UNITED STATES
        
         SECURITIES AND EXCHANGE COMMISSION
        
         WASHINGTON, D.C. 20549
        
         _________________
        FORM 10-Q
        
         _________________ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
        
         SECURITIES EXCHANGE ACT OF 1934
        
         For the quarterly period ended March 31, 2003
        Commission File No. 0-31261 ATHEROGENICS, INC. (Exact name of registrant as specified in its
        charter) Georgia

                    58-210832(State of
                        incorporation)

                    (I.R.S. Employer
                        Identification Number)
 8995 Westside Parkway,
        Alpharetta,
        Georgia30004 (Address of registrant's principal
        executive offices, including zip code)
        
         _______________________
        
         (Registrant's telephone number, including area code):
        (678) 336-2500 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 whether the registrant is an
        accelerated filer (as defined in Rule 12b-2 of the Act).
        Yes [ X ] No [   ] As of May 9, 2003, there were 36,431,460 shares of the
        registrant's common stock outstanding. _________________________


**ATHEROGENICS, INC.
        
         FORM 10-Q
        
         INDEX** PART I.  FINANCIAL
                    INFORMATION

                Page No.Item 1.  Financial Statements
                    (unaudited)Condensed
                    Balance SheetsMarch
                    31, 2003 and December 31, 2002

                3Condensed
                    Statements of OperationsThree
                    months ended March 31, 2003 and 2002

                4Condensed
                    Statements of Cash FlowsThree
                    months ended March 31, 2003 and 2002

                5Notes to
                    Condensed Financial Statements

                6Item 2.  Management's Discussion
                    and Analysis of Financial Conditionand Results of
                    Operations

                8Item 3.  Quantitative and Qualitative
                    Disclosures About Market Risk

                11Item 4.  Controls and Procedures

                11PART II.  OTHER INFORMATIONItem 2.  Changes in Securities and Use
                    of Proceeds

                12Item 6.  Exhibits and Reports on Form
                    8-K

                12SIGNATURES

                13CERTIFICATIONS

                14  
  PART I - FINANCIAL
        INFORMATION Item 1.Financial
        Statements  ATHEROGENICS, INC.
        CONDENSED BALANCE SHEETS  March 31,

                

                December 31,2003

                

                2002ASSETS

                (Unaudited)

                

                (Audited)Current assets:Cash and cash
                    equivalents

                $ 54,912,362

                

                $ 32,132,329Short-term
                    investments

                18,132,220

                

                2,538,802Prepaid
                    expenses, notes receivable and other current
                    assets

                462,731

                

                223,721Total
                    current assets

                73,507,313

                

                34,894,852Equipment and leasehold improvements, net of
                    accumulateddepreciation
                    and amortization

                2,701,607

                

                2,825,267Notes receivable, net of current portion

                221,955

                

                231,925Total
                    assets

                $ 76,430,875

                

                $
                    37,952,044LIABILITIES AND
                    SHAREHOLDERS' EQUITYCurrent liabilities:Accounts
                    payable

                $   
                    2,651,766

                

                $   1,959,295Accrued
                    research and development costs

                2,084,174

                

                945,506Accrued
                    compensation

                612,467

                

                957,056Accrued
                    liabilities

                446,981

                

                589,345Current
                    portion of equipment loan facility

                452,658

                

                434,637Total
                    current liabilities

                6,248,046

                

                4,885,839Equipment loan facility, net of current
                    portion

                446,624

                

                572,492Shareholders' equity:Preferred
                    stock, no par value:  Authorized -
                    5,000,000 shares

                --

                

                --Common stock,
                    no par value:  Authorized -
                    100,000,000shares;
                    issued and outstanding – 36,430,460
                    and28,133,560
                    shares at March 31, 2003 andDecember
                    31, 2002, respectively

                170,742,791

                

                122,182,607Warrants

                882,536

                

                798,076Deferred
                    stock compensation

                (1,146,686

                )

                (1,243,786

                )Accumulated
                    deficit

                (100,738,195

                )

                (89,243,494

                )Accumulated
                    other comprehensive (loss) income

                (4,241

                )

                310Total
                    shareholders' equity

                69,736,205

                

                32,493,713Total
                    liabilities and shareholders' equity

                $  
                    76,430,875

                

                $ 37,952,044 The accompanying notes are an integral part of these
        condensed financial statements.   3 
  ATHEROGENICS, INC.
        
