##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549




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Form 10-K

|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR
    15(d) OF THE SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31,
    2003                                             
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13
    OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | For the transition period
    from           to           .                                 

Commission file number: 000-22891

Corixa Corporation


(Exact name of registrant as specified in its
charter)


|                                                                    |  |                                         
|------------------------------------------------------------------- |  | ----------------------------------------
|Delaware                                                            |  | 91-1654387                              
|(State or other jurisdiction of
     incorporation or organization) |  | (I.R.S. Employer
    Identification No.)

1124 Columbia St., Suite 200

Seattle, WA 98104


(Address of principal executive offices,
including zip code)


Registrants telephone number, including
area code:

(206) 754-5711


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

None


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

Common Stock, $0.001 par value per
share


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

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.     o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Exchange Act
Rule 12b-2).     YES þ          NO o

The aggregate market value of the voting stock
held by non-affiliates of the Registrant was approximately
$362 million as of June 30, 2003, based upon the
closing sale price on the Nasdaq National Market reported for
such date. Shares of Common Stock held by each officer and
director and by each person who owns 5% or more of the
outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other
purposes.

There were 55,507,468 shares of the
registrants Common Stock outstanding as of March 3,
2004.

DOCUMENTS INCORPORATED BY REFERENCE:

Part III incorporates information by
reference to the Registrants Proxy Statement for its 2004
Annual Meeting of Stockholders.



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CORIXA CORPORATION

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31,
2003


TABLE OF CONTENTS

|              |  |                                                                                           |    |      |    |  |  | 
|------------- |  | ----------------------------------------------------------------------------------------- | -- | ---- | -- |  |  | 
|              |  |                                                                                           |    | Page
|              |  |                                                                                           |    |     
|PART I       
|Item 1.       |  | Business                                                                                  |    |      | 2  | 
|Item 2.       |  | Properties                                                                                |    |      | 25 | 
|Item 3.       |  | Legal Proceedings                                                                         |    |      | 25 | 
|Item 4.       |  | Submissions of Matters to a
    Vote of Security Holders                                  |    |      | 26 | 
|PART II      
|Item 5.       |  | Market for Registrants
    Common Equity and Related Stockholder Matters                 |    |      | 26 | 
|Item 6.       |  | Selected Consolidated
    Financial Data                                                  |    |      | 27 | 
|Item 7.       |  | Managements Discussion
    and Analysis of Financial Condition and Results of Operations |    |      | 29 | 
|Item 7A.      |  | Quantitative and Qualitative
    Disclosure About Market Risk                             |    |      | 42 | 
|Item 8.       |  | Financial Statements and
    Supplementary Data                                           |    |      | 60 | 
|Item 9.       |  | Changes in and Disagreements
    with Accountants and Financial Disclosure                |    |      | 87 | 
|Item 9A.      |  | Controls and Procedures                                                                   |    |      | 87 | 
|PART III     
|Item 10.      |  | Directors and Executive
    Officers of the Registrant                                    |    |      | 87 | 
|Item 11.      |  | Executive Compensation                                                                    |    |      | 87 | 
|Item 12.      |  | Security Ownership of
    Certain Beneficial Owners and Management                        |    |      | 87 | 
|Item 13.      |  | Certain Relationships and
    Related Transactions                                        |    |      | 87 | 
|Item 14.      |  | Principal Accounting Fees
    and Services                                                |    |      | 87 | 
|PART IV      
|Item 15.      |  | Exhibits, Financial
    Statement Schedules and Reports on Form 8-K                       |    |      | 87 | 
|Signatures    |  |                                                                                           | 95 |     
|Exhibit 3.1  
|Exhibit 10.51
|Exhibit 10.52
|Exhibit 10.72
|Exhibit 10.82
|Exhibit 21.1 
|Exhibit 23.1 
|Exhibit 31.1 
|Exhibit 31.2 
|Exhibit 32.1 



In this Annual Report Corixa or the
company, we, us and
our refer to Corixa Corporation and our wholly owned
subsidiaries.

