has generated net operating losses for income tax purposes. There
is no deferred income tax provision or benefit recorded in any period as the
Company is in a net deferred tax asset position for which a full valuation
allowance has been recorded due to the uncertainty of its realization.

      At December 31, 2001, 2000 and 1999, the Company had net operating loss
carryforwards of approximately $341,664, $265,279 and $155,344, respectively,
and research credit carryforwards of approximately $12,916, $10,895 and $8,249,
respectively, which will expire in years 2006 to 2021. The Company's ability to
utilize its carryforwards may be subject to an annual limitation in future
periods pursuant to the "change in ownership" provisions under Section 382 of
the Internal Revenue Code.

      In connection with the acquisition of Avid, the Company acquired
transferable net operating loss carryforwards, research and development credits
and capitalized start-up costs which may be used to offset certain future
income. Net operating loss carryforwards associated with Avid will have an
annual limitation on the amount available to reduce certain future taxable
income.

      The components of deferred taxes are as follows:

<Table>
<Caption>
                                                          DECEMBER 31,
                                             --------------------------------------
                                                2001          2000          1999
                                             ----------    ----------    ----------
<S>                                          <C>           <C>           <C>
Loss carryforwards .......................   $  134,906    $  104,918    $   61,439
Research tax credit ......................       12,916        10,895         8,249
License fees .............................        9,218         7,805         7,347
Deferred revenue .........................        7,354         9,658         9,887
Accrued liabilities and reserves .........        4,447         3,181         2,912
Start-up costs ...........................          226           567           907
                                             ----------    ----------    ----------
Deferred tax assets ......................      169,067       137,024        90,741
Deferred tax assets valuation allowance ..     (169,067)     (137,024)      (90,741)
                                             ----------    ----------    ----------
         Net deferred tax asset ..........   $       --    $       --    $       --
                                             ==========    ==========    ==========
</Table>


                                       64
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

10. AVID ACQUISITION

      On August 28, 1997, the Company acquired Avid in a merger accounted for as
a purchase transaction. Pursuant to the merger agreement, Triangle issued 400
shares of Common Stock in exchange for all outstanding capital stock of Avid. In
connection with the acquisition, the Company incurred a charge of $11,261 for
acquired in-process research and development. The Company subsequently issued
another 600 shares of Common Stock for milestone obligations and related
milestone extensions associated with the development of mozenavir dimesylate as
additional consideration to the former Avid shareholders. Issuance of these
shares resulted in additional purchased research and development charges
recorded in 1999, 2000 and 2001. These in-process research and development
charges were based upon the fair market value of Triangle Common Stock at the
date upon which an obligation to the former Avid shareholders existed. The 2001
issuance of 100 shares satisfies all current and any future obligations in
regards to contingent development milestones for mozenavir dimesylate. There,
however, remains a contingency for the issuance of 250 shares of Common Stock if
development milestones are achieved regarding compounds for the treatment of
hepatitis B obtained in the acquisition, although the Company is not currently
developing these compounds. Issuance of any additional contingent shares will be
recorded as additional purchase price and will be allocated upon resolution of
the underlying contingency. The operating results of Avid have been included in
the Company's consolidated financial statements from its acquisition. Avid's
principal asset consisted of worldwide license rights to mozenavir dimesylate.

