##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

FORM 10-K

|                                            |  |                                                                                      
|------------------------------------------- |  | -------------------------------------------------------------------------------------
|                                            |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
	THE SECURITIES EXCHANGE ACT OF 1934
|For the fiscal year ended December 31, 1999
|Commission File Number: 0-23736            



---

GUILFORD PHARMACEUTICALS INC.



|                                                                |  |                                   
|--------------------------------------------------------------- |  | ----------------------------------
|                                                               
|                                                               
|                                                               
|                                                               
|Delaware                                                        |  | 52-1841960                        
|(State or other jurisdiction of
	incorporation or organization) |  | (IRS Employer
	Identification No.)

6611 Tributary Street

Baltimore, Maryland 21224


(410) 631-6300




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


Title of Class


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 and (2) has been subject to such filing
requirements for the past
90 days.     Yes 
[X]     No  [   ]

Indicate by check mark 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.     [   ]

As of March 13, 2000, the aggregate value of the
approximately 23,562,733 shares of common stock of the
Registrant issued and outstanding on such date, excluding
approximately 1,772,958 shares held by all affiliates of the
Registrant, was approximately $799,423,265. This figure is based
on the closing sales price of $36.688 per share of the
Registrants common stock as reported on the Nasdaq®
National Market on March 10, 2000.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents incorporated by reference
and the Part of the Form 10-K into which the document is
incorporated:

Portions of the 1999 Annual Report to Stockholders are
incorporated by reference into Part II. Portions of the Notice of
 Annual Meeting and Proxy Statement to be filed no later than
120 days following December 31, 1999 are incorporated
by reference into Part III.



---






---

TABLE OF CONTENTS



|                                                                                              |  |  |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------- |  |  |  |  |  |  |  | 
|PART I                                                                                       
|Item 1. Business                                                                             
|Item 1A. Executive Officers and Other Significant Employees of Registrant                    
|Item 2. Properties.                                                                          
|Item 3. Legal Proceedings                                                                    
|Item 4. Submission of Matters to a Vote of Security Holders                                  
|Item 4A. Risk Factors                                                                        
|PART II                                                                                      
|Item 5. Market for Registrants Common Equity and Related Stockholder Matters                
|Item 6. Selected Consolidated Financial Data                                                 
|Item 7. Managements Discussion and Analysis of Results of Operations and Financial Condition
|Item 7A. Quantitative and Qualitative Disclosures About Market Risk                          
|Item 8. Financial Statements and Supplementary Data                                          
|Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 
|Item 10. Directors and Executive Officers of the Registrant                                  
|PART III                                                                                     
|Item 11. Executive Compensation                                                              
|Item 12. Security Ownership of Certain Beneficial Owners and Management                      
|Item 13. Certain Relationships and Related Transactions                                      
|PART IV                                                                                      
|Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K                    
|Signatures and Power of Attorney                                                             



---






PART I

In this annual report, we may make forward-looking statements.
 You should note that we are making these forward-looking
statements under the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Generally the
forward-looking statements in this annual report relate to our
current expectations regarding future results of operations,
economic performance, and financial condition of our business. In
 general, we have introduced these forward-looking statements by
words such as anticipates, believes,
estimates, expects, hopes and
 similar expressions. Although these statements reflect our
current plans and expectations, we may nevertheless not be able
to successfully implement these plans and we may not realize our
expectations in whole or in part in the future.

The forward-looking statements in this annual report may
cover, but are not necessarily limited to, the following topics:
(1) our efforts in conjunction with Aventis to obtain
international regulatory clearances to market and sell GLIADEL®Wafer and to increase end-user sales of the
product; (2) our efforts in conjunction with Aventis S.A.,
or Aventis, to expand the labeled uses for GLIADEL®Wafer; (3) our efforts to develop polymer drug
 delivery product line extensions and new polymer drug delivery
products; (4) the conduct and completion of research and
development programs related to our FKBP neuroimmunophilin ligand
 technology and other technologies; (5) clinical development
 activities, including commencing, conducting and completing
clinical trials related to our polymer-based drug delivery
candidates and pharmaceutical product candidates; (6) our
efforts to scale-up product candidates from laboratory bench
quantities to commercial quantities; (7) our efforts to
secure a supply of the active pharmaceutical ingredients for the
clinical development and commercialization of our polymer-based
and other drug candidates; (8) our efforts to manufacture
drug candidates for clinical development and eventual commercial
supply; (9) our strategic plans; and (10) anticipated
expenditures and the potential need for additional funds, all of
which involve significant risks and uncertainties. We caution you
 that our actual results may differ significantly from the
results that we discuss in the forward-looking statements. We
discuss some important factors that could cause or contribute to
this difference in the Risk Factors section of this
annual report. In addition, we intend any forward-looking
statement that we make to speak only as of the date on which we
make it. We are not undertaking any obligation to update any
forward-looking statement to reflect events or circumstances that
 occur after the date on which we made the statement.




Item 1.  Business

Guilford Pharmaceuticals Inc. is a biopharmaceutical company
engaged in the development and commercialization of novel
products in two principal areas: (1) targeted and controlled
 drug delivery systems using proprietary biodegradable polymers
for the treatment of cancer and other diseases; and
(2) therapeutic and diagnostic products for neurological
diseases and conditions. Throughout this discussion,
we, us, our and
Guilford refer to Guilford Pharmaceuticals Inc. and
its subsidiaries.

GLIADEL® Wafer and DOPASCAN® Injection are registered
trademarks of Guilford. TAXOL® is a registered trademark of
Bristol-Myers Squibb Company.

2



---



##### Table of Contents



Product and Development Programs

The following table summarizes the current status of
Guilfords product, product candidates and research
programs:

|                                                        |  |                                                                                                                                                                            |  |              |  |                                              
|------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ |  | ---------------------------------------------
|Program/ Product Candidates                             |  |                                                                                                                                                                            |  |              |  |                                              
|Drug Delivery Business                                  |  | Disease Indications/ Conditions                                                                                                                                            |  | Status (1)   |  | Corporate Partner                            
|GLIADEL® Wafer (3.85% BCNU)                             |  | Recurrent glioblastoma Multiforme                                                                                                                                          |  | Market       |  | Aventis (2); Orion Corporation
	Pharma (3)   
|                                                        |  | Malignant glioma at time of Initial surgery                                                                                                                                |  | Phase III    |  | Aventis (2); Orion Corporation
	Pharma (3)   
|GLIADEL® Wafer High-Dose (up to 28% BCNU)               |  | Malignant glioma                                                                                                                                                           |  | Phase I/ II  |  | Aventis (2); Orion Corporation
	Pharma (3)(4)
|PACLIMERMicrospheres (paclitaxel in PPE
	microspheres) |  | Ovarian cancer                                                                                                                                                             |  | Phase I      |  |                                             
|PACLIMERMicrospheres (paclitaxel in PPE
	microspheres) |  | Prostate, head & neck and lungs                                                                                                                                            |  | Pre-clinical |  |                                             
|LIDOMERMicrospheres (lidocaine in PPE
	microspheres)   |  | Post-surgical pain management                                                                                                                                              |  | Pre-clinical |  |                                             
|                                                       
|                                                       
|                                                       
|                                                       
|Neurological Products Program                           |  |                                                                                                                                                                            |  |              |  |                                              
|Neurotrophic Drugs                                      |  |                                                                                                                                                                            |  |              |  |                                              
|Neuroimmunophilin ligands                               |  | Parkinsons disease                                                                                                                                                        |  | Phase I      |  | Amgen                                        
|                                                        |  | Other nerve growth and repair indications (Alzheimers
	disease, traumatic brain injury, traumatic spinal cord injury,
	multiple sclerosis, neuropathy, stroke and others) |  | Pre-clinical |  | Amgen                                        
|Neuroprotective Drugs                                   |  |                                                                                                                                                                            |  |              |  |                                              
|NAALADase inhibitors                                    |  | Glutamate neurotoxity (such as stroke and head trauma)                                                                                                                     |  | Pre-clinical |  |                                             
|PARP inhibitors                                         |  | Stroke, cardiac ischemia, septic shock, inflammation                                                                                                                       |  | Research     |  |                                             
|D-Serine Racemase                                       |  | Stroke, head trauma, Amyotrophic Lateral Sclerosis,
	Parkinsons disease, and peripheral neuropathics                                                                      |  | Research     |  |                                             
|Propofol Pro-Drug                                       |  | Surgical anesthesia/sedation                                                                                                                                               |  | Pre-clinical |  |                                             
|Diagnostic Imaging Agent                                |  |                                                                                                                                                                            |  |              |  |                                              
|DOPASCAN® Injection                                     |  | Imaging agent to diagnose and monitor Parkinsons disease                                                                                                                  |  | Phase II     |  | Daiichi Radioisotope Laboratories, Ltd. (5)  
|Addiction Therapeutics                                  |  |                                                                                                                                                                            |  |              |  |                                              
|Dopamine transporter ligand                             |  | Cocaine addiction                                                                                                                                                          |  | Research     |  |                                             




|    |                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Research includes initial research
	related to specific molecular targets, synthesis of new chemical
	entities, and assay development for the identification of lead
	compounds. Pre-clinical includes testing of lead
	compounds in vitro and in animal models, pharmacology and
	toxicology testing, product formulation and process development
	prior to the commencement of clinical trials.
|   
|(2) | Aventis is our corporate partner for GLIADEL®
	 Wafer throughout the world, excluding Scandinavia and Japan.                                                                                                                                                                                                                                                                                         

3



---



##### Table of Contents





|    |                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------
|(3) | Orion Corporation Pharma, which was formerly Orion
	 Corporation Farmos, is our corporate partner for GLIADEL®
	Wafer in Scandinavia.
|   
|(4) | Orion Corporation Pharma has certain rights of
	first refusal for a high-dose GLIADEL® Wafer product in
	Scandinavia.                
|   
|(5) | Daiichi Radioisotope Laboratories, Ltd. is our
	corporate partner for DOPASCAN® Injection in Japan, Korea
	and Taiwan.               

Our efforts to develop and commercialize GLIADEL® Wafer and
our product candidates are subject to numerous risks and
uncertainties. We describe some of these risks under the section
captioned Risk Factors and elsewhere in this annual
report.

Drug Delivery Business

Our drug delivery business involves the use of biodegradable
polymers for targeted and controlled delivery of drugs to treat
cancer and other uses. Delivering high drug concentrations
locally for a sustained period of time may increase the efficacy
of chemotherapy in slowing tumor growth and/or reducing tumor
mass and may decrease the side effects associated with systemic
drug administration. Additionally, site-specific,
controlled-release delivery of other agents may enhance the
utility of those agents. Guilford has developed expertise in the
discovery, clinical development and manufacturing of
polymer-based drug delivery products.

GLIADEL® Wafer

Our first product in our drug delivery business is GLIADEL®
Wafer, a novel treatment for glioblastoma multiforme, and the
most common and rapidly fatal form of primary brain cancer.
GLIADEL® Wafer is a proprietary biodegradable polymer that
contains the cancer chemotherapeutic drug BCNU (carmustine). Up
to eight GLIADEL® Wafer wafers are implanted in the cavity
created when a neurosurgeon removes a brain tumor. The wafers
gradually erode from the surface and deliver BCNU directly to the
 tumor site in high concentrations for an extended period of time
 without exposing the rest of the body to the toxic side effects
of BCNU. GLIADEL® Wafer is used to complement surgery,
radiation therapy and systemic intravenous chemotherapy in
patients with recurrent glioblastoma multiforme. The availability
 of GLIADEL® Wafer gives physicians an additional treatment
option for this rapidly fatal disease.

The FDA cleared GLIADEL® Wafer for marketing in
September 1996 for use as an adjunct to surgery to prolong
survival in patients with recurrent glioblastoma multiforme for
whom surgical resection is indicated. Glioblastoma multiforme is
one of the most common and rapidly fatal forms of brain cancer.
Our worldwide marketing partner, except in Scandinavia and Japan,
 Aventis, commercially launched GLIADEL® Wafer in the United
 States in February 1997.

Through December 31, 1999, GLIADEL® Wafer has received
health authority approval in approximately 21 countries for use
in patients with recurrent glioblastoma multiforme, including:

|          |  |             |  |              
|--------- |  | ----------- |  | -------------
|Argentina |  | Greece      |  | Portugal     
|Austria   |  | Ireland     |  | Singapore    
|Brazil    |  | Israel      |  | South Korea  
|Canada    |  | Luxembourg  |  | Spain        
|France    |  | Netherlands |  | United States
|Germany   |  | Peru        |  | Uruguay      

In the case of Canada, GLIADEL® Wafer has also received
health authority approval for use upon the initial diagnosis of
glioblastoma multiforme.

4



---



##### Table of Contents



Applications for health authority approval are pending in other
countries, including:

|          |  |              |  |               
|--------- |  | ------------ |  | --------------
|Australia |  | Italy        |  | Taiwan        
|Ecuador   |  | Philippines  |  | Thailand      
|Indonesia |  | South Africa |  | United Kingdom

In a number of countries, including Canada, additional
governmental approvals, e.g., relating to pricing and/or
reimbursement, are necessary before a medicinal product may be
marketed. As of December 31, 1999, almost all sales of
GLIADEL® Wafer were in the United States and France, and in
Scandinavia on a named hospital basis.

Guilford entered into a series of agreements with Aventis in
June 1996, under which Aventis agreed to pay signing,
milestone, transfer and royalty payments for the right to market,
 sell and distribute GLIADEL® Wafer worldwide, currently
excluding Scandinavia and Japan, and agreed to seek international
 regulatory approvals for the product. During 1996, Aventis paid
Guilford $27.5 million in milestone payments, purchased
$7.5 million of our common stock, and extended to us a line
of credit for up to $7.5 million to support future expansion
 of our GLIADEL® Wafer and other polymer manufacturing
capacity. Under these agreements, Aventis pays to Guilford a
combined transfer price and royalty of between 35% and 40% on
Aventis net sales of GLIADEL® Wafer to hospitals.

Guilford and Aventis are working together to expand the label for
 GLIADEL® Wafer in the United States and other countries so
that it may be marketed for use in malignant glioma at the time
of initial surgery. Malignant glioma is a broader category of
brain cancer including but not limited to glioblastoma
multiforme. In the summer of 1999, patient enrollment was
completed in a 240-person, placebo-controlled, Phase III
clinical trial for GLIADEL® Wafer in patients undergoing
initial surgery for malignant glioma at 42 clinical sites in
Europe, the United States and Israel. We expect the results to be
 available in the second half of 2000, following a minimum of one
 year follow-up period for each study participant. If the results
 are favorable, Guilford and Aventis intend to file in the United
 States and other countries for use of GLIADEL® Wafer in
first surgery for malignant glioma.

Pursuant to the terms of our marketing, sales and distribution
rights agreement with Aventis, we are eligible to receive the
following non-recurring milestone payments if and when Aventis
obtains all the required approvals needed to sell GLIADEL®
Wafer in the following countries for the following indications:

|               |  |                      |              |                          |  |   |              |   
|-------------- |  | -------------------- | ------------ | ------------------------ |  | - | ------------ | --
|               |  | Milestone for        |              | Milestone for           
|Country        |  | recurrent indication |              | First Surgery Indication
|               |  |                      |              |                         
|United States  |  | $                    | 20.0 million | *                        |  | $ | 15.0 million | **
|              
|              
|              
|              
|France         |  | $                    | 2.5 million  | *                        |  | $ | 2.5 million  |   
|              
|              
|              
|              
|Germany        |  | $                    | 2.0 million  | *                        |  | $ | 2.0 million  |   
|              
|              
|              
|              
|Canada         |  | $                    | 2.0 million  |                          |  |   |             |   
|              
|              
|              
|              
|Italy          |  | $                    | 1.5 million  |                          |  | $ | 1.5 million  |   
|              
|              
|              
|              
|Spain          |  | $                    | 1.0 million  |                          |  | $ | 1.0 million  |   
|              
|              
|              
|              
|United Kingdom |  | $                    | 1.0 million  |                          |  | $ | 1.0 million  |   
|              
|              
|              
|              
|Australia      |  | $                    | 1.0 million  |                          |  | $ | 1.0 million  |   




|  |               
|- | --------------
|* | already earned



|   |                                                        
|-- | -------------------------------------------------------
|** | $7.5 million cash and $7.5 million in equity investment

Thus, if GLIADEL® Wafer is approved for first surgery
patients in all of the countries listed above, we are eligible to
 receive up to an aggregate of $30.5 million in milestone
and equity payments from Aventis.

5



---



##### Table of Contents



Our collaboration with Aventis also encompasses development of a
high-dose formulation of GLIADEL® Wafer. The current
formulation contains a 3.85% concentration of BCNU, the
anti-cancer agent in the product. Based on promising preclinical
data, Guilford and Aventis have been conducting a Phase I
dose-escalation clinical trial of GLIADEL® Wafer using
concentrations of BCNU ranging from 6.5% up to 28%. Final results
 of this trial are expected this summer.

We entered into our agreement with Orion Corporation Pharma, a
major Scandinavian health care company, for the sales, marketing
and distribution of GLIADEL® Wafer in Scandinavia in
October 1995. Under this agreement, Orion Corporation Pharma
 purchases GLIADEL® Wafer from Guilford on an exclusive
basis for sale in Scandinavia. Orion Corporation Pharma commenced
 sales of GLIADEL® Wafer in Scandinavia in 1997 on a named
hospital basis.

For 1999, our revenues related to the sales and distribution of
GLIADEL® Wafer were $6.8 million. Of this amount, we
received $4.4 million as a transfer price on units sold to
Aventis and to Orion Corporation Pharma and $2.4 million as
royalties on sales by Aventis to hospitals and other end-users.
In addition, under our agreements with Aventis, we are eligible
for additional milestone payments totaling up to
$30.5 million, including $7.5 million in the form of an
equity investment, if Guilford and Aventis achieve certain
regulatory objectives. These objectives include expanding the
labeling in the United States to include the use of GLIADEL®
 Wafer at the time of initial surgery as well as obtaining
specified international regulatory approvals to market and sell
GLIADEL® Wafer. Guilford does not control the timing and
extent of any future regulatory approvals for GLIADEL®
Wafer, and thus we may not receive any or all of these payments.
Whether we and Aventis will attain any or all of such regulatory
objectives remains uncertain. We pay a royalty to Massachusetts
Institute of Technology on sales of GLIADEL® Wafer pursuant
to the license agreement under which we acquired the underlying
technology for this product.

Future sales of GLIADEL® Wafer are subject to certain risks
and uncertainties. We discuss a number of these risks in detail
in the section of this annual report entitled Risks
Factors below.

PACLIMER Microspheres

We are also working to broaden our line of polymer-based oncology
 products through the use of other chemotherapeutic agents,
different polymer systems and various formulations. In
November 1999, we filed an application for an
Investigational New Drug, or an IND, for the
intraperitoneal administration of our second generation polymer
oncology product, PACLIMER Microspheres, in women with
ovarian cancer. PACLIMER Microspheres is a site-specific,
controlled release formulation of paclitaxel (TAXOL®) in a
PPE polymer developed in collaboration with scientists at Johns
Hopkins. We are conducting a Phase I clinical trial in
association with the Gynecologic Oncology Group, a consortium of
leading academic clinical investigators in the field. We are
additionally engaged in research on the suitability of this
site-specific, controlled release formulation of paclitaxel for
other local cancers, such as tumors of the lung, prostate, and
head and neck.

We are the exclusive licensee from MIT and Johns Hopkins of
several issued U.S. patents relating to the use of polymers to
deliver paclitaxel and certain other chemotherapeutics to solid
tumors. In addition, we have applied for a number of patent
applications in the U.S. and abroad relating to the composition
of matter of PPE polymers and their use for various kinds of
cancer, including ovarian cancer.

Other Polymer-Based Drug Delivery Products

We are also exploring the use of our proprietary biodegradable
polymer platform to deliver other agents which may have
therapeutic utility. Guilford scientists have demonstrated that
PPEs can deliver agents ranging from DNA to proteins to peptides
to small molecules in therapeutically effective doses in animal
models. In the first quarter of 2000, we announced a new
development

6



---



##### Table of Contents





Neurological Programs

Guilford is extensively engaged in the research and development
of small molecules that regeneratedamaged nerves, our
neurotrophic program, or protect nerves from damage, our
neuroprotectant program, for potential treatment of a range of
neurodegenerative diseases and conditions, such as
Parkinsons disease, Alzheimers disease, stroke,
Amyotrophic Lateral Sclerosis (ALS), multiple sclerosis, spinal
cord injury and peripheral neuropathies. We also announced in the
 first quarter of 2000 that we have licensed exclusive worldwide
rights to a pro-drug of the widely used anesthetic, propofol, at
a late pre-clinical stage of development. We have also been
developing an imaging agent for the diagnosis and monitoring of
Parkinsons disease, DOPASCAN® Injection, which is
expected to enter Phase III in Japan in the second half of
2000. In addition, we are researching small molecule therapeutics
 for cocaine abuse and possibly other addictive behaviors.

