<Page>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                    -----------------------------------------

                                    FORM 10-Q

         (MARK ONE)

         [X]    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 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: 000-30289

                      PRAECIS PHARMACEUTICALS INCORPORATED
         --------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                     DELAWARE                              043200305
         ------------------------------                ------------------
     (State or other jurisdiction of                   (I.R.S. Employer
      incorporation or organization)                    Identification No.)


                    830 WINTER STREET, WALTHAM, MA 02451-1420
              -----------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (781) 795-4100
              ----------------------------------------------------
              (Registrant's telephone number, including area code)

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

As of October 31, 2001, there were 51,041,859 shares of the registrant's common
stock, $.01 par value, outstanding.


<Page>





                      PRAECIS PHARMACEUTICALS INCORPORATED
                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2001

                                      INDEX

<Table>
<Caption>

                                                                                                     PAGE
                                                                                                   NUMBER
<S>                  <C>                                                                           <C>
PART I.              FINANCIAL INFORMATION                                                              3

Item 1.              Financial Statements                                                               3

                     Condensed Consolidated Balance Sheets - December 31,
                     2000 and September 30, 2001 (unaudited)                                            3

                     Condensed Consolidated Statements of Operations (unaudited)
                     - three and nine months ended September 30, 2000 and 2001                          4

                     Condensed Consolidated Statements of Cash Flows (unaudited)
                     - nine months ended September 30, 2000 and 2001                                    5

                     Notes to Condensed Consolidated Financial Statements                               6

Item 2.              Management's Discussion and Analysis of Financial Condition
                     and Results of Operations                                                         10

Item 3.              Quantitative and Qualitative Disclosures About Market Risk                        23


PART II.             OTHER INFORMATION                                                                 24

Item 2.              Changes in Securities and Use of Proceeds                                         24

Item 6.              Exhibits and Reports on Form 8-K                                                  24


SIGNATURE                                                                                              26

EXHIBIT INDEX                                                                                          27

</Table>


                                 Page 2 (of 27)

<Page>


                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.


                      PRAECIS PHARMACEUTICALS INCORPORATED
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

<Table>
<Caption>

                                                                                December 31,         September 30,
                                                                                    2000                  2001
                                                                                --------------       ------------
                                                                                                     (unaudited)
<S>                                                                            <C>                   <C>

ASSETS
Current assets:
    Cash and cash equivalents ..............................................         $132,207           $186,655
    Marketable securities ..................................................               --             82,760
    Accounts receivable ....................................................            1,079                667
    Refundable income taxes ................................................            4,853              4,795
    Unbilled revenue .......................................................            1,493              1,160
    Prepaid expenses and other assets ......................................              786              1,023
                                                                                --------------       ------------

          Total current assets .............................................          140,418            277,060

Property and equipment, net ................................................           53,821             74,029
Other assets ...............................................................            1,332                880
                                                                                --------------       ------------

          Total assets .....................................................         $195,571           $351,969
                                                                                ==============       ============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable .......................................................          $12,834            $30,417
    Accrued expenses .......................................................            7,142              9,266
    Deferred revenue .......................................................            4,709              1,298
                                                                                --------------       ------------

        Total current liabilities ..........................................           24,685             40,981
Deferred revenue ...........................................................              355                234
Long term debt .............................................................           24,000             33,000

Commitments and contingencies

Stockholders' equity:
    Preferred Stock, $0.01 par value; 10,000,000 shares authorized;
        no shares issued and outstanding ...................................               --                 --
    Common Stock, $0.01 par value; 200,000,000 shares authorized;
        42,284,199 shares in 2000 and 51,041,859 shares in 2001
        issued and outstanding .............................................              423                510
    Accumulated other comprehensive income .................................               --                843
    Additional paid-in capital .............................................          175,937            353,291
    Accumulated deficit ....................................................          (29,829)           (76,890)
                                                                                --------------       ------------

        Total stockholders' equity .........................................          146,531            277,754
                                                                                --------------       ------------

              Total liabilities and stockholders' equity ...................         $195,571           $351,969
                                                                                ==============       ============

</Table>

SEE ACCOMPANYING NOTES.



                                 Page 3 (of 27)

<Page>


                      PRAECIS PHARMACEUTICALS INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
                                   (UNAUDITED)
<Table>
<Caption>

                                                 Three Months Ended                            Nine Months Ended
                                                    September 30,                                 September 30,
                                             ------------------------------               -------------------------------
                                               2000                2001                      2000                2001
                                             ----------          ----------               ----------          -----------
<S>                                          <C>                 <C>                      <C>                 <C>
Revenues:
    Corporate collaborations ............... $   7,334           $   2,479                $  26,307           $    8,228
                                             ----------          ----------               ----------          -----------
        Total revenues .....................     7,334               2,479                   26,307                8,228

Costs and expenses:
    Research and development ...............    13,358              22,767                   37,023               49,481
    Sales and marketing ....................     2,080               1,933                    2,666                8,312
    General and administrative .............     1,283               1,831                    3,874                4,808
                                             ----------          ----------               ----------          -----------
        Total costs and expenses ...........    16,721              26,531                   43,563               62,601
                                             ----------          ----------               ----------          -----------

Operating loss .............................    (9,387)            (24,052)                 (17,256)             (54,373)

Interest income, net .......................     2,255               1,835                    5,697                7,312
                                             ----------          ----------               ----------          -----------

Loss before income taxes ...................    (7,132)            (22,217)                 (11,559)             (47,061)
Provision for income taxes .................        --                  --                      100                   --
                                             ----------          ----------               ----------          -----------


Net loss ................................... $  (7,132)          $ (22,217)               $ (11,659)          $  (47,061)
                                             ==========          ==========               ==========          ============

Net loss per share:
   Basic ................................... $   (0.17)          $   (0.44)               $   (0.44)          $    (0.95)
                                             ==========          ==========               ==========          ============
   Diluted ................................. $   (0.17)          $   (0.44)               $   (0.44)          $    (0.95)
                                             ==========          ==========               ==========          ============

Weighted average number of common
   shares:
   Basic ................................... 41,871,147         50,957,937               26,280,783           49,303,941
   Diluted ................................. 41,871,147         50,957,937               26,280,783           49,303,941

Pro forma net loss per share:
   Basic ............................................................................... $   (0.31)          $     (0.95)
                                                                                         ==========          ============
   Diluted ............................................................................. $   (0.31)          $     (0.95)
                                                                                         ==========          ============

Pro forma weighted average number of common shares:
   Basic .............................................................................. 37,682,818            49,303,941
   Diluted ............................................................................ 37,682,818            49,303,941

</Table>


SEE ACCOMPANYING NOTES.


                                 Page 4 (of 27)

<Page>


                      PRAECIS PHARMACEUTICALS INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)

<Table>
<Caption>

                                                                          SEPTEMBER 30,
                                                                 ---------------------------------
                                                                    2000                   2001
                                                                 ----------             ----------
<S>                                                              <C>                    <C>
OPERATING ACTIVITIES:
Net loss ..................................................      $ (11,659)             $ (47,061)
Adjustments to reconcile net loss to cash used in
operating activities:
    Depreciation and amortization .........................          1,984                  2,302
    Stock compensation. ...................................          1,699                   (578)
    Changes in operating assets and liabilities:
        Accounts receivable ...............................          5,973                    412
        Refundable income taxes ...........................             --                     58
        Unbilled revenue ..................................          2,102                    333
        Materials inventory ...............................         (8,857)                    --
        Prepaid expenses and other assets .................         (2,987)                   215
        Accounts payable ..................................         (6,034)                17,583
        Accrued expenses ..................................          5,608                  2,124
        Deferred revenue ..................................         (3,808)                (3,532)
        Advance payments ..................................          8,857                     --
        Income taxes payable ..............................         (4,672)                    --
                                                                 ----------             ----------

Net cash used in operating activities .....................        (11,794)               (28,144)

INVESTING ACTIVITIES:
Purchase of available-for-sale securities .................             --               (129,865)
Sales or maturities of available-for-sale securities ......             --                 47,948
Purchase of property and equipment ........................        (45,454)               (22,510)
                                                                 ----------             ----------

Net cash used in investing activities .....................        (45,454)              (104,427)

FINANCING ACTIVITIES:
Net follow-on offering proceeds ...........................             --                175,892
Net initial public offering proceeds ......................         84,263                     --
Proceeeds from debt issuance ..............................         24,000                  9,000
Proceeds from exercises of common stock, options and warrants          892                  2,127
Principal repayments of capital lease obligations .........            (54)                    --
                                                                 ----------             ----------

Net cash provided by financing activities .................        109,101                187,019
                                                                 ----------             ----------

Net increase in cash and cash equivalents .................         51,853                 54,448
Cash and cash equivalents, beginning of period ............         94,525                132,207
                                                                 ----------             ----------

Cash and cash equivalents, end of period ..................      $ 146,378              $ 186,655
                                                                 ==========             ==========
</Table>



SEE ACCOMPANYING NOTES.

                                 Page 5 (of 27)

<Page>


                      PRAECIS PHARMACEUTICALS INCORPORATED
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  BASIS OF PRESENTATION

         The accompanying condensed consolidated financial statements have been
prepared by PRAECIS PHARMACEUTICALS INCORPORATED (the "Company") in accordance
with generally accepted accounting principles and pursuant to the rules and
regulations of the Securities and Exchange Commission (the "SEC"). Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. It is suggested
that the financial statements be read in conjunction with the audited financial
statements and the accompanying notes included in the Company's Annual Report on
Form 10-K for the year ended December 31, 2000.