11. STRATEGIC ALLIANCE WITH ABBOTT LABORATORIES

      In August 1999, the Company completed a worldwide strategic alliance with
Abbott for several of its antiviral compounds. Under the terms of the Abbott
Alliance, Triangle and Abbott will collaborate with respect to the clinical
development, registration, distribution and marketing of various proprietary
pharmaceutical products for the prevention and treatment of HIV and hepatitis B
virus. In the United States, Triangle and Abbott will co-promote three Triangle
drug candidates currently in active development for HIV and/or hepatitis B,
Coviracil, amdoxovir and clevudine, and Abbott's HIV protease inhibitor,
Kaletra. Outside the United States, Abbott will have exclusive sales and
marketing rights for the three Triangle antiviral compounds. Triangle and Abbott
will share profits and losses for the Triangle drug candidates. Triangle will
receive detailing fees and commissions on incremental sales it generates for
Kaletra, although Triangle has not begun promoting Kaletra. In addition, Abbott
has the right of first discussion to market future Triangle compounds. The
Abbott Alliance provided for non-contingent research and development
reimbursement of $31,714, which has been received, and currently provides for up
to $120,000 of contingent development milestone payments and the sharing of
future commercialization costs. In addition, Abbott initially purchased
approximately 6,571 shares of Triangle Common Stock at $18.00 per share which
resulted in net proceeds to the Company of $115,861, and has subsequently
purchased another 1,367 shares which resulted in net proceeds of $8,208.
Pursuant to the terms of the Abbott Alliance, Abbott has the right to purchase
additional amounts of Triangle Common Stock up to a maximum aggregate percentage
of 21% and has certain rights to purchase shares directly from the Company in
order to maintain a certain ownership interest in Triangle, also known as
antidilution protection. The Abbott Alliance provides access to Abbott's
international and domestic infrastructure to market and distribute products
receiving regulatory approval, global manufacturing capabilities, drug
development assistance, United States co-promotion rights to Kaletra, as well as
financial support to help fund the continued development of our portfolio of
drug candidates.

12. RELATED PARTY TRANSACTIONS

      The Company has two outside directors on its Board of Directors which are
affiliated with companies with which Triangle conducts business operations and
whose companies have investments in Triangle Common Stock. One director is
affiliated with Abbott and the other has an ownership interest in various
companies that Triangle has utilized, and continues to utilize, in the
completion of its clinical studies. At December 31, 2001, these companies owned
approximately 5%, and Abbott owned approximately 10% of Triangle's outstanding
Common Stock. As of December 31, 2001 and 2000, the Company had accounts payable
outstanding to these companies performing clinical services of approximately
$207 and $1,631, respectively, and incurred approximately $1,035, $6,217 and
$2,763 during 2001, 2000 and 1999, respectively, in development expense for
services provided.


                                       65
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

12. RELATED PARTY TRANSACTIONS (CONTINUED)

      In association with the Abbott Alliance, the Company utilizes Abbott for
assistance primarily in drug development and manufacture and shares expenses
under a profit and loss calculation for Triangle drug candidates in the Abbott
Alliance. Accordingly, the Company had accounts payable of $2,645 and $6,005 at
December 31, 2001 and 2000, respectively, and had incurred approximately $5,014,
$18,388 and $4,676 during 2001, 2000 and 1999, respectively, for development
services performed by Abbott. Under the profit and loss calculation, the Company
had a receivable of $480 and $413 at December 31, 2001 and 2000, respectively,
and accordingly 2001, 2000 and 1999 marketing expense was reduced by $421,
$1,416 and $1,518, respectively, thereby reducing selling, general and
administrative expenses. The Company recognized $5,795 and $7,294 of
collaborative revenue during 2001 and 2000, respectively, associated with the
amortization of research and development expense reimbursement.

      Triangle's Chairman and Chief Executive Officer, Dr. David W. Barry,
served on the Board of Directors of Dynavax, and another Triangle non-employee
director is an executive officer with an investment organization which has a
greater than 5% investment in Dynavax. In association with the strategic license
and collaborative agreement with Dynavax, the Company utilized Dynavax for
assistance in conducting the initial clinical trial associated with the
Company's immunostimulatory pharmaceutical candidates. Accordingly, the Company
had accounts payable of $313 and $500 at December 31, 2001 and 2000,
respectively, and had incurred approximately $2,063 and $1,000 in expenses
during 2001 and 2000, respectively, for development services. In April 2000, the
Company purchased $2,000 of Dynavax Preferred Stock, and subsequently, in 2001,
recorded a $1,000 loss based upon an impairment of the investment.

