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

                                   FORM 10-K/A
                         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, 2001

                                       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
             (Exact name of Registrant as specified in its charter)

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


                336 Bollay Drive, Santa Barbara, California 93117
          (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
                          Common Share Purchase Rights

     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. [ ___ ]

     The   approximate   aggregate   market   value  of  voting  stock  held  by
non-affiliates as of March 15, 2002 based upon the last sale price of the Common
Stock of $1.15 per  share,  as  reported  on the  Nasdaq  National  Market,  was
approximately $16,566,361. 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, 2002 was
18,876,508
<PAGE>




ITEM 7. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF  OPERATIONS
       (As  amended  on  May  30,  2002  to  revise  research  and
        development disclosure.)

     This  section of the 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 "may,"  "will,"
"should," "potential," "expects,"  "anticipates," "intends," "plans," "believes"
and similar  expressions.  These  statements  are based on our current  beliefs,
expectations  and  assumptions  and  are  subject  to  a  number  of  risks  and
uncertainties and include  statements  regarding our general beliefs  concerning
the efficacy and potential benefits of photodynamic  therapy;  the timing of the
completion  of our  analysis of the  clinical  data from the SnET2 Phase III wet
age-related  macular  degeneration,  or AMD,  clinical  trials,  which Pharmacia
Corporation, or Pharmacia,  concluded had not met the primary efficacy endpoint;
the  assumption  that we will  continue  as a going  concern  and stay listed on
Nasdaq; our plans to collaborate with other parties;  our ability to continue to
retain employees under our current financial  circumstances;  our ability to use
our light  production  and  delivery  devices  in future  clinical  trials;  our
expected research and development expenditures; our patent prosecution strategy;
and our  expectations  concerning  the  government  exercising its rights to use
certain of our licensed  technology.  Our actual results could differ materially
from  those  discussed  in  these  statements  due  to a  number  of  risks  and
uncertainties  including:  a  failure  of  our  drugs  and  devices  to  receive
regulatory  approval;   unanticipated  complexity  or  difficulty  in  analyzing
clinical trial data; other parties may decline to collaborate with us due to our
financial  condition or other  reasons  beyond our control;  our existing  light
production and delivery technology may prove to be inapplicable or inappropriate
for future studies;  we may be unable to obtain the necessary funding to further
our research and  development  activities and the government may change its past
practices  and  exercise  its rights  contrary to our  expectations.  For a more
complete  description  of the risks  that may  impact  our  business,  see "Risk
Factors",  for a discussion of certain  risks,  including  those relating to our
ability to obtain  additional  funding,  our ability to establish  new strategic
collaborations,  our operating  losses,  risks related to our industry and other
forward-looking statements.

     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(TM)  PDT,
our proprietary technologies for photodynamic therapy. We have been unprofitable
since our founding  and have  incurred a  cumulative  net loss of  approximately
$173.6  million  as of  December  31,  2001.  As we  currently  do not  have any
significant sources of revenues, we expect to continue to incur substantial, and
possibly  increasing,  operating  losses for the next few years due to continued
spending on  research  and  development  programs,  the  funding of  preclinical
studies,   clinical   trials  and   regulatory   activities  and  the  costs  of
manufacturing  and  administrative  activities.  We also expect these  operating
losses to  fluctuate  due to our ability to fund the  research  and  development
programs as well as the operating  expenses of the Company.  We believe with the
implementation  of our cost  restructuring  program  in  January  2002,  we have
sufficient resources to fund the current required expenditures through September
30,  2002.  In  addition,  we also  believe we can raise  additional  funding to
support operations through corporate  collaborations or partnerships,  licensing
of SnET2 or new products and equity or debt  financings  prior to September  30,
2002. However, there can be no assurance that we will be successful in obtaining
such financing or financing will be available on favorable  terms. If additional
funding is not  available  when  required,  we  believe  we have the  ability to
conserve cash required for operations  through December 31, 2002 by the delay or
reduction in scope of one or more of our research and  development  projects and
adjusting, deferring or reducing salaries of employees and by reducing operating
and overhead expenditures to conserve cash to be used in operations.

     Our  historical  revenues  primarily  reflect  income earned from licensing
agreements,  grants  awarded,  royalties from device  product  sales,  milestone
payments,  non-commercial  drug sales to Pharmacia and interest  income.  During
2001, we sold approximately $4.3 million of the SnET2 bulk active pharmaceutical
ingredient,  or bulk API, to  Pharmacia  to be used in  preclinical  studies and
clinical trials and in anticipation of a potential New Drug Application, or NDA,
filing for SnET2 for the treatment of wet age-related macular  degeneration,  or
AMD.

     Our future  bulk API sales are  expected  to  consist of the  approximately
$450,000 in  reimbursements  that we are to receive from  Pharmacia for bulk API
costs  incurred by us through  January  2002.  Any other  future  potential  new
revenues such as license income from new collaborative agreements, revenues from
contracted  services,  grants awarded  and/or  royalties from potential drug and
device  sales,  if any,  will  depend on,  among other  factors,  the timing and
outcome of applications for regulatory  approvals,  the results from our ongoing
preclinical   studies  and  clinical  trials,   our  ability  to  establish  new
collaborative  partnerships  and their  subsequent level of participation in our
preclinical  studies  and  clinical  trials,  our  ability  to  have  any of our
potential drug and related device products successfully  manufactured,  marketed
and   distributed,   the   restructuring   or   establishment  of  collaborative
arrangements for the development,  manufacturing,  marketing and distribution of
some of our future products.  We anticipate our operating activities will result
in substantial,  and possibly increasing,  operating losses for the next several
years.

     In collaboration  with Pharmacia,  in December 2001, we completed two Phase
III  ophthalmology  clinical  trials for the treatment of AMD with our lead drug
candidate, SnET2. In January 2002, Pharmacia, after an analysis of the Phase III
AMD clinical  data,  determined  that the clinical data results  indicated  that
SnET2 did not meet the primary  efficacy  endpoint in the study  population,  as
defined by the clinical trial protocol, and that they would not be filing an NDA
with  the  U.S.  Food  and Drug  Administration,  or FDA.  Based on  Pharmacia's
analysis of the AMD clinical  data, we may not be able to proceed with our plans
to seek  regulatory  approval of SnET2 as formerly  planned.  In March 2002,  we
entered into a Contract  Modification and Termination  Agreement with Pharmacia,
whereby we regained the license  rights to SnET2 as well as the related data and
assets from the Phase III AMD clinical trials and  restructured  our outstanding
debt with them. We are  currently  conducting  our own detailed  analysis of the
clinical data, including an analysis of the subset groups. We expect to complete
our analysis by the end of the second  quarter 2002 and, based on the results of
our analysis,  we will  determine  the future  potential  development  of SnET2,
including the potential  use of SnET2 in other disease  indications,  such as in
cardiovascular disease and oncology. In addition, we have terminated our license
collaboration with Pharmacia,  and we intend to seek a new collaborative partner
for PhotoPoint PDT in ophthalmology.

     We have four  primary  disease  indications,  or research  and  development
programs,  for which we have  focused  our  research  and  development  efforts:
ophthalmology, dermatology, cardiovascular disease and oncology.

     In  ophthalmology,  besides the possible use of SnET2 in other eye diseases
and another AMD clinical trial, or in combination with other  therapies,  we are
continuing the development of next generation drug compounds for use in the same
eye disease areas.

     In our dermatology  program, we have developed a topical gel formulation to
deliver a proprietary new photoreactive drug directly to the skin. In July 2001,
we completed a Phase I  dermatology  clinical  trial and, in  January 2002,   we
commenced  a  Phase  II  clinical  trial  with  a  topical  formulation  of  our
photoreactive  drug,  MV9411,  for  potential  use in the  treatment  of  plaque
psoriasis, a chronic dermatological  condition for which there is no known cure.
Plaque  psoriasis is a disease  marked by  hyperproliferation  of the epidermis,
resulting in inflamed  and scaly skin  plaques.  The Phase II clinical  trial is
currently ongoing and we expect to complete the trial by the end of 2002.

     We are also conducting  preclinical studies of SnET2 and new photoselective
drugs  for  cardiovascular  diseases,  in  particular  for  the  prevention  and
treatment  of  restenosis.  Restenosis  is the  renarrowing  of an  artery  that
commonly  occurs after  balloon  angioplasty  for  obstructive  coronary  artery
disease.  We are in the  process of  formulating  a new lead drug,  MV0633,  and
performing  the  requisite  studies to prepare for an  Investigational  New Drug
application, or IND, in cardiovascular disease.

     In oncology,  we are conducting  preclinical research of our photoselective
therapy to destroy abnormal blood vessels in tumors.  We are pursuing this tumor
research  with  some of our new  photoselective  drugs  and  also  investigating
combination therapies with PhotoPoint PDT and other types of compounds.

     Below is a summary of the  disease  programs  and their  related  stages of
development.  The  information in the column labeled  "Estimate of Completion of
Phase" contains  forward-looking  statements  regarding  timing of completion of
product  development  phases.  The actual  timing of  completion of those phases
could differ materially from the estimates provided in the table.  Additionally,
due to the  uncertainty  of the  scientific  results of any of these programs as
well as the uncertainty  regarding the Company's ability to fund these programs,
we  are  unable  to  provide  an  accurate  estimate  as to the  costs,  capital
requirements or the specific timing necessary to complete any of these programs.
For a discussion of the risks and  uncertainties  associated  with the timing of
completing a product  development  phase for our company as well as our industry
as a whole,  see the "Risk  Factors"  section of  "Management's  Discussion  and
Analysis of Financial Condition and Results of Operations".

<TABLE>
<CAPTION>
<S>     <C>                                                     <C>                                     <C>

                                                                              Phase of             Estimate of Completion
              Program                Description / Indication               Development                  of Phase
       ----------------------    -----------------------------------     --------------------      ------------------------
           Ophthalmology              AMD (SnET2)                        Review of Phase III data         Q2 2002

                                      New drug compounds                 Research studies                   **

           Dermatology                Psoriasis                          Phase II                          2002

           Cardiovascular             Restenosis (MV9411)                Preclinical studies                **
            disease

           Oncology                   Tumor research (MV6033)            Research studies                   **
</TABLE>

     ** Based  on the  early  development  stage of  these  programs  we  cannot
     reasonable  estimate  the  time at which  these  programs  may move  from a
     research or preclinical  development phase to the clinical trial phase. The
     decision  and timing of whether  these  programs  will move to the clinical
     trial  phase will depend on a number of factors  including;  the results of
     the  preclinical  studies,  the  estimated  costs  of  the  programs,   the
     availability  of  alternative  therapies  and our ability to fund or obtain
     additional  financing or to obtain new collaborative  partners to help fund
     the programs.

     Based on our ability to successfully obtain additional funding, our ability
to obtain new collaborative  partners, our ability to pursue further development
of SnET2 for AMD or other disease  indications,  our ability to reduce operating
costs as needed,  our  ability  to remain  listed on Nasdaq  and  various  other
economic  and   development   factors,   such  as  the  cost  of  the  programs,
reimbursement and the available alternative therapies, we may or may not be able
to or elect to further  develop  PhotoPoint  PDT  procedures  in  ophthalmology,
cardiovascular disease, dermatology, oncology or in any other indications.

Pharmacia Corporation

     Over time we have entered  into a number of  agreements  with  Pharmacia to
fund our operations and develop and market SnET2. In March 2002, we entered into
a Contract  Modification and Termination Agreement with Pharmacia under which we
regained  all of the  rights  and  related  data and  assets  to our  lead  drug
candidate,  SnET2, and we restructured our outstanding debt to Pharmacia.  Under
the  terms of the  Contract  Modification  and  Termination  Agreement,  various
agreements and side letters between Miravant and Pharmacia have been terminated,
most of which  related to SnET2 license  agreements  and related drug and device
supply  agreements,  side letters,  the  Manufacturing  Facility  Asset Purchase
Agreement and various  supporting  agreements.  We also modified our 2001 Credit
Agreement with Pharmacia.

     The  termination of the various  agreements  provided that all ownership of
the  rights,  related  data and  assets to SnET2 and the Phase III AMD  clinical
trials for the  treatment of AMD will revert back to us. The rights  transferred
back to us include  the  ophthalmology  IND and the  related  filings,  data and
reports and the ability to license the rights to SnET2.  The assets  include the
lasers utilized in the Phase III AMD clinical trials, the bulk API manufacturing
equipment,  all of the bulk API inventory sold to Pharmacia in 2001 and 2002 and
the finished dose  formulation,  or FDF,  inventory.  In addition,  we will also
reassume  the lease  obligations  and  related  property  taxes for our bulk API
manufacturing  facility.  The  lease  agreement  expires  in  October  2006  and
currently has a base rent of approximately $26,000 per month.

