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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K
                         FOR ANNUAL AND SPECIAL REPORTS
                    PURSUANT TO SECTIONS 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

                   For the fiscal year ended December 31, 1998

                                       OR
|_|      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

                         Commission File Number: 0-25544

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

                          Miravant Medical Technologies
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             (Exact name of Registrant as specified in its charter)

          Delaware                                        77-0222872
--------------------------------------------------------------------------------
(State or other  jurisdiction of             (IRS Employer Identification No.)
incorporation  or  organization)  


        7408  Hollister  Avenue,  Santa Barbara, California   93117
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          (Address of principal executive offices, including zip code)
                                     
                                 (805) 685-9880
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act: None

                    Securities registered pursuant to Section
                               12(g) of the Act:

                          Common Stock, $.01 Par Value


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

         Indicate by check if disclosure of delinquent  filers  pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]

         The  approximate  aggregate  market  value  of  voting  stock  held  by
non-affiliates  as of March 15,  1999,  based  upon the last  sale  price of the
Common  Stock  reported  on  the  Nasdaq  National   Market  was   approximately
$89,064,113.  For purposes of this calculation  only, the registrant has assumed
that its  directors  and  executive  officers,  and any  person  who has filed a
Schedule 13D or 13G, is an affiliate.

         The number of shares of Common Stock  outstanding  as of March 15, 1999
was 17,915,302.




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ITEM 1.  BUSINESS

General

         Miravant  Medical  Technologies,  formerly PDT, Inc., is engaged in the
integrated  development  of  drugs  and  medical  device  products  for  use  in
PhotoPoint(TM),   our  proprietary   technologies  for   photodynamic   therapy.
PhotoPoint  is a  medical  procedure  which  integrates  the use of  proprietary
light-activated  drugs,  proprietary  light producing devices and light delivery
devices to achieve  selective  photochemical  destruction of diseased  cells. We
believe  that  PhotoPoint  has  the  potential  to  be a  safe,  cost-effective,
minimally  invasive  primary or adjunctive  treatment for indications in a broad
number of disease areas, including oncology, ophthalmology, urology, dermatology
and  cardiovascular  disease.  We are currently  conducting  clinical  trials in
ophthalmology and oncology.  Our current clinical trials are testing our leading
drug candidate,  SnET2 (tin ethyl  etiopurpurin).  We are developing products in
collaboration  with our corporate  partners,  including certain  subsidiaries of
Pharmacia & Upjohn, Inc.

         Effective  September  15,  1997,  we  changed  our name from PDT,  Inc.
to Miravant Medical Technologies.

         See "--Risk Factors" for a discussion of certain risks, including those
relating to operating losses, the early stage of the development of Miravant and
our products, strategic collaborations and forward-looking statements.

Background

         Photodynamic  therapy is a minimally  invasive  medical  procedure that
uses photoselective, or light-activated, drugs to treat or diagnose disease. The
technology  involves three  components:  photoselective  drugs,  light producing
devices and light delivery devices.

         Photoselective  drugs  transform light energy into chemical energy in a
manner  similar  to  the  action  of   chlorophyll  in  green  plants.   Certain
photoselective    drugs    accumulate   and   are   retained   in   fast-growing
(hyperproliferating)  cells.  Hyperproliferation  is a  characteristic  of cells
associated with a variety of diseases such as cancer, certain vascular disorders
and skin diseases such as psoriasis.

         A  photoselective   drug  is  typically   administered  by  intravenous
injection and  distributes  throughout the body.  After several hours,  the drug
starts to clear  from  normal  tissues  but is  retained  in  hyperproliferating
tissues for up to several days. The drug is inactive until exposed to light of a
specific wavelength, which can vary depending on the drug's molecular structure.
Exposing the target cells to the appropriate light wavelength  permits selective
activation of the retained drug and initiates a chemical reaction that generates
a highly  reactive form of oxygen.  High  concentrations  of this form of oxygen
lead to destruction of the cellular  membrane and,  ultimately,  cell death. The
response of the target cells depends on, among other factors, the drug dose, the
amount of light energy delivered, the physiology of the cell and the vasculature
in the diseased  areas.  Neither the drug nor the light on its own can cause the
desired  effect.  The drug is a catalyst which  transfers  energy.  The chemical
reaction  stops when the light is turned off. The result of this process is that
diseased cells are destroyed with minimal damage to surrounding  normal tissues,
offering the  potential  for a more  selective  method of treating  disease than
chemotherapy,  radiation  therapy or  surgery,  which can damage both normal and
abnormal tissues.

         Low-power,  non-thermal  light can be used to  activate  photoselective
drugs. As a result,  there is little or no risk of thermal damage to surrounding
tissue,  as with traditional  thermal lasers.  The light is typically  generated
electronically  or by lasers  which have been  specifically  modified for use in
photodynamic  therapy. The light is often delivered from the light source to the
patient via specially  modified  fiber optics.  These fiber optic light delivery
devices produce patterns of light for different disease  applications and can be
channeled into the body for internal applications.

         While light of a specific  wavelength is used to cause a photoselective
drug to produce chemical  reactions leading to cell death,  light of a different
wavelength  can be  used  to  cause  the  same  drug to  fluoresce  (glow).  The
fluorescent property of photodynamic drugs offers the potential for their use in
diagnostic applications.

Industry

         As early as 1900,  scientists  observed  that  certain  compounds  will
sensitize tissues to light. Since the mid-1970s, various aspects of photodynamic
therapy have been studied and  established  in humans.  Photodynamic  therapy is
currently  being studied by a variety of companies,  physicians and  researchers
around the world for the treatment of a broad range of disease applications.  We
believe  that  industry  development  has been  hindered  by  various  drawbacks
including inconsistent drug purity and performance, costly difficult-to-maintain
lasers and non-integrated drug and device  development.  We are addressing these
issues in our development programs.

Business Strategy

         Our  objective  is to  apply  PhotoPoint  -- our  photodynamic  therapy
systems, which integrate photoselective drugs, light producing devices and light
delivery  devices -- as a primary  therapy in targeted  disease  areas and as an
adjunct to  surgery or other  therapies  in these same or other  disease  areas.
Although the potential  applications for our PhotoPoint systems are numerous, in
1998 we announced  our  intention to refine our focus to target large  potential
market  opportunities or diseases with significant unmet medical needs. By doing
so,  we  believe  we  may be  able  to  accelerate  regulatory  processes  where
appropriate  and  facilitate  commercial  success.  In addition,  to  facilitate
development,  regulatory approval, manufacturing,  marketing and distribution of
our products, we have or seek to form strategic collaborations with partners who
are leaders in our targeted disease areas.

Technology and Products

         We  are  developing   synthetic   photoselective  drugs  together  with
software-controlled  desktop  light  producing  devices  and fiber  optic  light
delivery and  measurement  devices for the  application of PhotoPoint to a broad
range of disease indications. We believe that by being expert in both PhotoPoint
drugs and devices, and by integrating the development of these technologies,  we
can  produce  easy-to-use  PhotoPoint  systems  which  offer the  potential  for
predictable and consistent results.

         Drug  Technology.  We hold exclusive  license rights under certain U.S.
and foreign patents to several classes of synthetic,  photoselective  compounds,
subject to certain governmental  rights. From our classes of compounds,  we have
selected  SnET2 as our leading drug candidate and have used SnET2 in each of our
clinical  trials to date.  We have granted to  Pharmacia & Upjohn an  exclusive,
worldwide license to use SnET2 in the field of photodynamic  therapy for disease
indications  in the  fields  of  ophthalmology,  oncology  and  urology.  We are
developing  other  potential   photoselective   drugs  for  additional   disease
applications and future partnering opportunities.

         We believe  that our  synthetic  photoselective  drugs may  provide the
following benefits:

         o    Predictable.  The synthetic nature of our photoselective compounds
              permits us to design drugs with a single molecular  structure.  We
              believe that this  characteristic  may  facilitate  consistency in
              clinical  treatment   settings,   as  well  as  predictability  in
              manufacturing and quality control.

         o    Minimal side effects. Treatments to date have been well-tolerated,
              with  the  primary  side  effect  being  a  mild,  transient  skin
              photosensitivity in some patients.

         o    Versatile. We can design drugs with specific characteristics, such
              as   activation  by  a  particular   wavelength  of  light.   This
              versatility  provides us with the potential to customize our drugs
              for particular uses and to take advantage of  semiconductor  light
              technology.

          Light  Producing  Devices.   Because  our  photoselective   drugs  are
synthetic,  we have  been  able to design  our  drugs to be  activated  by light
produced  by  readily  available,  reliable  and  relatively  inexpensive  light
sources.  Our light technologies include  software-controlled  microchip diodes,
light emitting diode or LED arrays and non-thermal  lasers. We are collaborating
with  Iridex  Corporation  or  Iridex  on  the  development  of light  producing
devices for PhotoPoint in the field of  ophthalmology  and  have  co-developed a
portable,  solid  state diode light device  which is  currently   being  used in
clinical trials.

         We believe that our diode and LED array devices offer  advantages  over
laser technology  historically used in photodynamic  therapy.  For example,  our
software-controlled designs offer reliability and built-in control and measuring
features.  In  addition,  our diode  systems,  which are  roughly  the size of a
desktop computer,  are smaller and more portable than traditional laser systems.
We believe that it has the potential to offer light producing  devices that will
be more affordable and convenient than surgical laser systems  historically used
in photodynamic therapy.

         Light  Delivery  and  Measurement   Devices.   We  are  developing  and
manufacturing light delivery and measurement  devices,  including a wide variety
of  fiber  optic  light  delivery  devices  with  specialized  tips  for  use in
PhotoPoint. These devices must be highly flexible and appropriate for endoscopic
use and must be able to deliver  unique  patterns of uniform,  diffuse light for
different disease applications.  Our products include microlenses that produce a
tiny flashlight beam for discrete surface lesions, the Flex(R) cylinder diffuser
which  delivers light in a radial pattern along a flexible tip for sites such as
the  esophagus and  spherical  diffusers  which emit a diffuse ball of light for
sites such as the bladder or nasopharynx.  Certain of our light delivery devices
have been used in our clinical trials.  We have also developed light measurement
devices for PhotoPoint including devices that detect wavelength and fluorescence
to  facilitate  the  measurement  of light or drug dose.  In  addition,  through
collaborative  arrangements with Boston Scientific  Corporation in the fields of
urology, pulmonology and gastroenterology and Cordis Corporation in the field of
cardiovascular  disease, we  are  co-developing  medical  catheters  for  use in
PhotoPoint.

Targeted Diseases and Clinical Trials

         We  believe  that   PhotoPoint   has  potential  in  a  wide  range  of
applications.  We have  selected,  based upon  regulatory,  clinical  and market
considerations,  a number of disease applications,  discussed below, on which to
focus.  Of  these  applications,   age-related  macular  degeneration,  or  AMD,
currently   represents  our  highest   priority,   and  represents  the  largest
collaborative  effort with our corporate partner Pharmacia & Upjohn. Our current
clinical  trials use SnET2  together  with  light  producing  devices  and light
delivery  devices  either  developed  on our own or in  collaboration  with  our
partners.  Our decision to proceed to clinical trials in any application depends
upon such  factors  as  preclinical  results,  FDA  communications,  competitive
factors, corporate partner commitment and resources, economic considerations and
our overall business strategy.

Ophthalmology

         We believe  that  PhotoPoint  has the  potential  to treat a variety of
ophthalmic disorders, including conditions caused by neovascularization, such as
AMD, as well as other ophthalmic  conditions.  Neovascularization is a condition
in which new blood  vessels grow  abnormally  under the surface of the retina or
other parts of the eye. These fragile vessels can hemorrhage,  causing  scarring
and damage to the nerve  tissue and lead to loss of vision.  AMD is the  leading
cause of blindness in Americans over age 50. We are conducting  clinical  trials
for the  treatment  of  choroidal  neovascularization  associated  with AMD.  We
targeted  this area  because of the large  potential  market size as well as the
potential for expedited review by governmental  regulatory bodies. In June 1998,
SnET2   received   fast  track   designation   from  the  U.S.   Food  and  Drug
Administration,  or  FDA,  for the  treatment  of  choroidal  neovascularization
associated with AMD. Under the FDA Modernization Act of 1997, the FDA gives fast
track  designation  to drugs and devices that treat serious or  life-threatening
conditions that represent unmet medical needs. The designation means that we can
submit data during the  clinical  trial  process  based on clinical or surrogate
endpoints that are likely to predict clinical benefit,  and the FDA can expedite
its regulatory  review. We began Phase III clinical trials for AMD in the United
States in the fourth  quarter of 1998.  We are  collaborating  with  Pharmacia &
Upjohn  on the  co-development  of SnET2 in the field of  ophthalmology  and are
collaborating  with  Iridex,   through  its  subsidiary  company,  Iris  Medical
Instruments,  Inc., on the  co-development  of light  devices in this field.  In
addition,  we have  conducted  preclinical  studies for the  treatment  of other
ophthalmic diseases such as corneal neovascularization and glaucoma.

Oncology

         Cancer  is a large  group of  diseases  characterized  by  uncontrolled
growth and spread of  hyperproliferating  cells.  We targeted  this area for our
initial  products both because of the large potential market size as well as the
potential  for  certain  cancer   treatments  to  receive  expedited  review  by
governmental regulatory bodies.

         Prostate  Cancer.  Prostate  cancer is the most  common  malignancy  in
American  men, and  mortality  from it is second only to lung  cancer.  Prostate
cancer  generally  progresses  slowly,  and  58% of  all  prostate  cancers  are
discovered  while still  localized  (cancer has not spread  beyond the  prostate
gland). We are conducting a Phase I clinical trial using SnET2 for the treatment
of localized prostate cancer.

         Other Cancers. In 1998, we announced that we would no longer pursue the
commercialization  of cutaneous metastatic breast cancer, or CMBC. This decision
was made because of business considerations such as small market size, increased
costs from changes in FDA required tests, lack of a committed  marketing partner
for  this  disease  indication  and  continued  use of  internal  resources.  We
discontinued  trials in  AIDS-related  Kaposi's  sarcoma  for  similar  reasons,
including  our  renewed  focus on large  market  opportunities  and  those  with
significant  unmet medical need. The information we obtained from these clinical
trials has  provided  an  invaluable  amount of  information  on our  PhotoPoint
treatment in cancer and has enabled us to advance in preclinical studies for the
treatment of a variety of other cancers including lung cancer,  brain tumors and
head and neck cancers.  We have an existing  oncology  Investigational  New Drug
application,  or IND, under which we may choose to submit protocols for clinical
trials in oncology indications.

Dermatology

         A number of non-cancerous dermatological disorders have shown potential
for being  treated with  PhotoPoint.  One of these is  psoriasis,  a chronic and
potentially  debilitating  skin disorder.  We are currently  evaluating  topical
formulations of SnET2 for psoriasis and other  dermatological  diseases.  We are
collaborating with Medicis  Pharmaceutical  Corporation on the co-development of
PhotoPoint in the field of  dermatology  and, under the provisions of our letter
of intent with Medicis,  we are  responsible  for the funding and development of
dermatological clinical trials if we elect to move forward. We are continuing to
evaluate psoriasis as the next possible  dermatology  indication and may advance
to a  clinical  trial  based on the  progress  of the  development  of a topical
formulation,   preclinical  studies  and  other  factors.  Preparations  include
development  of LED or other  light  sources  and  delivery  systems  for use in
dermatology  applications and protocol development for possible clinical trials.
In 1998, development and marketing rights to SnET2 for dermatology reverted from
Pharmacia & Upjohn back to Miravant.

Other Disease Areas

         We are investigating the use of PhotoPoint in additional disease areas,
including the field of cardiovascular  disease.  Early preclinical  studies with
PhotoPoint  indicate  that certain  photoselective  drugs may be  preferentially
retained  in  the  hyperproliferating  and  lipid-rich  components  of  arterial
plaques, as they are in cancer cells. We are conducting  preclinical studies for
the prevention of restenosis,  the  renarrowing  of arterial  vessels  following
angioplasty.  We  believe  that  PhotoPoint  may  provide a means of  preventing
restenosis, or even treating diffuse atherosclerosis.  We have collaborated with
Cordis  on  the  joint   development  of  medical   catheter  devices  for  such
cardiovascular applications. In addition, we believe that PhotoPoint may provide
a means of  reducing  intimal  hyperplasia,  or  excessive  cell  growth  at the
anastomosis   (stitch)  sites,   associated  with  bypass  grafts,  and  we  may
collaborate with Ramus Medical  Technologies on the application of PhotoPoint in
the area of bypass  grafts.  Our decision to proceed to clinical  trials depends
upon such  factors  as  preclinical  results,  FDA  communications,  competitive
factors,   corporate  partner  commitment  and  the  availability  of  financial
resources,  economic  considerations and our overall business strategy. In light
of several of these factors, we decided to discontinue development activities in
certain diseases,  including  dysfunctional  uterine bleeding,  benign prostatic
hyperplasia and basal cell carcinoma. This will allow us to focus our activities
and resources on other disease applications which better represent large markets
and significant unmet medical needs.

Strategic Collaborations

         We are  pursuing a strategy  of  establishing  license  agreements  and
collaborative  arrangements for the purpose of securing exclusive access to drug
and device  technologies,  funding  development  activities and providing market
access  for our  products.  We seek to obtain  from our  collaborative  partners
exclusivity  in  the  field  of  photodynamic  therapy  and  to  retain  certain
manufacturing  and  co-development  rights. We intend to continue to pursue this
strategy  where  appropriate  in order to enhance  in-house  research  programs,
facilitate  clinical  testing  and gain  access  to  distribution  channels  and
additional technology. To date, we have entered into the following collaborative
arrangements:

Pharmacia & Upjohn

         We have had a collaborative  relationship with Pharmacia & Upjohn, Inc.
and certain of its subsidiaries, collectively referred to as Pharmacia & Upjohn,
relating to the  development  and  commercialization  of SnET2  since 1994.  Our
current relationship is critical to our ophthalmology program.

The original SnET2 license agreements with Pharmacia & Upjohn provided for:

         o    The co-development of, and exclusive marketing rights to, SnET2 in
              the fields of oncology,  urology and dermatology; 

         o    An equity investment in Miravant; and 

         o    Formulation of the SnET2 drug product.

 In 1996, these agreements were amended to include the field of ophthalmology.

 In 1998, significant amendments were made, resulting in:

         o    Additional financial commitment by Pharmacia & Upjohn to oncology;

         o    Additional flexibility  in  Miravant's oncology  and  urology
              programs;

         o    Increased reimbursement  commitment by Pharmacia & Upjohn to the 
              ophthalmology program;  and 

         o    The  development  and marketing  rights for SnET2 in dermatology
              reverting back to Miravant.

In 1999, the agreements were again amended and supplemented, as follows:

         o    Pharmacia & Upjohn increased its participation in ophthalmology by
              assuming  operational  control  of  the  clinical  and  regulatory
              aspects of the joint ophthalmic programs, including AMD;

         o    Pharmacia & Upjohn made an additional $19.0 million equity 
              investment in Miravant, and extended a line of credit to Miravant
              of $22.5 million;

         o    Eliminated certain AMD milestone payments and oncology clinical 
              reimbursements; and

         o    Added a right of first  negotiation by Pharmacia & Upjohn to SnET2
              marketing rights for the cardiovascular  field, subject to certain
              limitations.

         License Agreements. Under a July 1995 development and license agreement
and subsequent  amendments,  collectively referred to as the License Agreements,
we  granted  to  Pharmacia  & Upjohn an  exclusive,  worldwide  license  to use,
distribute and sell SnET2 for use in PhotoPoint in the fields of  ophthalmology,
oncology, urology, and right of first negotiation in cardiovascular diseases.

         Under the amended License Agreements:

         o    Pharmacia & Upjohn is responsible  for conducting  certain aspects
              of clinical  trials  involving SnET2 and to fund other current and
              future  preclinical  studies and clinical  trials  conducted by us
              involving SnET2;

         o    We are  entitled  to  receive  royalties  on the  sale  of  SnET2,
              payments for certain contemplated indications upon the achievement
              of certain milestones and reimbursement for certain expenses;

         o    Pharmacia & Upjohn has agreed to promote, market and sell SnET2 in
              certain fields,  subject to certain  limitations,  to refrain from
              developing  or selling  other  photodynamic  therapy  drugs in the
              fields  contained in the License  Agreements  during the agreement
              term; and

         o    Pharmacia & Upjohn has a right of first  negotiation  with respect
              to the  marketing  rights  to any new  photodynamic  therapy  drug
              developed  by  Miravant  in the fields  contained  in the  License
              Agreements,  as well as right of first  negotiation  to SnET2  for
              cardiovascular indications.

         With respect to ophthalmology,  the License  Agreements remain in force
for the  duration of the  patents  related to SnET2 or for a period of ten years
from the first commercial sale of SnET2 on a country-by-country basis, whichever
is longer.  After those  periods have  expired,  Pharmacia & Upjohn will have an
irrevocable,  royalty-free,  non-exclusive  license  to SnET2.  With  respect to
oncology  and  urology,  the license  agreement  remains in force for so long as
Pharmacia & Upjohn is required to pay royalties;  certain additional termination
provisions apply, which may terminate the agreement as early as July 1, 2000.

         Equity  Investment  Agreement.  In 1999, in connection with the amended
license  agreement,  Miravant  and  Pharmacia  & Upjohn  entered  into an Equity
Investment  Agreement,  under which  Pharmacia & Upjohn  purchased from Miravant
1,136,533 shares Common Stock for an aggregate  purchase price of $19.0 million.
This  agreement is in addition to an earlier  (1995) stock  purchase  agreement,
under which  Pharmacia & Upjohn  purchased  600,000  shares of Common Stock from
Miravant for $12.0 million, subject to certain restrictions.

         Credit  Agreement.  In 1999,  in  connection  with the amended  license
agreement, Miravant and Pharmacia & Upjohn entered into a Credit Agreement under
which  Pharmacia & Upjohn will lend to Miravant up to $22.5  million in the form
of quarterly term loans to be used to support Miravant's ophthalmology, oncology
and other  development  programs,  as well as for  general  corporate  purposes,
subject  to  certain   affirmative,   negative  and   financial   covenants  and
requirements.  Pharmacia  & Upjohn  may also  receive  a total of up to  360,000
warrants to purchase  Miravant Common Stock.  The exercise price of each warrant
will be equal to 140% of the average of the closing  prices of the Common  Stock
for the ten (10) trading days  immediately  preceding the borrowing  request for
the related loan.