         CONDENSED STATEMENTS OF OPERATIONS
        
         (Unaudited)  Three months endedMarch 31,2003

                

                2002Revenues

                $       
                              --

                

                $               
                    --Operating expenses:Research and
                    development

                10,158,401

                

                5,385,614General and
                    administrative

                1,193,292

                

                983,346Amortization
                    of deferred stockcompensation

                320,670

                

                499,323Total
                    operating expenses

                11,672,363

                

                6,868,283Operating loss

                (11,672,363

                )

                (6,868,283

                )Net interest income

                177,662

                

                304,568Net loss

                $ (11,494,701

                )

                $ (6,563,715

                )Net loss per share -basic and
                    diluted

                $           
                    (0.35

                )

                $         
                    (0.24

                )Weighted average shares outstanding -basic and
                    diluted

                33,293,017

                

                27,876,269 The accompanying notes are an integral part of these
        condensed financial statements.  4 
  ATHEROGENICS, INC.
        
         CONDENSED STATEMENTS OF CASH FLOWS
        
         (Unaudited) Three months endedMarch 31,2003

                

                2002Operating activities:Net loss

                $ (11,494,701

                )

                $ (6,563,715

                )Adjustments to reconcile net loss to net
                    cash used inoperating activities:Depreciation
                    and amortization

                198,484

                

                174,682Amortization
                    of deferred stock compensation

                320,670

                

                499,323Changes in
                    operating assets and liabilities:Prepaid
                    expenses, notes receivable and other assets

                (229,040

                )

                61,448Accounts
                    payable

                692,471

                

                (293,363

                )Accrued
                    liabilities

                651,715

                

                (251,577

                )Net
                    cash used in operating activities

                (9,860,401

                )

                (6,373,202

                )Investing activities:Purchases of equipment and leasehold
                    improvements

                (74,824

                )

                (257,364

                )(Purchases) sales of short-term
                    investments

                (15,597,969

                )

                10,520,862Net
                    cash (used in) provided by investing
                    activities

                (15,672,793

                )

                10,263,498Financing activities:Proceeds from the issuance of common
                    stock

                48,395,000

                

                --Proceeds from the exercise of common stock
                    options

                26,074

                

                32,471Payments on equipment loan facility and
                    capital lease obligation

                (107,847

                )

                (23,973

                )Net
                    cash provided by financing activities

                48,313,227

                

                8,498Increase in cash and cash equivalents

                22,780,033

                

                3,898,794Cash and cash equivalents at beginning of
                    period

                32,132,329

                

                28,682,050Cash and cash equivalents at end of
                    period

                $
                    54,912,362

                

                $
                    32,580,844Supplemental disclosures of cash flow
                    information:Interest paid

                $    
                       18,631

                

                $  
                           3,245Remeasurement adjustment for variable
                    options and warrants issuedfor technology license
                    agreements and consulting agreements

                223,570

                

                147,015  The accompanying notes are an integral part of these
        condensed financial statements.   5 
  ATHEROGENICS, INC.
        
         NOTES TO CONDENSED FINANCIAL STATEMENTS
        
         (Unaudited) 1.   Basis of Presentation
        
                        
        The accompanying unaudited condensed financial statements
        reflect all adjustments (consisting solely of normal
        recurring adjustments) which management considers necessary
        for a fair presentation of the financial position, results
        of operations and cash flows of AtheroGenics for the
        interim periods presented.  Certain footnote
        disclosures normally included in financial statements
        prepared in accordance with accounting principles generally
        accepted in the United States have been condensed or
        omitted from the interim financial statements as permitted
        by the rules and regulations of the Securities and Exchange
        Commission.  Interim results are not necessarily
        indicative of results for the full year. 
        
                        
        The interim results should be read in conjunction with the
        financial statements and notes thereto included in
        AtheroGenics' Annual Report on Form 10-K for the year
        ended December 31, 2002.  Shareholders are encouraged
        to review the Form 10-K for a broader discussion of
        AtheroGenics' opportunities and risks inherent in the
        business.  Copies of the Form 10-K are available on
        request.
        2.   Recently Issued Accounting Standards
        
                        
        In April 2002, the Financial Accounting Standards Board
        ("FASB") issued Statement of Financial Accounting
        Standards (“SFAS”) No. 145, Rescission of
        FASB Statements No. 4, 44, and 64, Amendment of FASB
        Statement No. 13 and Technical Corrections (“SFAS
        145”), which clarifies the criteria under which
        extinguishment of debt can be considered as extraordinary,
        rescinds the related Statement Nos. 4, 44 and 64, and makes
        technical corrections to other Statements of Financial
        Standards.  AtheroGenics adopted SFAS 145 in January
        2003.  AtheroGenics believes the adoption of SFAS 145
        will not have a material effect on its future results of
        operations.
        
                        
        In June 2002, the FASB issued SFAS No. 146,
        Accounting for Costs Associated with Exit or Disposal
        Activities ("SFAS 146"), which requires that
        a liability for a cost associated with an exit or disposal
        activity be recognized when the liability is incurred and
        nullifies Emerging Issues Task Force (“EITF”)
        Issue No. 94-3.  AtheroGenics adopted SFAS 146 in
        January 2003, but does not expect the adoption to have a
        material effect on its future results of operations.
        