     Under  the  Manufacturing  Facility  Asset  Purchase  Agreement,  which was
entered into in May 2001 and subsequently  terminated  in March 2002,  Pharmacia
satisfied the following obligations during 2001:

          *    Pharmacia  agreed to buy our existing  bulk API inventory at cost
               for $2.2 million. As of June 30, 2001, the entire $2.2 million of
               the existing bulk API inventory had been  delivered to Pharmacia,
               recorded as revenue and the  payment had been  received  into the
               inventory escrow account;
          *    Pharmacia committed, through two other purchase orders, to buy up
               to an  additional  $2.8  million  of the bulk API which  would be
               manufactured  by us. As of December  31,  2001,  we had sold $2.1
               million of newly manufactured bulk API inventory,  which had been
               delivered to  Pharmacia,  recorded as revenue and the payment had
               been received into the inventory escrow account. Additionally, in
               March  2002,   Pharmacia  made  their  final  purchase  of  newly
               manufactured  bulk API of  approximately  $450,000  which will be
               paid  directly  to us.  No  further  bulk  API  will  be  sold to
               Pharmacia;
          *    Pharmacia   agreed  to  purchase  the   manufacturing   equipment
               necessary to produce bulk API. The  manufacturing  equipment  was
               purchased for $863,000,  its fair market value as appraised by an
               independent  appraisal  firm. The payment for the purchase of the
               equipment  was  made  into  an  equipment  escrow  account  to be
               released in June 2001;
          *    The  interest  earned  by  the  inventory  and  equipment  escrow
               accounts  accrued  to us and will be  released  from each  escrow
               account.  All  amounts  received  into  escrow  are  recorded  as
               accounts receivable until the amounts are released;
          *    In January 2002, the inventory  escrow account as well as accrued
               interest was released to us in full;  and
          *    In  connection  with the Contract  Modification  and  Termination
               Agreement,  Pharmacia  has  transferred  ownership  of all of the
               bulk  API  inventory and bulk API manufacturing equipment back to
               us and has released the  equipment escrow  funds in  March  2002.

     The Contract  Modification and Termination Agreement also modified the 2001
Credit Agreement as follows:

          *    The outstanding  debt that we owed to Pharmacia of  approximately
               $26.8  million,   was  reduced  to  $10.0  million  plus  accrued
               interest;
          *    We will  be  required  to make a  payment  of $5.0  million  plus
               accrued  interest  on each of  March 4,  2003  and June 4,  2004.
               Interest on the debt will be  recorded  at the prime rate,  which
               was 4.75% at March 5, 2002;
          *    In  exchange  for these  changes  and the  rights  to  SnET2,  we
               terminated  our  right to  receive a $3.2  million  loan that was
               available under the 2001 Credit Agreement. Also, as Pharmacia has
               determined  that  they  will  not  file  an  NDA  for  the  SnET2
               PhotoPoint  PDT for  AMD and the  data  from  the  Phase  III AMD
               clinical  trials data did not meet certain  clinical  statistical
               standards as defined by the clinical trial protocol,  we will not
               have available to us an additional $10.0 million of borrowings as
               provided for under the 2001 Credit  Agreement.  Pharmacia  has no
               obligation  to  make  any  further  milestone  payments,   equity
               investments or to extend us additional credit;
          *    The early  repayment  provisions  and many of the covenants  were
               eliminated or modified.  Our requirement to allocate  one-half of
               the net  proceeds  from any public or private  equity  financings
               and/or asset dispositions towards the early repayment of our debt
               to Pharmacia was modified as follows:
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition proceeds are less than or equal to $7.0 million,
                    we are not required to make an  early  repayment towards our
                    Pharmacia debt;
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition  proceeds are greater than $7.0 million but less
                    than or equal  to $15.0  million,  then we are  required  to
                    apply  one-third  of net the  proceeds  from the  amount  in
                    excess of $7.0  million  up to $15.0  million,  or a maximum
                    repayment of $2.7 million towards our Pharmacia debt;
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition proceeds are greater than $15.0 million but less
                    than or equal  to $25.0  million,  then we are  required  to
                    apply one-half of the net proceeds from the amount in excess
                    of $15.0 million up to $25.0 million, or a maximum repayment
                    of $7.7 million towards our Pharmacia debt;
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition proceeds are greater than $25.0 million, then we
                    are  required  to  apply  all of the net  proceeds  from the
                    amount in excess of $25.0 million, or repay the entire $10.0
                    million plus accrued  interest  towards our Pharmacia  debt;
                    and
               *    Any early  repayment of our Pharmacia  debt applies first to
                    the loan  amount due on March 4, 2003, then to the remaining
                    loan amount due on June 4, 2004.

     Aside from the changes made under the Contract Modification and Termination
Agreement  discussed above, there were no changes made to the Warrant Agreement,
the Equity  Investment  Agreement and the  Registration  Rights  Agreement  with
Pharmacia.

     In connection with the 2001 Credit Agreement, we granted Pharmacia warrants
to purchase a total of 360,000 shares of our Common Stock.  The exercise  prices
and  expiration  dates are as follows:  120,000  shares at an exercise  price of
$11.87 per share  expiring May 5, 2004,  120,000  shares at an exercise price of
$14.83 per share  expiring  November 12, 2004 and 120,000  shares at an exercise
price of $20.62 per share  expiring May 23, 2005.  Pharmacia  will retain all of
its rights under the terms and conditions of the Warrant Agreement.

     In 1999,  through  an  Equity  Investment  Agreement,  Pharmacia  purchased
1,136,533  shares  of our  Common  Stock at $16.71  per  share for an  aggregate
purchase price of $19.0 million.  Additionally,  in connection with the original
SnET2  license  agreement in 1995,  Pharmacia  purchased  725,001  shares of our
Common Stock for $13.0 million. Under the terms of the Contract Modification and
Termination  Agreement,  Pharmacia  will  retain all the shares of Common  Stock
purchased from us.

Critical Accounting Policies

     Revenue  Recognition.  The Company  recognizes  revenues from product sales
based on when  ownership  of the  product  transfers  to the  customer  and when
collectibility  is  reasonably  assured.  Sales  of bulk  active  pharmaceutical
ingredient to Pharmacia is recorded as revenue in the period when the product is
received  by  Pharmacia  at  their  facility.  Our  current  licensing  revenues
represent  reimbursements from Pharmacia for out-of-pocket  expenses incurred in
our  preclinical  studies  and  clinical  trials  for the SnET2  PhotoPoint  PDT
treatment for AMD.  These  licensing  revenues are recognized in the period when
the reimbursable expenses are incurred. Grant income is recognized in the period
in which  the  grant  related  expenses  are  incurred  and  royalty  income  is
recognized in the period in which the royalties are earned.

     Research  and  Development  Expenses.  Research and  development  costs are
expensed as incurred.  Research and  development  expenses are  comprised of the
following  types  of costs  incurred  in  performing  research  and  development
activities:  salaries and  benefits,  allocated  overhead and  occupancy  costs,
preclinical  study costs,  clinical  trial and related  clinical drug and device
manufacturing costs,  contract services and other outside costs. The acquisition
of  technology  rights for  research and  development  projects and the value of
equipment or drug products for specific research and development projects,  with
no  alternative  future  use,  are also  included in  research  and  development
expenses.

     Stock-Based Compensation.  The Statement of Financial Accounting Standards,
or SFAS, issued SFAS No. 123,  "Accounting for Stock-Based  Compensation," which
encourages,  but does not require,  companies to record compensation expense for
stock-based  employee  compensation  plans  at fair  value.  We have  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
and  related   interpretations,   including  Financial  Interpretation  No.  44,
"Accounting  for  Certain   Transactions   Involving  Stock   Compensation,"  in
accounting for our stock option plans.

     We also have granted and continue to grant  warrants and options to various
consultants  of ours.  These  warrants and options are generally in lieu of cash
compensation  and, as such,  deferred  compensation is recorded related to these
grants.  Deferred compensation for warrants and options granted to non-employees
has been  determined  in accordance  with SFAS No. 123 and Emerging  Issues Task
Force or EITF 96-18 as the fair value of the consideration  received or the fair
value of the equity  instruments  issued,  whichever is more reliably  measured.
Deferred compensation is amortized over the consulting or vesting period.

Recent Accounting Pronouncements

     In October 2001, the Financial  Accounting Standards Board, or FASB, issued
SFAS No. 144,  "Accounting for the Impairment or Disposal of Long-Lived  Assets"
or SFAS No. 144. SFAS No. 144 addresses  financial  accounting and reporting for
the  impairment or disposal of long-lived  assets and  discontinued  operations.
SFAS No. 144 is effective  for all fiscal  years  beginning  after  December 15,
2001. The adoption of SFAS No. 144 is not expected to have a material  effect on
our consolidated financial statements.

     In June 1998,  the FASB  issued SFAS No. 133,  "Accounting  for  Derivative
Instruments  and Hedging  Activities" or SFAS No. 133. SFAS No. 133  establishes
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts,  and for hedging activities.
It requires an entity  recognize all derivatives as either assets or liabilities
in the  statement of financial  position and measure those  instruments  at fair
value.  In July 1999,  the FASB issued SFAS No. 137  "Accounting  for Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement  No. 133".  SFAS No. 137 deferred the  effective  date of SFAS No. 133
until fiscal years  beginning  after June 15, 2000. The adoption of SFAS No. 133
has not had a material effect on our consolidated financial statements.

Results of Operations

     The following  table provides a summary of our revenues for the years ended
December 31, 2001, 2000 and 1999:
<TABLE>
<CAPTION>
<S>     <C>                                                             <C>             <C>                     <C>

 ---------------------------------------------------------------------------------------------------------------------------
 Consolidated Revenues                                                   2001               2000                1999
 ---------------------------------------------------------------------------------------------------------------------------
 License - contract research and development...................        $    302,000         $ 4,481,000         $13,996,000
 Bulk active pharmaceutical ingredient sales...................           4,306,000                  --                  --
 Royalties.....................................................              75,000                  --             143,000
 Grants........................................................                  --             112,000             438,000
 ---------------------------------------------------------------------------------------------------------------------------
 Total revenues................................................        $  4,683,000         $ 4,593,000         $14,577,000
 ---------------------------------------------------------------------------------------------------------------------------

</TABLE>



Revenues

     Revenues. Our revenues decreased from $14.6 million in 1999 to $4.6 million
in 2000 and  increased  slightly to $4.7 million in 2001.  The  fluctuations  in
revenues are due to the following:

     Bulk Active  Pharmaceutical  Ingredient Sales. In May 2001, we entered into
an Asset Purchase  Agreement with Pharmacia  whereby Pharmacia agreed to buy our
existing  bulk API  inventory at cost for $2.2  million and  committed to buy an
additional  $2.8 million of newly  manufactured  bulk API through March 2002. In
2001,  we recorded  revenue of $2.2  million  related to the  existing  bulk API
inventory and $2.1 million related to the newly manufactured bulk API inventory.
There were no bulk API sales in 2000 or 1999.

     License  Income.   License  income,  which  represents   reimbursements  of
out-of-pocket or direct costs incurred in preclinical  studies and Phase III AMD
clinical  trials,  decreased  from $14.0 million in 1999 to $4.5 million in 2000
and $302,000 in 2001. The decrease in license income is specifically  related to
the transition of the majority of the operations and funding responsibilities of
the  Phase III AMD  clinical  trials to  Pharmacia  Corporation  in 1999 and the
completion   of  the   preclinical   studies   and   our  AMD   clinical   trial
responsibilities.  Reimbursements  received during 2001 were primarily for costs
incurred  to  complete  preclinical  studies  for  AMD.  During  2000,  we  were
responsible for the oversight of the AMD related preclinical studies, as well as
a portion of the  equipment and drug costs related to the Phase III AMD clinical
trials. We were completely  reimbursed for all  out-of-pocket  preclinical study
costs and  approximately  half of the  equipment  and drug  costs.  In 1999,  in
addition to being  responsible  for the same types of costs incurred in 2000, we
were also responsible,  and subsequently reimbursed, for the out-of-pocket costs
associated   with  the  screening,   treatment  and  monitoring  of  individuals
participating in the Phase III AMD clinical trials. We do not expect to have any
significant license income from Pharmacia in 2002.

     In January 2002, Pharmacia, after an analysis of the Phase III AMD clinical
data,  determined  that the clinical data results  indicated  that SnET2 did not
meet the primary efficacy  endpoint in the study  population,  as defined by the
clinical trial protocol,  and that they would not be filing an NDA with the FDA.
Subsequently,  in March  2002,  we  entered  into a  Contract  Modification  and
Termination  Agreement with Pharmacia  whereby Pharmacia has agreed to reimburse
us for all of our finished  and  in-process  lots of bulk API for  approximately
$450,000.  We will receive no further  reimbursements  from Pharmacia related to
any of our ongoing  preclinical  studies and clinical  trials and Pharmacia will
not make any more purchases of bulk API.