         The information furnished reflects all adjustments which, in the
opinion of management, are considered necessary for a fair presentation of
results for the interim periods. Such adjustments consist only of normal
recurring items. It should also be noted that results for the interim periods
are not necessarily indicative of the results expected for the full year or any
future period.

         The preparation of these 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
disclosures 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.

2.  SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES


NEW ACCOUNTING PRONOUNCEMENTS

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("SFAS No. 133"), ACCOUNTING
FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which is effective for fiscal
year 2001. SFAS No. 133 requires all derivatives to be carried on the balance
sheet as assets or liabilities at fair value. The Company has entered into an
interest rate cap agreement in order to reduce the potential impact of interest
rate increases on future income. The accounting for changes in fair value would
depend on the hedging relationship and would be reported in the income statement
or as a component of comprehensive income. The adoption of SFAS No. 133 during
2001 did not have a material impact on the Company's financial position or
results of operations.

         In June 2001, the FASB issued SFAS No. 141, BUSINESS COMBINATIONS, and
SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill will no longer
be amortized but will be subject to annual impairment tests in accordance with
the statements. Other intangible assets will continue to be amortized over their
useful lives. The Company will apply the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of 2002. Application
of the provisions of these statements is not expected to have a material effect
on the Company's financial position or results of operations since the Company
does not have any goodwill or intangibles at this time.

PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the
Company's accounts and the accounts of its wholly owned real estate subsidiary.
All significant intercompany account balances and transactions between the
companies have been eliminated.


                                 Page 6 (of 27)

<Page>

NET LOSS PER SHARE

         Basic net loss per share is based on the weighted average number of
common shares outstanding. For the three and nine months ended September 30,
2000 and 2001, diluted net loss per common share is the same as basic net loss
per common share as the inclusion of weighted average shares of common stock
issuable upon exercise of stock options and warrants would be antidilutive.

         Pro forma net loss per share has been computed as described above and
also gives effect, under SEC guidance, to the conversion of preferred shares not
included above that automatically converted to common shares upon the closing of
the Company's initial public offering in May 2000, using the if-converted
method.

         The reconciliation of the denominators of the historical and pro forma,
basic and diluted net loss per share calculations is as follows:

<Table>
<Caption>
                                                          Three Months Ended               Nine Months Ended
                                                             September 30,                   September 30,
                                                       -------------------------       --------------------------
                                                          2000           2001             2000           2001
                                                          ----           ----             ----           ----
<S>                                                    <C>            <C>              <C>            <C>
Historical:

Weighted average number of common shares
   outstanding used in computing basic and
   diluted net loss per share .....................    41,871,147     50,957,937       26,280,783     49,303,941
                                                       ==========     ==========       ==========     ==========

Pro forma:

Weighted average number of common shares
   used in computing basic and diluted net loss
   per share (from above) ........................................................     26,280,783     49,303,941
Adjustment to reflect the effect of the
   assumed conversion of preferred stock from
   the date of issuance ..........................................................     11,402,035            --
                                                                                       ----------     ----------
Weighted average number of common shares
   outstanding used in computing pro forma
   basic net loss per share ......................................................     37,682,818     49,303,941
                                                                                       ==========     ==========
</Table>


COMPREHENSIVE INCOME

         SFAS No. 130, REPORTING COMPREHENSIVE INCOME, establishes standards for
the reporting and display of comprehensive income (loss) and its components in
the consolidated financial statements. The Company's accumulated other
comprehensive income is comprised primarily of net unrealized gains or losses on
available-for-sale securities. For the three and nine months ended September 30,
2000 and 2001, respectively, comprehensive loss was as follows (in thousands):

<Table>
<Caption>
                                              Three Months Ended           Nine Months Ended
                                                 September 30                September 30
                                          --------------------------- -------------------------
                                             2000          2001           2000           2001
                                             ----          ----           ----           ----
<S>                                       <C>            <C>            <C>           <C>
Net loss ..........................       $(7,132)       $(22,217)      $(11,659)     $(47,061)
Changes in other comprehensive
loss:
   Unrealized holding gains
   on investments .................            --             821             --           843
                                          --------       ---------      ---------     ---------

Total comprehensive loss ..........       $(7,132)       $(21,396)      $(11,659)     $(46,218)
                                          ========       =========      =========     =========
</Table>

                                 Page 7 (of 27)

<Page>


3.  ACCOUNTS PAYABLE

         Accounts payable consists principally of trade accounts payable and our
share of Plenaxis program expenses under the corporate collaboration agreement
(the "Amgen Agreement") between the Company and Amgen Inc. ("Amgen"). At
December 31, 2000 and September 30, 2001, trade accounts payable included $7.1
million and $28.4 million due to Amgen, respectively. (See Note 6)

4.  INVESTMENTS

         Management determines the appropriate classification of debt securities
at the time of purchase and reevaluates such designation as of each balance
sheet date. Debt securities held by the Company are classified as
available-for-sale and are carried at estimated fair value in cash equivalents
and marketable securities. Unrealized gains and losses are reported as
accumulated other comprehensive income in stockholders' equity. The amortized
cost of debt securities in this category is adjusted for amortization of
premiums and accretion of discounts to maturity. Such amortization is included
in interest income. Realized gains and losses on available-for-sale securities
are included in interest income and expense. The cost of securities sold is
based on the specific identification method. Interest and dividends on
securities classified as available-for-sale are included in interest income. The
Company's cash, cash equivalents and marketable securities as of September 30,
2001 are as follows (in thousands):

<Table>
<Caption>
                                                               Gross             Gross            Estimated
                                          Amortized          Unrealized        Unrealized            Fair
                                             Cost              Gains             Losses             Value
                                        ---------------    ---------------   ---------------    ---------------
<S>                                     <C>                <C>               <C>                <C>
Money market funds ...................      $   77,659        $        --        $       --         $    77,659
U.S. government agencies .............         105,192                485               (30)            105,647
Commercial paper .....................          85,443                743               (77)             86,109
                                        ---------------    ---------------   ---------------    ---------------
    Total ............................         268,294              1,228              (107)            269,415

Less amounts classified as cash
  and cash equivalents ...............         186,655                 --                --             186,655
                                        ---------------    ---------------   ---------------    ---------------

    Total marketable securities ......      $   81,639         $    1,228        $     (107)         $   82,760
                                        ===============    ===============   ===============    ===============
</Table>


5.  FOLLOW-ON OFFERING

         In February 2001, the Company completed a follow-on public offering of
its common stock, par value $.01 per share ("Common Stock"). The Company sold
7,587,500 shares of its Common Stock, resulting in net proceeds to the Company
of approximately $175.9 million.

6.  CORPORATE COLLABORATION AGREEMENTS

         Effective March 1999, the Company entered into the Amgen Agreement,
which provides that Amgen would develop and commercialize the Company's Plenaxis
products in the United States, Canada, Japan, and all other countries not
covered by the Sanofi-Synthelabo Agreement (defined below). The Amgen Agreement
also provides that, subject to definitive agreements to be mutually agreed,
Amgen will provide the Company with a line of credit not to exceed $150.0
million through 2002. The line of credit was intended to fund the Company's
share of Plenaxis program expenses following Amgen's satisfaction of its initial
$175.0 million funding commitment under the Amgen Agreement. However, definitive
agreements for the line of credit were not entered into and the Company has
received no advances from Amgen thereunder. In September 2001, Amgen notified
the Company that it was terminating the Amgen Agreement. The Company and Amgen
are negotiating various financial and other matters related to the termination
of the Amgen Agreement, including matters relating to the line of credit. The
Company expects to finalize these matters during the fourth quarter of 2001.


                                 Page 8 (of 27)

<Page>


         In May 1997, the Company entered into a license agreement with
Synthelabo S.A., which subsequently merged with Sanofi S.A.
("Sanofi-Synthelabo"), for the development and commercialization of the
Company's Plenaxis products in Europe, Latin America, the Middle East and
various countries in Africa (the "Sanofi-Synthelabo Agreement"). In October
2001, Sanofi-Synthelabo notified the Company that it was terminating the
Sanofi-Synthelabo Agreement. The Company expects to finalize arrangements with
Sanofi-Synthelabo regarding the termination of the Sanofi-Synthelabo Agreement
during the fourth quarter of 2001.



                                 Page 9 (of 27)
<Page>


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

THE FOLLOWING DISCUSSION OF OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SHOULD BE READ TOGETHER WITH THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AND ACCOMPANYING NOTES TO THOSE STATEMENTS INCLUDED ELSEWHERE IN THIS FORM
10-Q. THIS FORM 10-Q CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING
OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, THAT
INVOLVE RISKS AND UNCERTAINTIES. ALL STATEMENTS OTHER THAN STATEMENTS OF
HISTORICAL INFORMATION SET FORTH HEREIN ARE FORWARD-LOOKING AND MAY CONTAIN
INFORMATION ABOUT FINANCIAL RESULTS, ECONOMIC CONDITIONS, TRENDS AND KNOWN
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE
DISCUSSED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF
FACTORS, WHICH INCLUDE THOSE DISCUSSED IN THIS SECTION AND ELSEWHERE IN THIS
REPORT, AND THE RISKS DISCUSSED IN OUR OTHER FILINGS WITH THE SECURITIES AND
EXCHANGE COMMISSION. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON
THESE FORWARD-LOOKING STATEMENTS, WHICH REFLECT MANAGEMENT'S ANALYSIS,
JUDGEMENT, BELIEF OR EXPECTATION ONLY AS OF THE DATE HEREOF. PRAECIS
UNDERTAKES NO OBLIGATION TO PUBLICLY REISSUE OR MODIFY THESE FORWARD-LOOKING
STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES THAT ARISE AFTER THE DATE
HEREOF.