Neurotrophic Program

Guilford is a pioneer in the effort to develop small molecule,
orally-bioavailable compounds to promote nerve growth and repair,
 called neurotrophic agents, for the treatment of neurological
disorders. The degeneration or damage of nerve cells in the brain
 and peripheral neurons resulting from certain diseases and
conditions causes a loss of either central nervous system
function, such as Alzheimers disease, Parkinsons
disease, multiple sclerosis, spinal cord injury and stroke, or
peripheral nerve function, such as diabetic neuropathy and other
peripheral neuropathies. Under normal circumstances, damaged
nerves have limited ability to regrow or otherwise recover, which
 poses a major obstacle for the treatment of these conditions.

Our neurotrophic program originated from observations first made
in the laboratory of Dr. Solomon Snyder, Director of the
Department of Neuroscience at Johns Hopkins and Chairman of our
Scientific Advisory Board. These observations revealed that
certain intracellular proteins, known as
immunophilins, which are targets of immunosuppressant
 drugs such as FK 506, are enriched 10-40 fold in certain areas
of the central nervous system. Johns Hopkins scientists went on
to discover that commonly used immunosuppressive drugs, and other
 immunophilin ligands, can promote nerve growth. Guilford
exclusively licensed rights to these inventions from Johns
Hopkins. Subsequently, Guilford scientists and their academic
collaborators demonstrated that the pathway leading to nerve
regeneration could be separated from the immunosuppressant
pathway. Guilford scientists have synthesized a large number of
proprietary small molecules, called neuroimmunophilin
ligands, a number of which have been shown in cell culture
and animal models to be neurotrophic without being
immunosuppressive, orally-bioavailable and able to cross the
blood-brain barrier. In contrast, many naturally occurring nerve
growth factors, proteins and peptides are not orally-bioavailable
 and do not normally cross the blood-brain barrier.

Some of our neuroimmunophilin ligands have induced functional and
 histological recovery of damaged dopamine nerve cells, which are
 the nerve cells that degenerate in Parkinsons disease, in
rodent and primate models. Neuroimmunophilin ligands have also
shown similar neurotrophic effects in a range of different
neurons, including dopaminergic, cholinergic, serotonergic and
sensory neurons, which means they may be useful in a range of
disorders characterized by degeneration of these types of
neurons, and in animal models of a range of neurodegenerative
diseases and conditions, such as Alzheimers disease,
stroke, traumatic brain and spinal cord injury and peripheral
neuropathy. Moreover, our scientists are researching the
potential of these compounds in certain non-neurological diseases
 and conditions.

In August 1997, we entered into a collaboration with Amgen
to research, develop and commercialize a broad class of
neuroimmunophilin ligands, referred to as FKBP neuroimmunophilin
ligands, as well as any other compounds that may result from the
collaboration, for all human therapeutic and diagnostic
applications. Amgen initially paid us a one time, non-refundable
signing

7



---



##### Table of Contents





As part of this collaboration, Amgen agreed to fund up to a total
 of $13.5 million to support research at Guilford relating
to the FKBP neuroimmunophilin ligand technology. This research
funding began on October 1, 1997 and is payable quarterly
over three years. Amgen also has the option to fund a fourth year
 of research.

If Amgen achieves certain specified development objectives in
each of ten different clinical indications, Amgen has agreed to
pay to Guilford up to a total of $392 million in milestone
payments. Of these ten clinical indications, seven are
neurological, consisting of Parkinsons disease,
Alzheimers disease, traumatic brain injury, traumatic
spinal cord injury, multiple sclerosis, neuropathy and stroke,
and three are non-neurological.

In 1998, Amgen nominated a second-generation lead FKBP
neuroimmunophilin compound, called NIL-A, initially
targeted for the treatment of Parkinsons disease. Amgen
completed a one-month Good Laboratory Practice study of NIL-A,
the initiation of which triggered a one-time, non-refundable
milestone payment to Guilford of $1 million under the
collaboration agreement. In the summer of 1999, Amgen initiated a
 Phase I safety, tolerability and pharmacokinetics study in
healthy human volunteers in Europe of a second-generation lead
FKBP neuroimmunophilin compound,
 NIL-A. In the fourth quarter of 1999, Amgen filed an IND for
human testing in the United States of NIL-A, initially targeting
Parkinsons disease. This milestone earned Guilford a
$5 million payment under the collaboration agreement with
Amgen. Amgen has conducted, and is preparing to conduct,
additional clinical trials pursuant to its clinical development
plan.

Under a license agreement pursuant to which we acquired rights to
 certain patent applications relating to the FKBP
neuroimmunophilin ligand technology, we are obligated to pay to
Johns Hopkins a portion of all milestone payments paid by Amgen
as well as a royalty on any and all net sales of any FKBP
neuroimmunophilin ligand product Amgen markets and sells in the
future.

We have filed a number of patent applications in the United
States and internationally relating to both novel compositions
and methods of treating neurological disorders utilizing these
compounds. These compounds induce nerve growth directly, as well
as potentiate nerve growth in the presence of nerve growth
factors. As of December 31, 1999, we have rights to
approximately 20 issued U.S. patents in the field, including
 those claiming multiple proprietary chemical series of
neuroimmunophilin ligands and their neurotrophic uses.

As noted in the section herein captioned Risk Factors
 and elsewhere in this annual report, there is no guarantee that
Guilford or Amgen will be able to successfully develop any FKBP
neuroimmunophilin compounds or other product candidates into safe
 and effective drug(s) for neurological or other uses.
Consequently, Guilford may not earn additional milestone payments
 related to Amgens development activities or revenues
related to product sales.

In particular, the research, development and commercialization of
 early-stage technology like the FKBP neuroimmunophilin ligand
technology is subject to significant risks and uncertainty. For
discussion of these and other risks, see the section herein
captioned Risk Factors.

Neuroprotectant Program

In Guilfords neuroprotectant program, Guilford scientists
are developing novel compounds to protect brain and other cells
from ischemia, which is the lack of oxygen delivery from reduced
blood flow, and other disorders caused by massive release of
excitatory amino acid neurotransmitters such as glutamate. We are
 exploring distinct intervention points in a biochemical pathway
that can lead to neuronal damage, including the pre-synaptic
inhibition of glutamate release by inhibiting the enzyme,

8



---



##### Table of Contents





It has been hypothesized that the release of the neurotransmitter
 glutamate may be mediated in part by the enzyme NAALADase, which
 cleaves glutamate from the abundant neuro-peptide,
N-acetyl-aspartyl-glutamate (NAAG), and results in stimulation of
 post-synaptic glutamate receptors (including
n-methyl-D-aspartate (NMDA) receptors). This release plays a
 critical role in many central neuronal functions. However, in
conditions such as ischemia and epilepsy, there is a massive
increase in synaptic glutamate concentrations, which results in
excessive activation of glutamate receptors. Dr. Solomon
Snyder and his colleagues at Johns Hopkins have shown that this
activation, in turn, causes excess production of the
neurotransmitter nitric oxide, mediated by the enzyme NOS, which
results in damage to cellular DNA. DNA damage activates PARP, a
nuclear repair enzyme, which can deplete cellular energy stores
and lead to cell death. In 1999, Dr. Snyders
laboratory announced the discovery of an enzyme, D-Serine
Racemase, which plays a key role in the activation of an
important post-synaptic glutamate receptor, the N-Methyl
D-Aspartate (NMDA) receptor. Guilford is working on the
selective inhibition of NAALADase, PARP, D-Serine Racemase and
other enzymes in the biochemical pathway to neuronal damage and
death as possible mechanisms for inhibiting the toxic effects of
excess glutamate in neurological diseases and conditions.

NAALADase Inhibitors

Glutamate is a neurotransmitter which is required for normal
brain functioning. However, excess amounts of glutamate can be
toxic and can kill brain cells. Excess glutamate
neurotransmission has been implicated in a number of neurological
 disorders, such as diabetic peripheral neuropathy, pain, head
trauma, stroke, ALS, Alzheimers disease, schizophrenia,
Huntingtons disease and Parkinsons disease. Because
of the large range of potential applications, blocking excess
glutamate has been an intense area of research in the
pharmaceutical industry. However, to date much of the research
and development activity has focused on blocking post-synaptic
glutamate receptors, with compounds such as NMDA antagonists,
glycine antagonists, and other post-synaptic excitatory amino
acid (EAA) receptor blockers. Unfortunately, these agents have
generally been associated with severe toxicities, both in
pre-clinical and clinical studies, which have greatly limited
their clinical potential.

In contrast, scientists at Guilford have been pioneers in
investigating a novel means of blocking excess glutamate release
mediated by inhibition of NAALADase. Guilford chemists have
identified a number of chemical series of novel NAALADase
inhibitors, some of which have nanomolar potency in inhibiting
NAALADase activity and robustly protect against neurodegeneration
 both in cell and animal models. Since Guilfords NAALADase
inhibitors do not appear to interact with post-synaptic glutamate
 receptors, they seem to be devoid of the behavioral toxicities
associated with post-synaptic glutamate antagonists. For example,
 neuropathology studies in rats dosed with a NAALADase inhibitor
have shown no evidence of the neuronal degeneration seen with
post-synaptic glutamate inhibitors.

We are closely investigating a novel, orally-bioavailable lead
compound, which may advance into clinical development later this
year. The initial therapeutic target is expected to be diabetic
peripheral neuropathy. Diabetic peripheral neuropathy is a
debilitating and progressive disorder involving severe pain
sensitivity, tingling, weakness and numbness in a patients
extremities. It may affect close to one million Americans, yet
there is currently no therapy that is approved to treat this
disorder in the United States. Guilford researchers have
demonstrated in animal models that treatment with a NAALADase
inhibitor can normalize pain sensitivity, improve nerve
conduction velocity, which is the speed at which a nerve impulse
travels, and promote re-myelination of peripheral nerves.
Additional potential target indications for NAALADase inhibitors
may include chronic pain, schizophrenia, head trauma, stroke,
ALS, Alzheimers disease and Parkinsons disease.

We have filed numerous patent applications in the U.S. and abroad
 relating to novel compositions of matter and methods of use. As
of December 31, 1999, we have rights to

9



---



##### Table of Contents





PARP Inhibitors

During conditions of nerve degeneration, the cascade of events
that is believed to result in cell death is initiated by an
increase in synaptic glutamate levels, which results in an
over-stimulation of post-synaptic glutamate receptors. This
stimulation results in a dramatic increase in intracellular
calcium, which leads to the formation of free radicals, such as
nitric oxide, a neurotransmitter involved in normal brain
functioning. However, too much nitric oxide, which can arise
under conditions of neurological disease or damage, can be toxic
and can cause DNA damage. This damage in turn leads to
over-activation of the enzyme, poly(ADP-ribose) polymerase
(PARP), which is involved in the repair of damaged DNA. This
repair process is very energy intensive, and excessive activation
 of PARP rapidly leads to a drop in the cellular energy level,
resulting in cell death.

The inhibition of PARP may represent a common intervention point
for neurodegeneration resulting from several different pathways
of damage, including the generation of nitric oxide and other
oxygen species, all of which trigger PARP activation. Thus the
inhibition of PARP may offer a unique approach to the development
 of neuroprotective agents for a range of neurological
conditions. In addition, the over-stimulation of PARP has been
implicated in a broad spectrum of other diseases, including
myocardial ischemia, which occurs in heart attacks, traumatic
head and spinal cord injuries, neurodegenerative disorders such
as Alzheimers disease, Parkinsons, disease,
Huntingtons disease, septic or hemorrhagic shock,
arthritis, type I diabetes and inflammatory bowel disease.

Guilford scientists and their academic collaborators were among
the first to investigate the use of PARP inhibitors for the
prevention of glutamate neurotoxicity. Recent studies by several
academic laboratories using mice that have been genetically
altered to possess no or greatly diminished PARP activity suggest
 that absence of PARP activity may reduce the area of neuronal
damage from stroke by up to 85%-90%, and the area of heart muscle
 damage during a heart attack by about 40%. Strikingly, some of
our prototype PARP inhibitors have achieved similar results in
preclinical models of stroke and heart attack in animals whose
PARP genes had not been knocked out. In addition, our scientists
have achieved neuroprotective results not only in transient
ischemia models of stroke, but also in the more rigorous global
ischemia models of stroke.

Guilford chemists have identified a number of distinct chemical
series of novel PARP inhibitors with pre-clinical efficacy. In
addition, our biologists have obtained results in animal
experiments suggesting that PARP inhibitors may have potential
utility in a range of therapeutic areas, including traumatic head
 and spinal cord injuries, Alzheimers disease, septic shock
 and arthritis.

We have filed numerous patent applications in the U.S. and abroad
 relating to novel compositions of matter and methods of use. As
of December 31, 1999, we had rights to two issued U.S.
patents in the field, including one generally claiming the use of
 PARP inhibitors for the prevention of glutamate neurotoxicity.

As used in this annual report, a prototype compound
is one which Guilford uses to establish scientific
proof-of-principle respecting the relevant biomedical mechanism
of action. In general, we do not intend to develop prototype
compounds into products because of sub-optimal drug metabolism or
 pharmacokinetic characteristics, our proprietary position with
respect to the compound, or for other reasons. Once we have in
 vitroand in vivoproof of principal of intervention
in what we believe to be a medically relevant biochemical
mechanism of action, we seek to develop proprietary lead
compounds through medicinal chemistry. We seek to develop these
proprietary lead compounds both around the prototype compounds
and other promising chemical structures generated by molecular
modeling, combinatorial or computational chemistry, and/or high
throughput screening.

10



---



##### Table of Contents



D-Serine Racemase and Other Inhibitors

In the first quarter of 2000, we announced that we had licensed
from Johns Hopkins rights relating to another potential
intervention point in the biochemical cascade of glutamate
neurotoxicity. Dr. Snyders laboratory demonstrated
that an enzyme, D-Serine Racemase, plays a key role in the
activation of an important post-synaptic glutamate receptor, the
NMDA receptor. Guilford is engaged in research on the selective
inhibition of this and several other enzymes, which may result in
 neuroprotection during neurodegenerative diseases and
conditions.

Propofol Pro-Drug

Also in the first quarter of 2000, we announced that we had
licensed from ProQuest Pharmaceuticals Inc. rights relating to a
novel pro-drug of a widely used anesthetic, propofol. A pro-drug
is a compound that is metabolized in the body into a drug. The
compound, GPI-15715, is water soluble and rapidly converts to
propofol once administered intravenously in animals. In contrast,
 propofol is administered in a lipid emulsion, which can cause
complications, such as short shelf-life, clogged IV routes of
administration, elevated blood lipids and a potentially higher
incidence of bacterial contamination. GPI-15715 may offer a
clinical benefit to patients both as an ICU sedating agent and an
 anesthesia-induction drug. GPI-15715, is at a late pre-clinical
stage of development, and we hope to commence human trials later
in 2000 or in early 2001.

Imaging Agent Program  DOPASCAN® Injection

Our product candidate for the diagnosis and monitoring of
Parkinsons disease, DOPASCAN® Injection, is
administered intravenously in trace quantities. It allows
physicians to obtain images and measure the degeneration of
dopamine neurons in the brain. Dopamine neurons are highly
concentrated in a specialized area of the brain that degenerates
in Parkinsons disease. Parkinsons disease is a common
 neurodegenerative disorder affecting more than 900,000 patients
in the United States. In Parkinsons disease, there is a
decrease in the dopaminergic nerve terminals and thus dopamine
release.

In its early stages, Parkinsons disease can be very
difficult to distinguish clinically from other diseases with
similar symptoms but which do not respond well or at all to
specific therapy for Parkinsons disease. Unfortunately,
there are no diagnostic tests currently marketed or commercially
available that can reliably detect the neuronal degeneration in
Parkinsons disease, and the typical delay between the onset
 of symptoms and clinical diagnosis is more than two years. The
primary way to establish the diagnosis at present is through
repeated physician visits and the use of therapeutic trials of
drugs such as L-Dopa, which carry with them the risk of
unnecessary, sometimes severe side effects.

Following intravenous injections with DOPASCAN® Injection,
images of a subjects brain are obtained with a SPECT camera
 and can identify the loss of dopamine neurons in the brain. To
date, over 2,000 patients have been imaged in the United States
and Europe using DOPASCAN® Injection. In a multi-center
Phase IIb clinical trial conducted by the Parkinsons Study
Group in the United States and completed in 1997, DOPASCAN®
Injection accurately differentiated patients clinically diagnosed
 with a Parkinsonian disorder, i.e., Parkinsons disease and
 progressive supranuclear palsy, from subjects without a
Parkinsonian disorder, e.g., essential tremor and healthy
controls, with a sensitivity of 98% and specificity of 97%. In
addition, no serious adverse events were attributed to
DOPASCAN® Injection in this study. In addition, in late 1998
 we completed a multi-center Phase IIb trial in Europe.

We have entered into an agreement with Daiichi Radioisotope
Laboratories, Ltd., a leading Japanese radiopharmaceutical
company, to develop and commercialize DOPASCAN® Injection in
 Japan, Korea and Taiwan. Daiichi Radioisotope Laboratories, Ltd.
 has informed us that it plans to commence Phase III clinical
trials in the second half of 2000. We have sought partners for
the manufacture and/or distribution of this product in other
territories, including the United States and

11



---



##### Table of Contents





Addiction Therapeutics

We are also researching therapeutics for cocaine addiction and
other addictive behaviors. Researchers have shown that cocaine
binds to structures in the brain known as dopamine transporters.
Our cocaine addiction therapeutics program focuses on the
research and development of drugs which will prevent cocaine from
 binding to dopamine transporters, thus potentially limiting the
effects of cocaine, and at the same time will minimally affect
normal dopamine transporter function.

Based on reported findings about the cocaine binding site,
Guilford scientists have used rational drug design techniques to
identify and synthesize novel compounds with recognition site in
the brain. In addition, we have generated further lead chemical
series from screening our own library of compounds. We are in the
 process of chemical optimization and testing in animal models.
We have filed patent applications covering several novel classes
of compounds for use in cocaine addiction. Guilford also intends
to test its optimized lead compounds on other forms of addiction,
 including alcohol and heroin addiction, which may result from
facilitation of dopaminergic neurotransmission in certain areas
of the brain.

Manufacturing and Raw Materials

We currently manufacture GLIADEL® Wafer using a proprietary
process at our 18,000 square foot manufacturing facility in
Baltimore, Maryland. This facility, which includes areas
designated for packaging, quality control, laboratory, and
warehousing, has been in operation since April 1995. The FDA
 initially inspected it in October 1995 and recently
re-inspected it in February 1999. Our current facilities are
 designed to enable us to produce up to 8,000 GLIADEL® Wafer
 treatments annually, with each treatment consisting of eight
GLIADEL® Wafers.

In January 1998, we completed construction of an expansion
of our manufacturing facilities to allow for the additional
synthesis of the polyanhydride co-polymer used in the manufacture
 of GLIADEL® Wafer. We will also be able to use this
facility to produce our newest proprietary biodegradable
polymers, the PPEs, in connection with the development of other
polymer-based products. In addition, we completed construction of
 a second clean room facility in 1998, which we expect could
increase our GLIADEL® Wafer manufacturing capacity to
20,000-30,000 treatments annually. Furthermore, we expect that
this second clean room facility will also provide sufficient
capacity to produce any clinical supply of PPE polymer-based
product candidates needed in the future, including its
paclitaxel/ PPE polymer product candidate currently under
development for ovarian cancer.