                        
        In December 2002, the FASB issued SFAS No. 148,
        Accounting for Stock-Based Compensation - Transition and
        Disclosure ("SFAS 148"), that amends
        SFAS No. 123, Accounting for Stock‐Based
        Compensation ("SFAS 123"), to provide
        alternative methods of transition to SFAS 123's fair
        value method of accounting for stock-based employee
        compensation.  SFAS 148 also amends the disclosure
        provisions of SFAS 123 and APB Opinion No. 28, Interim
        Financial Reporting, to require disclosure in the
        summary of significant accounting policies of the effects
        of an entity's accounting policy with respect to
        stock-based employee compensation on reported net income
        and earnings per share in annual and interim financial
        statements.  SFAS 148 does not amend SFAS 123 to
        require companies to account for employee stock options
        using the fair value method.  SFAS 148 is effective
        for fiscal years beginning after December 15,
        2002.  AtheroGenics adopted the new disclosure
        provisions in accordance with SFAS 148, as discussed in
        note 4 “Stock-Based Compensation.” **3.   Net Loss per Share**
        
                        
        SFAS No. 128, Earnings per Share, requires
        presentation of both basic and diluted earnings per
        share.  Basic earnings per share is computed by
        dividing net income (loss) by the weighted average number
        of shares of common stock outstanding during the
        period.  Diluted earnings per share is computed in the
        same manner as basic earnings per share except that diluted
        earnings per share reflects the potential dilution that
        would occur if outstanding options and warrants were
        exercised.  Because AtheroGenics reported a net loss
        for all periods presented, shares associated with stock
        options and warrants are not included because they are
        antidilutive.  Basic and diluted net loss per share
        amounts are the same for the periods presented.  6 
  4.   Stock‐Based Compensation
        AtheroGenics has elected to follow Accounting Principles
        Board ("APB") Opinion No. 25, Accounting for
        Stock Issued to Employees ("APB 25"), in
        accounting for its stock‐based employee compensation
        plans, rather than the alternative fair value accounting
        method provided for under SFAS 123, as SFAS 123 requires
        the use of option valuation models that were not developed
        for use in valuing employee stock options. AtheroGenics
        accounts for transactions in which services are received in
        exchange for equity instruments based on the fair value of
        such services received from non‐employees, in
        accordance with SFAS 123 and EITF Issue
        No. 96‐18, Accounting for Equity Instruments
        that are Issued to Other than Employees for Acquiring, or
        in Conjunction with Selling, Goods or Services.
        The following table illustrates the effect on net loss and
        loss per share if the fair value based method had been
        applied to all outstanding and unvested options in each
        period, based on the provisions of SFAS 123 and SFAS
        148. March 31,2003

                

                2002Net loss, as reported

                $  (11,494,701

                )

                $  (6,563,715

                )Add: Stock-based employee compensation
                    expenseincluded in reported net
                    loss

                140,793

                

                392,010Deduct: Total stock-based employee
                    compensation expensedetermined under fair
                    value based method for all awards

                (895,320

                )

                (836,591

                )Pro forma net
                    loss

                $  (12,249,228

                )

                $  (7,008,296

                )Net loss per share:Basic and diluted, as
                    reported

                $            
                    (0.35

                )

                $           
                    (0.24

                )Basic and diluted, pro
                    forma

                $            
                    (0.37

                )

                $           
                    (0.25

                ) **5.   Deferred Stock
        Compensation**
        
                        
        Deferred compensation for options granted to employees
        represents the difference between the exercise price and
        the deemed fair value of AtheroGenics' common stock on
        the dates these stock options were granted.  The
        deferred compensation is included as a reduction of
        shareholders' equity and is amortized over the vesting
        periods of the individual options, generally four years,
        using the graded vesting method.  The graded vesting
        method provides for vesting of portions of the overall
        award at interim dates and results in higher vesting in
        earlier years than straight-line vesting.
        
                        
        Deferred compensation for options and warrants granted to
        consultants is determined in accordance with SFAS 123 and
        EITF Issue No. 96-18 as the fair value of the equity
        instruments issued.  Deferred compensation for options
        and warrants granted to consultants is adjusted to fair
        market value on each balance sheet date.
        
