<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 June 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 July 31, 2000, there were 41,867,686 shares of the registrant's common
stock, $.01 par value, outstanding.


<PAGE>




                      PRAECIS PHARMACEUTICALS INCORPORATED

                                    FORM 10-Q
                       FOR THE QUARTER ENDED JUNE 30, 2000
                                      INDEX

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

Item 1.            Financial Statements

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

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

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

                   Notes to Condensed Consolidated Financial Statements               6

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

Item 3.            Quantitative and Qualitative Disclosures About Market Risk        25

PART II.           OTHER INFORMATION                                                 26

Item 2.            Changes in Securities and Use of Proceeds                         26

Item 6.            Exhibits and Reports on Form 8-K                                  27

SIGNATURE                                                                            28

EXHIBIT INDEX                                                                        29

</TABLE>

                                      2

<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>
                                                                                  JUNE 30,   DECEMBER 31,
                                                                                   2000          1999
                                                                                ----------   ------------
                                                                               (unaudited)
<S>                                                                            <C>           <C>
ASSETS
Current assets:
  Cash and cash equivalents ................................................    $ 167,931     $  94,525
  Accounts receivable ......................................................        3,460         8,121
  Unbilled revenue .........................................................        2,915         4,259
  Materials inventory ......................................................       29,957        21,100
  Prepaid expenses and other assets ........................................        2,994           708
  Deferred income taxes ....................................................        5,575         5,575
                                                                                ---------     ---------
        Total current assets ...............................................      212,832       134,288

Property and equipment, net ................................................        6,427         6,043
Other assets ...............................................................        2,180            --
                                                                                ---------     ---------
        Total assets .......................................................    $ 221,439     $ 140,331
                                                                                =========     =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable .........................................................    $   6,320     $   9,878
  Accrued expenses .........................................................        7,944         6,859
  Deferred revenue .........................................................        5,391         5,501
  Advance payments .........................................................       29,957        21,100
  Income taxes payable .....................................................           --         4,672
  Current portion of capital lease obligations .............................           19            58
                                                                                ---------     ---------
        Total current liabilities ..........................................       49,631        48,068
Deferred revenue ...........................................................        2,273         4,547

Commitments and contingencies

Stockholders' equity:
Preferred Stock, $0.01 par value; 10,000,000 shares authorized; no shares
  issued and outstanding ....................................................          --             --
Series A, B, C, D, 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; 41,867,320 shares in 2000 and 6,358,684 shares
  in 1999 issued and outstanding ............................................          419            64
Additional paid-in capital .................................................      174,736        88,710
Accumulated deficit ........................................................       (5,620)       (1,093)
                                                                                ---------     ---------
        Total stockholders' equity .........................................      169,535        87,716
                                                                                ---------     ---------
              Total liabilities and stockholders' equity ...................    $ 221,439     $ 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                Six Months Ended
                                                                June 30,                         June 30,
                                                      ----------------------------      ----------------------------
                                                         2000             1999             2000             1999
                                                      -----------      -----------      -----------      -----------

<S>                                                   <C>              <C>              <C>              <C>
Revenues:
  Corporate collaborations....................        $     9,972      $    39,202      $    18,973      $    40,345
                                                      -----------      -----------      -----------      -----------
     Total revenues...........................              9,972           39,202           18,973           40,345


Costs and expenses:
  Research and development....................             12,389           17,328           23,665           28,459
  General and administrative..................              1,783            2,510            3,177            3,427
                                                      -----------      -----------      -----------      -----------
    Total costs and expenses..................             14,172           19,838           26,842           31,886
                                                      -----------      -----------      -----------      -----------

Operating income (loss).......................             (4,200)          19,364           (7,869)           8,459
Interest income, net..........................              2,148            1,057            3,442            2,033
                                                      -----------      -----------      -----------      -----------
Income (loss) before income taxes.............             (2,052)          20,421           (4,427)          10,492
Provision for income taxes....................                --             1,600              100            1,700
                                                      -----------      -----------      -----------      -----------
Net income (loss).............................        $    (2,052)     $    18,821      $    (4,527)     $     8,792
                                                      ===========      ===========      ===========      ===========
Net income (loss) per share:
  Basic.......................................        $     (0.07)     $      3.08      $     (0.25)     $      1.45
                                                      ===========      ===========      ===========      ===========
  Diluted.....................................        $     (0.07)     $      0.50      $     (0.25)     $      0.24
                                                      ===========      ===========      ===========      ===========
Weighted average number of common shares:
  Basic.......................................         29,990,086        6,100,933       18,400,705        6,044,368
  Diluted.....................................         29,990,086       37,322,095       18,400,705       37,124,602