         Drug  Supply  Agreement.  Under a Drug  Supply  Agreement  we agreed to
manufacture,  or have  manufactured,  and  supply to  Pharmacia  & Upjohn,  upon
specified payment terms,  Pharmacia & Upjohn's requirements of SnET2 in finished
pharmaceutical  form  for  clinical  and  commercial  purposes  in the  area  of
photodynamic  therapy  in the fields of  oncology  and  ophthalmology.  The Drug
Supply  Agreement  remains  in  force  for the term of the  License  Agreements,
subject to termination under certain limited circumstances. Upon termination, we
have agreed to continue  to provide  SnET2 to  Pharmacia & Upjohn on terms to be
negotiated by the parties.

         Device Supply  Agreement.  Under a Device Supply Agreement we appointed
Pharmacia  &  Upjohn  as  a  non-exclusive   worldwide  distributor  of  certain
instruments  developed,  manufactured  or  licensed by  Miravant  that  produce,
deliver or measure  light,  collectively  known as light  devices,  for use with
SnET2 in photodynamic therapy in the fields contained in the License Agreements.
The Device  Supply  Agreement  provides  for the sale by Miravant to Pharmacia &
Upjohn of such light devices at specified  rates and we are  responsible for the
development and regulatory approval of the light devices. During the term of the
Device  Supply  Agreement,  Pharmacia & Upjohn is  prohibited  from  developing,
manufacturing   or   purchasing   from  third  parties  such  light  devices  or
distributing  or  selling  them for use with any  photodynamic  drug  other than
SnET2.  If,  however,  we decide not to or are unable to manufacture or supply a
particular  light  device,  Pharmacia & Upjohn is entitled to  manufacture  that
device. The Device Supply Agreement remains in force during the term of the 1995
development and license agreement,  subject to earlier termination under limited
circumstances.

         Formulation  Agreement.  In  August  1994,  we  entered  into a  supply
contract with Pharmacia & Upjohn to develop an emulsion formulation suitable for
intravenous  administration of SnET2.  Under this agreement,  Pharmacia & Upjohn
agreed to the following:

         o    They will be our exclusive supplier of such emulsion products;

         o    They will manufacture and supply all of our worldwide requirements
              of certainemulsion  formulations  containing  SnET2; and 

         o    They will not develop or supply formulations or services for use
              in any  photodynamic  therapy  applications for any other company.

         This agreement continues  indefinitely except that it may be terminated
ten (10) years after the first commercial sale of SnET2.  Effective November 30,
1998,  Pharmacia  &  Upjohn's  rights  and  obligations  under  the  Formulation
Agreement were assigned to Fresenius Kabi LLC, a subsidiary of Fresenius AG,  as
part of an Asset Transfer Agreement  between Pharmacia & Upjohn  and  Fresenius.
Operating  terms of the  Formulation  Agreement were not changed as part of the
assignment.

Iridex Corporation

         In  May  1996,  we  entered  into  a  co-development  and  distribution
agreement with Iridex, a leading provider of  semiconductor-based  laser systems
to treat eye diseases. The agreement generally provides:

         o    Miravant with the exclusive  right to co-develop with Iridex light
              producing devices for use in photodynamic  therapy in the field of
              ophthalmology;

         o    We will conduct  clinical trials and make  regulatory  submissions
              with  respect  to  all   co-developed   devices  and  Iridex  will
              manufacture all devices for such trials,  with costs shared as set
              forth in the agreement; and

         o    Iridex  will  have  an  exclusive,   worldwide  license  to  make,
              distribute and sell all co-developed devices, on which it will pay
              us royalties.

         The  agreement  remains in effect,  subject to earlier  termination  in
 certain  circumstances,  until ten (10)  years  after the date of the first FDA
 approval of any  co-developed  device for commercial  sale,  subject to certain
 renewal  rights.  The light  producing  device used in AMD clinical  trials was
 co-developed with Iris Medical Instruments Inc., a subsidiary of Iridex,  under
 this  agreement,  and  its  commercialization  is  governed  in  part  by  this
 agreement.

The University of Toledo, The Medical College of Ohio and St. Vincent Medical 
Center

         In July 1989, we entered into a License  Agreement  with the University
of Toledo,  the  Medical  College of Ohio and St.  Vincent  Medical  Center,  of
Toledo,  Ohio,  collectively  referred to as Toledo.  This agreement provides us
with, among other items, exclusive, worldwide rights:

         o    To make, use, sell, license or sublicense  certain  photoselective
              compounds  (including SnET2) covered by certain Toledo patents and
              patent  applications,  or not covered by Toledo  patents or patent
              applications but owned or licensed to Toledo (and which Toledo has
              the right to sublicense);

         o    To make, use, sell, license or sublicense certain of the compounds
              for which we have provided Toledo with financial support; and

         o    To make,  use or sell any invention  claimed in Toledo  patents or
              applications  and any  composition,  method or device  related  to
              compounds  conceived or developed by Toledo under research  funded
              by Miravant.

         The  agreement  further  provides  that we pay Toledo  royalties on the
sales of the compounds.   As of December 31, 1998, no royalties had been paid or
accrued since no drug or related product had been sold.  Under the agreement, we
are  required to satisfy certain development and  commercialization  objectives.
This agreement  terminates upon the expiration or non-renewal of the last patent
which may issue under this agreement,  currently  2013.  By its terms,  however,
the license  extends upon  issuance of any new Toledo  patents.   We do not have
contractual  indemnification rights against Toledo under the agreement.  Some of
the  research  relating  to the  compounds  covered  by the  License  Agreement,
including  SnET2,  has been or is  being funded in part by certain  governmental
grants under which the  United States Government has or will have certain rights
in the technology developed, including  the right under certain circumstances to
a non-exclusive license or to  require Miravant to grant an exclusive license to
a third party.

Boston Scientific Corporation

         In December 1993, we executed a strategic  development letter agreement
with  Boston  Scientific Corporation, a  leading  developer,  manufacturer   and
marketer  of catheter-based  medical technology,  for the  joint development of 
catheter-based light  delivery  devices  for photodynamic  therapy in the fields
of  urology, pulmonology and gastroenterology.  The letter agreement is intended
to provide  the framework for  a  more definitive agreement, relating  to, among
other  things,  the  distribution,  manufacturing  and  licensing  of  developed
products,  and continues until the parties enter into such an agreement. At this
time,  Miravant and  Boston Scientific  have  not entered into a more definitive
agreement.

Chiron Diagnostics

         In  November   1997,  we  executed  a  letter  of  intent  with  Chiron
Diagnostics, a subsidiary of Bayer Corporation and an international leader in in
vitro  diagnostics,  to  collaborate  on  studies  directed  towards  the  early
detection  and  treatment of lung cancer.  The alliance is designed to give us a
potentially  more  sensitive,  less  invasive  and less  costly way to  identify
patients  in early  stages of  cancer  who are  eligible  for  participation  in
PhotoPoint  clinical  trials.  In addition  to  assisting  us in these  clinical
trials,  Chiron  has  agreed  to  work  exclusively  with  us in  the  field  of
photodynamic therapy for certain oncology indications.

Cordis Corporation

         In December 1993, we executed a strategic  development letter agreement
with Cordis Corporation, a Johnson & Johnson  company  and a leader in  coronary
catheter devices,  for  the joint development  of  catheter-based light delivery
devices  for  photodynamic  therapy in  the  cardiovascular  field.   The letter
agreement under which the parties are  collaborating  is intended to provide the
framework for a more definitive  agreement, relating to, among other things, the
distribution, manufacturing  and  licensing of developed products, and continues
until the parties  enter into a definitive  agreement.   At this time,  Miravant
and Cordis have not entered into a definitive agreement.

Laserscope

         In  April  1992,   we  entered  into  a  seven  (7)  year  License  and
Distribution Agreement with Laserscope of San Jose, California,  a leader in the
surgical laser industry. Under this agreement, among other terms:

         o    We granted to  Laserscope  rights to  manufacture  and sell a dye 
              laser module developed by us; 

         o    We retained the right to manufacture and sell this system for use 
              with our own  photoselective  drugs; and

         o    Laserscope agreed to pay to us a license fee and royalties on 
              Laserscope's sales.

         We had developed this light  producing  device prior to the development
of our current diode light systems.  This agreement terminates in April 1999, at
which  point Laserscope will have a fully paid-up,  non-exclusive license to use
the technology.

Medicis Pharmaceutical Corporation

         In  October   1997,  we  executed  a  letter  of  intent  with  Medicis
Pharmaceutical  Corporation,  the leading independent dermatology company in the
United States, to develop and commercialize  certain  PhotoPoint  procedures for
dermatology  applications.  The letter  agreement is intended to facilitate  the
clinical  development of PhotoPoint in dermatology and provide the framework for
a more definitive  agreement  which would grant Medicis an exclusive  license to
distribute and sell certain  PhotoPoint  products in the United States.  At this
time, Miravant and Medicis have not entered into a definitive agreement.

Ramus Medical Technologies

         In December 1996, our wholly owned subsidiary, Miravant Cardiovascular,
Inc.,  entered into a  co-development  agreement with Ramus, an innovator in the
development of autologous  tissue  stent-grafts  for vascular bypass  surgeries.
Generally the agreement  provides us with the exclusive rights to co-develop our
photodynamic  therapy  technology  with  Ramus'  proprietary  technology  in the
development  of  autologous  vascular  grafts for  coronary  arteries  and other
vessels.  Ramus shall provide, at no cost to us, products for use in preclinical
studies and clinical trials with all other  preclinical and clinical costs to be
paid by us. The  agreement  remains in effect  until the later of ten (10) years
after  the  date of the  first  FDA  approval  of any  co-developed  device  for
commercial  sale,  or the life of any patent  issued on a  co-developed  device,
subject to certain renewal rights.

         In conjunction with the  co-development  agreement,  we purchased a 33%
equity interest in Ramus for $2.0 million, and obtained an option to acquire the
remaining  shares of Ramus.  We have  declined to  exercise  this option and the
option  period  has now  expired.  Further,  we have  first  refusal  rights and
pre-emptive  rights for any issuance of new securities,  whether debt or equity,
made by Ramus and Ramus must maintain  certain  financial  and other  covenants.
Additionally,  we entered  into a revolving  credit  agreement  with Ramus which
provided Ramus with the ability to borrow up to $2.0 million.

Xillix Technologies Corp.

         In June  1998,  Miravant  purchased  a 9%  equity  interest  in  Xillix
Technologies Corp. for $5.0 million. In conjunction with the investment, we also
entered into an exclusive strategic alliance agreement with Xillix to co-develop
proprietary systems  incorporating  PhotoPoint and Xillix's fluorescence imaging
technology  for  diagnosing  and treating  early stage cancer and  pre-malignant
tissues.  The  agreement  provides  that both  companies  will own  co-developed
products and will share the research and development  costs  associated with the
development program.  Xillix will receive drug royalty payments from us based on
the sale of our drugs used in conjunction with the co-developed technology.

Research and Development Programs

         Our research and development  programs are devoted to the discovery and
development of drugs and devices for PhotoPoint.  These research  activities are
conducted  in-house  in  our  pharmaceutical  and  engineering  laboratories  or
elsewhere in collaboration  with medical or other research  institutions or with
other companies. We have expended, and expect to continue to spend,  substantial
funds on our research and development programs.

         Our   pharmaceutical   research  program  is  focused  on  the  ongoing
evaluation of our  proprietary  compounds for  different  disease  applications.
Among our outside or extramural research, we are conducting  preclinical studies
at various academic and medical research  institutions in the United States.  We
are also active in the research and development of devices for PhotoPoint. These
programs  include   development  of  fiber  optic  light  delivery  devices  and
measurement  devices for accuracy in dosimetry.  Device research and development
is presently conducted either in-house or in collaboration with partners.

         We  have  pursued  and  been  awarded  various  government  grants  and
contracts, such as grants sponsored by the National Institutes of Health and the
Small Business Innovative Research Administration, which complement our research
efforts and facilitate new development.

Manufacturing

         Our strategy is generally to retain  manufacturing  rights and maintain
pilot  manufacturing  capabilities  and, where  appropriate due to financial and
production  constraints,  to partner  with  leading  pharmaceutical  and medical
device companies for certain  elements of our  manufacturing  processes.  We are
licensed by the State of California to  manufacture  bulk drug  substance at our
Santa  Barbara,  California  facility  for  clinical  trial  use.  We  currently
manufacture  active  SnET2 drug  substance,  light  producing  devices and light
delivery devices,  and conduct other production and testing activities,  at this
location.   However,  we  have  limited   capabilities  and  experience  in  the
manufacture of drug,  light  producing and light  delivery  products and utilize
outside suppliers,  contracted or otherwise,  for certain materials and services
related to our  manufacturing  activities.  Although  most of our  materials and
components  are  available  from various  sources,  we are  dependent on certain
suppliers for key materials or services used in our drug and light producing and
light delivery device development and production  operations.  One such supplier
is Fresenius,  which processes SnET2 into a sterile  injectable  formulation and
packages  it in vials for  distribution  by  Miravant.  We expect to continue to
develop  new  formulations  which may or may not have  similar  dependencies  on
suppliers.  In addition,  regulatory  approval  will be necessary  before we can
manufacture drug substance for commercial use.

         In February  1997,  we received  registration  to ISO 9001 and EN 46001
signifying  compliance  to  the  International  Standards  Organization  quality
systems  requirements  for  design,  manufacture  and  distribution  of  medical
devices.  This registration should enable us to more easily attain international
device marketing approvals.

Marketing, Sales and Distribution

         Our  strategy is to partner  with  leading  pharmaceutical  and medical
device companies for the marketing,  sales and distribution of our products.  We
have granted to Pharmacia & Upjohn the  exclusive,  worldwide  license to market
and sell our leading drug candidate SnET2 in certain  disease fields.  Under the
terms of our  co-development  arrangements  with Boston  Scientific  and Cordis,
these  companies  have  the  option  of  negotiating  to  enter  into  long-term
agreements  with  Miravant,  under  which they will have a license to market and
sell the  co-developed  medical  catheters - Boston  Scientific in the fields of
urology,   pulmonology  and   gastroenterology  and   Cordis  in  the  field  of
cardiovascular disease- on a  worldwide  basis.    At  this  time,  we have  not
entered  into  long-term  agreements.    Also,  we  have granted  to  Iridex the
worldwide license to market  and sell all  co-developed  light producing devices
for use in  PhotoPoint in  the   field  of  ophthalmology,  subject  to  certain
provisions with Pharmacia & Upjohn, and we have granted to Medicis the worldwide
license to market and sell  certain drugs for use in  PhotoPoint in the field of
dermatology.

         Where  appropriate,  we intend  to  seek  additional  arrangements with
collaborative  partners,  selected  for  experience in  diseaseapplications  or 
markets,  to act as our marketing and sales arm  and to establish  distribution
channels for our drugs and devices. We may also distribute our products directly
or through independent distributors.

Patents and Proprietary Technology

         We pursue a policy of seeking patent protection for our technology both
in the United  States and in selected  countries  abroad.  We plan to prosecute,
assert and defend our patent  rights when  appropriate.  We also rely upon trade
secrets,   know-how,   continuing   technological   innovations   and  licensing
opportunities to develop and maintain our competitive position.

         We are currently the record owner of 26 United  States  patents,  which
expire during the time frame 2010 through  2017, a  substantial  number of which
relate to certain light  delivery and  measurement  devices and methods.  We are
also the record owner of four  foreign  patents  expiring  during the time frame
from 2012 to 2014.  We have a number  of United  States  (and  related  foreign)
patent  applications filed and pending.  In addition,  we have exclusive license
rights under 16 issued United States patents, which expire during the time frame
from 2006 through 2013, and three issued foreign  patents  expiring in 2006, and
under several pending United States and foreign patent applications, relating to
certain  photoselective  compounds,  as  well as  rights to  five  method-of-use
patents and one co-owned formulation patent.

         We obtained the majority of our photoselective  compound patent rights,
including rights to SnET2,  through an exclusive  License Agreement with Toledo.
This  agreement  is the  basis  for our core  drug  technology.  Certain  of the
foregoing  patents and applications are subject to certain  governmental  rights
described below.

         It is  our  policy  to  require  our  employees,  consultants,  outside
scientific collaborators and sponsored researchers and other advisors to execute
confidentiality  agreements  upon the  commencement  of employment or consulting
relationships   with  us.  These   agreements   provide  that  all  confidential
information  developed or made known to the individual  during the course of our
relationship  are to be kept  confidential  and not  disclosed to third  parties
except in specific limited circumstances. We also require signed confidentiality
or material transfer agreements from any company that is to receive confidential
data or proprietary  compounds.  In the case of employees and  consultants,  the
agreements  generally  provide that all  inventions  conceived by the individual
while  rendering  services to us, which  relate to our  business or  anticipated
business, shall be assigned to us as our exclusive property.

         Certain  of  our  research,  including  research  relating  to  certain
pharmaceutical compounds covered by the License Agreement with Toledo, including
SnET2, has been or is being funded in part by Small Business Innovation Research
Administration or National  Institutes of Health grants. As a result, the United
States  Government has or will have certain  rights in the inventions  developed
with the  funding.  These rights  include a  non-exclusive,  paid-up,  worldwide
license under such inventions for any  governmental  purpose.  In addition,  the
government  has the right to require us to grant an exclusive  license under any
of such inventions to a third party if the government determines that:

         o    Adequate steps have not been taken to commercialize  such  
              inventions; 

         o    Such action is necessary to meet public health or safety needs; or
 
         o    Such action isnecessary to meet requirements for public use under 
              federal regulations.

         Federal law requires that any exclusive  licensor of an invention  that
was  partially  funded by federal  grants  (which is  the case with the  subject
matter of  certain  patents  issued in our name or licensed  from Toledo)  agree
that it  will not grant  exclusive  rights to use or sell the  invention  in the
United  States  unless  the  grantee  agrees  that any  products  embodying  the
invention will  be  manufactured  substantially  in the United States,  although
such requirement is subject to a discretionary waiver by the government.   It is
not expected  that  the  government  will  exercise any such rights or that such
exercise would have a material impact on us.

Government Regulation

         The research, development,  manufacture,  marketing and distribution of
our  products  are  subject to  regulation  for safety and  efficacy by numerous
governmental authorities in the United States and other countries. In the United
States,  pharmaceutical  products and medical  devices are  regulated by the FDA
through the Food,  Drug and Cosmetic Act,  known as the FDC Act. The FDC Act and
various  other  federal  and state  statutes  control and  otherwise  affect the
development,  approval, manufacture,  testing, storage, records and distribution
of  drugs  and  medical  devices.  We are  subject  to  regulatory  requirements
governing both drugs and devices.

         Drug  Products.  The FDA  generally  requires  the  following  steps  
before a new drug  product may be marketed in the United States:

         o    Preclinical studies (laboratory and animal tests);

         o    The submission to the FDA of an application  for an IND exemption,
              which must  become  effective  before  human  clinical  trials may
              commence;

         o    Adequate and  well-conducted  clinical trials to establish safety 
              and efficacy of the drug for its  intended  use; 

         o    The  submission  to the FDA of a New Drug Application, or NDA; and
              review and approval of the NDA by the FDA before any commercial
              sale or shipment of the drug.

         In addition to obtaining FDA approval for each new drug  product,  each
drug manufacturing establishment must be registered with the FDA.  Manufacturing
establishments,  both domestic  and foreign,  are subject to  inspections  by or
under the authority of the FDA and  by other  federal,  state or local  agencies
and must comply  with the FDA's current Good  Manufacturing  Practices,  or GMP,
regulations.   The FDA will not approve an NDA until a preapproval inspection of
the manufacturing  facilities  confirms that the drug is produced in accordance
with  current drug GMPs.   In addition,  drug  manufacturing  establishments  in
California  must also be  licensed by the  State of  California  and must comply
with   manufacturing,   environmental  and  other  regulations  promulgated  and
enforced by the California Department of Health Services.

         Preclinical studies include laboratory evaluation of product chemistry,
conducted  under Good  Laboratory  Practices,  or GLP,  regulations,  and animal
studies  to  assess  the  potential  safety  and  efficacy  of the  drug and its
formulation.  The results of the preclinical studies are submitted to the FDA as
part of the IND. Unless the FDA objects to the IND, the IND becomes effective 30
days following its receipt by the FDA.

         Clinical trials involve the administration of the investigational  drug
to human subjects  under FDA  regulations  and other guidance  commonly known as
Good  Clinical  Practice,  or  GCP,  requirements  under  the  supervision  of a
qualified physician.  Clinical trials are conducted in accordance with protocols
that detail the  objectives of the study,  the  parameters to be used to monitor
safety and the efficacy criteria to be evaluated.  Each protocol is submitted to
the FDA as a part of the IND.  Each clinical  study must be conducted  under the
auspices  of  an  independent  Institutional  Review  Board,  or  IRB.  The  IRB
considers, among other things, ethical factors, the safety of human subjects and
the possible liability of the testing institution.

         Clinical  trials are typically  conducted in three  sequential  phases,
although the phases may overlap.

         o    Phase I represents the initial introduction of the drug to a small
              group of  humans  to test for  safety  (adverse  effects),  dosage
              tolerance,  absorption,  distribution,  metabolism,  excretion and
              clinical  pharmacology and, if possible, to gain early evidence of
              effectiveness;

         o    Phase II  involves  studies  in a limited  sample of the  intended
              patient  population  to  assess  the  efficacy  of the  drug for a
              specific indication,  to determine dose tolerance and optimal dose
              range and to identify  possible  adverse effects and safety risks;
              and

         o    Once a  compound  is found to have  some  efficacy  and to have an
              acceptable  safety  profile  in Phase II  evaluations,  Phase  III
              clinical  trials are initiated for definitive  clinical safety and
              efficacy studies in a broader sample of the patient  population at
              multiple study sites.  The results of the preclinical  studies and
              clinical trials are submitted to the FDA in the form of an NDA for
              marketing approval.

         Completing  clinical  trials and  obtaining FDA approval for a new drug
product is likely to take several years and require  expenditure  of substantial
resources.  If an NDA  application is submitted,  there can be no assurance that
the FDA will approve the NDA. Even if initial FDA approval is obtained,  further
studies may be required to gain approval for the use of a product as a treatment
for clinical  indications  other than those for which the product was  initially
approved.  Also, the FDA requires post-market  surveillance  programs to monitor
and  report  the drug's  side  effects.  For  certain  drugs,  the FDA may also,
concurrent with marketing  approval,  seek agreement from the sponsor to conduct
post-marketing  ("Phase IV")  studies to obtain  further  information  about the
drug's risks,  benefits and optimal use. Results of such monitoring and of Phase
IV post-marketing studies may affect the further marketing of the product.

         Where  appropriate,  we may seek to obtain  accelerated  review  and/or
approval  of  products  and to use  expanded  access  programs  that may provide
broader   accessibility   and,  if   approved   by  the  FDA,   payment  for  an
investigational  drug  product.  Examples of such  activities  include  pursuing
programs such as treatment IND or parallel track IND classifications which allow
expanded  availability  of an  investigational  treatment to patients not in the
ongoing clinical trials,  and seeking physician or  cross-referenced  INDs which
allow  individual  physicians to use an  investigational  drug before  marketing
approval  and for an  indication  not  covered by the ongoing  clinical  trials.
However,  there can be no assurance  that we will seek such avenues at any time,
or that such  activities  will be successful or result in accelerated  review or
approval of any of our products.