13. STOCKHOLDER RIGHTS PLAN

      On January 29, 1999, the Board of Directors adopted a "Stockholder Rights
Plan" in which Preferred Stock Purchase Rights were distributed as a dividend at
the rate of one right per share of Common Stock and ten rights per share of
Series A Preferred Stock (i.e., the equivalent of one right per share of Common
Stock issuable upon the conversion of the Series A Preferred Stock), held as of
February 16, 1999. Each right entitles the holder to acquire one-thousandth of a
share of $0.001 par value Series B Junior Participating Preferred Stock, upon a
third party acquiring beneficial ownership of 15% or more of the Company's
Common Stock, without the consent of the Board of Directors, at a price of
$100.00 per right. The Company can redeem the rights for $0.001 per right at the
discretion of the Board of Directors. The Stockholder Rights Plan is designed to
deter a party from gaining control of the Company without offering a fair price
to all stockholders and should encourage a party to negotiate with the Board of
Directors prior to attempting to acquire the Company.

14. COMMITMENTS AND CONTINGENCIES

      The Company is indirectly involved in several opposition and interference
proceedings and two lawsuits filed in Australia regarding the patent rights
related to its licensed drug candidate, amdoxovir. Although the Company is not a
named party in any of these proceedings, it is obligated to reimburse its
licensors for certain legal expenses associated with these proceedings. In one
of these patent opposition proceedings, on November 8, 2000, the Australian
Patent Office held that several patent claims of Emory University ("Emory")
directed to amdoxovir are not patentable over an earlier opposing patent. Emory
has appealed this decision of the Australian Patent Office to the Australian
Federal Court. If Emory and the Company are unsuccessful in the appeal, then the
Company will not be able to sell amdoxovir in Australia without a license, which
may not be available on reasonable terms or at all. The Company cannot predict
the outcome of these proceedings. The Company believes that an adverse judgment
would not result in a material financial obligation to the Company, nor would
the Company have to recognize an impairment under SFAS No. 121 "ACCOUNTING FOR
IMPAIRMENT OF LONG-LIVED ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF" as no
amounts have been capitalized related to this drug candidate. However, any
development in these proceedings adverse to the Company's interests could have a
material adverse effect on the Company's future operations.


                                       66
<Page>

                         TRIANGLE PHARMACEUTICALS, INC.
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

14. COMMITMENTS AND CONTINGENCIES (CONTINUED)

      The Company enters into contractual arrangements regarding clinical and
toxicology studies in the development of its drug candidates. At December 31,
2001, the Company estimates its commitment to be approximately $20,617 under
these agreements; however, this estimate is dependent upon the results of the
underlying studies and certain other variable components. Additionally, the
Company has entered into agreements with third parties to provide drug substance
to satisfy its drug development requirements and to provide for the potential
commercial launch of its drug candidates. At December 31, 2001, the Company
estimates its commitment for drug substance to be approximately $5,000. Similar
to the clinical and toxicology studies commitment, this estimate is subject to a
number of variables that may result in the actual obligation differing from
management's estimate.

15. SUMMARY QUARTERLY FINANCIAL DATA (UNAUDITED)

<Table>
<Caption>
                                                  2001                                           2000
                             --------------------------------------------    --------------------------------------------
                               FIRST      SECOND       THIRD      FOURTH       FIRST      SECOND       THIRD      FOURTH
                              QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER     QUARTER
                             --------    --------    --------    --------    --------    --------    --------    --------
<S>                          <C>         <C>         <C>         <C>         <C>         <C>         <C>         <C>
Revenues .................   $  1,744    $  1,744    $  1,271    $  1,035    $  1,982    $  1,824    $  1,744    $  1,744
Loss from Operations .....    (23,898)    (22,163)    (18,970)    (13,584)    (33,662)    (28,752)    (27,780)    (26,656)
Net Loss .................    (22,858)    (21,163)    (18,197)    (13,708)    (31,386)    (26,758)    (26,057)    (25,325)
Basic and Diluted Loss
   per Common Share ......   $  (0.55)   $  (0.45)   $  (0.35)   $  (0.18)   $  (0.83)   $  (0.70)   $  (0.68)   $  (0.66)
</Table>

16. SUBSEQUENT EVENT (UNAUDITED)

      In January 2002, the Company's Chief Executive Officer and Chairman of the
Board, Dr. David W. Barry, died unexpectedly. The Board of Directors is
currently conducting a search for a qualified replacement. Additionally, the
Company has filed a claim under a keyman insurance policy and expects a $10,000
settlement in the first quarter of 2002.