     Grant Income.  We have  recorded  grant income of $112,000 and $438,000 for
the years ended December 31, 2000 and 1999.  There was no grant income  recorded
for 2001.  Grant income  relates to a two-year  grant  received in 1997 that was
extended to the end of 2000.  While we will continue to pursue  obtaining grants
as a means  of  funding  research  and  development  programs,  we have  not yet
received  any  additional  grants  and  currently  do not have any  grant  funds
available  to us.  Additionally,  there  can be no  assurance  that  we  will be
successful  in obtaining any future  grants.  We currently do not have any grant
funds available nor have any grants been awarded.

     Royalty Income. We earned royalty income from a 1992 license agreement with
Laserscope,  which  provided  royalties on the sale of our  previously  designed
device products.  We recorded income of $75,000 in 2001 and $143,000 in 1999. We
did not record any royalty  income under this  agreement in 2000.  The royalties
recorded in 2001  represent the final amounts due under the  Laserscope  license
agreement,  which  expired in April 1999 and no further  royalty  income will be
recorded under this agreement in the future.

     Cost of Goods Sold. In connection with the newly manufactured bulk API sold
under the terms of the Asset  Purchase  Agreement  with  Pharmacia,  we recorded
$934,000  in  manufacturing  costs for the year ended  December  31,  2001.  The
amounts recorded as cost of goods sold represent the costs incurred for only the
newly  manufactured  bulk API in 2001. No costs were recorded for those expenses
incurred in prior periods for raw materials and the bulk API manufactured  prior
to 2001, as these costs were expensed as research and  development  costs in the
periods  incurred.   Based  on  the  terms  of  the  Contract  Modification  and
Termination  Agreement with Pharmacia in March 2002,  future costs of goods sold
are only expected to be for those costs  related to the finished and  in-process
bulk API lots that Pharmacia has agreed to reimburse us for.

     Research and Development. Research and development expenses are expensed as
incurred. Research and development expenses are comprised of direct and indirect
costs.  Direct costs  consist of  preclinical  study costs,  clinical  trial and
related  clinical drug and device  development  and  manufacturing  costs,  drug
formulation  costs,   contract  services  and  other  research  and  development
expenditures.  Indirect  costs  consist of salaries and  benefits,  overhead and
facility costs, and other support service expenses. Our research and development
expenses decreased from $29.7 million in 1999 to $19.9 million in 2000 and $13.3
million in 2001. The overall  decrease in research and  development  expenses is
specifically  related to the  transition of the majority of the  operations  and
funding  responsibilities  of the Phase III AMD clinical  trials to Pharmacia in
December 1999 and the completion of the preclinical studies and our AMD clinical
trial  responsibilities.  Our research and development expenses,  net of license
reimbursement  and grant revenue,  were $13.0 million in 2001,  $15.4 million in
2000 and $15.3 million in 1999.

     As  previously  mentioned,  we have four primary  research and  development
programs  for  which we have  focused  our  research  and  development  efforts:
ophthalmology,  dermatology,  cardiovascular disease and oncology.  Research and
development  costs are initially  identified as direct and indirect costs,  with
only direct costs  tracked by specific  program.  These direct costs  consist of
clinical,  preclinical, drug and formulation development, device development and
research costs. We do not track our indirect  research and development  costs by
program.  These  indirect  costs consist of labor,  overhead and other  indirect
costs.  Prior to 1999, we did not track our historical  research and development
costs by specific program, but rather by the type of expense incurred. For these
reasons we cannot accurately  estimate with any degree of certainty our indirect
research  and  development  costs or our total  historical  costs on a  specific
program basis. The specific program research and development costs represent the
direct costs incurred.  The direct research and development costs by program are
as follows:
<TABLE>
<CAPTION>
<S>     <C>                                     <C>                     <C>                     <C>


            Program                                  2001                   2000                     1999
       -----------------------------------    -------------------    -------------------    -----------------------

       Direct costs:
            Ophthalmology.............         $   1,060,000          $    6,112,000         $  15,370,000
            Dermatology................              639,000               1,474,000             1,527,000
            Cardiovascular disease.....            2,038,000               1,217,000               814,000
            Oncology...................              126,000                 655,000               965,000
                                              -------------------    -------------------    -----------------------
       Total direct costs..............        $   3,863,000          $    9,458,000         $  18,676,000

       Indirect costs .................        $   9,455,000          $   10,486,000         $  11,073,000
                                              -------------------    -------------------    -----------------------
       Total research and development
       costs...........................        $  13,318,000          $   19,944,000         $  29,749,000
                                              ===================    ===================    =======================
</TABLE>

     Ophthalmology.  Our direct ophthalmology  program costs have decreased from
$15.4  million in 1999 to $6.1 million in 2000 and $1.1  million in 2001.  Costs
incurred in the ophthalmology  program have consisted of clinical trial expenses
for the screening,  treatment and monitoring of individuals participating in the
AMD clinical trials, internal and external preclinical study costs, and drug and
device development and manufacturing  costs. The continued decrease from 1999 to
2001 is specifically related to the transition of the majority of the operations
and funding  responsibilities  of the Phase III AMD clinical trials to Pharmacia
in December 1999 and the completion of the SnET2 preclinical studies and our AMD
clinical trial responsibilities.

     Dermatology.  Our direct  dermatology  program  costs were $1.5  million in
1999, $1.5 million in 2000 and decreased to $639,000 in 2001.  Costs incurred in
the  dermatology   program  include  expenses  for  drug  development  and  drug
formulation, internal and external preclinical study costs, and Phase I clinical
trial  expenses.  The  decrease in 2001 as compared to prior years is due to the
majority of the costs for preclinical studies and drug formulation were incurred
in 1999 and 2000,  while 2001 consisted  primarily of the relatively  minor cost
for the Phase I clinical trial.

     Cardiovascular  Disease.  Our direct  cardiovascular  disease program costs
increased  from  $814,000 in 1999 to $1.2 million in 2000 and to $2.0 million in
2001.  Our  cardiovascular  disease  program  costs  include  expenses  for  the
development of new drug compounds and light delivery  devices,  drug formulation
and  manufacturing  and  internal  and external  preclinical  study  costs.  The
continued  increase  from 1999 to 2001 is related to the progress of the program
which has required  expanded  preclinical  studies,  as well as, the increase in
development  and  manufacturing  activities  for  drug and  devices  used in the
preclinical studies.

     Oncology. Our direct oncology program costs have decreased from $965,000 in
1999 to $655,000 in 2000 and $126,000 in 2001.  Our oncology  program costs have
primarily  consisted of costs for a Phase I clinical trial for prostate  cancer,
internal and external  preclinical  study costs and expenses for the development
of new drug compounds.  The decrease in oncology program costs from 1999 to 2001
is related to our  decision in 2000 to suspend the  further  development  of the
prostate  cancer  clinical  trial and to focus on more  discovery  and  research
programs for use of PhotoPoint PDT in oncology.

     Indirect  Costs.  Our indirect  costs have  decreased from $11.1 million in
1999 to $10.5 million in 2000 and $9.5 million in 2001. Generally,  the decrease
from 1999 to 2001 was attributed to a reduction in our  responsibilities  in the
AMD  program,  as well as a continued  reduction  in labor costs due to employee
attrition.  The  decrease  was  also  related  to  the  sublease  of  one of our
buildings,  which reduced facility and overhead costs. The decrease from 2000 to
2001 was primarily  attributed to the  reclassification  of certain research and
development  labor costs to cost of goods sold due to API sales  associated with
the Manufacturing Asset Purchase Agreement entered into with Pharmacia in 2001.

     Selling,   General   and   Administrative.   Our   selling,   general   and
administrative  expenses  decreased from $7.5 million in 1999 to $6.3 million in
2000 and $6.1  million in 2001.  Selling,  general and  administrative  expenses
consist  primarily  of  payroll,  taxes and other  operating  costs.  The slight
decrease  from 1999 to 2001 was a result of a decrease in deferred  compensation
expense and the reclassification of a portion of certain overhead costs into the
cost of inventory as cost of goods sold.

     We expect future  selling,  general and  administrative  expenses to remain
consistent with prior periods although they may fluctuate depending on available
funds,  and the  support  staff  levels  needed  for  research  and  development
activities,   continuing  corporate   development  and  professional   services,
compensation  expense  associated  with stock  options and  warrants  granted to
consultants and expenses for general corporate matters.

     Loss in Investment in Affiliate.  In connection  with the $2.0 million line
of credit we have  provided to our  affiliate,  Ramus  Medical  Technologies  or
Ramus, we have recorded a reserve for the entire $2.0 million outstanding credit
line  balance plus  accrued  interest of $615,000 as of December  31, 2001.  The
$417,000  expense  recorded in 1999 represents a reserve for the final amount of
borrowings under the credit line plus accrued interest.  The investment in Ramus
has been fully reserved for since December 31, 1999.

     Interest and Other Income.  Interest and other income  increased  from $1.2
million in 1999 to $1.4 million in 2000 and $1.4  million in 2001.  Interest and
other  income  earned in 2001  represents  $798,000  of  interest  earned on the
available cash and  marketable  security  balances and $586,000  recorded on the
gain on sale of bulk API  manufacturing  equipment  to  Pharmacia.  Interest and
other  income  earned  in 2000 and 1999  represent  interest  earned on cash and
marketable security balances. The level of future interest and other income will
primarily  be subject to the level of cash  balances we maintain  from period to
period and the interest rates earned.  However, we expect our interest and other
income to decrease in future periods unless additional funding is obtained.

     Interest Expense.  Interest expense increased from $434,000 in 1999 to $2.3
million  in 2000  and  decreased  to $2.1  million  in  2001.  Interest  expense
represents  interest  related to borrowings under the 2001 Credit Agreement with
Pharmacia and interest  expense  related to the value of the warrants  issued in
connection  with these borrowings. The  decrease in interest  expense in 2001 as
compared  to 2000 is  directly  related to the  decrease in the rate of interest
being charged which was offset by an increase in the total amount of borrowings.
The borrowings accrue interest at the prime rate which was 4.75% , 9.5% and 8.0%
at December  31,  2001,  2000 and 1999,  respectively.  The increase in interest
expense  between  1999 and 2000 is  related  to the  increase  in the  amount of
borrowings outstanding under the 2001 Credit Agreement. Interest expense related
to the value of the warrants  issued with the borrowings was $374,000,  $315,000
and $57,000 for 2001, 2000 and 1999, respectively.

     In March 2002,  we entered  into a Contract  Modification  and  Termination
Agreement  with  Pharmacia  whereby  the  principal  balance of the debt owed to
Pharmacia was reduced from $26.8 million to $10.0  million,  plus  approximately
$800,000  in accrued  interest.  As a result of the  decrease  in the  principal
balance  of the loan,  as well as the  write  off of the  value of the  warrants
issued in connection with the borrowings,  we expect future interest  expense to
decrease.  Interest on the new principal  balance will continue to accrue at the
prime rate over the term of the loan and we will only record interest expense to
the  extent  the prime  rate  rises  above the  amount  used to record  the debt
reduction to total expected cash flows in accordance with the accounting for the
debt restructuring.

     Non-cash Loss in Investment.  In June 1998, we purchased an 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 Miravant Common Stock. During 2000, we
determined  that the  decline  in the  value of our  investment  in  Xillix  was
other-than-temporary.  We  recognized a loss totaling $3.5 million to adjust our
investment  in Xillix to its  estimated  current fair value based on the average
closing prices over a 120 day period. This loss is included in "Non-cash loss in
investment"  in  the   accompanying   consolidated   statements  of  operations,
stockholders'  equity and cash flows. As of December 31, 2001, we still hold the
2,691,904  shares of Xillix  common stock  received in our  original  investment
transaction.  The  new  cost  basis  in the  investment  is  $991,000  and  this
investment  will continue to be classified as an  available-for-sale  investment
recorded at fair value with any resulting unrealized gains or losses included in
"Accumulated  other  comprehensive  loss" in the consolidated  balance sheet and
statement of stockholders' equity.

     Income  Taxes.  As  of  December  31,  2001,  we  had  net  operating  loss
carryforwards  for federal tax purposes of $171.5  million,  which expire in the
years 2002 to 2022. Research credit  carryforwards  aggregating $8.7 million are
available  for  federal and state tax  purposes  and expire in the years 2002 to
2021.  We also had a state net operating  loss  carryforward  of $46.4  million,
which  expires  in the years  2002 to 2006.  Of the $46.4  million  in state net
operating  loss  carryforwards,  $17.5 million will expire during 2002 and 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  inflation  has had a material  impact on our results of
operations.