We believe that the various materials used in GLIADEL® Wafer
 are readily available and will continue to be available at
reasonable prices. Nevertheless, while we believe that we have an
 adequate supply of BCNU, the active chemotherapeutic ingredient
in GLIADEL® Wafer, to meet current demand, any interruption
in the ability of the two current suppliers to deliver this
ingredient could prevent us from delivering the product on a
timely basis. We depend upon the availability of certain
single-source raw materials in our formulations, but are seeking
alternate suppliers for most of these raw materials. We cannot be
 sure that we will be able to secure alternate sources
successfully on terms acceptable to us or at all. Failure of any
supplier to provide sufficient quantities of raw material in
accordance with the FDAs current Good Manufacturing
Practice regulations could cause delays in clinical trials and
commercialization of products, including GLIADEL® Wafer.

12



---



##### Table of Contents



Government Regulation and Product Testing

All domestic prescription pharmaceutical manufacturers are
subject to extensive regulation by the federal government,
principally the FDA and, to a lesser extent, by state and local
governments as well as foreign governments if products are
marketed abroad. Biologics and controlled drug products, such as
vaccines and narcotics, and radiolabeled drugs, are often
regulated more stringently than are other drugs. The Federal
Food, Drug, and Cosmetic Act and other federal statutes and
regulations govern or influence the development, testing,
manufacture, labeling, storage, approval, advertising, promotion,
 sale and distribution of prescription pharmaceutical products.
Pharmaceutical manufacturers are also subject to certain
recordkeeping and reporting requirements. Noncompliance with
applicable requirements can result in warning letters, fines,
recall or seizure of products, total or partial suspension of
production and/or distribution, refusal of the government to
enter into supply contracts or to approve marketing applications
and criminal prosecution.

Upon FDA approval, a drug may only be marketed in the United
States for the approved indications in the approved dosage forms
and at the approved dosage levels. The FDA also may require
post-marketing testing and surveillance to monitor a drug in
larger and more diverse patient populations. Manufacturers of
approved drug products are subject to ongoing compliance with FDA
 regulations. For example, the FDA mandates that drugs be
manufactured in conformity with the FDAs applicable current
 Good Manufacturing Practice regulations. In complying with the
current Good Manufacturing Practice regulations, manufacturers
must continue to expend time, money and effort in production,
recordkeeping and quality control to ensure that the product
meets applicable specifications and other requirements. The FDA
periodically inspects drug manufacturing facilities to ensure
compliance with its current Good Manufacturing Practice
regulations. Failure to comply subjects the manufacturer to
possible FDA action, such as suspension of manufacturing, seizure
 of the product or voluntary recall of a product. Adverse
experiences with the commercialized product must be reported to
the FDA. The FDA also may require the submission of any lot of
the product for inspection and may restrict the release of any
lot that does not comply with FDA regulations, or may otherwise
order the suspension of manufacture, voluntary recall or seizure.
 Product approvals may be withdrawn if compliance with regulatory
 requirements is not maintained or if problems concerning safety
or efficacy of the product occur following approval.

Full Clinical Testing Requirements

The steps required before a newly marketed drug may be
commercially distributed in the United States include:



| |     |                                                                                                                   
| | --- | ------------------------------------------------------------------------------------------------------------------
| | (1) | conducting appropriate preclinical laboratory and animal tests;                                                   
|
| | (2) | submitting to the FDA an application for an IND, which must
	become effective before clinical trials may commence;
|
| | (3) | conducting well-controlled human clinical trials that establish
	the safety and efficacy of the drug product;     
|
| | (4) | filing with the FDA a New Drug Application, or NDA,
	for non-biological drugs; and                              
|
| | (5) | obtaining FDA approval of the NDA prior to any commercial sale or
	 shipment of the non-biological drug.          

In addition to obtaining FDA approval for each indication to be
treated with each product, each domestic drug manufacturing
establishment must register with the FDA, list its drug products
with the FDA, comply with the FDAs current Good
Manufacturing Practice requirements and be subject to inspection
by the FDA. Foreign manufacturing establishments distributing
drugs in the United States also must comply with current Good
Manufacturing Practice requirements, register and list their
products, and are subject to periodic inspection by FDA or by
local authorities under agreement with the FDA. The FDA also
regulates drug advertising and promotion as well as the
distribution physician samples. Individual states also often
impose licensing requirements on drug manufacturers

13



---



##### Table of Contents





With respect to a drug product with an active ingredient not
previously approved by the FDA, the manufacturer must usually
submit a full NDA to prove that the product is safe and
effective. The NDA must include complete reports of pre-clinical,
 clinical and laboratory studies. A full NDA may also need to be
submitted for a drug product with a previously approved active
ingredient if studies are required to demonstrate safety and
efficacy. This could occur when the drug will be used to treat an
 indication for which the drug was not previously approved or
where the dose or method of drug delivery is changed. In
addition, the manufacturer of an approved drug may be required to
 submit for the FDAs review and approval a supplemental
NDA, including reports of appropriate clinical testing, prior to
marketing the drug with additional indications or making other
significant changes to the product or its manufacture. A
manufacturer intending to conduct clinical trials ordinarily will
 be required first to submit an IND to the FDA containing
information relating to previously conducted pre-clinical
studies.

Pre-clinical testing includes formulation development, laboratory
 evaluation of product chemistry and animal studies to assess the
 potential safety and efficacy of the product formulation.
Pre-clinical tests to support an FDA application must be
conducted in accordance with the FDA regulations concerning Good
Laboratory Practices. The results of the pre-clinical tests are
submitted to the FDA as part of the IND and are reviewed by the
FDA prior to authorizing the sponsor to conduct clinical trials
in human subjects. Unless the FDA issues a clinical hold on an
IND, the IND will become effective 30 days following its
receipt by the FDA. There is no certainty that submission of an
IND will result in the commencement of clinical trials or that
the commencement of one phase of a clinical trial will result in
commencement of other phases or that the performance of any
clinical trials will result in FDA approval.

Clinical trials for new drugs typically are conducted in three
phases, are subject to detailed protocols and must be conducted
in accordance with the FDAs regulations concerning good
clinical practices. Clinical trials involve the administration of
 the investigational drug product to human subjects. Each
protocol indicating how the clinical trial will be conducted in
the United States must be submitted for review to the FDA as part
 of the IND. The FDAs review of a study protocol does not
necessarily mean that, if the study is successful, it will
constitute proof of efficacy or safety. Further, each clinical
study must be conducted under the auspices of an independent
institutional review board, or IRB, established
pursuant to FDA regulations. The IRB considers, among other
factors, ethical concerns and informed consent requirements. The
FDA or the IRB may require changes in a protocol both prior to
and after the commencement of a trial. There is no assurance that
 the IRB or the FDA will permit a study to go forward or, once
started, to be completed. Clinical trials may be placed on hold
at any time for a variety of reasons, particularly if safety
concerns arise, or regulatory requirements are not met.

The three phases of clinical trials are generally conducted
sequentially, but they may overlap. In Phase I, the initial
introduction of the drug into humans, the drug is tested for
safety, side effects, dosage tolerance, metabolism and clinical
pharmacology. Phase II involves controlled tests in a larger
 but still limited patient population to determine the efficacy
of the drug for specific indications, to determine optimal dosage
 and to identify possible side effects and safety risks.
Phase II testing for an indication typically takes at least
from one and one-half to two and one-half years to complete. If
preliminary evidence suggesting effectiveness has been obtained
during Phase II evaluations, expanded Phase III trials
are undertaken to gather additional information about
effectiveness and safety that is needed to evaluate the overall
benefit-risk relationship of the drug and to provide an adequate
basis for physician labeling. Phase III studies for a
specific indication generally take at least from two and one-half
 to five years to complete. We cannot be sure that we will
successfully complete Phase I, Phase II or Phase III testing
within any specified time period, if at all, with respect to any
of our product candidates.

14



---



##### Table of Contents



Reports of results of the preclinical studies and clinical trials
 for non-biological drugs are submitted to the FDA in the form of
 an NDA for approval of marketing and commercial shipment. User
fee legislation now requires the submission in fiscal year 2000
of $285,740 to cover the costs of FDA review of a full NDA.
Annual fees also exist for certain approved prescription drugs
and the establishments that make them. The NDA typically includes
 information pertaining to the preparation of drug substances,
analytical methods, drug product formulation, details on the
manufacture of finished product as well as proposed product
packaging and labeling. Submission of an NDA does not assure FDA
approval for marketing. In May 1999, the FDA published final
 regulations describing criteria that the FDA will use to
evaluate the safety and efficacy of diagnostic
radiopharmaceuticals like DOPASCAN® Injection. It is unclear
 how these provisions may affect the potential for approval of
DOPASCAN® Injection.

The median FDA approval time is currently about 12 months,
although clinical development, reviews, or approvals of
treatments for cancer and other serious or life-threatening
diseases may be accelerated, expedited or fast-tracked. In
addition, approval times can vary widely among the various
reviewing branches of the FDA. The approval process may take
substantially longer if, among other things, the FDA has
questions or concerns about the safety and/or efficacy of a
product. In general, the FDA requires at least two properly
conducted, adequate and well-controlled clinical studies
demonstrating safety and efficacy with sufficient levels of
statistical assurance. In certain limited cases, the FDA may
consider one clinical study sufficient. The FDA also may request
long-term toxicity studies or other studies relating to product
safety or efficacy. For example, the FDA may require additional
clinical tests following NDA approval to confirm product safety
and efficacy, known as Phase IV clinical tests, or require other
conditions for approval. Notwithstanding the submission of such
data, the FDA ultimately may decide that the application does not
 satisfy its regulatory criteria for approval.

Confirmatory studies similar to Phase III clinical studies may be
 conducted after, rather than before, FDA approval under certain
circumstances. The FDA may determine under its expedited,
accelerated, or fast-track provisions that previous limited
studies establish an adequate basis for drug product approval,
provided that the sponsor agrees to conduct additional studies
after approval to verify safety and effectiveness. Treatment of
patients not in clinical trials with an experimental drug may
also be allowed under a Treatment IND before general marketing
begins. Charging for an investigational drug also may be allowed
under a Treatment IND to recover certain costs of development if
various requirements are met. These cost-recovery, Treatment IND,
 and expedited, accelerated or fast-track approval provisions are
 limited, for example, to drug products (1) intended to
treat AIDS or other serious severely debilitating or
life-threatening diseases especially and that provide meaningful
therapeutic benefit to patients over existing treatments,
(2) that are for diseases for which no satisfactory
alternative therapy exists, or (3) that address an unmet
medical need. We cannot assure you that any of our product
candidates will qualify for cost-recovery, expedited,
accelerated, or fast-track approvals or for treatment use under
the FDAs regulations or the current statutory provisions.

The full NDA process for newly marketed non-biological drugs,
such as those being developed by Guilford, including FKBP
neuroimmunophilin ligand products and inhibitors of NAALADase and
 PARP, can take a number of years and involves the expenditure of
 substantial resources. We cannot be sure that any approval will
be granted on a timely basis, or at all, or that we will have
sufficient resources to carry potential products through the
regulatory approval process.

Abbreviated Testing Requirements

The Drug Price Competition and Patent Term Restoration Act of
1984 established abbreviated procedures for obtaining FDA
approval for many non-biological drugs which are off-patent and
whose marketing exclusivity has expired. Applicability of the
Drug and Patent Act of 1984 means that a full NDA is not required
 for approval of a competitive product. Abbreviated requirements
are applicable to drugs which are, for example, either
bioequivalent to brand-name drugs, or otherwise similar to

15



---



##### Table of Contents





Newly marketed active ingredients of drug products not previously
 approved have a five-year period of market exclusivity and
certain changes in approved drug products for which reports of
new clinical investigations are essential for approval, other
than bioequivalence studies, have a three-year period of market
exclusivity. A period of three years is available for changes in
approved products, such as in delivery systems of previously
approved products. Both periods of marketing exclusivity mean
that abbreviated applications, which generally rely to some
degree on approvals or on some data submitted by previous
applicants for comparable innovator drug products, cannot be
marketed during the period of exclusivity. The market exclusivity
 provisions of the Drug and Patent Act of 1984 bar only the
marketing of competitive products that are the subject of
abbreviated applications, not products that are the subject of
full NDAs. The Drug and Patent Act of 1984 also may provide a
maximum time of five years to be restored to the life of any one
patent for the period it takes to obtain FDA approval of a drug
product, including biological drugs. We cannot offer any
assurance that the exclusivity or patent restoration benefits of
the Drug and Patent Act of 1984 will apply to any of our product
candidates.

Other Regulation

Products marketed outside the United States which are
manufactured in the United States are subject to certain FDA
export regulations, as well as regulation by the country in which
 the products are to be sold. U.S. law can prohibit the export of
 unapproved drugs to certain countries abroad. Guilford also
would be subject to foreign regulatory requirements governing
clinical trials and pharmaceutical sales, if products are
marketed abroad. Whether or not a company has obtained FDA
approval, it must usually obtain approval of a product by the
comparable regulatory authorities of foreign countries before
beginning to market the product in those countries. The approval
process varies from country to country and the time required may
be longer or shorter than that required for FDA approval.

In addition to the requirements for product approval, before a
pharmaceutical product may be marketed and sold in certain
foreign countries the proposed pricing for the product must be
approved as well. Products may be subject to price controls
and/or limits on reimbursement. The requirements governing
product pricing and reimbursement vary widely from country to
country and can be implemented disparately at the national level.
 As to reimbursement, the European Union generally provides
options for its fifteen Member States to restrict the range of
medicinal products that are covered by their national health
insurance systems. Member States in the European Union can opt to
 have a positive or a negative list. A
positive list is a listing of all medicinal products covered
under the national health insurance system, whereas a negative
list designates which medicinal products are excluded from
coverage. In the European Union, the United Kingdom and Spain use
 a negative list approach, while France uses a positive list
approach. In Canada, each province decides on reimbursement
measures.

The European Union also generally provides options for its Member
 States to control the prices of medicinal products for human
use. A Member State may approve a specific price for the
medicinal product or it may instead adopt a system of direct or
indirect controls on the profitability of the company placing the
 medicinal product on the market. For example, the regulation of
prices of pharmaceuticals in the United Kingdom is generally
designed to provide controls on the overall profits
pharmaceutical companies may derive from their sales to the U.K.
National Health Service. The U.K. system is generally based on
profitability targets or limits for individual companies which
are

16



---



##### Table of Contents





In comparison, Italy generally establishes prices for
pharmaceuticals based on a price monitoring system. The reference
 price is the European average price calculated on the basis of
the prices in four reference markets: France, Spain, Germany and
the United Kingdom. Italy typically levels the price of medicines
 belonging to the same therapeutic class on the lowest price for
a medicine belonging to that category. Medicines are in the same
therapeutic class if, for example, they have the same active
principle, same pharmaceutical form or same route of
administration. Spain generally establishes the selling price for
 new pharmaceuticals based on the prime cost, plus a profit
margin within a range established each year by the Spanish
Commission for Economic Affairs. Promotional and advertising
costs are limited.

In Canada, prices for most new drugs are generally limited such
that the cost of therapy for the new drug is in the range of the
cost of therapy for existing drugs used to treat the same disease
 in Canada. Prices of breakthrough drugs and those which bring a
substantial improvement are generally limited to the median of
the prices charged for those drugs in other industrialized
countries, such as France, Germany, Italy, Sweden, Switzerland,
the United Kingdom and the United States.

We cannot be sure that any country which has price controls or
reimbursement limitations for pharmaceuticals will allow
favorable reimbursement and pricing arrangements with respect to
us or our corporate partners, including Aventis and its
applications for GLIADEL in Canada and elsewhere outside of the
United States.

Guilford also is governed by other federal, state and local laws
of general applicability. These laws include, but are not limited
 to, those regulating working conditions enforced by the
Occupational Safety and Health Administration and regulating
environmental hazards under such statutes as the Toxic Substances
 Control Act, the Resource Conservation and Recovery Act and
other environmental laws enforced by the United States
Environmental Protection Agency. The DEA regulates controlled
substances, such as narcotics. A precursor compound to
DOPASCAN® Injection is a tropane-derivative similar to
cocaine and thus is subject to DEA regulations. Establishments
handling controlled substances must, for example, be licensed and
 inspected by the DEA, and may be subject to export, import,
security and production quota requirements. Radiolabeled
products, including drugs, are also subject to regulation by the
Department of Transportation and to state and federal licensing
requirements. Various states often have comparable health and
environmental laws, such as those governing the use and disposal
of controlled and radiolabeled products.

While we are currently focused on polymer drug delivery and small
 molecule therapies, we are not actively involved in product
areas involving biotechnology and have no current plans to
develop products utilizing modern biotechnology. If we were to
move in that direction, we would potentially be subject to
extensive regulation. The EPA, the FDA and other federal and
state regulatory bodies have developed or are in the process of
developing specific requirements concerning products of
biotechnology that may affect research and development programs
and product lines. We are unable to predict whether any
governmental agency will adopt requirements, including
regulations, which would have a material and adverse effect on
any future product applications involving biotechnology.

Patents and Proprietary Technology

Guilford believes that intellectual property protection is
crucial to its business and that its future will depend in large
part on its ability to obtain intellectual property protection
and operate without infringing the proprietary rights of others.
As of December 31, 1999, we owned or had licensed rights to
more than 160 U.S. patents and patent applications protecting our
 key technologies and to corresponding foreign patents and patent
 applications.

The role, validity and value of Guilfords intellectual
property are subject to various uncertainties and contingencies.
Guilfords success will depend in part on its ability to
obtain, maintain and enforce intellectual property protection for
 its products and processes and operate without infringing upon
the

17



---



##### Table of Contents





We are aware that other companies have been issued patents, and
have filed or may be engaged in filing patent applications, that
claim matter relating to polymer drug delivery technology,
including polymer-based oncology products, and neurological
therapeutics and diagnostics, including small molecule
neuroimmunophilin ligands and neuroprotectants. While we do not
believe that we are infringing valid third-party patents of which
 we are aware, we cannot give you any assurance as to the ability
 of our patents and patent applications to adequately protect our
 products or product candidates. In addition, our products or
product candidates may infringe or be dominated by patents that
have issued or may issue in the future to third parties.

We cannot be sure that any patent applications filed by, or
assigned or licensed to, us will be granted, that we will develop
 additional products or processes that are patentable, or that
any patents issued to, or licensed by, us will provide us with
any competitive advantages or adequate protection for our
products. In addition, existing or future patents or intellectual
 property issued to, or licensed by, us may subsequently be
challenged, invalidated or circumvented by others.

It is Guilfords policy to control the disclosure and use of
 Guilfords proprietary information under confidentiality
agreements with employees, consultants and other parties. We
cannot be sure, however, that our confidentiality agreements will
 be honored, that others will not independently develop
equivalent or competing technology, that disputes will not arise
concerning the ownership of intellectual property or the
applicability of confidentiality obligations, or that disclosure
of Guilfords proprietary information will not occur. To the
 extent that consultants or other research collaborators use
intellectual property owned by others in their work with us,
disputes may also arise as to the rights to related or resulting
intellectual property.

Guilford supports and collaborates in research conducted by other
 companies, universities and governmental research organizations.
 We cannot be sure that we will have or be able to acquire
exclusive rights to the inventions or technical information
derived from such collaborations. Also, disputes may arise as to
rights in derivative or related research programs conducted by
us. In addition, in the event of a contractual breach by
Guilford, certain of Guilfords collaborative research
contracts provide for transfer of technology, including any
patents or patent applications, to the relevant organization. In
addition, this type of breach may cause us to lose our rights to
use technology, including any patents or patent applications,
licensed from the relevant company or organization.

If we are required to defend against charges of infringement of
patent or proprietary rights of third parties or to protect our
own patent or proprietary rights against third parties, we may
incur substantial costs. We could also lose rights to develop or
market certain products or be required to pay monetary damages or
 royalties to license proprietary rights from third parties. In
response to actual or threatened litigation, we may seek licenses
 from third parties or attempt to redesign our products or
processes to avoid infringement. However, we cannot be sure that
we will be able to obtain licenses on acceptable terms or at all
or redesign our products or processes. In addition to being a
party to patent infringement litigation, we could be required to
participate in U.S. or foreign opposition patent interference
proceedings. We may also be forced to initiate legal proceedings
to protect its intellectual property position. Even if we were to
 prevail, those types of proceedings are usually costly and
extremely lengthy.

In order to protect its intellectual property position with
respect to its neuroimmunophilin ligands, Guilford filed an
opposition in 1998 in an effort to prevent the final issuance of
a European patent to a competing company. While Guilford does not
 believe the claims of this European patent would be valid, any
final issuance could result in future litigation if this company
were to allege that Guilford or Amgen infringed the claims of
this patent in Europe.

