<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, 2002

                                       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, 2002, there were 51,782,751 shares of the registrant's common
stock, $.01 par value, outstanding.

<Page>

                      PRAECIS PHARMACEUTICALS INCORPORATED

                                    FORM 10-Q

                    FOR THE QUARTER ENDED SEPTEMBER 30, 2002

                                      INDEX

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

Item 1.      Financial Statements                                                      3

             Condensed Consolidated Balance Sheets - December 31, 2001 and
             September 30, 2002 (unaudited)                                            3

             Condensed Consolidated Statements of Operations (unaudited)
             - three and nine months ended September 30, 2001 and 2002                 4

             Condensed Consolidated Statements of Cash Flows (unaudited)
             - nine months ended September 30, 2001 and 2002                           5

             Notes to Condensed Consolidated Financial Statements                      6

Item 2.      Management's Discussion and Analysis of Financial Condition
             and Results of Operations                                                 8

Item 3.      Quantitative and Qualitative Disclosures About Market Risk               24

Item 4.      Controls and Procedures                                                  24

PART II.     OTHER INFORMATION                                                        25

Item 6.      Exhibits and Reports on Form 8-K                                         25

SIGNATURE                                                                             26

CERTIFICATION OF CHIEF EXECUTIVE OFFICER                                              27

CERTIFICATION OF CHIEF FINANCIAL OFFICER                                              28

EXHIBIT INDEX                                                                         29
</Table>

                                 Page 2 (of 29)
<Page>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.


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

<Table>
<Caption>
                                                    DECEMBER 31,  SEPTEMBER 30,
                                                        2001          2002
                                                    ------------  ------------
                                                                  (UNAUDITED)
<S>                                                  <C>           <C>
ASSETS
Current assets:
    Cash and cash equivalents ....................   $  144,685    $  101,138
    Marketable securities ........................      121,531       107,919
    Accounts receivable ..........................          458             -
    Prepaid expenses and other assets ............          783         1,143
                                                     ----------    ----------

       Total current assets ......................      267,457       210,200

Property and equipment, net ......................       74,200        72,290
Due from officer                                              -         1,000
Other assets                                                468           241
                                                     ----------    ----------

       Total assets ...........................      $  342,125    $  283,731
                                                     ==========    ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable .............................   $   30,721    $    5,195
    Accrued expenses .............................        7,708         7,172
                                                     ----------    ----------

          Total current liabilities ..............       38,429        12,367
Long-term debt ...................................       33,000        33,000

Commitments and contingencies

Stockholders' equity:
    Common Stock, $0.01 par value; 200,000,000
     shares authorized; 51,116,135 shares in 2001
     and 51,782,751 shares in 2002 issued and
     outstanding .................................          511           518
    Accumulated other comprehensive income........          730           132
    Additional paid-in capital ...................      353,887       354,615
    Accumulated deficit ..........................      (84,432)     (116,901)
                                                     ----------    ----------

       Total stockholders' equity ................      270,696       238,364
                                                     ----------    ----------

       Total liabilities and stockholders' equity    $  342,125    $  283,731
                                                     ==========    ==========
</Table>

       SEE ACCOMPANYING NOTES.

                                 Page 3 (of 29)
<Page>

                      PRAECIS PHARMACEUTICALS INCORPORATED
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<Table>
<Caption>

                                              Three months ended           Nine months ended
                                                September 30,                September 30,
                                           ------------------------    ------------------------
                                              2001          2002          2001          2002
                                           ----------    ----------    ----------    ----------
<S>                                        <C>           <C>           <C>           <C>
Corporate collaboration revenue ........   $    2,479    $        -    $    8,228    $    1,029

Costs and expenses:
    Research and development ...........       22,767        19,986        49,481        44,840
    Sales and marketing ................        1,933           325         8,312         1,039
    General and administrative .........        1,831         2,274         4,808         7,131
                                           ----------    ----------    ----------    ----------
        Total costs and expenses .......       26,531        22,585        62,601        53,010
                                           ----------    ----------    ----------    ----------

Operating loss .........................      (24,052)      (22,585)      (54,373)      (51,981)

Interest income, net ...................        1,835           997         7,312         3,492
Gain on termination of collaboration
 agreement .............................            -        16,020             -        16,020
                                           ----------    ----------    ----------    ----------
Net loss ...............................   $  (22,217)   $   (5,568)   $  (47,061)   $  (32,469)
                                           ==========    ==========    ==========    ==========

Basic and diluted net loss per share ...   $    (0.44)   $    (0.11)   $    (0.95)   $    (0.63)

Weighted average number of basic
 and diluted shares outstanding ........       50,958        51,782        49,304        51,643
</Table>

SEE ACCOMPANYING NOTES.

                                 Page 4 (of 29)
<Page>

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

<Table>
<Caption>
                                                         NINE MONTHS ENDED
                                                           SEPTEMBER 30,
                                                     ------------------------
                                                        2001          2002
                                                     ----------    ----------
<S>                                                  <C>           <C>
OPERATING ACTIVITIES:
Net loss .........................................   $  (47,061)   $  (32,469)
Adjustments to reconcile net loss to cash used in
operating activities:
   Depreciation and amortization .................        2,302         3,535
   Stock compensation ............................         (578)         (195)
   Changes in operating assets and liabilities:
      Accounts receivable ........................          412           458
      Refundable income taxes ....................           58             -
      Unbilled revenue ...........................          333             -
      Prepaid expenses and other assets ..........          215          (133)
      Due from officer ...........................            -        (1,000)
      Accounts payable ...........................       17,583       (25,526)
      Accrued expenses ...........................        2,124          (536)
      Deferred revenue ...........................       (3,532)            -
                                                     ----------    ----------

Net cash used in operating activities ............      (28,144)      (55,866)

INVESTING ACTIVITIES:
Purchase of available-for-sale
securities .......................................     (129,865)      (87,267)
Sales or maturities of available-for-sale
securities .......................................       47,948       100,281
Purchase of property and
equipment ........................................      (22,510)       (1,625)
                                                     ----------    ----------

Net cash (used in) provided by investing
activities .......................................     (104,427)       11,389

FINANCING ACTIVITIES:
Net follow-on offering proceeds ..................      175,892             -
Proceeds from debt issuance ......................        9,000             -
Proceeds from exercises of stock options .........        2,127           930
                                                     ----------    ----------

Net cash provided by financing activities ........      187,019           930
                                                     ----------    ----------
Net increase (decrease) in cash and cash
equivalents ......................................       54,448       (43,547)
Cash and cash equivalents, beginning of
period ...........................................      132,207       144,685
                                                     ----------    ----------
Cash and cash equivalents, end of
period ...........................................   $  186,655    $  101,138
                                                     ==========    ==========
</Table>

SEE ACCOMPANYING NOTES.