                        
        At March 31, 2003, AtheroGenics had a total of $1,146,686
        remaining to be amortized over the vesting periods of all
        stock options and warrants.
        6.   Bank Credit
        Agreements
        
                        
        In March 2002, AtheroGenics entered into a revolving credit
        facility with Silicon Valley Bank for up to a maximum
        amount of $5,000,000 to be used for working capital
        requirements.  Under the terms of the facility,
        interest on advances is charged at the Bank's prime
        rate plus 1.50% per year, provided that certain liquidity
        levels are maintained; otherwise interest will be charged
        at prime rate plus 2.0% per year.  Amounts borrowed
        under the revolving credit facility may be repaid and
        reborrowed at any time and from time to time during the
        term of the facility.  The revolving line of credit
        terminates on September 5, 2004 and all outstanding amounts
        and accrued interest will be due and payable on that
        date.  As of March 31, 2003, there were no outstanding
        balances under the revolving credit facility.
        
                        
        In addition, in March 2002, AtheroGenics entered into an
        equipment loan facility with Silicon Valley Bank  7 
 for up to a maximum amount of $2,500,000 to be used to
        finance existing and new equipment purchases.  The
        interest rate on the equipment advances was equal to the
        greater of (1) the Bank's prime rate plus 3.0% or (2)
        7.5% per year and was fixed at the time of each
        advance.  Amounts borrowed under the equipment loan
        facility are repaid in 33 equal installments of principal
        and interest beginning on the first business day of the
        month following an advance.  As of March 31, 2003,
        there was an outstanding balance of $899,282 under the
        equipment loan facility and the weighted average interest
        rate was 7.7%.
        
                        
        As collateral for the revolving credit facility and for the
        equipment loan facility, AtheroGenics granted to Silicon
        Valley Bank a security interest in all of its assets other
        than its intellectual property, and granted a negative
        pledge on its intellectual property.  Also, in
        conjunction with these facilities, AtheroGenics is required
        to maintain a $15,000,000 compensating cash balance in an
        account with the Bank.
        Item 2.   Management's Discussion and
        Analysis of Financial Condition and Results of Operations
        
                        
        The following should be read with the financial
        statements and related footnotes and Management's
        Discussion and Analysis of Financial Condition and Results
        of Operations included in AtheroGenics' Annual Report
        on Form 10-K.  The results discussed below are not
        necessarily indicative of the results to be expected in any
        future periods.  The following discussion contains
        forward-looking statements that are subject to risks and
        uncertainties which could cause actual results to differ
        from the statements made.  These risks are set forth
        in more detail in our Annual Report on Form 10-K.
        OVERVIEW
        
                        
        Since our operations began in 1994, we have focused on the
        discovery, development and commercialization of novel drugs
        for the treatment of chronic inflammatory diseases, such as
        atherosclerosis, rheumatoid arthritis and asthma. 
        Based on our proprietary vascular protectant, or
        v-protectantTM, technology platform, we have four drug
        programs in the clinic, and are progressing on a number of
        other pre-clinical programs.  We are implementing a
        Phase III clinical trial, called ARISE (Aggressive
        Reduction of Inflammation Stops Events), for our most
        advanced clinical compound, AGI-1067, for the treatment of
        atherosclerosis in patients with coronary artery
        disease.  The AGI-1067 Phase IIb clinical trial for
        atherosclerosis and post-angioplasty restenosis is
        ongoing.  Our second clinical compound, AGIX-4207, is
        a novel oral agent being tested in a Phase II clinical
        program for the treatment of rheumatoid arthritis. 
        AGIX-4207 I.V. is an intravenous rheumatoid arthritis
        treatment that has completed a Phase I clinical
        trial.  AGI-1096 is a novel, oral agent that has
        completed a Phase I clinical trial for the prevention of
        organ transplant rejection.
        
                        
        To date, we have devoted substantially all of our resources
        to research and development.  We have not received any
        commercial revenues from product sales.  We expect to
        incur significant losses in most years prior to deriving
        any product revenue as we continue to increase research and
        development costs.  We have incurred significant
        losses since we began operations in 1994 and as of March
        31, 2003, we had an accumulated deficit of $100.7
        million.  We cannot assure you that we will become
        profitable.  We expect that losses will fluctuate from
        quarter to quarter and that these fluctuations may be
        substantial.  Our ability to achieve profitability
        depends upon a variety of factors, including our ability,
        alone or with others, to complete the successful
        development of our product candidates, to obtain required
        regulatory clearances, and to manufacture and market our
        future products.
        RESULTS OF OPERATIONS
        Comparison of the Three Month Periods Ended March 31, 2003
        and 2002
        Revenues
        
                        
        There were no revenues during the three months ended March
        31, 2003 and 2002.
        Expenses
        
                        
        Research and Development.  Research and
        development expenses increased 89% to $10.2 million for the
        quarter ended March 31, 2003 from $5.4 million for the
        comparable period in 2002.  The increase in research
        and development expenses for the quarter ended March 31,
        2003 was primarily due start-up expenditures related to the
        AGI-1067 ARISE Phase III clinical trial, such as
        manufacturing activities for clinical drug supply, clinical
        site selection and investigator recruitment.  In
        addition, there were increased expenditures for the ongoing
        AGI-1067  8 
 CART-2 Phase IIb and the AGIX-4207 Phase II clinical
        trials.
        