18



---



##### Table of Contents



Technology Licensing Agreements

In March 1994, we entered into an agreement called the
GLIADEL® Wafer Agreement with Scios Inc. Under
the GLIADEL® Wafer Agreement, we licensed from Scios
exclusive worldwide rights to numerous U.S. patents and patent
applications and corresponding international patents and patent
applications for polyanhydride biodegradable polymer technology
for use in the field of tumors of the central nervous system and
cerebral edema. GLIADEL® Wafer is covered by two of the U.S.
 patents under this license which expire in 2005 and certain
related international patents and patent applications. In
April 1994, Scios assigned all of its rights and obligations
 under the GLIADEL® Wafer Agreement to the Massachusetts
Institute of Technology.

Under this agreement, Guilford is obligated to pay a royalty on
all net sales of products incorporating such technology as well
as a percentage of all royalties received by Guilford from
sublicensees and certain advance and minimum annual royalty
payments. Guilford has exclusive worldwide rights to the
technology for brain cancer therapeutics, subject to certain
conditions, including a requirement to perform appropriate
pre-clinical tests and file an IND with the FDA within
24 months of the identification of a drug-polymer product
having greater efficacy than GLIADEL® Wafer. In addition,
Guilford is obligated to meet certain development milestones.
Although we believe that we can comply with these obligations,
our failure to perform these obligations could result in the loss
 of our right to new polymer-based product(s).

In June 1996, we entered into a license agreement with the
Massachusetts Institute of Technology and Johns Hopkins
respecting a patent application covering certain biodegradable
polymers for use in connection with the controlled local delivery
 of certain chemotherapeutic agents (including paclitaxel
(TAXOL®) and camptothecin) for treating solid tumors. Under
this agreement, we are obligated to make certain annual and
milestone payments to the Massachusetts Institute of Technology
and to pay royalties based on any sales of products incorporating
 the technology licensed to Guilford. Furthermore, under the
terms of the agreement, we have committed to spend minimum
amounts to develop the technology and to meet certain development
 milestones. Although we believe that we can comply with such
obligations, our failure to perform these obligations could
result in the loss of our rights to that technology.

In July 1996, we entered into a license agreement with Johns
 Hopkins relating to U.S. patents respecting certain PPE polymers
 developed at Johns Hopkins and additional PPE patent
applications. This agreement, among other things, requires
Guilford to pay certain processing, maintenance and/or up-front
fees, milestone payments and royalties, a portion of proceeds
from sublicenses, and fees and costs related to patent
prosecution and maintenance and to spend minimum amounts for, and
 meet deadlines regarding, development of this technology.
Although we believe that we can comply with such obligations, our
 failure to perform these obligations could result in the loss of
 our rights to that technology.

Guilford and Johns Hopkins are parties to exclusive license
agreements covering certain patents and patent applications
relating to neuroimmunophilin ligands and their neurotrophic and
other uses, and inhibition of PARP for neuroprotective uses and
certain other technologies. These agreements, among other things,
 require Guilford to pay certain processing, maintenance, and/or
up-front fees, milestone payments and royalties, a portion of
proceeds from sublicenses, and fees and costs related to patent
prosecution and maintenance and to spend minimum amounts for, and
 meet deadlines regarding, development of the technologies.
Although we believe that we can comply with these obligations,
our failure to perform these obligations could result in the loss
 of our rights to that technology or in the case of joint
inventions, exclusive use of the technology. In the case of
Guilfords license with Johns Hopkins relating to
neuroimmunophilin ligands, Johns Hopkins is entitled to a portion
 of all milestone payments paid to Guilford, including payments
under Guilfords collaboration

19



---



##### Table of Contents





We obtained exclusive worldwide rights to DOPASCAN®
Injection pursuant to a March 1994 license agreement with
Research Triangle Institute, which grants Guilford rights to
various U.S. and international patents and patent applications
relating to binding ligands for certain receptors in the brain
which are or may be useful as dopamine neuron imaging agents.
DOPASCAN® Injection and certain related precursors and
analogues are covered by U.S. patents which start expiring in
2009, as well as certain related international patents and patent
 applications.

Under the Research Triangle Institute Agreement, we reimbursed
Research Triangle Institute for certain past patent-related
expenses and made certain annual payments to Research Triangle
Institute to support research conducted at Research Triangle
Institute through March 1999. In addition, we are obligated to
pay Research Triangle Institute a royalty on gross revenues to
Guilford from products derived from the licensed technology and
from sublicensee proceeds and to make certain minimum royalty
payments following the first commercial sale of such products.
Guilford must use commercially reasonable efforts to develop
products related to the licensed technology and to meet certain
performance milestones. Our failure to perform our obligations
under the RTI Agreement in the future could result in termination
 of the license.

United States Government Rights

Aspects of the technology licensed by us under agreements with
third party licensors may be subject to certain government
rights. Government rights in inventions conceived or reduced to
practice under a government-funded program may include a
non-exclusive, royalty-free worldwide license to practice or have
 practiced those inventions for any governmental purpose. In
addition, the U.S. government has the right to grant licenses
which may be exclusive under any of such inventions to a third
party if it determines that: (1) adequate steps have not
been taken to commercialize such inventions; (2) the action
is necessary to meet public health or safety needs; or
(3) the action is necessary to meet requirements for public
use under federal regulations. The U.S. government also has the
right to take title to a subject invention if there is a failure
to disclose the invention and elect title within specified time
limits. In addition, the U.S. government may acquire title in any
 country in which a patent application is not filed within
specified time limits. Federal law requires any licensor of an
invention that was partially funded by the federal government to
obtain a covenant from any exclusive licensee to manufacture
products using the invention substantially in the United States.
Further, the government rights include the right to use and
disclose without limitation technical data relating to licensed
technology that was developed in whole or in part at government
expense. Our principal technology license agreements contain
provisions recognizing these government rights.

Sales, Marketing and Distribution

In general, our strategy is to establish strategic alliances with
 larger pharmaceutical companies where possible to develop and
promote products that require extensive development, sales and
marketing resources. Within the United States, we may seek to
retain co-promotion rights with respect to some or all compounds
or indications in any such strategic alliances, or we may elect
to market and distribute our products directly where the
commercial prospects so warrant.

Aventis Agreement

In June 1996, we entered into a marketing, sales and distribution
 rights agreement and other related agreements with Aventis.
Under these agreements Aventis has worldwide, with the exclusion
of Scandinavia and Japan, marketing, sales, promotion and
distribution rights for GLIADEL® Wafer. Upon execution of
these agreements, we received $7.5 million for 281,531
shares of our common stock. Furthermore, in addition to an
aggregate of $27.5 million in rights payments made by
Aventis upon execution of the agreements in June 1996 and FDA
clearance of the GLIADEL® Wafer NDA in September 1996, the
agreements with Aventis currently provide for up to an additional

20



---



##### Table of Contents





Aventis may, under certain circumstances, fund up to
approximately $17 million for the development of higher dose
forms of GLIADEL® Wafer that we are developing and for
certain additional clinical studies related to GLIADEL®
Wafer. We have the right under certain circumstances to borrow up
 to an aggregate of $7.5 million to expand our GLIADEL®
 Wafer manufacturing and related facilities.

In addition to the payments outlined above, we act as the
exclusive manufacturer of GLIADEL® Wafer and receive
transfer price payments and royalties based on any net
sales, as defined in the agreements with Aventis, of
GLIADEL® Wafer. Aventis exclusive rights terminate in
a particular country upon the later of the expiration of the last
 to expire of certain patents applicable in that country or the
last commercial sale of GLIADEL® Wafer in that country.
Aventis also has an exclusive 90-day period following development
 by Guilford of new polymer technology for brain cancer to make
an offer to license such technology.

Amgen Collaboration

As described in more detail above under Product and
Development Programs  Neurological Programs, in
August 1997, we entered into a collaboration with Amgen to
research, develop and commercialize FKBP neuroimmunophilin
ligands, as well as any other compounds that may result from the
collaboration, for all human therapeutic and diagnostic
applications. Under this agreement, Amgen initially paid Guilford
 a total of $35 million and agreed to fund future FKBP
neuroimmunophilin ligand technology research up to
$13.5 million. Amgen also agreed to pay Guilford a total of
$392 million in milestone payments if Amgen achieves
specified development objectives.

We will receive royalties on any future sales of products
resulting from the collaboration. Amgen has agreed to fund,
develop and commercialize the FKBP neuroimmunophilin ligand
technology. Under limited circumstances, Guilford has the option
to conduct certain Phase I and Phase II clinical trials on one
product candidate and has the right to co-promote in the United
States one product resulting from the collaboration. Subject to
its obligation to fund two years of research at Guilford, Amgen
has the right to discontinue all its development and
commercialization activities under the collaboration at any time.

Other Agreements

In October 1995, we entered into an agreement appointing
Orion Corporation Pharma distributor for GLIADEL® Wafer in
Scandinavia, and in December 1995 we entered into an
agreement with Daiichi Radioisotope Laboratories, Ltd. for the
marketing, sale and distribution of DOPASCAN® Injection in
Japan, Korea and Taiwan.

Competition

We are involved in evolving technological fields in which
developments are expected to continue at a rapid pace.
Guilfords success depends upon its ability to compete
effectively in the research, development and commercialization of
 products and technologies in its areas of focus. Competition
from pharmaceutical, chemical and biotechnology companies,
universities and research institutes is intense and expected to
increase. Many of these competitors have substantially greater
research and development capabilities, experience and
manufacturing, marketing, financial and managerial resources than
 Guilford and represent significant competition for Guilford.
Acquisitions of competing companies by large pharmaceutical or
other companies could enhance the financial, marketing and

21



---



##### Table of Contents





We are aware of several competing approaches under development
for the treatment of malignant glioma including using radioactive
 seeds for interstitial radiotherapy, increasing the permeability
 of the blood-brain barrier to chemotherapeutic agents,
sensitizing cancer cells to chemotherapeutic agents using gene
therapy and developing chemotherapeutics directed to specific
receptors in brain tumors.

A number of companies are working on products for the treatment
of ovarian cancer, using approaches ranging from novel
chemotherapeutics to antibody technologies. Further, controlled
release polymers and liposomes are being explored by various
companies to enhance the efficacy of current and novel therapies.

A number of companies have shown interest in trying to develop
neurotrophic agents to promote nerve growth and repair in
neurodegenerative disorders and traumatic central nervous system
injuries. However, much of this activity has focused on naturally
 occurring growth factors. Such large molecules generally cannot
cross the blood-brain barrier and thus present problems in
administration and delivery. One company has announced that
certain of its neuroimmunophilin ligands showed positive results
in stimulating nerve growth in an animal model of nerve crush,
and has disclosed that it has made patent filings covering
compounds and uses in connection with nerve growth promotion.
This company has also announced that it has begun a phase II
 clinical trial for peripheral neuropathy using a
neuroimmunophilin compound it originally was developing for
multiple drug resistance in cancer patients. In addition, another
 company announced that IGF-1 showed positive results in clinical
 trials of a peripheral neurodegenerative disorder.

There is intense competition to develop an effective and safe
neuroprotective drug or biological agent. Calcium channel
antagonists, calpain inhibitors, adenosine receptor antagonists,
free radical scavengers, superoxide dismutase inducers,
proteoloytic enzyme inhibitors, phospholipase inhibitors and a
variety of other agents are under active development by others.
Glutamate or NMDA receptor antagonists are under development by
several other companies.

The anesthesia/sedation field is concentrated in the United
States mainly among four major companies, with several other
companies doing research in the field. There are numerous
products currently on the market that are accepted as relatively
safe and effective anesthetic agents and sedation agents. We
cannot be sure that we can successfully develop GPI-15715, our
propofol pro-drug product candidate, into a safe and effective
drug or that it will be cleared for marketing. Even if we do
develop it into a safe and effective drug and it is cleared for
marketing, the commercial prospect of GPI-15715 will heavily
depend on its safety and efficacy profile relative to
alternatives then available in the market.

We believe that two other companies and their affiliates, as well
 as some university researchers, are clinically evaluating
imaging agents for dopamine neurons. In addition, a variety of
radiolabeled compounds for use with Positron Emission Tomography,
 or PET, scanners have been used to image dopamine
neurons successfully in patients with Parkinsons disease.
PET scanning is currently only available in a limited number of
hospitals in the United States and Europe.

In the field of cocaine addiction, academic and government groups
 have studied most of the investigated compounds to date.
Further, much of this work has been with known agents, such as
carbamazepine, that are commercially available for other
indications. Guilford is aware of another company that is
investigating the use of butylcholinesterase as a treatment for
acute cocaine overdose. We are aware of one company that is
investigating an immunological approach in an attempt to develop
a cocaine vaccine. We are not aware of other commercial research
programs targeting specific cocaine antagonists, which do not
interfere with normal dopamine neuron function.

Any product candidate that we develop and for which we gain
regulatory approval, including GLIADEL® Wafer, must then
compete for market acceptance and market share. For certain of
our

22



---



##### Table of Contents







| |   |                                       
| | - | --------------------------------------
| |  | the capabilities of our collaborators,



| |   |                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------
| |  | product efficacy and safety,                                                                                
|
| |  | timing and scope of regulatory approval,                                                                    
|
| |  | product availability,                                                                                       
|
| |  | marketing and sales capabilities,                                                                           
|
| |  | reimbursement coverage,                                                                                     
|
| |  | the amount of clinical benefit of our product candidates relative
	 to their cost, method of administration,
|
| |  | price, and                                                                                                  
|
| |  | patent protection.                                                                                          

Our competitors may develop more effective or more affordable
products or achieve earlier product development completion,
patent protection, regulatory approval or product
commercialization than Guilford. The achievement of any of these
goals by our competitors could have a material adverse effect on
our business, financial condition and results of operations.

Product Liability and Insurance

Product liability risk is inherent in the testing, manufacture,
marketing and sale of Guilfords product candidates, and
there can be no assurance that Guilford will be able to avoid
significant product liability exposure. While Guilford currently
maintains $15 million of product liability insurance
covering clinical trials and product sales, we cannot be sure
that this or any future insurance coverage that we obtain will be
 adequate or that our insurance will cover any claims.
Guilfords insurance policies provide coverage on a
claims-made basis and are subject to annual renewal. Product
liability insurance varies in cost, can be difficult to obtain
and may not be available to Guilford in the future on acceptable
terms, or at all.

Employees

At December 31, 1999, Guilford employed 228 individuals. Of
these 228 employees, 193 were employed in the areas of research
and product development and in manufacturing and quality control
of GLIADEL. The remaining 35 employees performed general and
administrative functions, including executive, finance and
administration, legal and business development. None of
Guilfords employees are currently represented by a labor
union. To date, we have experienced no work stoppages related to
labor issues and believe our relations with our employees are
good.

All employees are required to enter into a confidentiality
agreement with Guilford. Hiring and retaining qualified personnel
 are important factors for Guilfords future success. We are
 likely to continue to add personnel particularly in the areas of
 research, clinical research and operations, including
manufacturing. Intense competition exists for these qualified
personnel from other biotechnology and biopharmaceutical
companies as well as academic, research and governmental
organizations. Guilford cannot be sure that it will be able to
continue to hire qualified personnel and, if hired, that it will
be able to retain these individuals.

23



---



##### Table of Contents






Item 1A.  Executive Officers and Other Significant
Employees of Registrant

Craig R. Smith, M.D.,age 54, joined Guilford
as a Director at its inception in July 1993. Dr. Smith was
elected President and Chief Executive Officer in August 1993 and
was elected Chairman of the Board in January 1994. Prior to
joining Guilford, Dr. Smith was Senior Vice President for
Business and Market Development at Centocor, Inc., a
biotechnology corporation. Dr. Smith joined Centocor in 1988
 as Vice President of Clinical Research after serving on the
Faculty of the Department of Medicine at Johns Hopkins Medical
School for 13 years. Dr. Smith received his M.D. from
the State University of New York at Buffalo in 1972 and received
training in Internal Medicine at Johns Hopkins Hospital from 1972
 to 1975. Dr. Smith is a member of the board of directors of
 CellGate, Inc.

John P. Brennan,age 57, joined Guilford as
Vice President, Operations in January 1994 and became Senior Vice
 President, Operations in January 1997. In February 1999,
Mr. Brennan was promoted to Senior Vice President, Technical
 Operations and General Manager, Drug Delivery Business. From
1980 to 1993, he was Vice President, Technical Operations and
Manufacturing for G.D. Searle and Co., a pharmaceutical company,
and was responsible for the operation of manufacturing plants in
North America, Latin America and Europe and the worldwide
pharmaceutical and process technology from 1980 to 1993. From
1977 to 1980, Mr. Brennan was General Manager of the
E.R. Squibb & Sons, Inc. manufacturing facility in
Humacao, Puerto Rico. Mr. Brennan held various technical
positions at SmithKline Corporation from 1960 to 1977.
Mr. Brennan has over 39 years of experience in the
pharmaceutical industry. Mr. Brennan received his B.S. in
Chemistry from the Philadelphia College of Pharmacy and Science
in 1968 and attended the Wharton Graduate Management Program in
1976.

Andrew R. Jordan,age 52, joined Guilford as
Vice President, Secretary, Treasurer and Chief Financial Officer
in September 1993 and became Senior Vice President, Treasurer and
 Chief Financial Officer in January 1997. Prior to joining
Guilford, Mr. Jordan held various positions with KPMG LLP, a
 public accounting firm, beginning in 1973, including partner
since 1983. Mr. Jordans experience at KPMG LLP
included advising early-stage and emerging technology companies
and initial and secondary public equity and debt offerings. He
received his B.A. from Rutgers College in 1969 and his MBA from
Rutgers Graduate School of Business in 1973 and is a Certified
Public Accountant.

Peter D. Suzdak, Ph.D.,age 41, joined
Guilford in March 1995 as Vice President, Research. In February
1999, Dr. Suzdak was promoted to Senior Vice President,
Research & Development. Prior to joining Guilford,
Dr. Suzdak was Director of Neurobiology at Novo Nordisk A/ S
 and was responsible for all neurobiology research from 1993 to
1995, and Department Head for Receptor Neurochemistry from 1988
to 1992 as well as a member of the drug discovery management
group from 1989 to 1995. Prior thereto, Dr. Suzdak was a
Pharmacology Research Associate in the Clinical Neuroscience
Branch of the National Institute of Mental Health in Bethesda,
Maryland from 1985 to 1988. Dr. Suzdak received his Ph.D. in
 Neuroscience from the University of Connecticut and a B.S. in
Pharmacy from St. Johns University.

Thomas C. Seoh,age 42, joined Guilford in
April 1995 as Vice President, General Counsel and Secretary.
 In August 1999, Mr. Seoh was promoted to Senior Vice
President, General Counsel and Secretary. From 1992 to 1995,
Mr. Seoh was affiliated with the ICN Pharmaceuticals, Inc.
(ICN) group, as Vice President and Associate General
Counsel of ICN from 1994 to 1995, Vice President, General Counsel
 and Secretary of Viratek, Inc. from 1993 to 1994 and Deputy
General Counsel of SPI Pharmaceuticals, Inc. from 1992 to 1994,
providing legal function support for pharmaceutical operations,
research and development and corporate development. From 1990 to
1992, Mr. Seoh was General Counsel and Secretary of
Consolidated Press U.S., Inc., the North American holding
corporation of the Sydney, Australia-based Consolidated Press
group. Prior thereto, Mr. Seoh was associated with the New
York and London law offices of Lord, Day & Lord, Barrett
Smith. Mr. Seoh received his J.D. and A.B. from Harvard
University.

24



---



##### Table of Contents



William C. Vincek, Ph.D.,age 52, joined Guilford
as Vice President, Corporate Quality in August 1997. From
November 1993 until Dr. Vincek joined Guilford, he was
Group Director, CMC & Preclinical Regulatory Affairs and
Global Research and Development GMP Quality Assurance at Glaxo
Wellcome, Inc. Prior thereto from 1984 until October 1993,
Dr. Vincek held various positions at SmithKline Beecham
Pharmaceuticals and related entities, most recently from
July 1992 until October 1993 as Director,
Pharmaceutical Analysis Department. Dr. Vincek received his
Ph.D. in Medicinal Chemistry from the University of Kansas, where
 he also received an M.S. in Medicinal Chemistry. Dr. Vincek
 received a B.S. in Chemistry from Colorado State University.