Pro forma net income (loss) per share:
  Basic.......................................        $     (0.05)     $      0.59      $     (0.13)     $      0.28
                                                      ===========      ===========      ===========      ===========
  Diluted.....................................        $     (0.05)     $      0.50      $     (0.13)     $      0.24
                                                      ===========      ===========      ===========      ===========
Pro forma weighted average number
  of common shares:
  Basic.......................................         38,713,639       31,708,783       35,566,406       31,652,218
  Diluted.....................................         38,713,639       37,322,095       35,566,406       37,124,602

</TABLE>


SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.

                                      4

<PAGE>


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



<TABLE>
<CAPTION>


                                                                                             Six Months Ended
                                                                                                 June 30,
                                                                                        ----------------------------
                                                                                           2000             1999
                                                                                        -----------      -----------

<S>                                                                                     <C>              <C>
OPERATING ACTIVITIES:
Net income (loss).................................................................      $    (4,527)     $     8,792
Adjustments to reconcile net income (loss) to cash (used in)
  provided by operating activities:
  Depreciation and amortization...................................................            1,293              553
  Deferred income taxes...........................................................               --           (2,648)
  Stock compensation..............................................................            1,238               --
  Changes in operating assets and liabilities:
    Accounts receivable...........................................................            4,661           (4,902)
    Unbilled revenue..............................................................            1,344           (8,728)
    Materials inventory...........................................................           (8,857)          (1,324)
    Prepaid expenses and other assets.............................................           (2,286)            (850)
    Other assets..................................................................           (2,180)              --
    Accounts payable..............................................................           (3,558)           4,713
    Accrued expenses..............................................................            1,085            3,904
    Deferred revenue..............................................................           (2,384)           8,481
    Advance payments..............................................................            8,857            1,324
    Income taxes payable..........................................................           (4,672)           2,960
                                                                                        -----------      -----------

Net cash (used in) provided by operating activities...............................           (9,986)          12,275

INVESTING ACTIVITIES:
Purchase of property and equipment................................................           (1,677)          (1,945)
                                                                                        -----------      -----------

Net cash used in investing activities.............................................           (1,677)          (1,945)



FINANCING ACTIVITIES:
Principal repayments of capital lease obligations.................................              (39)            (144)
Initial public offering proceeds (net of offering costs)..........................           84,263               --
Proceeds from exercises of common stock options ..................................              845               41
                                                                                        -----------      -----------
Net cash provided by (used in) financing activities...............................           85,069             (103)
                                                                                        -----------      -----------

Net increase in cash and cash equivalents.........................................           73,406           10,227
Cash and cash equivalents, beginning of period....................................           94,525           85,298
                                                                                        -----------      -----------

Cash and cash equivalents, end of period..........................................      $   167,931      $    95,525
                                                                                        ===========      ===========

</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 POLICIES

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. The Company believes that there are no awards
that would result in an adjustment at July 1, 2000 as a result of this
Interpretation.

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.

                                      6

<PAGE>


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 calculated
using 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 six months ended June 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. For the three and
six months ended June 30, 1999, the difference between basic and diluted shares
used in the computation of net income (loss) per share is 31.2 million and 31.1
million weighted-average common equivalent shares, respectively, resulting from
outstanding convertible preferred stock, common stock options and warrants.

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          Six Months Ended
                                                          June 30,                    June 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 ..................    29,990,086     6,100,933    18,400,705     6,044,368
     Net effect of common stock options,
      warrants and convertible preferred                    --    31,221,162            --    31,080,234
      stock ....................................    ----------    ----------    ----------    ----------
     Weighted average number of common shares
      outstanding used in computing diluted net     29,990,086    37,322,095    18,400,705    37,124,602
      income (loss) per share ..................    ==========    ==========    ==========    ==========

Pro forma:

     Weighted average number of common shares
      used in computing basic net income (loss)
      per share (from above) ...................    29,990,086     6,100,933    18,400,705     6,044,368
     Adjustment to reflect the effect of the
      assumed conversion of preferred stock from     8,723,553    25,607,850    17,165,701    25,607,850
      the date of issuance .....................    ----------    ----------    ----------    ----------
     Weighted average number of common shares
      outstanding used in computing pro forma
      basic net income (loss) per                   38,713,639    31,708,783    35,566,406    31,652,218
      share ....................................    ==========    ==========    ==========    ==========