                                 Page 5 (of 29)
<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, 2001.

     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

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.

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 month periods ended September 30,
2001 and 2002, diluted net loss per common share is the same as basic net loss
per common share as the inclusion of common stock equivalents, including the
effect of stock options and warrants, would be antidilutive due to the Company's
net loss position for all periods presented.

COMPREHENSIVE INCOME

     Statement of Financial Accounting Standards ("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, 2001 and 2002, respectively,
comprehensive loss was as follows (in thousands):

<Table>
<Caption>
                                                     THREE MONTHS ENDED          NINE MONTHS ENDED
                                                        SEPTEMBER 30,              SEPTEMBER 30,
                                                  ------------------------    ------------------------
                                                     2001          2002          2001          2002
                                                  ----------    ----------    ----------    ----------
 <S>                                              <C>           <C>           <C>           <C>
 Net loss ....................................    $  (22,217)   $   (5,568)   $  (47,061)   $  (32,469)
 Changes in comprehensive loss:
    Net unrealized holding gains (losses)
     on investments ..........................           821          (326)          843          (598)
                                                  ----------    ----------    ----------    ----------
 Total comprehensive loss ....................    $  (21,396)   $   (5,894)   $  (46,218)   $  (33,067)
                                                  ==========    ==========    ==========    ==========
</Table>

                                 Page 6 (of 29)
<Page>

SIGNIFICANT ACCOUNTING POLICIES

     On October 20, 2001, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED
ASSETS ("SFAS No.144"). SFAS No. 144 supersedes SFAS No. 121, ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED
OF, however it retains the fundamental provision of that statement related to
the recognition and measurement of the impairment of long-lived assets to be
held and used. In addition, SFAS No. 144 provides additional guidance on
estimating cash flows when performing a recoverability test, requiring that a
long-lived asset to be disposed of other than by sale be classified as an
asset held for sale until it is disposed of, and establishes more restrictive
criteria to classify an asset as held for sale. SFAS No. 144 became effective
in the first quarter of 2002. Application of SFAS No. 144 did not have any
effect on the Company's consolidated financial position or consolidated
results of operations since the Company does not believe that there are any
impairment indicators at this time.

     In July 2002, the FASB issued SFAS No. 146, ACCOUNTING FOR COSTS
ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES ("SFAS No. 146"). SFAS No. 146
addresses financial accounting and reporting for costs associated with exit
or disposal activities and nullifies EITF Issue No. 94-3, LIABILITY
RECOGNITION FOR CERTAIN EMPLOYEE TERMINATION BENEFITS AND OTHER COSTS TO EXIT
AN ACTIVITY (INCLUDING CERTAIN COSTS INCURRED IN A RESTRUCTURING) ("EITF
Issue No. 94-3"). The principal difference between SFAS No. 146 and EITF
Issue No. 94-3 relates to SFAS No. 146's requirements for recognition of a
liability for a cost associated with an exit or disposal activity. SFAS No.
146 requires that a liability for a cost associated with an exit or disposal
activity be recognized when the liability is incurred. Under EITF Issue No.
94-3, a liability for an exit cost as generally defined in EITF Issue No.
94-3 was recognized at the date of an entity's commitment to an exit plan.
Therefore, SFAS No. 146 eliminates the definition and requirements for
recognition of exit costs in EITF Issue No. 94-3. SFAS No. 146 also
establishes that fair value is the objective for initial measurement of the
liability. The provisions of SFAS No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002, with early application
encouraged. The Company does not anticipate the adoption of SFAS No. 146 to
have a material impact on its consolidated financial statements.

3.   DUE FROM OFFICER

     In May 2002, the Company extended a $1.0 million loan to an officer in
connection with the officer's acceptance of employment with the Company. The
loan is full recourse, uncollateralized, bears no interest and becomes due and
payable in May of 2012. Under the terms of the promissory note (the "Note")
executed in connection with the loan, 10% of the original loan principal will be
forgiven annually on the anniversary date of the Note, provided that the officer
remains an employee of the Company. The Company is not responsible for the
personal income tax implications related to the forgiveness of this Note. Upon
the officer's voluntary termination of employment with the Company, with certain
exceptions, and upon termination by the Company of the officer's employment for
cause, the Note becomes immediately due and payable.

4.   CORPORATE COLLABORATION AGREEMENTS

     In March 1999, the Company entered into a binding agreement in principle
with Amgen Inc. ("Amgen") for the development and commercialization of the
Company's Plenaxis products (the "License Agreement"). In September 2001,
Amgen notified the Company that it was terminating the License Agreement
effective December 17, 2001. As a result of the termination of the License
Agreement, all licenses for Plenaxis granted to Amgen under the License
Agreement, and all rights of Amgen in the Plenaxis program, have terminated.

     On August 19, 2002, the Company and Amgen finalized a termination
agreement with respect to the termination by Amgen of the License Agreement
(the "Termination Agreement"). Under the terms of the Termination Agreement,
the Company paid to Amgen $13.0 million in full and complete satisfaction of
all amounts payable under the License Agreement and in consideration of the
transfer from Amgen to the Company of title to, and possession of, any
existing materials inventory. The Company had originally provided a $29.1
million accrual for the Termination Agreement. As a result of the Company's
payment of $13.0 million plus certain related legal fees in connection with
the Termination Agreement, the Company eliminated its excess accrued
liability related to Amgen and recognized a gain of $16.0 million during the
third quarter of 2002.