Dana C. Hilt, M.D.,age 46, joined Guilford as Vice
 President, Clinical Research in May 1998. As part of
Guilfords reorganization in February 1999,
Dr. Hilts title was changed to Vice President,
Clinical Research and Drug Metabolism. Prior to joining Guilford,
 Dr. Hilt was employed by Amgen, most recently as Director,
Neuroscience from 1996 to 1998, earlier as Associate Director,
Neuroscience from 1993 to 1996. While at Amgen,
Dr. Hilts duties included overseeing aspects of basic
research, clinical trials, regulatory strategy and manufacturing
for certain of Amgens neurological product programs. Prior
to joining Amgen, Dr. Hilt held a variety of positions at
the University of Maryland School of Medicine and the National
Institutes of Health. Dr. Hilt received his B.S. degree in
Chemistry from the University of Maine, his M.D. from Tufts
University School of Medicine, and received training in Internal
Medicine at Harvard Medical School and Neurology at Johns Hopkins
 Hospital.

Nancy J. Linck, Ph.D., J.D.,age 58, joined
Guilford as Vice President, Intellectual Property in
November 1998. From 1994 to 1998, Dr. Linck was
Solicitor for the U.S. Patent and Trademark Office, where she
acted as general counsel for the Commissioner of Patents and
Trademarks. From 1987 to 1994, Dr. Linck worked as a patent
and trademark litigator at the intellectual property law firm of
Cushman, Darby & Cushman, first as an Associate from 1987 to
1990, and later as a Partner from 1991 to 1994. Since 1995,
Dr. Linck has been engaged as an Adjunct Professor of Law,
first at George Washington University School of Law and presently
 at Georgetown University Law Center. Dr. Linck received her
 B.S. in Chemistry from the University of California, Berkeley,
her M.S. and Ph.D. in Inorganic Chemistry from the University of
California, San Diego, and her J.D. from Western New England
College School of Law.

Denise Battles,age 45, joined Guilford as Director
 of Quality Assurance in August 1994 and became Senior
Director of Product Compliance in August 1997.
Ms. Battles was promoted to Vice President of Corporate
Quality in August 1999. Prior to joining Guilford,
Ms. Battles was employed by Pharmaceutical Systems,
Incorporated as the Director of Quality Assurance from 1993 to
1994. Prior thereto, Ms. Battles held various positions with
 Quality Control and Quality Assurance at Baxter Healthcare
Corporation, including Director of Quality Assurance from 1990 to
 1993. Ms. Battles received her B.S. in Biology from Fisk
University in 1977 and received training at the Lake Forest
Graduate School of Management.




Item 2.  Properties.

In August 1994, Guilford entered into a master lease for an
approximately 83,000 square foot building in Baltimore, Maryland.
 Guilford currently occupies 23,000 square feet for office space,
 18,000 square feet for manufacturing space for GLIADEL and
potentially other polymer-based products, and 42,000 square feet
of research and development laboratories. Guilford added
approximately 5,000 square feet to its animal handling facilities
 in 1998. The master lease expires in July 2005. Two five-year
renewal options are available to Guilford or Guilford may
exercise a purchase option any time after the ninth year of the
lease for the then-current fair market value.

In February 1998, Guilford entered into an operating lease
with a trust affiliated with First Union National Bank respecting
 the construction and occupancy of a new laboratory and office
facility, consisting of approximately 73,000 square feet.
Guilford began moving personnel into the facility in June 1999
and consolidated all of its operations into its current
headquarters and the new facility during the third quarter of
1999. The lease expires in February 2005, at which time
Guilford has an

25



---



##### Table of Contents








Item 3.  Legal Proceedings

We are not a party to any material legal proceedings.




Item 4.  Submission of Matters to a Vote of Security
 Holders

None.




Item 4A.  Risk Factors

An investment in our stock is very speculative and involves a
high degree of risk. In addition to the other information
contained in this annual report, including the reports we
incorporate by reference, you should consider the following
important factors carefully in evaluating our company and its
business before purchasing shares of our stock.

We have a history of losses and our future profitability is
uncertain.

We cannot be sure that we will be able to achieve significant and
 sustained revenues or realize sustained profitable operating
results in the future. Guilford was founded in July 1993
and, with the sole exception of 1996, we have not earned a profit
 in any year since inception. Our losses stem mainly from the
significant amount of money that we have spent on research and
development. As of December 31, 1999, we had an accumulated
deficit of approximately $83 million. We expect to have
significant additional losses over the next several years.

Most of our product candidates are in research or early stages of
 pre-clinical and clinical development. Except for GLIADEL, none
of our product candidates has been marketed and sold to the
public. At this time, nearly all of our revenues have come from:



| |   |                                                                                                                                                                                                                                                                                
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | payments from Aventis from the sale and distribution of
	GLIADEL® Wafer,                                                                                                                                                                                                       
|
| |  | one-time signing fees from our corporate partners under our
	collaboration agreements supporting the research, development and
	 commercialization of our product candidates,                                                                                                  
|
| |  | one-time payments from our corporate partners upon the
	achievement of specified regulatory or development milestones;
	for example, Aventis payment to us in July 1999
	relating to approval in France to market and sell GLIADEL for the
	 recurrent surgery indication, and
|
| |  | periodic research funding under our collaboration with Amgen.                                                                                                                                                                                                                  

We do not expect current and anticipated revenues from
GLIADEL® Wafer to be sufficient to support all our
anticipated future activities. Whether GLIADEL® Wafer sales
will ever generate any significant revenues continues to remain
uncertain. In addition, we do not anticipate generating revenues
from the sale of our product candidates for the next several
years, if ever. We will require payments from our current
corporate partners, principally Aventis and Amgen, and any future
 corporate partners, to fund our ongoing activities.

Whether we will ever recognize significant revenues from Amgen in
 the form of milestone payments or royalties paid on product
sales is also subject to significant risk and uncertainty. These
risks are part of each of the following activities, among others:



| |   |                                                                                        
| | - | ---------------------------------------------------------------------------------------
| |  | new product development,                                                               
|
| |  | the conduct of pre-clinical animal studies and human clinical
	trials,                 
|
| |  | applying for and obtaining regulatory approval to market and sell
	 product candidates,

26



---



##### Table of Contents





| |   |                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | scale-up of the processes for making product candidates in
	quantities and qualities needed for research and development
	purposes to commercial scale manufacture needed to support
	marketing and sales of new products, and
|
| |  | commercialization of new products.                                                                                                                                                                                            

We discuss these and other risks in greater detail below in this
Risk Factors section.

Whether we will ever be able to achieve sustained profitability
in the future will depend on many factors, including:



| |   |                                                                                                                                                                                                      
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the successful marketing of GLIADEL® Wafer by Aventis,                                                                                                                                               
|
| |  | receipt of regulatory clearance to market and sell GLIADEL®
	Wafer in Europe,                                                                                                                        
|
| |  | receipt of regulatory clearance to market and sell GLIADEL®
	Wafer for patients undergoing initial surgery for malignant
	glioma in the United States as well as Europe and other
	countries,        
|
| |  | the successful development and commercialization of product
	candidates that result from our collaboration with Amgen, and                                                                           
|
| |  | our ability to enter into additional collaborative arrangements
	and license agreements with other corporate partners for our
	product candidates and earlier stage technologies as we develop
	them.

We will need to conduct substantial additional research,
development and clinical trials. We will also need to receive
necessary regulatory clearances. We expect that these research,
development and clinical trial activities, and regulatory
clearances, together with future general and administrative
activities, will result in significant expenses for the
foreseeable future.

Our results of operations are likely to fluctuate.

Our revenues and expenses have fluctuated significantly in the
past because of the nature of their sources. This fluctuation has
 in turn caused our results of operations to vary significantly
from quarter to quarter and year to year. We expect the
fluctuations in our revenues and expenses to continue and thus
our results of operations should also continue to vary
significantly. These fluctuations are due to a variety of
factors, including:



| |   |                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the timing and amount of sales of GLIADEL® Wafer to Aventis
	and Aventis sales to others,                                                                                                   
|
| |  | the timing and realization of milestone and other payments from
	our corporate partners, including Aventis and Amgen,                                                                        
|
| |  | the timing and amount of expenses relating to our research and
	development, product development, and manufacturing activities,
	and                                                         
|
| |  | the extent and timing of costs related to our activities to
	obtain patents on our inventions and to extend, enforce and/or
	defend our patent and other rights to our intellectual property.

We are dependent on GLIADEL® Wafer and Aventis for
 revenues.

Our near term prospects depend to a large extent on sales by
Aventis of GLIADEL® Wafer, our only commercial product to
date. GLIADEL® Wafer was commercially launched in the United
 States in February 1997. We currently do not know whether
the product will ever gain broad market acceptance or the extent
of the marketing efforts necessary to achieve broad market
acceptance. If GLIADEL® Wafer fails to gain market
acceptance, that failure would have a material adverse effect on
the likelihood of increasing the revenues that we receive from
sales of GLIADEL® Wafer.

To date, we have received clearance from the FDA to market
GLIADEL® Wafer in the United States for a limited subset of
patients suffering from brain cancer. This clearance extends to
those patients for whom surgical tumor removal, commonly referred
 to as resection, is indicated and who have recurrent
 forms of the brain cancer glioblastoma multiforme. A recurrent
form of glioblastoma

27



---



##### Table of Contents





In order to expand the medical uses, commonly referred to as
indications, for which Aventis may market
GLIADEL® Wafer, we and Aventis must successfully complete
additional lengthy clinical trials. Thereafter, we and Aventis
will have to apply to the FDA and international health regulatory
 authorities for clearance to market GLIADEL® Wafer for
patients undergoing initial surgery for glioblastoma multiforme
and potentially other brain cancers. We cannot be sure that we
and Aventis will be able to successfully complete these clinical
trials or receive the desired regulatory clearance. If
GLIADEL® Wafer fails to receive regulatory clearance, that
failure would limit Aventis ability to market GLIADEL®
 Wafer for use in patients beyond the current narrow indication
and would have a material adverse effect on our business
prospects.

In addition, Aventis has filed for marketing clearance for the
current indication for GLIADEL® Wafer in a number of foreign
 countries, and as of the date of this annual report, Aventis has
 received international regulatory approvals to market and sell
GLIADEL® Wafer in only a limited number of foreign
countries, including France and Germany. Aventis may not be able
to obtain any other international regulatory approvals for
GLIADEL® Wafer. If Aventis fails to obtain those approvals,
the geographic market for GLIADEL® Wafer would remain
limited, which reduces the likelihood of increasing the revenues
that we receive from sales of GLIADEL® Wafer.

We have granted Aventis exclusive worldwide (excluding
Scandinavia and Japan) marketing, sales and distribution rights
for GLIADEL® Wafer. However, our agreements with Aventis do
not impose any minimum requirements on Aventis for the purchase
of GLIADEL from us or for the sale of GLIADEL® Wafer to
end-users. Therefore, we have no control over the revenues we
receive from the sale and distribution of GLIADEL® Wafer,
which depend completely on Aventis marketing efforts. In
addition, prior to the February 1997 commercial launch of
GLIADEL® Wafer in the United States, Aventis oncology
sales force had no previous experience in marketing a product to
neurosurgeons. We cannot be sure that Aventis will elect to
continue or increase its marketing and promotional activities for
 GLIADEL® Wafer or that its efforts in that regard will be
successful. The inability or unwillingness of Aventis to
aggressively market and promote GLIADEL® Wafer would have a
material adverse effect on the revenues that we receive from
sales of GLIADEL® Wafer.

GLIADEL® Wafer is also a very fragile product and can easily
 break into many pieces if not handled with great care. Product
recalls due to excessive breakage of the GLIADEL® Wafers or
for other reasons could also have a material adverse effect on
our business, financial condition and results of operations.

Aventis must make designated one-time milestone payments to us
upon achieving specified domestic and international regulatory
approvals. By and large, Aventis is responsible for the timing
and content of the applications necessary for international
regulatory clearances to market and sell GLIADEL® Wafer.
Thus, whether GLIADEL® Wafer will receive these clearances
depends heavily on the efforts of Aventis. We cannot be sure any
or all of these milestones will be satisfied in a manner so as to
 entitle us to receive the corresponding milestone payments from
Aventis. The potential milestone payments are significant, and
failure to achieve the designated regulatory objectives could
have a material adverse effect on our financial condition.

28



---



##### Table of Contents



The success of our Amgen collaboration is dependent on a
number of 
 factors, most of which are outside of our control.

Regulatory and development milestone payments as well as royalty
amounts on product sales payable to us under our collaboration
with Amgen depend on a number of factors. Many of these factors
are not within our control, including:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | the selection of one or more appropriate lead compounds,                                                           
|
| |  | successful design and completion of pre-clinical and clinical
	development activities,                             
|
| |  | application for and obtaining regulatory clearances to market
	potential products,                                 
|
| |  | commercialization of products, and                                                                                 
|
| |  | the successful preservation and extension of the patent and other
	 intellectual property rights licensed to Amgen.

All of these activities are subject to significant risks and
uncertainties. For a description of these and other material
risks related to the research, development and commercialization
of the FKBP neuroimmunophilin ligand technology, you should read
the following sections contained in this Risk Factors
 discussion:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | We face technological uncertainties related to research,
	development and commercialization,                        
|
| |  | We may be unable to protect our proprietary rights,
	permitting competitors to duplicate our products and
	services,
|
| |  | We are dependent on licensed intellectual property,                                                                 
|
| |  | Pre-clinical and clinical trial results for our products
	may not be favorable,                                     
|
| |  | Our products use novel alternative technologies and
	therapeutic approaches which have not been widely studied,
	and
|
| |  | Our business is dependent on our ability to keep pace with
	the latest technological changes.                       

Moreover, under the terms of our collaboration with Amgen, we
have no control over the development activities regarding the
FKBP neuroimmunophilin ligand technology, which have been left to
 the sole discretion of Amgen. Our agreement with Amgen also does
 not specify a binding timetable for achieving development and
commercialization goals with respect to the FKBP
neuroimmunophilin ligand technology. If Amgen determines to
conduct clinical trials on a product candidate resulting from our
 collaboration, Amgen still may not be able successfully to
complete those clinical trials and then receive clearance from
the FDA or foreign regulatory authorities to market and sell any
such products.

The FKBP neuroimmunophilin ligand technology we have licensed to
Amgen represents a new approach to the treatment of certain types
 of neurological and other diseases and conditions. We and Amgen
have very limited experience in taking the kinds of compounds
likely to result from our work and formulating them into final
drug products appropriate for sale to the public. In addition,
both of us have limited experience with the scale-up of such
compounds from the quantity and quality needed to support
research and development efforts to quantities needed to support
commercial scale distribution. Also, both we and Amgen have
limited experience with the manufacture of compounds of this type
 for commercial sale. There is a risk that Amgen will not be
successful in scaling-up and manufacturing any such compounds
needed for commercial sale. For a more complete description of
the kinds of risks associated with product manufacture, you
should read the section entitled We have limited
manufacturing capabilities below.

If Amgen is able to obtain all regulatory approvals necessary to
market a product resulting from our collaboration, our agreement
does not specify any minimum sales requirements for Amgen. Thus,
any royalty amounts payable to us in the future will depend
entirely on the sales and marketing efforts of Amgen, an activity
 over which we will have no control. In addition, our agreement
with

29



---



##### Table of Contents





We have limited manufacturing capabilities.

To commercialize GLIADEL® Wafer, we must be able to
manufacture this product in sufficient quantities, in compliance
with regulatory requirements, and at acceptable costs. We
manufacture GLIADEL® Wafer at our manufacturing facility in
Baltimore, Maryland, which consists of production laboratories
and redundant cleanrooms. We estimate that the facility currently
 has the capacity to manufacture approximately 8,000
GLIADEL® Wafer treatments per year.

Although we believe this GLIADEL® Wafer manufacturing
facility meets the FDAs current requirements for good
manufacturing practices, which are commonly referred to as
cGMP, and the FDA has inspected the facility in the
past, we have manufactured only limited quantities of
GLIADEL® Wafer in the facility. We cannot be sure that we
will be able to continue to satisfy applicable regulatory
standards, including cGMP requirements, and other requirements
relating to the manufacture of GLIADEL® Wafer in the
facility.

We also face risks inherent in the operation of a single facility
 for manufacture of GLIADEL® Wafer. These risks include:



| |   |                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------
| |  | unforeseen plant shutdowns due to personnel, equipment or other
        factors, and                             
|
| |  | the possible inability of the facility to produce GLIADEL®
        Wafer in quantities sufficient to meet demand.

Any delay in the manufacture of GLIADEL® Wafer could result
in delays in product shipment. Delays in product shipment would
have a material adverse effect on our business, financial
condition and results of operations.

Currently, we have no manufacturing capabilities for our product
candidates, including DOPASCAN® Injection. Consequently, in
order to complete the commercialization process of any of our
product candidates, we must either acquire, build or expand our
internal manufacturing capabilities or rely on third parties to
manufacture these product candidates. We cannot be sure that we
or our corporate partners, including Amgen, will be able to
(1) acquire, build or expand facilities that will meet
quality, quantity and timing requirements or (2) enter into
manufacturing contracts with others on acceptable terms, or at
all. Our inability, or that of our corporate partners, to
accomplish these tasks would impede our efforts to bring our
product candidates to market, which would adversely affect our
business.

Third-party manufacturers must also comply with FDA, Drug
Enforcement Administration, and other regulatory requirements for
 their facilities, including the FDAs cGMP regulations. In
addition, manufacture of product candidates on a limited basis
for investigational use in animal studies or human clinical
trials does not guarantee that large-scale, commercial production
 is viable. Small changes in methods of manufacture can affect
the safety, efficacy, controlled release or other characteristics
 of a product. Changes in methods of manufacture, including
commercial scale-up, can, among other things, require the
performance of new clinical studies. Moreover, if we decide to
manufacture one or more of our product candidates ourselves, we
would incur substantial start-up expenses and need to expand our
facilities and hire additional personnel.

We face technological uncertainties related to research,
development 
 and commercialization.

The research, development and commercialization of pharmaceutical
 drugs inherently involve significant risk. Before we or our
corporate partners can be in a position to commercialize a new
product (i.e., to market, distribute and sell the product), each
of us will have to:



| |   |                                                                                                                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | expend substantial capital and effort to develop our product
        candidates further, which includes conducting extensive and
        expensive pre-clinical animal studies and human clinical trials,

30



---



##### Table of Contents





| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | apply for and obtain regulatory approval to market and sell such
	product candidates, and               
|
| |  | conduct other costly activities related to preparation for
	product launch, among many other activities.

In some of our research programs, we are using compounds that we
consider to be prototype compounds in the research
phase of our work. By prototype compounds we mean compounds that
we are using primarily to establish that a relevant scientific
mechanism of biological or chemical action could have commercial
application in diagnosing, treating or preventing disease. We
generally do not consider our prototype compounds to be lead
compounds acceptable for further development into a product(s)
because of factors that render them unsuitable as drug
candidates. Such factors include sub-optimal metabolic or
pharmacokinetic characteristics or unfavorable patent coverage.
In order to develop commercial products, we will need to conduct
research using other compounds that share the key aspects of the
prototype compounds but do not have the unsuitable
characteristics. We cannot be sure that this will always be
possible.

In addition, our product candidates are subject to the risks of
failure inherent in the development of products based on new and
unproved technologies. These risks include the possibility that:



| |   |                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | our new approaches will not result in any products that gain
	market acceptance;                                                                                                          
|
| |  | a product candidate will prove to be unsafe or ineffective, or
	will otherwise fail to receive and maintain regulatory clearances
	 necessary for marketing,                              
|
| |  | a product, even if found to be safe and effective, could still be
	 difficult to manufacture on the large scale necessary for
	commercialization or otherwise not be economical to market,
|
| |  | a product will unfavorably interact with other types of commonly
	used medications, thus restricting the circumstances in which it
	may be used,                                          
|
| |  | proprietary rights of third parties will preclude us from
	manufacturing or marketing a new product, or                                                                                   
|
| |  | third parties will market superior or more cost-effective
	products.                                                                                                                      

As a result, our activities, either directly or through corporate
 partners, may not result in any commercially viable products.

We are dependent on collaborations with third parties for the
development 
 and commercialization of our products.

Our resources are limited, particularly because we are developing
 our technologies for a variety of different diseases. Our
business strategy requires that we enter into various
arrangements with:



| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | corporate partners, such as Aventis and Amgen,                                                   
|
| |  | academic investigators at universities, such as Johns Hopkins and
	 others,                      
|
| |  | licensors of technologies, such as Johns Hopkins, Massachusetts
	Institute of Technology and RTI,
|
| |  | licensees of our technologies, such as Daiichi Radioisotope
	Laboratories, Ltd. and others.      

