<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, 2000

                                       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                       04-3200305
         -------------------------------       -------------------
         (State or other jurisdiction of        (I.R.S. Employer
          incorporation or organization)       Identification No.)

                 One Hampshire Street, Cambridge, MA 02139-1572
              ----------------------------------------------------
              (Address of principal executive offices and zip code)

                                 (617) 494-8400
                                -----------------
              (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, 2000, there were 41,924,320 shares of the registrant's common
stock, $.01 par value, outstanding.
<PAGE>

                      PRAECIS PHARMACEUTICALS INCORPORATED

                                    FORM 10-Q
                    FOR THE QUARTER ENDED SEPTEMBER 30, 2000

                                      INDEX

<TABLE>
<CAPTION>
                                                                                    PAGE
                                                                                   NUMBER
                                                                                   ------

<S>                <C>                                                             <C>

PART I.            FINANCIAL INFORMATION                                               3

Item 1.            Financial Statements                                                3

                   Condensed Consolidated Balance Sheets - September 30, 2000
                   (unaudited) and December 31, 1999                                   3

                   Condensed Consolidated Statements of Operations (unaudited) -
                   three and nine months ended September 30, 2000 and 1999             4

                   Condensed Consolidated Statements of Cash Flows (unaudited) -
                   nine months ended September 30, 2000 and 1999                       5

                   Notes to Condensed Consolidated Financial Statements                6

Item 2.            Management's Discussion and Analysis of Financial Condition
                   and Results of Operations                                           9

Item 3.            Quantitative and Qualitative Disclosures About Market Risk         23

PART II.           OTHER INFORMATION                                                  25

Item 2.            Changes in Securities and Use of Proceeds                          25

Item 6.            Exhibits and Reports on Form 8-K                                   26

SIGNATURE                                                                             28

EXHIBIT INDEX                                                                         29
</TABLE>
<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                      PRAECIS PHARMACEUTICALS INCORPORATED
                      Condensed Consolidated Balance Sheets
                 (In thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                September 30, December 31,
                                                                    2000         1999
                                                                  ---------    ---------
                                                                 (unaudited)
<S>                                                               <C>          <C>
ASSETS
Current assets:
    Cash and cash equivalents .................................   $ 146,378    $  94,525
    Accounts receivable .......................................       2,148        8,121
    Unbilled revenue ..........................................       2,157        4,259
    Materials inventory .......................................      29,957       21,100
    Prepaid expenses and other assets .........................       3,695          708
    Deferred income taxes .....................................       5,575        5,575
                                                                  ---------    ---------

          Total current assets ................................     189,910      134,288

Property and equipment, net ...................................      49,513        6,043
                                                                  ---------    ---------

          Total assets ........................................   $ 239,423    $ 140,331
                                                                  =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
    Accounts payable ..........................................   $   3,844    $   9,878
    Accrued expenses ..........................................      12,467        6,859
    Deferred revenue ..........................................       5,104        5,501
    Advance payments ..........................................      29,957       21,100
    Income taxes payable ......................................          --        4,672
    Current portion of capital lease obligations ..............           4           58
                                                                  ---------    ---------

          Total current liabilities ...........................      51,376       48,068
Deferred revenue ..............................................       1,136        4,547
Long term debt ................................................      24,000           --

Commitments and contingencies

Stockholders' equity:
    Preferred Stock, $0.01 par value; 10,000,000 shares
      authorized; no shares issued and outstanding  ...........          --           --
    Series A through E Convertible Preferred Stock,
       $0.01 par value; 3,750,000 shares authorized; no
       shares in 2000 and 3,417,300 shares in 1999 issued
       and outstanding ........................................          --           35
    Common Stock, $0.01 par value; 200,000,000 shares in
       2000 and 60,000,000 shares in 1999 authorized;
       41,877,096 shares in 2000 and 6,358,684 shares in 1999
       issued and outstanding .................................         419           64
    Additional paid-in capital ................................     175,244       88,710
    Accumulated deficit .......................................     (12,752)      (1,093)
                                                                  ---------    ---------

          Total stockholders' equity ..........................     162,911       87,716
                                                                  ---------    ---------

              Total liabilities and stockholders' equity ......   $ 239,423    $ 140,331
                                                                  =========    =========
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                        3
<PAGE>

                      PRAECIS PHARMACEUTICALS INCORPORATED
                 Condensed Consolidated Statements of Operations
                 (In thousands, except share and per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                    Three Months Ended          Nine Months Ended
                                                     September 30,                September 30,
                                             ---------------------------   ---------------------------
                                                 2000           1999           2000            1999
                                             ------------    -----------   ------------    -----------
<S>                                          <C>             <C>           <C>             <C>
Revenues:
    Corporate collaborations..............   $      7,334    $    16,783   $     26,307    $    57,128
                                             ------------    -----------   ------------    -----------
          Total revenues..................          7,334         16,783         26,307         57,128

Costs and expenses:
    Research and development..............         13,358         13,731         37,023         42,190
    Sales and marketing...................          2,080            335          2,666          2,047
    General and administrative............          1,283          1,006          3,874          2,721
                                             ------------    -----------   ------------    -----------
        Total costs and expenses..........         16,721         15,072         43,563         46,958
                                             ------------    -----------   ------------    -----------

Operating income (loss)...................         (9,387)         1,711        (17,256)        10,170

Interest income, net......................          2,255          1,175          5,697          3,208
                                             ------------    -----------   ------------    -----------

Income (loss) before income taxes.........         (7,132)         2,886        (11,559)        13,378
Provision for income taxes................             --            470            100          2,170
                                             ------------    -----------   ------------    -----------

Net income (loss).........................   $     (7,132)   $     2,416   $    (11,659)   $    11,208
                                             ============    ===========   ============    ===========

Net income (loss) per share:
   Basic..................................   $      (0.17)   $      0.39   $      (0.44)   $      1.84
   Diluted................................   $      (0.17)   $      0.06   $      (0.44)   $      0.30

Weighted average number of common
   shares:
   Basic..................................     41,871,147      6,146,184     26,280,783      6,078,679
   Diluted................................     41,871,147     38,207,157     26,280,783     37,488,940

Pro forma net income (loss) per share:
   Basic..................................   $      (0.17)   $      0.08   $      (0.31)   $      0.35
   Diluted................................   $      (0.17)   $      0.06   $      (0.31)   $      0.30

Pro forma weighted average number
   of common shares:
   Basic..................................     41,871,147     31,754,034     37,682,818     31,686,529
   Diluted................................     41,871,147     38,207,157     37,682,818     37,488,940
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                        4
<PAGE>

                      PRAECIS PHARMACEUTICALS INCORPORATED
                 Condensed Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                    Nine Months Ended
                                                                      September 30,
                                                                    2000        1999
                                                                  ---------    --------
<S>                                                               <C>          <C>
OPERATING ACTIVITIES:
Net (loss) income..............................................   $ (11,659)   $ 11,208
Adjustments to reconcile net (loss) income to cash used in
operating activities:
   Depreciation and amortization...............................       1,984         964
   Deferred income taxes.......................................          --      (4,132)
   Stock compensation..........................................       1,699          --
   Changes in operating assets and liabilities:
      Accounts receivable......................................       5,973     (13,668)
      Unbilled revenue.........................................       2,102      (9,708)
      Materials inventory......................................      (8,857)     (5,186)
      Prepaid expenses and other assets........................      (2,987)         78
      Accounts payable.........................................      (6,034)      9,509
      Accrued expenses.........................................       5,608         730
      Deferred revenue.........................................      (3,808)      8,293
      Advance payments.........................................       8,857       5,186
      Income taxes payable.....................................      (4,672)      3,665
                                                                  ---------    --------
Net cash (used in) provided by operating activities............     (11,794)      6,939