     In May 1997, the Company entered into a license agreement with Synthelabo
S.A., which subsequently merged with Sanofi S.A. forming Sanofi-Synthelabo S.A.
("Sanofi-Synthelabo"), for the development and commercialization of the
Company's Plenaxis products. In October 2001, Sanofi-Synthelabo notified the
Company that it was terminating the Sanofi-Synthelabo agreement effective
December 31, 2001. As a result of the termination of the Sanofi-Synthelabo
agreement, all licenses for Plenaxis granted to Sanofi-Synthelabo under the
agreement, and all rights of Sanofi-Synthelabo in the Plenaxis program, have
terminated. In June 2002, a final reimbursement payment of $1.0 million was
received by the Company and is included as corporate collaboration revenue in
the accompanying financial statements.

                                 Page 7 (of 29)
<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, JUDGMENT, 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) (abarelix for injectable suspension), a drug for the treatment of
diseases that respond to the lowering of hormone levels. We are developing
Plenaxis for the treatment of hormonally responsive advanced prostate cancer and
endometriosis.

     We are also conducting clinical trials of Apan, our proprietary drug
candidate for the treatment of Alzheimer's disease. In addition, we have a
number of other product candidates in the research or preclinical development
stage.

     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 agreement with us. In October
2001, Sanofi-Synthelabo notified us that it was terminating its agreement with
us. Both terminations were effective in December 2001. As a result, all of the
licenses for Plenaxis granted to Amgen and Sanofi-Synthelabo under these
agreements, and all rights of Amgen and Sanofi-Synthelabo in the Plenaxis
program, have terminated. We finalized an agreement relating to the termination
of our collaboration with Amgen during August 2002.

     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. We do not anticipate
receiving any additional revenues under current or past collaboration
agreements.

     Our accumulated deficit as of September 30, 2002 was approximately $116.9
million.

     At September 30, 2002, we had 134 full-time employees, 104 of whom were
engaged in research and development activities, compared to 134 full-time
employees at September 30, 2001, 101 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 costs associated with the continued development and potential
commercialization of Plenaxis for the treatment of hormonally responsive
advanced prostate cancer, as well as other research and development and general
and administrative expenses, and our lack of revenues, we had a net operating
loss for the first nine months of 2002. For these same reasons, we expect to
have net operating losses for the remainder of 2002 and for several years
thereafter. We do not expect to generate operating income unless, and not until
at least two years after, we receive FDA approval to market Plenaxis for the
treatment of a defined sub-population of hormonally responsive advanced prostate
cancer patients. We will need to receive regulatory approval to market any of
our future products.

                                 Page 8 (of 29)
<Page>

     The termination of our collaboration agreement with Sanofi-Synthelabo
became effective as of December 31, 2001 and we received a final reimbursement
payment of approximately $1.0 million during the second quarter of 2002. Through
June 30, 2002, we recognized an aggregate of approximately $24.7 million in
non-refundable fees and performance-based payments, and approximately $11.7
million in reimbursement for ongoing development costs, under the
Sanofi-Synthelabo agreement.

     The termination of our collaboration agreement with Amgen became effective
as of December 17, 2001. During 2002 we have recognized no additional revenues
under that agreement. 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
were required to reimburse Amgen for one-half of the costs associated with
establishing a sales and marketing infrastructure for Plenaxis products in the
United States. Through December 31, 2001, we recognized an aggregate of
approximately $121.7 million of revenues under the Amgen agreement.

     On August 19, 2002, we executed a termination agreement with Amgen. In
accordance with this agreement, we made a final payment to Amgen of $13.0
million. This payment represented full and complete satisfaction of our share of
the expenses incurred under the collaboration agreement, which amounted to
approximately $17.8 million, as well as consideration for the receipt from Amgen
of full title to, and possession of, all materials inventory purchased during
the term of the collaboration.

     Prior to signing the termination agreement with Amgen, we had provided a
$29.1 million accrual representing previously incurred collaboration expenses,
our share of purchased materials inventory, and certain other costs associated
with finalizing the termination. As a result of our payment of $13.0 million
plus certain related legal fees in connection with the termination agreement, as
of September 30, 2002 we have eliminated our accrued liability related to the
Amgen agreement and have recognized a gain on termination of $16.0 million.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 2001

     Revenues for the three months ended September 30, 2002 decreased to zero
from approximately $2.5 million for the corresponding period in 2001. The
decrease in revenues was the result of the termination during the fourth quarter
of 2001 of our collaboration agreements with Amgen and Sanofi-Synthelabo. We
will not receive any additional revenues under these agreements.

     Research and development expenses for the three months ended September 30,
2002 decreased 12% to approximately $20.0 million, from approximately $22.8
million for the corresponding period in 2001. The decrease in expenses primarily
reflects reduced spending in our Plenaxis prostate cancer clinical program and,
to a lesser extent, the lack of spending on our clinical program for Latranal,
an in-licensed compound that was in development for the relief of
musculoskeletal pain. Development of Latranal was discontinued during the third
quarter of 2001. These decreases were partially offset by increased spending in
our endometriosis clinical development program and our preclinical development
program for PPI-2458, our candidate in development for the treatment of
rheumatoid arthritis and certain types of cancer.

     Members of our research and development team typically work on a number of
projects concurrently. In addition, a substantial amount of our fixed costs such
as facility depreciation, utilities and maintenance are shared by our various
programs. Accordingly, we have not and do not plan to separately track the costs
for each of our research and development programs. We estimate that during the
three months ended September 30, 2002 and 2001, the majority of our research and
development expenses were related to manufacturing costs, clinical trial costs,
salaries and lab supplies related to our prostate cancer and endometriosis
clinical programs. The remaining research and development costs

                                 Page 9 (of 29)
<Page>

were incurred primarily in our Alzheimer's disease clinical program, our
PPI-2458 preclinical research program and our other research programs.