Our success depends in large part upon the efforts of these
parties.

Like many small biopharmaceutical companies, our business
strategy includes finding larger pharmaceutical companies to
collaborate with us to support the research, development and
commercialization of our product candidates. In trying to attract
 corporate partners to collaborate with us in the research,
development and commercialization process, we face serious
competition from other small biopharmaceutical companies and even
 the in-house research and development staffs of the larger
pharmaceutical companies themselves. If we are unable to enter
into such arrangements with corporate partners, this failure may
severely limit our ability to proceed with the research,

31



---



##### Table of Contents





It is common in many corporate partnerships in our industry for
the larger partner to have responsibility for conducting
pre-clinical studies and human clinical trials and/or preparing
and submitting applications for regulatory approval of potential
pharmaceutical or other products. That is the case with some of
our current corporate partnerships, including our collaboration
with Amgen. It is possible that this will also be the case with
future arrangements into which we may enter. If one of our
collaborative partners fails to develop or commercialize
successfully any of our product candidates, we would not be able
to remedy this failure would and the failure could materially and
 adversely affect our business.

Furthermore, larger pharmaceutical companies often explore
multiple technologies and products for the same medical
conditions. Therefore, they are likely to enter into
collaborations with our competitors for products addressing the
same medical conditions targeted by our technologies. Thus our
collaborators, including Amgen, may pursue alternative
technologies or product candidates either on their own or in
collaboration with others, including our competitors, in order to
 develop treatments for the diseases or disorders targeted by our
 collaborative arrangements. Depending on how other product
candidates advance, a corporate partner may slow down or abandon
its work on our product candidates or terminate its collaborative
 arrangement with us in order to focus on these other prospects.

We also depend to a large extent on technology license agreements
 with third parties, including our agreements with Johns Hopkins
relating to the neuroimmunophilin ligand technology. This license
 agreement and others we have require that we meet a specified
schedule for achieving designated research, development and
regulatory milestones and that we spend minimum amounts of money
to develop the technology, as well as make specified payments
from proceeds from corporate partners and royalty payments. If we
 are unable to meet or agree upon these requirements under a
license, our licensor could terminate the license and thus
deprive us of access to key technology. A deprivation of this
type could have a material adverse effect on our business.

We may be unable to obtain the additional capital needed to
operate 
 and grow our business.

We will require substantial funds in order to continue our
research and development programs and pre-clinical and clinical
testing and to manufacture and, where applicable, market our
products. We cannot be sure that we will be able to obtain any
future funds that we may require on acceptable terms, or at all.
Under our operating lease with a trust affiliated with First
Union National Bank for our new research and development
facility, we are required to hold, in the aggregate, unrestricted
 cash, cash equivalents and investments of $40 million at
all times during the term of the lease. In addition, we are
required to maintain specified amounts of cash,
$19.1 million restricted at December 31, 1999, as
collateral at First Union under this arrangement and other loan
agreements with First Union. These requirements may limit our
ability to access our capital in the future.

Our capital requirements depend on numerous factors, including:



| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | the progress of our research and development programs,                                                             
|
| |  | the progress of pre-clinical and clinical testing,                                                                 
|
| |  | the time and costs involved in obtaining regulatory approvals,                                                     
|
| |  | the cost of filing, prosecuting, defending and enforcing any
	patent claims and other intellectual property rights,
|
| |  | competing technological and market developments,                                                                   

32



---



##### Table of Contents





| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | changes in our existing research relationships with universities
	and others,                                     
|
| |  | our ability to establish collaborative arrangements with large
	pharmaceutical companies and others,              
|
| |  | the requirements and timing of entering into technology licensing
	 agreements and other similar arrangements, and
|
| |  | the progress of efforts to scale-up manufacturing processes.                                                      

We may use our existing resources before we may otherwise expect
because of changes in our research and development and
commercialization plans or other factors affecting our operating
expenses or capital expenditures, including potential
acquisitions of other businesses, assets or technologies.

Our ability to raise future capital on acceptable terms depends
on conditions in the public and private equity markets and our
performance, as well as the overall performance of other
companies in the biopharmaceutical and biotechnology sectors.

Our stock price is volatile.

The market price of our stock has been and is likely to continue
to be highly volatile, and an investment in our shares involves
substantial risks. The market prices for shares of smaller
biotechnology companies like ours have a history of being highly
volatile. Furthermore, the stock market generally and the market
for stocks of companies with lower market capitalizations, like
us, have from time to time experienced and likely will again
experience significant price and volume fluctuations that are
unrelated to the operating performance of a particular company.

From time to time, stock market professionals publish research
reports covering our business and our future prospects. A number
of factors may limit our ability to meet the expectations of
securities analysts or investors and thus may adversely affect
our stock price. These factors include:



| |   |                                                                                                                                             
| | - | --------------------------------------------------------------------------------------------------------------------------------------------
| |  | announcements by us or our competitors of clinical results,
	technological innovations, product sales, new products or product
	 candidates,
|
| |  | developments or disputes concerning patent or proprietary rights,                                                                           
|
| |  | regulatory developments affecting our products,                                                                                             
|
| |  | period-to-period fluctuations in the results of our operations,
	and                                                                        
|
| |  | market conditions for emerging growth companies and
	biopharmaceutical companies.                                                           

We may be unable to protect our proprietary rights, permitting
 competitors 
 to duplicate our products and services.

Any success that we have will depend in large part on our ability
 to:



| |   |                                                                                                
| | - | -----------------------------------------------------------------------------------------------
| |  | obtain, maintain and enforce intellectual property protection for
	 our products and processes,
|
| |  | license rights to patents from third parties,                                                  
|
| |  | maintain trade secret protection, and                                                          
|
| |  | operate without infringing upon the proprietary rights of others.                              

Intellectual property for our technologies and products will be a
 crucial factor in our ability to develop and commercialize our
products. Large pharmaceutical companies consider a strong patent
 estate critical when they evaluate whether to enter into a
collaborative arrangement to support the research, development
and commercialization of a technology. Without the prospect of
reasonable intellectual property protection, it would be
difficult for a corporate partner, or our company for that
matter, to justify the time and money that is necessary to
complete the development of a product.

33



---



##### Table of Contents



The rules and criteria for receiving and enforcing a patent for
pharmaceutical and biotechnological inventions are in flux and
are unclear in many respects. The ultimate scope of patent
protection afforded these types of patents remains uncertain, and
 a number of our product candidates are subject to this
uncertainty.

Many others, including companies, universities and other research
 organizations, work in the areas of our business, and we cannot
be sure that the claims contained in our issued patents will be
interpreted as broadly as we would like in light of the
inventions of these other parties. In addition, we cannot be sure
 that the claims set forth in our pending patent applications
will issue in the form submitted. These claims may be narrowed or
 stricken, and the applications may not ever ultimately result in
 valid and enforceable patents. Thus, we cannot be sure that our
patents and patent applications will adequately protect our
product candidates.

We are aware that other companies have been issued patents, and
have filed or may be engaged in filing patent applications, that
claim matter relating to polymer drug delivery technology,
including polymer-based oncology products, and neurological
therapeutics and diagnostics, including small molecule
neuroimmunophilin ligands and neuroprotectants. While we do not
believe that we are infringing valid third-party patents of which
 we are aware, we cannot give you any assurance as to the ability
 of our patents and patent applications to adequately protect our
 products or product candidates. In addition, our products or
product candidates may infringe or be dominated by patents that
have issued or may issue in the future to third parties. Also,
our neurotropic product candidates may infringe or be dominated
by patents that have been issued or may be issued to third
parties.

In order to protect our intellectual property position with
respect to our neuroimmunophilin ligands, we filed an opposition
in 1998 in an effort to prevent the final issuance of a European
patent to the company we reference in the immediately preceding
paragraph. While we do not believe the claims of this European
patent are valid, any final issuance could result in future
litigation if this company were to allege that we infringed the
claims of this patent in Europe.

Furthermore, we cannot be sure that any or all of the patent
applications assigned or licensed to us from third parties will
be granted. We cannot offer assurances that we will develop
additional products or processes that are patentable, or that any
 patents issued to us, or licensed by us, will provide us with
any competitive advantages or adequate protection for our
products. We also cannot be sure that others will not
successfully challenge, circumvent or invalidate any of our
existing or future patents or intellectual property.

Our policy is to control the disclosure and use of our know-how
and trade secrets by entering into confidentiality agreements
with our employees, consultants and third parties. There is a
risk, however, that:



| |   |                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------
| |  | these parties will not honor our confidentiality agreements,                                                                  
|
| |  | others will independently develop equivalent or competing
	technology,                                                        
|
| |  | disputes will arise concerning the ownership of intellectual
	property or the applicability of confidentiality obligations, or
|
| |  | disclosure of our trade secrets will occur regardless of these
	contractual protections.                                      

In our business, we often work with consultants and research
collaborators at universities and other research organizations.
To the extent that any of these consultants or research
collaborators uses intellectual property owned by others as part
of their work with us, disputes may arise between us and these
other parties as to which one of us has the rights to
intellectual property related to or resulting from the work done.

We support and collaborate in research conducted in universities,
 such as Johns Hopkins, and in governmental research
organizations, such as the National Institutes of Health. We
cannot be sure that we will have or be able to acquire exclusive
rights to the inventions or technical information that result
from work performed by university personnel or at these
organizations. Also, disputes may arise as to which party should
have rights in research programs that we conduct on our own or in

34



---



##### Table of Contents





Questions of infringement of intellectual property rights,
including patent rights, may involve highly technical and
subjective analyses. Some or all of our existing or future
products or technologies may now or in the future infringe the
rights of other parties. These other parties might initiate legal
 action against us to enforce their claims, and our defense of
the claims might not be successful.

We may incur substantial costs if we must defend against charges
of infringement of patent or proprietary rights of third parties.
 We may also incur substantial costs if we find it necessary to
protect our own patent or proprietary rights by bringing suit
against third parties, including suits involving our neurotrophic
 product candidates. We could also lose rights to develop or
market products or be required to pay monetary damages or
royalties to license proprietary rights from third parties. In
response to actual or threatened litigation, we may seek licenses
 from third parties or attempt to redesign our products or
processes to avoid infringement. We cannot be sure that we will
be able to obtain licenses on acceptable terms, or at all, or
successfully redesign our products or processes.

In addition to the risk that we could be a party to patent
infringement litigation, the U.S. Patent and Trademark Office, or
 its foreign counterparts, could require us to participate in
patent interference proceedings that it declares. These
proceedings are often expensive and time-consuming, even if we
were to prevail in such a proceeding. We may also be forced to
initiate legal proceedings to protect our patent position or
other proprietary rights. These proceedings typically are costly,
 protracted, and offer no assurance of success.

Under our collaboration, Amgen is responsible for preparing,
filing, prosecuting, maintaining and defending patent
applications and patents relating to the FKBP neuroimmunophilin
ligand technology. We cannot be sure that Amgen will pursue these
 activities in the same manner or as vigorously as we would if we
 had that responsibility. Furthermore, Amgen has the option to
take the lead in bringing actions to enforce patent rights
relating to the FKBP neuroimmunophilin ligand technology and to
defend against third party infringement suits regarding that
technology. While Amgen and Guilford have agreed to consult with
each other on such matters, in the event of disagreement,
Amgens decisions will control.

We are dependent on licensed intellectual property.

We have licensed intellectual property, including patents, patent
 applications and know-how, from universities and others,
including intellectual property underlying GLIADEL® Wafer,
DOPASCAN® Injection and the neuroimmunophilin ligand
technology. Some of our product development programs depend on
our ability to maintain rights under these licenses. Under the
terms of our license agreements, we are generally obligated to:



| |   |                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------
| |  | exercise diligence in the research and development of these
	technologies,                                 
|
| |  | achieve specified development and regulatory milestones,                                                   
|
| |  | expend minimum amounts of resources in bringing potential
	products to market,                             
|
| |  | make specified royalty and milestone payments to the party from
	which we have licensed the technology, and
|
| |  | reimburse patent costs to these parties.                                                                   

In addition, these license agreements obligate us to abide by
record-keeping and periodic reporting obligations. Each licensor
has the power to terminate its agreement if we fail to meet our
obligations under that license. We may not be able to meet our
obligations under these license

35



---



##### Table of Contents





If we default under any of these license agreements, we may lose
our right to market and sell any products based on the licensed
technology. Losing our marketing and sales rights would have a
material and adverse effect on our business, financial condition
and results of operations. Our license agreements require that we
 pay a royalty on sales of GLIADEL® Wafer to the university
that licensed us the technology underlying that product. In
addition, we will have to pay milestone and/or royalty payments
in connection with the successful development and
commercialization of DOPASCAN® Injection and any products
that result from the NIL and PARP technologies.

In the future, to support our product development efforts, we may
 need research materials or scientific information that
researchers at universities or other organizations generate. We
cannot be sure that we will be able to obtain this scientific
information or research materials in a timely manner or at all.

Revenues from our products are dependent in part on
reimbursement from 
 healthcare payors, which is uncertain.

Sales of our product candidates will depend in part on the
availability of reimbursement from third-party healthcare payors,
 such as government insurance plans, including Medicare and
Medicaid in the United States, private insurance and managed care
 plans. Reimbursement policies for GLIADEL® Wafer remain
uncertain, both domestically and internationally. We cannot be
sure that any reimbursement will be available for GLIADEL®
Wafer or any of our product candidates under development.
Furthermore, even if reimbursement is available, we cannot be
sure that it will be available at price levels sufficient to
realize an appropriate return on our investment in GLIADEL®
Wafer or our other products in development.

We are dependent on one source of supply for several of our
key product components.

Currently, we are able to purchase some of the key components for
 GLIADEL® Wafer and our product candidates only from single
source suppliers. These vendors are subject to many strict
regulatory requirements regarding the supply of these components.
 We cannot be sure that these suppliers will comply, or have
complied, with applicable regulatory requirements or that they
will otherwise continue to supply us with the key components we
require. If suppliers are unable or refuse to supply us, or will
supply us only at a prohibitive cost, we may not be able to
access additional sources at acceptable prices, on a timely
basis, if ever.

The current formulation of GLIADEL® Wafer utilizes the
chemotherapeutic agent BCNU, which is also known as
carmustine. Currently we have the option to procure
BCNU from only two sources in the United States, and we are not
aware of any supplier outside of the United States. We currently
obtain BCNU from one of these two U.S. suppliers on a purchase
order basis and not through any long-term supply agreement. If we
 fail to receive key supplies necessary for the manufacture of
GLIADEL on a timely basis at a reasonable cost, delays in product
 shipment could result. Delays of this type would have a material
 adverse effect on our business.

The manufacture of DOPASCAN® Injection requires that a
precursor compound be labeled with a radioactive isotope of
iodine, known as Iodine-123, to form the final product. Only a
limited number of companies worldwide are capable of performing
the necessary radioiodination of the precursor and
distribution of the final product. Currently, we do not have any
arrangement for the manufacture and supply of DOPASCAN®
Injection nor do we have the internal capability to manufacture
DOPASCAN® Injection ourselves. Consequently, we will not be
in a position to commence Phase III or other clinical trials
 for DOPASCAN® Injection until we locate a qualified
supplier.

We have assessed the companies that we believe are currently
capable of manufacturing a product like DOPASCAN® Injection.
 Based on this assessment, we believe a significant risk exists

36



---



##### Table of Contents





The U.S. Government holds rights which may permit it to
license to third parties technology we currently hold the
exclusive right to use.

The U.S. government holds rights that govern aspects of certain
of the technologies licensed to us by third party licensors.
These government rights in inventions conceived or reduced to
practice under a government-funded program may include a
non-exclusive, royalty-free, worldwide license for the government
 to practice or have practiced resulting inventions for any
governmental purpose. In addition, the U.S. government has the
right to grant to others licenses that may be exclusive under any
 of these inventions if the government determines that:



| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | adequate steps have not been taken to commercialize such
	inventions,                 
|
| |  | the grant is necessary to meet public health or safety needs, or                      
|
| |  | the grant is necessary to meet requirements for public use under
	federal regulations.

The U.S. government also has the right to take title to a subject
 invention if we fail to disclose the invention, and may elect to
 take title within specified time limits. The U.S. government may
 acquire title in any country in which we do not file a patent
application within specified time limits.

Federal law requires any licensor of an invention partially
funded by the federal government to obtain a commitment from any
exclusive licensee, such as us, to manufacture products using the
 invention substantially in the United States. Further, these
rights include the right of the government to use and disclose
technical data relating to licensed technology that was developed
 in whole or in part at government expense. Our principal
technology license agreements contain provisions recognizing
these rights.

We have entered into a contract with the U.S. Army, funded by the
 Office of National Drug Control Policy, commonly referred to as
the Drug Czar, to provide financial support for
research being conducted by us on a potential cocaine inhibitor.
That contract permits the U.S. government to obtain unlimited
rights to data developed in the course of our performance if we
do not use the data within five years after termination of the
contract to conduct further laboratory investigation and/or
clinical trials aimed at developing a commercial product to
combat drug abuse.

Pre-clinical and clinical trial results for our products may
not be favorable.

In order to obtain regulatory approval for the commercial sale of
 any of our product candidates, we must conduct both pre-clinical
 studies and human clinical trials. These studies and trials must
 demonstrate that the product is safe and effective for the
clinical use for which we are seeking approval. Together with
Aventis, we commenced a Phase III clinical trial for GLIADEL
 in December 1997 in patients undergoing initial surgery for the
brain cancer malignant glioma. We cannot be sure that the results
 of this or other clinical trials we may conduct in the future
will be successful. Adverse results from this or any future trial
 would have a material adverse effect on our business.

We also face the risk that we will not be permitted to undertake
or continue clinical trials for any of our product candidates in
the future. Even if we are able to conduct such trials, we may
not be able to demonstrate satisfactorily that the products are
safe and effective and thus qualify for the regulatory approvals
needed to market and sell them. Results from pre-clinical studies
 and early clinical trials are often not accurate indicators of
results of later-stage clinical trials that involve larger human
populations.

37



---



##### Table of Contents



We are subject to extensive governmental regulation, which may
 
 change and harm our business.

Our research, pre-clinical development and clinical trials, and
the manufacturing and marketing of our product candidates, are
subject to extensive regulation by numerous governmental
authorities in the United States and other countries, including
the FDA and the DEA. Controlled drugs such as GLIADEL® Wafer
 and radiolabeled drugs such as DOPASCAN® Injection are
subject to additional requirements. Except for GLIADEL®
Wafer, none of our product candidates has received marketing
clearance from the FDA. In addition, none of our product
candidates has received clearance from any foreign regulatory
authority for commercial sale, except with respect to
GLIADEL® Wafer, which has received marketing clearance in a
limited number of foreign countries.

As a condition to approval of our product candidates under
development, the FDA could require additional pre-clinical,
clinical or other studies. Any requirement that we perform
additional pre-clinical, clinical or other studies, or purchase
clinical or other data from other companies could delay, or
increase the expense of, approval of our product candidates,
which could have a material adverse effect on our business.

In order to obtain FDA approval of a new drug product for a
specific clinical use, we must demonstrate to the satisfaction of
 the FDA that the product is safe and effective for its intended
use. We must also demonstrate that the product is capable of
being manufactured in accordance with applicable regulatory
standards. Significant risks exist that:



| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | we will not be able to satisfy the FDAs requirements with
	respect to any of our drug product candidates or with respect to
	the proposed expanded labeling for GLIADEL® Wafer for
	patients undergoing initial surgery for malignant glioma, or
|
| |  | even if the FDA does approve our product candidates or expanded
	labeling, the FDA will approve less than the full scope of uses
	or labeling that we seek.                                                                                      

Failure to obtain regulatory drug approvals on a timely basis
could have a material adverse effect on our business.

Even if we are able to obtain necessary FDA approval, the FDA may
 nevertheless require post-marketing testing and surveillance to
monitor the approved product and continued compliance with
regulatory requirements. The FDA may withdraw product approvals
if we or our corporate partners, such as Aventis in the case of
GLIADEL® Wafer, do not maintain compliance with regulatory
requirements. The FDA may also withdraw product approvals if
problems concerning safety or efficacy of the product occur
following approval.