     Weighted average number of common shares
      used in computing diluted net income
      (loss) per share (from above) ............    29,990,086    37,322,095    18,400,705    37,124,602
     Adjustment to reflect the effect of the
      assumed conversion of preferred stock from     8,723,553            --    17,165,701            --
      the date of issuance .....................    ----------    ----------    ----------    ----------
     Weighted average number of common shares
      used in computing pro-forma diluted net       38,713,639    37,322,095    35,566,406    37,124,602
      income (loss) per share ..................    ==========    ==========    ==========    ==========


</TABLE>

                                      7

<PAGE>


3.       STOCK BASED COMPENSATION

Options granted to non-employee consultants to purchase 62,500 shares of
common stock at June 30, 2000 are accounted for at fair value in accordance
with SFAS 123, ACCOUNTING FOR STOCK-BASED COMPENSATION. During the three and
six months ended June 30, 2000, $0.8 million and $1.2 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, par value $.01 per share ("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 (the "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.       SUBSEQUENT EVENTS

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 principal
headquarters and research facility. In connection with obtaining first
mortgage financing to purchase this facility, the Company formed 830 Winter
Street and assigned to 830 Winter Street all of its rights and obligations
under the related Purchase and Sale Agreement (the "Purchase and Sale
Agreement").

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% (8.64% at July 11,
2000). Interest is payable monthly in arrears commencing July 1, 2000.
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. As a
condition of the

                                      8

<PAGE>


financing, the Company executed certain unconditional guaranties of all of 830
Winter Street's obligations under the Loan Agreement and related loan documents.

In connection with the first mortgage financing, in July 2000 830 Winter
Street 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% (7.88% at July 10, 2000). 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.

                                      9

<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 IN CONJUNCTION 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 STATEMENTS 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.

         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 fiscal 1997, 1998 and 1999. From inception through June 30, 2000,
we recognized approximately $138.7 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 June 30, 2000 was approximately $5.6
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 fiscal 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.

         In August 1996, we entered into a collaboration and license agreement
with Boehringer Ingelheim International GmbH. Under this agreement, Boehringer
paid us approximately $5.4 million over approximately two years. These payments
consisted of an initial signing payment and additional payments for

                                      10

<PAGE>


the screening of Boehringer compounds and reimbursement of personnel and related
materials expenses. We also are entitled to receive royalties on the net sales
of any product containing a Boehringer compound which we screened if Boehringer
develops and commercializes the product.

         In May 1997, we entered into an agreement with Sanofi-Synthelabo for
the development and commercialization of abarelix products in Europe, Latin
America, the Middle East and various countries in Africa. 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 receive a transfer price that varies based on sales price
and volume. Additionally, we are entitled to receive reimbursement for ongoing
development costs. To date, we have received a total of approximately $31.5
million in non-refundable fees, performance-based payments and reimbursement for
ongoing development costs under the Sanofi-Synthelabo agreement.

         In 1997 and 1998, we entered into agreements with Roche Products Inc.
for the research, development and commercialization of abarelix products in all
countries outside of the Sanofi-Synthelabo territory. In December 1998, we and
Roche mutually terminated the agreement. During the term of the agreement, Roche
paid to us approximately $28.2 million in performance-based and cost-sharing
payments. Roche retains no rights to the abarelix program and has no equity
interest in us.

         Effective March 1999, we entered into an agreement with Amgen for
the development and commercialization of abarelix products in the countries
not covered by the Sanofi-Synthelabo agreement. Under the 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.
Amgen will pay 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. We expect Amgen's $175.0 million funding
commitment to be fulfilled during the third quarter of 2000. Following these
expenditures, in general we will share with Amgen all subsequent United
States research and development costs for abarelix products through the
launch period and we will reimburse Amgen for our share of the costs
associated with establishing a sales and marketing infrastructure in the
United States, as set forth in the Amgen agreement. In general, we will
receive a transfer price and royalty based on a 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. Under the Amgen agreement, we have
retained manufacturing responsibility for the depot formulation of abarelix,
subject to the terms of the agreement.

RESULTS OF OPERATIONS

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

         Revenues for the three months ended June 30, 2000 decreased 75% to
approximately $10.0 million, from approximately $39.2 million for the
corresponding period in 1999. The decrease in revenues was the result of a
decrease in reimbursable abarelix expenses. In addition, incremental
reimbursement revenues were recognized during the three months ended June 30,
1999 which related to reimbursable expenses incurred prior to the signing of
the Amgen agreement and recognized as revenue in accordance with the terms
therein. We anticipate revenues to continue to decrease due to the expected
completion of Amgen's initial funding commitment and the decline in our
abarelix development expenses, which will be subject to a reduced rate of

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reimbursement under our corporate collaborations.