         Medical Device  Products.  Our medical  device  products are subject to
government regulation in the United States and foreign countries.  In the United
States,  we are  subject  to the rules and  regulations  established  by the FDA
requiring  that our medical  device  products are safe and  efficacious  and are
designed, tested, developed, manufactured and distributed in accordance with FDA
regulations.

         Under the FDC Act,  medical  devices are  classified  into one of three
classes  (i.e.,  class I, II, or III) on the basis of the controls  necessary to
reasonably ensure their safety and  effectiveness.  Safety and effectiveness can
reasonably  be  assured  for class I devices  through  general  controls  (e.g.,
labeling, premarket notification and adherence to GMPs) and for class II devices
through the use of general and special  controls (e.g.,  performance  standards,
postmarket  surveillance,  patient  registries and FDA  guidelines).  Generally,
class III devices are those which must receive premarket  approval by the FDA to
ensure their safety and effectiveness  (e.g.,  life-sustaining,  life-supporting
and  implantable  devices,  or new  devices  which  have  been  found  not to be
substantially equivalent to legally marketed devices).

         Before a new device can be introduced to the market,  the  manufacturer
generally  must  obtain  FDA  clearance   through  either  a  510(k)   premarket
notification  or a premarket  approval  application,  or PMA. A PMA requires the
completion of extensive  clinical  trials  comparable  to those  required of new
drugs and  typically  requires  several  years before FDA  approval,  if any, is
obtained.  A 510(k)  clearance  will be granted if the submitted  data establish
that the proposed  device is  "substantially  equivalent" to a legally  marketed
class I or class II medical  device,  or to a class III medical device for which
the FDA  has not  called  for  PMAs.  Currently,  devices  indicated  for use in
photodynamic therapy, such as our devices, regardless of classification, must be
evaluated in conjunction with an IND as a combination drug-device product.

         Combination   Drug-Device  Products.   Medical  products  containing  a
combination  of drugs,  devices  or  biological  products  may be  regulated  as
"combination  products." A combination product is generally defined as a product
comprised of components  from two or more  regulatory  categories  (drug/device,
device/biologic,  drug/biologic,  etc.) and in which the various  components are
required  to achieve  the  intended  effect and are  labeled  accordingly.  Each
component  of a  combination  product is  subject  to the rules and  regulations
established by the FDA for that component  category,  whether drug,  biologic or
device.  Primary  responsibility  for the  regulation of a  combination  product
depends  on the FDA's  determination  of the  "primary  mode of  action"  of the
combination product, whether drug, biologic or device.

         In order to facilitate  premarket review of combination  products,  the
FDA designates one of its centers to have primary jurisdiction for the premarket
review and regulation of both components,  in most cases eliminating the need to
receive approvals from more than one center. The determination whether a product
is a  combination  product  or two  separate  products  is  made by the FDA on a
case-by-case  basis.  Market  approval  authority for  combination  photodynamic
therapy drug/device products is vested in the FDA Center for Drug Evaluation and
Research,  or CDER, which is required to consult with the FDA Center for Devices
and Radiological  Health. As the lead agency,  the CDER administers and enforces
the  premarket  requirements  for both the drug  and  device  components  of the
combination  product.  The FDA has  reserved  the decision on whether to require
separate submissions for each component until the product is ready for premarket
approval. Although, to date, photodynamic therapy products have been categorized
by the  FDA as  combination  drug-device  products,  the  FDA  may  change  that
categorization in the future,  resulting in different submission and/or approval
requirements.

         If separate  applications  for  approval are required in the future for
PhotoPoint  devices,  it may be necessary  for us to submit a PMA or a 510(k) to
the FDA for our PhotoPoint  devices.  Submission of a PMA would include the same
clinical studies  submitted under the IND to show the safety and efficacy of the
device for its intended use in the combination  product.  A 510(k)  notification
would  include  information  and data to show that our  device is  substantially
equivalent to previously  marketed devices.  There can be no assurance as to the
exact  form  of  the  premarket  approval  submission  required  by  the  FDA or
post-marketing controls for our PhotoPoint devices.

         Post-Approval Compliance.  Once a product is approved for marketing, we
must  continue to comply  with  various  FDA,  and in some cases  Federal  Trade
Commission,  requirements  for design,  safety,  advertising,  labeling,  record
keeping  and  reporting  of  adverse  experiences  associated  with the use of a
product. The FDA actively enforces regulations prohibiting marketing of products
for non-approved uses. Failure to comply with applicable regulatory requirements
can result in, among other things, fines, injunctions,  civil penalties, failure
of the government to grant  premarket  clearance,  premarket  approval or export
certificates  for devices or drugs,  delays or  suspensions  or  withdrawals  of
approvals,  seizures or recalls of products, operating restrictions and criminal
prosecutions.  Changes in existing  requirements or adoption of new requirements
could have a material  adverse effect on our business,  financial  condition and
results of operations.

         International.  We are also subject to foreign regulatory  requirements
governing   testing,   development,   marketing,   licensing,   pricing   and/or
distribution of drugs and devices in other  countries.  These  regulations  vary
from country to country.  Beginning in 1995, a new regulatory  system to approve
drug market registration  applications was implemented in the European Union, or
EU. The system provides for new centralized,  decentralized and national (member
state by member  state)  registration  procedures  through  which a company  may
obtain  drug  marketing  registrations.  The  centralized  procedure  allows for
expedited  review and approval of biotechnology  and high  technology/innovative
product marketing  applications by a central Committee for Proprietary Medicinal
Products  that is  binding on all  member  states in the EU.  The  decentralized
procedure allows a company to petition individual EU member states to review and
recognize a market  application  previously  approved in one member state by the
national  route.  Our devices  must also meet the new Medical  Device  Directive
effective  in Europe in 1998.  The  Directive  requires  that our  manufacturing
quality assurance systems and compliance with technical  essential  requirements
be certified  with a CE Mark  authorized by a registered  notified body of an EU
member  state  prior to free  sale in the EU.  Registration  and  approval  of a
photodynamic  therapy  product in other  countries,  such as Japan,  may include
additional  procedures and requirements,  nonclinical and clinical studies,  and
may require the assistance of native corporate partners.

Competition

         The  pharmaceutical  and medical device industries are characterized by
extensive  worldwide  research and development  efforts and rapid  technological
change.  Competition from other domestic and foreign  pharmaceutical  or medical
device companies and research and academic  institutions in the areas of product
development, product and technology acquisition,  manufacturing and marketing is
intense and is expected to increase.  These competitors may succeed in obtaining
approval  from the FDA or other  regulatory  agencies  for their  products  more
rapidly than Miravant.  Competitors have also developed or are in the process of
developing  technologies  that  are,  or in the  future  may be,  the  basis for
competitive products.

         We believe  that a primary  competitive  issue will be the  performance
characteristics of photoselective drugs,  including product efficacy and safety,
as well as availability,  price and patent position,  among other issues. As the
photodynamic   therapy   industry   evolves,   we  believe  that  new  and  more
sophisticated  devices  will be  required  and that the  ability of any group to
develop advanced devices will be important to market position.  We believe that,
after  approval,  competition  will be based on  product  reliability,  clinical
utility,  patient  outcomes,  marketing and distribution  partner  capabilities,
availability, price and patent position.

         We are  aware  of  various  competitors  involved  in the  photodynamic
therapy arena.  We understand  that these  companies are conducting  preclinical
studies and/or clinical trials in various countries and for a variety of disease
indications.  One such company is QLT  PhotoTherapeutics  or QLT. We  understand
that QLT's drug  Photofrin(R)  has  received  marketing  approval  in the United
States and certain other countries for various specific disease indications. QLT
is also  conducting  clinical  testing of another drug for the treatment of AMD,
which may be first to market.

Employees

         As of March 15, 1999, we employed 171 individuals,  approximately 88 of
which were engaged in research and development, 40 were engaged in manufacturing
and clinical  activities  and 43 in general and  administrative  activities.  We
believe  that  our  relationship  with  our  employees  is good  and none of the
employees are represented by a labor union.

Risk Factors


         This Annual  Report on Form 10-K contains  forward-looking  statements,
which involve known and unknown risks and uncertainties. These statements relate
to our future plans, objectives,  expectations and intentions.  These statements
may be  identified  by the  use  of  words  such  as  "expects,"  "anticipates,"
"intends,"  "plans" and similar  expressions.  Our actual  results  could differ
materially  from those discussed in these  statements.  The factors listed below
are not intended to represent a complete  list of the general or specific  risks
that may affect us. It should be recognized that other risks may be significant,
presently  or in the  future,  and the risks set forth  below may affect us to a
greater extent than indicated.


Early Stage of the Company and its Products

         Our business is at an early stage of development. No revenues have been
generated from sales of our drugs and only limited  revenues have been generated
from sales of our  devices.  We do not expect to achieve  significant  levels of
revenues for at least several years.  Our revenues to date have  consisted,  and
for the  foreseeable  future are  expected  to  consist,  principally  of grants
awarded,   payments  for  our  devices,   license  fees,   royalties,   clinical
reimbursements,  milestone payments and interest income. Our ability to generate
significant revenues in the future is dependent upon:

         o    Successfully completing our research or product development 
              efforts or those of our collaborative partners; 

         o    Successfully  transforming our drugs or devices currently under 
              development into marketable  products;  

         o    Obtaining the required regulatory  approvals;  

         o    Manufacturing  our products at an acceptable cost and with 
              appropriate quality;

         o    Favorable acceptance of any products marketed; and 

         o    Successful marketing and sales efforts of our corporate 
              partner(s).

         We may not be successful  in achieving any of the above,  and if we are
not successful, our business, financial condition and operating results could be
adversely  affected.  The time frame  necessary  to achieve  these goals for any
individual  product is long and uncertain.  Most of our products currently under
development  will require  significant  additional  research and development and
preclinical  studies  and  clinical  trials,  and all  will  require  regulatory
approval  prior to  commercialization.  The  likelihood  of our success  must be
considered  in  light of  these  and  other  problems,  expenses,  difficulties,
complications and delays.

Unproven Safety and Efficacy; Clinical Trials

         All of our drug and device products  currently under  development  will
require  extensive  preclinical  studies and clinical trials prior to regulatory
approval for  commercial  use. None of our products have  completed  testing for
efficacy  or safety in humans.  Some of the risks and  uncertainties  related to
safety and  efficacy  testing  and the  completion  of  preclinical  studies and
clinical trials include:

         o    Our ability to demonstrate to the FDA that SnET2 or any other of 
              our products is safe and efficacious;

         o    Our ability to successfully  commence and complete the testing for
              any of our compounds  within any specified time period, if at all;

         o    Clinical data reported may change as a result of the continuing 
              evaluation of patients;

         o    Data obtained  from  preclinical  studies and clinical  trials are
              subject  to  varying  interpretations  which can  delay,  limit or
              prevent approval by the FDA or other regulatory authorities;

         o    Problems  in  research  and  development,  preclinical  studies or
              clinical  trials  that will  cause us to delay,  suspend or cancel
              clinical trials; and

         o    As a result of changing  economic  considerations,  competitive or
              new  technological  developments,  market  approvals  or  changes,
              clinical or regulatory conditions,  or clinical trial results, our
              focus may shift to other  indications,  or we may determine not to
              further  pursue  one or more of the  indications  currently  being
              pursued.

         To date, we have limited  experience in conducting  clinical trials. We
will either need to rely on third parties, including our collaborative partners,
to design and conduct any required  clinical trials or expend  resources to hire
additional   personnel  or  engage  outside  consultants  or  contract  research
organizations  to  administer  the clinical  trials.  We may not be able to find
appropriate  third parties to design and conduct  clinical  trials or we may not
have the resources to administer clinical trials in-house.

Reliance on Collaborative Partners

         We   have  entered  into   collaborative  relationships   with  certain
corporations  and  academic  institutions  for  the  research   and development,
preclinical  studies and clinical  trials,  licensing,  manufacturing, sales and
distribution  of our  products.  These collaborative relationships include:

         o    In 1995, we entered into a collaborative  agreement with Pharmacia
              & Upjohn,  which was subsequently  amended in 1996, 1998 and 1999,
              pursuant to which we granted to  Pharmacia  & Upjohn an  exclusive
              worldwide   license  to  use,   distribute   and  sell  SnET2  for
              therapeutic or diagnostic applications in photodynamic therapy for
              ophthalmology, oncology and urology;

         o    Collaborations  with Boston  Scientific and Cordis for the  
              co-development  of catheters for use in photodynamic therapy; 

         o    Collaborations with Medicis for the clinical development of 
              PhotoPoint in dermatology;  

         o    Collaborations with Chiron for the early  detection and  treatment
              of lung cancer;  

         o    Collaborations  with Iridex,  Ramus and Xillix for the development
              of devices for use in photodynamic therapy in the fields of
              ophthalmology,  cardiovascular disease and oncology, respectively;
              and
  
         o    Collaborations  with Fresenius for final drug formulation and drug
              product supply.

         The amount of royalty revenues and other payments,  if any,  ultimately
paid by Pharmacia & Upjohn globally to Miravant for sales of SnET2 is dependent,
in part,  on the amount and timing of  resources  Pharmacia & Upjohn  commits to
research and  development,  clinical  testing and  regulatory  and marketing and
sales  activities,  which are entirely within the control of Pharmacia & Upjohn.
Pharmacia & Upjohn may not pursue the development and commercialization of SnET2
and/or may not  perform  its  obligations  as  expected.  Also,  we have not yet
entered into any definitive  collaborative  agreements  with Boston  Scientific,
Cordis,  Medicis or Chiron. These collaborations may not culminate in definitive
collaborative agreements or marketable products. Additionally, Iridex, Ramus and
Xillix may not  continue  the  development  of devices  for use in  photodynamic
therapy, or such development may not result in marketable products.

         We are currently at various stages of discussions  with other companies
regarding  the   establishment  of   collaborations.   Our  current  and  future
collaborations  are  important  to us because  they  allow us greater  access to
funds, to research, development or testing resources and to manufacturing, sales
or  distribution  resources  that we would  otherwise  not  have.  We  intend to
continue  to rely on such  collaborative  arrangements.  Some of the  risks  and
uncertainties related to the reliance on collaborations include:

         o    Our ability to negotiate acceptable collaborative arrangements;

         o    Future or existing collaborative arrangements may not be 
              successful or may not result in products that are marketed or 
              sold; 

         o    Such collaborative relationships may  limit  or  restrict  us; 

         o    Collaborative  partners  are  free  to  pursue alternative  
              technologies  or  products  either  on  their  own or with others,
              including our competitors, for the diseases targeted by our
              programs and products;

         o    Our partners may terminate the relationships  described above, and
              we may be required to seek other partners,  or expend  substantial
              additional  resources  to pursue these  activities  independently.
              These efforts may not be successful; and

         o    Our ability to manage,  interact and  coordinate our timelines and
              objectives with our strategic partners.

Competition and Technological Uncertainty

         Many of our competitors have substantially greater financial, technical
and  human  resources  than  we do,  and may  also  have  substantially  greater
experience in developing  products,  conducting  preclinical studies or clinical
trials, obtaining regulatory approvals and manufacturing and marketing. Further,
our  competitive   position  could  be  materially  adversely  affected  by  the
establishment of patent protection by our competitors.  The existing competitors
or other companies may succeed in developing  technologies and products that are
more safe,  effective  or  affordable  than those being  developed by us or that
would render our technology and products less competitive or obsolete.

Liability or Recall

         The use of our products in clinical trials and the sale of our products
may expose us to  liability  claims.  These  claims  could be made  directly  by
patients or consumers, or by companies,  institutions or others using or selling
our  products.  The  following  are some of the risks  related to liability  and
recall:

         o    We are subject to the inherent risk that a governmental  authority
              or  third  party  may  require  the  recall  of one or more of our
              products;

         o    We have not obtained liability  insurance that would cover a claim
              relating to the use or recall of our  products;  

         o    In the  absence of  liability  insurance,claims made against us or
              a product recall could have a material  adverse effecton us; 

         o    If we obtain insurance coverage in the future, this coverage may 
              not beavailable at a reasonable cost and in amounts sufficient  to
              protect us against  claims  that could have a  material  adverse 
              effect on our  financial  condition  and prospects; and

         o    Liability  claims  relating to our  products  or a product  recall
              could  negatively   effect  our  ability  to  obtain  or  maintain
              regulatory approval for our products.

         We have  agreed to  indemnify  certain  of our  collaborative  partners
against certain  potential  liabilities  relating to the manufacture and sale of
SnET2 and PhotoPoint light devices.

Government Regulation

         The production  and marketing of our products and our ongoing  research
and development,  preclinical  studies and clinical trial activities are subject
to extensive regulation and review by numerous  governmental  authorities in the
United  States,  including the FDA, and in other  countries.  All drugs and most
medical  devices  we develop  must  undergo  rigorous  preclinical  studies  and
clinical trials and an extensive regulatory approval process administered by the
FDA under the FDC Act, and comparable  foreign  authorities,  before they can be
marketed.  These  processes  involve  substantial  cost and can often  take many
years.  We have  limited  experience  in, and limited  resources  available  for
regulatory  activities.   Failure  to  comply  with  the  applicable  regulatory
requirements  can, among other things,  result in  non-approval,  suspensions of
regulatory   approvals,   fines,   product   seizures  and  recalls,   operating
restrictions, injunctions and criminal prosecution. To date, none of our product
candidates  being  developed  have  been  submitted  for  approval  or have been
approved by the FDA or any other regulatory authority for marketing. Some of the
risks and uncertainties include:

         o    Delays in  obtaining  approval  or  rejections  due to  regulatory
              review  of  each   submitted  new  drug,   device  or  combination
              drug/device application or product license application, as well as
              changes  in  regulatory   policy  during  the  period  of  product
              development;

         o    If regulatory approval of a product is granted,  such approval may
              entail  limitations  on the  uses for  which  the  product  may be
              marketed;

         o    If regulatory approval is obtained,  the product, our manufacturer
              and the  manufacturing  facilities are subject to continual review
              and periodic inspections;

         o    If  regulatory   approval  is  obtained,   such  approval  may  be
              conditional  on the  satisfaction  of the  completion  of clinical
              trials or require additional clinical trials;

         o    Later  discovery of  previously  unknown  problems with a product,
              manufacturer  or  facility  may  result  in  restrictions  on such
              product or manufacturer,  including withdrawal of the product from
              the market and litigation; and

         o    Photodynamic  therapy products have been categorized by the FDA as
              combination drug-device products. If current or future drug/device
              products do not continue to be categorized for regulatory purposes
              as combination products, then:

                    o  The FDA may require separate drug and device submissions;
                       and 

                    o  The FDA may require separate approval by regulatory 
                       authorities.

         Internationally,  beginning in 1995, a new regulatory system to approve
drug market  registration  applications  was  implemented  in the EU. The system
provides for new centralized, decentralized and national registration procedures
through which a company may obtain drug marketing registrations. The centralized
procedure  allows for expedited  review and approval of  biotechnology  and high
technology/innovative  product marketing applications by a central Committee for
Proprietary Medicinal Products. The decentralized  procedure allows a company to
petition   individual  EU  member  states  to  review  and  recognize  a  market
application  previously approved in one member state by the national route. Some
of the international risks and uncertainties include:

         o    Foreign regulatory  requirements  governing testing,  development,
              marketing,  licensing,  pricing and/or  distribution  of drugs and
              devices in other countries;

         o    Our drug  products  may not  qualify  for the  centralized  review
              procedure  or we may not be  able  to  obtain  a  national  market
              application that will be accepted by other EU member states;

         o    Our  devices  must  also  meet the new  Medical  Device  Directive
              effective  in  Europe in 1998.  The  Directive  requires  that our
              manufacturing   quality  assurance  systems  and  compliance  with
              technical  essential  requirements  be  certified  with a CE  Mark
              authorized  by a  registered  notified  body of an EU member state
              prior to free sale in the EU; and

         o    Registration  and approval of a  photodynamic  therapy  product in
              other countries,  such as Japan, may include additional procedures
              and  requirements,  nonclinical  and  clinical  studies,  and  may
              require the assistance of native corporate partners.

Other Laws; Future Legislation or Regulations

         In addition to the  regulations  for drug or device  approvals,  we are
subject to regulation under state,  federal or other law, including  regulations
for worker occupational safety,  laboratory practices,  environmental protection
and hazardous  substance  control.  We continue to make capital and  operational
expenditures  for  protection  of the  environment  in  amounts  which  are  not
material.  Some of the  risks  and  uncertainties  related  to laws  and  future
legislation or regulations include:

         o    Our future capital and operational expenditures may increase and 
              become material;

         o    We may also be subject to other present and possible future local,
              state, federal and foreign regulation;

         o    Heightened  public awareness and concerns  regarding the growth in
              overall health care  expenditures  in the United States,  combined
              with the continuing efforts of governmental authorities to contain
              or reduce  costs of health  care,  may result in the  enactment of
              national  health care reform or other  legislation  or regulations
              that  impose  limits on the number and type of medical  procedures
              which may be performed or which have the effect of  restricting  a
              physician's ability to select specific products for use in certain
              procedures;

         o    Such new  legislation  or  regulations  may  materially  adversely
              affect the demand for our products.  In the United  States,  there
              have been,  and we expect that there will continue to be, a number
              of federal and state  legislative  proposals  and  regulations  to
              implement  greater   governmental   control  in  the  health  care
              industry;

         o    The  announcement of such proposals may materially  adversely  
              affect our ability to raise capital or to form  collaborations;
              and

         o    Legislation or regulations  that impose  restrictions on the price
              that may be charged  for health care  products or medical  devices
              may adversely affect our results of operations.

         We are unable to predict the likelihood of adverse  effects which might
arise from future  legislative or  administrative  action,  either in the United
States or abroad.

Health Care Reimbursement

         Our products may not be covered by the various  health care  providers.
If they are not  covered,  our  products  may or may not be purchased or sold as
expected.  Our ability to commercialize our products successfully may depend, in
part,  on the  extent to which  reimbursement  for these  products  and  related
treatment  will be available  from  collaborative  partners,  government  health
administration  authorities,  private health insurers, managed care entities and
other  organizations.  These payers are  increasingly  challenging  the price of
medical products and services and establishing protocols and formularies,  which
effectively  limit  physicians'  ability  to  select  products  and  procedures.
Uncertainty  exists  as to the  reimbursement  status of  health  care  products
(especially innovative technologies).  Additionally,  reimbursement coverage, if
available,  may not be adequate to enable us to achieve market acceptance of our
products  or  to  maintain  price  levels   sufficient  for  realization  of  an
appropriate return on our products.