OVERVIEW

         Since our inception, we have been engaged in developing drugs for the
treatment of a variety of human diseases. Our lead program is the development of
Plenaxis(TM) (previously known as abarelix depot), a drug for the treatment of
hormonally responsive prostate cancer and other diseases that respond to the
lowering of hormone levels. In December 2000, we filed a New Drug Application
(NDA) with the U.S. Food and Drug Administration (FDA) for Plenaxis for the
treatment of hormonally responsive prostate cancer, which was granted priority
review. In June 2001, we received a letter from the FDA in which the FDA
indicated that the information presented in the NDA was inadequate for approval.
In September 2001, we met with the FDA in an effort to clarify the various
deficiencies cited in the FDA's letter, and to discuss what further steps need
to be taken. The FDA recommended that we analyze the allergic reactions that
occurred in a small subset of clinical trial patients. We are conducting this
analysis utilizing existing data and samples. In addition, the FDA expressed
concern that, in a subset of patients, testosterone suppression was not
maintained beyond the three-month pivotal study timeframe. We have submitted to
the FDA a clinical protocol for potential new clinical studies designed to
evaluate the effects of using currently available hormonal therapies in patients
following treatment with Plenaxis. We expect that the proposed studies, if
approved by the FDA, would be of relatively limited scope and duration. Although
we are attempting to respond to the FDA's concerns, we can give no assurance
that we will be successful in obtaining approval for the commercialization of
Plenaxis for the treatment of hormonally responsive prostate cancer or any other
indication.

         We are also developing Plenaxis for the treatment of endometriosis.
Study subjects are in the final stages of follow-up in a phase II/III study of
Plenaxis for this indication.

         We had entered into collaborations with Amgen Inc. and
Sanofi-Synthelabo S.A. to develop and commercialize our Plenaxis products. In
September 2001, Amgen notified us that it was terminating its collaboration
agreement under the terms of its agreement with us. In October 2001,
Sanofi-Synthelabo gave us notice that it was terminating its collaboration
agreement with us. Both terminations will be effective in December 2001. We are
working with Amgen and Sanofi-Synthelabo in an effort to achieve a successful
transition of the rights and responsibilities for the continued development and
commercialization of Plenaxis.

         We are also developing Apan, our proprietary drug candidate for the
treatment of Alzheimer's disease. A phase I study of Apan is ongoing, in which
the safety and pharmacokinetics of the compound are being evaluated in normal
volunteers. We anticipate that this study will be completed during the first
half of 2002. We expect to begin a second phase I study in the second half of
2002, in which we intend to further evaluate the safety and pharmacokinetics of
Apan in individuals suffering from Alzheimer's disease. We also have a number of
other product candidates in the research or preclinical development stage.

         In September 2001, we decided not to proceed with additional clinical
trials of Latranal, our in-licensed drug candidate in development for the relief
of musculoskeletal pain, due to the lack of efficacy observed in a phase II
clinical trial.


                                 Page 10 (of 27)
<Page>

         Since our inception, we have had no revenues from product sales. We
have received revenues in the form of signing, performance-based, cost sharing
and contract services payments from corporate collaborations. Following the
effective dates of the Amgen and Sanofi-Synthelabo terminations, we will receive
no additional payments under those agreements. Accordingly, for the foreseeable
future, we do not expect to have any revenues other than interest income.

         Our accumulated deficit as of September 30, 2001 was approximately
$76.9 million. At September 30, 2001, we had 134 employees, 101 of whom were
engaged in research and development activities, compared to 126 employees at
September 30, 2000, 106 of whom were engaged in research and development
activities. Substantially all of our expenditures to date have been for drug
development and commercialization activities and for general and administrative
expenses.

         Due to the high costs associated with the continued development, and
preparing for the possible commercial launch, of Plenaxis for the treatment
of hormonally responsive prostate cancer, as well as other research and
development and general and administrative expenses, we had net operating
losses for 2000 and for the nine months ended September 30, 2001. We expect
to have significant net operating losses for 2001 and for the next several
years, due, in part, to our assumption, as of the effective dates of the
Amgen and Sanofi-Synthelabo terminations, of all Plenaxis program costs. We
do not expect to generate operating income unless, and not until several
years after, we receive FDA approval to market Plenaxis for the treatment of
hormonally responsive prostate cancer. We will require regulatory approval to
market all of our future products.

         Through September 30, 2001, we have recognized a total of
approximately $24.5 million in non-refundable fees and performance-based
payments, and approximately $10.7 million in reimbursement for ongoing
development costs, under the Sanofi-Synthelabo agreement. Of this amount, we
are recognizing the $4.7 million initial non-refundable signing fee payment
through December 31, 2001, the effective date of termination of the
Sanofi-Synthelabo agreement, which is the period during which we are
obligated to participate on a continuing and substantial basis in the
research, development and manufacturing process development of Plenaxis
products. We expect to finalize arrangements with Sanofi-Synthelabo regarding
the termination of its agreement with us during the fourth quarter of 2001.

         In addition, through September 30, 2001, we have recognized
approximately $120.3 million of revenues under the Amgen agreement. We
received a $10.0 million signing fee under the Amgen agreement which we are
recognizing as revenue through December 17, 2001, the effective date of
termination of the Amgen Agreement, which is the period during which we are
obligated to participate on a continuing and substantial basis in the
research, development and manufacturing process development of Plenaxis
products.

         Under the Amgen agreement, Amgen paid the first $175.0 million of all
authorized costs and expenses associated with the research, development and
commercialization of Plenaxis products in the United States. Amgen's initial
$175.0 million funding commitment was fulfilled during the third quarter of
2000. Following Amgen's completion of this funding, we became responsible for
one-half of all subsequent United States research and development costs for
Plenaxis products. Additionally, the agreement provided that following Amgen's
completion of its $175.0 million funding commitment, we must reimburse Amgen for
one-half of the costs associated with establishing a sales and marketing
infrastructure for Plenaxis products in the United States. We expect to finalize
our obligations under the Amgen agreement during the fourth quarter of 2001.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 2000

         Revenues for the three months ended September 30, 2001 decreased 66% to
approximately $2.5 million, from approximately $7.3 million for the
corresponding period in 2000. The decrease in revenues was the result of
decreases in both the amount and rate of reimbursement of Plenaxis expenses
under our corporate collaboration agreements. Following the effective dates of
the Amgen and Sanofi-Synthelabo terminations, we will receive no additional
revenues under those agreements.

         Research and development expenses for the three months ended September
30, 2001 increased 70% to approximately $22.8 million, from approximately $13.4
million for the corresponding period in

                                 Page 11 (of 27)
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2000. The increase in expenses was primarily the result of our responsibility,
beginning in the third quarter of 2000, for one-half of the costs associated
with the Plenaxis clinical development program in the United States, as well as
our increased spending related to our Latranal and Apan clinical development
programs. These increases were partially offset by decreased spending related to
the Plenaxis endometriosis clinical development program. Due to the termination
of the Amgen and Sanofi-Synthelabo agreements, as well as increased spending on
our other clinical development and research programs, we expect our research and
development expenses to continue at an equal or greater level over the next
several years.

         Sales and marketing expenses for the three months ended September 30,
2001 decreased to approximately $1.9 million, from approximately $2.1 million
for the corresponding period in 2000. The decrease in expenses was due primarily
to reduced or delayed spending on the commercialization of Plenaxis in the
United States resulting from FDA actions in June 2001 regarding our NDA. Due to
the termination of the Amgen and Sanofi-Synthelabo agreements, we expect that
our sales and marketing expenses may increase significantly as we prepare for
the possible launch of Plenaxis for the treatment of hormonally responsive
prostate cancer.

         General and administrative expenses for the three months ended
September 30, 2001 increased 43% to approximately $1.8 million, from
approximately $1.3 million for the corresponding period in 2000. The increase
was due to an increase in personnel-related operating costs and increased use of
professional services. We expect that general and administrative expenses will
continue to increase as we hire additional administrative personnel to support
continued growth of our research and development initiatives and incur increased
operating costs related to our new facility.

         Net interest income for the three months ended September 30, 2001
decreased 19% to approximately $1.8 million, from approximately $2.3 million for
the corresponding period in 2000. The decrease in net interest income was due
primarily to higher interest expense related to our long-term debt, as well as a
decrease in average interest rates on invested funds from the same period last
year. This decrease was offset somewhat by an increase in average cash and
investment balances resulting primarily from the proceeds of our follow-on
public offering in February 2001.

         There was no provision for income taxes in either the three months
ended September 30, 2001 or the comparable period in 2000. We anticipate that we
will continue to be in a net operating loss carryforward position during 2001
and for several years thereafter, and therefore, as in 2000, no benefit from our
operating losses has been recognized.

NINE MONTHS ENDED SEPTEMBER 30, 2001 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2000

         Revenues for the nine months ended September 30, 2001 decreased 69% to
approximately $8.2 million, from approximately $26.3 million for the
corresponding period in 2000. The decrease in revenues was the result of
decreases in both the amount and rate of reimbursement of Plenaxis expenses
under our corporate collaboration agreements. Following the effective dates of
the Amgen and Sanofi-Synthelabo terminations, we will receive no additional
revenues under those agreements.