                        
        General and Administrative.  General and
        administrative expenses increased 21% to $1.2 million for
        the quarter ended March 31, 2003, from $1.0 million for the
        comparable period in 2002.  The increase in general
        and administrative expenses for the quarter ended March 31,
        2003 was due to increased business development costs
        related to AGI-1067.
        
                        
        Amortization of Deferred Stock Compensation. 
        Amortization of deferred stock compensation was $320,670
        for the quarter ended March 31, 2003, compared to $499,323
        for the same period in 2002.  The decrease in the
        quarter ended March 31, 2003 is due to the deferred stock
        compensation being amortized using the graded vesting
        method, which results in higher amortization in the earlier
        years.  The decrease was partially offset by the
        effect of remeasuring options and warrants granted to
        consultants to current fair market value.
        Net Interest Income
        
                        
        Net interest income was $177,662 for the quarter ended
        March 31, 2003.  This is a decrease of 42% from
        $304,568 for the quarter ended March 31, 2002.  The
        decrease in net interest income is a reflection of lower
        average interest rates.
        LIQUIDITY AND CAPITAL RESOURCES
        
                        
        Since inception, we have financed our operations primarily
        through sales of equity securities and payments received
        from a license agreement, which was subsequently
        terminated.  At March 31, 2003, we had cash, cash
        equivalents and short-term investments of $73.0 million,
        compared with $34.7 million at December 31, 2002. 
        Working capital at March 31, 2003 was $67.3 million,
        compared to $30.0 million at December 31, 2002.  The
        increase in cash, cash equivalents, short-term investments
        and working capital is primarily due to a follow-on public
        offering of 8.3 million shares of common stock (including
        the exercise of the underwriters’ over-allotment
        option) in the first quarter of 2003 that raised net
        proceeds of approximately $48.4 million.
        
                        
        Net cash used in operating activities was $9.9 million for
        the quarter ended March 31, 2003, compared to $6.4 million
        for the quarter ended March 31, 2002.  The increase in
        the use of cash in operating activities is principally due
        to the expenditures for the initiation of our ARISE Phase
        III clinical trial and the continuation of our CART-2 Phase
        IIb clinical trial for AGI-1067 as well as other ongoing
        product development activities, partially offset by
        increases in payables and accruals related to the clinical
        trials.  We anticipate net cash usage in 2003 to be
        between $43 million and $48 million.
        
                        
        Net cash used in investing activities was $15.7 million for
        the quarter ended March 31, 2003, compared to $10.3 million
        provided by investing activities for the quarter ended
        March 31, 2002.  Net cash used in investing activities
        during the quarter ended March 31, 2003 consisted primarily
        of the purchases of available-for-sale securities and
        equipment and leasehold improvements.  Net cash
        provided by investing activities during the quarter ended
        March 31, 2002 consisted primarily of the sales of
        available-for-sale securities, with the proceeds reinvested
        in interest bearing cash equivalents, partially offset by
        the purchase of equipment and leasehold improvements.
        
                        
        Net cash provided by financing activities was $48.3 million
        for the quarter ended March 31, 2003, compared to $8,498
        for the quarter ended March 31, 2002.  Net cash
        provided by financing activities in the quarter ended March
        31, 2003 consisted primarily of proceeds of approximately
        $48.4 million from the follow-on public offering of 8.3
        million shares of our common stock.  This was
        partially offset by payments on our equipment loan
        facility.  Net cash provided by financing activities
        in the quarter ended March 31, 2002 consisted of the
        exercise of stock options, offset by payments for capital
        lease obligations.
        
                        
        In March 2002, we entered into a revolving credit facility
        with Silicon Valley Bank in the amount of up to $5.0
        million to be used for working capital requirements. 
        In addition, we entered into an equipment loan facility
        with Silicon Valley Bank in the amount of up to $2.5
        million to be used to finance existing and new equipment
        purchases.  At March 31, 2003 there was no outstanding
        balance on the revolving credit facility and an outstanding
        balance of $899,282 with a weighted average interest rate
        of 7.7% on the equipment loan facility.  As collateral
        for the revolving credit facility and for the equipment
        loan facility, AtheroGenics granted to Silicon Valley Bank
        a security interest in all of its assets other than its
        intellectual property, and granted a negative pledge on its
        intellectual property.  Also, in conjunction with
        these facilities, AtheroGenics is required to maintain a
        $15 million  9 
 compensating cash balance in an account with the
        Bank.
        