Limited Manufacturing and Marketing Capability and Experience

         To be  successful,  our products  must be  manufactured  in  commercial
quantities  under current GMP,  prescribed  by the FDA and at acceptable  costs.
Although  we  intend  to  manufacture  drugs  and  devices,   we  have  not  yet
manufactured  any  products  in  commercial  quantities  under  GMP and  have no
experience in such commercial manufacturing.  We currently have the capacity, in
conjunction with our  manufacturing  partners  Pharmacia & Upjohn and Iridex, to
manufacture products at certain commercial levels and will be able to do so upon
FDA approval.  If we receive an FDA or other regulatory  approval we may need to
expand  our  manufacturing  capabilities  and/or  depend  on our  collaborators,
licensees or contract  manufacturers for the expanded commercial  manufacture of
our  products.  If we expand  our  manufacturing  capabilities,  we will need to
expend substantial funds, hire and retain significant  additional  personnel and
comply with extensive regulations.  We may not be able to expand successfully or
we may be unable to manufacture products in increased commercial  quantities for
sale at  competitive  prices.  Further,  we may not be able to enter into future
manufacturing   arrangements   with   collaborators,   licensees,   or  contract
manufacturers  on  acceptable  terms or at all. If we are not able to expand our
manufacturing  capabilities  or enter into additional  commercial  manufacturing
agreements,  our business  growth could be limited and could be  materially  and
adversely affected.

         We have  limited  experience  in  marketing,  distributing  and selling
pharmaceutical or medical device products. We will need to develop a sales force
or rely on our  collaborators or licensees or make  arrangements  with others to
provide  for  the  marketing,  distribution  and  sale of our  products.  We are
currently  relying  on  Pharmacia  & Upjohn  and  Iridex  for these  needs.  Our
marketing, distribution and sales capabilities or current or future arrangements
with third parties for such  activities  may not be adequate for the  successful
commercialization of our products.

Uncertainty Regarding Patents and Proprietary Technology

         Our success will depend, in part, on our and our licensors'  ability to
obtain, assert and defend our patents, protect trade secrets and operate without
infringing the proprietary  rights of others.  The exclusive license relating to
various drug compounds,  including our leading drug candidate  SnET2, may become
non-exclusive  if we fail to satisfy certain  development and  commercialization
objectives.  The  termination  or  restriction of our rights under this or other
licenses for any reason would likely have a material  adverse  impact on the our
business  and  financial  condition.  Although  we  believe we should be able to
achieve such objectives, we may not be successful.

         The  patent  position  of  pharmaceutical   and  medical  device  firms
generally is highly uncertain. Some of the risks and uncertainties include:

         o    The patent  applications owned by or licensed to us may not result
              in issued patents; 

         o    Our issued patents may not provide us with proprietary  protection
              or competitive  advantages;  

         o    Our issued patents may be infringed  upon or  designed  around  by
              others;  

         o    Our issued  patents may be challenged by others and held to be 
              invalid  or  unenforceable;  and

         o    The  patents of others may have a material adverse effect on us.

         We are aware that our  competitors  and others have been issued patents
relating to photodynamic  therapy.  In addition,  our competitors and others may
have  been  issued  patents  or  filed  patent  applications  relating  to other
potentially  competitive  products  of  which  we are not  aware.  Further,  our
competitors  and others may in the future file  applications  for, or  otherwise
obtain proprietary  rights to, such products.  These existing or future patents,
applications  or rights  may  conflict  with our or our  licensors'  patents  or
applications.  Such  conflicts  could  result  in a  rejection  of  our  or  our
licensors'  applications or the  invalidation of the patents.  This could have a
material adverse effect on our competitive position. If such conflicts occur, or
if we believe that such products may infringe on our proprietary  rights, we may
pursue  litigation or other  proceedings,  or may be required to defend  against
such  litigation.   Such   proceedings  may  materially   adversely  affect  our
competitive  position,  and we may not be  successful  in any  such  proceeding.
Litigation and other proceedings can be expensive and time consuming, regardless
of  whether  we  prevail.  This  can  result  in the  diversion  of  substantial
financial,  managerial  and other  resources from other  activities.  An adverse
outcome could subject us to significant  liabilities to third parties or require
us to cease any related  research and  development  activities or product sales.
Some of the risks and uncertainties include:

         o    We do not have contractual indemnification rights against the 
              licensors of the various drug patents; 

         o    We may be required to obtain licenses under  dominating or
              conflicting  patents or other  proprietary  rights of others; 

         o    Such licenses may not be made  available on terms  acceptable to 
              us, if at all; and 

         o    If we do not  obtain  such  licenses,  we could  encounter  delays
              or could find that the development, manufacture or sale of
              products requiring such licenses is foreclosed.

         We also seek to protect our  proprietary  technology  and  processes in
part by confidentiality  agreements with our collaborative  partners,  employees
and consultants. These agreements could be breached and we may not have adequate
remedies  for any  breach.  Also,  our  trade  secrets  may  become  known or be
independently discovered by competitors. Certain research activities relating to
the  development of certain  patents owned by or licensed to us were funded,  in
part,  by  agencies  of the United  States  Government.  When the United  States
Government  participates in research activities,  it retains certain rights that
include the right to use the resulting  patents for government  purposes under a
royalty-free license.

         We also rely upon  unpatented  trade  secrets,  and no assurance can be
given  that  others  will not  independently  develop  substantially  equivalent
proprietary  information and  techniques,  or otherwise gain access to our trade
secrets or disclose such  technology,  or that we can  meaningfully  protect its
rights to its unpatented trade secrets and know-how.

Dependence upon Key Personnel and Consultants

         Our  success  will  depend in large part on our  ability to attract and
retain  highly  qualified  scientific,  management  and other  personnel  and to
develop and  maintain  relationships  with  leading  research  institutions  and
consultants.  We are highly dependent upon principal  members of our management,
key employees, scientific staff and consultants which we may retain from time to
time.  Competition for such personnel and  relationships is intense,  and we may
not be able to continue to attract and retain such  personnel.  Our  consultants
may be  affiliated with or employed by others, and some have consulting or other
advisory  arrangements  with other  entities  that may  conflict or compete with
their obligations to us. Inventions or processes discovered by such persons will
not necessarily  become our property and may remain the property of such persons
or others.

Dependence upon Suppliers

         We depend on outside suppliers for certain raw materials and components
for our  products.  Such raw  materials  or  components  may not  continue to be
available to our standards or on acceptable  terms,  if at all, and  alternative
suppliers may not be available to us on acceptable terms, if at all. Further, we
may not be able to adequately  produce needed materials or components  in-house.
We are  currently  dependent on single,  contracted  sources for a couple of key
materials or services used by us in our drug  development,  light  producing and
light delivery device  development and production  operations.  Although most of
our raw materials and  components  are available  from various  sources,  we are
currently developing qualified backup suppliers for each of these resources.  We
have or will enter into agreements with these suppliers, which may or may not be
successful or which may encounter delays or other problems, which may materially
adversely affect our business.

Environmental Matters

         We are subject to federal, state, county and local laws and regulations
relating to the protection of the environment. In the course of our business, we
are  involved in the  handling,  storage  and  disposal  of  materials  that are
classified  as  hazardous.  Our safety  procedures  for  handling,  storage  and
disposal of such  materials  are  designed to comply  with  applicable  laws and
regulations.  However,  we may be involved in contamination or injury from these
materials.  If this occurs, we could be held liable for any damages that result,
and any such liability could  materially and adversely  affect us. Further,  the
cost of complying with these laws and regulations may increase materially in the
future.

Year 2000

         The Year 2000 issue is the result of computer  programs  being  written
using two digits rather than four to define the  applicable  year.  Our computer
equipment   and  software  and  devices  with  embedded   technology   that  are
time-sensitive  may recognize a date using "00" as the year 1900 rather than the
year 2000.  This could  result in a system  failure or  miscalculations  causing
disruptions of operations, such as:

         o    A temporary  inability to process accounting,  payroll,  database,
              network  and  software   transactions;   

         o    Possible disruption of environmental, lighting, security  controls
              and other  corporate equipment;

         o    A temporary  inability to process  clinical and preclincal testing
              and data; and

         o    Loss of  telephone  and related  voicemail  and internet messages,
              in addition to other similar normal business activities.

         We have  undertaken  various  initiatives  intended  to ensure that our
computer  equipment and software will function properly with respect to dates in
the Year  2000  and  thereafter.  The term  "computer  equipment  and  software"
includes  systems that are commonly  thought of as Information  Technology or IT
systems,  including  accounting,  data processing and telephone/PBX  systems and
other  miscellaneous  systems.  It also  includes  systems that are not commonly
thought of as IT systems, such as alarm systems, fax machines,  air conditioning
units, internally developed software and other miscellaneous systems. Based upon
our efforts to date,  we believe  that  certain of the  computer  equipment  and
software we use may require replacement or modification. Utilizing both internal
and external  resources to identify and assess needed Year 2000 remediation,  we
currently anticipate that our Year 2000 identification,  assessment, remediation
and testing efforts, which began in February 1998, will be completed by June 30,
1999. We estimate  that as of December 31, 1998, we had completed  approximately
60% of the  initiatives  that we  believe  will be  necessary  to fully  address
potential  Year 2000 issues  relating to our  computer  equipment  software  and
non-IT systems. The projects comprising the remaining 40% of the initiatives are
in process  and are  expected to be  completed  on or about June 30,  1999.  The
following table describes the Year 2000  initiatives as well as our progress and
the anticipated completion dates as of December 31, 1998:

<TABLE>
<CAPTION>


                                                                                Expected
Year 2000 Initiatives                                                           Completion          Percent
                                                                                Date                Complete
                                                                                ----------          --------
<S>                                                                             <C>                 <C>     
     Initial IT system identification......................................     10/98               100%
     Initial IT system assessment..........................................     11/98               100%
     Remediation regarding central system issues...........................      6/99                60%
     Testing regarding central system issues...............................      6/99                10%
     Identification, assessment, remediation and testing regarding desktop
       and individual system issues........................................      6/99                60%
     Identification regarding non-IT system issues.........................     10/98               100%
     Assessment regarding non-IT system issues.............................     11/98               100%
     Remediation regarding non-IT system issues............................      6/99                60%
     Testing regarding non-IT system issues................................      6/99                10%
</TABLE>

     

         We are in the process of communicating with our significant vendors and
service  providers  and  strategic  partners  to  determine  the extent to which
interfaces with such entities are vulnerable to Year 2000 issues and whether the
products and services  utilized by such entities are Year 2000  compliant.  This
process is expected to be completed in May 1999.

         We  believe  that the cost of our Year 2000  efforts,  as well as those
costs related to Year 2000 issues of third parties,  are expected to approximate
$250,000.  As of December  31, 1998,  we had not  incurred  any  external  costs
related to our Year 2000 efforts.  Other  non-Year 2000 IT efforts have not been
materially  delayed or impacted by Year 2000  initiatives.  We presently believe
that the Year 2000 issue will not pose significant  operational problems for us.
However,  if all Year 2000  issues are not  properly  identified,  the Year 2000
issue may  materially  adversely  impact our results of  operations or adversely
affect our relationships with vendors,  or others.  Additionally,  the Year 2000
issues of other  entities may have a material  adverse  impact on our systems or
results of operations.

Volatility of Stock Price

         The market prices for our Common Stock,  and the securities of emerging
pharmaceutical  and medical  device  companies,  have  historically  been highly
volatile and subject to extreme  price  fluctuations,  which may have a material
adverse  effect  on  the  market  price  of  the  Common  Stock.  Extreme  price
fluctuations could be the result of the following:

         o    Future announcements concerning Miravant or our collaborators,  
              competitors or industry;  

         o    The  results  of  our  testing,  technological  innovations or new
              commercial  products; 

         o    The  achievement  of or  failure  to  achieve  certain milestones;
              and

         o    Governmental  regulations,  rules and orders, or developments
              concerning safety of our products.

         In addition,  the stock market has experienced extreme price and volume
fluctuations.  This volatility has  significantly  affected the market prices of
securities  of many emerging  pharmaceutical  and medical  device  companies for
reasons  frequently  unrelated or  disproportionate  to the  performance  of the
specific  companies.  These broad market  fluctuations may materially  adversely
affect the market price of the Common Stock.

ITEM 2.  PROPERTIES

         We have entered into four leases for approximately  101,050 square feet
of  office,  laboratory  and  potential  manufacturing  space in Santa  Barbara,
California.  The first lease for  approximately  18,900 square feet of space was
entered  into in 1992 and the base rent for  1998,  which is  adjusted  annually
based on  increases in the consumer  price  index,  was $24,400 per month.  This
lease was  extended in March 1999 and expires in October  2003.  The facility is
equipped and licensed to allow certain laboratory testing and manufacturing.  We
manufacture and distribute our active SnET2 drug substance from this facility.

         In the second half of 1996, we entered into two  additional  leases for
approximately 54,800 square feet of office,  laboratory and manufacturing space.
Each lease  provides for rent to be adjusted  annually based on increases in the
consumer price index and the total rent for both leases was $64,700 per month in
1998.  These leases were extended in March 1999 and expire in August 2002.  Each
leased  property is located in a business  park and is subject to a master lease
agreement.  We manufacture  our light  producing and light delivery  devices and
perform  research and  development of drugs,  light delivery and light producing
devices from these facilities.

         In  July  1998,   we  entered  into  a  fourth  lease   agreement   for
approximately  27,400 square feet of primarily  office  space.  The current base
rent for this lease is $34,200 per month.  The lease expires in October 2003 and
provides  for rent to be adjusted  annually  based on  increases in the consumer
price index.  The lease also allows us the ability to sublet all or a portion of
the property and it is management's  intention to sublet this space during 1999.
The leased  property is located in a business  park where our  headquarters  are
located and is subject to a master lease agreement.

         For each of the four  facilities  noted above, we may continue to incur
additional  costs for the  construction of the  manufacturing,  laboratories and
office space associated with these facilities.

         During 1997, we entered into a letter of intent with a local  developer
to have a  facility  constructed  to house our  operations  for the  foreseeable
future. We continue to work with the developer with the expected completion date
in 2001. Depending on our future needs and financial  capabilities we may or may
not continue this project.

         In September  1997, the Company began to sublease  approximately  3,900
square feet of one of its buildings to Ramus Medical Technologies.  The sublease
agreement  is for three  years  with rent based  upon the  percentage  of square
footage occupied.  Rental income from Ramus,  which is approximately  $4,500 per
month, is also subject to increases based upon the consumer price index.

ITEM 3.  LEGAL PROCEEDINGS

         We are not currently party to any material litigation or proceeding and
are not aware of any material litigation or proceeding threatened against us.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters  were  submitted  to a vote of security  holders  during the
fourth quarter of 1998.



                                     PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS

         Our Common  Stock is traded on The  Nasdaq  National  Market  under the
symbol MRVT. From August 30, 1995 to September 12, 1997, our Stock was traded on
The Nasdaq National Market under the symbol PDTI.  Effective September 15, 1997,
we changed our name to Miravant  Medical  Technologies  and our ticker symbol to
MRVT.  The  following  table sets  forth high and low sales  prices per share of
Common  Stock as  reported  on The Nasdaq  National  Market  based on  published
financial sources.
<TABLE>
<CAPTION>

                                                                                                          High        Low
                                                                                                          ----        ---
1998:
<S>                                                                                                       <C>         <C>    

   First quarter..................................................................................        $39.00     $28.56
   Second quarter.................................................................................         36.00      21.88
   Third quarter..................................................................................         28.75       4.69
   Fourth quarter.................................................................................         17.69       6.13
1997:
   First quarter..................................................................................        $37.25     $25.50
   Second quarter.................................................................................         36.75      22.75
   Third quarter..................................................................................         60.75      34.00
   Fourth quarter.................................................................................         72.00      30.50
</TABLE>


         As of March 15, 1999,  there  were  approximately  306  stockholders of
record of the Common Stock.  Except for the three  for two split of  the  Common
Stock declared for  stockholders  of record at July 24, 1995, we have never paid
dividends,  cash or otherwise, on our capital stock and do not anticipate paying
any  dividends  in the  foreseeable  future.    We  currently  intend  to retain
future earnings, if any, to finance the growth and  development of our business.
Any future determination to pay dividends will be at the discretion of the Board
of Directors and will be dependent  upon  our financial  condition,  results  of
operations,  capital  requirements  and  such other  factors  as  the  Board  of
Directors  deems  relevant.    Our  credit  agreement  with  Pharmacia  & Upjohn
prohibits the payment of dividends on the Common Stock.



ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

         In the table  below, we provide  you with summary  historical financial
data of  Miravant  Medical  Technologies.  We  have  prepared  this  information
using  the  consolidated  financial  statements of Miravant  for  the five years
ended  December 31, 1998.  The financial  statements  for  the five fiscal years
ended December 31, 1998 have been audited by Ernst & Young LLP.

         When  you  read  this  summary  of  historical  financial  data,  it is
important  that you read along with it the  historical  statements  and  related
notes in our annual and  quarterly  reports  filed with the SEC,  as well as the
section of our annual and quarterly reports titled "Management's  Discussion and
Analysis of Financial Condition and Results of Operations".

<TABLE>
<CAPTION>


                                                                  Year Ended December 31,
                                    ----------------------------------------------------------------------------------
                                                      (in thousands, except share and per share data)
                                          1998             1997             1996            1995             1994
                                    ---------------  --------------- ---------------  ---------------  ---------------
<S>                                 <C>              <C>             <C>              <C>              <C>    
Statement of Operations Data:

Revenues .......................      $     10,179    $       2,278   $     3,598      $      521       $       130           
Costs and expenses..............            41,788           35,065        22,113          12,416             9,350             
                                    ---------------  --------------- ---------------  ---------------  --------------
Loss from operations............           (31,609)         (32,787)      (18,515)        (11,895)           (9,220)
Net interest income (expense) ..             3,545            2,578         2,373             185              (259)   
                                    ---------------  --------------- ---------------  ---------------  ---------------
Net loss........................      $    (28,064)   $     (30,209)  $   (16,142)     $  (11,710)      $    (9,479)
                                    ===============  =============== ===============  ===============  ===============
Net loss per share (1) .........      $      (1.94)   $       (2.36)  $     (1.37)     $    (1.19)      $     (1.04)
                                    ===============  =============== ===============  ===============  ===============
Shares used in computing net
   loss per share (1) ..........        14,464,044       12,791,044    11,786,429       9,861,212         9,115,926 
                                    ===============  =============== ===============  ===============  ===============
</TABLE>


<TABLE>
<CAPTION>


                                                                        December 31,
                                    ----------------------------------------------------------------------------------
                                          1998             1997             1996            1995             1994
                                       ------------     ------------     -----------     ------------     ------------
<S>                                    <C>              <C>              <C>             <C>              <C>   

Balance Sheet Data:
Cash and marketable securities (2).    $   11,284       $   83,462       $   52,098      $   8,886        $   1,483    
Working capital....................        11,134           80,734           51,519          6,403             (882)       
Total assets.......................        23,810           93,031           59,886         11,259            3,545
Long-term obligations .............            --               --               21            203              778   
Accumulated deficit................      (108,918)         (80,854)         (50,645)       (34,503)         (22,793)
Total shareholders' equity.........        19,686           87,698           56,717          8,167              150
-----------

(1)See Note 1 of Notes to Consolidated Financial Statements for information concerning the computation of net loss per share.
(2)See Note 3, 11 and 12 of Notes to Consolidated Financial Statements for information concerning the changes in cash and
   marketable securities.

</TABLE>



ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The  following  discussion  should  be read  in  conjunction  with  the
Consolidated Financial Statements and Notes thereto.

General

         Since our inception,  we have been principally  engaged in the research
and development of drugs and medical device products for use in PhotoPoint,  our
proprietary  technologies for photodynamic  therapy.  We have been  unprofitable
since our founding  and have  incurred a  cumulative  net loss of  approximately
$108.9  million  as of  December  31,  1998.  We  expect  to  continue  to incur
substantial,  and  possibly  increasing,  operating  losses for the next several
years due to  continued  and  increased  spending  on research  and  development
programs,  the funding  of preclinical studies,  clinical trials and  regulatory
activities and the costs of manufacturing and administrative activities.

         Our revenues primarily reflect income earned from licensing agreements,
grants and royalties  from device  product  sales.  To date, we have received no
revenue from the sale of drug  products,  and we are not  permitted to engage in
commercial  sales of drugs or devices  until such time,  if ever,  as we receive
requisite  regulatory  approvals.  As a  result,  we do  not  expect  to  record
significant product sales until such approvals are received.

         Until we commercialize  our product(s),  we expect revenues to continue
to be  attributable  to licensing  agreements,  grants and royalties from device
product sales.  We anticipate that future revenues and results of operations may
continue to  fluctuate  significantly  depending  on, among other  factors,  the
timing and outcome of  applications  for  regulatory  approvals,  our ability to
successfully  manufacture,  market and  distribute  our drug products and device
products and/or the restructuring or establishment of collaborative arrangements
for the  manufacturing,  marketing and distribution of some of our products.  We
anticipate our operating  activities  will result in substantial  net losses for
several more years.

         In June 1998, we amended the development and funding  provisions of our
previously  executed 1995 SnET2 license agreements with Pharmacia & Upjohn, Inc.
and some of its  subsidiaries,  which  together  are  referred to as Pharmacia &
Upjohn in this report.  Under the amended  ophthalmology  agreement,  we were to
conduct all preclinical studies and U.S. clinical trials and would be reimbursed
by Pharmacia & Upjohn for all out-of-pocket expenses incurred, provided that the
trials were conducted in accordance  with the agreement.  Pharmacia & Upjohn was
to conduct all international  clinical trials in ophthalmology.  We also amended
our  oncology,  urology and  dermatology  license  agreement to return to us the
rights for SnET2 in  dermatology  and to provide for the funding of $2.5 million
in quarterly amounts for use in our oncology and urology programs. Subsequently,
in January 1999, we entered into an Equity Investment  Agreement,  which amended
the June 1998  ophthalmology,  oncology and urology  agreements with Pharmacia &
Upjohn.  Under this 1999 agreement,  Pharmacia & Upjohn has purchased  1,136,533
shares of our Common Stock for an  aggregate  purchase  price of $19.0  million,
which  represents the  acceleration of the remaining six $2.5 million  quarterly
payments and two future milestone payments for age-related macular degeneration,
or AMD,  under  the  amended  June 1998  license  agreements.  Under a  separate
agreement,  Pharmacia  & Upjohn  will also  extend to us up to $22.5  million in
credit in the form of six  quarterly  loans of $3.75  million each to be used to
support our ophthalmology,  oncology and other development programs,  as well as
for general corporate  purposes,  which are subject  to certain  limitations and
requirements.