Liquidity and Capital Resources

     Since inception through December 31, 2001, we have accumulated a deficit of
approximately  $173.6 million and expect to continue to incur  substantial,  and
possibly  increasing,  operating losses for the next few 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, a secondary public offering,  Pharmacia's purchases
of Common  Stock and credit  arrangements.  As of  December  31,  2001,  we have
received  proceeds  from the sale of equity  securities,  convertible  notes and
credit  arrangements  of  approximately  $223.0  million.  We do not  anticipate
achieving  profitability in the next few years, as such we expect to continue to
rely on external sources of financing to meet our cash needs for the foreseeable
future. As of December 31, 2001, our consolidated financial statements have been
prepared assuming we will continue as a going concern.

     We have  received the entire $22.5  million  available to us under the 2001
Credit  Agreement with Pharmacia.  We have issued  promissory notes to Pharmacia
for the principal loan amounts received of $22.5 million,  as well as promissory
notes of $4.0 million for the related  interest due on each of the quarterly due
dates through  December 31, 2001.  The promissory  notes accrue  interest at the
prime  rate,  which was 4.75% at  December  31,  2001.  In  connection  with the
borrowings  received,  we have issued  warrants to  purchase  360,000  shares of
Common  Stock at an  exercise  price of $11.87  per  warrant  share for  120,000
shares, $14.83 per warrant share for 120,000 shares and $20.62 per warrant share
for 120,000 shares.  The warrants to purchase 360,000 shares of Common Stock are
callable by us if the average  closing prices of the Common Stock for 30 trading
days, preceding such request, exceeds the related warrant exercise price.

     Under the Manufacturing Asset Facility Purchase Agreement with Pharmacia in
May 2001,  Pharmacia  agreed to buy our existing  bulk API inventory at cost for
$2.2 million and committed to buy up to an  additional  $2.8 million of the bulk
API which would be manufactured by us. In addition, Pharmacia agreed to purchase
the  manufacturing  equipment  necessary to produce bulk API. The  manufacturing
equipment  was  purchased  for  $863,000,  its fair  market  value.  The amounts
received for the sale of bulk API and the manufacturing  equipment were recorded
as accounts receivable as of December 31, 2001. In addition,  these amounts were
held in inventory escrow and equipment escrow accounts, which were approximately
$4.1 million and  $880,000,  respectively,  at December 31, 2001.  The inventory
escrow account was released to us in full in January 2002.

     Under the 2001  Credit  Agreement,  which  amends  and  restates  the $22.5
million  1999  Credit  Agreement,  Pharmacia  was to  provide  us  with up to an
additional  $13.2  million in credit  beginning  in April  2002,  under  certain
conditions related to the results of the SnET2 Phase III AMD clinical trials. In
January 2002,  Pharmacia,  after an analysis of the Phase III AMD clinical data,
determined that the clinical data results  indicated that SnET2 did not meet the
primary efficacy  endpoint in the study  population,  as defined by the clinical
trial  protocol, and that they would not be filing an NDA with the FDA;  as such
Pharmacia  was released from their  obligation  to loan us an  additional  $10.0
million.   Subsequently,   under  our  negotiated   Contract   Modification  and
Termination  Agreement in March 2002, we released Pharmacia from their remaining
$3.2 million loan  obligation  to us, in exchange for reducing our debt of $26.8
million to $10.0 million,  with $5.0 million due in March 2003 and the remaining
$5.0 million due in June 2004, as well as changing and  eliminating  many of our
covenants. Additionally, the funds in the equipment escrow account, containing a
principal and interest balance of $880,000, were released to us in March 2002.

     In addition to receiving funds through private and public stock  offerings,
we have also  received  funding  through  the  exercise  of  warrants  and stock
options.  For the year ended  December 31, 2001,  we have  received  $315,000 in
proceeds  from  warrant  and option  exercises.  Based on the  exercise  prices,
expiration dates and call features contained in certain warrants,  and depending
on the market  value of our Common  Stock,  we may  receive  additional  funding
through the  exercise of these  outstanding  warrants  and stock  options in the
future. As of December 31, 2001, the average exercise price of stock options and
warrants outstanding were $14.60 and $13.55, respectively.

Statement of Cash Flows

     For 2001,  2000 and 1999, we required cash for operations of $15.2 million,
$13.4 million and $18.4 million, respectively. The increase in net cash required
for operations in 2001 as compared to 2000 is directly related to the production
and sale of our bulk API inventory,  our  subsequent  bulk API sale to Pharmacia
and the timing on the  collection  of the  payments  from an escrow  account for
these  sales  which was  deferred  into  2002.  Subsequently,  a payment of $4.1
million for the sales of bulk API was  released  in full to us in January  2002.
The  increase  in net cash  required  for  operations  in 2001 was  offset by an
increase in stock awards used as employee compensation. The decrease in net cash
used in operating  activities  in 2000 compared to 1999 was primarily due to the
timing  of  funds  received  from  Pharmacia  for   reimbursable   research  and
development  costs and an increase  in non-cash  interest  and  amortization  of
deferred financing costs related to the Credit Agreement.  These activities were
offset  by  reductions  in  depreciation,  amortization,  deferred  compensation
expense and accounts payable.

     For 2001, net cash provided by investing  activities was $14.8 million. For
2000 and 1999, net cash used in investing  activities was $15.8 million and $4.4
million, respectively. The net cash provided by financing activities in 2001 was
related to the proceeds from the net sales of  marketable  securities as well as
proceeds from the sale of bulk API manufacturing equipment to Pharmacia. The net
cash used in 2000 and 1999 for investing  activities was directly related to the
net  purchases  of  marketable  securities  based on an  analysis  of the  funds
available for investment and purchases of property, plant and equipment.

     For 2001,  2000 and 1999,  net cash  provided by financing  activities  was
$15,000,  $11.9  million  and $30.6  million,  respectively.  Cash  provided  by
financing  activities  in 2001 was related to  $315,000  provided by warrant and
option  exercises which was offset by $300,000 in loans provided to an executive
officer of the  Company.  Cash  provided  by  financing  activities  in 2000 was
attributed to the $7.5 million  provided  under the 2001 Credit  Agreement  with
Pharmacia  and  warrant  and option  exercise  proceeds  of $4.4  million.  Cash
provided by financing activities in 1999 was primarily attributed to Pharmacia's
$19.0  million  equity  investment,  net of offering  costs,  and $15.0  million
provided under the 2001 Credit Agreement.

Lease Obligations and Long-Term Debt
<TABLE>
<CAPTION>
<S>     <C>                                                     <C>             <C>                     <C>

           Contractual
           Obligations                                       Payments Due by Period
      ------------------------------------------------------------------------------------------------------------
                                Less than 1
                                    year          1 - 3 years       4 - 5 years    After 5 years        Total
                               ---------------  -----------------  --------------  ---------------  --------------
      Long Term Debt(1).......  $         --      $ 10,000,000       $       --      $       --      $ 10,000,000
      Building Leases(1)(2)...       773,000           964,000          262,000              --         1,999,000
                               ---------------  -----------------  --------------  ---------------  --------------
      Total Contractual
      Cash Obligations.......   $    773,000      $ 10,964,000       $  262,000      $       --      $ 11,999,000
                               ===============  =================  ==============  ===============  ==============

</TABLE>

          (1)  The  long-term  debt  represents  the  principal  amounts  due to
               Pharmacia  under  the  terms  of the  Contract  Modification  and
               Termination  Agreement entered into in March 2002.  Additionally,
               the amounts recorded for contractual building leases includes the
               lease payments for our bulk API manufacturing  facility for which
               we reassumed in March 2002 under the  Contract  Modification  and
               Termination Agreement.
          (2)  The amounts  recorded  for building  leases  consist of leases on
               four buildings and is net of sublease revenue of $423,000 in 2002
               and $352,000 in 2003.

     We invested a total of $9.6 million in property,  plant and equipment  from
1996 through  December 31, 2001.  Based on available  funds,  we may continue to
purchase  property  and  equipment  in the future as we expand our  preclinical,
clinical  and research and  development  activities  as well as the buildout and
expansion of laboratories and office space.

     We will need substantial  additional resources to develop our products. The
timing and  magnitude  of our future  capital  requirements  will depend on many
factors, including:

          *    Our ability to implement an effective cost restructuring  program
               to reduce our use of cash;
          *    The viability of SnET2 for future use;
          *    Our ability to establish additional collaborations;
          *    Our ability to stay listed on Nasdaq;
          *    Our ability to raise  equity  financing  or use stock  awards for
               employee and consultant compensation;
          *    The pace of scientific progress and the magnitude of our research
               and development programs;
          *    The scope and results of preclinical studies and clinical trials;
          *    The time and costs involved in obtaining regulatory approvals;
          *    The costs involved in preparing, filing, prosecuting, maintaining
               and enforcing patent claims;
          *    The costs involved in any potential litigation;
          *    Competing technological and market developments; and
          *    Our dependence on others for development and commercialization of
               our potential products.

     We have implemented a cost restructuring  program in January 2002 that will
allow us to reduce our overall use of cash from  operations  in future  periods.
Based on our current cash and investment balances, the $450,000 payable to us by
Pharmacia   for  bulk  API  drug  sales  during  the  first   quarter  2002  and
approximately $880,000 released to us in March 2002 for manufacturing  equipment
sold to Pharmacia,  we anticipate  that we only have sufficient cash to fund our
operations  through  September  30,  2002.  For this  reason our  auditors  have
indicated  that there is  substantial  doubt  about our ability to continue as a
going concern.  We plan to actively seek  additional  capital needed to fund our
operations through corporate  collaborations or partnerships,  through licensing
of  SnET2  or new  products  and  through  public  or  private  equity  or  debt
financings.  Additional financing may not be available on acceptable terms or at
all.  Our  ability to raise  funds may  become  more  difficult  if our stock is
delisted  from trading on the Nasdaq  National  Market.  Any inability to obtain
additional  financing would adversely  affect our business and could cause us to
significantly  reduce or cease operations.  Our ability to generate  substantial
additional  funding  to  continue  our  research  and  development   activities,
preclinical  studies and clinical trials and  manufacturing,  and administrative
activities and to pursue any additional investment opportunities is subject to a
number of risks and uncertainties and will depend on numerous factors including:

          *    The future development  decisions related to the ongoing analysis
               of the data from our Phase III AMD clinical  trials;
          *    The future  development  and results of our Phase II  dermatology
               clinical  trial  and  our  ongoing  cardiovascular  and  oncology
               preclinical studies;
          *    The  potential  future  use of SnET2 for  ophthalmology  or other
               disease indications;
          *    Our ability to  successfully  raise  funds in the future  through
               public  or  private  equity  or  debt  financings,  or  establish
               collaborative arrangements or raise funds from other sources;
          *    The extent to which our  obligation to pay Pharmacia a portion of
               the funds  received in our financing  activities  will hinder our
               fundraising efforts;
          *    Our requirement to allocate  certain  percentages of net proceeds
               from  any  public  or  private  equity  financings  and/or  asset
               dispositions,  as defined earlier, towards the early repayment of
               our debt of $10.0 million plus accrued  interest due to Pharmacia
               under the Contract Modification and Termination Agreement;
          *    The potential for equity investments, collaborative arrangements,
               license  agreements or development or other funding programs that
               are at terms  acceptable  to us, in exchange  for  manufacturing,
               marketing,  distribution or other rights to products developed by
               us;
          *    The amount of funds received from  outstanding  warrant and stock
               option exercises, if any;
          *    Our ability to maintain,  renegotiate,  or terminate our existing
               collaborative arrangements;
          *    Our  ability to receive any funds from the sale of our 33% equity
               investment  in Ramus,  consisting  of  2,000,000  shares of Ramus
               Preferred Stock and 59,112 shares of Ramus Common Stock,  neither
               of which are  publicly  traded and the fair market value of which
               is currently negligible;
          *    Our ability to  liquidate  our equity  investment  in Xillix,  of
               2,691,904 shares of Xillix Common Stock, which is publicly traded
               on the Toronto Stock Exchange under the symbol (XLX.TO),  but has
               historically had very small trading volume; and
          *    Our ability to collect the loan and accrued interest  provided to
               Ramus under their credit agreement with us.

     We cannot  guarantee that  additional  funding will be available to us now,
when needed,  or if at all. If  additional  funding is not available in the near
term, we will be required to scale back our research and  development  programs,
preclinical  studies and clinical trials and administrative  activities or cease
operations.  As a result, we would not be able to successfully  develop our drug
candidates   or   commercialize   our  products  and  we  would  never   achieve
profitability.

Related Party Transactions

     In April 1998, we entered into a $2.0 million  revolving  credit  agreement
with our affiliate,  Ramus. As of December 31, 2001, we have provided the entire
loan of $2.0 million to Ramus.  The revolving credit line, which was due in full
in March 2000, has been  subsequently  extended  indefinitely.  In addition,  in
accordance with the 1996 equity  investment in Ramus, we had an exclusive option
to purchase the remaining  shares of Ramus for a specified  amount under certain
terms and conditions. We elected not to exercise the option, which expired March
3, 1999.  Additionally,  we do provide various  services to them on an as needed
basis,  which have been  insignificant  to date and due to Ramus' poor financial
condition,  we have deferred Ramus' sublease rent payments until sometime in the
future.