CORIXA®, BEXXAR®, MPL®,
ENHANZYN® and the Corixa logo are registered trademarks and
DUAL ACTION, DURABLE REMISSIONTM, TARGETED PRECISE
DURABLETM, POWERED BY CORIXATM, the
POWERED BY CORIXA logo and the BEXXAR logo are trademarks of
Corixa Corporation. All other brand names, trademarks or service
marks referred to in this Annual Report are the property of
their respective owners.

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##### Table of Contents






PART I

Our disclosure and analysis in this Annual Report
and the documents incorporated by reference contain
forward-looking statements, which provide our current
expectations or forecasts of future events. Forward-looking
statements include, without limitation:



| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | information concerning possible or assumed future
    results of operations, trends in financial results and business
    plans, including those relating to earnings growth and revenue
    growth;            
|
| |  | statements about the level of our costs and
    operating expenses relative to our revenues, and about the
    expected composition of our revenues;                                                            
|
| |  | statements about our product development schedule;                                                                                                                                                              
|
| |  | statements about our expectations for regulatory
    approval of any of our product candidates;                                                                                                                 
|
| |  | statements regarding expected payments under
    collaboration agreements;                                                                                                                                      
|
| |  | statements about our future capital requirements
    and the sufficiency of our cash, cash equivalents, investments
    and available equity line facilities and bank borrowings to meet
    these requirements;
|
| |  | statements about our future operational and
    manufacturing capabilities;                                                                                                                                     
|
| |  | other statements about our plans, objectives,
    expectations and intentions; and                                                                                                                              
|
| |  | other statements that are not historical facts.                                                                                                                                                                 

Words such as believes,
anticipates, expects and
intends may identify forward-looking statements, but
the absence of these words does not necessarily mean that a
statement is not forward-looking. Forward-looking statements are
subject to known and unknown risks and uncertainties and are
based on potentially inaccurate assumptions that could cause
actual results to differ materially from those expected or
implied by the forward-looking statements. Our actual results
could differ materially from those anticipated in the
forward-looking statements for many reasons, including the
factors described in the section entitled
Managements Discussion and Analysis of Financial
Condition and Results of Operations  Important
Factors That May Affect Our Business, Our Results of Operations
and Our Stock Price in this Annual Report. Other factors
besides those described in this Annual Report could also affect
actual results. You should carefully consider the factors
described in the section entitled Managements
Discussion and Analysis of Financial Condition and Results of
Operations  Important Factors That May Affect Our
Business, Our Results of Operations and Our Stock Price in
evaluating our forward-looking statements.

You should not unduly rely on these
forward-looking statements, which speak only as of the date of
this Annual Report. We undertake no obligation to publicly
revise any forward-looking statement to reflect circumstances or
events after the date of this Annual Report or to reflect the
occurrence of unanticipated events. You should, however, review
the factors and risks we describe in the reports we file from
time to time with the SEC after the date of this Annual Report.






|        |         
|------- | --------
|Item 1. | Business

Overview

We are a developer of innovative
immunotherapeutic products designed to affect the immune system
and treat debilitating and life-threatening conditions caused by
cancer and infectious disease.

Originally founded to pursue development of
leading, proprietary antigen discovery technology, we are
emerging as a product development company with multiple product
candidates, many in late-stage human clinical trials. We are
driven by an aggressive commercialization strategy that we
believe will give us an opportunity for sustained and consistent
commercial success. Our development efforts are focused on core
areas of immunotherapy expertise, including monoclonal
antibodies, vaccines and adjuvants, and small molecules called
TLR4 agonists and antagonists that stimulate innate immunity.

2



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In June, 2003 we received approval from the
U.S. Food and Drug Administration, or FDA, of BEXXAR®
therapeutic regimen for the treatment of patients with CD20
positive, follicular, non-Hodgkins lymphoma, or NHL, with
and without transformation, whose disease is refractory to
Rituximab and has relapsed following chemotherapy.