                                       67
<Page>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        ---------------------------------------------------------------
        FINANCIAL DISCLOSURE
        --------------------

      None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
         --------------------------------------------------

(a) Identification of Directors. The information under the heading "Election of
Directors," appearing in the Proxy Statement, is incorporated herein by
reference.

(b) Identification of Executive Officers. The information under the heading
"Executive Officers," appearing in the Proxy Statement, is incorporated herein
by reference.

(c) Section 16(a) Beneficial Ownership Reporting Compliance. The information
under the heading "Section 16(a) Beneficial Ownership Reporting Compliance,"
appearing in the Proxy Statement, is incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION
         ----------------------

      The information under the heading "Executive Compensation and Other
Information," appearing in the Proxy Statement, is incorporated herein by
reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
         --------------------------------------------------------------

      The information under the heading "Principal Stockholders," appearing in
the Proxy Statement, is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
         ----------------------------------------------

      The information under the heading "Certain Relationships and Related
Transactions," appearing in the Proxy Statement, is incorporated herein by
reference.


                                       68
<Page>

                                     PART IV
                                     -------

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

(a)   (1)   Financial Statements

      The financial statements of the Company are included herein as required
under Item 8 of this Annual Report on Form 10-K. See Index to Consolidated
Financial Statements on page 47.

      (2)   Financial Statement Schedules

      All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable, and therefore have been omitted.

(b)   Reports on Form 8-K

      On October 10, 2001, we filed a current report on Form 8-K dated October
10, 2001, announcing the approval of an amendment to our Second Restated
Certificate of Incorporation, and the completion of a private placement of
18,673,885 newly issued shares of common stock to a group of investors led by
Warburg Pincus.

      On December 7, 2001, we filed a current report on Form 8-K dated November
30, 2001, announcing the signing of a Master Loan and Security Agreement with
Wells Fargo Equipment Finance, Inc.

      On January 18, 2002, we filed a current report on Form 8-K dated January
17, 2002, announcing our plans to file an NDA for Coviracil for the treatment of
HIV in September 2002 and the discontinuation of development of Coactinon.

      On January 29, 2002, we filed a current report on Form 8-K dated January
28, 2002, announcing the death of David W. Barry, Chairman and Chief Executive
Officer.

(c)   Exhibits

EXHIBIT
NUMBER      DESCRIPTION
-------     -----------

3.1(a)      Restated Certificate of Incorporation of the Company.

3.2(a)      Second Restated Certificate of Incorporation of the Company.

3.3         Amendment to Second Restated Certificate of Incorporation (filed as
            Exhibit 4.1 to the Company's Form 8-K filed October 10, 2001).

3.4         Bylaws of the Company, as amended (filed as Exhibit 3.3 to the
            Company's Form S-1 filed September 9, 1996).

3.5         Restated Bylaws of the Company (filed as Exhibit 3.4 to the
            Company's Form S-1 filed September 9, 1996).

3.6         Certificate of Designations, Preferences and Rights of the Series B
            Junior Participating Preferred Stock, as filed with the Secretary of
            State of the State of Delaware (filed as Exhibit 3.6 to the
            Company's Form 10-K filed March 19, 1999).


                                       69
<Page>

3.7         Certificate of Designations, Preferences and Rights of the Series B
            Preferred Stock, as filed with the Secretary of State of the State
            of Delaware (filed as Exhibit 4.1 to the Company's Form 8-K filed
            March 21, 2001).

4.1(a)      Form of Certificate for Common Stock.

4.2(a)      Form of Restricted Stock Purchase Agreement.

4.3         Form of Purchase Agreement made as of January 30, 2001, between the
            Company and each of the investors with whom the stock was placed
            (filed as Exhibit 4.2 to the Company's Form S-3/A filed February 27,
            2001).

4.4         Form of Purchase Agreement with respect to the Series B Preferred
            Stock made as of January 30, 2001 between the Company and each of
            the investors with whom the stock was placed (filed as Exhibit 10.1
            to the Company's Form 8-K filed March 21, 2001).