     In July 1996, the Board of Directors  appointed Joseph Nida, a partner in a
law firm  that we use for  outside  legal  services,  to serve as our  corporate
Secretary.  We paid Mr. Nida's law firm fees for legal services totaling $55,000
in 2001,  $40,000  in 2000 and  $46,000 in 1999.  In  addition,  we have  issued
warrants to Mr. Nida's firm to purchase a total of 87,500 shares of Common Stock
as partial  consideration  for his services as acting in-house legal counsel and
corporate Secretary.




<PAGE>



                                  RISK FACTORS


FACTORS AFFECTING FUTURE OPERATING RESULTS

     The  following  section  of  this  report  describes   material  risks  and
uncertainties  relating to our company and its business. Our business operations
may be impaired by additional risks and  uncertainties  that we are not aware of
or that we currently consider immaterial. Our business, results of operations or
cash flows may be  adversely  affected if any of the  following  risks  actually
occur. In such case, the trading price of our Common Stock could decline.

                          RISKS RELATED TO OUR BUSINESS


OUR BUSINESS IS NOT EXPECTED TO BE PROFITABLE FOR THE FORESEEABLE  FUTURE AND WE
WILL NEED ADDITIONAL FUNDS TO CONTINUE OUR OPERATIONS PAST SEPTEMBER 2002. IF WE
FAIL TO OBTAIN  ADDITIONAL  FUNDING,  WE COULD BE FORCED TO SCALE  BACK OR CEASE
OPERATIONS.

     Since our inception we have incurred  losses  totaling $173.6 million as of
December 31, 2002 and have never  generated  enough funds through our operations
to support our  business.  Although  we have  implemented  a cost  restructuring
program in January  2002 that will  allow us to reduce our  overall  use of cash
from  operations in future  periods,  we currently  anticipate that we only have
sufficient  cash  to  fund  our  operations  through  September  30,  2002.  Our
independent  auditors,  Ernst  & Young  LLP,  have  indicated  in  their  report
accompanying  our year end  consolidated  financial  statements  that,  based on
generally accepted accounting principles, our viability as a going concern is in
question.  We will need  substantial  additional  resources  in the near term to
continue to develop our products. If we do not receive sufficient funding by the
end of  September  2002 we may be forced to cease  operations.  The  timing  and
magnitude  of our  future  capital  requirements  will  depend on many  factors,
including:

          *    Our ability to implement an effective cost restructuring program
               to reduce our use of cash;
          *    The viability of SnET2 for future use;
          *    Our ability to establish additional collaborations;
          *    Our ability to stay listed on Nasdaq;
          *    Our ability to raise  equity  financing  or use stock  awards for
               employee and consultant compensation;
          *    The pace of scientific progress and the magnitude of our research
               and development programs;
          *    The scope and results of preclinical studies and clinical trials;
          *    The time and costs involved in obtaining regulatory approvals;
          *    The costs involved in preparing, filing, prosecuting, maintaining
               and enforcing patent claims;
          *    The costs involved in any potential litigation;
          *    Competing technological and market developments; and
          *    Our dependence on others for development and commercialization of
               our potential products.

     We plan to actively seek  additional  capital needed to fund our operations
through corporate collaborations or partnerships,  through licensing of SnET2 or
new  products  and  through  public or  private  equity or debt  financings.  No
commitments  for such  collaborations  or funding are  currently  in place.  Any
inability to obtain additional financing would adversely affect our business and
could  cause  us to  significantly  scale  back or cease  operations.  If we are
successful in obtaining additional equity financing it may result in significant
dilution to our  stockholders.  In addition,  any new securities issued may have
rights, preferences or privileges senior to those securities held by our current
stockholders.

OUR EXISTING LOAN OBLIGATIONS,  NASDAQ LISTING STATUS AND THE FUTURE DEVELOPMENT
UNCERTAINTY OF SNET2, WILL MAKE OBTAINING ADDITIONAL FUNDING DIFFICULT.

     Our ability to obtain  additional  funding by September 30, 2002 to operate
our business may be impeded by a number of factors including:

     *    We currently owe Pharmacia Corporation,  or Pharmacia,  $10.0 million,
          and are  obligated to pay a portion of net proceeds from any public or
          private  equity  financings  and/or  asset  dispositions  towards  the
          repayment of the $10.0 million plus accrued  interest due to Pharmacia
          under the Contract Modification and Termination Agreement:
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition proceeds are less than or equal to $7.0 million,
                    we  are not  required to make an early repayment towards our
                    Pharmacia debt;
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition  proceeds are greater than $7.0 million but less
                    than or equal  to $15.0  million,  then we are  required  to
                    apply  one-third  of net the  proceeds  from the  amount  in
                    excess of $7.0  million  up to $15.0  million,  or a maximum
                    repayment of $2.7 million towards our Pharmacia debt;
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition proceeds are greater than $15.0 million but less
                    than or equal  to $25.0  million,  then we are  required  to
                    apply one-half of the net proceeds from the amount in excess
                    of $15.0 million up to $25.0 million, or a maximum repayment
                    of $7.7 million towards our Pharmacia debt;
               *    If  our  aggregate  net  equity   financing   and/or  assets
                    disposition proceeds are greater than $25.0 million, then we
                    are  required  to  apply  all of the net  proceeds  from the
                    amount in excess of $25.0 million, or repay the entire $10.0
                    million plus accrued  interest  towards our Pharmacia  debt;
                    and
               *    Any early  repayment of our Pharmacia  debt applies first to
                    the loan  amount due on March 4, 2003, then to the remaining
                    loan amount due on June 4, 2004.
          *    Our Common  Stock is subject to being  delisted  from  trading on
               Nasdaq; and
          *    The uncertainty surrounding the effectiveness of SnET2, following
               the January 2002 announcement,  that Pharmacia, after an analysis
               of the Phase III wet age-related  amcular  degeneration,  or AMD,
               clinical  data,  determined  that the clinical trial data results
               indicated that SnET2 did not meet the primary  efficacy  endpoint
               in  the  study  population,  as  defined  by the  clinical  trial
               protocol,   and  that  they  would  not  be  filing  a  New  Drug
               Application,  or NDA, with the U.S. Food and Drug Administration,
               or FDA.

          We will need a  substantial  amount of funding to further our programs
     and  investors  may be reluctant to invest in our equity  securities if the
     funds  necessary  to grow our  business  are  instead  used to pay down our
     existing  debt  obligations.  Investors may also be reluctant to provide us
     funds for fear that  Pharmacia may  foreclose on our assets.  The fact that
     our  Common  Stock may no longer be listed  for  trading on Nasdaq may also
     discourage  investors  or result in a discount on the price that  investors
     may pay for our securities. We will also have to overcome investor concerns
     about our other compounds given the failure of SnET2 to demonstrate success
     in meeting the  primary  efficacy  endpoint  in the Phase III AMD  clinical
     trials.  These and other factors may prevent us from  obtaining  additional
     financing as required in the near term on favorable terms or at all.

PHARMACIA  DETERMINED THAT SNET2,  OUR LEADING DRUG CANDIDATE,  DID NOT MEET THE
PRIMARY EFFICACY ENDPOINT FOR THE STUDY  POPULATION,  AS DEFINED BY THE CLINICAL
TRIAL  PROTOCOL,  IN OUR PHASE III AMD CLINICAL  TRIALS WHICH CAUSED US TO DELAY
AND POTENTIALLY  CANCEL OUR PLANS TO SEEK REGULATORY  APPROVAL FOR SNET2. WE ARE
CURRENTLY ANALYZING THE CLINICAL DATA FROM THE PHASE III AMD CLINICAL TRIALS. IF
THE DATA DO NOT PRESENT ANY PROSPECT OF FUTURE  DEVELOPMENT  FOR SNET2,  THEN WE
MAY BE UNABLE TO SUCCESSFULLY ESTABLISH A NEW COLLABORATIVE  PARTNERSHIP,  WHICH
COULD MATERIALLY HARM OUR DEVELOPMENT PROGRAMS.

     In collaboration  with Pharmacia,  in December 2001, we completed two Phase
III  ophthalmology  clinical trials for the treatment of AMD, with our lead drug
candidate,  SnET2.  In January  2002,  Pharmacia  performed  an  analysis of the
clinical data and determined that the clinical data results indicated that SnET2
patients did not meet the primary efficacy endpoint in the study population,  as
defined by the clinical trial protocol, and that they would not be filing an NDA
with the FDA. Based on Pharmacia's analysis of the AMD clinical data, we may not
be able to  proceed  with our  plans  to seek  regulatory  approval  of SnET2 as
formerly planned. In March 2002, we regained the license rights to SnET2 as well
as the  related  data and assets  from the Phase III AMD  clinical  trials  from
Pharmacia. We are currently conducting our own detailed analysis of the clinical
data,  including  an analysis of the subset  groups.  We expect to complete  our
analysis by the end of the second  quarter 2002 and, based on the results of our
analysis, we will determine the future potential development of SnET2, including
the potential use of SnET2 in other disease  indications.  In addition,  we have
terminated our license collaboration with Pharmacia, and we intend to seek a new
collaborative  partner in ophthalmology for PhotoPoint(TM)  PDT, our proprietary
technologies for photodynamic therapy. If our analysis of the clinical data does
not provide  the  information  to support  further  development,  then we may be
unable to enter into an agreement  with a new  collaborative  partner and may be
unable to  continue  our  current  research  programs.  If we cease  development
efforts for SnET2 it could adversely affect our funding and development  efforts
for our other programs and severely harm our business.

THE CURRENT TRADING PRICE OF OUR COMMON STOCK, OUR MARKET CAPITALIZATION AND THE
AMOUNT OF OUR STOCKHOLDER'S  EQUITY AND NET TANGIBLE ASSETS, COULD RESULT IN OUR
SHARES BEING DELISTED FROM TRADING ON NASDAQ. IF WE BECOME DELISTED FROM NASDAQ,
THEN OUR ABILITY TO RAISE ADDITIONAL CAPITAL MAY BE LIMITED OR IMPAIRED.

     Our Common Stock is listed on the Nasdaq National  Market.  We currently do
not satisfy the Nasdaq continued  listing  standards  concerning the size of our
market  capitalization  and the minimum bid price of our stock.  Nasdaq recently
informed  us of its  intention  to delist  our  Common  Stock.  This  delisting,
however,  has been stayed  pending the outcome of an oral  hearing  scheduled on
April 18,  2002 to appeal the Nasdaq  decision.  If this  appeal is denied,  our
stock will be delisted  from  Nasdaq.  If this were to happen,  it would be much
more  difficult  to  purchase  or sell  our  common  stock  or  obtain  accurate
quotations as to the price of the securities.

UNDER THE CONTRACT  MODIFICATION  AND  TERMINATION  AGREEMENT  ENTERED INTO WITH
PHARMACIA IN MARCH 2002,  OUR  OUTSTANDING  DEBT TO  PHARMACIA OF $10.0  MILLION
REMAINS  SECURED  BY ALL  OF OUR  ASSETS.  IF WE  BECOME  UNABLE  TO  REPAY  OUR
BORROWINGS  OR VIOLATE  THE  COVENANTS  UNDER THIS  AGREEMENT,  PHARMACIA  COULD
FORECLOSE ON OUR ASSETS.

     Under the terms of the Contract Modification and Termination Agreement with
Pharmacia,  we have  outstanding  debt to  Pharmacia of $10.0  million  which is
secured by all of our assets.  Our ability to comply with all  covenants  and to
make scheduled  payments,  early repayments as required or to refinance our debt
obligation will depend on our financial and operating performance, which in turn
will be  subject  to  prevailing  economic  conditions  and  certain  financial,
business and other factors,  including  factors that are beyond our control.  If
our cash flow and capital resources become insufficient to fund our debt service
obligations  or  we  otherwise  default  under  the  Contract  Modification  and
Termination Agreement,  Pharmacia could accelerate the debt and foreclose on our
assets. As a result,  we could be forced to obtain additional  financing at very
unfavorable terms or significantly reduce or cease operations.

OUR  FINANCIAL  CONDITION AND COST  REDUCTION  EFFORTS COULD RESULT IN DECREASED
EMPLOYEE MORALE AND LOSS OF EMPLOYEES AND CONSULTANTS CRITICAL TO OUR SUCCESS.