         Research and development expenses for the nine months ended September
30, 2001 increased 34% to approximately $49.5 million, from approximately $37.0
million for the corresponding period in 2000. The increase in expenses was
primarily the result of our responsibility, beginning in the third quarter of
2000, for one-half of the costs associated with the Plenaxis clinical
development program in the United States, as well as our increased spending
related to our Latranal and Apan clinical development programs and our discovery
research initiatives. These increases were partially offset by decreased
spending related to the Plenaxis endometriosis clinical development program. Due
to the termination of the Amgen and Sanofi-Synthelabo agreements, as well as
increased spending on our other clinical development and research programs, we
expect our research and development expenses to continue at an equal or greater
level over the next several years.

         Sales and marketing expenses for the nine months ended September 30,
2001 increased to approximately $8.3 million, from approximately $2.7 million
for the corresponding period in 2000. The increase in expenses was due primarily
to our responsibility, beginning in the third quarter of 2000, for one-half of
the costs associated with the commercialization of Plenaxis in the United
States. Due to the termination of the Amgen and Sanofi-Synthelabo agreements, we
expect that our sales and marketing expenses may increase as we prepare for the
possible launch of Plenaxis for the treatment of hormonally responsive prostate
cancer.

                                 Page 12 (of 27)
<Page>

         General and administrative expenses for the nine months ended September
30, 2001 increased 24% to approximately $4.8 million, from approximately $3.9
million for the corresponding period in 2000. The increase was due to an
increase in personnel related operating costs, increased use of professional
services and other costs associated with being a public company. We expect that
general and administrative expenses will continue to increase as we hire
additional administrative personnel to support continued growth of our research
and development initiatives and incur increased operating costs related to our
new facility.

         Net interest income for the nine months ended September 30, 2001
increased 28% to approximately $7.3 million, from approximately $5.7 million for
the corresponding period in 2000. The increase in net interest income was due to
higher average cash and investment balances resulting from the proceeds of our
initial public offering and follow-on public offering in May 2000 and February
2001, respectively. This increase was offset somewhat by an increase in interest
expense related to our long-term debt, as well as a decrease in average interest
rates on invested funds from the same period last year.

         The provision for income taxes for the nine months ended September
30, 2001 and 2000 was zero and $0.1 million, respectively. The provision for
income taxes during 2000 was primarily for state income taxes. We anticipate
that we will continue to be in a net operating loss carryforward position
during 2001 and for several years thereafter, and therefore, as in 2000, no
benefit from our operating losses has been recognized.

LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations since inception principally through
private placements of equity securities and the proceeds from our public
offerings. Prior to our initial public offering, we had received aggregate net
proceeds of approximately $88.5 million from various private placements of our
securities. In May 2000, we completed our initial public offering in which we
sold a total of 9,200,000 shares of common stock at a price of $10 per share,
raising a total of approximately $84.3 million, net of underwriting discounts
and commissions and offering expenses. In February 2001, we completed a
follow-on public offering in which we sold a total of 7,587,500 shares of common
stock at a price of $24.5625 per share, raising a total of approximately $175.9
million, net of underwriting discounts and commissions and offering expenses.

         Additionally, we have received a total of approximately $184.6 million
from one-time signing payments and performance-based payments, cost
reimbursements and contract service payments under our collaboration agreements.
We have also received approximately $27.4 million from interest on invested cash
balances, and paid approximately $1.7 million in interest expense associated
with building and equipment financing.

         At September 30, 2001, we had cash, cash equivalents and marketable
securities of approximately $269.4 million and working capital of approximately
$236.1 million, compared to approximately $132.2 million and $115.7 million,
respectively, at December 31, 2000. Based upon our existing capital resources
and interest income, we anticipate that we will be able to maintain currently
planned operations for at least the next few years.

         For the nine months ended September 30, 2001, net cash of approximately
$28.1 million was used in operating activities, compared to approximately $11.8
million used in operating activities during the corresponding period in 2000.
During the nine months ended September 30, 2001, our use of cash in operations
was due principally to our net loss, partially offset by an increase in accounts
payable consisting principally of our share of accrued Plenaxis program expenses
pursuant to the Amgen agreement. Our investing activities during the nine months
ended September 30, 2001 consisted of the purchase, sale and maturity of
marketable securities, as well as $21.5 million of additional spending toward
the build-out of our new corporate headquarters and other fixed asset additions.
Our financing activities for the nine months ended September 30, 2001 consisted
principally of the proceeds of our follow-on public offering, proceeds received
from the exercise of common stock options and advances of $9.0 million under an
acquisition and construction loan agreement.

         In July 2000, in connection with the purchase, through our wholly owned
real estate subsidiary, of our new corporate headquarters and research facility
in Waltham, Massachusetts, the subsidiary entered into an acquisition and
construction loan agreement providing for up to $33.0 million in financing for
the acquisition of, and improvements to, the new facility. As of September 30,
2001, $33.0 million was outstanding under the loan agreement. Advances bear
interest at a rate equal

                                 Page 13 (of 27)
<Page>


to the 30-day LIBOR plus 2.0% (4.64% at September 30, 2001). Interest is
payable monthly in arrears. Principal is due and payable in full on July 30,
2003, subject to two one-year extension options. The loan is secured by the
new facility, together with all fixtures, equipment, improvements and other
related items, and by all rents, income or profits received by our real
estate subsidiary, and is unconditionally guaranteed by us. In addition to
this financing, as of September 30, 2001, we had spent approximately $37.6
million of our own funds in connection with the build-out and occupancy of
our new facility. We occupied the new facility during May 2001 and as
planned, are actively seeking to sublease a portion of this facility. We
terminated the lease for our Cambridge, Massachusetts facility effective as
of September 1, 2001. In addition, in connection with our move to the new
facility, we consolidated our Provid Research division with our Massachusetts
operations and, effective October 31, 2001, have assigned to a third party
all of our right, title and interest in and to the lease for the New Jersey
facility, and the third party has assumed all of our obligations thereunder.

         Our agreement with Amgen, as to which Amgen has given us notice of
termination effective December 17, 2001, provides that, subject to definitive
agreements to be mutually agreed, Amgen will provide us with a line of credit
not to exceed $150.0 million through 2002. The line of credit was intended to
fund our share of Plenaxis program expenses following Amgen's satisfaction of
its initial $175.0 million funding commitment as described above. However,
definitive agreements for the line of credit were not entered into and we have
received no advances from Amgen thereunder. We and Amgen are negotiating various
financial and other matters related to the termination of the Amgen agreement,
including matters relating to the line of credit. We expect to finalize these
matters during the fourth quarter of 2001.

         We expect our funding requirements to increase over the next several
years as we prepare for the possible commercial launch of Plenaxis for the
treatment of hormonally responsive prostate cancer, continue with current
prostate cancer and endometriosis clinical trials for Plenaxis and clinical
trials for Apan, initiate preclinical trials for additional product candidates,
continue to improve our new facility and expand our research and development
initiatives. The amount of these expenditures will depend on numerous factors,
including:

         o        the cost, timing and outcomes of regulatory reviews;

         o        decisions relating to the Plenaxis program made by us;

         o        the effect of the termination of our Plenaxis corporate
                  collaborations and our ability to assume the responsibilities
                  under these agreements or contract with other third parties to
                  do so;

         o        the development of sales and marketing resources by us;

         o        the establishment, continuation or termination of third-party
                  manufacturing or sales and marketing arrangements for Plenaxis
                  or our other potential products;

         o        the establishment of additional strategic or licensing
                  arrangements with, or acquisitions of, other companies;

         o        the progress of our research and development activities;

         o        the scope and results of preclinical testing and clinical
                  trials;

         o        the rate of technological advances;

         o        determinations as to the commercial potential of our products
                  under development;

         o        the status of competitive products;

         o        our ability to defend and enforce our intellectual property
                  rights;

         o        our ability to sublease a portion of our new facility; and

         o        the availability of additional financing.


                                 Page 14 (of 27)
<Page>


         At December 31, 2000, we had provided a valuation allowance of $10.2
million for our deferred tax assets. The valuation allowance represents the
excess of the deferred tax asset over the benefit from future losses that could
be carried back if, and when, they occur. Due to anticipated operating losses in
the future, we believe that it is more likely than not that we will not realize
a portion of the net deferred tax assets in the future and we have provided an
appropriate valuation allowance.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES WE FACE.
ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT ARE
CURRENTLY DEEMED IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS, FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. IF ANY OF THESE RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS COULD BE MATERIALLY ADVERSELY
AFFECTED.

BECAUSE WE HAVE NOT YET MARKETED OR SOLD ANY PRODUCTS AND ANTICIPATE SIGNIFICANT
INCREASES IN OUR OPERATING EXPENSES OVER THE NEXT SEVERAL YEARS, WE MAY NOT BE
PROFITABLE IN THE FUTURE.

         We cannot assure you that we will be profitable in the future or, if
we are profitable, that it will be sustainable. All of our potential products
are in the research or development stage. We have not yet marketed or sold
any products, and we may not succeed in developing and marketing any product
in the future. To date, we have derived substantially all of our revenues
from payments under corporate collaboration and license agreements. Due to
the termination of the Amgen and Sanofi-Synthelabo agreements, for the
foreseeable future, we do not expect to have any revenues, other than
interest income. In addition, we expect to continue to spend significant
amounts to continue clinical studies, seek regulatory approval for our
existing product candidates and expand our facilities. We also intend to
spend substantial amounts to fund additional research and development for
other potential products, enhance our core technologies, and for general and
administrative purposes. As of September 30, 2001, we had an accumulated
deficit of approximately $76.9 million. We expect that our operating expenses
will increase significantly in the near term, due, in part, to the
termination of the Amgen and Sanofi-Synthelabo agreements, resulting in
significant operating losses for 2001 and the next several years.