     We began our clinical program to develop Plenaxis for the treatment of
prostate cancer during 1996. In December 2000, we submitted a new drug
application, or NDA, to the FDA for Plenaxis for the treatment of hormonally
responsive advanced prostate cancer. However, the FDA raised concerns over the
occurrence of allergic reactions in a small subset of clinical trial patients.
In addition, the FDA expressed concern that, in a subset of patients treated
beyond the three-month pivotal study time frame, testosterone suppression was
not maintained. We have proposed various alternatives to the FDA to address
these issues and improve the risk/benefit profile of Plenaxis. Based upon
discussions with the FDA, we intend to seek approval for Plenaxis for use in a
defined sub-population of advanced prostate cancer patients. The specific
sub-population of patients will be determined through additional discussions
with the FDA. We anticipate resubmitting to the FDA during the first quarter of
2003 our NDA seeking approval for this indication.

     In addition, we have completed patient accrual in our previously disclosed
clinical study in which patients are being treated with Plenaxis for three
months and then switched to a commercially available hormonal therapy for an
additional two months of treatment. We intend to include safety data from this
study in our NDA resubmission. However, we cannot assure investors that we will
be successful in obtaining approval for the commercialization of Plenaxis for
the treatment of any portion of the hormonally responsive advanced prostate
cancer patient population or for any other indication.

     In 1998, we began our clinical program to develop Plenaxis for the
treatment of endometriosis. We completed a phase II/III study of Plenaxis for
the treatment of pain associated with endometriosis in March 2002. Results from
this study have suggested that we may be able to utilize a lower dose or a more
prolonged dosing interval in future studies to reduce drug exposure and
attendant bone mineral density loss, a known consequence of hormonal therapies
that lower estrogen levels. Accordingly, we are conducting a pharmacokinetic
study of Plenaxis for the treatment of endometriosis to examine the appropriate
dose and dosing schedule. We anticipate completing the pharmacokinetic study by
year-end and thereafter submitting the results to the FDA and proceeding to
evaluate the design of potential additional trials.

     We began our clinical program for Apan in 2000. We are currently conducting
a normal volunteer, phase Ia dose escalation study of Apan to identify the
maximum tolerated dose, or MTD. Preliminary observations from cerebrospinal
fluid of the volunteers in this study indicate that Apan successfully passes
through the blood-brain barrier and apparently stimulates the clearance of
amyloid beta, a suspected key culprit in the development of Alzheimer's disease.
Following the completion of the phase 1a study and assuming favorable FDA review
of the study's results, we intend to move into a phase 1b trial in Alzheimer's
disease patients during 2003. This 1b study will investigate a single
administration of Apan to establish the MTD in patients. Upon completion of the
phase 1b study and assuming favorable FDA review of the study results, we expect
to initiate a phase 1c trial, examining multiple administrations of a selected
Apan dose in Alzheimer's disease patients.

     As we continue ongoing clinical trials and related manufacturing and
development activities for Plenaxis for prostate cancer and endometriosis,
continue our Apan clinical program, and continue spending on preclinical
activities, we expect that our research and development expenses may increase
during the remainder of 2002 and thereafter. In addition, we currently have
several other ongoing research and development programs. Using industry
estimates, typical drug development programs may last for ten or more years and
may cost hundreds of millions of dollars to complete. As our programs progress,
we will assess the possibility of entering into corporate collaborations to
offset a portion of development costs. The ultimate success of our research and
development programs and the impact of these programs on our operations and
financial results cannot be accurately predicted and will depend, in large part,
upon the outcome and timing of many variables outside of our control.

     Sales and marketing expenses for the three months ended September 30, 2002
decreased 83% to approximately $0.3 million, from approximately $1.9 million for
the corresponding period in 2001. During the three months ended September 30,
2001, we incurred increased sales and marketing expenses in preparation for the
potential launch of Plenaxis for the treatment of hormonally responsive advanced
prostate cancer. Under our agreement with Amgen, we were obligated to pay
one-half of all program costs incurred during 2001 associated with establishing
a sales and marketing infrastructure in

                                 Page 10 (of 29)
<Page>

the United States for Plenaxis. The subsequent decrease in sales and marketing
expenses was due to the temporary suspension of the majority of marketing
efforts resulting from the repositioning of our prostate cancer program in
response to issues raised by the FDA. The Amgen agreement was terminated in
December 2001, and, consequently, we are solely responsible for all sales and
marketing expenses associated with Plenaxis. These expenses are likely to
increase during the remainder of 2002 and thereafter as we again incur costs
related to preparing for the possible launch of Plenaxis for the treatment of a
defined sub-population of hormonally responsive advanced prostate cancer
patients. We intend, upon FDA approval of our NDA, to market and sell Plenaxis
in the United States through our own marketing and sales team.

     General and administrative expenses for the three months ended September
30, 2002 increased 24% to approximately $2.3 million, from approximately
$1.8 million for the corresponding period in 2001. The increase was due
primarily to higher personnel-related operating costs. We expect that going
forward general and administrative expenses will continue to increase based
on normal hiring of administrative personnel to support continued growth of our
research, development and commercialization initiatives.

     Net interest income for the three months ended September 30, 2002 decreased
46% to approximately $1.0 million, from approximately $1.8 million for the
corresponding period in 2001. The decrease in net interest income was due
primarily to lower average cash and marketable securities balances coupled with
reduced average interest rates.

     At December 31, 2001, we had federal net operating loss carryforwards of
$51.6 million that will expire in varying amounts through 2021, if not utilized.
Utilization of net operating loss and tax credit carryforwards will be subject
to substantial annual limitations under the Internal Revenue Code of 1986, as
amended. The annual limitations may result in the expiration of the net
operating loss and tax credit carryforwards before full utilization.

NINE MONTHS ENDED SEPTEMBER 30, 2002 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
2001

     Revenues for the nine months ended September 30, 2002 decreased 87% to
approximately $1.0 million, from approximately $8.2 million for the
corresponding period in 2001. The decrease in revenues was the result of the
termination during the fourth quarter of 2001 of our collaboration agreements
with Amgen and Sanofi-Synthelabo. During the second quarter of 2002, we received
a final reimbursement payment from Sanofi-Synthelabo. We will not receive any
additional revenues under these agreements.