         During  the  third  quarter  of 1998  and in  connection  with the 1998
amendment  of  the  Pharmacia  &  Upjohn  agreements,   we  implemented  a  cost
restructuring  program  designed to focus our resources on our core  development
programs,  which  emphasizes  large  potential  market  opportunities  and unmet
medical  needs.  Additionally,  the  program  was  designed  to utilize the cost
reimbursement  components of the 1998 amended  Pharmacia & Upjohn  agreements as
well  as  streamline  administrative  activities,   reduce  overhead  costs  and
eliminate positions that were not central to our core development  programs.  We
will  continue   to  evaluate   the  use  of  our   resources  as  our   funding
provisions change and as opportunities present themselves.

         We  are   currently   conducting   clinical   trials  in  oncology  and
ophthalmology.  In dermatology,  we are investigating the development of topical
formulations  of our  photoselective  drugs.  Based  upon the  outcome  of these
studies  and  various   economic  and  development   factors,   including  cost,
reimbursement and the available alternative  therapies,  we may or may not elect
to further develop PhotoPoint procedures in oncology, ophthalmology, dermatology
or in any other indications.

         We have awarded,  and may award in the future,  stock options that vest
upon the achievement of certain  milestones.  Under Accounting  Principals Board
Opinion No. 25, such options are accounted  for as variable  stock  options.  As
such,  until the  milestone is achieved  (but only after it is  determined to be
probable),  deferred  compensation  is  recorded  in  an  amount  equal  to  the
difference  between  the fair  market  value of the Common  Stock on the date of
determination  less the option  exercise  price and is  adjusted  from period to
period to  reflect  changes in the market  value of the Common  Stock.  Deferred
compensation,  as it relates to a particular  milestone,  is amortized  over the
period between when  achievement of the milestone  becomes probable and when the
milestone is estimated to be  achieved.  Amortization  of deferred  compensation
could result in significant  additional  compensation  expense being recorded in
future  periods  based on the market  value of the Common  Stock from  period to
period.

Results of Operations

         The  following  table  provides a summary of our revenues for the years
ended December 31, 1998, 1997 and 1996:

<TABLE>
<CAPTION>


 ---------------------------------------------------------------------------------------------------------------------------
 Consolidated Revenues                                                   1998               1997                1996
 ---------------------------------------------------------------------------------------------------------------------------
 <S>                                                                <C>                   <C>                <C>    

 Product sales ................................................     $        --           $     2,000           $     5,000   
 Grants........................................................         674,000               146,000               577,000
 Royalties.....................................................         191,000               234,000                73,000
 License.......................................................       9,314,000             1,896,000             2,943,000
 ---------------------------------------------------------------------------------------------------------------------------
 Total Revenues................................................     $10,179,000           $ 2,278,000           $ 3,598,000
 ---------------------------------------------------------------------------------------------------------------------------
                                                                   
</TABLE>



         Revenues.  Our revenues decreased from $3.6 million in 1996 to $2.3 
million in 1997 and increased to $10.2 million in 1998.

         The fluctuations in license income are due to the following:

         o    During 1998, we recorded  revenues for oncology  expenditures  of 
              $1.2  million  under  the  original  Pharmacia  &  Upjohn  license
              agreement and  $5.0 million  under the June 1998  amended  license
              agreement.  In 1997 and 1996,  revenues were $1.2 million and $2.3
              million, respectively.  The amounts were recorded for the specific
              reimbursement  of  oncology  clinical  program costs  during those
              years in metastatic breast cancer,  basal cell carcinoma, Kaposi's
              sarcoma and prostate cancer. These fluctuations  in  revenues  are
              based on the  timing of  specific  reimbursements and reimbursable
              costs  incurred  in  preclinical  studies and  clinical trials, as
              well as the structure of the payments received under the different
              oncology agreements.  In 1996,  1997 and the first two quarters of
              1998, we were reimbursed  for only  the  out-of-pocket  or  direct
              costs  incurred in these  programs.  In the last two  quarters  of
              1998,  under the  amended  agreement,  we  received  two quarterly
              payments  of  $2.5  million  each  which were  designed  to  cover
              both the direct and  indirect  costs of these programs.

         o    During 1998, we recorded revenues of $3.1 million for the specific
              reimbursement   for  out-of-pocket  or  direct costs  incurred  in
              preclinical  studies  and clinical  trials in  ophthalmology  from
              the  continuation of Phase I/II   clinical   trials  in  the first
              half  of  1998  and  the commencement  of our  Phase III  clinical
              trials in  the  second half of 1998.   During 1997 and  1996,   we
              recorded  revenues of $724,000 and   $636,000,   respectively, for
              expenditures   related  to preclinical   studies   and  Phase I/II
              clinical   trials  in ophthalmology.   The  revenues  recorded for
              ophthalmology  cost reimbursement  have continued and are expected
              to  continue to increase as we  progress through various stages of
              clinical trials.

         The fluctuations in grant income are due to the following:

         o    We were  awarded a one year  grant of  $904,000  in 1995 and a two
              year grant of $1.5 million in 1997.  Since the grant periods began
              October 1 of those years, we recorded nine and twelve months worth
              of grant revenue in 1996 and 1998, respectively. In 1996 and 1998,
              grant revenue amounted to $577,000 and $674,000,  respectively. In
              1997,  we recorded  only one  quarter's  worth of grant  income of
              $146,000.

         The fluctuations in royalty income are due to the following:

         o    We  earn  royalty  income  from  a  1992  license  agreement  with
              Laserscope, which provides royalties on the sale of our previously
              designed device products.  The  fluctuations in revenues  recorded
              are a function of the number of device products sold by Laserscope
              in each of the respective periods.

         The level of license,  grant and royalty  income is likely to fluctuate
materially  from period to period and in the future  depending  on the amount of
clinical costs incurred and/or reimbursed, the achievement of milestones and the
extent of development  activities  under the amended  Pharmacia & Upjohn license
agreements,  the amount of grant  income  awarded and expended and the amount of
device  products sold by Laserscope.  Under the 1999 amended  Pharmacia & Upjohn
license  agreements  for  ophthalmology,  oncology and urology,  we will only be
reimbursed for the specific costs for preclinical studies and clinical trials in
ophthalmology  and we will no longer be reimbursed  for any oncology and urology
program  costs,  as the  quarterly  reimbursement  payments for these costs were
accelerated  in connection  with the $19.0  million  equity  investment  made by
Pharmacia & Upjohn.  The  Laserscope  license  agreement will terminate in April
1999 and no further royalties are expected to be received.

         Cost of Goods  Sold.  Our cost of goods sold  decreased  from $5,000 in
1996 to $1,000 in 1997 and to zero in 1998.  The  decrease in cost of goods sold
from 1996  through 1998 is due to the  reduction in sales of our custom  devices
due to our decision to allocate our  manufacturing  resources to supporting  our
preclinical and clinical  programs.  We expect gross margins to be insignificant
until we commence commercial sales of our products.

         Research  and  Development.   Our  research  and  development  expenses
increased  from  $15.7  million  in 1996 to $19.1  million  in 1997 and to $27.5
million in 1998. The increase in research and development  expenses for the year
ended  December 31, 1998 compared to the year ended  December 31, 1997,  relates
primarily to:

         o    The costs associated with the screening,  treatment and monitoring
              of qualified individuals  participating in clinical trials for AMD
              and prostate cancer;

         o    The preparation of the documentation for clinical trials and 
              regulatory filings; and

         o    The preclinical  studies and development  work associated with the
              development of existing and new drug compounds,  formulations  and
              clinical programs.

         In addition,  research and development expenses continue to increase in
conjunction  with our  progression  through  the various  stages of  preclinical
studies and clinical trials and the increased costs associated with the purchase
of raw materials and supplies for the production of devices and drugs for use in
these studies and trials. The increase in research and development  expense from
1996 to 1997 is  consistent  with the above items,  except for that the clinical
trial costs were those incurred in clinical  programs in Phase II/III metastatic
breast cancer,  basal cell carcinoma and Kaposi's  sarcoma and in the Phase I/II
AMD   program.     Future  research  and  development  expenses  may   fluctuate
depending  on the  impact  of our  cost  restructuring  program  implemented  in
September   1998,  the  structure  of  any  future  or  existing   collaborative
agreements,  continued expenses incurred in our clinical trials in ophthalmology
and  oncology,  and  costs  associated  with  the  pharmaceutical  manufacturing
scale-up and expansion of our research and development programs,  which includes
the increased hiring of personnel and continued expansion of preclinical studies
and clinical trials.

         Selling,   General  and  Administrative.   Our  selling,   general  and
administrative  expenses increased from $6.4 million in 1996 to $14.9 million in
1997 and  decreased to $11.3 million in 1998.  The overall  decrease in selling,
general and  administrative  expenses  for the year ended  December  31, 1998 as
compared to the year ended  December 31, 1997 is primarily due to a $5.5 million
decrease in advertising  expenses.  Aside from the advertising expenses incurred
in 1997, selling,  general and administrative  expenses have increased from 1996
to 1998 due primarily to:

         o    An  increase  in  costs  associated  with  professional   services
              received  from  financial  consultants,  attorneys  and public and
              media relations;

         o    An increase in payroll and  overhead  costs due to the addition of
              administrative and corporate  personnel needed to support research
              and development and corporate activities; and

         o    An increase in  compensation  expense  associated with options and
              warrants  issued  to  consultants  and  expense  recorded  for the
              executive option loans.

         Future  selling,  general and  administrative  expenses are expected to
remain constant due to our September 1998 cost  restructuring  program,  but may
change due to the  increased  support  required  for  research  and  development
activities,   continuing  corporate   development  and  professional   services,
compensation  expense  associated  with stock options and warrants and financial
consultants and general corporate matters.

         Loss  in  Investment  in  Affiliate.  In  connection  with  our  equity
investment in Ramus Medical  Technologies,  or Ramus,  made in December 1996, we
recorded  $2.9 million as expense  related to Ramus for the year ended  December
31, 1998 as compared to $1.1 million for the year ended  December 31, 1997.  For
the year ended December 31, 1998, the $2.9 million loss consists  primarily of a
$1.8  million  reserve  for  funds  provided to Ramus in  1998  under the  Ramus
revolving credit agreement, as well as $895,000 related to our equity investment
in Ramus. The $1.1 million  in  expense  recorded  in 1997  represents  100%  of
Ramus' losses for fiscal 1997. While Ramus' losses from  operations are expected
to continue beyond 1998, we will not record any further  losses  associated with
Ramus'  operating losses as our  investment in Ramus has been completely reduced
to zero as of December 31, 1998.  As of December  31,  1998,  Ramus had  $250,00
available  to  borrow  on  their loan which, if borrowed, will be fully reserved
for.

         Interest and Other  Income.  Interest and other income  increased  from
$2.4 million in 1996 to $2.6  million in 1997 and to $3.5  million in 1998.  The
increase from 1996 to 1998 resulted  primarily  from the  investment of proceeds
received from our secondary public offering in April 1996 and our private equity
offerings in September and October 1997. The level of future  interest and other
income will  primarily be subject to the level of cash balances we maintain from
period to period.

         Interest  Expense.  Interest expense  decreased from $34,000 in 1996 to
$6,000 in 1997 and to $1,000 in 1998. The decrease in interest expense from 1996
through 1998 resulted  primarily from the conversion of our convertible notes to
Common  Stock  and  the   completion   of  payments   under  our  capital  lease
arrangements. The level of future interest expense will be subject to the amount
of borrowings under the Pharmacia & Upjohn Credit Agreement.

         As of December 31, 1998,  we had  approximately  $120.1  million of net
operating loss  carryforwards  for federal income tax purposes,  which expire at
various  dates  from  the  years  2002  through   2018.  In  addition,   we  had
approximately  $5.1 million of research and development and alternative  minimum
tax credit carryforwards  available for federal and state tax purposes.  We also
had a state net operating loss tax  carryforward  of $28.1 million which expires
at various dates from the years 1999 to 2003.  Under Section 382 of the Internal
Revenue Code, utilization of the net operating loss carryforwards may be limited
based on our changes in the percentage of ownership.  Our ability to utilize the
net operating loss carryforwards, without limitation, is uncertain.

         We do not  believe  that  inflation  has had a  material  impact on our
results of operations.

Liquidity and Capital Resources

         Since  inception  through  December 31,  1998,  we have  accumulated  a
deficit  of  approximately  $108.9  million  and  expect  to  continue  to incur
substantial,  and  possibly  increasing,  operating  losses for the next several
years. We have financed our operations  primarily through private  placements of
Common Stock and Preferred Stock,  private  placements of convertible  notes and
short-term notes, our initial public offering, Pharmacia & Upjohn's purchases of
Common Stock and a secondary public  offering.  As of December 31, 1998, we have
received  proceeds from the sale of equity  securities and convertible  notes of
approximately $181.5 million.

         In September  and October  1997,  we entered  into a private  placement
offering,  which was  subsequently  amended with respect to certain  purchasers,
which provided net proceeds to Miravant of approximately  $68.2 million.  During
1998, under the price protection and repurchase  provisions of these agreements,
we issued an additional  2,444,380 shares of Common Stock,  repurchased  337,500
shares of Common Stock for $16.9  million and paid $8.6  million.  Additionally,
during 1999, we completed our price protection  obligations  through the payment
of $4.2 million and the issuance of 688,996 shares Common Stock and the issuance
of 450,000 warrants to purchase Common Stock at an exercise  price of $35.00 per
share.  As such,  we have no  further  obligation  to  these  purchasers   under
the  price  protection  or  repurchase  provisions  of  the Securities  Purchase
Agreements and the amendments thereto.

         In December  1997,  the Board of  Directors  authorized  a Common Stock
repurchase program allowing for the repurchase of up to 750,000 shares of Common
Stock.  This  750,000  share  repurchase  authorization  was in  addition to and
superseded the repurchase program authorized in July 1996, which allowed for the
repurchase of up to 600,000  shares of Common Stock.  Under these  programs,  we
repurchased 725,000 shares in 1998 and 301,000 shares in 1997 at a cost of $17.9
million and $10.0  million,  respectively.  As of  December  31, 1998 all shares
repurchased were retired.

         In January 1999, we entered into an Equity  Investment  Agreement  with
Pharmacia & Upjohn whereby Pharmacia & Upjohn purchased  1,136,533 shares of our
Common Stock for an aggregate purchase price of $19.0 million, which represented
the  acceleration  of the  oncology and urology  reimbursement  payments and the
AMD milestone  payments. Pharmacia & Upjohn  will  also extend to us up to $22.5
million  in  credit  over  the  next  two  years  to  be  used  to  support  our
ophthalmology,  oncology and other development programs,  as well as for general
corporate purposes.

         In June 1998,  we  purchased  a $5.0  million,  9% equity  interest  in
Xillix. We received 2,691,904 shares of Xillix common stock in exchange for $3.0
million in cash and 58,909  shares of  restricted  Miravant  Common Stock at the
market value on the date of the agreement of $25.06 per share,  or $1.5 million.
In  addition,  we entered  into a strategic  alliance  agreement  with Xillix to
co-develop  proprietary systems incorporating the technology of each company and
to share the research and  development  costs. To date, we have not incurred any
costs under this agreement.

         In April 1998, we entered into a revolving  credit  agreement  with our
affiliate,  Ramus,  which  provided  Ramus with the ability to borrow up to $2.0
million.  During 1998, we provided $1.8 million in loans to Ramus.  In addition,
we had an  exclusive  option to  purchase  the  remaining  shares of Ramus for a
specified amount under certain terms and conditions. The option expired March 3,
1999 and we elected not to exercise the option.

         In  February  1998,  we agreed to guaranty a term loan in the amount of
$7.6  million from a bank to a director of ours at the time.  In June 1998,  the
director did not stand for  re-election  on the Board of Directors.  The loan is
due and  payable on July 31,  1999,  or sooner  upon an event of default  and is
secured by all of the  individual's  shares of our Common Stock. We also granted
the bank a security  interest in an account  maintained  at the bank and agreed,
upon an  event  of  default,  to  purchase  the  loan  from the bank for a price
generally equal to the then outstanding principal,  plus accrued interest,  fees
and costs.  If we  purchase  the loan,  we have the option to acquire all of the
individual's shares at a price equal to 50% of the 20-day average closing price,
net of the loan repayment. The individual also agreed to certain restrictions on
the  sale of such  shares.  Under  the  loan  agreement  and the  guaranty,  the
individual and Miravant are subject to the  maintenance  of specified  financial
and other covenants.

         For 1998,  1997 and 1996,  we  required  cash for  operations  of $21.7
million, $23.8 million and $15.1 million,  respectively.  The increase from 1996
through 1998 was primarily due to an increase in operating activities associated
with the continued  expansion of preclinical  studies and clinical  trials,  the
increase in research and development  programs and personnel and the increase in
general  corporate  activities.  For 1998,  we required  net cash for  financing
activities  of $42.5  million as compared to net cash  provided by our financing
activities of $59.1  million in 1997 and $62.2 million in 1996.  The increase in
1998 is  primarily  related to our  repurchase  of Common  Stock under the Board
authorized  stock  repurchase  program and the  repurchase  of our Common  Stock
pursuant to the  Securities  Purchase  Agreement and related  amendments,  which
amounted to $17.9  million and $16.9  million,  respectively.  The 1997 and 1996
increases resulted from proceeds from our private equity placements in September
and October 1997 and our secondary public offering in April 1996.

         We invested a total of $8.5 million in property and equipment from 1996
through  1998.  During  1998,  we  entered  into a new  lease  agreement  for an
additional  facility,  for which we have the ability to  sublease.  We expect to
continue  to purchase  property  and  equipment  in the future as we continue to
expand our preclinical, clinical and research and development activities as well
as the buildout and expansion of laboratories and office space.

         Our  future  capital  requirements  will  depend  on  numerous  factors
including:

         o    The progress and magnitude of our research and development 
              programs, including preclinical studies and clinical trials;

         o    The time involved in obtaining regulatory approvals;

         o    The cost involved in filing and maintaining patent claims;

         o    Competitor and market conditions;

         o    Investment opportunities;

         o    Our ability to establish and maintain collaborative arrangements;

         o    The cost of manufacturing scale-up and the cost and effectiveness
              of commercialization activities and arrangements; and

         o    Our ability to obtain grants to finance research and development 
              projects.

         Our ability to generate  substantial  funding to continue  our research
and  development  activities,   preclinical  studies  and  clinical  trials  and
manufacturing,  scale-up,  administrative  activities and additional  investment
opportunities is subject to a number of risks and  uncertainties and will depend
on numerous factors including:

          o   Our ability to raise funds in the future through public or private
              financings, collaborative arrangements or from other sources;

          o   The potential for equity investments,  collaborative arrangements,
              license  agreements or development or other funding  programs with
              us in exchange for manufacturing, marketing, distribution or other
              rights to products developed by us; and

          o   Our ability to maintain our existing collaborative arrangements.

         We can not guarantee  that  additional  funding will be available to us
when  needed.  If it is not, we will be required to scale back our  research and
development programs, preclinical studies and clinical trials and administrative
activities  and our  business  and  financial  results  and  condition  would be
materially adversely affected.

         Except for the historical  information herein, the matters discussed in
this report are deemed forward-looking  statements under federal securities laws
that involve risks and uncertainties.  Actual results may differ materially from
those  in the  forward-looking  statements  depending  on a  number  of  factors
including,  among  other  things,  the risks,  uncertainties  and other  factors
detailed in Item 1, "Business - Risk Factors."

ITEM 7A. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

         The following  discussion  about our market risk  disclosures  involves
forward-looking  statements.  Actual results could differ  materially from those
projected  in the  forward-looking  statements.  We are  exposed to market  risk
related to changes in  interest  rates.  The risks  related to foreign  currency
exchange  rates  are   immaterial  and  we  do  not  use  derivative   financial
instruments.

         From time to time,  we  maintain  a  portfolio  of highly  liquid  cash
equivalents  maturing in three months or less as of the date of purchase.  Given
the short-term nature of these  investments,  and that the we have no borrowings
outstanding, we are not subject to significant interest rate risk.

ITEM 8.  FINANCIAL STATEMENT AND SUPPLEMENTARY DATA

         The Report of Independent  Accountants and the  Consolidated  Financial
Statements and Notes to the Consolidated  Financial  Statements of Miravant that
are filed as part of this Report are listed under Item 14, "Exhibits,  Financial
Statement  Schedules,  and  Reports  on Form  8-K" and are set forth on pages 34
through 53 immediately following the signature page of this Report.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND DISCLOSURE

         None.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         This   information  is  incorporated  by  reference  to  the  Company's
definitive proxy statement to be filed pursuant to Regulation 14A not later than
120 days after the end of the Company's fiscal year.

ITEM 11. EXECUTIVE COMPENSATION

         This   information  is  incorporated  by  reference  to  the  Company's
definitive proxy statement to be filed pursuant to Regulation 14A not later than
120 days after the end of the Company's fiscal year.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         This   information  is  incorporated  by  reference  to  the  Company's
definitive proxy statement to be filed pursuant to Regulation 14A not later than
120 days after the end of the Company's fiscal year.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         This   information  is  incorporated  by  reference  to  the  Company's
definitive proxy statement to be filed pursuant to Regulation 14A not later than
120 days after the end of the Company's fiscal year.




                                     PART IV

ITEM 14.         EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

<TABLE>
<CAPTION>
<S>              <C>                                                                   <C>   
(a)(1)           Index to Consolidated Financial Statements:                           Page

                 Report of Independent Auditors                                         36
                 Consolidated Balance Sheets as of
                      December 31, 1998 and 1997                                        37
                 Consolidated Statements of Operations for the
                      years ended December 31, 1998, 1997 and 1996                      38
                 Consolidated Statements of Shareholders'
                      Equity for the years ended December 31,
                      1998, 1997 and 1996                                               39
                 Consolidated Statements of Cash Flows for the
                      years ended December 31, 1998, 1997 and 1996                      40
                 Notes to Consolidated Financial Statements                             41
</TABLE>


(a)(2)           Index to Consolidated Financial Statement Schedules:

                 All  schedules are omitted because the required  information is
not present or is not present in amounts sufficient to require submission of the
schedule  or  because  the  information  required  is given in the  consolidated
financial statements or notes thereto.

(a)(3)           Index to Exhibits:

                 See Index to Exhibits on pages 54 to 55

(b)              Reports on Form 8-K:

                 None.