We were originally incorporated in Delaware as
WWE Corp. on Sept. 8, 1994. Our headquarters and our
primary research and process development as well as clinical and
regulatory operations are in Seattle, Washington, our adjuvant
manufacturing operations are in Hamilton, Montana and our BEXXAR
therapeutic regimen operations are in South San Francisco,
California. We make available on our website, free of charge,
copies of our annual report on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of
1934, as soon as reasonably practicable after filing or
furnishing the information to the SEC. The Internet address for
the information is http://www.shareholder.com/corixa/edgar.cfm.

Product Development

Using three primary therapeutic approaches, we
are developing innovative immunotherapeutic products that
address a range of cancers and infectious diseases. Our primary
therapeutic approaches include:



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | antibody-based therapeutics;                                                                                                                               
|
| |  | therapeutic vaccines for cancer and infectious
    disease, and adjuvants designed to increase the effectiveness of
    our and our partners vaccines; and
|
| |  | TLR4 agonists and antagonists of innate immune
    responses.                                                                                              

In addition to the BEXXAR therapeutic regimen,
which has been approved for sale in the United States, two of
our partners vaccine products that contain our adjuvants
have been approved for sale: Berna Biotechs prophylactic
vaccine for the prevention of Hepatitis B infection contains our
synthetic RC-529TM adjuvant and has been approved for
sale in Argentina, and Allergy Therapeutics Ltd.s, or
ATLs, allergy vaccine, contains our MPL® adjuvant and
has been approved for sale on a named patient basis in Germany,
Spain, Italy and the U.K. In addition, together with our
partners, we are conducting late-stage clinical trials for
several product candidates targeting a range of cancers and
infectious diseases.

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The following table outlines our approved
products and our significant product candidates that are at the
clinical stage. These programs, as well as our programs in
earlier stages of development are described more fully in the
sections following the table below.

|                                                                  |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|----------------------------------------------------------------- |  | ----------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------
|Product                                                           |  | Disease                                                           |  | Development Phase                                                                                              |  | Partner(s)                                                                                                     
|                                                                  |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|Antibody-based Therapeutics                                       |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|                                                                 
|BEXXAR therapeutic regimen                                        |  | NHL                                                               |  | Approved in U.S., post- marketing trials ongoing;
    application for approval under priority review in Canada |  | GSK in the U.S.; GSK Canada in Canada; Amersham
    Health in Europe                                           
|                                                                 
|Adjuvants and Vaccines                                            |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|                                                                 
|Adjuvants                                                         |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|                                                                 
|RC-529 adjuvant component in Berna Biotechs
    SUPERVAX vaccine |  | Hepatitis B                                                       |  | Approved in Argentina                                                                                          |  | Berna Biotech                                                                                                  
|                                                                 
|MPL adjuvant component in GSKs Fendrix
    vaccine               |  | Hepatitis B                                                       |  | GSK E.U. application for approval under review                                                                 |  | GSK                                                                                                            
|                                                                 
|MPL adjuvant component in GSKs Cervarix
    vaccine              |  | Human Papilloma Virus, or HPV                                     |  | Two GSK U.S. Phase III trials planned
    for 2004                                                             |  | GSK                                                                                                            
|                                                                 
|MPL adjuvant component in GSKs Simplirix
    vaccine             |  | Herpes Simplex Virus, or HSV                                      |  | GSK U.S. Phase III                                                                                             |  | GSK                                                                                                            
|                                                                 
|MPL adjuvant component in ATLs Pollinex
    Quattro vaccine      |  | Certain allergies caused by grasses, trees, weeds
    and pollens |  | ATL E.U. Phase III  approved on
    named patient basis in Germany, Spain, Italy and the U.K.                 |  | Allergy Therapeutics                                                                                           
|                                                                 
|ENHANZYN adjuvant component in Biomiras
    Theratope vaccine    |  | Breast cancer                                                     |  | Biomira U.S. Phase III                                                                                         |  | Biomira                                                                                                        
|                                                                 
|ENHANZYN adjuvant component in Biomiras
    Theratope vaccine    |  | Colorectal cancer                                                 |  | Biomira U.S. Phase II                                                                                          |  | Biomira                                                                                                        
|                                                                 
|Vaccines                                                          |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|                                                                 
|HER-2/neu vaccine                                                 |  | Breast cancer                                                     |  | GSK U.S. Phase I                                                                                               |  | GSK                                                                                                            
|                                                                 
|Lung cancer vaccine                                               |  | Lung cancer                                                       |  | Corixa U.S. Phase I                                                                                            |  | Zambon in Europe and certain other countries;
    Japan Tobacco in Japan; unpartnered in the U.S. and elsewhere
|                                                                 
|Tuberculosis vaccine                                              |  | Tuberculosis                                                      |  | Corixa U.S. Phase I                                                                                            |  | GSK                                                                                                            
|                                                                 
|Leishmaniasis vaccine                                             |  | Leishmaniasis                                                     |  | Corixa U.S. Phase I                                                                                            |  | IDRI                                                                                                           
|TLR4 Agonists and Antagonists                                     |  |                                                                   |  |                                                                                                                |  |                                                                                                                
|CRX-675 TLR4 agonist                                              |  | Seasonal Allergic                                                 |  | Corixa U.S. Phase I                                                                                            |  | Unpartnered                                                                                                    
|                                                                  |  | Rhinitis, or SAR                                                  |  | planned for 2004                                                                                               |  |                                                                                                                