     Research and development expenses for the nine months ended September 30,
2002 decreased 9% to approximately $44.8 million, from approximately $49.5
million for the corresponding period in 2001. The slight decrease in expenses
primarily reflects reduced spending in our Plenaxis prostate cancer clinical
program and, to a lesser extent, the lack of spending on our clinical program
for Latranal. Development of Latranal was discontinued during the third quarter
of 2001. These decreases were partially offset by increased spending on
preclinical and manufacturing development activities for PPI-2458.

     Sales and marketing expenses for the nine months ended September 30, 2002
decreased 88% to approximately $1.0 million, from approximately $8.3 million for
the corresponding period in 2001. During the nine months ended September 30,
2001, we incurred increased sales and marketing expenses in preparation for the
potential launch of Plenaxis for the treatment of hormonally responsive advanced
prostate cancer. Under our agreement with Amgen, we were obligated to pay
one-half of all program costs incurred during 2001 associated with establishing
a sales and marketing infrastructure in the United States for Plenaxis. The
subsequent decrease in sales and marketing expenses was due to the temporary
suspension of the majority of marketing efforts resulting from the repositioning
of our prostate cancer program in response to issues raised by the FDA. The
Amgen agreement was terminated in December 2001, and, consequently, we are
solely responsible for all sales and marketing expenses associated with
Plenaxis. These expenses are likely to increase during the remainder of 2002 and
thereafter as we again incur costs related to preparing for the possible launch
of Plenaxis for the treatment of a defined sub-population of hormonally
responsive advanced prostate cancer patients. We intend, upon FDA approval of
our application, to market and sell Plenaxis in the United States through our
own marketing and sales team.

                                 Page 11 (of 29)
<Page>

     General and administrative expenses for the nine months ended September
30, 2002 increased 48% to approximately $7.1 million, from approximately $4.8
million for the corresponding period in 2001. This increase was due primarily
to higher facility-related expenses, as well as personnel-related operating
costs and increased professional services expenses. In May 2001, we occupied
our new, larger facility and began incurring depreciation expense and
increased utilities, maintenance and tax expenses. General and administrative
expenses for the remainder of 2002 and going forward now fully reflect these
new facility-related expenses. However, we expect that general and
administrative expenses will increase slightly based on normal hiring of
additional administrative personnel to support continued growth of our
research, development and pre-commercialization initiatives.

     Net interest income for the nine months ended September 30, 2002 decreased
52% to approximately $3.5 million, from approximately $7.3 million for the
corresponding period in 2001. The decrease in net interest income was due
primarily to lower average cash balances and reduced average interest rates.

LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 2002, we had cash, cash equivalents and marketable
securities of approximately $209.1 million and working capital of approximately
$197.8 million, compared to approximately $266.2 million and $229.0 million,
respectively, at December 31, 2001. During 2002, we expect to spend in the range
of $80.0 million to $85.0 million in cash, which is a reduction in the previous
estimate of $85.0 million to $95.0 million provided in our Annual Report on Form
10-K for the year ended December 31, 2001. We believe that our existing cash and
investments will be sufficient to meet our working capital and capital
expenditure needs through approximately the end of 2005. However, assuming
timely regulatory approval to market Plenaxis in the United States for a defined
sub-population of hormonally responsive advanced prostate cancer patients,
partnering of clinical programs at opportune times and continued conservative
fiscal management, we believe that we should have sufficient financial resources
to execute our operating plan and attain profitability by 2006 without returning
to the capital markets.

     For the nine months ended September 30, 2002, net cash of approximately
$55.9 million was used in operating activities, compared to approximately $28.1
million used in operating activities for the corresponding period in 2001.
During the nine months ended September 30, 2002, our use of cash in operations
was due principally to our net loss of $32.5 million and our payment of $13.0
million in connection with the Amgen termination agreement, partially offset by
depreciation and amortization. Our investing activities during the nine months
ended September 30, 2002 consisted mainly of the purchase, sale and maturity of
marketable securities. Our financing activities for the nine months ended
September 30, 2002 consisted principally of $0.9 million of proceeds received
from the exercise of common stock options.

     In July 2000, in connection with the purchase, through our wholly owned
real estate subsidiary, of our 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 facility. As of September 30, 2002,
$33.0 million was outstanding under the loan agreement. Advances bear interest
at a rate equal to the 30-day LIBOR plus 2.0% (3.81% at September 30, 2002).
Interest is payable monthly in arrears. Principal is due and payable in full on
July 30, 2003, subject to two one-year extension options, exercisable at our
option. 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 June 30, 2002, we had
spent approximately $38.0 million of our own funds in connection with the
build-out and occupancy of this facility. We occupied this facility during May
2001 and, as planned, are actively seeking to sublease a portion of the
facility.

                                 Page 12 (of 29)
<Page>

     In addition to our long-term debt, we have fixed purchase obligations under
various supply agreements. As of September 30, 2002, our long-term debt and
fixed purchase obligations were as follows:

<Table>
<Caption>
                                                         PAYMENTS DUE BY PERIOD
                                           ----------------------------------------------------
                                                         LESS THAN        1-3          AFTER
         CONTRACTUAL OBLIGATIONS             TOTAL         1 YEAR        YEARS        3 YEARS
----------------------------------------   ----------    ----------    ----------    ----------
                                                             (IN THOUSANDS)
<S>                                        <C>           <C>           <C>           <C>
Long-term debt .........................   $   33,000    $       --    $   33,000    $       --

Unconditional purchase obligations .....        8,691         8,691            --            --
                                           ----------    ----------    ----------    ----------

Total contractual cash obligations .....   $   41,691    $    8,691    $   33,000    $       --
                                           ==========    ==========    ==========    ==========
</Table>

     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 a defined sub-population of hormonally responsive advanced prostate cancer
patients, continue with current prostate cancer and endometriosis clinical
trials for Plenaxis and clinical trials for Apan, potentially initiate an
additional clinical program, initiate preclinical trials for additional product
candidates, continue to improve our facility and expand our research and
development initiatives. The amount of these expenditures will depend on
numerous factors, including:

     -    the cost, timing and outcomes of FDA and other regulatory reviews;

     -    decisions relating to the Plenaxis program made by us;

     -    the development of sales and marketing resources by us;

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

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

     -    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;

     -    the progress of our research and development activities;

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

     -    the rate of technological advances;

     -    determinations as to the commercial potential of our product
          candidates under development;

     -    the status of competitive products;

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

     -    our ability to sublease a portion of our facility; and

     -    the availability of additional financing.