INVESTING ACTIVITIES:
Purchase of property and equipment.............................     (45,454)     (3,329)
                                                                  ---------    --------
Net cash used in investing activities..........................     (45,454)     (3,329)

FINANCING ACTIVITIES:
Proceeds from debt issuance....................................      24,000          --
Principal repayments of capital lease obligations..............         (54)       (181)
Initial public offering proceeds...............................      84,263          --
Proceeds from issuance of common stock, options and warrants...         892          47
                                                                  ---------    --------
Net cash provided by (used in) financing activities............     109,101        (134)
                                                                  ---------    --------

Net increase in cash and cash equivalents......................      51,853       3,476
Cash and cash equivalents, beginning of period.................      94,525      85,298
                                                                  ---------    --------

Cash and cash equivalents, end of period.......................   $ 146,378    $ 88,774
                                                                  =========    ========
</TABLE>

SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.


                                      5
<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 Registration
Statement on Form S-1 (File No. 333-96351) (the "Registration Statement"), which
was declared effective by the SEC on April 26, 2000.

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

The preparation of these financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES

NEW ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES (SFAS No. 133), which is effective for fiscal year 2001.
SFAS No. 133 requires all derivatives to be carried on the balance sheet as
assets or liabilities at fair value. The accounting for changes in fair value
would depend on the hedging relationship and would be reported in the income
statement or as a component of comprehensive income. The Company believes that
the adoption of this new accounting standard will not have a material impact on
the Company's financial statements.

In December 1999, the SEC issued Staff Accounting Bulletin 101 ("SAB 101"),
REVENUE RECOGNITION IN FINANCIAL STATEMENTS. SAB 101 clarifies the SEC staff's
views on applying generally accepted accounting principles to revenue
recognition in financial statements. In March 2000, the SEC issued an amendment,
SAB 101A, which deferred the effective date of SAB 101. In June 2000, the SEC
issued an amendment, SAB 101B, which again deferred the effective date of SAB
101. The Company will adopt SAB 101 in the fourth quarter of 2000 in accordance
with SAB 101B. The Company believes its revenue recognition policies are in
compliance with SAB 101.

In March 2000, the FASB issued Interpretation No. 44, ACCOUNTING FOR CERTAIN
TRANSACTIONS INVOLVING STOCK COMPENSATION (the "Interpretation"). This
Interpretation clarifies how companies should apply the Accounting Principles
Board's Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES. The
Interpretation will be applied prospectively to new awards, modifications to
outstanding awards, and changes in employee status on or after July 1, 2000,
except as follows: the definition of an employee applies to awards granted after
December 15, 1998; the Interpretation applies to modifications that reduce the
exercise price of an award after December 15, 1998; and the Interpretation
applies to modifications that add a reload feature to an award made after
January 12, 2000. There are no awards that resulted in an adjustment as a result
of this Interpretation.


                                     6

<PAGE>

PRINCIPLES OF CONSOLIDATION

The accompanying condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary, 830 Winter Street LLC
("830 Winter Street"), a single purpose Delaware limited liability company, that
was formed by the Company on June 8, 2000 in connection with the purchase of the
Company's new facility in Waltham, Massachusetts. All material intercompany
balances and transactions have been eliminated in consolidation.

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is based on the weighted average number of
common shares outstanding. Diluted net income (loss) per share is based on the
weighted average number of common shares outstanding plus the dilutive effect of
outstanding stock options and warrants using the treasury stock method, and the
effect of the convertible preferred stock using the if-converted method. For the
three and nine months ended September 30, 2000, diluted net income (loss) per
common share is the same as basic net income (loss) per common share as the
inclusion of weighted average shares of common stock issuable upon exercise of
stock options and warrants would be antidilutive.

Pro forma net income (loss) per share has been computed as described above and
also gives effect, under SEC guidance, to the conversion of preferred shares not
included above that automatically converted to common shares upon the closing of
the Company's initial public offering in May 2000 (See Note 5), using the
if-converted method.

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

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED          NINE MONTHS ENDED
                                                        SEPTEMBER 30,              SEPTEMBER 30,
                                                     -------------------         ------------------
                                                     2000           1999           2000          1999
                                                    ------         ------         ------        ------
<S>                                                 <C>           <C>           <C>          <C>
Historical:

     Weighted average number of common shares
      outstanding used in computing basic net
      income (loss) per share ..................    41,871,147     6,146,184    26,280,783     6,078,679
     Net effect of common stock options,
      warrants and convertible preferred                    --    32,060,973            --    31,410,261
      stock ....................................    ----------    ----------    ----------    ----------
     Weighted average number of common shares
      outstanding used in computing diluted net     41,871,147    38,207,157    26,280,783    37,488,940
      income (loss) per share ..................    ==========    ==========    ==========    ==========

Pro forma:

     Weighted average number of common shares
      used in computing basic net income (loss)
      per share (from above) ...................    41,871,147     6,146,184    26,280,783     6,078,679
     Adjustment to reflect the effect of the
      assumed conversion of preferred stock from            --    25,607,850    11,402,035    25,607,850
      the date of issuance .....................    ----------    ----------    ----------    ----------
     Weighted average number of common shares
      outstanding used in computing pro forma
      basic net income (loss) per                   41,871,147    31,754,034     37,682,818    31,686,529
      share ....................................    ==========    ==========     ==========    ==========

     Weighted average number of common shares
      used in computing diluted net income
      (loss) per share (from above) ............    41,871,147    38,207,157     26,280,783    37,488,940
     Adjustment to reflect the effect of the
      assumed conversion of preferred stock from            --            --     11,402,035            --
      the date of issuance .....................    ----------    ----------     ----------    ----------
     Weighted average number of common shares
      used in computing pro-forma diluted net       41,871,147    38,207,157     37,682,818    37,488,940
      income (loss) per share ..................    ==========    ==========     ==========    ==========
</TABLE>

3.       STOCK BASED COMPENSATION

Options granted to non-employee consultants to purchase 62,500 shares of

common stock, par value $.01 per share ("Common Stock"), at September 30, 2000
are accounted for at fair value in accordance with SFAS 123, ACCOUNTING FOR


                                     7

<PAGE>

STOCK-BASED COMPENSATION. During the three and nine months ended September 30,
2000, $0.5 million and $1.7 million, respectively, were charged to compensation
expense in connection with these options.

4.       STOCK SPLIT

On March 8, 2000, the Company effected a two-for-one stock split of its Common
Stock in the form of a 100% stock dividend. All common share and per share data
in the accompanying condensed consolidated financial statements have been
retroactively adjusted to reflect the stock split.

5.       INITIAL PUBLIC OFFERING

On April 26, 2000, the Company's Registration Statement was declared effective
by the SEC. Pursuant to the Registration Statement, on May 2, 2000, the Company
sold 8,000,000 shares of its Common Stock at $10 per share and on May 8, 2000,
the Company sold an additional 1,200,000 shares of Common Stock at $10 per share
pursuant to the underwriters' exercise in full of their over-allotment option.