<PAGE>


                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                   Miravant Medical Technologies
                                   
                                   /S/ Gary S. Kledzik
                                   ---------------------------------------
                                   Gary S. Kledzik, Ph.D., Chief Executive
                                   Officer and Chairman of the Board

Dated:  March 30, 1999

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
this  Report has been  signed  below by the  following  persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>



Signature                               Title                                             Date

<S>                                     <C>                                               <C>    

/S/ Gary S. Kledzik                     Chairman of the Board, Director,                  March 30, 1999
-----------------------                 and Chief Executive Officer,  
Gary S. Kledzik, Ph.D.                  (Principal Executive Officer)                                    
                      


/S/ David E. Mai                        Director and President                            March 30, 1999
-----------------------
David E. Mai


/S/ John M. Philpott                    Chief Financial Officer and Controller            March 30, 1999
-----------------------                 (Principal Financial Officer and
John M. Philpott                        Principal Accounting Officer)   
                                            


/S/ Larry S. Barels                     Director                                          March 30, 1999 
-----------------------
Larry S. Barels


/S/ William P. Foley II                 Director                                          March 30, 1999
-----------------------
William P. Foley II 


/S/ Charles T. Foscue                   Director                                          March 30, 1999
----------------------- 
Charles T. Foscue


/S/ Raul E. Perez                       Director                                          March 30, 1999
----------------------- 
Raul E. Perez, M.D.

/S/ Jonah Shacknai                      Director                                          March 30, 1999
-----------------------
Jonah Shacknai
</TABLE>

<PAGE>


                         REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders
Miravant Medical Technologies

We have audited the accompanying consolidated balance sheets of Miravant Medical
Technologies  as of  December  31, 1998 and 1997,  and the related  consolidated
statements of  operations,  shareholders'  equity and cash flows for each of the
three years in the period ended December 31, 1998.  These  financial  statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the consolidated  financial position of Miravant Medical
Technologies at December 31, 1998 and 1997 and the  consolidated  results of its
operations  and its cash flows for each of the three  years in the period  ended
December 31, 1998, in conformity with generally accepted accounting principles.

                                                        /S/ Ernst & Young LLP
                                                        ---------------------
                                                            ERNST & YOUNG LLP

Woodland Hills, California
March 4, 1999



<PAGE>







                                              CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>


                                                                                              December 31,
                                                                                        1998                  1997
                                                                                 ------------------   -------------------
<S>                                                                              <C>                  <C>   

                                    Assets
Current assets:
   Cash and cash equivalents...............................................      $     11,284,000     $      55,666,000
   Investments in short-term marketable securities.........................                    --            27,796,000
   Accounts receivable.....................................................             3,182,000             1,833,000
   Prepaid expenses and other current assets...............................               792,000               772,000
                                                                                 ------------------   -------------------
Total current assets.......................................................            15,258,000            86,067,000

Property, plant & equipment:
   Vehicles................................................................                28,000                28,000
   Furniture and fixtures..................................................             1,720,000             1,578,000
   Equipment...............................................................             5,180,000             3,752,000
   Leasehold improvements..................................................             4,232,000             3,071,000
   Capital lease equipment.................................................               184,000               184,000
                                                                                 ------------------   -------------------
                                                                                       11,344,000             8,613,000
   Accumulated depreciation and amortization...............................            (5,514,000)           (2,886,000)
                                                                                 ------------------   -------------------
                                                                                        5,830,000             5,727,000
Investments in affiliates..................................................             1,512,000               895,000
Loan to affiliate, net of reserve of $1.8 million at December 31, 1998.....                    --                    --
Patents and other assets...................................................             1,210,000               342,000
                                                                                 ------------------   ------------------- 
Total assets...............................................................      $     23,810,000      $     93,031,000
                                                                                 ==================   ===================

                      Liabilities and shareholders' equity
Current liabilities:
   Accounts payable........................................................      $      3,541,000      $      4,290,000
   Accrued payroll and expenses............................................               583,000             1,022,000
   Current portion of capital lease obligations............................                    --                21,000
                                                                                 ------------------   -------------------
Total current liabilities..................................................             4,124,000             5,333,000


Shareholders' equity:
   Common stock, 50,000,000 shares authorized;  16,080,054 and 13,952,847 
     shares issued and outstanding at December 31, 1998 and
     December 31, 1997, respectively.......................................           135,989,000           170,451,000
   Notes receivable from officers..........................................            (1,525,000)                   --        
   Deferred compensation...................................................            (2,896,000)           (1,899,000)
   Unrealized loss on available-for-sale securities........................            (2,964,000)                   --          
   Accumulated deficit.....................................................          (108,918,000)          (80,854,000)
                                                                                 ------------------   -------------------
Total shareholders' equity.................................................            19,686,000            87,698,000
                                                                                 ------------------   -------------------
Total liabilities and shareholders' equity.................................      $     23,810,000      $     93,031,000
                                                                                 ==================   ===================

See accompanying notes.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>


                                          CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                              Year ended December 31,
                                                                   1998                 1997                1996
                                                            -------------------  -------------------  ------------------

<S>                                                         <C>                  <C>                  <C>  

Revenues:
   Product sales.....................................        $             --     $          2,000     $         5,000  
   Grants, licensing and royalty revenues............              10,179,000            2,276,000           3,593,000
                                                            -------------------  -------------------  ------------------
Total revenues.......................................              10,179,000            2,278,000           3,598,000

Costs and expenses:
   Cost of goods sold................................                      --                1,000               5,000
   Research and development..........................              27,548,000           19,053,000          15,715,000
   Selling, general and administrative...............              11,311,000           14,906,000           6,393,000
   Loss in affiliate.................................               2,929,000            1,105,000                  --
                                                            -------------------  -------------------  ------------------
Total costs and expenses.............................              41,788,000           35,065,000          22,113,000

Loss from operations.................................             (31,609,000)         (32,787,000)        (18,515,000)

Interest and other income (expense):
   Interest and other income.........................               3,546,000            2,584,000           2,407,000
   Interest expense..................................                  (1,000)              (6,000)            (34,000)
                                                            -------------------  -------------------  ------------------
Total net interest and other income..................               3,545,000            2,578,000           2,373,000
                                                            -------------------  -------------------  ------------------

Net loss.............................................        $    (28,064,000)    $    (30,209,000)    $   (16,142,000)
                                                            ===================  ===================  ==================
Net loss per share - basic and diluted...............        $          (1.94)    $          (2.36)    $         (1.37)  
                                                            ===================  ===================  ==================
Shares used in computing net loss per share..........              14,464,044           12,791,044          11,786,429
                                                            ===================  ===================  ==================

See accompanying notes.

</TABLE>

<PAGE>

<TABLE>
<CAPTION>



                                                          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

                                                                  Notes                                   Accumulated
                                                               Receivable                                    Other
                                           Common Stock           From       Deferred      Accumulated   Comprehensive
                                       Shares        Amount     Officers   Compensation      Deficit        Income         Total
                                   ------------ -------------- ----------  ------------- --------------  ------------- -------------
<S>                                <C>          <C>            <C>         <C>           <C>             <C>            <C>


Balance at January 1, 1996.......  10,401,358   $ 50,188,000   $       --  $ (7,518,000)  $ (34,503,000)  $       --   $  8,167,000
Issuance of stock at $48.00 per
 share (net of approximately
 $6,733,000 of offering                                                 
 costs)..........................   1,500,000     65,267,000           --            --              --           --     65,267,000
Exercise of stock options and         
 warrants........................     563,456      1,010,000           --            --              --           --      1,010,000
Conversion of notes payable 
 (net of approximately $5,000 
 of debt issuance costs).........      11,562         87,000           --            --              --           --         87,000
Repurchases of stock.............    (138,500)    (3,948,000)          --            --              --           --     (3,948,000)
Deferred compensation related 
 to stock options and warrants             
 granted.........................          --     (3,630,000)          --     3,630,000              --           --             --
Amortization of deferred                                                 
 compensation  ..................          --             --           --     2,276,000              --           --      2,276,000
Net loss ........................          --             --           --            --     (16,142,000)          --    (16,142,000)
                                   ------------ -------------- ----------- -------------- -------------- -------------- ------------
Balance at December 31, 1996.....  12,337,876    108,974,000           --    (1,612,000)    (50,645,000)          --     56,717,000
                                                                           
Issuance of stock at $50.00 per
 share (net of approximately
 $2,627,000 of offering costs)...   1,416,000     68,173,000           --            --              --           --     68,173,000
Exercise of stock options and        
 warrants........................     485,799      1,080,000           --            --              --           --      1,080,000
Issuance of stock awards.........      14,172        456,000           --            --              --           --        456,000
Repurchases of stock.............    (301,000)   (10,041,000)          --            --              --           --    (10,041,000)
Deferred compensation related
 to warrants granted, net of                                                     
 cancellations...................          --      1,809,000           --    (1,809,000)             --           --             --
Amortization of deferred
 compensation....................          --             --           --     1,522,000              --           --      1,522,000
Net loss.........................          --             --           --            --     (30,209,000)          --    (30,209,000)
                                   ------------ -------------- ------------ ------------- -------------- ------------- -------------
Balance at December 31, 1997.....  13,952,847    170,451,000           --    (1,899,000)    (80,854,000)          --     87,698,000
                                                                          
Exercise of stock options and        
 warrants.......................      551,566      2,330,000           --            --              --           --      2,330,000
Notes receivable from officers..       83,731        179,000   (1,525,000)           --              --           --     (1,346,000)
Issuance of stock awards........       51,121      1,579,000           --            --              --           --      1,579,000
Repurchases of stock............     (725,000)   (17,911,000)          --            --              --           --    (17,911,000)
Fulfillment of  obligations
 under the Securitie Purchase 
 Agreement and related
 amendments.....................    2,106,880    (25,521,000)          --            --              --           --    (25,521,000)
Deferred compensation related
 to warrants granted and notes
 from officers..................           --      3,406,000           --    (3,406,000)             --           --             --
Amortization of deferred                   
 compensation...................           --             --           --     2,409,000              --           --      2,409,000
Issuance of stock related to
 investment in Xillix and              
 unrealized loss................       58,909      1,476,000           --            --              --   (2,964,000)    (1,488,000)
Net loss........................           --             --           --            --     (28,064,000)          --    (28,064,000)
                                   =========== ============== ============= ============= ============== ============= =============
Balance at December 31, 1998....   16,080,054  $ 135,989,000  $(1,525,000)  $(2,896,000)  $(108,918,000) $(2,964,000)  $ 19,686,000
                                   =========== ============== ============= ============= ============== ============= =============


See accompanying notes.
</TABLE>


<PAGE>


<TABLE>
<CAPTION>



                                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                    Year ended December 31,
                                                                        1998                 1997                 1996
                                                                  ----------------     ----------------     -----------------

<S>                                                                 <C>                  <C>                  <C>     

Operating activities:
    Net loss...............................................       $   (28,064,000)     $   (30,209,000)     $    (16,142,000)
    Adjustments to reconcile net loss to net cash used
    by operating activities:
       Depreciation and amortization.......................             2,736,000            1,099,000               615,000    
       Amortization of deferred compensation...............             2,409,000            1,522,000             2,276,000      
       Reserve for loan receivable from affiliate..........             1,808,000                   --                    --      
       Stock awards........................................             1,579,000              456,000                    --      
       Write-off of investment in affiliate................               895,000            1,105,000                    --      
       Changes in operating assets and liabilities:
          Accounts receivable .............................            (1,349,000)             346,000            (2,168,000)
          Prepaid expenses and other assets................              (528,000)            (372,000)               44,000
          Accounts payable and accrued payroll and
          expenses.........................................            (1,188,000)           2,244,000               269,000
                                                                  ------------------   ------------------   -------------------
    Net cash used in operating activities..................           (21,702,000)         (23,809,000)          (15,106,000)

Investing activities:
    Purchases of marketable securities.....................          (230,660,000)         (44,696,000)         (130,200,000)
    Sales of marketable securities.........................           258,456,000           37,500,000           109,600,000
    Investments in affiliates..............................            (3,000,000)                  --            (2,000,000)
    Loan to affiliate......................................            (1,808,000)                  --                    --
    Purchases of property, plant and equipment.............            (2,731,000)          (3,942,000)           (1,855,000)
    Purchases of patents...................................              (468,000)             (17,000)              (51,000)
                                                                  ------------------   ------------------   -------------------
    Net cash provided by (used in) investing activities....            19,789,000          (11,155,000)          (24,506,000)

Financing activities:
    Proceeds from issuance of Common Stock, less
       issuance costs......................................             2,509,000           69,253,000            66,271,000      
    Purchases of  Common Stock.............................           (17,911,000)         (10,041,000)           (3,948,000)
    Payments of notes to officers..........................            (1,525,000)                  --                    --
    Payments of capital lease obligations..................               (21,000)             (38,000)              (43,000)
    Payments of long term obligations......................                    --              (42,000)              (56,000)
    Purchases of Common Stock under the Amended Securities
       Agreement...........................................           (16,875,000)                  --                    --
    Payments for price protection obligations under the
       Amended Securities Agreement........................            (8,646,000)                  --                    --
                                                                  ------------------   ------------------   -------------------
    Net cash (used in) provided by financing activities....           (42,469,000)           59,132,000           62,224,000

    Net (decrease) increase in cash and cash equivalents...           (44,382,000)           24,168,000           22,612,000

    Cash and cash equivalents at beginning of period.......            55,666,000            31,498,000            8,886,000
                                                                  ------------------   ------------------   -------------------
    Cash and cash equivalents at end of period.............       $    11,284,000      $     55,666,000     $     31,498,000
                                                                  ==================   ==================   ===================

Supplemental disclosures:
    State taxes paid.......................................       $       113,000      $        104,000     $         14,000      
                                                                  ==================   ==================   ===================
    Interest paid..........................................       $         1,000      $          7,000     $         34,000
                                                                  ==================   ==================   ===================

See accompanying notes.
</TABLE>


<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.        Accounting Policies

 Description of Business and Basis of Presentation

         Miravant Medical  Technologies,  or Miravant, or the Company is engaged
in the research and  development of drugs and medical device products for use in
PhotoPoint,  the Company's  proprietary  technologies for photodynamic  therapy.
Effective  September  15, 1997,  the Company  changed its name from PDT, Inc. to
Miravant  Medical  Technologies.  The  Company  is  located  in  Santa  Barbara,
California.  The Company has had limited  sales of devices and its customers are
medical  device  companies,  researchers,  hospitals  and  universities  located
throughout the world.

         As of December  31,  1998,  the Company had an  accumulated  deficit of
$108.9  million and  anticipates it will continue to incur losses for some time.
The  Company is  continuing  its  efforts in research  and  development  and the
clinical  trials  of  its  products.  These  efforts,  and  obtaining  requisite
regulatory  approval,  prior  to  commercialization,  will  require  substantial
expenditures.  While  management of the Company  believes that it has sufficient
resources  to fund the  required  expenditures  for the next few  years and that
additional  funding will be available when required,  there is no assurance that
this will be the case.

         The  preparation of financial  statements in conformity  with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect the amounts reported in the financial statements and the
accompanying  notes.  Actual  results may differ from those  estimates  and such
differences may be material to the financial statements.

 Principles of Consolidation

         The consolidated  financial statements include the accounts of Miravant
Medical Technologies and its wholly owned subsidiaries,  Miravant Systems, Inc.,
Miravant Pharmaceuticals, Inc. and Miravant Cardiovascular, Inc. All significant
intercompany  balances and transactions  have been eliminated in  consolidation.
Certain  reclassifications  of prior year amounts have been made for purposes of
presentation.

Cash Equivalents

         The Company considers all highly liquid  investments with a maturity of
three months or less when purchased to be cash equivalents.

Marketable Securities

         Marketable securities consist of short-term, interest-bearing corporate
bonds, U.S. Government obligations and municipal obligations. As of December 31,
1998  the  Company  held no  marketable  securities.  As of  December  31,  1997
marketable securities consisted of short-term, interest-bearing corporate bonds,
U.S.  Government  obligations  and  municipal  obligations  in the  amount  $8.3
million,  $8.5  million  and  $11.0  million,   respectively.  The  Company  has
established  investing  guidelines  relative to  concentration,  maturities  and
credit ratings that maintain safety and liquidity.

         In accordance with Statement of Financial  Accounting Standards or SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity Securities," the
Company determines the appropriate  classification of debt and equity securities
at the time of purchase and  re-evaluates  such  designation  as of each balance
sheet date.  As of December 31, 1998 and 1997,  all  marketable  securities  and
certain  investments  in affiliates  were  classified  as  "available-for-sale".
Available-for-sale  securities  and  investments  are carried at fair value with
unrealized  gains and losses reported as a separate  component of  shareholders'
equity. Realized gains and losses on investment transactions are recognized when
realized based on settlement dates and recorded as interest income. Interest and
dividends on securities are recognized when earned.


Investments in Affiliates

         Investments in affiliates owned more than 20% but not in excess of 50%,
where the  Company is not deemed to be able to exercise  controlling  influence,
are recorded under the equity method. Investments in affiliates, owned less than
20%,  where  the  Company  is not  deemed  to be  able to  exercise  controlling
influence,  are  recorded  under  the cost  method.  Under  the  equity  method,
investments are carried at acquisition  cost and adjusted for the  proportionate
share of the affiliates' earnings or losses. Under the cost method,  investments
are  recorded  at  acquisition  cost and  adjusted  to fair  value  based on the
investments classification.

         In December 1996, the Company  purchased a 33% equity interest in Ramus
Medical Technologies or Ramus for $2.0 million. The investment was accounted for
under the equity  method.  As the  Company is the main source of  financing  for
Ramus, the Company has conservatively recorded 100% of Ramus' loss to the extent
of the investment  made by the Company,  resulting in losses from  affiliates of
$895,000  and $1.1  million  for the years  ended  December  31,  1998 and 1997,
respectively. The investment in Ramus has been fully written down as of December
31, 1998.

         In  connection  with  the  investment  made in  Ramus  and the  related
investment  agreement,  the Company  had the  exclusive  option to purchase  the
remaining  shares  of  Ramus at a  specified  amount  under  certain  terms  and
conditions.  The option  period  began in 1998 and expired  March 3, 1999 as the
Company  elected not to exercise its option to purchase the remaining  shares of
Ramus.

         In June 1998, the Company purchased a $5.0 million, 9% equity  interest
in Xillix Technologies Corp. or Xillix. The Company received 2,691,904 shares of
Xillix common  stock,  in exchange for $3.0 million in cash and the remainder in
restricted  Miravant  Common  Stock  at the  market  value  on the  date  of the
agreement,  which represented 58,909 shares of Common Stock at $25.06 per share,
or $1.5 million. The investment has been accounted for under the cost method and
classified as  available-for-sale.  At December 31, 1998, in accordance with the
accounting for available-for-sale securities, the investment was adjusted to the
current market value of Xillix common stock, with the resulting  unrealized loss
recorded as a separate component of shareholders' equity.

Equipment and Leasehold Improvements

         Equipment  is  stated  at cost  with  depreciation  provided  over  the
estimated  useful lives of the  respective  assets on the  straight-line  basis.
Leasehold  improvements  are stated at cost with  amortization  provided  on the
straight-line basis. The estimated useful lives of the assets are as follows:

Furniture and fixtures         5 years
Equipment                      3 - 5 years
Leasehold improvements         5 years or the remaining life of the lease term, 
                               whichever is shorter

Patents and Other Assets

         Costs  of  acquiring  patents  are  capitalized  and  amortized  on the
straight-line  basis over the  estimated  useful life of the patents,  seventeen
years.  Accumulated  amortization  was $175,000 and $67,000 at December 31, 1998
and 1997,  respectively.  The  costs of  servicing  the  Company's  patents  are
expensed as  incurred.  Also  included in this  caption are  deposits  and other
miscellaneous non-current assets.

Long-Lived Assets

         The Company reviews for the impairment of long-lived assets and certain
identifiable  intangibles  whenever events or changes in circumstances  indicate
that the carrying amount of an asset may not be recoverable.  No such impairment
losses  have  been  identified  by the  Company.  An  impairment  loss  would be
recognized when the estimated  future cash flows expected to result from the use
of the asset and its eventual disposition is less than its carrying amount.

Stock-Based Compensation

         SFAS No. 123,  "Accounting for Stock-Based  Compensation",  encourages,
but does not require,  companies  to record  compensation  cost for  stock-based
employee compensation plans at fair value. The Company has chosen to continue to
account for stock-based compensation using the intrinsic value method prescribed
by Accounting  Principles  Board Opinion or APB Opinion No. 25. In the past, the
Company has awarded  stock  options  that vest upon the  achievement  of certain
milestones. Under APB Opinion No. 25, such options are accounted for as variable
stock  options.  As such,  until the milestone is achieved (but only after it is
determined to be probable), deferred compensation is recorded in an amount equal
to the difference  between the fair market value of the Common Stock on the date
of  determination  less the option exercise price and is adjusted from period to
period to  reflect  changes in the market  value of the Common  Stock.  Deferred
compensation,  as it relates to a particular  milestone,  is amortized  over the
period between when  achievement of the milestone  becomes probable and when the
milestone is estimated to be achieved.

 Revenue Recognition

         The  Company  recognizes  revenues  from  product  sales at the time of
shipment to the  customer.  Grant,  royalty and  licensing  income is recognized
based on the terms of the related  agreements  and license  income  includes the
reimbursement of certain preclinical and clinical costs.

Research and Development Expenses

         Research  and   development   costs  are  expensed  as  incurred.   The
acquisition of technology  rights for research and development  projects and the
value of equipment  for  specific  research  and  development  projects are also
included in research and development expenses.

Advertising

         Costs  incurred  for  producing  and   communicating   advertising  are
generally  expensed when incurred.  In September  1997, the Company  commenced a
name change awareness and product-branding program pursuant to which advertising
costs were  incurred.  Advertising  expense was not material for the years ended
December 31, 1998 and 1996 and was $5.5 million for the year ended  December 31,
1997.  The amounts  incurred  in 1997 were  primarily  associated  with the name
change awareness and product-branding program.

Segment Reporting

         Effective   January  1,  1998,  the  Company   adopted  SFAS  No.  131,
"Disclosures about Segments of an Enterprise and Related  Information". SFAS No.
131 established  standards for the way that public business  enterprises  report
information  about  operating  segments in the annual  financial  statements and
requires that those  enterprises  report  selected  information  about operating
segments in interim financial reports.  SFAS No. 131 also established  standards
for related disclosures about products and services,  geographic areas and major
customers.  The adoption of SFAS No. 131 did not affect the reported  results of
operations or financial  position of the Company.  In addition,  the adoption of
the new  statements  did not affect  disclosures  of segment  information as the
Company is engaged principally in one aggregated line of business,  the research
and  development  of  drugs  and  medical  device  products  for  the use in the
Company's proprietary technologies for photodynamic therapy.

Comprehensive Income

         Effective January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive  Income". SFAS No. 130 establishes new rules for the reporting and
display of  comprehensive  income and its components;  however,  the adoption of
SFAS No. 130 had no impact on the  Company's net loss or  shareholders'  equity.
Under SFAS No.  130,  the  Company  has  elected to report  other  comprehensive
income,  which  includes  unrealized  gains  or  losses  on   available-for-sale
securities in the statement of shareholders' equity.