     At December 31, 2001, we had provided a valuation allowance of $42.5
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

                                 Page 13 (of 29)
<Page>

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.

RECENT ACCOUNTING PRONOUNCEMENTS

     On October 20, 2001, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 144, ACCOUNTING FOR THE
IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, or SFAS No.144. SFAS No. 144
supersedes SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND
FOR LONG-LIVED ASSETS TO BE DISPOSED OF, however it retains the fundamental
provision of that statement related to the recognition and measurement of the
impairment of long-lived assets to be held and used. In addition, SFAS No. 144
provides additional guidance on estimating cash flows when performing a
recoverability test, requiring that a long-lived asset to be disposed of other
than by sale be classified as an asset held for sale until it is disposed of,
and establishes more restrictive criteria to classify an asset as held for sale.
SFAS No. 144 became effective in the first quarter of 2002. Application of SFAS
No. 144 did not have any effect on our consolidated financial position or
consolidated results of operations since we do not believe that we have any
impairments at this time.

     In July 2002, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 146, ACCOUNTING FOR COSTS ASSOCIATED WITH
EXIT OR DISPOSAL ACTIVITIES, or SFAS No. 146. SFAS No. 146 addresses financial
accounting and reporting for costs associated with exit or disposal activities
and nullifies EITF Issue No. 94-3, LIABILITY RECOGNITION FOR CERTAIN EMPLOYEE
TERMINATION BENEFITS AND OTHER COSTS TO EXIT AN ACTIVITY (INCLUDING CERTAIN
COSTS INCURRED IN A RESTRUCTURING). The principal difference between SFAS No.
146 and EITF Issue No. 94-3 relates to SFAS No. 146's requirements for
recognition of a liability for a cost associated with an exit or disposal
activity. SFAS No. 146 requires that a liability for a cost associated with an
exit or disposal activity be recognized when the liability is incurred. Under
EITF Issue No. 94-3, a liability for an exit cost as generally defined in EITF
Issue No. 94-3 was recognized at the date of an entity's commitment to an exit
plan. Therefore, SFAS No. 146 eliminates the definition and requirements for
recognition of exit costs in EITF Issue No. 94-3. SFAS No. 146 also establishes
that fair value is the objective for initial measurement of the liability. The
provisions of SFAS No. 146 are effective for exit or disposal activities that
are initiated after December 31, 2002, with early application encouraged. We do
not anticipate the adoption of SFAS No. 146 to have a material impact on our
consolidated financial statements.

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, develop commercial
sales and marketing capabilities 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, 2002, we had an accumulated deficit
of approximately $116.9 million. We expect that our operating expenses will
increase significantly in the near term, resulting in significant operating
losses for 2002 and the next several years.

                                 Page 14 (of 29)
<Page>

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 in clinical trials,
and satisfy the FDA and foreign regulatory authorities as to, 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 that may not be 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.

     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, or of safety issues associated with, the
drug we are testing. Future governmental action or existing or changes in FDA
policies or precedents, 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 advanced prostate cancer and endometriosis,
or for any of our other product candidates, or regulatory approval may be
conditioned upon significant labeling requirements which could adversely affect
the marketability or value 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
advanced prostate cancer, in which the FDA indicated that the information
presented in the NDA was inadequate for approval. The FDA raised concerns over
the occurrence of allergic reactions in a small subset of clinical trial
patients. In addition, the FDA expressed concern that, in a subset of patients
treated beyond the three-month pivotal study time frame, testosterone
suppression was not maintained. We have proposed various alternatives to the FDA
to address these issues and improve the risk/benefit profile of Plenaxis. Based
upon our discussions with the FDA, we now intend to seek approval for Plenaxis
for use in a defined sub-population of advanced prostate cancer patients for
whom the use of existing commercially available hormonal therapies may not be
appropriate. The specific sub-population of patients will be determined through
additional discussions with the FDA. We anticipate resubmitting to the FDA
during the first quarter of 2003 our NDA seeking approval for this indication.

     In addition, we have completed patient accrual in our previously disclosed
clinical study in which patients are being treated with Plenaxis for three
months and then switched to a commercially available hormonal therapy for an
additional two months of treatment. We intend to include safety data from this
study in our NDA resubmission. However, we cannot assure investors that we will
be

                                 Page 15 (of 29)
<Page>

successful in obtaining approval for the commercialization of Plenaxis for the
treatment of any portion of the hormonally responsive advanced prostate cancer
patient population or for any other indication.

     The FDA actions described above have delayed, and otherwise adversely
affected, our obtaining regulatory approval to market Plenaxis for the treatment
of hormonally responsive advanced prostate cancer. Moreover, there could be
further delays due to FDA review or action, and the FDA could deny approval
altogether. 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 given 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 relied on them to some extent in seeking
regulatory approval in the United States and abroad for Plenaxis for the
treatment of hormonally responsive advanced prostate cancer. In addition, under
our agreement with Amgen, they had assumed principal responsibility for the
manufacture of Plenaxis, and under our agreements with Amgen and
Sanofi-Synthelabo, those parties were responsible for the marketing,
distribution and sale of Plenaxis in their respective licensed territories.

     The termination of our 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
advanced prostate cancer and endometriosis. We will likely need to devote funds
and other resources to Plenaxis development and commercialization that we had
planned would be available from our collaborators. This could require us to
curtail or terminate one or more of our other drug development programs. Also,
due to increased operating costs, lost revenue and the $13.0 million final
payment to Amgen associated with the termination of our agreement with them, 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.

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 very limited marketing and sales resources. To achieve commercial success
for any approved product, we must either develop a marketing and sales force, as
well as the infrastructure to support it, 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. We have announced our intention to
independently market and sell Plenaxis in the United States if we receive FDA
approval of this compound for use in a defined sub-population of advanced
prostate cancer patients. Accordingly, we will 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 will be able to attract and retain a
sufficient number of qualified individuals to successfully launch Plenaxis or
any other potential product. In addition, establishing the expertise necessary
to successfully market and sell Plenaxis, or any other product, will require a
substantial capital investment. We cannot assure you that we will have the funds
necessary to successfully commercialize Plenaxis for the treatment of a defined
sub-population of hormonally responsive advanced prostate cancer patients 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

                                 Page 16 (of 29)
<Page>

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.