         Research and development expenses for the three months ended June
30, 2000 decreased 29% to approximately $12.4 million, from approximately
$17.3 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. We
expect Amgen's initial funding commitment will be completed during the third
quarter of 2000. Following these expenditiures, in general we will share with
Amgen all subsequent United States research and development costs for
abarelix products through the launch period.

         General and administrative expenses for the three months ended June
30, 2000 decreased 29% to approximately $1.8 million, from approximately $2.5
million for the corresponding period in 1999. The decrease in expenses was
due primarily to sales and marketing costs incurred during the corresponding
period in 1999 that are currently being assumed by our corporate partner,
Amgen, in order to establish a sales and marketing infrastructure in the
United States for abarelix products. The decrease in expenses was partially
offset by an increase in personnel and compensation costs, an increased use
of consultants and external contractors, 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 and incur
additional costs related to being a public company, including directors' and
officers insurance, investor relations programs and printing and legal costs.
In addition, following the expected completion of Amgen's initial funding
commitment during the third quarter of 2000, we will reimburse Amgen for our
share of the costs associated with establishing a sales and marketing
infrastructure in the United States, as set forth in the Amgen agreement.

         Net interest income for the three months ended June 30, 2000 increased
103% to approximately $2.1 million, from approximately $1.1 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 June 30, 2000
and 1999 was zero and $1.6 million, respectively. Our effective tax rate was
approximately 16.3% during 1999.

SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999

         Revenues for the six months ended June 30, 2000 decreased 53% to
approximately $19.0 million, from approximately $40.3 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 six months ended June 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 revenues to continue to decrease due to the expected completion of
Amgen's initial funding commitment and the decline in our abarelix
development expenses, which will be subject to a reduced rate of
reimbursement under our corporate collaborations.

         Research and development expenses for the six months ended June 30,
2000 decreased 17% to approximately $23.7 million, from approximately $28.5
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. We expect
Amgen's initial funding commitment will be completed during the third quarter
of 2000. Following these expenditiures, in general we will share with Amgen
all subsequent United States research and development costs for abarelix
products through the launch period.

                                      12

<PAGE>


         General and administrative expenses for the six months ended June
30, 2000 decreased 7% to approximately $3.2 million, from approximately $3.4
million for the corresponding period in 1999. The decrease in expenses for
the sixth-month period was due primarily to sales and marketing costs
incurred during the corresponding period in 1999 that are currently being
assumed by our corporate partner, Amgen, in order to establish a sales and
marketing infrastructure in the United States for abarelix products. The
decrease in expenses was partially offset by an increase in personnel and
compensation costs, an increased use of consultants and external contractors,
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 and incur additional costs related to being a public
company, including directors' and officers insurance, investor relations
programs and printing and legal costs. In addition, following the expected
completion of Amgen's initial funding commitment during the third quarter of
2000, we will reimburse Amgen for our share of the costs associated with
establishing a sales and marketing infrastructure in the United States, as
set forth in the Amgen agreement.

         Net interest income for the six months ended June 30, 2000 increased
69% to approximately $3.4 million, from approximately $2.0 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 six months ended June 30, 2000
and 1999 was $0.1 million and $1.7 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.

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 $176.0 million for one-time signing payments
and performance-based payments, cost reimbursements and contract service
payments under our collaboration agreements. We also have received $14.3 million
from interest on invested cash balances and paid $0.4 million in interest
expense associated with equipment leasing.

         On May 2, 2000, we completed our initial public offering, selling
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. 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 June 30, 2000, we had cash and cash equivalents of $167.9 million
and working capital of $163.2 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 and payments under our collaboration agreements, we
anticipate that we will be able to maintain currently planned operations for
at least the next several years.

         For the six months ended June 30, 2000, net cash of $10.0 million was

                                      13

<PAGE>

used in operating activities, compared to $12.3 million provided by operating
activities in the corresponding period in 1999. During the six months ended
June 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,
partially offset by decreases in accounts receivable and unbilled revenues.
Our investing activities for the six months ended June 30, 2000 were limited
to the purchase of property and equipment in the amount of approximately $1.7
million. Our financing activities for the six months ended June 30, 2000
consisted principally of the proceeds of our initial public offering, as well
as proceeds received from the exercise of common stock options.