IF OUR CLINICAL TRIALS ARE NOT SUCCESSFUL, OR IF WE ARE OTHERWISE UNABLE TO
OBTAIN AND MAINTAIN THE REGULATORY APPROVAL REQUIRED TO MARKET AND SELL OUR
POTENTIAL PRODUCTS, WE WOULD INCUR ADDITIONAL OPERATING LOSSES.

         The development and sale of our product candidates are subject to
extensive regulation by governmental authorities. Obtaining and maintaining
regulatory approval typically is costly and takes many years. Regulatory
authorities, most importantly, the FDA, have substantial discretion to terminate
clinical trials, delay or withhold registration and marketing approval in the
United States, and mandate product recalls. Failure to comply with regulatory
requirements may result in criminal prosecution, civil penalties, recall or
seizure of products, total or partial suspension of production or injunction, as
well as other actions as to our potential products or against us. Outside the
United States, we can market a product only if we receive marketing
authorization from the appropriate regulatory authorities. This foreign
regulatory approval process includes all of risks associated with the FDA
approval process, and may include additional risks.

         To gain regulatory approval from the FDA and foreign regulatory
authorities for the commercial sale of any product, we must demonstrate the
safety and efficacy of the product in clinical trials. If we develop a product
to treat a long-lasting disease, such as cancer or Alzheimer's disease, we must
gather data over an extended period of time. There are many risks associated
with our clinical trials. For example, we may be unable to achieve the same
level of success in later trials as we did in earlier ones. Additionally, data
we obtain from preclinical and clinical activities are susceptible to varying
interpretations that could impede regulatory approval. Further, some patients in
our prostate cancer and Alzheimer's disease programs have a high risk of death,
age-related disease or other adverse medical events not related to our products.
These events may affect the statistical analysis of the safety and efficacy of
our products. If we obtain regulatory approval for a product, the approval will
be limited to those diseases for which our clinical trials demonstrate the
product is safe and effective.


                                 Page 15 (of 27)
<Page>

         In addition, many factors could delay or result in termination of our
ongoing or future clinical trials. For example, a clinical trial may experience
slow patient enrollment or lack of sufficient drug supplies. Patients may
experience adverse medical events or side effects, and there may be a real or
perceived lack of effectiveness of the drug we are testing. Future governmental
action or changes in FDA policy may also result in delays or rejection of an
application for marketing approval. Accordingly, we may not be able to obtain
product registration or marketing approval for Plenaxis, our drug candidate for
the treatment of hormonally responsive prostate cancer and endometriosis, or for
any of our other product candidates, based on the results of our clinical
trials, or regulatory approval may be conditioned upon significant labeling
requirements which could adversely affect marketability of the product.

         To date, none of our product candidates has received regulatory
approval for commercial sale. In June 2001, we received a letter from the FDA
with respect to our NDA for Plenaxis for the treatment of hormonally responsive
prostate cancer, which was submitted in December 2000. The FDA indicated that
the information presented in the NDA was inadequate for approval. In September
2001, we met with the FDA in an effort to clarify the various deficiencies cited
in the FDA's letter, and to discuss what further steps need to be taken before
the application may be approved. The FDA recommended that we analyze the
allergic reactions that occurred in a small subset of clinical trial patients.
We are conducting this analysis utilizing existing data and samples. In
addition, the FDA expressed concern that in a subset of patients testosterone
suppression was not maintained beyond the three-month pivotal study timeframe.
We have submitted to the FDA a clinical protocol for studies designed to
evaluate the effects of using currently available hormonal therapies in patients
following treatment with Plenaxis. Although we are attempting to respond to the
FDA's concerns, we can give no assurance that we will be successful in obtaining
approval for the commercialization of Plenaxis for the treatment of hormonally
responsive prostate cancer or any other indication.

         These FDA actions have delayed, and otherwise adversely affected, our
obtaining regulatory approval to market Plenaxis for the treatment of hormonally
responsive prostate cancer. If we are further delayed in obtaining or are unable
to obtain this regulatory approval, or regulatory approval to market our other
potential products, we may exhaust our available resources significantly sooner
than we had planned, particularly due to the termination of the Amgen and
Sanofi-Synthelabo agreements. If this were to happen, we would need to either
raise additional funds or seek alternative partners to complete development and
commercialization of Plenaxis and continue our currently planned research and
development programs. We cannot assure you that we would be able to raise the
necessary funds or negotiate additional corporate collaborations on acceptable
terms, if at all.

DUE TO THE TERMINATION BY OUR CORPORATE COLLABORATORS OF THEIR AGREEMENTS WITH
US, WE MAY BE UNABLE TO SUCCESSFULLY DEVELOP, MARKET, DISTRIBUTE OR SELL OUR
PRODUCT CANDIDATES.

         We depended upon our corporate collaborators, Amgen and
Sanofi-Synthelabo, to provide substantial financial support for the development
and commercialization of Plenaxis. We also relied on them in some instances to
help us obtain regulatory approval and to manufacture, market, distribute or
sell Plenaxis.

         The termination of our collaboration agreements with Amgen and
Sanofi-Synthelabo may delay or otherwise adversely affect or prevent the
development or commercialization of Plenaxis for the treatment of hormonally
responsive prostate cancer and endometriosis. We will likely need to devote
additional resources to Plenaxis development and commercialization, and this
could require us to curtail or terminate one or more of our other drug
development programs. Due to increased operating costs and lost revenue
associated with the termination of these agreements, we could have to seek
additional funding to meet our capital requirements. In addition, we may have to
seek alternative partners to support the continued development and
commercialization of Plenaxis. We cannot assure you that we would be able to
raise the necessary funds or negotiate additional corporate collaborations on
acceptable terms, if at all, and in that event we might have to curtail or cease
operations.

EVEN IF WE RECEIVE APPROVAL FOR THE MARKETING AND SALE OF OUR PRODUCT
CANDIDATES, THEY MAY FAIL TO ACHIEVE MARKET ACCEPTANCE AND, ACCORDINGLY, MAY
NEVER BE COMMERCIALLY SUCCESSFUL.

         Many factors may affect the market acceptance and commercial success of
any of our potential products, including:

                                 Page 16 (of 27)
<Page>

         o        the scope of the patient population and the indications for
                  which Plenaxis or our other product candidates are approved;

         o        the effectiveness of Plenaxis or any of our other product
                  candidates, including any potential side effects, as compared
                  to alternative treatment methods;

         o        the extent and success of our marketing and sales efforts
                  relating to the marketing and sales of Plenaxis or other
                  potential products;

         o        the product labeling or product insert required by the FDA for
                  each of our products;

         o        the timing of market entry as compared to competitive
                  products;

         o        the rate of adoption of our products by doctors and nurses and
                  acceptance by the target patient population;

         o        the competitive features of our products as compared to other
                  products, including the frequency of administration of
                  Plenaxis as compared to other products, and doctor and patient
                  acceptance of these features;

         o        the cost-effectiveness of our products and the availability of
                  insurance or other third-party reimbursement, in particular
                  Medicare, for patients using our products; and

         o        unfavorable publicity concerning our products or any similar
                  products.

     If our products are not commercially successful, we may never become
profitable.

WE MAY BE UNABLE TO ESTABLISH MARKETING AND SALES CAPABILITIES NECESSARY TO
SUCCESSFULLY COMMERCIALIZE OUR POTENTIAL PRODUCTS.

         We have no experience in marketing or selling pharmaceutical
products and have a very limited marketing and sales staff. To achieve
commercial success for any approved product, we must either develop a
marketing and sales force or enter into arrangements with others to market
and sell our products. We may be unable to establish marketing, sales and
distribution capabilities necessary to commercialize and gain market
acceptance for our potential products. If we decide to market and sell our
potential products, including Plenaxis, independently, we would need to hire
a sales force with expertise in pharmaceutical sales. Recruiting and
retaining qualified sales personnel will be critical to our success.
Competition for skilled personnel is intense, and we cannot assure you that
we would be able to attract and retain a sufficient number of qualified
individuals to successfully launch any potential product. In addition,
establishing the expertise necessary to successfully market and sell any
product would require a substantial capital investment. We cannot assure you
that we would have the funds necessary to successfully commercialize Plenaxis
for the treatment of hormonally responsive prostate cancer or any other
potential product.

         In the event that we decide to contract with third parties to
provide sales force capabilities to meet our needs for Plenaxis or any other
product candidates, we cannot assure you that we will be able to enter into
such agreements on acceptable terms, if at all. In addition, co-promotion or
other marketing arrangements with third parties to commercialize potential
products could significantly limit the revenues we derive from these
potential products, and these third parties may fail to commercialize our
potential products successfully. To the extent we enter into any such
agreements, the parties to those agreements may also market products that
compete with our products, further limiting our potential revenue from
product sales.

IF WE FAIL TO DEVELOP AND MAINTAIN OUR RELATIONSHIPS WITH THIRD-PARTY
MANUFACTURERS, OR IF THESE MANUFACTURERS FAIL TO PERFORM ADEQUATELY, WE MAY BE
UNABLE TO COMMERCIALIZE OUR PRODUCT CANDIDATES.