The process of obtaining FDA and other required approvals or
licenses and of meeting other regulatory requirements to test and
 market drugs, including controlled substances and radiolabeled
drugs, is rigorous and lengthy. It has required, and will
continue to require, that we expend substantial resources. We
will need to conduct clinical trials and other studies on all of
our product candidates before we are in a position to file a new
drug application for marketing and sales approval. Unsatisfactory
 clinical trial results and other delays in obtaining regulatory
approvals or licenses would prevent the marketing of the products
 we are developing. Until we receive the necessary approvals or
licenses and meet other regulatory requirements, we will not
receive revenues or royalties related to product sales.

In addition to the requirements for product approval, before a
pharmaceutical product may be marketed and sold in some foreign
countries, the proposed pricing for the product must be approved
as well. Products may be subject to price controls or limits on
reimbursement. The requirements governing product pricing and
reimbursement vary widely from country to country and can be
implemented disparately at the national level. We cannot
guarantee that any country which has price controls or
reimbursement limitations for pharmaceuticals will allow
favorable reimbursement and pricing arrangements for our products
 or those of our corporate partners, including Aventis and its
applications for GLIADEL® Wafer outside the United States.

38



---



##### Table of Contents



Where applicable, we hope to capitalize on current FDA
regulations and the new provisions of the FDA Modernization Act
of 1997. These regulations or provisions permit fast
track, expedited or accelerated approval or more limited
treatment use of, and cost recovery for, certain
experimental drugs under limited circumstances. The fast track
and treatment provisions, and FDAs accelerated, expedited
and treatment regulations apply generally only to:



| |   |                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | drug products intended to treat severely debilitating or serious
	or life-threatening diseases, and                                                                                                                                
|
| |  | drug products that provide meaningful therapeutic benefit to
	patients over existing treatments, that potentially address an
	unmet medical need, or that are for diseases for which no
	satisfactory or comparable therapy exists.

The FDA Modernization Act contains provisions patterned after the
 accelerated approval regulations and other provisions pertaining
 to expanded access, i.e., treatment uses. Since some of the new
statutory provisions and current FDA regulations are different
from one another, it is unclear how they will apply, if at all,
to our drug candidates. We cannot be sure that our drug
candidates will qualify for fast track, accelerated or expedited
approvals or for treatment use and cost recovery.

Because controlled drug products and radiolabeled drugs are
subject to special regulations in addition to those applicable to
 other drugs, some of our products and product candidates,
including DOPASCAN® Injection, are or may be subject to
regulation by the DEA as controlled substances and by the Nuclear
 Regulatory Commission as radiolabeled drugs. The NRC licenses
persons who use nuclear materials and establishes standards for
radiological health and safety. The DEA is responsible for the
control of manufacture, distribution and dispensing of controlled
 substances, including the equipment and raw materials used in
their manufacture and packaging in order to prevent such articles
 from being diverted into illicit channels of commerce.
Registration is required and other activities involving
controlled substances are subject to a variety of record keeping
and security requirements, and to permits and authorizations and
other requirements. States often have requirements for controlled
 substances, as well. Certain exceptions are granted by the DEA
from requirements for permits and authorizations to export or
import materials related to or involving controlled substances.
If we are unable to continue to obtain exceptions from the DEA
for shipment abroad or other activities, as we have in the past,
this situation could have a material adverse effect on us.

We have obtained registrations for our facilities from the DEA.
We have also obtained exceptions from the DEA with respect to
various of our activities involving DOPASCAN® Injection,
including the shipment of specified quantities of a precursor of
this product candidate to an overseas collaborative partner.
However, we cannot be sure that these exceptions will be
sufficient to cover our future activities or that the DEA will
not revoke the exceptions. We also cannot be sure that we will be
 able to meet the other requirements to test, manufacture and
market controlled substances or radiolabeled drugs, or that we
will be able to obtain additional necessary approvals, permits,
authorizations, registrations or licenses to meet state, federal
and international regulatory requirements to manufacture and
distribute these products. The FDA Modernization Act required the
 FDA to issue and finalize within one and one-half years
regulations governing the approval of radiolabeled drugs. Final
regulations were issued in May 1999. These cover general
factors relevant to safety and effectiveness, possible
indications for radiopharmaceuticals, and the evaluation criteria
 for safety and effectiveness. We do not know and cannot predict
how these and other provisions may affect the potential for
approval of DOPASCAN® Injection.

Our products use novel alternative technologies and
therapeutic 
 approaches which have not been widely studied.

Many of our product development efforts focus on novel
alternative therapeutic approaches and new technologies that have
 not been widely studied. Applications for these approaches and
technologies include, among other things, the treatment of brain
cancer, the diagnosis and monitoring of Parkinsons disease,
 the promotion of nerve growth and the prevention of neuronal
damage. These

39



---



##### Table of Contents





Our business is dependent on our ability to keep pace with the
 
 latest technological changes.

The technological areas in which we work continue to evolve at a
rapid pace. Our future success depends upon maintaining our
ability to compete in the research, development and
commercialization of products and technologies in our areas of
focus. Competition from pharmaceutical, chemical and
biotechnology companies, universities and research institutions
is intense and expected to increase. Many of these competitors
have substantially greater research and development capabilities
and experience and manufacturing, marketing, financial and
managerial resources than we do, and represent significant
competition for us.

Acquisitions of competing companies by large pharmaceutical
companies or other companies could enhance the financial,
marketing and other resources available to these competitors.
These competitors may develop products that are superior to those
 we are developing. We are aware of the development by other
companies and research scientists of alternative approaches to:



| |   |                                                     
| | - | ----------------------------------------------------
| |  | the treatment of malignant glioma,                  
|
| |  | the diagnosis of Parkinsons disease,               
|
| |  | the promotion of nerve growth and repair,           
|
| |  | the treatment and prevention of neuronal damage, and
|
| |  | the treatment of cocaine addiction.                 

Our competitors may develop products that render our products or
technologies noncompetitive or obsolete. In addition, we may not
be able to keep pace with technological developments.

Our products must compete with others to gain market
acceptance.

Any product candidate that we develop and for which we gain
regulatory approval, including GLIADEL® Wafer, must then
compete for market acceptance and market share. An important
factor will be the timing of market introduction of competitive
products. Accordingly, we expect that the relative speed with
which we and competing companies can develop products, complete
the clinical testing and approval processes, and supply
commercial quantities of the products to the market will be an
important element of market success.

Significant competitive factors include:



| |   |                                                                                   
| | - | ----------------------------------------------------------------------------------
| |  | capabilities of our collaborators,                                                
|
| |  | product efficacy and safety,                                                      
|
| |  | timing and scope of regulatory approval,                                          
|
| |  | product availability,                                                             
|
| |  | marketing and sale capabilities,                                                  
|
| |  | reimbursement coverage from insurance companies and others,                       
|
| |  | the amount of clinical benefit of our product candidates relative
	 to their cost,
|
| |  | the method of administering a product,                                            

40



---



##### Table of Contents





| |   |           
| | - | ----------
| |  | price, and



| |   |                   
| | - | ------------------
| |  | patent protection.

Our competitors may develop more effective or more affordable
products or achieve earlier product development completion,
patent protection, regulatory approval or product
commercialization than we do. Our competitors achievement
of any of these goals could have a material adverse effect on our
 business.

We have limited clinical and regulatory compliance
capabilities.

We have limited resources in the areas of product testing and
regulatory compliance. Consequently, in order to carry our
products through the necessary regulatory approvals and prepare
our product candidates for commercialization and marketing, we
will have to:



| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | expend capital to acquire and expand such capabilities,                               
|
| |  | reach collaborative arrangements with third parties to provide
	these capabilities, or
|
| |  | contract with third parties to provide these capabilities.                            

We are subject to risks of product liability.

We may potentially become subject to large liability claims and
significant defense costs as a result of the design, manufacture
or marketing of our products, including GLIADEL® Wafer, or
the conduct of clinical trials involving these products. A
product liability-related claim or recall could have a material
adverse effect on us. We currently maintain only $15 million
 of product liability insurance covering clinical trials and
product sales. We cannot be sure that this existing coverage or
any future insurance coverage we obtain will be adequate.
Furthermore, we cannot be sure that our insurance will cover any
claims made against us.

Product liability insurance varies in cost. It can be difficult
to obtain, and we may not be able to purchase it in the future on
 terms acceptable to us, or at all. We also may not be able to
otherwise protect against potential product liability claims. If
this occurs, it could prevent or inhibit the clinical development
 and/or commercialization of any products we are developing.

We are dependent on qualified personnel and consultants.

We depend heavily on the principal members of our management and
scientific staff, including Craig R. Smith, M.D., our Chief
Executive Officer, and Solomon H. Snyder, M.D., who is a
member of our Board of Directors and a consultant to our company.
 Both Dr. Smith and Dr. Snyder have extensive
experience in the biotechnology industry and provide us with
unique access to their contacts in the scientific community. The
loss of the services of either of these individuals or other
members of our senior management team could have a material
adverse effect on our business.

We have entered into a consulting agreement with Dr. Snyder
and an employment agreement with Dr. Smith, each of which
provides protection for our proprietary rights. Nevertheless,
either Dr. Snyder or Dr. Smith may terminate his
relationship with us at any time. Accordingly, we cannot be sure
that either of these individuals or any of our other employees or
 consultants will remain with us. In the future they may take
jobs or consulting positions with our competitors. These
employees or consultants may also choose to organize competing
companies or ventures.

Our planned activities will require individuals with expertise in
 many areas including:



| |   |                                                    
| | - | ---------------------------------------------------
| |  | medicinal chemistry and other research specialties,
|
| |  | pre-clinical testing,                              
|
| |  | clinical trial management,                         
|
| |  | regulatory affairs,                                

41



---



##### Table of Contents





| |   |                      
| | - | ---------------------
| |  | manufacturing, and   
|
| |  | business development.

These planned activities will require additional personnel,
including management personnel, and will also require existing
management personnel to develop added expertise. Recruiting and
retaining qualified personnel, collaborators, advisors and
consultants will be critical to our activities. We cannot be sure
 that we will be able to attract and retain the personnel
necessary for the development of our business. Furthermore, many
pharmaceutical, biotechnology and health care companies and
academic and other research institutions compete intensely for
experienced scientists. If we are not able to hire the necessary
experienced scientists or develop the necessary expertise, this
inability could have a material adverse effect on us. In
addition, we also depend on the support of our collaborators at
research institutions and our consultants.

We currently lack sales and marketing experience.

We currently do not have a sales force, and we have no experience
 in marketing or selling a product in a commercial setting. If we
 decide to establish an in-house sales force, our efforts may not
 be successful in this regard. In addition, if we succeed in
bringing additional products to market, our sales force will have
 to compete with many other companies that currently have
extensive and well-funded marketing and sales operations. We
cannot be sure that our marketing and sales efforts would compete
 successfully against these other companies.

Our business involves using hazardous and radioactive
materials and animal 
 testing, all of which may result in environmental liability.

Our research and development processes involve the controlled use
 of hazardous and radioactive materials. We and our collaborative
 partners are subject to international, federal, state and local
laws and regulations governing the use, manufacture, storage,
handling and disposal of hazardous and radioactive materials. We
believe that the safety procedures relating to our in-house
research and development and manufacturing efforts comply in all
material respects with the standards prescribed by such laws and
regulations. However, we cannot completely eliminate the risk of
accidental contamination or injury from these materials.
Moreover, we cannot be sure that our collaborative partners are
currently complying with the governing standards. We also cannot
be sure that we and our collaborative partners will be in
compliance with such standards in the future. If a regulatory
authority determines that we or our collaborative partners are
not complying with the governing laws and regulations, that
determination could have a material adverse effect on our
business, operations or finances. In addition, we and/or our
collaborative partners could be held liable for damages, fines or
 other liabilities, which could exceed our resources.

We believe that we are and will continue to be in compliance in
all material respects with applicable environmental laws and
regulations and currently do not expect to make material capital
expenditures for environmental control facilities in the near
term. However, we may have to incur significant costs to comply
with environmental laws and regulations in the future. In
addition, future environmental laws or regulations may have a
material adverse effect on our operations, business or assets.

Many of the research and development efforts we sponsor involve
the use of laboratory animals. Changes in laws, regulations or
accepted clinical procedures may adversely affect these research
and development efforts. Social pressures that would restrict the
 use of animals in testing or actions against us or our
collaborators by groups or individuals opposed to testing using
animals could also adversely affect these research and
development efforts.

42



---



##### Table of Contents



Effecting a change of control of Guilford would be difficult,
which may 
 discourage offers for shares of our common stock.

Our certificate of incorporation and the Delaware General
Corporation Law contain provisions that may delay or prevent an
attempt by a third party to acquire control of us. These
provisions include the requirements of Section 203 of the
Delaware General Corporation Law. In general, Section 203
prohibits designated types of business combinations, including
mergers, for a period of three years between us and any third
party who owns 15% or more of our common stock. This provision
does not apply if:



| |   |                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------
| |  | our Board of Directors approves of the transaction before the
	third party acquires 15% of our stock,                                   
|
| |  | the third party acquires at least 85% of our stock at the time
	its ownership goes past the 15% level, or                               
|
| |  | our Board of Directors and two-thirds of the shares of our common
	 stock not held by the third party vote in favor of the
	transaction.

We have also adopted a stockholder rights plan intended to deter
hostile or coercive attempts to acquire us. Under the plan, if
any person or group acquires more than 20% of our common stock
without approval of the Board of Directors under specified
circumstances, our other stockholders have the right to purchase
shares of our common stock, or shares of the acquiring company,
at a substantial discount to the public market price. The plan
thus makes an acquisition much more costly to a potential
acquirer.

Our certificate of incorporation also authorizes us to issue up
to 4,700,000 shares of preferred stock in one or more
different series with terms fixed by the Board of Directors. We
do not have to obtain stockholder approval to issue preferred
stock in this manner. Issuance of these shares of preferred stock
 could have the effect of making it more difficult for a person
or group to acquire control of us. No shares of our preferred
stock are currently outstanding. While our Board of Directors has
 no current intentions or plans to issue any preferred stock,
issuance of these shares could also be used as an anti-takeover
device.

43



---



##### Table of Contents






PART II




Item 5.  Market for Registrants Common
Equity and Related Stockholder Matters

We include the information set forth under the caption
Stock Description and Form 10-K on the inside back
cover of Guilfords 1999 Annual Report to Stockholders which
 is included as Exhibit 13.01 to this annual report, and we
incorporate by reference that portion into Part II of this
report.

We have never declared or paid any cash dividends and do not
intend to do so for the foreseeable future. Under our various
loan and lease agreements with certain financial institutions, we
 may not declare, during the term of these agreements, any cash
dividends on our common stock without the prior written consent
of these financial institutions and, in certain cases, the
Maryland Industrial Development Financing Authority.




Item 6.  Selected Consolidated Financial Data

We incorporate by reference herein the information set forth
under the caption Selected Financial Data in the 1999
 Annual Report to Stockholders. We have filed this information as
 Exhibit 13.01 to this annual report. You should read this
information in conjunction with the Consolidated Financial
Statements of the Company and notes thereto.




Item 7.  Managements Discussion and
Analysis of Results of 
 Operations and Financial Condition

We incorporate by reference herein the information set forth
under the caption Managements Discussion and Analysis
 of Results of Operations and Financial Condition in the
1999 Annual Report to Stockholders. We have filed this
information as Exhibit 13.01 to this annual report.




Item 7A.  Quantitative and Qualitative
Disclosures About Market Risk

We have exposure to changing interest rates. Our investment
portfolio includes investment grade debt instruments. These
instruments are subject to interest rate risk and are volatile to
 interest rate fluctuations. Due to the short duration and
conservative nature of these instruments, we do not believe that
we have a material exposure to interest rate risk related to our
investment portfolio.

Substantially all of our financial obligations have variable
rates of interest. By entering into certain interest rate swap
agreements with a commercial bank (counter party), we
 have effectively fixed the interest rates for these floating
rate financial obligations. In the event of non-performance by
the counter party, we could be exposed to market risk related to
interest rates. We describe our exposure to interest rate risk in
 Notes 4 and 7, Interest Rate Swap Agreements
and Indebtedness, respectively, to the footnotes to
our Consolidated Financial Statements. We have filed this
information as Exhibit 13.01 to this annual report.




Item 8.  Financial Statements and Supplementary
 Data

We incorporate by reference herein the consolidated financial
statements and notes thereto and independent auditors
report thereon which are included in the 1999 Annual Report to
Stockholders required by this Item 8. We have filed this
information as Exhibit 13.01 to this annual report.




Item 9.  Changes in and Disagreements with
Accountants on Accounting and Financial Disclosure

Not Applicable.

44



---



##### Table of Contents






Item 10.  Directors and Executive Officers of
the Registrant

The information concerning our executive officers is contained in
 Item 1A of Part I. The information concerning the
Companys directors and with regard to Item 405 of
Regulation S-K is hereby incorporated by reference from the
information to be contained under the caption Board of
Directors and Section 16(a) Beneficial Ownership
 Reporting Compliance in our 2000 Proxy Statement, which we
 will file no later than 120 days following
December 31, 1999.




PART III




Item 11.  Executive Compensation

The information required by this item is hereby incorporated by
reference from the information to be contained under the caption
Executive Compensation in our 2000 Proxy Statement,
which we will file no later than 120 days following
December 31, 1999.




Item 12.  Security Ownership of Certain
Beneficial Owners and Management

The information required by this item is hereby incorporated by
reference from the information to be contained under the caption
Beneficial Ownership of Common Stock in our 2000
Proxy Statement, which we will file no later than 120 days
following December 31, 1999.




Item 13.  Certain Relationships and Related
Transactions

The information required by this item is hereby incorporated by
reference from the information to be contained under the caption
Beneficial Ownership of Common Stock and
Certain Relationships and Related Party Transactions
in our 2000 Proxy Statement, which we will file no later than
120 days following December 31, 1999.




PART IV




Item 14.  Exhibits, Financial Statement
Schedules, and Reports on Form 8-K

(a)(1) Financial Statements

The following Consolidated Financial Statements of Guilford and
Independent Auditors Report beginning on page 41 in
Guilfords 1999 Annual Report to Stockholders are included
in Exhibit 13.01 to this report and are incorporated into
Item 8 of this report:

Independent Auditors Report

Consolidated Balance Sheets as of December 31, 1999 and 1998

Consolidated Statements of Operations for the Years Ended
December 31, 1999, 1998 and 1997

Consolidated Statements of Changes in Stockholders Equity
for the Years Ended December 31, 1999, 1998 and 1997

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997

Notes to Consolidated Financial Statements

(a)(2)  Financial Statement Schedules

Independent Auditors Report

Schedule II  Valuation and Qualifying Accounts

45



---



##### Table of Contents



Independent Auditors Report

The Board of Directors and Stockholders 
 Guilford Pharmaceuticals Inc.:

Under date of February 11, 2000, we reported on the
consolidated balance sheets of Guilford Pharmaceuticals Inc. and
subsidiaries as of December 31, 1999 and 1998, and the
related consolidated statements of operations, changes in
stockholders equity, and cash flows for each of the years
in the three-year period ended December 31, 1999, which are
included in the Form 10-K. In connection with our audits of
the aforementioned consolidated financial statements, we also
audited the related consolidated financial statement schedule as
listed in the accompanying index. This financial statement
schedule is the responsibility of the Companys management.
Our responsibility is to express an opinion on this financial
statement schedule based on our audits.

In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.