                        
        The following table summarizes our long-term contractual
        obligations as of March 31, 2003. 2003

                

                2004-2005

                

                2006-2007

                

                ThereafterOperating leases, net of sublease income

                $  
                     841,006

                

                $ 2,086,674

                

                $ 2,273,790

                

                $ 1,326,378Long-term debt

                326,790

                

                572,492

                

                --

                

                --Total contractual obligations

                $ 1,167,796

                

                $ 2,659,166

                

                $ 2,273,790

                

                $ 1,326,378 Based upon the current status of our product development
        and commercialization plans, we believe that our existing
        cash and cash equivalents, along with our revolving credit
        facility with Silicon Valley Bank, will be adequate to
        satisfy our capital needs for at least the next 12
        months.  However, our actual capital requirements will
        depend on many factors, including: -

                the status of product development;-

                the time and cost involved in conducting
                    clinical trials and obtaining regulatory
                    approvals;-

                the costs of filing, prosecuting and
                    enforcing patent  and other intellectual
                    property claims;-

                competing technological and market
                    developments; and-

                our ability to establish new licensing
                    agreements. FORWARD-LOOKING STATEMENTS
        
                        
        The Private Securities Litigation Reform Act of 1995 (the
        "Reform Act") provides a safe harbor for
        forward-looking statements made by or on behalf of
        AtheroGenics.  AtheroGenics and its representatives
        may from time to time make written or oral forward-looking
        statements, including statements contained in this report
        and our other filings with the Securities and Exchange
        Commission and in our reports to our shareholders. 
        Generally, the words "believe,"
        "expect," "intend,"
        "estimate," "anticipate,"
        "will" and similar expressions identify
        forward-looking statements.  All statements which
        address operating performance, events or developments that
        we expect or anticipate will occur in the future, such as
        projections about our future results of operations or our
        financial condition, research, development and
        commercialization of our product candidates and anticipated
        trends in our business, are forward-looking statements
        within the meaning of the Reform Act.  The
        forward-looking statements are and will be based on
        management's then current views and assumptions
        regarding future events and operating performance, and
        speak only as of their dates.  AtheroGenics undertakes
        no obligation to publicly update or revise any
        forward-looking statements, whether as a result of new
        information, future events or otherwise.
        
                        
        The following are some of the factors that could affect our
        financial performance or could cause actual results to
        differ materially from those expressed or implied in our
        forward-looking statements: -

                AGI-1067, AGIX-4207, AGIX-4207 I.V. and
                    AGI-1096 may fail in clinical trials;-

                our ability to generate positive cash flow
                    in light of our history of operating
                    losses;-

                our inability to obtain additional financing
                    on satisfactory terms, which could preclude us
                    fromdeveloping or marketing our products;-

                our ability to successfully develop our
                    other product candidates;-

                our ability to commercialize our product
                    candidates if we fail to demonstrate adequately
                    their safetyand efficacy;-

                possible delays in our clinical trials;  10 
   -

                our inability to predict whether or when we
                    will obtain regulatory approval to
                    commercialize ourproduct candidates or the timing of any
                    future revenue from these product
                    candidates;-

                our need to comply with applicable
                    regulatory requirements in the manufacture and
                    distribution ofour products to avoid incurring penalties
                    that may inhibit our ability to commercialize
                    our products;-

                our ability to protect adequately or enforce
                    our intellectual property rights or secure
                    rights to thirdparty patents;-

                the ability of our competitors to develop
                    and market anti-inflammatory products that are
                    moreeffective, have fewer side effects or are
                    less expensive than our current or future
                    product candidates;-

                third parties' failure to synthesize and
                    manufacture our product candidates, which could
                    delay ourclinical trials or hinder our
                    commercialization prospects;-

                our ability to create sales, marketing and
                    distribution capabilities or enter into
                    agreements with thirdparties to perform these functions;-

                our ability to attract, retain and motivate
                    skilled personnel and cultivate key academic
                    collaborations;-

                our ability to obtain an adequate level of
                    reimbursement or acceptable prices for our
                    products; and-

                if plaintiffs bring product liability
                    lawsuits against us, we may incur substantial
                    financial loss or maybe unable to obtain future product liability
                    insurance at reasonable prices, if at all,
                    either of whichcould diminish our ability to commercialize
                    our future products. The foregoing list of important factors is discussed in
        more detail in our Annual Report on Form 10-K and is not
        exclusive.
        Item 3. Quantitative And Qualitative Disclosures About
        Market Risk
        
                        
        Market risk represents the risk of loss that may impact our
        financial position, operating results or cash flows due to
        changes in U.S. interest rates.  This exposure is
        directly related to our normal operating activities. 
        Our cash, cash equivalents and short-term investments are
        invested with high quality issuers and are generally of a
        short-term nature.  Interest rates payable on our
        lease obligations are generally fixed.  As a result,
        we do not believe that near-term changes in interest rates
        will have a material effect on our future results of
        operations.
        