4.5         Amendment to Rights Agreement between America Stock Transfer & Trust
            Company and the Company, dated August 24, 2001 (filed as Exhibit 4.1
            to the Company's Form 8-K filed August 24, 2001).

10.2(a)     Form of Employee Proprietary Information Agreement.

10.12(a)    Sublease between the Company and Eli Lilly, dated January 18, 1996.

10.18(a)    Sublease Amendment between the Company and Eli Lilly, dated March 1,
            1996.

10.19(a)    License Agreement among the Company, Emory University and the
            University of Georgia Research Foundation, Inc. for compound
            amdoxovir (DAPD), dated March 31, 1996.

10.22(a)    License Agreement between the Company and Emory University for
            Coviracil (FTC), dated April 17, 1996.

10.31(a)    Second Amendment to Sublease between the Company and Eli Lilly and
            Company, dated August 2, 1996.

10.40(a)    Employee Stock Purchase Plan.

10.41(a)    Form of Indemnification Agreement between the Company and each of
            its directors.

10.42(a)    Form of Indemnification Agreement between the Company and each of
            its officers.

10.44(a)    Form of Waiver of Registration Rights, dated September 5, 1996.

10.47       License Agreement between the Company and Mitsubishi Chemical
            Corporation dated June 17, 1997 (filed as Exhibit 10.3 to the
            Company's Form 10-Q filed August 14, 1997).

10.48       License Agreement dated as of February 27, 1998, between the Company
            and Bukwang Pharm. Ind. Co., Ltd. (filed as Exhibit 10.51 to the
            Company's Form 10-K filed March 10, 1998).

10.49       Amended and Restated 1996 Stock Incentive Plan (as amended and
            restated through March 27, 1998) (filed as Exhibit 99.1 to the
            Company's Form S-8 filed June 5, 1998).

10.50       Amended and Restated 1996 Stock Incentive Plan - Form of Stock
            Option Agreement (filed as Exhibit 99.3 to the Company's Form S-8
            filed June 5, 1998).


                                       70
<Page>

10.51       Amended and Restated 1996 Stock Incentive Plan - Form of Addendum to
            Stock Option Agreement (Involuntary Termination Following Corporate
            Transaction) (filed as Exhibit 99.4 to the Company's Form S-8 filed
            June 5, 1998).

10.52       Amended and Restated 1996 Stock Incentive Plan - Form of Addendum to
            Stock Option Agreement (Involuntary Termination Following Change in
            Control) (filed as Exhibit 99.5 to the Company's Form S-8 filed June
            5, 1998).

10.53       Amended and Restated 1996 Stock Incentive Plan - Form of Stock
            Issuance Agreement (filed as Exhibit 99.6 to the Company's Form S-8
            filed June 5, 1998).

10.54       Amended and Restated 1996 Stock Incentive Plan - Form of Automatic
            Stock Option Agreement (filed as Exhibit 99.8 to the Company's Form
            S-8 filed June 5, 1998).

10.55       Amended and Restated 1996 Stock Incentive Plan - Form of Salary
            Investment Stock Option Agreement (filed as Exhibit 99.11 to the
            Company's Form S-8 filed June 5, 1998).

10.56       Rights Agreement, dated as of February 1, 1999, between the Company
            and American Stock Transfer & Trust Company, which includes the form
            of Rights Certificate as Exhibit B and the Summary of Rights to
            Purchase Series B Preferred Shares as Exhibit C (filed as Exhibit 4
            to the Company's Form 8-K filed February 10, 1999).

10.57       Form of Employment Agreement among the Company and each officer of
            the Company. (filed as Exhibit 10.63 to the Company's Form 10-K
            filed March 19, 1999).

10.58       Third Amendment to Sublease between the Company and Eli Lilly and
            Company, dated as of February 11, 1998. (filed as Exhibit 10.64 to
            the Company's Form 10-K filed March 19, 1999).

10.59       Collaboration Agreement between the Company and Abbott Laboratories
            dated as of June 2, 1999 (filed as Exhibit 2.1 to the Company's Form
            8-K/A filed November 3, 1999).

10.60       Co-Promotion Agreement between the Company and Abbott Laboratories
            dated as of June 2, 1999 (filed as Exhibit 2.2 to the Company's Form
            8-K/A filed November 3, 1999).