     Our  success in the  future  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. We currently  have limited cash and capital  resources and the efficacy
of our primary drug development  candidate is questionable  causing our business
outlook to be uncertain.  In January 2002, we implemented measures to reduce our
expenses to provide us more  flexibility.  These  actions  included  temporarily
reducing  our  employees  salaries  by  approximately  20% until  April 5, 2002.
Additionally,  due to our ongoing limited cash balances, we try to utilize stock
options  and  stock  awards  as a key  component  of  short-term  and  long-term
compensation.  However,  given that our current  stock options  outstanding  are
significantly  de-valued,  the  current  value  of  our  stock  is low  and  the
uncertainty  of our  long-term  prospects,  our ability to use stock options and
stock awards as  compensation  may be limited.  These  measures,  along with our
financial condition and unfavorable clinical data results from the Phase III AMD
clinical  trials,  may cause  employees to question our long-term  viability and
increase our turnover. These factors may also result in reduced productivity and
a decrease in employee  morale  causing our  business to suffer.  We do not have
insurance  providing us with benefits in the event of the loss of key 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.

IF WE ARE NOT ABLE TO MAINTAIN AND SUCCESSFULLY  ESTABLISH NEW COLLABORATIVE AND
LICENSING ARRANGEMENTS WITH OTHERS, OUR BUSINESS WILL BE HARMED.

     Our business  model is based on  establishing  collaborative  relationships
with  other  parties  both to license  compounds  upon  which our  products  and
technologies  are based and to manufacture,  market and sell our products.  As a
development company we must have access to compounds and technologies to license
for further  development.  For example, we are party to 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,  to license or
sublicense certain photoselective compounds, including SnET2. Similarly, we must
also  establish  relationships  with  suppliers and  manufacturers  to build our
medical devices and to manufacture our compounds.  We have partnered with Iridex
for the  manufacture of certain light sources and have entered into an agreement
with  Fresenius for supply of the final dose  formulation  of SnET2.  Due to the
expense of the drug approval process it is critical for us to have relationships
with  established  pharmaceutical  companies  to offset some of our  development
costs in exchange for a combination of manufacturing, marketing and distribution
rights.  We formerly  had a  significant  relationship  with  Pharmacia  for the
development  of SnET2 for the  treatment of AMD. To further  develop SnET2 it is
essential that we establish a new collaborative relationship with another party.

     We are currently at various  stages of discussions  with various  companies
regarding the establishment of new  collaborations.  If we are not successful in
establishing new collaborative  partners for the potential  development of SnET2
or our other molecules, we may not be able to pursue further development of such
drugs and/or may have to reduce or cease our current development programs, which
would  materially  harm our business.  Even if we are successful in establishing
new  collaborations,  they are  subject  to  numerous  risks  and  uncertainties
including the following:

          *    Our ability to negotiate acceptable  collaborative  arrangements,
               including those based upon existing letter agreements;
          *    Future  or  existing   collaborative   arrangements  may  not  be
               successful  or may not result in  products  that are  marketed or
               sold;
          *    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;
          *    Our partners may fail to fulfill their contractual obligations or
               terminate  the  relationships  described  above,  and  we  may be
               required to seek other partners,  or expend substantial resources
               to pursue these activities  independently.  These efforts may not
               be successful; and
          *    Our ability to manage,  interact and coordinate our timelines and
               objectives with our strategic partners may not be successful.

ALL  OF OUR  PRODUCTS,  EXCEPT  SNET2  AND  MV9411,  ARE IN AN  EARLY  STAGE  OF
DEVELOPMENT AND ALL OF OUR PRODUCTS,  INCLUDING  SNET2 AND MV9411,  MAY NEVER BE
SUCCESSFULLY COMMERCIALIZED.

     Our products, except SnET2 and MV9411, are at an early stage of development
and our ability to successfully  commercialize  these products,  including SnET2
and MV9411, is dependent upon:

          *    Successfully  completing  our  research  or  product  development
               efforts or those of our collaborative partners;
          *    Successfully  transforming  our drugs or devices  currently under
               development  into marketable  products;
          *    Obtaining the required regulatory approvals;
          *    Manufacturing  our  products  at  an  acceptable  cost  and  with
               appropriate quality;
          *    Favorable acceptance of any products marketed; and
          *    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 would 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.

OUR PRODUCTS,  INCLUDING  SNET2 AND MV9411,  MAY NOT  SUCCESSFULLY  COMPLETE THE
CLINICAL  TRIAL PROCESS AND WE MAY BE UNABLE TO PROVE THAT OUR PRODUCTS ARE SAFE
AND EFFICACIOUS.

     All of our  drug and  device  products  currently  under  development  will
require extensive preclinical studies and/or clinical trials prior to regulatory
approval for commercial use, which is a lengthy and expensive  process.  None of
our products,  except SnET2,  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:

          *    Our ability to  demonstrate to the FDA that our products are safe
               and efficacious;
          *    Our  products  may  not  be as  efficacious  as  our  competitors
               products;
          *    Our ability to  successfully  complete the testing for any of our
               compounds within any specified time period, if at all;
          *    Clinical  outcomes  reported  may  change  as  a  result  of  the
               continuing evaluation of patients;
          *    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;
          *    Problems  in research  and  development,  preclinical  studies or
               clinical  trials  that will cause us to delay,  suspend or cancel
               clinical trials; and
          *    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.

     Data already obtained from  preclinical  studies and clinical trials of our
products under  development do not necessarily  predict the results that will be
obtained  from future  preclinical  studies  and  clinical  trials.  A number of
companies in the pharmaceutical industry, including biotechnology companies like
us, have suffered  significant  setbacks in advanced clinical trials, even after
promising results in earlier trials.

     In collaboration  with Pharmacia,  in December 2001, we completed two Phase
III  ophthalmology  clinical trials for the treatment of AMD, with our lead drug
candidate,  SnET2.  In January  2002,  Pharmacia  performed  an  analysis of the
clinical data and determined that the clinical data results indicated that SnET2
patients did not meet the primary efficacy endpoint in the study population,  as
defined by the clinical trial protocol, and they would not be filing an NDA with
the FDA. Based on  Pharmacia's  analysis of the AMD clinical data, we may not be
able to proceed with our plans to seek regulatory  approval of SnET2 as formerly
planned.  In March 2002, we regained the license  rights to SnET2 as well as the
related data and assets from the Phase III AMD clinical  trials from  Pharmacia.
We are  currently  conducting  our own detailed  analysis of the clinical  data,
including an analysis of the subset  groups.  We expect to complete our analysis
by the end of the second quarter 2002 and, based on the results of our analysis,
we will  determine  the future  potential  development  of SnET2,  including the
potential  use of SnET2 in  other  disease  indications.  In  addition,  we have
terminated our license collaboration with Pharmacia, and we intend to seek a new
collaborative partner in ophthalmology.

     Our clinical trials may not demonstrate the sufficient levels of safety and
efficacy necessary to obtain the requisite regulatory approval or may not result
in marketable  products.  The failure to adequately  demonstrate  the safety and
effectiveness of a product under development  could delay or prevent  regulatory
approval of the potential product and would materially harm our business.

WE HAVE A HISTORY OF SIGNIFICANT OPERATING LOSSES AND EXPECT TO CONTINUE TO HAVE
LOSSES IN THE FUTURE,  WHICH MAY FLUCTUATE  SIGNIFICANTLY.  WE MAY NEVER ACHIEVE
PROFITABILITY.

     We have incurred  significant losses since our inception in 1989 and, as of
December 31, 2001, had an accumulated  deficit of approximately  $173.6 million.
We expect to continue to incur significant,  and possibly increasing,  operating
losses over the next few years. Although we continue to incur costs for research
and development, preclinical studies, clinical trials, manufacturing and general
corporate activities, we have currently implemented a cost restructuring program
which we expect  will help to reduce our overall  costs.  Our ability to achieve
profitability  depends upon our ability,  alone or with others,  to successfully
complete  the  development  of  our  proposed  products,   obtain  the  required
regulatory  clearances  and  manufacture  and market our proposed  products.  No
revenues have been  generated  from  commercial  sales of SnET2 and only limited
revenues  have been  generated  from sales of our  devices.  We do not expect to
achieve  significant levels of revenues for the next several years. Our revenues
to date have consisted of license reimbursements,  grants awarded,  royalties on
our devices,  SnET2 bulk active  pharmaceutical  ingredient,  or bulk API sales,
milestone payments,  payments for our devices, and interest income. Our revenues
for the foreseeable  future are expected to consist of the remaining $450,000 of
bulk API sold to Pharmacia  through January 2002,  reimbursements  under license
agreements, milestone payments, licensing fees and interest income.

THE PRICE OF OUR COMMON STOCK HAS BEEN AND MAY CONTINUE TO BE VOLATILE.

     From time to time and in particular  during the last couple of months,  the
price of our Common Stock has been highly volatile.  These fluctuations create a
greater risk of capital losses for our stockholders as compared to less volatile
stocks.  From  January 15, 2001 to March 15, 2002,  our Common Stock price,  per
Nasdaq closing prices, has ranged from a high of $12.42 to a low of $0.80.

     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 reduce the market
price of the Common Stock. Extreme price fluctuations could be the result of the
following:

          *    Future development  decisions related to the results of our Phase
               III AMD clinical trials;
          *    Announcements   concerning   Miravant   or   our   collaborators,
               competitors or industry;
          *    Our ability to successfully establish new collaborations;
          *    The  results of our  testing,  technological  innovations  or new
               commercial products;
          *    The results of preclinical  studies and clinical  trials by us or
               our competitors;
          *    Technological innovations or new therapeutic products;
          *    Our ability to stay listed on Nasdaq;
          *    Litigation;
          *    Public  concern as to the safety,  efficacy or  marketability  of
               products developed by us or others;
          *    Comments by securities analysts;
          *    The achievement of or failure to achieve certain milestones; and
          *    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.  If these broad market fluctuations cause the trading price
of our  Common  Stock to  significantly  decline,  we may be  unable  to  obtain
additional  capital  that  we may  need  through  public  or  private  financing
activities and our stock could be delisted from Nasdaq further  exacerbating our
ability to raise funds and limiting  your  ability to sell your shares.  Because
outside financing is critical to our future success,  large  fluctuations in our
share price that harm our financing  activities  could cause us to significantly
alter our business plans or cease operations altogether.

WE RELY ON THIRD  PARTIES TO CONDUCT  CLINICAL  TRIALS ON OUR  PRODUCTS,  AND IF
THESE RESOURCES FAIL, OUR ABILITY TO SUCCESSFULLY  COMPLETE CLINICAL TRIALS WILL
BE ADVERSELY AFFECTED AND OUR BUSINESS WILL SUFFER.

     To date, we have limited  experience in conducting  clinical trials. We had
relied on Pharmacia,  our former corporate partner, and Inveresk, Inc., formerly
ClinTrials Research,  Inc., a contract research organization,  for our Phase III
AMD  clinical  trials and we rely on a contract  research  organization  for our
Phase II  dermatology  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
current and future 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.  The failure to have adequate resources
for conducting and managing  clinical  trials will have a negative impact on our
ability to  develop  marketable  products  and would  harm our  business.  Other
contract  research  organizations may be available in the event that our current
contract  research  organizations  fail;  however there is no guarantee  that we
would be able to engage another organization in a timely manner, if at all. This
could cause delays in our clinical  trials and our development  programs,  which
could materially harm our business.

WE RELY ON PATIENT  ENROLLMENT TO CONDUCT CLINICAL TRIALS,  AND OUR INABILITY TO
CONTINUE TO ATTRACT  PATIENTS TO PARTICIPATE  WILL HAVE A NEGATIVE IMPACT ON OUR
CLINICAL TRIAL RESULTS.

     Our  ability to  complete  clinical  trials is  dependent  upon the rate of
patient enrollment. Patient enrollment is a function of many factors including:

          *    The nature of our clinical trial protocols;
          *    Existence of competing protocols or treatments;
          *    Size and longevity of the target patient population;
          *    Proximity of patients to clinical sites; and
          *    Eligibility criteria for the clinical trials.

     A specific  concern for potential  future AMD clinical trials is that there
currently is an approved  treatment for AMD and patients  enrolled in future AMD
clinical  trials,  if  any,  may  choose  to drop  out of the  trial  or  pursue
alternative treatments. This could result in delays or incomplete clinical trial
data.

     We cannot assure that we will obtain or maintain adequate levels of patient
enrollment  in  current or future  clinical  trials.  Delays in planned  patient
enrollment  may result in increased  costs,  delays or  termination  of clinical
trials,  which could result in slower introduction of our potential products,  a
reduction  in our  revenues  and may  prevent us from  becoming  profitable.  In
addition,  the FDA may  suspend  clinical  trials  at any time if,  among  other
reasons,  it  concludes  that  patients  participating  in such trials are being
exposed to unacceptable health risks. Failure to obtain and keep patients in our
clinical  trials  will  delay or  completely  impede  test  results  which  will
negatively  impact the  development of our products and prevent us from becoming
profitable.