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:

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

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

     -    the product labeling or product insert required by the FDA for
          Plenaxis and each of our other product candidates;

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

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

     -    the rate of adoption of Plenaxis or our other product candidates by
          doctors and nurses and acceptance by the target patient population;

     -    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;

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

     -    unfavorable publicity concerning Plenaxis or any of our other product
          candidates or any similar products.

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

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 later-stage preclinical, clinical and commercial purposes for a
significant period of time. Third-party manufacturers may not be able to meet
our needs as 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

                                 Page 17 (of 29)
<Page>

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 will 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 a defined
sub-population of hormonally responsive advanced prostate cancer patients. Also,
the establishment of our own facility could itself be costly thereby increasing
our operating costs.

THE LOSS OR FAILURE OF ANY OF OUR THIRD-PARTY MANUFACTURERS COULD DELAY OR
IMPAIR OUR DEVELOPMENT, OR OUR SALE OR CONTINUED SALE, OF PLENAXIS PRODUCTS.

     For each stage of Plenaxis production we have relied, and expect in the
near term to continue to rely, on a separate third-party manufacturer, and we
currently have not contracted, and in the near term do not expect to contract,
with second-source suppliers for any of these production stages. Accordingly,
the loss of one or more of these suppliers for any reason, including as a result
of fire, terrorism, acts of God or insolvency or bankruptcy, could result in
delays in, or impair our ability to complete, clinical trials and regulatory
submissions or reviews, and could delay or impair our sale or continued sale of
Plenaxis products. Such delays or impairment, and the associated costs and
expenses, may lower our potential revenues and profitability. While we intend to
evaluate the possibility of a second source of supply at each stage of Plenaxis
production, the number of qualified alternative suppliers is limited, and we
cannot

                                 Page 18 (of 29)
<Page>

assure investors that we will be able to locate alternative suppliers or
negotiate second supply agreements on reasonable terms. Furthermore, the process
of engineering a new supplier's facility for the production of Plenaxis and
obtaining the necessary FDA approval of the facility would require a substantial
lead-time and could be extremely costly. We cannot assure investors that we will
not lose one or more of our suppliers, or that in such event we would be readily
able to continue the development and commercialization and sale of Plenaxis
products without substantial and costly delays.

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 them to do so. In
addition, these third parties may conduct our clinical trials in a manner
inconsistent with regulatory requirements or otherwise in a manner that yields
misleading or unreliable data. This, or other failures of these third parties to
carry out their duties, could result in significant additional costs and
expenses and 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.

     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 responds to changes in hormone
levels. Even if the FDA approves Plenaxis for commercialization for the
treatment of hormonally responsive advanced prostate cancer, the approval is
expected to 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 advanced 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 may face increasing competition from generic formulations or existing drugs
whose active components are no longer covered by patents.

     Our competitors may:

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

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

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

     -    successfully market products that compete with our products.

                                 Page 19 (of 29)
<Page>

     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 andpotential 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 20 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.

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 OUR POTENTIAL 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 our use of 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 on acceptable terms or at
all. 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

                                 Page 20 (of 29)
<Page>

Advanced Research and Technology Institute, 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:

     -    government and health administration authorities;

     -    private health insurers; and

     -    other third party payors, including Medicare and Medicaid.

     We cannot predict the availability of reimbursement for newly approved
drugs. 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 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 this facility
to third parties. To date, we have not been able to find suitable sub-tenants to
occupy this space. 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
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 and Chairman of the Board, and William K. Heiden, our President and
Chief Operating Officer. 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.

                                 Page 21 (of 29)
<Page>

     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 continuing to develop our potential
products, enhancing our 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. Our collaboration
agreements with Amgen and Sanofi-Synthelabo included, and the agreements with
them regarding the termination of those collaborations also include, an
indemnification of them for liabilities associated with the development and
commercialization of Plenaxis. If a third party, including a former
collaborator, sues us for any injury, or for indemnification for losses, arising
out of 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 HANDLING, 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, which may pose health risks. 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 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, third-parties have also worked with hazardous materials
in connection with our agreements with them. We have agreed to indemnify our
present and former 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 as 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 transaction of this sort. To
the extent we issue stock in a transaction, the ownership interest

                                 Page 22 (of 29)
<Page>

of our stockholders 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:


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

     -    failure or delay by third-party manufacturers in performing their
          supply obligations or disputes or litigation regarding those
          obligations;

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

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

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

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

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

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

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

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

     -    actual or anticipated fluctuations in our operating results;

     -    changes in financial estimates or recommendations by securities
          analysts;

     -    sales of large blocks of our common stock;

     -    changes in accounting principles; and

     -    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.

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:

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

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

                                 Page 23 (of 29)
<Page>

     -    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
CERTAIN PROVISIONS OF 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 an increase in prevailing interest rates
may cause the principal amount of the investment to decrease. 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. A hypothetical 100
basis point increase in interest rates would result in an approximate $0.4
million decrease in the fair value of our investments as of September 30, 2002.
Due to the conservative nature of our investments and relatively short duration,
interest rate risk is mitigated. As of September 30, 2002, approximately 82% 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 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
currently do not believe that there is material interest rate risk exposure with
respect to the loan agreement. In addition, we believe that we have mitigated
our risk relating to significant adverse fluctuations in interest rates with
respect to borrowings under the loan agreement, 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.

ITEM 4.   CONTROLS AND PROCEDURES.

(a)      EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES. Our chief executive
officer and chief financial officer have evaluated the effectiveness of the
Company's disclosure controls and procedures (as such term is defined in Rules
13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended)
as of a date within 90 days prior to the filing date of this quarterly report,
referred to as the evaluation date. Based on this evaluation, these officers
have concluded that, as of the evaluation date, the Company's disclosure
controls and procedures are effective in alerting them on a timely basis to
material information relating to the Company required to be included in the
Company's reports filed or submitted under the Exchange Act.