         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 principal headquarters and 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 on July 11, 2000. 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% (8.64% at July 11,
2000). Interest is payable monthly in arrears commencing July 1, 2000.
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. 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.

         Under our agreement with Amgen, Amgen will provide us with a line of
credit not to exceed $150.0 million through 2002. Under the line of credit,
subject to various conditions each year, we are 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

                                      14

<PAGE>

will bear interest at market rates and will be secured by various receivables
relating to abarelix products. In addition, all borrowings under the line of
credit must be repaid by 2008. We anticipate making drawdowns under the loan
beginning this year, subject to the conditions set forth in the Amgen
agreement.

         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 continue
to expand our research and development initiatives. Our expenditure requirements
will depend on numerous factors, including:

         -        the progress of our research and development activities;

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

         -        the cost, timing and outcomes of regulatory reviews;

         -        the rate of technological advances;

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

         -        the status of competitive products;

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

         -        the continued viability and duration of 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.

YEAR 2000 CONSIDERATIONS

         We, our corporate collaborators, suppliers and other third parties we
rely upon use a wide variety of information technologies, computer systems and
scientific equipment containing computer chips dedicated to a specific task. As
of July 31, 2000, neither we, nor to our knowledge, any of the third parties we
depend upon, have experienced any material problems associated with the year
2000 issue. If we or these third parties experience problems in the future as a
result of any year 2000-related issues, we could experience an interruption of
our research programs. We currently are unable to estimate the duration and
extent of any potential interruption, or estimate the effect that

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<PAGE>

any interruption may have on our future revenue. However, we believe that the
impact of any residual year 2000-related issues on our research operations will
be limited to the ongoing execution of new experiments, and we do not expect
that any historical data would be affected. Costs to ensure that our systems and
networks are year 2000 compliant have not been, nor do we expect them to be,
material.

ADDITIONAL RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES THAT 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 June 30, 2000, we had an
accumulated deficit of approximately $5.6 million. We expect that our
operating expenses will increase significantly in the near term, resulting in
significant operating losses for fiscal 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
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.

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<PAGE>

         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 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 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;

         -        the extent and success of our marketing efforts and those of
                  our collaborators; 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

                                      17

<PAGE>

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. 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 its
obligations, it may delay 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 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.

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.

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

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<PAGE>


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.

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., the 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. In addition, if this occurs, we must pay
Sanofi-Synthelabo its incremental costs of assuming manufacturing
responsibility.

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

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<PAGE>

prostate cancer, we may not become profitable.

MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO AND MAY
BE ABLE TO DEVELOP AND COMMERCIALIZE PRODUCTS THAT MAKE OUR 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

         -        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

                                      20

<PAGE>

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 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.

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. 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.

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. For example,
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

                                      21

<PAGE>

control initiatives could impair our collaborators' ability 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.

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

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

         Recruiting and retaining qualified scientific personnel to perform
future research and development work also will be critical to our success.
Competition for skilled personnel is intense and the turnover rate can be high.
We compete with numerous companies and academic and other research institutions
for experienced scientists. This competition may limit our ability to recruit
and retain qualified personnel on acceptable terms. Failure to attract and
retain 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 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

                                      22

<PAGE>

sale. This insurance may be prohibitively expensive or may not fully cover our
potential liabilities. Our inability to obtain adequate insurance coverage and
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.

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:

         -        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;

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

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

                                      23

<PAGE>

         -        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;

         -        loss of corporate collaborators;

         -        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 consistent product revenues and
earnings, have been highly volatile, and may continue to be highly volatile in
the future. This volatility has often been unrelated to the operating
performance of particular companies. In the past, securities class action
litigation has often been brought against companies that experience volatility
in the market price of their securities. Whether or not meritorious, litigation
brought against us could result in substantial costs and a diversion of
management's attention and resources.

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

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

         -        the failure of any of our corporate collaborators to meet
                  their payment 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; 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.

CONCENTRATION OF OWNERSHIP AMONG OUR EXISTING EXECUTIVE OFFICERS, DIRECTORS AND
PRINCIPAL STOCKHOLDERS MAY PREVENT NEW STOCKHOLDERS FROM INFLUENCING SIGNIFICANT
CORPORATE DECISIONS.