         Our ability to conduct, or continue to conduct, clinical trials and
commercialize our product candidates, including Plenaxis, will depend in part
on our ability to manufacture, or arrange for third-party manufacture of, our
products on a large scale, at a competitive cost and in accordance with
regulatory requirements. We must establish and maintain a commercial scale
formulation and manufacturing process for each of our potential products for
which we seek marketing approval. We or third-party manufacturers may
encounter difficulties with these processes at any time that could result in
delays in clinical trials, regulatory submissions or in the commercialization
of potential products.

         We have no experience in large-scale product manufacturing, nor do we
have the resources or facilities to manufacture products on a commercial scale.
We will continue to rely upon contract manufacturers to produce Plenaxis and
other compounds for preclinical, clinical and commercial

                                 Page 17 (of 27)
<Page>


purposes for a significant period of time. Third-party manufacturers may not
be able to meet our needs with respect to timing, quantity or quality of
materials. If we are unable to contract for a sufficient supply of needed
materials on acceptable terms, or if we should encounter delays or
difficulties in our relationships with manufacturers, our clinical trials may
be delayed, thereby preventing or delaying the submission of product
candidates for, or the granting of, regulatory approval and the market
introduction and subsequent commercialization of our potential products. Any
such delays may lower our revenues and potential profitability.

         We may increase our manufacturing capacity in part by building our
own manufacturing facilities. This activity would require substantial
expenditures, and we would need to hire and train significant numbers of
employees to staff a new facility. If we decide to build our own facility, we
may not be able to develop sufficient manufacturing capacity to produce drug
materials for clinical trials or commercial use.

         In addition, we and the third-party manufacturers that we use must
continually adhere to current Good Manufacturing Practice regulations enforced
by the FDA through its facilities inspection program. If our facilities or the
facilities of third-party manufacturers cannot pass a pre-approval plant
inspection, the FDA pre-market approval of our product candidates will not be
granted. In complying with these regulations and foreign regulatory
requirements, we and any of our third-party manufacturers will be obligated to
expend time, money and effort in production, record-keeping and quality control
to assure that our potential products meet applicable specifications and other
requirements. If we or any of our third-party manufacturers fail to comply with
these requirements, we may be subject to regulatory sanctions.

         If we make changes in our manufacturing processes, the FDA and
corresponding foreign authorities may require us to demonstrate that the changes
have not caused the resulting drug material to differ significantly from the
drug material previously produced. Also, we may want to rely on results of prior
preclinical studies and clinical trials performed using the previously produced
drug material. Depending on the type and degree of differences between the newer
and older drug material, we may be required to conduct additional animal studies
or human clinical trials to demonstrate that the newly produced drug material is
sufficiently similar to the previously produced drug material.

         Any of these factors could prevent, or cause delays in, obtaining
regulatory approvals for, and the manufacturing, marketing or selling of, our
potential products, including Plenaxis, and could also result in
significantly higher operating expenses.

         Under our collaboration agreement with Amgen, Amgen had control over
certain phases of the manufacturing process for Plenaxis. Accordingly, Amgen
had either entered into or assumed from us agreements with third parties to
perform, or was itself performing, these manufacturing processes. Due to the
termination of our collaboration agreement with Amgen, to assure an adequate
supply of drug product for continued clinical studies and, if Plenaxis is
approved for marketing, for commercial sale, we will need to assume these
manufacturing contracts from Amgen, enter into new agreements with third
party manufacturers or act as manufacturer ourselves. We may elect not to, or
may not be able to, assume the existing contracts from Amgen, and we may be
unable to make necessary alternative arrangements in a timely manner or on
favorable terms, if at all. Moreover, to the extent we must make alternative
supply arrangements, even if we are able to establish these arrangements in a
timely manner, the use of a different manufacturer or the establishment of
our own facility may require us to undergo additional regulatory review and
compliance procedures which could result in additional expenses and further
delay the regulatory review and potential commercialization of Plenaxis for
the treatment of hormonally responsive prostate cancer. Also, the
establishment of our own facility could itself be costly thereby increasing
our operating losses.

BECAUSE WE DEPEND ON THIRD PARTIES TO CONDUCT LABORATORY TESTING AND HUMAN
CLINICAL STUDIES AND ASSIST US WITH REGULATORY COMPLIANCE, WE MAY ENCOUNTER
DELAYS IN PRODUCT DEVELOPMENT AND COMMERCIALIZATION.

         We have contracts with a limited number of research organizations to
design and conduct our laboratory testing and human clinical studies. If we
cannot contract for testing activities on acceptable terms, or at all, we may
not complete our product development efforts in a timely manner. To the extent
we rely on third parties for laboratory testing and human clinical studies, we
may lose some control over these activities. For example, third parties may not
complete testing activities on schedule or when we request. In addition, these
third parties may not conduct our clinical trials in accordance with regulatory
requirements. The failure of these third parties to carry out their contractual
duties could delay or prevent the development and commercialization of our
product candidates.

ALTERNATIVE TREATMENTS ARE AVAILABLE WHICH MAY IMPAIR OUR ABILITY TO CAPTURE
MARKET SHARE FOR OUR POTENTIAL PRODUCTS.


                                 Page 18 (of 27)
<Page>


         Alternative products exist or are under development to treat the
diseases for which we are developing drugs. For example, the FDA has approved
several drugs for the treatment of prostate cancer that respond to changes in
hormone levels. Even if the FDA approves Plenaxis for commercialization for
the treatment of hormonally responsive prostate cancer, the approval could be
limited to a particular group of patients or to administration over a
limited period of time, and Plenaxis may not compete favorably with
existing treatments that already have an established market share. If
Plenaxis does not achieve broad market acceptance as a drug for the treatment
of hormonally responsive prostate cancer, we may not become profitable.

MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO AND MAY
BE ABLE TO DEVELOP AND COMMERCIALIZE PRODUCTS THAT MAKE OUR POTENTIAL PRODUCTS
AND TECHNOLOGIES OBSOLETE OR NON-COMPETITIVE.

         A biotechnology company such as ours must keep pace with rapid
technological change and faces intense competition. We compete with
biotechnology and pharmaceutical companies for funding, access to new
technology, research personnel and in product research and development. Many of
these companies have greater financial resources and more experience than we do
in developing drugs, obtaining regulatory approvals, manufacturing and
marketing. We also face competition from academic and research institutions and
government agencies pursuing alternatives to our products and technologies. We
expect that all of our products under development will face intense competition
from existing or future drugs. In addition, for each of our product candidates,
we will face increasing competition from generic formulations or existing drugs
whose active components are no longer covered by patents.

         Our competitors may:

         o        successfully identify drug candidates or develop products
                  earlier than we do;

         o        obtain approvals from the FDA or foreign regulatory bodies
                  more rapidly than we do;

         o        develop products that are more effective, have fewer side
                  effects or cost less than our products; or

         o        successfully market products that compete with our products.

         The success of our competitors in any of these efforts would adversely
affect our ability to develop, commercialize and market our product candidates.

IF WE ARE UNABLE TO OBTAIN AND ENFORCE VALID PATENTS, WE COULD LOSE ANY
COMPETITIVE ADVANTAGE WE MAY HAVE.

         Our success will depend in part on our ability to obtain patents and
maintain adequate protection of our technologies and potential products. If we
do not adequately protect our intellectual property, competitors may be able to
use our technologies and erode any competitive advantage we may have. For
example, if we lose our patent protection for Plenaxis, another party could
produce and market the compound in direct competition with us. Some foreign
countries lack rules and methods for defending intellectual property rights and
do not protect proprietary rights to the same extent as the United States. Many
companies have had difficulty protecting their proprietary rights in foreign
countries.

         Patent positions are sometimes uncertain and usually involve complex
legal and factual questions. We can protect our proprietary rights from
unauthorized use by third parties only to the extent that our proprietary
technologies are covered by valid and enforceable patents or are effectively
maintained as trade secrets. We currently own or have exclusively licensed
seventeen issued United States patents. We have applied, and will continue to
apply, for patents covering both our technologies and products as we deem
appropriate. Others may challenge our patent applications or our patent
applications may not result in issued patents. Moreover, any issued patents on
our own inventions, or those licensed from third parties, may not provide us
with adequate protection, or others may challenge the validity of, or seek to
narrow or circumvent, these patents. Third-party patents may impair or block our
ability to conduct our business. Additionally, third parties may independently
develop products similar to our products, duplicate our unpatented products, or
design around any patented products we develop.


                                 Page 19 (of 27)
<Page>

IF WE ARE UNABLE TO PROTECT OUR TRADE SECRETS AND PROPRIETARY INFORMATION, WE
COULD LOSE ANY COMPETITIVE ADVANTAGE WE MAY HAVE.

         In addition to patents, we rely on a combination of trade secrets,
confidentiality, nondisclosure and other contractual provisions, and security
measures to protect our confidential and proprietary information. These measures
may not adequately protect our trade secrets or other proprietary information.
If these measures do not adequately protect our rights, third parties could use
our technology, and we could lose any competitive advantage we may have. In
addition, others may independently develop similar proprietary information or
techniques, which could impair any competitive advantage we may have.

IF OUR TECHNOLOGIES, PROCESSES OR POTENTIAL PRODUCTS CONFLICT WITH THE PATENTS
OF COMPETITORS, UNIVERSITIES OR OTHERS, WE COULD HAVE TO ENGAGE IN COSTLY
LITIGATION AND BE UNABLE TO COMMERCIALIZE THOSE PRODUCTS.