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In the column entitled Development
Phase:



| |   |                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Phase I means products that are
    in, or have completed, Phase I clinical trials, performed
    to evaluate safety;                                                 
|
| |  | Phase II means products that are
    in, or have completed, Phase II dose-ranging clinical
    testing, being tested to further determine safety and
    efficacy; and
|
| |  | Phase III means products that
    are in, or have completed, Phase III clinical testing,
    being tested to determine efficacy.                                      

Antibody-Based Therapeutics

We maintain a highly focused discovery,
development and commercialization program to provide viable
monoclonal antibody candidates for the treatment of certain
types of cancer. BEXXAR therapeutic regimen continues to be a
focal point for us and our co-developers GlaxoSmithKline Inc.,
or GSK, and Amersham Health, a subsidiary of Amersham plc.
Through a combination of internal discovery efforts and external
collaborations, we, with our partners, intend to take select
early-stage monoclonal antibody candidates into clinical testing
over the next several years.

BEXXAR Therapeutic
Regimen.On June 30, 2003 we and
GSK announced that the FDA approved BEXXAR therapeutic regimen
for the treatment of patients with CD20 positive, follicular,
NHL, with and without transformation, whose disease is
refractory to Rituximab and has relapsed following chemotherapy.

NHL is a form of cancer that affects the blood,
bone marrow and lymphatic tissues. NHL currently is the
sixth-leading cause of cancer-related deaths in the United
States and is expected to claim the lives of 19,410 Americans
this year. According to the American Cancer Society, or ACS, in
2004 there will be approximately 53,370 new diagnoses of NHL in
the United States. The incidence of NHL increases with age, and
there has been an increase in age-adjusted incidence of
approximately 1 to 2% annually for the last four decades.

BEXXAR therapeutic regimen is a dual-action
therapy that pairs the tumor-targeting ability of a cytotoxic
(cancer killing) anti-B1monoclonal antibody, or Tositumomab, and
the therapeutic potential of radiation (Iodine-131) with
patient-specific dosing. Combined, these agents form a
radiolabeled monoclonal antibody called Iodine I 131
Tositumomab that is able to bind to the target antigen CD20
found on NHL cells, thereby initiating an immune response
against the cancer and delivering a dose of radiation directly
to tumor cells.

The efficacy of the BEXXAR therapeutic regimen
was examined in a multi-center, single-arm study of
40 patients with follicular NHL whose disease had relapsed
following or had not responded to Rituximab. The median age of
patients in the study was 57 (range: 35-78) and the median
number of prior chemotherapies was 4 (range: 1-11). Eighty-eight
percent of patients met the definition of Rituximab refractory
(defined as no response or a response of less than 6 months
in duration). In patients with Rituximab refractory disease, 63%
of patients had a response to BEXXAR therapeutic regimen, with a
median duration of response of 25 months. Twenty-nine
percent of patients had a complete response (no clinical signs
of disease) to BEXXAR therapeutic regimen. The median duration
of complete responses has not been reached after a median follow
up of 26 months.