10.61       Triangle Pharmaceuticals, Inc. Common Stock Purchase Agreement
            between the Company and Abbott Laboratories dated as of June 2, 1999
            (filed as Exhibit 99(a)(1) to Abbott Laboratories' Schedule 13D
            filed June 11, 1999).

10.62       Triangle Pharmaceuticals, Inc. Stockholder Rights Agreement between
            the Company and Abbott Laboratories dated as of June 2, 1999 (filed
            as Exhibit 99(a)(2) to Abbott Laboratories' Schedule 13D filed June
            11, 1999).

10.63       Amendment to Rights Agreement between the Company and Abbott
            Laboratories dated as of June 2, 1999 (filed as Exhibit 4.1 to the
            Company's Form 8-K filed June 18, 1999).

10.64       Amendment to Rights Agreement between the Company and American Stock
            Transfer & Trust Company dated as of June 2, 1999 (filed as Exhibit
            1 to the Company's Form 8-A12G/A filed June 18, 1999).

10.65       Exclusive License Agreement among the Company, Glaxo Group Limited,
            The Wellcome Foundation Limited, Glaxo Wellcome Inc. and Emory
            University dated May 6, 1999 (filed as Exhibit 10.1 to the Company's
            Form 10-Q/A filed November 3, 1999).

10.66       Settlement Agreement among the Company, Emory University, Dr. David
            W. Barry, Glaxo Wellcome plc, Glaxo Wellcome Inc., Glaxo Group
            Limited and The Wellcome Foundation Limited dated May 6, 1999 (filed
            as Exhibit 10.2 to the Company's Form 10-Q/A filed November 3,
            1999).


                                       71
<Page>

10.67       Amendment to License Agreement between the Company and Bukwang
            Pharm. Ind. Co., Ltd. dated April 1, 1999 (filed as Exhibit 10.3 to
            the Company's Form 10-Q/A filed November 3, 1999).

10.68       First Amendment to License Agreement between the Company and Emory
            University dated May 6, 1999 (filed as Exhibit 10.4 to the Company's
            Form 10-Q/A filed November 3, 1999).

10.69       Supply and Manufacturing Agreement by and between Abbott
            Laboratories and the Company dated August 3, 1999 (filed as Exhibit
            10.1 to the Company's Form 10-Q filed November 12, 1999).

10.70       Declaration of Registration Rights, dated as of June 30, 1997 (filed
            as Exhibit 10.4 to the Company's Form 10-Q filed May 15, 2000).

10.71       License Agreement between Dynavax Technologies Corporation and the
            Company, dated as of March 31, 2000 (filed as Exhibit 10.5 to the
            Company's Form 10-Q filed May 15, 2000).

10.72       First Amendment to License Agreement between Emory University, the
            University of Georgia Research Foundation, Inc. and the Company,
            dated July 10, 2000 (filed as Exhibit 10.1 to the Company's Form
            10-Q filed November 14, 2000).

10.73       Second Amendment to License Agreement between Emory University and
            the Company, dated July 10, 2000 (filed as Exhibit 10.2 to the
            Company's Form 10-Q filed November 14, 2000).

10.74       Amendment to License Agreement between Bukwang Pharm. Ind. Co., Ltd.
            and the Company, dated September 5, 2000 (filed as Exhibit 10.4 to
            the Company's Form 10-Q filed November 14, 2000).

10.75       First Amendment to Employment Agreement between Carolyn Underwood
            and the Company, dated April 12, 2000 (filed as Exhibit 10.91 to the
            Company's Form 10-K filed February 26, 2001).

10.76       Amendment to License Agreement between Mitsubishi-Tokyo
            Pharmaceuticals, Inc. and the Company, dated January 1, 2001 (filed
            as Exhibit 10.93 to the Company's Form 10-K filed February 26,
            2001).

10.77       Form of Common Stock Purchase Agreement, dated January 30, 2001
            (filed as Exhibit 10.94 to the Company's Form 10-K filed February
            26, 2001).

10.78       Amendment to Co-Promotion Agreement between Abbott Laboratories and
            the Company, dated February 12, 2001 (filed as Exhibit 10.95 to the
            Company's Form 10-K filed February 26, 2001).