The Company received net proceeds of approximately $84.3 million from its
initial public offering (including the net proceeds from the sale of shares
pursuant to the exercise by the underwriters of the over-allotment option),
after payment of underwriting discounts and commissions and estimated offering
expenses.

Upon the closing of the Company's initial public offering on May 2, 2000, all of
the outstanding shares of the Company's convertible preferred stock, par value
$.01 per share ("Preferred Stock"), automatically converted into 25,607,850
shares of Common Stock. Immediately following the automatic conversion of the
Preferred Stock, the Company filed an amended and restated certificate of
incorporation. Under the amended and restated certificate of incorporation, the
Company is authorized to issue 200,000,000 shares of Common Stock and 10,000,000
shares of Preferred Stock. There currently are no shares of Preferred Stock
issued and outstanding.

6.       BUILDING AND RELATED MORTGAGE FINANCING

On July 11, 2000, the Company purchased, for $41.3 million, through its
subsidiary 830 Winter Street, land and a building to be used as its
headquarters and principal research facility. On July 11, 2000, 830 Winter
Street executed an Acquisition and Construction Loan Agreement (the "Loan
Agreement") providing for up to $33.0 million in first mortgage financing. Under
the terms of the Loan Agreement, advances are available primarily to pay for the
acquisition of, and improvements to, the Company's new facility. In connection
with the purchase of the new facility, an initial advance of $24.0 million was
made on July 11, 2000. Advances bear interest at a rate equal to the 30-day
LIBOR plus 2.0% (8.62% at September 30, 2000). Interest is payable monthly in
arrears. Principal is due and payable in full on July 30, 2003, subject to two,
one-year extension options. The loan is secured by the new facility, together
with all fixtures, equipment, improvements and other items related thereto, and
by all rents, income or profits received by 830 Winter Street.

In connection with the first mortgage financing, in July 2000 the Company
entered into an interest rate cap agreement (the "Interest Rate Cap") in order
to manage fluctuation in cash flows resulting from interest rate risk. Under the
terms of the Interest Rate Cap, the Company has hedged its exposure to the
underlying interest rate index to a maximum of 30-day LIBOR plus 1.25%. The term
of the Interest Rate Cap is the three-year period ending July 10, 2003.

The Company expects to occupy the new facility during the first quarter of 2001
and intends to sublet a portion of the facility at that time. In connection with
the decision to relocate its principal operations to the new facility, the
Company may incur approximately $1.0 million of incremental cash and non-cash
operating costs during the approximate 12-month transition period.


                                     8
<PAGE>

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

                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
PROVIDED 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 PRAECIS' 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
abarelix, a drug to treat diseases that respond to the lowering of hormone
levels. We have entered into collaborations with Amgen Inc. and
Sanofi-Synthelabo S.A. to further develop and commercialize our abarelix
products. We are also developing Latranal, our proprietary topical composition
for the relief of localized pain, and Apan, our proprietary drug candidate for
the treatment of Alzheimer's Disease.

         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. These revenues
enabled us to achieve profitability and positive cash flow before any financing
activity for 1997, 1998 and 1999. From inception through September 30, 2000, we
recognized approximately $146.0 million in revenues under these collaboration
agreements. Under these agreements, we could receive additional non-refundable
performance-based payments and reimbursement for ongoing development costs, as
well as a percentage of future product profits. For the next several years, we
expect that our sources of revenue, if any, will consist primarily of interest
income and payments from our corporate collaborators. We expect reimbursement
for ongoing development costs under our corporate collaborations to diminish
over the next several years.

         Our accumulated deficit as of September 30, 2000 was approximately
$12.8 million. Substantially all of our expenditures to date have been for drug
development activities and for general and administrative expenses.

         Due to the high costs associated with preparing to launch our first
product, as well as other research and development and general and
administrative expenses, we expect to have net operating losses for 2000 and the
following several years. We do not expect to generate operating income until
several years after abarelix is approved for marketing by the FDA for the
treatment of prostate cancer. We will require regulatory approval to market all
of our future products.

         Under our agreement with Sanofi-Synthelabo, we could receive up to
approximately $69.6 million in non-refundable fees and performance-based
payments. For supply of product to Sanofi-Synthelabo, we are entitled to receive
a transfer price that varies based on sales price and volume. Additionally, we
are entitled to receive reimbursement for certain ongoing development costs. To
date, we have received a total of approximately $32.4 million in non-refundable
fees, performance-based payments and reimbursement for ongoing development costs
under the Sanofi-Synthelabo agreement.

                                     9

<PAGE>

         Under our agreement with Amgen for the development and
commercialization of abarelix products in the countries not covered by the
Sanofi-Synthelabo agreement, we could receive up to $25.0 million in signing and
performance-based fees. Of this $25.0 million, we have received $10.0 million to
date, which is the minimum amount payable under the agreement. The remaining
$15.0 million is payable upon FDA approval of a new drug application (NDA)
relating to abarelix. Under the agreement, Amgen paid the first $175.0 million
of all authorized costs and expenses associated with the research, development
and commercialization of abarelix products in the United States. Amgen's $175.0
million funding commitment was fulfilled during the third quarter of 2000.
Following the completion of this funding by Amgen, we became responsible for
one-half of all subsequent United States research and development costs for
abarelix products through the launch period and we must reimburse Amgen for
one-half of the costs associated with establishing a sales and marketing
infrastructure in the United States. In general, we will receive a transfer
price and royalty based on an equal sharing of the resulting profits on sales of
abarelix products in the United States. All program expenses in Amgen's licensed
territory outside the United States will be borne by Amgen, and we will receive
a royalty on net sales of abarelix products in those territories.

         We have granted Amgen exclusive manufacturing and commercialization
rights for abarelix products for all indications in the licensed territories.
During the second quarter of 2000, Amgen assumed manufacturing responsibility
for abarelix products, with the exception of the depot formulation, pursuant to
the terms of the Amgen agreement. Subject to the terms of the agreement, we have
retained manufacturing responsibility for the depot formulation of abarelix. In
addition, under the terms of the Amgen agreement, we transferred the final
decision making authority for the abarelix endometriosis indication to Amgen
during the third quarter of 2000.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1999

         Revenues for the three months ended September 30, 2000 decreased 56% to
approximately $7.3 million, from approximately $16.8 million for the
corresponding period in 1999. The decrease in revenues was the result of a
decrease in reimbursable abarelix expenses. We anticipate that revenues will
continue to decrease due to the decline in our reimbursable abarelix expenses,
which are subject to a reduced rate of reimbursement under our collaboration
agreements.

         Research and development expenses for the three months ended September
30, 2000 decreased 3% to approximately $13.4 million, from approximately $13.7
million for the corresponding period in 1999. The decrease in expenses was
primarily the result of decreased spending on our abarelix/prostate cancer
clinical development program. This decrease was partially offset by increased
spending related to our abarelix/endometriosis, Latranal and Apan clinical
development programs, as well as discovery research initiatives. Amgen's initial
funding commitment was completed during the third quarter of 2000. Following the
completion of this funding by Amgen, we became responsible for one-half of all
subsequent United States research and development costs for abarelix products
through the launch period. Accordingly, we expect our research and development
expenses to increase significantly during the fourth quarter and thereafter.