                        
        The following table summarizes information on our equipment
        loan facility.  The table presents maturity of the
        debt and projected annual average interest rates as of
        March 31, 2003. Value as of2003

                

                2004

                

                2005

                

                Total

                

                March 31,
                    2003Long-term debt - fixed rateMaturity

                $326,790

                

                $488,870

                

                $83,622

                

                $899,282

                

                $899,282Average interest rate

                7.7%

                

                7.7%

                

                7.7% Item 4.  Controls and Procedures Evaluation of disclosure controls and procedures. 
        Our chief executive officer and chief financial officer are
        responsible for establishing and maintaining
        "disclosure controls and procedures" (as defined
        in the Securities Exchange Act of 1934 Rules 13a-14(c) and
        15d-14(c)) for AtheroGenics.  Our disclosure controls
        and procedures include our "internal controls,"
        as that term is used in Section 302 of the Sarbanes-Oxley
        Act of 2002 and described in the Security and Exchange
        Commission's Release No. 34-46427 (August 29,
        2002).  Our chief executive officer and chief
        financial officer, after evaluating the effectiveness of
        our disclosure controls and procedures as of a date within
        90 days before the filing date of this quarterly report,
        have concluded that our disclosure controls and procedures
        are adequate and effective in timely alerting them to
        material information relating to us required to be included
        in our periodic SEC filings. 11 
 Changes in internal controls.  There were no
        significant changes in our internal controls or in other
        factors that could significantly affect those controls
        subsequent to the date of the evaluation.  As a
        result, there were no corrective actions to be taken. PART II - OTHER INFORMATION Item 2.  Changes in Securities and Use of
        Proceeds
        
                        
        The Securities and Exchange Commission declared our
        Registration Statement on Form S-1 (File No. 333-31140)
        effective August 8, 2000.  The net proceeds from the
        sale of the 6,900,000 shares of common stock registered
        pursuant to the Registration Statement (including the
        exercise of the underwriters’ over-allotment option)
        were $49.4 million after deducting underwriting discounts
        of $3.9 million and offering expenses of $1.9 million.
        
                        
        We have used the proceeds from our initial public offering
        for research and development activities, including clinical
        trials, process development and manufacturing support, and
        for general corporate purposes, including working
        capital.  As of March 31, 2003, the proceeds have been
        applied toward: -

                purchases of equipment and leasehold
                    improvements, $2.4 million;-

                operating activities, $46.9 million; and-

                investments in highly liquid, interest
                    bearing, investment grade securities,
                    $100,000. Item 6.  Exhibits and Reports on Form 8-K
        
         (a) Exhibits None.
        
         (b) Reports on Form 8-K We filed a report on Form 8-K on January 21, 2003 under
        Item 5 to announce the public offering of 6,000,000 shares
        of our common stock. We filed a report on Form 8-K on January 28, 2003 under
        Item 5 to report that we had entered into an underwriting
        agreement with Morgan Stanley & Co. Incorporated,
        Lehman Brothers Inc., Lazard Frères & Co. LLC and
        Adams, Harkness & Hill, Inc.   12 
  SIGNATURES Pursuant to the requirements of the Securities Exchange Act
        of 1934, the registrant has duly caused this report to be
        signed on its behalf by the undersigned, thereunto duly
        authorized.  ATHEROGENICS, INC.Date:  May 13,
                    2003