         Our technologies, processes or potential products may give rise to
claims that they infringe other patents. A third party could force us to pay
damages, stop using these technologies or processes, or stop our
manufacturing or marketing of the affected products by bringing a legal
action against us for infringement. In addition, a third party could require
us to obtain a license to continue to use the technologies or processes or
manufacture or market the affected products, and we may not be able to do so.
We believe that significant litigation will continue in our industry
regarding patent and other intellectual property rights. If we become
involved in litigation, it could consume a substantial portion of our
resources. Even if legal actions were meritless, defending a lawsuit could
take significant time, be expensive and divert management's attention from
other business concerns.

IF THIRD PARTIES TERMINATE OUR LICENSES, WE COULD EXPERIENCE DELAYS OR BE UNABLE
TO COMPLETE THE DEVELOPMENT AND COMMERCIALIZATION OF OUR POTENTIAL PRODUCTS.

         We license some of our technology from third parties. Termination of
our licenses could force us to delay or discontinue some of our development and
commercialization programs. For example, if Advanced Research and Technology
Institutes, Inc., the assignee of Indiana University Foundation, terminated our
license with them, we could have to discontinue development and
commercialization of our Plenaxis products. We cannot assure you that we would
be able to license substitute technology in the future. Our inability to do so
could impair our ability to conduct our business because we may lack the
technology, or the necessary rights to technology, required to develop and
commercialize our potential products.

OUR POTENTIAL REVENUES WILL DIMINISH IF WE FAIL TO OBTAIN ACCEPTABLE PRICES OR
ADEQUATE REIMBURSEMENT FOR OUR PRODUCTS FROM THIRD-PARTY PAYORS.

         The continuing efforts of government and third-party payors to contain
or reduce the costs of health care may limit our commercial opportunity. If
government and other third-party payors do not provide adequate coverage and
reimbursement for our products, physicians may not prescribe them. If we are
unable to offer physicians comparable or superior financial motivation to use
our products, we may not be able to generate significant revenues. In some
foreign markets, pricing and profitability of prescription pharmaceuticals are
subject to government control. In the United States, we expect that there will
continue to be federal and state proposals for similar controls. In addition,
increasing emphasis on managed care in the United States will continue to put
pressure on the pricing of pharmaceutical products. Cost control initiatives
could decrease the price that we receive for any products in the future.
Further, cost control initiatives could impair or diminish our ability or
incentive, or the ability or incentive of potential partners, to commercialize
our products, and our ability to earn revenues from this commercialization.

         Our ability to commercialize pharmaceutical products, alone or with
collaborators, may depend in part on the availability of reimbursement for our
products from:

         o        government and health administration authorities;

         o        private health insurers; and

         o        other third party payors, including Medicare and Medicaid.


                                 Page 20 (of 27)
<Page>


         We cannot predict the availability of reimbursement for newly
approved health care products. Third-party payors, including Medicare, are
increasingly challenging the prices charged for medical products and
services. Government and other third-party payors increasingly are limiting
both coverage and the level of reimbursement for new drugs and, in some
cases, refusing to provide coverage for a patient's use of an approved drug
for purposes not approved by the FDA. Third-party insurance coverage may not
be available to patients for any of our products.

WE MAY BE UNABLE TO FIND SUITABLE TENANTS FOR A PORTION OF OUR NEW FACILITY.

         In May 2001, we moved to a new 175,000 square foot facility in
Waltham, Massachusetts. We are currently seeking to sublease a portion of our
new facility to third parties. We may not be able to find suitable
sub-tenants to occupy this space in a timely manner, if at all. If we are
unable to find suitable sub-tenants in a timely manner, we may not be able to
partially offset with rental income the substantial mortgage payments and
other operating expenses associated with our new facility.

IF WE LOSE OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL
SKILLED PERSONNEL, WE MAY BE UNABLE TO PURSUE OUR PRODUCT DEVELOPMENT AND
COMMERCIALIZATION EFFORTS.

         We depend substantially on the principal members of our management and
scientific staff, including Malcolm L. Gefter, Ph.D., our Chief Executive
Officer, President and Chairman of the Board. We do not have employment
agreements with any of our executive officers. Any officer or employee can
terminate his or her relationship with us at any time and work for one of our
competitors. The loss of these key individuals could result in competitive harm
because we could experience delays in our product research, development and
commercialization efforts without their expertise.

         Recruiting and retaining qualified scientific personnel to perform
future research and development work also will be critical to our success.
Competition for skilled personnel is intense and the turnover rate can be
high. We compete with numerous companies and academic and other research
institutions for experienced scientists. This competition may limit our
ability to recruit and retain qualified personnel on acceptable terms.
Failure to attract and retain qualified personnel would prevent us from
successfully developing our potential products or core technologies and
launching our products commercially. Our planned activities may require the
addition of new personnel, including management, and the development of
additional expertise by existing management personnel. The inability to
retain these personnel or to develop this expertise could prevent, or result
in delays in, the research, development and commercialization of our
potential products.

WE MAY HAVE SUBSTANTIAL EXPOSURE TO PRODUCT LIABILITY CLAIMS AND MAY NOT HAVE
ADEQUATE INSURANCE TO COVER THOSE CLAIMS.

         We may be held liable if any product we develop, or any product made
by others using our technologies, causes injury. We have only limited product
liability insurance coverage for our potential products in clinical trials.
We intend to expand our product liability insurance coverage for any of our
products for which we obtain marketing approval. However, this insurance may
be prohibitively expensive or may not fully cover our potential liabilities.
Our inability to obtain adequate insurance coverage at an acceptable cost
could prevent or inhibit the commercialization of our products. If a third
party sues us for any injury caused by products made by us or using our
technologies, our liability could exceed our total assets.

WE USE HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS IN OUR
BUSINESS AND ANY CLAIMS RELATING TO THE HANDING, STORAGE OR DISPOSAL OF THESE
MATERIALS COULD BE TIME CONSUMING AND COSTLY.

         Our research and development processes involve the controlled use of
hazardous materials, including chemicals and radioactive and biological
materials. For example, the health risks associated with accidental exposure to
Plenaxis include temporary impotence or infertility and harmful effects on
pregnant women. Our operations also produce hazardous waste products. We cannot
completely eliminate the risk of accidental contamination or discharge from
hazardous materials and any resultant injury. Federal, state and local laws and
regulations govern the use, manufacture, storage, handling and disposal of
hazardous materials. Compliance with environmental laws and regulations is
necessary and expensive. Current or future environmental regulations may impair
our research, development or


                                 Page 21 (of 27)
<Page>

production efforts. We may be required to pay fines, penalties or damages in the
event of noncompliance or the exposure of individuals to hazardous materials.

         From time to time, collaborators have also worked with hazardous
materials in connection with our collaborations. We have agreed to indemnify our
collaborators in some circumstances against damages and other liabilities
arising out of development activities or products produced in connection with
these collaborations.

IF WE ENGAGE IN AN ACQUISITION, WE WILL INCUR A VARIETY OF COSTS AND MAY NEVER
REALIZE THE ANTICIPATED BENEFITS OF THE ACQUISITION.

         If appropriate opportunities become available, we may attempt to
acquire businesses, or acquire or in-license products or technologies, that
we believe are a strategic fit with our business. We currently have no
commitments or agreements for any acquisitions, nor are there any
negotiations with respect to any specific transaction. If we do undertake any
transaction of this sort, the process of integrating an acquired business, or
an acquired or in-licensed product or technology, may result in unforeseen
operating difficulties and expenditures and may absorb significant management
attention that would otherwise be available for the ongoing development of
our business. Moreover, we may fail to realize the anticipated benefits of
any transactions of this sort. To the extent we issue stock in a transaction,
your ownership interest in us will be diluted. Transactions of this kind
could also cause us to incur debt, expose us to future liabilities and result
in amortization expenses related to goodwill and other intangible assets.

THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE EXTREME PRICE AND VOLUME
FLUCTUATIONS.

         The market price of our common stock may fluctuate substantially due to
a variety of factors, including, but not limited to:

         o        announcement of FDA approval or disapproval of Plenaxis for
                  the treatment of hormonally responsive prostate cancer or any
                  of our other product candidates;

         o        failure or delay by corporate collaborators in performing
                  their remaining obligations, or disputes or litigation with
                  corporate collaborators regarding those obligations;

         o        the success rate of our discovery efforts and clinical trials;

         o        our ability or the ability of third parties to commercialize
                  our product candidates and the timing of commercialization;

         o        announcements of technological innovations or new products by
                  us or our competitors;

         o        developments or disputes concerning patents or proprietary
                  rights, including announcements of claims of infringement,
                  interference or litigation against us or our licensors;

         o        announcements concerning our competitors, or the biotechnology
                  or pharmaceutical industry in general;

         o        public concerns as to the safety of our products or our
                  competitors' products;

         o        changes in government regulation of the pharmaceutical or
                  medical industry;

         o        changes in the reimbursement policies of third-party insurance
                  companies or government agencies;

         o        actual or anticipated fluctuations in our operating results;

         o        changes in financial estimates or recommendations by
                  securities analysts;

         o        sales of large blocks of our common stock;

         o        changes in accounting principles; and

         o        the loss of any of our key scientific or management personnel.