          For the years ended  December 31, 1998, 1997 and  1996,  comprehensive
loss amounted to  approximately $31.0  million, $30.2 million and $16.1 million,
respectively.  The difference between net loss and comprehensive loss relates to
the unrealized loss the Company recorded for its  available-for-sale  securities
on its investment in its affiliate Xillix.

Net Loss Per Share

         During the year ended December 31, 1997,  the Company  adopted SFAS No.
128,  "Earnings per Share",  which  supersedes APB Opinion No. 15 and required a
change in the method used to compute  earnings per share.  SFAS No. 128 replaced
the  presentation of primary and fully diluted earnings per share with basic and
diluted earnings per share.  Unlike primary  earnings per share,  basic earnings
per share  excludes any dilutive  effects of options,  warrants and  convertible
securities.  Diluted  earnings  per  share  is very  similar  to the  previously
reported  fully diluted  earnings per share and reflects the potential  dilution
that would occur if  securities  or other  contracts  to issue common stock were
exercised or converted to common stock.  Common stock equivalent shares from all
stock options and warrants for all years presented, have been excluded from this
computation as their effect is anti-dilutive. All previously stated earnings per
share amounts conform to the new SFAS No. 128 requirements.

         Basic loss per common share is computed by dividing the net loss by the
weighted  average shares  outstanding  during the period in accordance with SFAS
No. 128.  Since the effect of the assumed  exercise of common stock  options and
other convertible securities was anti-dilutive, basic and diluted loss per share
as presented on the consolidated statements of operations are the same.

2.        Credit Arrangements

         The Company had a $1.0  million  line of credit  agreement  with a bank
with a variable rate of interest  based on the bank's  lending rate. The Company
did not  utilize  the line of credit  during 1998 or 1997 and the line of credit
expired on January 31, 1999 and was subsequently not renewed.

         In April 1998, the Company  entered into a revolving  credit  agreement
with its  affiliate,  Ramus,  pursuant to which the  Company,  at the request of
Ramus,  shall from time to time make loans to Ramus in an aggregate  outstanding
principal  amount  not  exceeding  at any one  time  $2.0  million.  The  unpaid
principal  amount of the  loans,  which are to be used to fund  Ramus'  clinical
trials and  operating  costs,  accrues  interest at a variable rate (7.25% as of
December 31, 1998) based on the Company's  bank rate, and matures in March 2000.
The loans are  evidenced  by a  promissory  note,  the balance of which shall be
convertible under certain circumstances at the option of the Company into shares
of Ramus stock.  As of December 31, 1998,  Ramus had borrowed $1.8 million under
the revolving  credit  agreement.  The Company has established a reserve for the
entire outstanding balance of the loan receivable at December 31, 1998, which is
included in loss in affiliate in the consolidated statements of operations.

3.        Shareholders' Equity

         In September  and October  1997,  the Company  completed  three private
equity  placements  totaling $70.8  million,  which provided net proceeds to the
Company of $68.2  million.  The  private  placements  included  the  issuance of
1,416,000  shares of Common Stock at $50.00 per share, as well as one detachable
Common Stock warrant for each share of Common Stock  purchased.  With respect to
the warrants issued in connection with these placements, 50% were exercisable at
$55.00 per share and 50% were  exercisable at $60.00 per share.  Both the Common
Stock and warrants to purchase Common Stock were subject to a Lock-Up  Agreement
which prohibited any offer or  sale for a one-year  period after the  closing of
the purchase.   The Lock-Up  Agreement  was  subject to  earlier  termination in
certain limited  circumstances  and  the  prohibition  on sales was  subject  to
certain limited  exceptions.   Additionally,  the Securities Purchase Agreements
provided price protection  provisions  that if  on the first  anniversary of the
closing of the purchase,  the thirty (30) day average closing  bid price of  the
Common Stock for the period ending on the trading day prior to  the  anniversary
date is less than the closing  price  paid by the  purchasers,  then the Company
shall pay each  purchaser  additional  cash or stock, or  a combination of both,
as determined by  the  Company  at its sole option.   In October 1998,  for  the
purchasers  of  516,000  shares,  the Company  satisfied  its  price  protection
obligation by issuing an additional 2,444,380 shares of Common Stock.

         Effective June 30, 1998, the Company entered into an Amended Securities
Purchase Agreement or Amendment  Agreement with the purchasers of 900,000 shares
under the Securities Purchase Agreement dated September 22, 1997. Included among
the  provisions of the Amendment  Agreement is a change in the price  protection
provisions.  Under the Amendment  Agreement,  the Company's obligation under the
price protection  provisions  is now spread  out  over  an  eight  month  period
beginning  August 1, 1998 and ending  March 1, 1999,  and is  determined  by the
difference  between the original  purchase price and the thirty (30) day average
closing bid price of the Common  Stock on the first day of each month  beginning
August 1st and ending March 1st (each a "measurement date").  Additionally,  the
Amendment  Agreement  included  repurchase  provisions  which  provided that the
Company  also had the  option  to  repurchase  all or a part of the  purchasers'
shares at the original  closing price of $50.00 per share and thus eliminate all
of the purchasers' rights under the price protection provisions of the Amendment
Agreement and the Securities Purchase Agreement.

         Under the  Amendment  Agreement,  the  exercise  price of the  original
warrants  issued to  certain of the  purchasers  under the  Securities  Purchase
Agreement was reduced to $35.00 and, under certain  limited  circumstances,  the
Company has the right to redeem the warrants. Furthermore, the Lock-Up Agreement
was amended to provide  that,  if the  Company  does not  repurchase  the Common
Stock, 1/8th of the shares and original warrant shares will be released from the
lock-up on each measurement date. In addition, if the Company did not repurchase
all of the  purchasers'  original  900,000  shares within sixty (60) days of the
closing of the Amendment  Agreement,  the Company  agreed to issue an additional
450,000  warrants to the  purchasers  at an  exercise  price of $35.00 per share
within  five  business  days of March 1,  1999 or the early  termination  of the
Lock-Up Agreement.

         In accordance  with the Amendment  Agreement,  the Company  repurchased
337,500 shares subject to the repurchase  provisions of the Amendment  Agreement
at a cost of $16.9 million.  This repurchase eliminated the Company's obligation
to issue  additional  shares or pay cash  under  the  amended  price  protection
provisions for the August 1, September 1 and October 1, 1998 measurement  dates.
Additionally,  for the November 1 and December 1, 1998  measurement  dates,  the
Company  fulfilled  its  price  protection  obligation  by  electing  to pay the
purchasers cash, which amounted to $4.6 million and $4.0 million, respectively.
      
         In December  1997,  the  Company's  Board of Directors  authorized  the
repurchase of up to 750,000 shares of the Company's  Common Stock.  This 750,000
repurchase  authorization  was in  addition  to and  superseded  the  repurchase
program  authorized in July 1996,  which allowed the Company to repurchase up to
600,000 shares.  Under the Board  authorized  repurchase  programs,  the Company
repurchased 725,000 shares in 1998, 301,000 shares in 1997 and 138,500 shares in
1996 at a cost of $17.9 million,  $10.0 million and $3.9 million,  respectively.
As of December  31,  1998,  all shares  repurchased  were retired and no further
stock repurchase plans have been approved.

         In April 1996, the  Company  completed a secondary  public  offering in
which it  sold 1,500,000 shares of  Common Stock at $48 per share.  The offering
provided net proceeds to the Company of approximately $65.3 million.

 Stock Option Plans

         The Company has five stock-based compensation plans which are described
below - the 1989 Plan,  the 1992  Plan,  the 1994 Plan or the Prior  Plans,  the
Miravant Medical  Technologies 1996 Stock Compensation Plan or the 1996 Plan and
the  Non-Employee  Directors  Stock  Option  Plan  or the  Directors'  Plan.  As
disclosed  in Note 1,  the  Company  applies  APB  Opinion  No.  25 and  related
interpretations  in accounting for its stock option plans.  The Company  records
deferred  compensation for the excess of the fair value of Common Stock over the
exercise price of stock options. With respect to variable stock options granted,
deferred  compensation is recorded when the likelihood of the achievement of the
specified milestone is considered probable.

         The Prior Plans provided for the grant of both incentive  stock options
and non-statutory stock options. Stock options were granted under these plans to
certain employees and corporate officers.  The purchase price of incentive stock
options  must equal or exceed the fair market  value of the Common  Stock at the
grant date and the purchase  price of  non-statutory  stock  options may be less
than fair market  value of the Common  Stock at grant date.  Effective  July 21,
1996, the Prior Plans were  superseded with the adoption of the 1996 Plan except
to the  extent of  options  outstanding  in the Prior  Plans.  The  Company  has
allocated  300,000 shares,  750,000 shares and 600,000 shares for the 1989 Plan,
the 1992 Plan and the 1994 Plan,  respectively.  The outstanding  shares granted
under  the  Prior  Plans  vest in equal  annual  installments  over  four  years
beginning  one year from the grant date and  expire ten years from the  original
grant date.

         The 1996  Plan  provides  for  awards  which  include  incentive  stock
options,  non-qualified  stock options,  restricted  shares,  stock appreciation
rights,  performance  shares,  stock  payments and dividend  equivalent  rights.
Included  in the 1996 Plan is a stock  purchase  program  which has not yet been
implemented.  Also included in the 1996 Plan is a Non-Employee  Directors' Stock
Option award program which  provides for an automatic  fully vested annual grant
on the  first  day of the  fourth  quarter  of each  year  to each  non-employee
director of a  non-qualified  stock  option for the  purchase of 7,500 shares of
Common  Stock at fair market  value.  Officers,  key  employees,  directors  and
independent  contractors or agents of the Company may be eligible to participate
in the 1996 Plan,  except that  incentive  stock  options may only be granted to
employees of the Company.  The 1996 Plan supersedes and replaces the Prior Plans
and the Directors' Plan, except to the extent of options outstanding under those
plans.  The purchase price for awards granted from the 1996 Plan may not be less
than the fair market  value at the date of grant.  The maximum  amount of shares
that could be  awarded  under the 1996 Plan over its term is  4,000,000  shares.
Awards  granted  under the 1996 Plan expire on the date  determined  by the Plan
Administrators  as evidenced by the award agreement,  but shall not expire later
than ten  years  from  the  date the  award is  granted  except  for  grants  of
restricted shares which expire at the end of a specified period if the specified
service or performance conditions have not been met.

         Effective  March  1997,  the  Directors'  Plan  was  superseded  by the
adoption of the 1996 Plan except to the extent of options  outstanding under the
Directors'  Plan. The Directors' Plan provided for an automatic  annual grant of
an option for the purchase of 7,500 shares at fair market value on the first day
of the fourth quarter of each year to be made to each non-employee director. The
options  vest on the grant  date and  expire ten years from the date of grant or
within 90 days of termination of the individual's directorship.

         As of December  31,  1995,  the Company had  nonvested  variable  stock
options  included  in the  outstanding  options  under  the 1992  Plan,  with an
exercise  price of $34.75 per share  covering  427,500  shares of Common  Stock.
Effective  June 21, 1996, the  Compensation  Committee of the Board of Directors
adjusted the future  vesting  periods of the variable  stock options  granted in
1995 under the 1992 Plan covering  400,000 shares of Common Stock. The remaining
options  covering  27,500  shares  were not  adjusted  due to  milestones  being
attained.  These  variable  stock  options  were  adjusted to change the vesting
periods to specific dates as opposed to the original vesting periods, which were
based upon the  achievement  of  milestones;  no change was made to the exercise
prices of these  variable  stock  options.  This change in the  vesting  periods
provides  for the  options to be  accounted  for as  non-variable  options,  and
therefore,  alleviates  the  impact of  deferred  compensation  and the  related
expense  fluctuating  in future  periods  based on the  changes in the per share
market value from period to period.  The Company  recorded $9,800 and $17,000 of
deferred  compensation  expense  related to these  options  for the years  ended
December 31, 1998 and 1997, respectively.  For the year ended December 31, 1996,
the Company recorded deferred  compensation  expense of $767,000 and a reduction
in deferred  compensation  of $3.7 million  with  respect to variable  milestone
options.  As of December  31,  1998,  options  covering  287,500  shares with an
exercise  price of $34.75 per share have  vested and  options  covering  110,000
shares have been canceled. The remaining 30,000 unvested shares will vest in the
years 1999 and 2000.


         Additionally,  during the years ended  December 31, 1996 and 1995,  the
Company  recorded  deferred  compensation  with  respect to certain of the stock
options which had been granted at less than the estimated  fair value.  Deferred
compensation recorded is amortized ratably over the period that the options vest
to the option holder and is adjusted for options which have been canceled.  This
resulted in compensation expense of $21,000,  $39,000 and $378,000 for the years
ended December 31, 1998, 1997 and 1996, respectively.

Other Stock Options

         In  connection  with  employment  agreements  the  Company has with its
executives  and certain key  employees,  non-qualified  stock  options have been
granted  to  purchase  shares of Common  Stock.  The  options  generally  become
exercisable in equal  installments  over four years  beginning one year from the
grant date and expire ten years from the original grant date.

<TABLE>
<CAPTION>

The following table summarizes all stock option activity:

                                                                 Weighted
                                                                  Average
                                           Exercise price        Exercise           Stock
                                              per share            Price           Options
---------------------------------------------------------------------------------------------
<S>                                       <C>                    <C>             <C>    


Outstanding at January 1, 1996..........  $ 0.33  -  40.25       $  8.74         2,563,370
   Granted..............................   24.38  -  56.00         36.58           355,040                                     
   Exercised............................    0.33  -   8.00          1.58          (545,062)
   Canceled.............................    6.00  -  56.00         49.83          (114,918)
---------------------------------------------------------------------------------------------
Outstanding at December 31, 1996........    0.33  -  52.25         12.76         2,258,430
   Granted..............................   28.00  -  55.50         35.05           446,000                                     
   Exercised............................    0.33  -  29.00          5.06          (262,002)
   Canceled.............................    6.00  -  46.75         25.52          (200,645)
---------------------------------------------------------------------------------------------
Outstanding at December 31, 1997........    0.33  -  55.50         16.80         2,241,783                                     
   Granted..............................    8.50  -  39.00         21.21         1,117,250
   Exercised............................    0.33  -  28.00          2.43          (483,423)                                    
   Canceled.............................    4.00  -  55.50         32.82          (376.754)
---------------------------------------------------------------------------------------------
Outstanding at December 31, 1998........  $ 0.67  -  55.50       $ 19.14         2,498,856
---------------------------------------------------------------------------------------------

Options Outstanding by Price Range at
   December 31, 1998....................  $ 0.67  -   6.00       $  2.96           649,877                                     
                                          $ 8.00  -  15.00       $  8.62           697,187
                                          $15.13  -  32.13       $ 28.81           742,792                                    
                                          $33.50  -  55.50       $ 36.30           409,000
                                                    
Exercisable at:
December 31, 1996.......................  $ 0.33  -  40.25       $  8.39         1,629,469
December 31, 1997.......................  $ 0.33  -  55.50       $ 11.55         1,629,942
December 31, 1998.......................  $ 0.67  -  55.50       $ 15.45         1,227,651

</TABLE>

                                                           


         In accordance with APB Opinion No. 25 and in connection with accounting
for the Company's  stock-based  compensation  plans,  the Company recorded total
stock  compensation  expense of $31,000,  $56,000 and $1.1 million for the years
ended  December  31,  1998,  1997 and 1996,  respectively,  with  respect to the
variable  stock  options and options  granted at less than fair value  described
previously. Additionally, in January 1998, the Company issued loans to the Chief
Executive  Officer,  President  and Chief  Financial  Officer for the purpose of
exercising stock options.  In accordance with the accounting  guidance for these
types of loans,  the Company  recorded  deferred  compensation  of $2.7  million
related  to these  loans.  For the year  ended  December  31,  1998 the  Company
recorded $540,000 of compensation expense related to these loans.

         If the Company  had elected to  recognize  stock  compensation  expense
based on the fair value of the options granted at grant date for its stock-based
compensation plans consistent with the method of SFAS No. 123, the Company's net
loss and loss per  share  would  have  been  reduced  to the pro  forma  amounts
indicated below:
<TABLE>
<CAPTION>


                                                    1998                   1997                     1996
----------------------------------------- -- ----------------- -- --------------------- -- --------------------
<S>                                          <C>                  <C>                      <C>   

Net Loss
  As reported......................           $ (28,064,000)       $ (30,209,000)          $  (16,142,000)
  Pro forma........................           $ (34,371,000)       $ (34,332,000)          $  (22,940,000)

Loss per share - basic and diluted
  As reported......................           $      ( 1.94)       $      ( 2.36)          $       ( 1.37)                  
  Pro forma........................           $      ( 2.38)       $      ( 2.68)          $       ( 1.95)                     
----------------------------------------- -- ----------------- -- --------------------- -- --------------------

</TABLE>

     The fair value of each option grant was estimated  using the  Black-Scholes
option pricing model using the Multiple Option approach  whereby a separate fair
value is  computed  for each  vesting  increment  of an  option.  The  following
assumptions were used:
<TABLE>
<CAPTION>

                                                    1998                   1997                      1996
----------------------------------------- -- ----------------- -- -------------------- -- --------------------
<S>                                          <C>                  <C>                     <C>  

Expected dividend yield.............                 0%                     0%                        0%
Expected stock price volatility.....                50%                     50%                       50%
Risk-free interest rate.............           4.62% - 4.83%           5.71% - 5.81%             6.01% - 6.41%
Expected life of options............            2 - 4 years             2 - 4 years               2 - 4 years
----------------------------------------- -- ----------------- -- -------------------- -- --------------------
</TABLE>


     The above  assumptions  are highly  subjective,  in particular the expected
stock  price  volatility  of the  underlying  stock.  Because  changes  in these
subjective input assumptions can materially  affect the fair value estimate,  in
management's  opinion,  the  existing  models do not  provide a reliable  single
measure of the fair value of its stock options.


     The weighted average remaining  contractual life of options  outstanding at
December  31,  1998,  1997 and 1996 was 7.2  years,  6.6  years  and 6.9  years,
respectively.

Warrants

     In connection with a private placement offering which commenced in 1993 and
continued  through 1994, the Company issued one detachable  Common Stock warrant
for every two shares of Common Stock purchased.  Each half warrant was allocated
$0.67 of the  overall  $8.00 per share  purchase  price.  In 1994 and 1993,  the
Company  issued  detachable  stock  warrants  in  connection  with  the  private
placement offering of 287,294 and 242,247,  respectively.  Each detachable stock
warrant  provides  for the  purchase  of one share of Common  Stock at $8.00 per
share with the warrants expiring in February 2000.  Warrants to purchase 136,688
shares, 136,783 shares and 13,190 shares of Common Stock were  exercised  during
1998,  1997 and 1996, respectively.

     During 1994 and 1993,  the  Company  issued  warrants to private  placement
selling  agents and a  corporate  partner to purchase  7,216  shares and 148,449
shares of Common Stock, respectively.  Each warrant provides for the purchase of
one share of Common Stock at $8.00 per share with the warrants expiring February
2000. Warrants to purchase 312 shares and 125,000  shares of  Common Stock  were
exercised during 1998 and 1997, respectively, and no warrants  were exercised in
1996.

     In January 1995,  the Company,  in  connection  with a loan received from a
principal of its designated  selling agent,  issued  warrants to purchase 15,000
shares of the Company's  Common Stock at $10.67 per share.  The warrants  expire
February 2000. As of December 31, 1998, no warrants have been exercised.

     In April 1995,  the Company,  in  connection  with  consulting  agreements,
issued  warrants to purchase  750,000 shares of Common Stock at $10.67 per share
to  various  consultants.  Additionally,  in  November  1995,  the  Company,  in
connection with consulting agreements, issued warrants to purchase 55,000 shares
of Common  Stock at $34.75 per share to different  consultants.  During 1997 and
1998, the Company, in connection with consulting agreements,  issued warrants to
purchase  128,000 shares and 240,000  shares,  respectively,  of Common Stock to
various consultants.  These warrants were priced at the fair market value on the
date of grant and the prices ranged from $7.00 to $32.13 per share. All of these
warrants vest equally over the term of the agreements, generally between one and
four  years.  The consulting  agreements can be terminated by the Company at any
time with only those warrants vested as of the date of termination  exercisable.
The warrants  expire  four or  five years  after  the date  of issuance.   As of
December 31, 1998,  no  warrants  have  been  exercised.   The Company  recorded
deferred compensation  associated  with the value of these  warrants of $717,000
and  $1.9  million  in  1998  and  1997,  respectively.   The  Company  recorded
compensation expense of $1.8  million,  $1.5  million  and  $1.1 million for the
years ended December 31, 1998, 1997 and 1996, respectively.

     In September and October of 1997,  the Company,  in  connection  with three
private  equity  placements,  issued  warrants to purchase  1,416,000  shares of
Common  Stock with 50% of the warrants  exercisable  at $55.00 per share and 50%
exercisable at $60.00 per share.  In addition,  in connection with these private
equity  placements,  the Company also issued warrants to purchase 250,000 shares
of Common Stock to various  selling  agents.  In  accordance  with the Amendment
Agreement,  for the purchasers of 900,000 shares,  the warrant price was amended
to be $35.00 per share.  The warrants are  exercisable  beginning one year after
the closing of the  purchase  and expire in December  2001.  As of December  31,
1998, no warrants have been exercised.


4.   Convertible Notes Payable

     During 1993, the Company issued $3.0 million in convertible  notes payable.
The notes earned interest at 10% per year which was payable quarterly (beginning
September 30, 1993) and the principal  balance was due three years from the date
of issuance.  The principal  balance was due to be paid on the due date or could
be converted into shares of Common Stock at a price of $8.00 per share.

     In  December  1994,  the  holders of $2.4  million in  principal  amount of
convertible  notes exchanged their notes for shares of Common Stock at $8.00 per
share for 294,624  shares of Common  Stock.  The  conversion  also  provided the
noteholders  with one warrant for every two shares of Common Stock converted for
total warrants covering 147,312 shares of Common Stock. The warrants provide for
the purchase of one share of Common Stock at $8.00 per share and expire February
2000.  During 1995,  noteholders  converted an additional  $550,000 in principal
amount of  convertible  notes  for  68,748  shares of Common  Stock at $8.00 per
share.  During 1996,  holders of the  remaining  $93,000 in principal  amount of
convertible  notes  exchanged  their notes for 11,562  shares of Common Stock at
$8.00 per share.  For the years ended December 31, 1998,  1997 and 1996 warrants
to purchase  17,186  shares,  23,435 shares and 5,204 shares,  respectively,  of
Common Stock were exercised.

5.   Employee Benefit Plans

     The  Company has  available  a  retirement  savings  plan for all  eligible
employees who have  completed  three months and 500 hours of service and who are
at least  21 years of age.  The  plan  has  received  Internal  Revenue  Service
approval  under  Section  401(a) of the  Internal  Revenue  Code.  Participating
employees are 100% vested upon entering the plan and no matching contribution is
made by the Company.