10.79       Amendment to Triangle Pharmaceuticals, Inc. 1996 Stock Incentive
            Plan (as amended and restated through March 27, 1998) dated May 18,
            2001 (filed as Exhibit 10.1 to the Company's Form 10-Q filed August
            10, 2001).

10.80       Purchase Agreement between Warburg Pincus Private Equity VIII, L.P.
            and the Company, dated August 24, 2001 (filed as Exhibit 10.1 to the
            Company's Form 8-K filed August 24, 2001).

10.81       Standstill Agreement between Warburg Pincus Private Equity VIII,
            L.P. and the Company, dated August 24, 2001 (filed as Exhibit 10.3
            to the Company's Form 8-K filed August 24, 2001).

10.82       Form of Purchase Agreement, between the Company and each of
            QFinance, Inc., Caduceus Capital II, L.P., Winchester Global Trust
            Company Limited as Trustee for Caduceus Capital Trust, PW Eucalyptus
            Fund, L.L.C. and PW Eucalyptus Fund, Ltd., each dated August 30,
            2001 (filed as Exhibit 10.1 to the Company's Form 8-K filed October
            10, 2001).

10.83       Master Loan and Security Agreement, between Wells Fargo Equipment
            Finance, Inc. and the Company, dated November 30, 2001 (filed as
            Exhibit 10.1 to the Company's Form 8-K filed December 7, 2001).


                                       72
<Page>

23.1        Consent of PricewaterhouseCoopers LLP, Independent Accountants.

24.1        Power of Attorney. Reference is made to page 74.

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

(a)   Incorporated by reference to the same-numbered exhibit to the Company's
      Registration statement on Form S-1 filed September 9, 1996.

SUPPLEMENTAL INFORMATION
------------------------

Copies of the Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders and copies of the form of proxy to be used for such Annual Meeting
will be furnished to the Securities and Exchange Commission prior to the time
they are distributed to the Registrant's stockholders.


                                       73
<Page>

                                   SIGNATURES

      Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form
10-K to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: March 25, 2002              TRIANGLE PHARMACEUTICALS, INC.


                                  By: /s/ Chris A. Rallis
                                      -----------------------
                                          Chris A. Rallis
                                          President and Chief Operating Officer

                                POWER OF ATTORNEY

      Know all men by these presents, that each person whose signature appears
below constitutes and appoints Chris A. Rallis or Robert F. Amundsen, Jr., his
or her attorney-in-fact, with power of substitution in any and all capacities,
to sign any amendments to this Annual Report on Form 10-K, and to file the same
with exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that the
attorney-in-fact or his or her substitute or substitutes may do or cause to be
done by virtue hereof.

      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 in the capacities and on the dates indicated.

         SIGNATURE                           TITLE                     DATE
         ---------                           -----                     ----


/s/ Chris A. Rallis             Director, President and Chief     March 25, 2002
----------------------------          Operating Officer
Chris A. Rallis                 (Principal Executive Officer)


/s/ Robert F. Amundsen, Jr.     Executive Vice President and      March 25, 2002
----------------------------       Chief Financial Officer
Robert F. Amundsen, Jr.           (Principal Financial and
                                     Accounting Officer)


/s/ Anthony B. Evnin                       Director               March 25, 2002
----------------------------
Anthony B. Evnin


/s/ Standish M. Fleming                    Director               March 25, 2002
----------------------------
Standish M. Fleming


/s/ Dennis B. Gillings                     Director               March 25, 2002
----------------------------
Dennis B. Gillings


/s/ Henry G. Grabowski                     Director               March 25, 2002
----------------------------
Henry G. Grabowski


/s/ Stewart J. Hen                         Director               March 25, 2002
----------------------------
Stewart J. Hen


/s/ Jonathan S. Leff                       Director               March 25, 2002
----------------------------
Jonathan S. Leff


/s/ George McFadden                        Director               March 25, 2002
----------------------------
George McFadden


                                       74
<Page>

/s/ James L. Tyree                         Director               March 25, 2002
----------------------------
James L. Tyree


                                       75