         Sales and marketing expenses for the three months ended September
30, 2000 increased 521% to approximately $2.1 million, from approximately $0.3
million for the corresponding period in 1999. Following the completion of
Amgen's initial funding commitment, we became responsible for one-half of all
subsequent costs associated with establishing a sales and marketing
infrastructure in the United States for abarelix through the launch period.
Accordingly, we expect our sales and marketing expenses to increase
significantly during the fourth quarter and thereafter.

         General and administrative expenses for the three months ended
September 30, 2000 increased 28% to approximately $1.3 million, from
approximately $1.0

                                     10

<PAGE>

million for the corresponding period in 1999. The increase was due to an
increase in personnel and compensation costs, an increased use of professional
services and other costs associated with being a public company. We expect that
general and administrative expenses will increase as we hire additional
administrative personnel to support continued growth of our research and
development initiatives, incur increased operating costs related to our new
facility and incur additional costs related to being a public company, including
directors' and officers insurance, investor relations programs and printing and
legal costs.

         Net interest income for the three months ended September 30, 2000
increased 92% to approximately $2.3 million, from approximately $1.2 million for
the corresponding period in 1999. The increase in interest income was due to
higher average cash and investment balances from our initial public offering in
May 2000 and an increase in average interest rates from the same period last
year.

         The provision for income taxes for the three months ended September 30,
2000 and 1999 was zero and $0.5 million, respectively. Our effective tax rate
was approximately 16.3% during 1999. The Company anticipates that by the end of
2000 it will be in a net operating loss carryforward position and therefore no
benefit from the Company's operating losses has been recognized.

NINE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30,
1999

         Revenues for the nine months ended September 30, 2000 decreased 54% to
approximately $26.3 million, from approximately $57.1 million for the
corresponding period in 1999. The decrease in revenues was the result of a
decrease in reimbursable abarelix expenses. In addition, incremental revenues
were recognized during the nine months ended September 30, 1999 which related to
reimbursable abarelix expenses incurred prior to the signing of the Amgen
agreement and recognized as revenue in accordance with the terms therein. We
anticipate that revenues will continue to decrease due to the decline in our
reimbursable abarelix expenses, which are subject to a reduced rate of
reimbursement under our collaboration agreements.

         Research and development expenses for the nine months ended September
30, 2000 decreased 12% to approximately $37.0 million, from approximately $42.2
million for the corresponding period in 1999. The decrease in expenses was
primarily the result of decreased spending on our abarelix/prostate cancer
clinical development program. This decrease was partially offset by increased
spending related to our abarelix/endometriosis, Latranal and Apan clinical
development programs, as well as discovery research initiatives. Amgen's initial
funding commitment was completed during the third quarter of 2000. Following the
completion of this funding by Amgen, we became responsible for one-half of all
subsequent United States research and development costs for abarelix products
through the launch period. Accordingly, we expect our research and development
expenses to increase significantly during the fourth quarter and thereafter.

         Sales and marketing expenses for the nine months ended September
30, 2000 increased 30% to approximately $2.7 million, from approximately $2.0
million for the corresponding period in 1999. Following the completion of
Amgen's initial funding commitment, we became responsible for one-half of all
subsequent costs associated with establishing a sales and marketing
infrastructure in the United States for abarelix through the launch period.
Accordingly, we expect our sales and marketing expenses to increase
significantly during the fourth quarter and thereafter.

         General and administrative expenses for the nine months ended September
30, 2000 increased 42% to approximately $3.9 million, from approximately $2.7
million for the corresponding period in 1999. The increase was due to an
increase in personnel and compensation costs, an increased use of professional
services and other costs associated with being a public company. We expect that
general and administrative expenses will increase as we hire additional
administrative personnel to support continued growth of our research and
development initiatives, incur increased operating costs related to our new
facility and incur additional costs related to being a public company, including
directors' and officers insurance, investor relations programs and printing and
legal costs.


                                     11
<PAGE>

         Net interest income for the nine months ended September 30, 2000
increased 78% to approximately $5.7 million, from approximately $3.2 million for
the corresponding period in 1999. The increase in interest income was due to
increased cash and investment balances from our initial public offering in May
2000 and an increase in average interest rates from the same period last year.

         The provision for income taxes for the nine months ended September 30,
2000 and 1999 was $0.1 million and $2.2 million, respectively. Our effective tax
rate was approximately 16.3% during 1999. The provision for income taxes during
2000 was primarily for state income taxes. The Company anticipates that by the
end of 2000 it will be in a net operating loss carryforward position and
therefore no benefit from the Company's operating losses has been recognized.

LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations since inception principally through
private placements of equity securities and our initial public offering. Prior
to our initial public offering, we had received net proceeds of approximately
$10.5 million from the private placement of our common stock, $0.5 million from
the private placement of warrants to purchase common stock and $78.5 million
from the private placement of convertible preferred stock. Additionally, we have
received a total of approximately $177.9 million from one-time signing payments
and performance-based payments, cost reimbursements and contract service
payments under our collaboration agreements. We have also received $16.7 million
from interest on invested cash balances, and paid $0.5 million in interest
expense associated with equipment leasing.

         On May 2, 2000, we completed our initial public offering in which we
sold 8,000,000 shares of common stock at a price of $10 per share, raising a
total of approximately $73.1 million in net proceeds after payment of
underwriting discounts and commissions and estimated offering expenses. On May
3, 2000, the underwriters of our initial public offering exercised their right
to purchase additional shares of common stock to cover over-allotments.
Accordingly, on May 8, 2000, we sold an additional 1,200,000 shares of common
stock at a price of $10 per share, resulting in an additional $11.2 million in
net proceeds after payment of underwriting discounts and commissions. Thus, we
sold a total of 9,200,000 shares (including the over-allotment shares) of common
stock in our initial public offering for a total of approximately $84.3 million,
net of underwriting discounts and commissions and estimated offering expenses.

         At September 30, 2000, we had cash and cash equivalents of $146.4
million and working capital of $138.5 million, compared to $94.5 million and
$86.2 million, respectively, at December 31, 1999. Based upon our existing
capital resources, together with the net proceeds of the initial public
offering, interest income, payments under our collaboration agreements and the
line of credit contemplated by the Amgen agreement (discussed below), we
anticipate that we will be able to maintain currently planned operations for at
least the next several years.

         For the nine months ended September 30, 2000, net cash of $11.8 million
was used in operating activities, compared to $6.9 million provided by operating
activities in the corresponding period in 1999. During the nine months ended
September 30, 2000, our use of cash in operations was principally due to our net
loss coupled with our payment of 1999 income taxes, as well as an increase in
our prepaid expenses and other assets and a decrease in accounts payable and
deferred revenue, partially offset by an increase in accrued expenses and
decreases in accounts receivable and unbilled revenues. Our investing activities
for the nine months ended September 30, 2000 consisted of the purchase of land
and a building to use as our headquarters and principal research facility and
the purchase of property and equipment in the aggregate amount of approximately
$45.5 million. Our financing activities for the nine months ended September 30,
2000 consisted principally of the proceeds of our initial public offering,
proceeds received from the exercise of common stock options and advances during
the third quarter of $24.0 million under an acquisition and construction loan
agreement.