     On December 9, 1996, the Board of Directors  approved the Miravant  Medical
Technologies  401(k) - Employee Stock  Ownership Plan or the ESOP which provides
substantially  all employees with the  opportunity for long-term  benefits.  The
ESOP was  implemented  by  management on July 1, 1997 and operates on a calendar
year  basis.  In  conjunction  with the ESOP,  the Company  registered  with the
Securities and Exchange  Commission 300,000 shares of the Company's Common Stock
for purchase by the ESOP.  The ESOP provides for eligible  employees to allocate
pre-tax  deductions from payroll which are used to purchase the Company's Common
Stock  on a  bi-weekly  basis.  The  ESOP  also  provides  for  a  discretionary
contribution  made  by the  Company  based  on the  amounts  contributed  by the
participants.  The amount to be  contributed by the Company is determined by the
Board of Directors prior to the start of each plan year. Company  contributions,
which the Board of Directors  determined  to be 50% for the 1998 plan year,  are
made on a  quarterly  basis  and vest  equally  over a five year  period.  Total
Company matching contributions for 1998 and 1997 were not material.

6.   Provision for Income Taxes

     Deferred  income taxes  reflect the net tax effects of net  operating  loss
carryforwards,   credits  and  temporary   differences   between  the  financial
statements and tax basis of assets and  liabilities.  Significant  components of
the  Company's  deferred  tax assets and  liabilities  as of  December 31 are as
follows:

<TABLE>
<CAPTION>




                                                       1998                          1997
                                           ----------------------------------------------------------------
                                             Current       Non-current      Current        Non-current
                                           ----------------------------------------------------------------
<S>                                          <C>           <C>              <C>            <C>    

Deferred tax assets:
  Other accruals and reserves...........     $  118,000    $         --     $  110,000     $         --                      
  Capitalized research and development..             --       3,315,000             --        2,293,000                          
  Net operating losses and tax credits..             --      47,529,000             --       33,951,000                          
                                           ----------------------------------------------------------------
Total deferred tax assets...............        118,000      50,844,000        110,000       36,244,000
Deferred tax liabilities:
  Amortization and depreciation expense.             --         234,000             --          468,000                        
  Federal benefit for state income taxes          8,000       2,261,000          8,000        1,633,000                          
                                           ----------------------------------------------------------------                  
Total deferred tax liabilities..........          8,000       2,495,000          8,000        2,101,000                     
                                           ----------------------------------------------------------------
Net deferred tax assets.................        110,000      48,349,000        102,000       34,143,000
Less valuation reserve..................        110,000      48,349,000        102,000       34,143,000
                                           ----------------------------------------------------------------
                                             $       --    $         --     $       --     $         --                         
                                           ================================================================
</TABLE>


     The Company has net operating loss  carryforwards  for federal tax purposes
of  $120.1  million  which  expire  in the  years  2002 to  2018.  Research  and
alternative  minimum  tax credit  carryforwards  aggregating  $5.1  million  are
available  for  federal and state tax  purposes  and expire in the years 2002 to
2013.  The Company also has a state net  operating  loss  carryforward  of $28.1
million  which  expires  in the years  1999 to 2003.  Under  Section  382 of the
Internal  Revenue Code,  the  utilization of the Company's tax attributes may be
limited based on changes in the percentage of ownership in the Company.

     Included in the valuation  allowance balance is $8.2 million related to the
exercise of stock  options  which are not  reflected as an expense for financial
reporting purposes. Accordingly, any future reduction in the valuation allowance
relating to this amount will be credited directly to equity and not reflected as
an income tax benefit in the statement of operations.

7.   Commitments and Contingencies

     The Company has entered into  agreements  with  various  parties to perform
research and development  and conduct  clinical trials on behalf of the Company.
For the research and  development  agreements,  the Company has the right to use
and  license,  patent  and  commercialize  any  products  resulting  from  these
agreements.  The Company does not have any financial commitments with respect to
these  agreements  and  records  these  expenses as the  services  and costs are
incurred.  The Company has also entered into  licensing  and OEM  agreements  to
develop,  manufacture and market drugs and devices for photodynamic  therapy and
other related  uses.  The  agreements  provide for the Company to receive or pay
royalties  at various  rates.   The  Company  has  recorded  royalty  income  of
$191,000,  $234,000 and $73,000 for the years ended December 31, 1998,  1997 and
1996, respectively.

     In 1994,  the Company  entered into a  development  and  commercial  supply
agreement with Pharmacia & Upjohn to receive  formulation and packaging services
for one of the Company's drugs at specified prices. For the years ended December
31,  1998,  1997 and 1996 the Company paid $2.6  million,  $3.3 million and $2.6
million,  respectively,  and recorded as expense $2.9 million,  $2.9 million and
$2.5 million, respectively, primarily for drug formulation development cost.


     In July  1995,  the  Company  entered  into an  exclusive  development  and
licensing   agreement  with  Pharmacia  &  Upjohn  for  the  Company's   leading
proprietary  photoselective drug. Under this agreement,  the Company is entitled
to receive funding for certain preclinical development and clinical trial costs,
payments upon the  achievement  of certain  milestones  and  royalties  upon the
commercial  sale of drug  products.  In September  1995,  the Company signed two
supply contracts with Pharmacia & Upjohn which support the license  agreement by
providing drug product for the ongoing  clinical  development  and medical light
devices for use with the drug  product.  In July 1996,  the Company  amended the
license  agreement to include an additional  disease field and in December 1996,
entered into an additional  supply contract for devices under the new field. For
the years  ended  December  31,  1998 and 1997,  the  Company  recorded  license
revenues of $9.3 million and $1.9 million, respectively,  related to the billing
for the reimbursement of preclinical and clinical costs related to the Pharmacia
& Upjohn license agreement.


     Certain of the  Company's  research  has been or is being funded in part by
Small Business Innovation Research or National Institutes of Health grants. As a
result of such funding,  the United States  Government  has or will have certain
rights in the technology  developed  which includes a  non-exclusive,  worldwide
license  under such  inventions  of any  governmental  purpose  and the right to
require the Company to grant an exclusive  license under any of such  intentions
to a third party based on certain  criteria.  For the years ended  December  31,
1998,  1997 and 1996,  the Company has recorded  income from grants of $674,000,
$146,000 and $550,000, respectively.


     In February  1998, the Company agreed to guaranty a term loan in the amount
of $7.6  million  from a bank to a  director of the  Company.  In June 1998, the
director did not stand for  re-election  on the Board of Directors.  The loan is
due and payable on July 31, 1999, or sooner upon an event of default (as defined
in the loan  agreement),  bears interest at the bank's reference rate, minus .5%
per annum payable quarterly, and is secured by all of the individual's shares of
the Company's Common Stock. In connection with the guaranty, the Company granted
the bank a security  interest in an account  maintained  at the bank and agreed,
upon an  event  of  default,  to  purchase  the  loan  from the bank for a price
generally equal to the then outstanding principal,  plus accrued interest,  fees
and costs. In the event the Company  purchases the loan, the individual  granted
the Company  the option to acquire all of his shares of Common  Stock at a price
equal to 50% of the 20-day average closing price, net of the loan repayment. The
individual also agreed to certain restrictions on the sale of such shares. Under
the loan agreement and the guaranty,  the individual and the Company are subject
to the maintenance of specified financial and other covenants.

     The Company is involved in certain claims and inquiries that are routine to
its business.  Legal proceedings tend to be unpredictable  and costly.  Based on
currently  available  information,  management  believes that the  resolution of
pending claims,  regulatory  inquiries,  and legal  proceedings  will not have a
material adverse effect on the Company's  operating results,  financial position
or liquidity position.

8.   Leases


     The Company  leases four  buildings for a total monthly rental of $123,000.
Three of the leases  were  renewed in 1999 and expire  between  August  2002 and
October 2003.  The fourth lease expires in the year 2003. The leases provide for
annual rental  increases  based upon a consumer price index.  In September 1997,
the Company  began to sublease a portion of one of its  buildings  to Ramus,  an
affiliate.  The  sublease  agreement is for three years with rent based upon the
percentage of square footage occupied.  Sublease rental income from Ramus, which
is  approximately  $4,500 per month,  and is netted  against the Company's  rent
expense which is included in general and administrative expenses.

     Beginning in 1993,  the Company  entered into capital lease  agreements for
various research equipment.  The leases were from one to five years and required
equal monthly payments of principal and interest, with interest ranging from 10%
to 14%.  Amortization  expense related to this  capitalized  leased equipment is
included as  depreciation  expense.  Accumulated  amortization  was $158,000 and
$128,000 at December 31, 1998 and 1997,  respectively.  As of December 31, 1998,
the Company had no remaining capital lease obligations.

     Future  minimum  operating  lease  payments as of December  31, 1998 are as
follows:

1999..........................................        $    1,146,000        
2000..........................................               655,000
2001..........................................               411,000
2002..........................................               411,000
2003..........................................               360,000
                                                    ------------------
Total minimum lease payments..................        $    2,983,000       
                                                    ==================

     Rent  expense,  net of sublease  income,  was $1.1  million,  $866,000  and
$504,000 for the years ended December 31, 1998, 1997 and 1996, respectively.

9.   Related Party Transactions

     An outside  director  of the  Company is an officer of a  consulting  firm,
which provides corporate  financial  consulting services in the areas of mergers
and  acquisitions,   public  and  private  financings,  strategic  planning  and
financial analysis.  Both the consulting firm and the outside director have been
advisors  to the  Company  since 1991 and have been  involved  in the  Company's
private and public financings from 1991 to the present.  The consulting firm was
paid $45,800 in connection  with the Company's  initial public offering in 1995,
$1.1 million in  connection  with the Company's  secondary  offering in 1996 and
$222,000 in connection with the Company's  private equity placements in 1997. In
connection with ongoing  services  provided by the consulting  firm, the Company
recorded as expense $373,000, $178,000 and $224,000 for the years ended December
31, 1998, 1997 and 1996, respectively.

     In July 1996, a partner in a law firm used by the Company for outside legal
counsel,  was elected by the Board of  Directors  to serve as  Secretary  of the
Company.  The Company paid  $131,000 in connection  with legal  services for the
Company's  initial  public  offering  in 1995,  $57,000 in  connection  with the
Company's  secondary  offering  in 1996  and  $57,000  in  connection  with  the
Company's  private equity  placements in 1997. In connection  with general legal
services  provided by the law firm,  the Company  recorded as expense  $246,000,
$155,000  and $116,000  for the years ended  December  31, 1998,  1997 and 1996,
respectively.

10.  Fair Value of Financial Instruments

     The  following is  information  concerning  the fair value of each class of
financial instruments as of December 31, 1998 and 1997:

Cash, cash equivalents, accounts receivable and marketable securities

     The carrying  amounts of cash, cash  equivalents,  accounts  receivable and
marketable equity securities  approximate their fair values. Fair values of cash
equivalents and marketable securities are based on quoted market prices.

Long-Term Obligations

     The carrying amount of long-term obligations  approximate their fair values
due to the short remaining term of maturity of these obligations.

11.  Subsequent Events

Collaboration with Pharmacia & Upjohn

     In January 1999,  the Company and Pharmacia & Upjohn,  Inc. and Pharmacia &
Upjohn  S.p.A.,  which  involve  these  entities and certain  other wholly owned
subsidiaries or Pharmacia & Upjohn,  entered into an Equity Investment Agreement
pursuant to which  Pharmacia & Upjohn has purchased  from the Company  1,136,533
shares of Common  Stock for an aggregate  purchase  price of $19.0  million,  or
$16.71 per share.  This price includes a premium of  approximately  20% over the
ten (10) day average per share closing price of the Common Stock through January
14,  1999.  The Company and certain  wholly  owned  subsidiaries  of Pharmacia &
Upjohn have also  entered  into  certain  other  agreements,  including a Credit
Agreement  which will extend to the Company up to $22.5  million in credit to be
used to support the Company's   ophthalmology,  oncology  and other  development
programs, as  well as  for  general  corporate purposes, which  are   subject to
certain limitations and restrictions.   In connection with the extension of this
credit,  Pharmacia & Upjohn, or its  wholly owned subsidiaries,  will  receive a
total of up to 360,000  warrants  to purchase  Common  Stock of  Miravant.   The
exercise  price  of each  warrant  will  be equal to 140% of the  average of the
closing prices of the  Common Stock  for the  ten (10)  trading days immediately
preceding the borrowing request for the related loan.  Additionally, the Company
and  Pharmacia & Upjohn have amended  their  existing ophthalmology and oncology
development  and license agreements to eliminate future cost  reimbursements for
oncology and urology and any future milestone  payments in  age-related  macular
degeneration or AMD. Upon its initial borrowing under the Credit  Agreement, the
Company will  be required to meet certain affirmative,   negative  and financial
covenants.

Shareholders' Equity

     In accordance with the Amendment Agreement dated June 30, 1998, the Company
fulfilled  its  obligations related  to  112,500  shares  subject  to the  price
protection  provisions  for the  January  1,  February  1,  and  March  1,  1999
measurement  dates.  The Company  elected to pay the purchasers  cash and Common
Stock,  with the cash portion  amounting to $1.2 million,  $1.3 million and $1.7
million,  respectively.  The remainder of the price  protection  obligations for
those measurement dates was paid in the form of shares of Miravant Common Stock,
which  amounted  to  199,746   shares,   207,072  shares  and  282,178   shares,
respectively. The original shares and a corresponding number of warrants are now
released  from the lock-up  provisions  under the Amendment  Agreement  with the
purchasers.  In  addition,  under the  Amendment  Agreement,  in March  1999 the
Company issued an additional  450,000  warrants to the purchasers at an exercise
price of $35.00 per share.  The Company has now satisfied all of its obligations
under  the  Amendment  Agreement  and,  as  such,  the  Company  has no  further
obligations under this agreement to any of these parties.

12.  Pro Forma Disclosure for Subsequent Events (Unaudited)


     The following  unaudited  consolidated  pro forma  condensed  balance sheet
information presented below includes adjustments for the subsequent events above
in Note 11:

<TABLE>
<CAPTION>

                                                                          Adjustment for             Pro Forma
                                                December 31, 1998       Subsequent Events         December 31, 1998
----------------------------------------- --- --------------------- -- --------------------- -- --------------------
<S>                                           <C>                      <C>                      <C>   

Cash and cash equivalents (1).........        $     11,284,000         $     14,800,000         $      26,084,000
Total current assets..................              15,258,000               14,800,000                30,058,000
Total assets (1)......................        $     23,810,000         $     14,800,000         $      38,610,000
                                              ===================== -- ===================== -- ====================

Total current liabilities.............        $      4,124,000         $             --         $       4,124,000              
Common stock (1)......................             135,989,000               14,800,000               150,789,000
Total shareholders' equity (1)........              19,686,000               14,800,000                34,486,000
Total liabilities and shareholders' 
  equity (1)..........................        $     23,810,000         $     14,800,000         $      38,610,000
----------------------------------------- --- ===================== -- ===================== -- ====================
</TABLE>

(1) Cash  received,  and related  Common Stock issued,  in  connection  with the
equity  investment  made by Pharmacia & Upjohn net of cash paid to fulfill price
protection  provisions  as noted above in Note 11 as if such events had occurred
as of December 31, 1998.


<PAGE>

<TABLE>
<CAPTION>



                                                           INDEX TO EXHIBITS
                                                                                                            Incorporating
Exhibit                                                                                                     Reference
Number          Description                                                                                 (if applicable)
------          -----------                                                                                 ---------------
<S>             <C>                                                                                         <C>    

3.1             Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant
                filed with the Delaware Secretary of State on September 12, 1997.                           [D][3.1]
3.2             Certificate of Amendment of the Restated Certificate of Incorporation of the Registrant     [C][3.11]
                filed with the Delaware Secretary of  State on  July 24, 1995.
3.3             Restated Certificate of Incorporation of the Registrant filed with the Delaware Secretary   [B][3.1]
                of State on December 14, 1994.
3.4             Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.2]
                the Delaware Secretary of State on March 17, 1994.
3.5             Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.3]
                the Delaware Secretary of State on October 7, 1992.
3.6             Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.4]
                the Delaware Secretary of State on November 21, 1991.
3.7             Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.5]
                the Delaware Secretary of State on September 27, 1991.
3.8             Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.6]
                the Delaware Secretary of State on December 20, 1989.
3.9             Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.7]
                the Delaware Secretary of State on August 11, 1989.
3.10            Certificate of Amendment of the Certificate of Incorporation of the Registrant filed with   [A][3.8]
                the Delaware Secretary of State on July 13, 1989.
3.11            Certificate of Incorporation of the Registrant filed with the Delaware Secretary of State   [A][3.9]
                on June 16, 1989.
3.12            Amended and Restated Bylaws of the Registrant.                                              [D][3.12]
4.1             Specimen Certificate of Common Stock.                                                       [B][4.1]
4.2             Form of Convertible Promissory Note.                                                        [A][4.3]
4.3             Form of Indenture.                                                                          [A][4.4]
4.4             Special Registration Rights Undertaking.                                                    [A][4.5]
4.5             Undertaking Agreement dated August 31, 1994.                                                [A][4.6]
4.6             Letter Agreement dated March 10, 1994.                                                      [A][4.7]
4.7             Form of $10,000,000 Common Stock and Warrants Offering Investment Agreement.                [A][4.8]
4.8             Form of $55 Common Stock Purchase Warrant.                                                  [E][4.1]
4.9             Form of $60 Common Stock Purchase Warrant.                                                  [E][4.2]
4.10            Form of $35 Amended and Restated Common Stock Purchase Warrant.                             [F][4.1]
4.11            Form of Additional $35 Common Stock Purchase Warrant.                                       [F][4.2]
4.12            Warrant to Purchase 10,000 Shares of Common Stock between the Registrant and Charles S.     [G][4.12]
                Love.*
10.1            Amendment No. 6 dated as of January 1, 1998 to Employment Agreement between the             [G][10.1]
                Registrant and Gary S. Kledzik.**
10.2            Amendment No. 11 dated as of January 1, 1998 to Employment Agreement between the            [G][10.2]
                Registrant and David E. Mai.**
10.3            Amendment No. 3 dated as of January 1, 1998 to Employment Agreement between the             [G][10.3]
                Registrant and John M. Philpott.**
10.4            Security Agreement dated February 17, 1998 between the Registrant and Sanwa Bank.           [G][10.4]
10.5            Continuing Guaranty dated February 17, 1998 between the Registrant and Sanwa Bank.          [G][10.5]
10.6            Addendum to Continuing Guaranty dated February 17, 1998 between the Registrant and Sanwa    [G][10.6]
                Bank.
10.7            Indemnification Agreement dated February 27, 1998 between the Registrant and Michael D.     [G][10.7]
                Farney.
10.8            Amended and Restated Development and Commercial Supply Agreement dated June 8, 1998         [H][10.1]
                between the Registrant and Pharmacia & Upjohn Co.*
10.9            Amended and Restated Development and License Agreement dated June 8, 1998 between the       [H][10.2]
                Registrant and Pharmacia & Upjohn S.p.A.*
10.10           Amended and Restated Ophthalmology Development and License Agreement dated June 8, 1998     [H][10.3]
                between the Registrant and Pharmacia & Upjohn AB.*
10.11           Right of First Refusal Agreement dated June 8, 1998 between the Registrant and Pharmacia    [H][10.4]
                & Upjohn, Inc.*
10.12           Credit Agreement dated April 1, 1998 between the Registrant and Ramus Medical               [H][10.5]
                Technologies.*
10.13           Convertible Promissory Note dated April 1, 1998 between the Registrant and Ramus Medical    [H][10.6]
                Technologies.*
10.14           Strategic Alliance Agreement dated June 2, 1998 between the Registrant and Xillix           [H][10.7]
                Technologies Corp.*
10.15           Subscription Agreement relating to the Registrant's Common Stock dated June 2, 1998         [H][10.8]
                between the Registrant and Xillix Technologies Corp.
10.16           Subscription Agreement relating to Xillix's Common Stock dated June 2, 1998 between the     [H][10.9]
                Registrant and Xillix Technologies Corp.
10.17           Commercial Lease Agreement dated May 27, 1998 between the Registrant and Raytheon Company   [I][10.4]
10.18           Equity Investment  Agreement dated January 15, 1999 between the Registrant and Pharmacia    [J][10.1]
                & Upjohn, Inc., and Pharmacia & Upjohn, S.p.A.
10.19           Credit Agreement between the Registrant and the Lender.                                     [J][10.2]
10.20           Warrant Agreement between the Registrant and Pharmacia & Upjohn, Inc.                       [J][10.3]
10.21           Security Agreement between the Registrant and the Secured Party.                            [J][10.4]
10.22           Registration Rights Agreement between the Registrant and Pharmacia & Upjohn, Inc.           [J][10.5]
10.23           Amended and Restated Ophthalmology Development & License Agreement between the Registrant   [J][10.6]
                and Pharmacia & Upjohn AB.
10.24           Cardiovascular Right of First Negotiation between the Registrant and Pharmacia & Upjohn,    [J][10.7]
                Inc.
21.1            Subsidiaries of the Registrant.
23.1            Consent of Independent Auditors.
27.1            Financial Data Schedule.

-------------------------------------------
</TABLE>

[A]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained  in the  Registrant's  Registration  Statement  on Form S-1
           (File No. 33-87138).
[B]        Incorporated by  reference from the  exhibit referred to in  brackets
           contained  in  Amendment  No. 2  to  the  Registrant's   Registration
           Statement on Form S-1 (File No. 33-87138).
[C]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained in the  Registrant's  Form 10-Q for the quarter  ended June
           30, 1995, as amended on Form 10-Q/A dated  December 6, 1995 (File No.
           0-25544).
[D]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained  in the  Registrant's  Form  10-Q  for  the  quarter  ended
           September 30, 1997 (File No. 0-25544).
[E]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained  in the  Registrant's  Registration  Statement  on Form S-3
           (File No. 333-39905).
[F]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained in the Registrant's  Form 8-K dated June 30, 1998 (File No.
           0-25544).
[G]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained in the  Registrant's  Form 10-Q for the quarter ended March
           31, 1998 (File No. 0-25544).
[H]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained in the  Registrant's  Form 10-Q for the quarter  ended June
           30, 1998 (File No. 0-25544).
[I]        Exhibit A-1 to this exhibit is  incorporated  by  reference  from the
           exhibit  referred to in the  Registrant's  Registration  Statement on
           Form S-1 (File No. 33-87138).
[J]        Incorporated  by reference  from the exhibit  referred to in brackets
           contained in the  Registrant's  Form 8-K dated January 15, 1999 (File
           No. 0-25544).
*          Confidential  portions of  this exhibit  have been deleted and  filed
           separately  with  the  Commission pursuant  to Rule  24b-2  under the
           Securities Exchange Act of 1934.
**         Management contract or compensatory plan or arrangement.

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