                /s/  MARK P.
                    COLONNESEMark P. ColonneseSenior Vice President of Finance andAdministration and Chief
                    Financial Officer  13 
  CERTIFICATIONS  I, Russell M. Medford, President and Chief
                    Executive Officer, certify that:1.     I
                    have reviewed this quarterly report on Form
                    10-Q of AtheroGenics, Inc.;2.     Based
                    on my knowledge, this quarterly report does not
                    contain any untrue statement of a material fact
                    or omitto
                    state a material fact necessary to make the
                    statements made, in light of the circumstances
                    under which suchstatements
                    were made, not misleading with respect to the
                    period covered by this quarterly report;3.     Based
                    on my knowledge, the financial statements, and
                    other financial information included in this
                    quarterlyreport,
                    fairly present in all material respects the
                    financial condition, results of operations and
                    cash flows of theregistrant
                    as of, and for, the periods presented in this
                    quarterly report;4.     The
                    registrant’s other certifying officers
                    and I are responsible for establishing and
                    maintaining disclosurecontrols
                    and procedures (as defined in Exchange Act
                    Rules 13a-14 and 15d-14) for the registrant and
                    wehave:a)     designed
                    such disclosure controls and procedures to
                    ensure that material information relating to
                    theregistrant,
                    including its consolidated subsidiaries, is
                    made known to us by others within those
                    entities,particularly
                    during the period in which this quarterly
                    report is being prepared;b)     evaluated
                    the effectiveness of the registrant’s
                    disclosure controls and procedures as of a date
                    within 90days
                    prior to the filing date of this quarterly
                    report (the “Evaluation Date”);
                    andc)     presented
                    in this quarterly report our conclusions about
                    the effectiveness of the disclosure controls
                    andprocedures
                    based on our evaluation as of the Evaluation
                    Date;5.     The
                    registrant’s other certifying officers
                    and I have disclosed, based on our most recent
                    evaluation, to theregistrant’s
                    auditors and the audit committee of
                    registrant’s board of directors (or
                    persons performing theequivalent
                    function):a)     all
                    significant deficiencies in the design or
                    operation of internal controls which could
                    adversely affect theregistrant’s
                    ability to record, process, summarize and
                    report financial data and have identified for
                    theregistrant’s
                    auditors any material weaknesses in internal
                    controls; andb)     any
                    fraud, whether or not material, that involves
                    management or other employees who have a
                    significantrole
                    in the registrant’s internal controls;
                    and6.     The
                    registrant’s other certifying officers
                    and I have indicated in this quarterly report
                    whether or not there weresignificant
                    changes in internal controls or in other
                    factors that could significantly affect
                    internal controlssubsequent
                    to the date of our most recent evaluation,
                    including any corrective actions with regard
                    tosignificant
                    deficiencies and material weaknesses.   Date:  May 13,
                    2003

                /s/  RUSSELL M.
                    MEDFORDRussell M. MedfordPresident and Chief Executive Officer  14 
   I, Mark P. Colonnese, Senior Vice President
                    of Finance and Administration and Chief
                    Financial Officer, certify that:1.     I
                    have reviewed this quarterly report on Form
                    10-Q of AtheroGenics, Inc.;2.     Based
                    on my knowledge, this quarterly report does not
                    contain any untrue statement of a material fact
                    or omitto
                    state a material fact necessary to make the
                    statements made, in light of the circumstances
                    under which suchstatements
                    were made, not misleading with respect to the
                    period covered by this quarterly report;3.     Based
                    on my knowledge, the financial statements, and
                    other financial information included in this
                    quarterlyreport,
                    fairly present in all material respects the
                    financial condition, results of operations and
                    cash flows of theregistrant
                    as of, and for, the periods presented in this
                    quarterly report;4.     The
                    registrant’s other certifying officers
                    and I are responsible for establishing and
                    maintaining disclosurecontrols
                    and procedures (as defined in Exchange Act
                    Rules 13a-14 and 15d-14) for the registrant and
                    wehave:a)     designed
                    such disclosure controls and procedures to
                    ensure that material information relating to
                    theregistrant,
                    including its consolidated subsidiaries, is
                    made known to us by others within those
                    entities,particularly
                    during the period in which this quarterly
                    report is being prepared;b)     evaluated
                    the effectiveness of the registrant’s
                    disclosure controls and procedures as of a date
                    within 90days
                    prior to the filing date of this quarterly
                    report (the “Evaluation Date”);
                    andc)     presented
                    in this quarterly report our conclusions about
                    the effectiveness of the disclosure controls
                    andprocedures
                    based on our evaluation as of the Evaluation
                    Date;5.     The
                    registrant’s other certifying officers
                    and I have disclosed, based on our most recent
                    evaluation, to theregistrant’s
                    auditors and the audit committee of
                    registrant’s board of directors (or
                    persons performing theequivalent
                    function):a)     all
                    significant deficiencies in the design or
                    operation of internal controls which could
                    adversely affect theregistrant’s
                    ability to record, process, summarize and
                    report financial data and have identified for
                    theregistrant’s
                    auditors any material weaknesses in internal
                    controls; andb)     any
                    fraud, whether or not material, that involves
                    management or other employees who have a
                    significantrole
                    in the registrant’s internal controls;
                    and6.     The
                    registrant’s other certifying officers
                    and I have indicated in this quarterly report
                    whether or not there weresignificant
                    changes in internal controls or in other
                    factors that could significantly affect
                    internal controlssubsequent
                    to the date of our most recent evaluation,
                    including any corrective actions with regard
                    tosignificant
                    deficiencies and material weaknesses.   Date:  May 13,
                    2003

                /s/  MARK P.
                    COLONNESEMark P. ColonneseSenior Vice President of Finance andAdministration and Chief
                    Financial Officer   15