                                     12
<PAGE>

         On July 11, 2000, we purchased, for $41.3 million, through our wholly
owned subsidiary, 830 Winter Street LLC, a single purpose Delaware limited
liability company, land and a building of approximately 175,000 square feet
located in Waltham, Massachusetts. We will use this building as
our headquarters and principal research facility. In connection with obtaining
first mortgage financing to purchase this facility, we formed 830 Winter Street
and assigned all of our rights and obligations under the related purchase and
sale agreement to that entity. 830 Winter Street executed an acquisition and
construction loan agreement providing for up to $33.0 million in financing for
the acquisition of, and improvements to, the new facility.

         Under the terms of the loan agreement, advances are available primarily
to pay for the acquisition of, and improvements to, the new facility. In
connection with the purchase of the new facility, an initial advance of $24.0
million was made. The remaining $9.0 million of the loan will be made available
following the expenditure by 830 Winter Street of not less than $4.5 million for
renovation costs, and will be subject to various other terms and conditions
under the loan documents. Advances bear interest at a rate equal to the 30-day
LIBOR plus 2.0% (8.62% at September 30, 2000). Interest is payable monthly in
arrears. Principal is due and payable in full on July 30, 2003, subject to two,
one-year extension options. The loan is secured by the new facility, together
with all fixtures, equipment, improvements and other items related thereto, and
by all rents, income or profits received by 830 Winter Street. In addition, as a
condition of the financing, we executed certain unconditional guaranties of all
of 830 Winter Street's obligations under the loan agreement and related loan
documents. In addition to this financing, we have spent approximately $19.4
million of our own funds, and anticipate spending an additional $17.6 million,
to complete the build-out and prepare for occupancy of our new facility. We
expect to occupy the new facility during the first quarter of 2001 and intend to
sublet a portion of the facility at that time.

         Our agreement with Amgen provides that, pursuant to definitive
agreements to be mutually agreed, Amgen will provide us with a line of credit
not to exceed $150.0 million through 2002 whereby, subject to various
conditions each year, we will be permitted to draw down a maximum of $25.0
million in 2000, $75.0 million in 2001, and in 2002, the remaining balance of
the line of credit available after all previous drawdowns. For each drawdown
in 2002, we must demonstrate a cash flow need reasonably acceptable to Amgen
and meet various other specified conditions, including conditions relating to
the commercial sale of abarelix. Borrowings will bear interest at market
rates and will be secured by various receivables relating to abarelix
products. All borrowings under the line of credit must be repaid by 2008. We
anticipate funding a portion of our share of the abarelix-related expenses
incurred following the completion of Amgen's funding commitment prior to
making drawdowns under the line of credit. We do not anticipate drawing down
a significant portion of the $25.0 million available in 2000 under the Amgen
line of credit.

         We expect our funding requirements to increase over the next several
years as we continue with current clinical trials for abarelix, initiate
clinical trials for additional products, prepare for a potential commercial
launch of abarelix products, improve and move into our new facility and expand
our research and development initiatives. The amount of these expenditures will
depend on numerous factors, including:

         -        decisions relating to the abarelix program made by our
                  corporate collaborators;

         -        the cost, timing and outcomes of regulatory reviews;

         -        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 products
                  under development;

                                     13
<PAGE>

         -        the status of competitive products;

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

         -        the continued viability and duration of, and compliance by our
                  collaborators with, our corporate collaboration agreements or
                  other licensing agreements;

         -        the establishment, continuation or termination of third-party
                  manufacturing or sales and marketing arrangements;

         -        the development of sales and marketing resources;

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

         -        our ability to sublease our current facility and part of our
                  new facility; and

         -        the availability of other financing.

         At December 31, 1999, we had provided a valuation allowance of $3.6
million for our deferred tax assets. The valuation allowance represents the
excess of the deferred tax asset over the benefit from future losses that could
be carried back if, and when, they occur. Due to anticipated operating losses in
the future, we believe that it is more likely than not that we will not realize
a portion of the net deferred tax assets in the future and we have provided an
appropriate valuation allowance.

ADDITIONAL 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 OF OUR 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 of
our 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 our collaboration and license agreements and will continue to do
so for at least the next several years. In addition, we expect to continue to
spend significant amounts to continue clinical studies, obtain regulatory
approval for our product candidates and expand our facilities. We also intend to
spend substantial amounts to fund additional research and development for other
products, enhance our core technologies, and for general and administrative
purposes. As of September 30, 2000, we had an accumulated deficit of
approximately $12.8 million. We expect that our operating expenses will increase
significantly in the near term, resulting in significant operating losses for
2000 and the next several years.

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

         The development and sale of our products is subject to extensive
regulation by governmental authorities. Obtaining and maintaining regulatory
approval typically is costly and takes many years. Regulatory authorities have
substantial discretion to terminate clinical trials, delay or withhold
registration and marketing approval, and mandate product recalls. Failure to


                                     14
<PAGE>

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 action against our potential products
or us. Outside the United States, we can market a product only if we receive a
marketing authorization from the appropriate regulatory authorities. This
foreign regulatory approval process includes all of, and in some cases,
additional, risks associated with the FDA approval process we describe above.

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

         In addition, many factors could delay or terminate our ongoing or
future clinical trials. For example, a clinical trial may experience slow
patient enrollment or lack of sufficient drug supplies. Patients may experience
adverse medical events or side effects, and there may be a real or perceived
lack of effectiveness of the drug we are testing. Future governmental action or
changes in FDA policy may also result in delays or rejection. Accordingly, we
may not be able to obtain product registration or marketing approval for
abarelix depot, our drug candidate for the treatment of prostate cancer and
endometriosis, or for any of our other products, based on the results of our
clinical trials.

         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. To date, none of our products have received regulatory
approval for commercial sale. If we are delayed in obtaining or are unable to
obtain regulatory approval to market our products, we may exhaust our available
resources, including the proceeds from our initial public offering, which was
completed in May 2000, significantly sooner than we had planned. If this
happened, we would need to raise additional funds to complete commercialization
of our lead products and continue our research and development programs. We
cannot assure you that we would be able to obtain these additional funds on
favorable terms, if at all.

EVEN IF WE RECEIVE APPROVAL FOR THE MARKETING AND SALE OF OUR PRODUCTS, 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 extent and success of our marketing and sales efforts,
                  and, in particular, those of our collaborators relating to the
                  marketing and sales of abarelix products;

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

         -        the effectiveness of our products, including any potential
                  side effects, as compared to alternative treatment methods;

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

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

         -        the competitive features of our products as compared to other
                  products, including the frequency of administration of
                  abarelix as


                                     15
<PAGE>

                  compared to other products, and doctor and patient acceptance
                  of these features;

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

         -        unfavorable publicity concerning our products or any similar
                  products.

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

IF OUR STRATEGIC PARTNERS REDUCE, DELAY OR TERMINATE THEIR FINANCIAL SUPPORT, WE
MAY BE UNABLE TO SUCCESSFULLY DEVELOP, MARKET, DISTRIBUTE AND SELL OUR PRODUCTS.

         We depend upon our corporate collaborators, in particular Amgen and
Sanofi-Synthelabo, to provide substantial financial support for developing our
products. We also will rely on them in some instances to help us obtain
regulatory approval for our products and to manufacture, market, distribute or
sell our products. Despite our dependence, we have limited control over the
amount and timing of resources that our corporate collaborators devote to our
programs or potential products. For example, Amgen has final decision making
authority with respect to most of the abarelix program in the Amgen territory,
and accordingly, we have limited control over decisions related to that program.