WE MAY FAIL TO ADEQUATELY  PROTECT OR ENFORCE OUR INTELLECTUAL  PROPERTY RIGHTS,
OUR PATENTS AND OUR PROPRIETARY TECHNOLOGY, WHICH WILL MAKE IT EASIER FOR OTHERS
TO MISAPPROPRIATE OUR TECHNOLOGY AND INHIBIT OUR ABILITY TO BE COMPETITIVE.

     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  reduce our future  income,  increase our
costs and limit our ability to develop additional products.  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:

          *    The patent applications owned by or licensed to us may not result
               in issued patents;
          *    Our issued patents may not provide us with proprietary protection
               or competitive advantages;
          *    Our issued  patents may be infringed  upon or designed  around by
               others;
          *    Our issued  patents  may be  challenged  by others and held to be
               invalid or unenforceable;
          *    The  patents  of  others  may  prohibit  us from  developing  our
               products as planned; and
          *    Significant  time  and  funds  may be  necessary  to  defend  our
               patents.

     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.

     Further exposure could arise from the following risks and uncertainties:

          *    We do not have  contractual  indemnification  rights  against the
               licensors of the various drug patents;
          *    We may  be  required  to  obtain  licenses  under  dominating  or
               conflicting patents or other proprietary rights of others;
          *    Such  licenses may not be made  available on terms  acceptable to
               us, if at all; and
          *    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.

     The  occurrence  of any of these  events  described  above  could  harm 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. We may
not be successful in any such proceeding.  Litigation and other  proceedings are
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.

WE HAVE LIMITED  MANUFACTURING AND MARKETING  CAPABILITY AND EXPERIENCE AND THUS
RELY HEAVILY UPON THIRD PARTIES.

     Prior  to  our  being  able  to  supply  drugs  for  commercial   use,  our
manufacturing facilities must comply with Good Manufacturing Practices, or GMPs.
In  addition,   if  we  elect  to   outsource   manufacturing   to   third-party
manufacturers,  these facilities also have to satisfy GMP and FDA  manufacturing
requirements.  To be successful, our products must be manufactured in commercial
quantities  under  current  GMPs and must be at  acceptable  costs.  Although we
intend to manufacture  drugs and devices at some commercial  levels, we have not
yet  manufactured  any products  under GMPs which can be released for commercial
use, and we have limited  experience in manufacturing in commercial  quantities.
We are licensed by the State of California to manufacture  SnET2 bulk API at our
Santa  Barbara,  California  facility  for  clinical  trial  and other  use.  We
currently  manufacture the bulk API, the process up to the final formulation and
packaging step, and have the ability to manufacture  light producing devices and
light delivery devices, and conduct other production and testing activities,  at
this location.  However, we have limited capabilities,  personnel and experience
in the manufacture of finished drug product,  light producing and light delivery
devices and utilize  outside  suppliers,  contracted or  otherwise,  for certain
materials and services  related to our  manufacturing  activities.  We currently
have the capacity, in conjunction with our manufacturing suppliers Fresenius and
Iridex, to manufacture  products at certain  commercial levels and we believe we
will be able to do so under GMPs with subsequent 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
commercial  product  sales,  as well as our  overall  business  growth  could be
limited,  which in turn could prevent us from becoming profitable or viable as a
business.  Fresenius is the sole  manufacturer of the final dose  formulation of
SnET2 and Iridex is currently the sole supplier of the light  producing  devices
used in our  AMD  clinical  trials.  Both  currently  have  commercial  quantity
capabilities.  At this time, we have no readily available back-up  manufacturers
to  produce  the final  formulation  of SnET2 at  commercial  levels or  back-up
suppliers  of  the  light  producing  devices.  If  Fresenius  could  no  longer
manufacture  for us or Iridex  was  unable to supply us with  devices,  we could
experience  significant delays in production or may be unable to find a suitable
replacement,   which  would   reduce  our  revenues  and  harm  our  ability  to
commercialize our products and become profitable.

     We have no direct  experience  in marketing,  distributing  and selling our
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 currently
intend to rely on Iridex for any medical  device needs for the AMD program.  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.

OUR PRODUCTS MAY EXHIBIT  ADVERSE  SIDE  EFFECTS THAT PREVENT  THEIR  WIDESPREAD
ADOPTION OR THAT NECESSITATE WITHDRAWAL FROM THE MARKET.

     Our PhotoPoint  PDT drug and device  products may exhibit  undesirable  and
unintended side effects that may prevent or limit their commercial  adoption and
use.  One such side effect  upon the  adoption  of our  PhotoPoint  PDT drug and
device   products  as   potential   therapeutic   agents  may  be  a  period  of
photosensitivity  for a certain period of time after  receiving  PhotoPoint PDT.
This period of  photosensitivity  is  generally  dose  dependent  and  typically
declines over time. Even upon receiving approval by the FDA and other regulatory
authorities,  our products may later  exhibit  adverse side effects that prevent
widespread use or necessitate  withdrawal from the market.  The manifestation of
such side effects could cause our business to suffer.

ACCEPTANCE  OF OUR  PRODUCTS IN THE  MARKETPLACE  IS  UNCERTAIN,  AND FAILURE TO
ACHIEVE MARKET ACCEPTANCE WILL HARM OUR BUSINESS.

     Even if  approved  for  marketing,  our  products  may not  achieve  market
acceptance.  The  degree  of  market  acceptance  will  depend  upon a number of
factors, including:

          *    The  establishment  and demonstration in the medical community of
               the  safety  and  clinical  efficacy  of our  products  and their
               potential  advantages  over  existing  therapeutic  products  and
               diagnostic and/or imaging techniques. For example, if we are able
               to eventually  obtain  approval of our drugs and devices to treat
               cardiac  restenosis we will have to  demonstrate  and gain market
               acceptance  of this as a  method  of  treatment  over use of drug
               coated stents and other restenosis treatment options;
          *    Pricing and reimbursement  policies of government and third-party
               payors   such  as   insurance   companies,   health   maintenance
               organizations and other plan administrators; and
          *    The possibility that physicians,  patients, payors or the medical
               community  in general  may be  unwilling  to  accept,  utilize or
               recommend any of our products.

     If our products are not accepted due to these or other factors our business
will not develop as planned and may be harmed.

OUR ABILITY TO ESTABLISH AND MAINTAIN  AGREEMENTS WITH OUTSIDE SUPPLIERS MAY NOT
BE SUCCESSFUL AND OUR FAILURE TO DO SO COULD ADVERSELY AFFECT OUR BUSINESS.

     We depend on outside suppliers for certain raw materials and components for
our products.  Although most of our raw materials and  components  are available
from various  sources,  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  certain  key
materials or services used by us in our drug  development,  light  producing and
light delivery device development and production  operations.  We are seeking to
establish  relationships  with  additional  suppliers,  however,  we may  not be
successful in doing so and may  encounter  delays or other  problems.  If we are
unable to produce our  potential  products in a timely  manner,  or at all,  our
sales would decline, our development activities could be delayed or cease and as
a result we may never achieve profitability.

WE MAY NOT HAVE ADEQUATE  PROTECTION AGAINST PRODUCT LIABILITY OR RECALL,  WHICH
COULD SUBJECT US TO LIABILITY CLAIMS THAT COULD MATERIALLY HARM OUR BUSINESS.

     The  testing,  manufacture,  marketing  and  sale of  human  pharmaceutical
products and medical devices entails significant  inherent,  industry-wide risks
of allegations of product liability.  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:

          *    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;
          *    We have not obtained product liability insurance that would cover
               a claim  relating to the clinical or commercial  use or recall of
               our products;
          *    In the  absence  of  product  liability  insurance,  claims  made
               against us or a product  recall could result in our being exposed
               to large damages and expenses;
          *    If we obtain product liability  insurance coverage in the future,
               this  coverage may not be  available at a reasonable  cost and in
               amounts  sufficient to protect us against claims that could cause
               us to pay large amounts in damages; and
          *    Liability  claims  relating to our  products or a product  recall
               could  negatively  affect  our  ability  to  obtain  or  maintain
               regulatory approval for our products.

     We currently do not expect to obtain product  liability  insurance until we
have an approved product and begin  distributing the product for commercial use.
We plan to obtain  product  liability  insurance  to cover  our  indemnification
obligations  to Iridex for third party claims  relating to any of our  potential
negligent  acts or omissions  involving our SnET2 drug  technology or PhotoPoint
PDT light device  technology.  A successful product liability claim could result
in monetary or other damages that could harm our business,  financial  condition
and additionally cause us to cease operations.

OUR  BUSINESS  COULD  SUFFER  IF WE ARE  UNSUCCESSFUL  IN  INTEGRATING  BUSINESS
COMBINATIONS AND STRATEGIC ALLIANCES.

     We may expand our operations and market  presence by entering into business
combinations,  joint ventures or other strategic alliances with other companies.
These  transactions  create  risks,  such  as the  difficulty  assimilating  the
operations,  technology and personnel of the combined companies;  the disruption
of our  ongoing  business,  including  loss  of  management  focus  on  existing
businesses and other market  developments;  problems retaining key technical and
managerial personnel;  expenses associated with the amortization of goodwill and
other purchased  intangible assets;  additional operating losses and expenses of
acquired  businesses;  the impairment of relationships with existing  employees,
customers  and  business  partners;  and,  additional  losses  from  any  equity
investments we might make.

     We may not succeed in  addressing  these  risks,  and we may not be able to
make  business   combinations  and  strategic  investments  on  terms  that  are
acceptable to us. In addition, any businesses we may acquire may incur operating
losses.

WE RELY ON THE AVAILABILITY OF CERTAIN UNPROTECTED INTELLECTUAL PROPERTY RIGHTS,
AND IF ACCESS TO SUCH RIGHTS BECOMES UNAVAILABLE, OUR BUSINESS COULD SUFFER.

     Our trade  secrets  may  become  known or be  independently  discovered  by
competitors.  Furthermore,  inventions or processes  discovered by our employees
will not  necessarily  become our  property  and may remain the property of such
persons or others.

     In addition,  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 our rights to our
unpatented trade secrets and know-how.

     In the event that the  intellectual  property we do or will rely on becomes
unavailable, our ability to be competitive will be impeded and our business will
suffer.

EFFECTING  A CHANGE  OF  CONTROL  OF  MIRAVANT  WOULD BE  DIFFICULT,  WHICH  MAY
DISCOURAGE OFFERS FOR SHARES OF OUR COMMON STOCK.

     Our Board of Directors has adopted a Preferred  Stockholder Rights Plan, or
Rights  Plan.  The Rights Plan may have the effect of  delaying,  deterring,  or
preventing  changes  in  our  management  or  control  of  Miravant,  which  may
discourage  potential  acquirers who otherwise  might wish to acquire us without
the consent of the Board of  Directors.  Under the Rights  Plan,  if a person or
group  acquires 20% or more of our Common  Stock,  all holders of rights  (other
than the acquiring  stockholder) may, upon payment of the purchase price then in
effect,  purchase  Common Stock having a value of twice the purchase  price.  In
April 2001, the Rights Plan was amended to increase the trigger  percentage from
20% to 25% as it applies to Pharmacia and excluded  shares acquired by Pharmacia
in  connection  with our 2001  Credit  Agreement  with  Pharmacia,  and from the
exercise of warrants held by  Pharmacia.  In the event that we are involved in a
merger  or  other  similar  transaction  where  Miravant  is not  the  surviving
corporation,  all holders of rights (other than the acquiring stockholder) shall
be entitled,  upon  payment of the then in effect  purchase  price,  to purchase
Common Stock of the surviving  corporation  having a value of twice the purchase
price. The rights will expire on July 31, 2010, unless previously redeemed.

OUR CHARTER AND BYLAWS CONTAIN  PROVISIONS  THAT MAY PREVENT  TRANSACTIONS  THAT
COULD BE BENEFICIAL TO STOCKHOLDERS.

     Our charter and bylaws restrict  certain actions by our  stockholders.  For
example:

          *    Our  stockholders  can act at a duly  called  annual  or  special
               meeting but they may not act by written consent;
          *    Special  meetings  can  only be  called  by our  chief  executive
               officer,  president,  or  secretary  at the written  request of a
               majority of our Board of Directors; and
          *    Stockholders  also must give advance  notice to the  secretary of
               any  nominations  for director or other business to be brought by
               stockholders at any stockholders' meeting.

     Some of these restrictions can only be amended by a super-majority  vote of
members of the Board and/or the stockholders.  These and other provisions of our
charter and bylaws, as well as certain provisions of Delaware law, could prevent
changes in our  management  and  discourage,  delay or prevent a merger,  tender
offer  or  proxy  contest,  even  if  the  events  could  be  beneficial  to our
stockholders.  These  provisions could also limit the price that investors might
be willing to pay for our Common Stock.