         In addition, the stock market has experienced extreme price and volume
fluctuations. The market prices of the securities of biotechnology companies,
particularly companies like ours without current product revenues and earnings,
have been highly volatile, and may continue to be highly volatile in the future.
This volatility has often been unrelated to the operating performance of
particular companies. In the past, securities class action litigation has often
been brought against companies that experience volatility in the market price of
their securities. Whether or not meritorious, litigation brought against us
could result in substantial costs and a diversion of management's attention and
resources.

                                 Page 22 (of 27)
<Page>

WE EXPECT THAT OUR QUARTERLY RESULTS OF OPERATIONS WILL FLUCTUATE, AND THIS
FLUCTUATION COULD CAUSE OUR STOCK PRICE TO DECLINE.

         Our quarterly operating results have fluctuated in the past and are
likely to do so in the future. These fluctuations could cause our stock price to
decline. Some of the factors that could cause our operating results to fluctuate
include:

         o        the timing and level of expenses related to the development
                  and commercialization of our Plenaxis products leading to
                  revenues from product sales;

         o        the timing and level of expenses related to our other research
                  and development programs;

         o        the delay or failure of any of our corporate collaborators to
                  meet their payment or other obligations in connection with the
                  termination of our agreements with them or otherwise; and

         o        the timing of our commercialization of other products
                  resulting in revenues.

         Due to the possibility of fluctuations in our revenues and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BY-LAWS, OUR RIGHTS AGREEMENT AND
UNDER DELAWARE LAW MAY MAKE AN ACQUISITION OF US MORE DIFFICULT, EVEN IF AN
ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.

         Provisions in our certificate of incorporation and by-laws may delay or
prevent an acquisition of us or a change in our management. Also, because we are
incorporated in Delaware, we are governed by the provisions of Section 203 of
the Delaware General Corporation Law, which may prohibit or delay large
stockholders, in particular those owning 15% or more of our outstanding voting
stock, from merging or combining with us. In addition, the rights issued under
our rights agreement may be a substantial deterrent to a person acquiring 10% or
more of our common stock without the approval of our board of directors. These
provisions in our charter and by-laws, rights agreement and under Delaware law
could reduce the price that investors might be willing to pay for shares of our
common stock in the future and result in the market price being lower that it
would be without these provisions.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The primary objective of our investment activities is to preserve
principal while at the same time maximizing the income we receive from our
investments without significantly increasing risk. Some of the securities that
we invest in may have market risk. This means that a change in prevailing
interest rates may cause the principal amount of the investment to fluctuate. To
minimize this risk in the future, we maintain our portfolio of cash equivalents
and short-term investments in a variety of securities, including commercial
paper, money market funds and government and non-government debt securities. Our
investments are also subject to interest rate risk and will decrease in value if
market interest rates increase. A hypothetical 100 basis point increase in
interest rates would result in an approximate $1.1 million decrease in the fair
value of our investments as of September 30, 2001. However, due to the
conservative nature of our investments and relatively short duration, interest
rate risk is mitigated. As of September 30, 2001, approximately 84% of our total
portfolio will mature in one year or less, with the remainder maturing in less
than two years.

         In connection with the purchase of our new facility in July 2000, our
wholly owned real estate subsidiary executed an acquisition and construction
loan agreement that provides for up to $33.0 million in borrowings at a floating
interest rate indexed to 30-day LIBOR. Concurrent with that transaction, the
subsidiary also entered into an interest rate cap agreement which limits
exposure to interest rate increases above a certain threshold. Due to the
decrease in interest rates since we entered into this interest rate cap, we do
not believe that there is material market risk exposure with respect to this
item which would require additional disclosure. With regard to borrowings under
the loan agreement, we believe that we have mitigated our risk to significant
adverse fluctuations in interest rates and we do not believe that a 10% change
in interest rates would have a material impact on our results of operations or
cash flows.

                                 Page 23 (of 27)
<Page>


                           PART II. OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

         (d) On February 8, 2000, we filed a Registration Statement on Form S-1
(Registration No. 333-96351) with the Securities and Exchange Commission to
register under the Securities Act 8,000,000 shares of our common stock (plus an
additional 1,200,000 shares subject to an over-allotment option granted to the
underwriters). The Registration Statement was declared effective by the
Securities and Exchange Commission on April 26, 2000.

         From April 26, 2000 through September 30, 2001, we used approximately
$37.6 million of the net proceeds from our initial public offering for the
purchase and build-out of our new facility. Due to unanticipated construction
costs, we expect that the total amount of net proceeds from our initial public
offering that we will use for the purchase and build-out of our new facility
will exceed our original estimates by approximately $7.6 million. Pending use of
the remaining net proceeds of our initial public offering, we have invested
these funds in short-term, interest-bearing, investment-grade securities. Our
management will continue to have broad discretion over the actual use of these
proceeds.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.
(a)      Exhibits

                 EXHIBIT
                  NUMBER         EXHIBIT
                 -------         -------

                   3.1           Amended and Restated Certificate of
                                 Incorporation (2)

                   3.2           Amended and Restated By-Laws (2)

                   4.1           Specimen certificate representing shares of
                                 common stock (1)

                   4.2           Specimen certificate representing shares of
                                 common stock (including Rights Agreement
                                 Legend) (3)

                   4.3           Warrant to purchase Common Stock dated as of
                                 May 13, 1997 (1)

                   4.4           Amendment dated as of January 30, 2001 between
                                 the Registrant and Sanofi-Synthelabo Inc.
                                 (formerly Sylamerica, Inc.) to the Warrant for
                                 the Purchase of Shares of Common Stock issued
                                 by the Registrant to Sylamerica, Inc. (3)

                   4.5           Rights Agreement between the Registrant and
                                 American Stock Transfer & Trust Company, as
                                 Rights Agent (4)

                   4.6           Form of Certificate of Designations of Series A
                                 Junior Participating Preferred Stock  (attached
                                 as Exhibit A to the Rights Agreement filed as
                                 Exhibit 4.5 hereto) (4)

                   4.7           Form of Rights Certificate (attached as Exhibit
                                 B to the Rights Agreement filed as Exhibit 4.5
                                 hereto) (4)
----------------

(1)      Incorporated by reference to Registration Statement on Form S-1
         (Registration No. 333-96351) initially filed with the Securities and
         Exchange Commission on February 8, 2000 and declared effective on April
         26, 2000.

(2)      Incorporated by reference to Quarterly Report on Form 10-Q for the
         quarter ended March 31, 2000 filed with the Securities and Exchange
         Commission on June 7, 2000.

(3)      Incorporated by reference to Registration Statement on Form S-1
         (Registration No. 333-54342) initially filed with the Securities and
         Exchange Commission on January 26, 2001 and declared effective on
         February 14, 2001.

(4)      Incorporated by reference to Registration Statement on Form 8-A filed
         with the Securities and Exchange Commission on January 26, 2001.


                                 Page 24 (of 27)
<Page>


(b)      Reports Submitted on Form 8-K

         The Registrant did not file any reports on Form 8-K during the
quarter ended September 30, 2001.


                                 Page 25 (of 27)
<Page>


                                    SIGNATURE

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



                            PRAECIS PHARMACEUTICALS INCORPORATED





Date:  November 14, 2001    By /s/ Kevin F. McLaughlin
                            ------------------------------------
                            Kevin F. McLaughlin
                            Chief Financial Officer, Senior Vice President,
                            Treasurer and Secretary
                            (DULY AUTHORIZED OFFICER AND PRINCIPAL FINANCIAL AND
                            ACCOUNTING OFFICER)


                                 Page 26 (of 27)
<Page>


                                  EXHIBIT INDEX


      EXHIBIT
       NUMBER     EXHIBIT
      -------     -------

         3.1      Amended and Restated Certificate of Incorporation (2)

         3.2      Amended and Restated By-Laws (2)

         4.1      Specimen certificate representing shares of common stock (1)

         4.2      Specimen certificate representing shares of common stock
                  (including Rights Agreement Legend) (3)

         4.3      Warrant to purchase Common Stock dated as of May 13, 1997 (1)

         4.4      Amendment dated as of January 30, 2001 between the Registrant
                  and Sanofi-Synthelabo Inc. (formerly Sylamerica, Inc.) to the
                  Warrant for the Purchase of Shares of Common Stock issued by
                  the Registrant to Sylamerica, Inc. (3)

         4.5      Rights Agreement between the Registrant and American Stock
                  Transfer & Trust Company, as Rights Agent (4)

         4.6      Form of Certificate of Designations of Series A Junior
                  Participating Preferred Stock (attached as Exhibit A to the
                  Rights Agreement filed as Exhibit 4.5 hereto) (4)

         4.7      Form of Rights Certificate (attached as Exhibit B to the
                  Rights Agreement filed as Exhibit 4.5 hereto) (4)

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

(1)      Incorporated by reference to Registration Statement on Form S-1
         (Registration No. 333-96351) initially filed with the Securities and
         Exchange Commission on February 8, 2000 and declared effective on April
         26, 2000.

(2)      Incorporated by reference to Quarterly Report on Form 10-Q for the
         quarter ended March 31, 2000 filed with the Securities and Exchange
         Commission on June 7, 2000.

(3)      Incorporated by reference to Registration Statement on Form S-1
         (Registration No. 333-54342) initially filed with the Securities and
         Exchange Commission on January 26, 2001 and declared effective on
         February 14, 2001.

(4)      Incorporated by reference to Registration Statement on Form 8-A filed
         with the Securities and Exchange Commission on January 26, 2001.



                                 Page 27 (of 27)