         Also, our corporate collaborators may terminate our collaboration
agreements in various circumstances. For example, in December 1998, we and Roche
Products Inc. mutually terminated our agreement. We and each of Amgen and
Sanofi-Synthelabo may mutually terminate our agreement, and, in addition:

         -        Amgen and Sanofi-Synthelabo each may terminate its agreement
                  with us if the results of any clinical trial of abarelix
                  materially harms the product's commercial prospects;

         -        Amgen may terminate its agreement with us at any time upon 90
                  days prior written notice; and

         -        Sanofi-Synthelabo may terminate its agreement with us if
                  specified adverse events occur relating to our European patent
                  applications or the related patents which may be issued
                  covering abarelix or our Rel-Ease(TM) technology.

         We cannot assure you that any of our present or future collaborators
will meet their obligations to us under the collaboration agreements. If a
collaborator terminates its agreement with us or fails to perform, or delays
performance of, its obligations, it could delay or prevent the development or
commercialization of the potential product or research program. As a result, we
could have to devote unforeseen additional resources to development and
commercialization or to terminate one or more of our drug development programs.
Due to increased operating costs and lost revenue associated with the
termination of, or non-performance of a corporate collaborator under, a
collaboration agreement, we could have to seek funds in addition to the net
proceeds of our initial public offering, which was completed in May 2000, to
meet our capital requirements. 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 we may have to curtail or cease operations. For
instance, if, following the termination of our agreement with Roche, we had been
unable to enter into an alternative collaboration for the development and
commercialization of our abarelix products in a timely manner, we likely would
have needed to delay or cut back our programs for the development of abarelix or
other drugs and to raise additional funds through one or more equity financings
prior to the time we had planned to do so, and possibly on less than favorable
terms.

                                     16

<PAGE>

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 PRODUCTS.

         Our capacity to conduct clinical trials and commercialize our products
will depend in part on our ability to manufacture 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 all of our potential products to complete clinical trials. We, our
collaborators 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 abarelix and
other compounds for preclinical, clinical and commercial purposes for a
significant period of time. If our supply agreements are not satisfactory, we
may not be able to develop or commercialize potential products as planned. The
manufacture of our potential products will be subject to current good
manufacturing practices regulations. Third-party manufacturers are subject to
regulatory review and may fail to comply with these good manufacturing practices
regulations. If we need to replace our current third-party manufacturers, or
contract with additional manufacturers, we must conduct new product testing and
facility compliance inspections. This testing and inspection is costly and
time-consuming. Any of these factors could prevent, or cause delays in,
obtaining regulatory approvals for, and the manufacturing, marketing or selling
of, our products and could also result in significantly higher operating
expenses.

         For example, Oread Pharmaceutical Manufacturing, Inc., our former
supplier of abarelix depot powder in finished vials, advised us that its lease
for possession and use of the facility where it conducted its manufacturing
operations pursuant to its agreement with us had been terminated, effective June
30, 2000, that it would be unable to continue operations in the leased premises
and that it must terminate its agreement with us. Although we were able to make
alternative arrangements for this step in the manufacture of abarelix depot in a
timely manner, the use of a different manufacturer may require us to undergo
additional regulatory review and compliance procedures which could result in
additional expenses and delay the regulatory approval and commercialization of
abarelix depot for the treatment of prostate cancer.

         If we fail to meet our manufacturing and supply obligations under our
agreements with either Amgen or Sanofi-Synthelabo, they may assume manufacturing
responsibility under their agreements to the extent they do not already have
such responsibility under those agreements. In addition, if this occurs, we must
pay Sanofi-Synthelabo its incremental costs of assuming manufacturing
responsibility.

DUE TO OUR INEXPERIENCE AND OUR LIMITED SALES AND MARKETING STAFF, WE WILL
DEPEND ON THIRD PARTIES TO SELL AND MARKET OUR PRODUCTS.

         We have no experience in marketing or selling pharmaceutical products
and have a limited marketing and sales staff. To achieve commercial success for
any approved product, we must either develop a marketing and sales force or
enter into arrangements with third parties to market and sell our products. We
have granted Amgen and Sanofi-Synthelabo exclusive commercialization rights for
abarelix products in defined geographic locations. We have limited control over
the decisions made by Amgen or Sanofi-Synthelabo or the resources devoted by
them for the commercialization of abarelix products in their respective
territories. Our marketing and distribution arrangements with Amgen and
Sanofi-Synthelabo may not be successful and we may not receive any revenues from
these arrangements. We cannot assure you that we will be able to enter into
marketing and sales agreements on acceptable terms, if at all, for any other
products.


                                     17
<PAGE>

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

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

ALTERNATIVE TREATMENTS ARE AVAILABLE WHICH MAY IMPAIR OUR ABILITY TO CAPTURE
MARKET SHARE FOR OUR 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 abarelix depot for commercialization
for the treatment of prostate cancer, it may not compete favorably with existing
treatments that already have an established market share. If abarelix depot does
not achieve broad market acceptance as a drug for the treatment of prostate
cancer, we may not become profitable.

WE COULD EXPERIENCE DELAYS IN THE RESEARCH, DEVELOPMENT OR COMMERCIALIZATION OF
OUR PRODUCTS AS A RESULT OF CONFLICTS WITH OUR CORPORATE COLLABORATORS OR
COMPETITION FROM THEM.

         An important part of our strategy involves conducting proprietary
research programs. We may pursue opportunities that conflict with our
collaborators' businesses. Disagreements with our collaborators could develop
over rights to intellectual property, including the ownership of technology
co-developed with our collaborators. Our current or future collaborators could
develop products in the future that compete with our products. This could
diminish our collaborators' commitment to us, and reduce the resources they
devote to developing and commercializing our products. Conflicts or disputes
with our collaborators, and competition from them, could harm our relationships
with our other collaborators, restrict our ability to enter future collaboration
agreements and delay the research, development or commercialization of our
products.

MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO AND MAY
BE ABLE TO DEVELOP AND COMMERCIALIZE PRODUCTS THAT MAKE OUR PRODUCTS AND
TECHNOLOGIES OBSOLETE AND 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 competitive alternatives to our products and
technologies. We expect that all of our products under development will face
intense competition from existing or future drugs.

         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


                                     18
<PAGE>

         -        successfully market products that compete with our products.

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

         Our success will depend in part on our ability to obtain patents and
maintain adequate protection of our technologies and products. If we do not
adequately protect our intellectual property, competitors may be able to use our
technologies and erode our competitive advantage. For example, if we lost our
patent protection for abarelix, another party could produce and market abarelix
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 these 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. To date, we own or exclusively license eight 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, circumvent or narrow our 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 OUR COMPETITIVE ADVANTAGE IN THE MARKET.

         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 they 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 or otherwise gain access to our trade secrets, which could impair any
competitive advantage we may have.

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

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

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

         We license some of our technology from third parties. Termination of
our licenses could force us to delay or discontinue some of our development and
commercialization programs. For example, if Advanced Research and Technology
Institutes, Inc., the assignee of Indiana University Foundation, terminated our
abarelix license, we could have to discontinue development and

                                     19
<PAGE>

commercialization of our abarelix 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 necessary to develop and commercialize our potential products.

OUR 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 any of our collaborators or we receive for any
products in the future. Further, cost control initiatives could impair or
diminish our collaborators' ability or incentive 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
health care products. Third-party payors, including Medicare, are 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 SUB-LEASE OUR CURRENT FACILITY OR FIND SUITABLE TENANTS FOR
A PORTION OF OUR NEW FACILITY.