     In addition,  our charter authorizes our Board of Directors to issue shares
of undesignated  preferred stock without stockholder  approval on terms that the
Board may determine.  The issuance of preferred  stock could decrease the amount
of earnings and assets available for  distribution to our other  stockholders or
otherwise  adversely  affect their rights and powers,  including  voting rights.
Moreover,  the  issuance of  preferred  stock may make it more  difficult or may
discourage another party from acquiring voting control of us.

BUSINESS INTERRUPTIONS COULD ADVERSELY AFFECT OUR BUSINESS.

     Our operations are vulnerable to  interruption by fire,  earthquake,  power
loss, floods, telecommunications failure and other events beyond our control. We
do not have a detailed disaster recovery plan. Our facilities are all located in
the  state  of  California  and  were  subject  to  electricity  blackouts  as a
consequence of a shortage of available  electrical power.  There is no guarantee
that this electricity  shortage has been permanently  resolved,  as such, we may
again in the future experience unexpected  blackouts.  Though we do have back-up
electrical  generation systems in place, they are for use for a limited time and
in the event  these  blackouts  continue or  increase  in  severity,  they could
disrupt the operations of our affected facilities. In addition, we may not carry
adequate  business  interruption  insurance to compensate us for losses that may
occur and any losses or damages incurred by us could be substantial.




<PAGE>



                          RISKS RELATED TO OUR INDUSTRY

WE ARE SUBJECT TO UNCERTAINTIES REGARDING HEALTH CARE REIMBURSEMENT AND REFORM.

     Our products may not be covered by the various  health care  providers  and
third party payors.  If they are not covered,  our products may not be purchased
or sold as expected. Our ability to commercialize our products successfully will
depend,  in part, on the extent to which  reimbursement  for these  products and
related  treatment  will be  available  from  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.

     The efforts of governments and third-party  payors to contain or reduce the
cost of healthcare will continue to affect our business and financial  condition
as a biotechnology  company.  In foreign  markets,  pricing or  profitability of
medical  products  and  services may be subject to  government  control.  In the
United  States,  we expect  that there  will  continue  to be federal  and state
proposals  for  government  control of pricing and  profitability.  In addition,
increasing  emphasis on managed  healthcare has increased pressure on pricing of
medical  products and will continue to do so. These cost controls may prevent us
from selling our potential products  profitability,  may reduce our revenues and
may affect our ability to raise additional capital.

     In addition,  cost control  initiatives could adversely affect our business
in a number of ways, including:

          *    Decreasing  the price we, or any of our  partners  or  licensees,
               receive for any of our products;
          *    Preventing  the  recovery of  development  costs,  which could be
               substantial; and
          *    Minimizing profit margins.

     Further, our commercialization strategy depends on our collaborators.  As a
result,  our ability to commercialize  our products and realize royalties may be
hindered if cost control initiatives adversely affect our collaborators.

FAILURE  TO  OBTAIN  PRODUCT  APPROVALS  OR  COMPLY  WITH  ONGOING  GOVERNMENTAL
REGULATIONS COULD ADVERSELY AFFECT OUR BUSINESS.

     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 Food,  Drug and Cosmetic Act, or 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 and we rely on our collaborators
and  outside  consultants.  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  relating to United States  Government
regulation include:

          *    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;
          *    If regulatory approval of a product is granted, such approval may
               entail  limitations  on the uses for  which  the  product  may be
               marketed;
          *    If regulatory approval is obtained, the product, our manufacturer
               and the manufacturing  facilities are subject to continual review
               and periodic inspections;
          *    If  regulatory  approval  is  obtained,   such  approval  may  be
               conditional  on the  satisfaction  of the  completion of clinical
               trials or require additional clinical trials;
          *    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
          *    Photodynamic therapy products have been categorized by the FDA as
               combination   drug-device   products.   If   current   or  future
               photodynamic  therapy  products do not continue to be categorized
               for regulatory purposes as combination products, then:
                  -  The FDA may require separate drug and device
                     submissions; and
                  -  The FDA may require separate approval by
                     regulatory authorities.

     Some  of  the  risks  and   uncertainties  of  international   governmental
regulation include:

          *    Foreign regulatory  requirements governing testing,  development,
               marketing,  licensing,  pricing and/or  distribution of drugs and
               devices in other countries;
          *    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 European Union, or EU,
               member states;
          *    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
          *    Registration  and approval of a photodynamic  therapy  product in
               other countries, such as Japan, may include additional procedures
               and  requirements,  preclinical  and  clinical  studies,  and may
               require the assistance of native corporate partners.

WE MAY  NOT BE ABLE TO KEEP UP  WITH  RAPID  CHANGES  IN THE  BIOTECHNOLOGY  AND
PHARMACEUTICAL   INDUSTRIES  THAT  COULD  MAKE  SOME  OR  ALL  OF  OUR  PRODUCTS
NON-COMPETITIVE  OR OBSOLETE.  COMPETING PRODUCTS AND TECHNOLOGIES MAY MAKE SOME
OR ALL OF OUR PROGRAMS OR POTENTIAL PRODUCTS NONCOMPETITIVE OR OBSOLETE.

     Our   industry  is  subject  to  rapid,   unpredictable   and   significant
technological  change.   Competition  is  intense.   Well-known  pharmaceutical,
biotechnology,  device and chemical  companies  are  marketing  well-established
therapies for the  treatment of AMD.  Doctors may prefer  familiar  methods that
they are comfortable using rather than try our products. Many companies are also
seeking to develop new  products and  technologies  for medical  conditions  for
which we are developing  treatments.  Our  competitors may succeed in developing
products that are safer or more effective than ours and in obtaining  regulatory
marketing  approval of future  products before we do. We anticipate that we will
face  increased  competition  as new  companies  enter  our  markets  and as the
scientific development of PhotoPoint PDT evolves.

     We expect that our principal methods of competition with other photodynamic
therapy companies will be based upon such factors as:

          *    The ease of administration of our photodynamic therapy;
          *    The degree of generalized skin sensitivity to light;
          *    The number of required doses;
          *    The safety and efficacy profile;
          *    The  selectivity  of our drug for the target  lesion or tissue of
               interest;
          *    The type, cost and price of our light systems;
          *    The cost and price of our drug; and
          *    The  amount  reimbursed  for the drug  and  device  treatment  by
               third-party payors.

     We cannot  give any  assurance  that new drugs or  future  developments  in
photodynamic  therapy or in other drug  technologies will not harm our business.
Increased competition could result in:

          *    Price reductions;
          *    Lower levels of third-party reimbursements;
          *    Failure to achieve market acceptance; and
          *    Loss of market share.

     Any of the above could have an adverse effect on our business.  Further, we
cannot  give any  assurance  that  developments  by our  competitors  or  future
competitors will not render our technology obsolete.

WE FACE INTENSE COMPETITION AND OUR FAILURE TO COMPETE EFFECTIVELY, PARTICULARLY
AGAINST LARGER,  MORE ESTABLISHED PHARMACEUTICAL  AND MEDICAL DEVICE  COMPANIES,
WILL CAUSE OUR BUSINESS TO SUFFER.

     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 and distribution.
Further, our competitive position could be harmed 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.

     We are aware that other  companies  are  marketing  or  developing  certain
products to  prevent,  diagnose or treat  diseases  for which we are  developing
PhotoPoint PDT. These products,  as well as others of which we may not be aware,
may adversely affect the existing or future market for our products. Competitive
products  may include,  but are not limited to, drugs such as those  designed to
inhibit  angiogenesis  or otherwise  target new blood vessels,  certain  medical
devices, such as drug-eluting stents and other photodynamic therapy treatments.

     We are aware of various  competitors  involved in the photodynamic  therapy
sector.  We understand that these companies are conducting  preclinical  studies
and/or  clinical  trials  in  various  countries  and for a variety  of  disease
indications. Our direct competitors in our sector include QLT Inc., or QLT, DUSA
Pharmaceuticals,  or DUSA, Axcan  Pharmaceuticals and Pharmacyclics.  QLT's drug
Visudyne has received  marketing approval in the United States and certain other
countries  for the  treatment  of AMD and has been  commercialized  by Novartis.
Axcan and DUSA have  photodynamic  therapy  drugs,  both of which have  received
marketing approval in the United States - Photofrin(R)  (Axcan  Pharmaceuticals)
for  the  treatment  of  certain  oncology   indications  and  Levulan(R)  (DUSA
Pharmaceuticals / Berlex Laboratories) for the treatment of actinic keratoses, a
dermatological condition. Pharmacyclics has a photodynamic therapy drug that has
not  received  marketing  approval,  which is being used in certain  preclinical
studies and/or clinical trials for  ophthalmology,  oncology and  cardiovascular
indications.  We are aware of other drugs and devices under development by these
and other photodynamic therapy competitors in additional disease areas for which
we are developing  PhotoPoint  PDT. These  competitors as well as others that we
are not aware of, may develop  superior  products  or reach the market  prior to
PhotoPoint PDT and render our products non-competitive or obsolete.

OUR  INDUSTRY  IS SUBJECT  TO  TECHNOLOGICAL  UNCERTAINTY,  WHICH MAY RENDER OUR
PRODUCTS AND DEVELOPMENTS OBSOLETE AND OUR BUSINESS MAY SUFFER.

     The   pharmaceutical   industry   is  subject  to  rapid  and   substantial
technological  change.  Developments  by others may render  our  products  under
development or our technologies  noncompetitive or obsolete, or we may be unable
to  keep  pace  with   technological   developments  or  other  market  factors.
Technological competition in the industry from pharmaceutical, biotechnology and
device companies,  universities,  governmental  entities and others diversifying
into the field is intense and is expected to increase.  These entities represent
significant  competition for us.  Acquisitions  of, or investments in, competing
pharmaceutical or biotechnology  companies by large  corporations could increase
such competitors' financial, marketing, manufacturing and other resources.

     We are  engaged  in the  development  of  novel  therapeutic  technologies,
specifically photodynamic therapy. As a result, our resources are limited and we
may  experience  technical  challenges  inherent  in  such  novel  technologies.
Competitors have developed or are in the process of developing technologies that
are, or in the future may be, the basis for competitive products.  Some of these
products  may have an  entirely  different  approach  or means of  accomplishing
similar therapeutic, diagnostic and imaging effects compared to our products. We
are aware that three of our competitors in the market for  photodynamic  therapy
drugs have received  marketing approval of their product for certain uses in the
United States or other countries.  Our competitors may develop products that are
safer, more effective or less costly than our products and, therefore, present a
serious competitive threat to our product offerings.

     The widespread  acceptance of therapies that are  alternatives  to ours may
limit market acceptance of our products even if commercialized. The diseases for
which we are developing  our  therapeutic  products can also be treated,  in the
case of cancer,  by  surgery,  radiation  and  chemotherapy,  and in the case of
restenosis,  by  surgery,  angioplasty,  drug  therapy and the use of devices to
maintain and open blood vessels.  These  treatments  are widely  accepted in the
medical  community and have a long history of use. The  established use of these
competitive  products  may limit  the  potential  for our  products  to  receive
widespread acceptance if commercialized.

     Our  understanding  of the market  opportunities  for our PhotoPoint PDT is
derived  from a variety of  sources,  and  represents  our best  estimate of the
overall market sizes presented in certain disease areas.  The actual market size
and market share which we may be able to obtain may vary  substantially from our
estimates, and is dependent upon a number of factors, including:

               *    Competitive  treatments or diagnostic tools, either existing
                    or those that may arise in the future;
               *    Performance of our products and subsequent  labeling claims;
                    and
               *    Actual patient population at and beyond product launch.

OUR PRODUCTS ARE SUBJECT TO OTHER STATE AND FEDERAL LAWS, FUTURE LEGISLATION AND
REGULATIONS  SUBJECTING  US TO COMPLIANCE  ISSUES THAT COULD CREATE  SIGNIFICANT
ADDITIONAL  EXPENDITURES  AND LIMIT THE  PRODUCTION AND DEMAND FOR OUR POTENTIAL
PRODUCTS.

     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:

               *    Our future capital and operational  expenditures  related to
                    these matters may increase and become material;
               *    We may also be subject to other present and possible  future
                    local, state, federal and foreign regulation;
               *    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;
               *    Such new legislation or regulations may materially limit the
                    demand  and  manufacturing  of 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;
               *    The announcement of such proposals may hinder our ability to
                    raise capital or to form collaborations; and
               *    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.

OUR BUSINESS IS SUBJECT TO ENVIRONMENTAL PROTECTION LAWS AND REGULATIONS, AND IN
THE EVENT OF AN  ENVIRONMENTAL  LIABILITY  CLAIM,  WE COULD BE HELD  LIABLE  FOR
DAMAGES AND ADDITIONAL SIGNIFICANT UNEXPECTED COMPLIANCE COSTS, WHICH COULD HARM
OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONs.

     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 the 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 cause us to pay  significant  amounts of money and
harm  our  business.  Further,  the  cost  of  complying  with  these  laws  and
regulations may increase materially in the future.





                                   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