         After giving effect to our initial public offering, our officers,
directors and stockholders affiliated with them control, based on their
beneficial ownership as of July 31, 2000, a significant percentage of our
outstanding common stock, and will until at least 180 days after our initial

                                      24

<PAGE>

public offering. As a result, these stockholders, acting together, will be able
to significantly influence all matters requiring approval by our stockholders,
including the election of directors and the approval of mergers or other
business combination transactions. The interests of this group of stockholders
may not always coincide with our interests or the interests of other
stockholders.

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 duration of all of our investments in 1999 and during
the six months ended June 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.

         In connection with the purchase of our new facility in July 2000,
830 Winter Street, our wholly owned 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.

                                      25

<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 and the
option exercise prices 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.

              On April 5, 2000, we issued 6,100 shares of common stock upon the
exercise of options for aggregate consideration of $38,887.50.

              The issuance of common stock upon the exercise of options was
exempt from registration under the Securities Act either pursuant to Rule 701
under the Securities Act, as a transaction pursuant to a compensatory benefit
plan, or pursuant to Section 4(2) of the Securities Act, as a transaction 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.

              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 June 30, 2000, we had not used
any of the net proceeds from our initial public offering. We expect to use
approximately $28.0 million of the net proceeds of the offering for the
purchase of our new facility and related improvements. Pending use of these
proceeds, we have invested these funds in short-term, interest-bearing,
investment-grade securities.

              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

                                      26

<PAGE>

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

               EXHIBIT
               NUMBER                    EXHIBIT
               -------                   -------
                  3.1      Amended and Restated Certificate of Incorporation (1)
                  3.2      Amended and Restated By-Laws (1)
                  4.1      Specimen certificate representing shares of common
                           stock (2)
                  4.2      Warrant to purchase Series A Convertible Preferred
                           Stock dated as of August 12, 1998 held by Comdisco,
                           Inc. (2)
                  4.3      Warrant to purchase Series A Convertible Preferred
                           Stock dated as of August 12, 1998 held by Gregory
                           Stento (2)
                  4.4      Warrant to purchase Common Stock dated as of May 13,
                           1997 (2)
                  10.1     Second Amended and Restated 1995 Stock 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
                  10.3     Guaranty of Costs and Completion dated as of July 11,
                           2000
                  10.4     Guaranty of Non-Recourse Exceptions dated as of July
                           11, 2000
                  10.5     Environmental Compliance and Indemnity Agreement
                           dated as of July 11, 2000 executed by 830 Winter
                           Street LLC and the Registrant
                  10.6     Lease Agreement dated as of July 11, 2000 between 830
                           Winter Street LLC, as landlord, and the Registrant,
                           as tenant
                  10.7     Letter Amendment, effective as of March 1, 2000, to
                           Lease dated as of August 19, 1998 by and between the
                           Registrant and BDG Piscataway, LLC
                  27       Financial Data Schedule

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

(1)  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.

(2)  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.

         (b)  Reports Submitted on Form 8-K

         The Registrant did not file any reports on Form 8-K during the quarter
ended June 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:  August 14, 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)


<PAGE>


                                  EXHIBIT INDEX


                EXHIBIT
                NUMBER                 EXHIBIT
                -------                -------
                  3.1      Amended and Restated Certificate of Incorporation (1)
                  3.2      Amended and Restated By-Laws (1)
                  4.1      Specimen certificate representing shares of common
                           stock (2)
                  4.2      Warrant to purchase Series A Convertible Preferred
                           Stock dated as of August 12, 1998 held by Comdisco,
                           Inc. (2)
                  4.3      Warrant to purchase Series A Convertible Preferred
                           Stock dated as of August 12, 1998 held by Gregory
                           Stento (2)
                  4.4      Warrant to purchase Common Stock dated as of May 13,
                           1997 (2)
                  10.1     Second Amended and Restated 1995 Stock 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
                  10.3     Guaranty of Costs and Completion dated as of July 11,
                           2000
                  10.4     Guaranty of Non-Recourse Exceptions dated as of July
                           11, 2000
                  10.5     Environmental Compliance and Indemnity Agreement
                           dated as of July 11, 2000 executed by 830 Winter
                           Street LLC and the Registrant
                  10.6     Lease Agreement dated as of July 11, 2000 between 830
                           Winter Street LLC, as landlord, and the Registrant,
                           as tenant
                  10.7     Letter Amendment, effective as of March 1, 2000, to
                           Lease dated as of August 19, 1998 by and between the
                           Registrant and BDG Piscataway, LLC
                  27       Financial Data Schedule

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

(1)  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.

(2)  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.