         We have exceeded the capacity of our current facilities, and recently
purchased, through our wholly owned special purpose subsidiary, 830 Winter
Street LLC, a new facility in Waltham, Massachusetts. In July 2000, we executed
a 15-year lease with 830 Winter Street for our new facility. We intend to
sub-lease a portion of our new facility to third-parties and expect to sub-lease
our current facility. We may not be able to find suitable sub-tenants to occupy
these spaces in a timely manner, if at all. If we are unable to find suitable
sub-tenants in a timely manner, we may experience greater than anticipated
operating expenses in the future.

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

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


                                     20
<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 personnel would prevent us from successfully developing our products or
core technologies and launching our products commercially. Our planned
activities may require the addition of new personnel, including management, and
the development of additional expertise by existing management personnel. The
inability to acquire these services or to develop this expertise could 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 clinical trials. We intend to obtain
product liability insurance to cover our products approved for marketing and
sale. This insurance may be prohibitively expensive or may not fully cover our
potential liabilities. Our inability to obtain adequate insurance coverage at an
acceptable cost could prevent or inhibit the commercialization of our products.
If a third party sues us for any injury caused by products made by us or using
our technologies, our liability could exceed our total assets.

WE USE HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS IN OUR
BUSINESS AND POTENTIAL CLAIMS RELATING TO IMPROPER 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. The health risks associated with accidental exposure to abarelix
include temporary impotence or infertility and harmful effects on pregnant
women. Our operations also produce hazardous waste products. We cannot 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 may be expensive. Current or
future environmental regulations may impair our research, development or
production efforts. We might have to pay civil damages in the event of an
improper or unauthorized release of, or exposure of individuals to, hazardous
materials.

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

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

         If appropriate opportunities become available, we may attempt to
acquire businesses, products or technologies that we believe are a strategic fit
with our business. We currently have no commitments or agreements for any
acquisitions. If we do undertake any transaction of this sort, the process of
integrating an acquired business, product or technology may result in unforeseen
operating difficulties and expenditures and may absorb significant management
attention that would otherwise be available for ongoing development of our
business. Moreover, we may fail to realize the anticipated benefits of any
acquisition. Future acquisitions could dilute your ownership interest in us and
could cause us to incur debt, expose us to future liabilities and result in
amortization expenses related to goodwill and other intangible assets.


                                     21
<PAGE>

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

         The market price of the common stock may fluctuate substantially due to
a variety of factors, including:

         -        the willingness of collaborators to commercialize our products
                  and the timing of commercialization;

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

         -        announcement of FDA approval or disapproval of our products;

         -        the success rate of our discovery efforts and clinical trials
                  leading to performance-based payments and revenues under our
                  collaborations;

         -        loss of corporate collaborators or failure by our corporate
                  collaborators to perform their obligations;

         -        developments or disputes concerning patents or proprietary
                  rights, including announcements of infringement, interference
                  or other 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 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:

                                     22

<PAGE>

         -        the failure of any of our corporate collaborators to meet
                  their payment or other obligations, or termination of any of
                  our agreements with them;

         -        the timing of development and commercialization of our
                  abarelix products leading to performance-based payments and
                  revenues under our agreements with our corporate
                  collaborators;

         -        the timing and level of expenses related to the development
                  and commercialization of our abarelix products, or to our
                  other research and development programs; and

         -        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.

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE.

         If our stockholders sell substantial amounts of our common stock in the
public market, the market price of our common stock could decline. All of the
9,200,000 shares of common stock sold in our initial public offering in May 2000
are freely tradable, without restriction, in the public market. In addition, the
lock-up agreements entered into by our directors, executive officers and all of
our stockholders and warrant holders in connection with that offering containing
restrictions on the sale or other transfer of our common stock expired in their
entirety on October 24, 2000, at which time substantially all of our outstanding
shares became eligible for sale in the public market. The market price of our
common stock could decline if one or more of our significant stockholders
decides for any reason to sell substantial amounts of common stock in the public
market.

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

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         The primary objective of our investment activities is to preserve
principal while at the same time maximizing the income we receive from our
investments without significantly increasing risk. Some of the securities that
we invest in may have market risk. This means that a change in prevailing
interest rates may cause the principal amount of the investment to fluctuate.
For example, if we hold a security that was issued with an interest rate fixed
at the then-prevailing rate and the prevailing interest rate later rises, the
principal amount of our investment will probably decline. We believe that a 10%
decline in the average yield of our investments would adversely impact our net
interest income. We do not believe, however, that such a 10% decline would have
a material adverse effect on our overall results of operations or cash flows. To
minimize this risk in the future, we intend to 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. The average maturity of all of our investments in 1999 and during
the nine months ended September 30, 2000 was less than one year. Due to the
short-term nature of these investments, we believe we have no material exposure
to interest rate risk arising from our investments.


                                     23
<PAGE>

         In connection with the purchase of our new facility in July 2000,
830 Winter Street, our wholly owned special purpose 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 the 30-day LIBOR.
Concurrent with that transaction, 830 Winter Street also entered into an
interest rate cap agreement which limits exposure to interest rate increases to
30-day LIBOR plus 1.25%. With regard to borrowings under the loan agreement, we
believe that we have mitigated our risk to significant adverse fluctuations in
interest rates and we do not believe that a 10% change in interest rates would
have a material impact on our results of operations or cash flows.

         Accordingly, we do not believe that there is any material market risk
exposure with respect to derivative or other financial instruments that would
require quantitative tabular disclosure under this item.






                                     24
<PAGE>

                           PART II. OTHER INFORMATION

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS.

             On March 8, 2000, we filed an amendment to our amended and restated
certificate of incorporation, as amended, effecting a two-for-one split of our
common stock, par value $.01 per share. The common stock share amounts set forth
below give effect to the 2-for-1 stock split of the common stock.

         (c) During the period covered by this report on Form 10-Q, we issued
the securities set forth below that were not registered under the Securities Act
of 1933, as amended.

             We issued, effective as of May 4, 2000, 2,750 shares of common
stock in a private placement to one accredited investor in exchange for certain
consulting services.

             On August 1, 2000, we issued 2,744 shares of common stock to one
warrant holder upon the net issuance exercise of warrants to purchase 2,862
shares of common stock, based upon an exercise price of $1.35 per share and a
fair market value of $32.81 per share.

             No underwriters were involved in the foregoing issuances of
securities. We issued the shares of common stock in reliance upon an exemption
from registration under the Securities Act of 1933, as amended, provided by
Section 4(2) of the Securities Act, and its related rules and regulations,
regarding transactions by an issuer not involving a public offering. The
foregoing securities are deemed restricted securities for the purposes of the
Securities Act.

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

             The managing underwriters for the offering were Salomon Smith
Barney Inc., CIBC World Markets Corp. and Credit Suisse First Boston
Corporation.

             On May 2, 2000, upon the closing of the sale of 8,000,000 shares of
common stock to the underwriters in our initial public offering, all of the
outstanding shares of our convertible preferred stock automatically converted
into 25,607,850 shares of common stock and certain warrants to purchase shares
of Series A convertible preferred stock automatically converted into warrants to
purchase 111,495 shares of common stock.