/s/  KPMG LLP

Philadelphia, Pennsylvania 
 February 11, 2000

46



---



##### Table of Contents



GUILFORD PHARMACEUTICALS INC. AND SUBSIDIARIES

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES


SCHEDULE II


(in thousands)


|                  |  |            |   |                    |  |            |     |            |  |   |   |  |  |   |     | 
|----------------- |  | ---------- | - | ------------------ |  | ---------- | --- | ---------- |  | - | - |  |  | - | --- | 
|                  |  | Balance    |   | Charged to         |  |            |     | Balance   
|Classification    |  | @ 12/31/96 |   | Costs and Expenses |  | Deductions |     | @ 12/31/97
|                  |  |            |   |                    |  |            |     |           
|Inventory Reserve |  | $          |  |                    |  | $          | 257 |            |  | $ |  |  |  | $ | 257 | 

|                  |  |            |     |                    |  |            |   |            |  |   |   |  |  |   |     | 
|----------------- |  | ---------- | --- | ------------------ |  | ---------- | - | ---------- |  | - | - |  |  | - | --- | 
|                  |  | Balance    |     | Charged to         |  |            |   | Balance   
|Classification    |  | @ 12/31/97 |     | Costs and Expenses |  | Deductions |   | @ 12/31/98
|                  |  |            |     |                    |  |            |   |           
|Inventory Reserve |  | $          | 257 |                    |  | $          |  |            |  | $ |  |  |  | $ | 257 | 

|                  |  |            |     |                    |  |            |   |            |  |   |   |  |  |   |     | 
|----------------- |  | ---------- | --- | ------------------ |  | ---------- | - | ---------- |  | - | - |  |  | - | --- | 
|                  |  | Balance    |     | Charged to         |  |            |   | Balance   
|Classification    |  | @ 12/31/98 |     | Costs and Expenses |  | Deductions |   | @ 12/31/99
|                  |  |            |     |                    |  |            |   |           
|Inventory Reserve |  | $          | 257 |                    |  | $          |  |            |  | $ |  |  |  | $ | 257 | 

All other schedules are omitted because they are not applicable
or the required information is included in the Consolidated
Financial Statements or notes thereto.

47



---



##### Table of Contents



(a)(3)  Exhibits

The following exhibits are filed with this Form 10-K or
incorporated herein by reference to the document set forth next
to the exhibit listed below:

|        |         |             |  |                                                                                                                                                                                                                                                                       
|------- | ------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |            
|Number* |         | Description
|        |         |            
|        | 3.01A   |             |  | Amended and Restated Certificate of Incorporation of the Company.                                                                                                                                                                                                     
|        | 3.01B   |             |  | Certificate of Amendment to Amended and Restated Certificate of
	Incorporation.                                                                                                                                                                                       
|        | 3.02A   |             |  | Amended and Restated By-laws of the Company.                                                                                                                                                                                                                          
|        | 3.02B   |             |  | Amendments to Amended and Restated By-laws of the Company
	(incorporated by reference to the Registrants Quarterly
	Report on Form 10-Q for the quarter ended June 30, 1998
	 and the Registrants Annual Report on Form 10-K for
	the year ended December 31, 1998).
|        | 4.01    |             |  | Specimen Stock Certificate.                                                                                                                                                                                                                                           
|        | 4.02A   |             |  | Stockholder Rights Agreement dated September 26, 1995.                                                                                                                                                                                                                
|        | 4.02B   |             |  | Form of Amendment No. 1 to Stockholder Rights Agreement
	(incorporated by reference to Form 8-K, filed
	October 20, 1998).                                                                                                                                            
|        | 10.01A  |             |  | 1993 Employee Share Option and Restricted Share Plan (1993
	Option Plan).                                                                                                                                                                                           
|        | 10.01B  |             |  | Amendments to 1993 Option Plan.                                                                                                                                                                                                                                       
|        | 10.01C  |             |  | 1998 Employee Share Option and Restricted Share Plan as amended
	(1998 Option Plan) (incorporated by reference to
	Form S-8, filed on February 22, 2000).                                                                                                           
|        | 10.01D  |             |  | Amendment to 1998 Option Plan (incorporated by reference to Form
	10-K filed on March 30, 1999).                                                                                                                                                                      
|        | 10.02A  |             |  | Series A Preferred Stock Purchase Agreement, dated
	September 30, 1993, as amended between the Company and
	holders of its Series A Preferred Stock (Series A
	 Agreement).                                                                                         
|        | 10.02B  |             |  | Amendment, dated August 25, 1994, to Series A
	Agreement.                                                                                                                                                                                                             
|        | 10.02C  |             |  | Amendment, dated February 15, 1995, to Series A
	Agreement.                                                                                                                                                                                                           
|        | 10.03A |             |  | License Agreement, effective March 18, 1994, between the
	Company and Research Triangle Institute, a not-for-profit
	Corporation existing under the laws of North Carolina.                                                                                           
|        | 10.03B  |             |  | Appendix A to Exhibit 10.04.                                                                                                                                                                                                                                          
|        | 10.04  |             |  | License Agreement, dated March 15, 1994, between the Company
	 and Scios Nova.                                                                                                                                                                                        
|        | 10.05   |             |  | Employment Agreement between the Company and Craig R. Smith,
	 M.D.                                                                                                                                                                                                   
|        | 10.06   |             |  | Employment Agreement between the Company and Andrew R.
	Jordan.                                                                                                                                                                                                       
|        | 10.07   |             |  | Employment Agreement between the Company and John P.
	Brennan.                                                                                                                                                                                                        
|        | 10.08   |             |  | (Intentionally Omitted)                                                                                                                                                                                                                                               
|        | 10.09   |             |  | Employment Agreement between the Company and William C.
	Vincek, Ph.D.                                                                                                                                                                                                
|        | 10.10   |             |  | Employment Agreement between the Company and Peter D.
	Suzdak.                                                                                                                                                                                                        
|        | 10.11   |             |  | Employment Agreement between the Company and Nicholas Landekic.                                                                                                                                                                                                       
|        | 10.12   |             |  | Employment Agreement between the Company and Thomas C. Seoh.                                                                                                                                                                                                          
|        | 10.13A  |             |  | Amendments to certain executive officer employment letter
	Agreements.                                                                                                                                                                                                
|        | 10.13B  |             |  | Form of Change in Control Severance Agreement (incorporated be
	reference to the Form 10-Q for the quarter ended
	September 30, 1998).                                                                                                                                
|        | 10.13C  |             |  | Severance Provisions from Employment Letter Agreement, effective
	September 21, 1998, with Nancy J. Linck (incorporated
	be reference to the Form 10-Q for the quarter ended
	September 30, 1998).                                                                    
|        | 10.14   |             |  | (Intentionally Omitted)                                                                                                                                                                                                                                               
|        | 10.15A  |             |  | Consulting Agreement, dated August 1, 1993, as amended on
	February 28, 1994, between the Company and Solomon H.
	Snyder, M.D (the Snyder Consulting Agreement).                                                                                                    
|        | 10.15B  |             |  | September 1, 1995 amendment to Snyder Consulting Agreement.                                                                                                                                                                                                           

48



---



##### Table of Contents



|        |          |             |  |                                                                                                                                                                                                                                                           
|------- | -------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |          |            
|Number* |          | Description
|        |          |            
|        | 10.15C   |             |  | November 19, 1997 amendment to Snyder Consulting Agreement.                                                                                                                                                                                               
|        | 10.15D   |             |  | September 1, 1998 and January 1, 1999 amendments to
	Snyder Consulting Agreement (incorporated by reference to
	Form  10-K filed March 30, 1999).                                                                                                         
|        | 10.16A  |             |  | License Agreement, dated December 20, 1993, between the
	Company and The Johns Hopkins University (JHU
	Agreement).                                                                                                                                     
|        | 10.16B   |             |  | Appendix B to JHU Agreement.                                                                                                                                                                                                                              
|        | 10.16C  |             |  | Amended and Restated License Agreement, effective November 
	25, 1998, between the Company and Johns Hopkins (incorporated by
	reference to Form 10-K filed March 30, 1999).                                                                              
|        | 10.17    |             |  | Form of Director and Officer Indemnification Agreement.                                                                                                                                                                                                   
|        | 10.18    |             |  | Form of Tax Indemnity Agreement.                                                                                                                                                                                                                          
|        | 10.19A   |             |  | Guilford Pharmaceuticals Inc. Directors Stock Option Plan.                                                                                                                                                                                               
|        | 10.19B   |             |  | Amendments to Directors Stock Option Plan (incorporated by
	reference to Form 10-K filed on March 30, 1999).                                                                                                                                             
|        | 10.19C   |             |  | Amendment to Form of Directors Stock Option Agreement
	(incorporated by reference to Form 10-K filed March 30,
	 1999).                                                                                                                                  
|        | 10.20    |             |  | Lease Agreement, dated August 30, 1994, between Crown
	Royal, L.P. and the Company.                                                                                                                                                                       
|        | 10.21A   |             |  | Lease Agreement, dated June 9, 1997 between SN Properties,
	Inc. and the Company (Freeport Lease).                                                                                                                                                      
|        | 10.21B   |             |  | Amendment, dated February 10, 1998, to Freeport Lease.                                                                                                                                                                                                    
|        | 10.22(1) |             |  | Employment Letter Agreement, effective March 8, 1998,
	between the Company and Gregory M. Hockel, Ph.D.                                                                                                                                                   
|        | 10.23(1) |             |  | Employment Letter Agreement, effective January 27, 1998,
	between the Company and Dana C. Hilt, M.D.                                                                                                                                                      
|        | 10.24    |             |  | Exchange and Registration Rights Agreement, dated February 
	17, 1995, among the Company and the Abell Foundation, Inc., and
	the several holders named in Appendix I.                                                                                    
|        | 10.25A   |             |  | Loan and Financing Agreement between the Maryland Economic
	Development Corporation (MEDCO), the Company and
	Signet Bank/ Maryland (Signet) (L&F
	Agreement).                                                                                      
|        | 10.25B   |             |  | Amendment No. 1, dated June 30, 1998, to L&F
	Agreement (incorporated be reference to the Form 10-Q for
	the quarter ended June 30, 1998).                                                                                                                
|        | 10.26    |             |  | Leasehold Deed of Trust by and between the Company and
	Janice E. Godwin and Ross Chaffin (as trustees) for the
	benefit of MEDCO and Signet.                                                                                                             
|        | 10.27A   |             |  | Insurance Agreement between the Maryland Industrial Development
	Financing Authority and Signet (Insurance Agreement).                                                                                                                                  
|        | 10.27B   |             |  | Letter, dated April 2, 1996, amending Insurance Agreement.                                                                                                                                                                                                
|        | 10.27C   |             |  | Amendment No. 2, dated June 29, 1998, to Insurance
	Agreement (incorporated by reference to the Form 10-Q for
	the quarter ended June 30, 1998).                                                                                                          
|        | 10.28   |             |  | License Agreement, dated December 9, 1995, by and between
	the Company and Daiichi Radioisotope Laboratories, Ltd.                                                                                                                                        
|        | 10.29   |             |  | License and Distribution Agreement, dated October 13, 1995,
	by and between the Company and Orion Corporation Farmos.                                                                                                                                     
|        | 10.30    |             |  | Employment Letter Agreement, effective June 10, 1998,
	between the Company and David H. Bergstrom, Ph.D.                                                                                                                                                  
|        | 10.31    |             |  | Master Lease Agreement, dated March 19, 1998, by and between
	 Comdisco Laboratory and Scientific Group, a Division of Comdisco
	 Healthcare Group, Inc., and the Company (incorporated by
	reference to Form 10-Q for the quarter ended March 31,
	1998).

49



---



##### Table of Contents



|        |         |             |  |                                                                                                                                                                                                                                                                                                                 
|------- | ------- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |            
|Number* |         | Description
|        |         |            
|        | 10.32  |             |  | Bulk Pharmaceutical Sales Contract, dated September 23,
	1994, between the Company and Aerojet-General Corporation.                                                                                                                                                                                             
|        | 10.33   |             |  | Equipment Lease, dated September 18, 1996, between the
	Company and General Electric Capital Corporation.                                                                                                                                                                                                       
|        | 10.34   |             |  | Term Loan, dated April 30, 1996, as amended on
	December 6, 1996, by and between the Company and Signet
	Bank.                                                                                                                                                                                                  
|        | 10.35A  |             |  | Marketing, Sales and Distribution Rights Agreement between
	Aventis S.A (formerly known as Rhône-Poulenc Rorer
	Pharmaceuticals Inc.) (Aventis), the Company and GPI
	Holdings, Inc., dated June 13, 1996 (MSDA).                                                                                           
|        | 10.35B |             |  | Amendment No. 1 to MDSA, dated September 25, 1998
	(incorporated by reference to Form 8-K, filed
	October 2, 1998).                                                                                                                                                                                             
|        | 10.36   |             |  | Manufacturing and Supply Agreement between Aventis and the
	Company, dated June 13, 1996.                                                                                                                                                                                                                       
|        | 10.37A  |             |  | Stock Purchase Agreement between the Company and Aventis, dated
	June 13, 1996 (Aventis Stock Purchase
	Agreement).                                                                                                                                                                                           
|        | 10.37B  |             |  | Amendment No. 1 to Aventis Stock Purchase Agreement, dated
	September 25, 1998 (incorporated by reference to
	Form 8-K, filed October 2, 1998).                                                                                                                                                                 
|        | 10.38   |             |  | Loan Agreement between the Company and Aventis Inc., dated
	June 13, 1996.                                                                                                                                                                                                                                      
|        | 10.39   |             |  | (Intentionally Omitted)                                                                                                                                                                                                                                                                                         
|        | 10.40  |             |  | Collaboration and License Agreement, dated December 15, 1997
	 and effective as of August 20, 1997, between Amgen Inc.
	(Amgen), GPI NIL Holdings, Inc. and the Company.                                                                                                                                      
|        | 10.41   |             |  | Stock and Warrant Purchase Agreement, dated October 1, 1997,
	 between Amgen and the Company.                                                                                                                                                                                                                   
|        | 10.42   |             |  | Registration Rights Agreement, dated October 1, 1997,
	between Amgen and the Company.                                                                                                                                                                                                                           
|        | 10.43   |             |  | Warrant, dated October 1, 1997 issued to Amgen.                                                                                                                                                                                                                                                                 
|        | 10.44   |             |  | Security Agreement, dated as of February 5, 1998, between
	First Security Bank, National Association (First
	Security), not individually, but solely as the Owner
	Trustee under the Guilford Real Estate Trust 1998-1 (the
	Trust) and First Union.                                                        
|        | 10.45   |             |  | Amended and Restated Trust Agreement, dated as of February 5,
	1998 between the Several Holders from time to time parties
	thereto and the Trust.                                                                                                                                                               
|        | 10.46   |             |  | Agency Agreement, dated as of February 5, 1998, between the
	Company and the Trust.                                                                                                                                                                                                                             
|        | 10.47   |             |  | Credit Agreement, dated as of February 5, 1998, among the
	Trust, the Several Holders from time to time parties thereto and
	First Union.                                                                                                                                                                       
|        | 10.48   |             |  | Participation Agreement, dated as of February 5, 1998, among
	 the Company, the Trust, the various and other lending
	institutions which are parties hereto from time to time, as
	Holders, the various and other lending institutions which are
	parties hereto from time to time, as Lenders, and First Union.
|        | 10.49   |             |  | Lease Agreement, dated as of February 5, 1998, between the
	Trust and the Company.                                                                                                                                                                                                                              
|        | 10.50   |             |  | MIDFA Agreement, dated June 29, 1998, by and between MIDFA,
	First Security, the Company and First Union (incorporated by
	reference to Form 10-Q for the quarter ended June 30,
	1998).                                                                                                                        
|        | 10.51   |             |  | Insurance Agreement, dated June 29, 1998, by and between
	MIDFA and First Union (incorporated by reference to Form 10-Q for
	 the quarter ended June 30, 1998).                                                                                                                                                 
|        | 10.52   |             |  | April 1, 1999 amendment to Consulting Agreement, dated
	August 1, 1993, as amended, between the Company and Solomon
	H. Snyder, M.D. (incorporated by reference to Form 10-Q for
	the quarter ended March 31, 1999).                                                                                            

50



---



##### Table of Contents



|        |       |             |  |                                                                                                                                                                                                                   
|------- | ----- | ----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |       |            
|Number* |       | Description
|        |       |            
|        | 10.53 |             |  | Amendment to Directors Stock Option Plan (incorporated by
	reference to Form 10-Q for the quarter ended March 31,
	1999).                                                                                        
|        | 10.54 |             |  | Amendment to Form of Stock Option Agreement under the
	Companys 1993 and 1998 Employee Share Option and Restricted
	 Share Plans (incorporated by reference to Form 10-Q for the
	 quarter ended March 31, 1999).
|        | 10.55 |             |  | Amendment to Form of Directors Stock Option Agreement,
	effective May 18, 1999 (incorporated by reference to
	Form  10-Q for the quarter ended June 30, 1999).                                                   
|        | 10.56 |             |  | July 1, 1999 amendment to Consulting Agreement, dated
	August 1, 1993 between the Company and Solomon H. Snyder,
	M.D. (incorporated by reference to Form 10-Q for the quarter
	 ended June 30, 1999).            
|        | 10.57 |             |  | Consulting Agreement, dated July 23, 1999, between the
	Company and Solomon H. Snyder, M.D. (incorporated by reference to
	 Form 10-Q for the quarter ended June 30, 1999).                                       
|        | 10.58 |             |  | Form of Severance Agreement (incorporated by reference to
	Form 10-Q for the quarter ended September 30, 1999).                                                                                                   
|        | 10.59 |             |  | Form of Change in Control Severance Agreement (incorporated by
	reference to Form 10-Q for the quarter ended September 
	 30, 1999).                                                                              
|        | 11.01 |             |  | Statement re: Computation of Per Share Earnings (See Notes to
	Consolidated Financial Statements).                                                                                                                
|        | 13.01 |             |  | Portions of the Companys 1999 Annual Report to Stockholders
	 (filed herewith).                                                                                                                                  
|        | 21.01 |             |  | Subsidiaries of Registrant (filed herewith).                                                                                                                                                                      
|        | 23.01 |             |  | Consent of KPMG LLP (filed herewith).                                                                                                                                                                             
|        | 24.01 |             |  | Power of Attorney (contained in signature page).                                                                                                                                                                  
|        | 27.01 |             |  | Financial Data Schedule (filed herewith).                                                                                                                                                                         




|  |                                                                                                                                                                           
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Unless otherwise noted above, all exhibits referenced above are
	incorporated by reference to Guilfords Annual Report on
	Form 10-K for the year ended December 31, 1997.



|  |                                                                                                                            
|- | ---------------------------------------------------------------------------------------------------------------------------
| | Confidential treatment of certain portions of these agreements
	has been granted by the Securities and Exchange Commission.

(b)  Reports on 8-K:

None.

51



---



##### Table of Contents






Signatures and Power of Attorney

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.

March 30, 2000

| |                              
| | -----------------------------
| | GUILFORD PHARMACEUTICALS INC.



| |     |                         
| | --- | ------------------------
| | By: | /s/ CRAIG R. SMITH, M.D.

| |                                      
| | -------------------------------------
| |                                      
| | Craig R. Smith, M.D.                 
| | President and Chief Executive Officer

KNOW ALL PERSONS BY THESE PRESENT, that each
person whose signature appears below constitutes and appoints,
Craig R. Smith, M.D., Andrew R. Jordan, Thomas C.
Seoh, Stephen H. McElhennon and Michael J. Silver, and
each of them, his or her true and lawful attorney-in-fact and
agents, with full power of substitution and resubstitution, from
such person and in each persons name, place and stead, in
any and all capacities, to sign the report and any and all
amendments to this report, and to file the same, with all
exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that
said attorneys-in-fact and agents, and any of them, may lawfully
do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, this Report has been signed by the
following persons in the capacities and on the date indicated.

|                                                                 |  |                                                                                                                            |  |               
|---------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------- |  | --------------
|Signature                                                        |  | Title                                                                                                                      |  | Date          
|                                                                 |  |                                                                                                                            |  |               
|/s/ CRAIG R. SMITH, M.D.Craig R. Smith, M.D.                     |  | Chief Executive Officer, President and Director (Principal
	Executive Officer)                                             |  | March 30, 2000
|/s/ ANDREW R. JORDANAndrew R. Jordan                             |  | Sr. Vice President, Chief Financial Officer, and Treasurer
	(Principal Financial Officer and Principal Accounting Officer) |  | March 30, 2000
|/s/ SOLOMON H. SNYDER, M.D.Solomon H. Snyder, M.D.               |  | Director                                                                                                                   |  | March 30, 2000
|/s/ RICHARD L. CASEYRichard L. Casey                             |  | Director                                                                                                                   |  | March 30, 2000
|/s/ GEORGE L. BUNTING, JR.George L. Bunting, Jr.                 |  | Director                                                                                                                   |  | March 30, 2000
|/s/ W. LEIGH THOMPSON, M.D., PH.D.W. Leigh Thompson, M.D., Ph.D. |  | Director                                                                                                                   |  | March 30, 2000
|/s/ ELIZABETH M. GREETHAMElizabeth M. Greetham                   |  | Director                                                                                                                   |  | March 30, 2000
|/s/ JOSEPH KLEIN, IIIJoseph Klein, III                           |  | Director                                                                                                                   |  | March 30, 2000

52