(b)      CHANGES IN INTERNAL CONTROLS. Since the evaluation date, there have
not been any significant changes in the Company's internal controls or in
other factors that could significantly affect these controls. There were no
significant deficiencies or material weaknesses, and therefore, there were no
corrective actions required or undertaken.

                                 Page 24 (of 29)
<Page>

                           PART II. OTHER INFORMATION

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      Second Amended and Restated By-Laws (5)

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

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

                  4.5      Form of Rights Certificate (attached as Exhibit B to
                           the Rights Agreement filed as Exhibit 4.3 hereto) (4)

                  10.1     Executive Management Bonus Plan, as amended and
                           restated as of September 12, 2002

                  10.2     Termination Agreement dated as of August 19, 2002 by
                           and between the Registrant and Amgen Inc.

                  99.1     Certification of chief executive officer pursuant to
                           18 U.S.C. Section 1350, as Adopted Pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002

                  99.2     Certification of chief financial officer pursuant to
                           18 U.S.C. Section 1350, as Adopted Pursuant to
                           Section 906 of the Sarbanes-Oxley Act of 2002

----------

(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.

(5)      Incorporated by reference to Annual Report on Form 10-K for the year
         ended December 31, 2001 filed with the Securities and Exchange
         Commission on April 1, 2002.

(b)      REPORTS SUBMITTED ON FORM 8-K.

                    On July 26, 2002, we filed a Current Report on Form 8-K to
          file under Item 5 (Other Events) a copy of our Press Release dated
          July 26, 2002.

                    On August 21, 2002, we filed a Current Report on Form 8-K to
          file under Item 5 (Other Events) a copy of our Press Release dated
          August 20, 2002.









                                 Page 25 (of 29)
<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, 2002      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 29)
<Page>

                                 CERTIFICATIONS

     I, Malcolm L. Gefter, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of PRAECIS
     PHARMACEUTICALS INCORPORATED;

     2.   Based on my knowledge, this quarterly report does not contain any
     untrue statement of a material fact or omit to state a material fact
     necessary to make the statements made, in light of the circumstances under
     which such statements were made, not misleading with respect to the period
     covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

     4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     c)   presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed, based
     on our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

     6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.


             Date: November 13, 2002


                                                 /s/ Malcolm L. Gefter
                                                 ---------------------
                                                   Malcolm L. Gefter
                                                 Chief Executive Officer


                                 Page 27 (of 29)
<Page>


     I, Kevin F. McLaughlin, certify that:

     1.   I have reviewed this quarterly report on Form 10-Q of PRAECIS
     PHARMACEUTICALS INCORPORATED;

     2.   Based on my knowledge, this quarterly report does not contain any
     untrue statement of a material fact or omit to state a material fact
     necessary to make the statements made, in light of the circumstances under
     which such statements were made, not misleading with respect to the period
     covered by this quarterly report;

     3.   Based on my knowledge, the financial statements, and other financial
     information included in this quarterly report, fairly present in all
     material respects the financial condition, results of operations and cash
     flows of the registrant as of, and for, the periods presented in this
     quarterly report;

     4.   The registrant's other certifying officer and I are responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

     a)   designed such disclosure controls and procedures to ensure that
     material information relating to the registrant, including its consolidated
     subsidiaries, is made known to us by others within those entities,
     particularly during the period in which this quarterly report is being
     prepared;

     b)   evaluated the effectiveness of the registrant's disclosure controls
     and procedures as of a date within 90 days prior to the filing date of this
     quarterly report (the "Evaluation Date"); and

     c) presented in this quarterly report our conclusions about the
     effectiveness of the disclosure controls and procedures based on our
     evaluation as of the Evaluation Date;

     5.   The registrant's other certifying officer and I have disclosed, based
     on our most recent evaluation, to the registrant's auditors and the audit
     committee of registrant's board of directors (or persons performing the
     equivalent function):

     a)   all significant deficiencies in the design or operation of internal
     controls which could adversely affect the registrant's ability to record,
     process, summarize and report financial data and have identified for the
     registrant's auditors any material weaknesses in internal controls; and

     b)   any fraud, whether or not material, that involves management or other
     employees who have a significant role in the registrant's internal
     controls; and

     6.   The registrant's other certifying officer and I have indicated in this
     quarterly report whether or not there were significant changes in internal
     controls or in other factors that could significantly affect internal
     controls subsequent to the date of our most recent evaluation, including
     any corrective actions with regard to significant deficiencies and material
     weaknesses.

             Date: November 13, 2002


                                                 /s/ Kevin F. McLaughlin
                                                 -----------------------
                                                   Kevin F. McLaughlin
                                                 Chief Financial Officer


                                 Page 28 (of 29)
<Page>


                                  EXHIBIT INDEX

             EXHIBIT
             NUMBER     EXHIBIT

             3.1        Amended and Restated Certificate of Incorporation (2)

             3.2        Second Amended and Restated By-Laws (5)

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

             4.4        Form of Certificate of Designations of Series A Junior
                        Participating Preferred Stock (attached as Exhibit A to
                        the Rights Agreement filed as Exhibit 4.3 hereto) (4)

             4.5        Form of Rights Certificate (attached as Exhibit B to the
                        Rights Agreement filed as Exhibit 4.3 hereto) (4)

             10.1       Executive Management Bonus Plan, as amended and restated
                        as of September 12, 2002

             10.2       Termination Agreement dated as of August 19, 2002 by and
                        between the Registrant and Amgen Inc.

             99.1       Certification of chief executive officer pursuant to 18
                        U.S.C. Section 1350, as Adopted Pursuant to Section 906
                        of the Sarbanes-Oxley Act of 2002

             99.2       Certification of chief financial officer pursuant to 18
                        U.S.C. Section 1350, as Adopted Pursuant to Section 906
                        of the Sarbanes-Oxley Act of 2002

     ----------

     (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.

     (5)     Incorporated by reference to Annual Report on Form 10-K for the
             year ended December 31, 2001 filed with the Securities and Exchange
             Commission on April 1, 2002.

                                 Page 29 (of 29)