             The offering was terminated on May 8, 2000, after we had sold all
of the 9,200,000 shares of common stock registered under the Registration
Statement, including 1,200,000 shares sold pursuant to the exercise of the
underwriters' over-allotment option. The initial public offering price was
$10.00 per share. The aggregate proceeds of the offering (including the
over-allotment option) were $92,000,000. In connection with the offering, we
paid an aggregate of $6,440,000 in underwriting discounts and commissions and
incurred approximately $1,300,000 in other offering expenses. We did not pay any
finders' fees in connection with our initial public offering.

             We received net offering proceeds of approximately $84,260,000,
after deducting underwriting discounts and commissions and other offering
related expenses. From April 26, 2000 through September 30, 2000, we used
approximately $19,400,000 of the net proceeds from our initial public offering
for the purchase of our new facility and related improvements. We expect to use
approximately an additional $17,600,000 million of the net proceeds of the
offering for completion of the build-out and occupancy of the facility. Pending
use of these proceeds, we have invested these funds in short-term,
interest-bearing, investment-grade securities.


                                     25
<PAGE>

             No direct or indirect payments were made by PRAECIS for offering
expenses or from the net offering proceeds to any director, officer, person
owning ten percent or more of any class of equity securities of PRAECIS, general
partner of PRAECIS or their associates or to any affiliate of PRAECIS.

             We have not determined the specific allocation of the remaining
proceeds of the offering. While we cannot specify with certainty the particular
uses for such proceeds, we currently intend to use the remaining proceeds over
time for: (i) the production of abarelix drug products; (ii) clinical trial
expenses related to abarelix and other clinical and preclinical testing and
expansion of research and development initiatives; (iii) sales and marketing
expenses associated with the commercial launch of abarelix; and (iv) working
capital and general corporate purposes. Our management will continue to have
broad discretion over the actual use of these proceeds.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits

<TABLE>
<CAPTION>
                 EXHIBIT
                 NUMBER                         EXHIBIT
                 ------                         -------
                   <S>           <C>
                   3.1           Amended and Restated Certificate of Incorporation (2)
                   3.2           Amended and Restated By-Laws (2)
                   4.1           Specimen certificate representing shares of common stock (1)
                   4.2           Warrant to purchase Series A Convertible Preferred Stock dated as of August 12,
                                 1998 held by Comdisco, Inc. (automatically converted into a Warrant to purchase
                                 Common Stock upon the consummation of the Registrant's initial public offering)(1)
                   4.3           Warrant to purchase Common Stock dated as of August 12, 1998 held by Gregory
                                 Stento, reissued as of July 31, 2000
                   4.4           Warrant to purchase Common Stock dated as of May 13, 1997 (1)
                   10.1          Employee Stock Purchase Plan
                   10.2          Acquisition and Construction Loan Agreement dated as of July 11, 2000 between 830
                                 Winter Street LLC and Anglo Irish Bank Corporation plc and related Loan and
                                 Security Agreements (3)
                   10.3          Guaranty of Costs and Completion dated as of July 11, 2000 (3)
                   10.4          Guaranty of Non-Recourse Exceptions dated as of July 11, 2000 (3)
                   10.5          Environmental Compliance and Indemnity Agreement dated as of July 11, 2000
                                 executed by 830 Winter Street LLC and the Registrant (3)
                   10.6          Lease Agreement dated as of July 11, 2000 between 830 Winter Street LLC, as
                                 landlord, and the Registrant, as tenant (3)
                   10.7          Amendment No. 4 dated as of September 1, 2000 to Amended and Restated Stockholders
                                 Agreement dated as of April 30, 1998 by and among the Registrant and certain
                                 stockholders referred to therein, as amended
                   10.8          Amendment No. 1 to Amended and Restated Binding Agreement in Principle effective
                                 as of March 8, 1999 by and between the Registrant and Amgen Inc.
                  10.9+          Amendment No. 1 dated as of August 25, 2000 to License Agreement dated as of April
                                 15, 1999 between Pharmaceutical Applications Associates LLC, C. Donald Williams,
                                 M.D., C.G.P., Robert Murdock, R.Ph. and the Registrant
                    27           Financial Data Schedule
</TABLE>

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

+    Confidential treatment requested as to certain portion of this exhibit.
     Omitted portions have been filed separately with the Securities and
     Exchange Commission.

(1)  Incorporated by reference to Registration Statement on Form S-1
     (Registration No. 333-96351) initially filed with the Securities and


                                     26
<PAGE>

     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 Quarterly Report on Form 10-Q for the quarter
     ended June 30, 2000 filed with the Securities and Exchange Commission on
     August 14, 2000.

         (b)      Reports Submitted on Form 8-K

                  The Registrant did not file any reports on Form 8-K during the
quarter ended September 30, 2000.


                                     27

<PAGE>

                                    SIGNATURE

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

                                      PRAECIS PHARMACEUTICALS INCORPORATED

Date:  November 13, 2000             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)


                                     28
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                 EXHIBIT
                 NUMBER                              EXHIBIT
                 -------                             -------
                   <S>           <C>
                   3.1           Amended and Restated Certificate of Incorporation (2)
                   3.2           Amended and Restated By-Laws (2)
                   4.1           Specimen certificate representing shares of common stock (1)
                   4.2           Warrant to purchase Series A Convertible Preferred Stock dated as of August 12,
                                 1998 held by Comdisco, Inc. (automatically converted into a Warrant to purchase
                                 Common Stock upon the consummation of the Registrant's initial public offering) (1)
                   4.3           Warrant to purchase Common Stock dated as of August 12, 1998 held by Gregory
                                 Stento, reissued as of July 31, 2000
                   4.4           Warrant to purchase Common Stock dated as of May 13, 1997 (1)
                   10.1          Employee Stock Purchase Plan
                   10.2          Acquisition and Construction Loan Agreement dated as of July 11, 2000 between 830
                                 Winter Street LLC and Anglo Irish Bank Corporation plc and related Loan and
                                 Security Agreements (3)
                   10.3          Guaranty of Costs and Completion dated as of July 11, 2000 (3)
                   10.4          Guaranty of Non-Recourse Exceptions dated as of July 11, 2000 (3)
                   10.5          Environmental Compliance and Indemnity Agreement dated as of July 11, 2000
                                 executed by 830 Winter Street LLC and the Registrant (3)
                   10.6          Lease Agreement dated as of July 11, 2000 between 830 Winter Street LLC, as
                                 landlord, and the Registrant, as tenant (3)
                   10.7          Amendment No. 4 dated as of September 1, 2000 to Amended and Restated Stockholders
                                 Agreement dated as of April 30, 1998 by and among the Registrant and certain
                                 stockholders referred to therein, as amended
                   10.8          Amendment No. 1 to Amended and Restated Binding Agreement in Principle effective
                                 as of March 8, 1999 by and between the Registrant and Amgen Inc.
                  10.9+          Amendment No. 1 dated as of August 25, 2000 to License Agreement dated as of April
                                 15, 1999 between Pharmaceutical Applications Associates LLC, C. Donald Williams,
                                 M.D., C.G.P., Robert Murdock, R.Ph. and the Registrant
                    27           Financial Data Schedule
</TABLE>

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

+    Confidential treatment requested as to certain portion of this exhibit.
     Omitted portions have been filed separately with the Securities and
     Exchange Commission.

(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 Quarterly Report on Form 10-Q for the quarter
     ended June 30, 2000 filed with the Securities and Exchange Commission on
     August 14, 2000.


                                     29