The results of this study were supported by
demonstration of durable objective responses in four other
single-arm studies enrolling 190 patients with
Rituximab-naïve, follicular NHL, with or without
transformation, who had relapsed following or were refractory to
chemotherapy. In these studies, the overall response rates
ranged from 47% to 64% and the median durations of response
ranged from 12 to 18 months.

The most common adverse reactions occurring in
the clinical trials included neutropenia, thrombocytopenia and
anemia that can be both prolonged and severe. Of
230 patients included in the safety data from five clinical
trials, 63% had documented Grade 3 or 4 neutropenia, 53% had
Grade 3 or 4 thrombocytopenia, and 29% had Grade 3 or 4 anemia.
Twenty-seven percent of patients received one or more blood
transfusions or blood cell growth factors, eight percent of
patients experienced a serious infection and 12% experienced
bleeding events; the majority were mild to moderate. The most
common non-hematologic side effects included

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asthenia (weakness), fever, nausea, infection and
cough. The BEXXAR therapeutic regimen was associated with a risk
of hypothyroidism and human anti-murine antibody formation.
Certain chemotherapy agents and ionizing radiation have been
associated with the development of myelodysplasia, or MDS,
secondary leukemia and solid tumors. MDS, secondary leukemia and
solid tumors have also been observed in patients receiving the
BEXXAR therapeutic regimen. BEXXAR therapeutic regimen carries a
warning about infusion-related reactions that may be induced by
the administration of foreign proteins. Hypersensitivity
reactions occurred in six percent of patients. Adjustments of
the rate of infusion to control adverse reactions occurred in
seven percent of patients.


The BEXXAR therapeutic regimen consists of four
components administered in two steps over seven to fourteen
days, usually on an outpatient basis. The first set of infusions
includes the non-radioactive antibody, Tositumomab, used to
improve the distribution in the body of the subsequent
radioactive antibody and increase its uptake in the tumor,
followed by a dosimetric infusion, containing the antibody and a
trace amount of radioactive Iodine-131. The dosimetric step
allows the rate of clearance of radioactivity from the body to
be determined by the use of gamma camera counts obtained at
three time points. Clearance is dependent on factors such as
tumor size and bone marrow involvement. From these
determinations, the patient-specific amount of radioactivity
necessary to deliver the targeted therapeutic total body dose of
radiation can be calculated. Seven to fourteen days after the
dosimetric step, the patient returns for the therapeutic step,
which includes two infusions, again beginning with the
non-radioactive antibody, followed by the calculated
patient-specific radioactivity needed to deliver the targeted
total body dose of radiation.

We and GSK in Canada, or GSK Canada, entered into
an agreement in May 2003 whereby in the event of product
approval GSK Canada will market BEXXAR therapeutic regimen in
Canada. Under the terms of the agreement, GSK Canada is
responsible for registration, marketing and sales of the product
in Canada. We are responsible for the manufacture and supply of
BEXXAR therapeutic regimen to GSK Canada for the Canadian market.

On August 25, 2003, we announced that the
Biologics and Genetic Therapies Directorate, or BGTD, of Health
Canada accepted our New Drug Submission, or NDS, for BEXXAR
therapeutic regimen under a Priority Review. Health
Canadas Priority Review is a status granted to eligible
new drug submissions for human use with a shortened review
target period in comparison to 300 days for non-priority
review. Priority Review status may be granted to drug
submissions intended for the treatment, prevention or diagnosis
of serious, life-threatening or severely debilitating illnesses
or conditions where there is no existing drug on the Canadian
market with the same profile or where the new product represents
a significant improvement in the benefit/risk profile over
existing products.

We and Amersham Health entered into an agreement
in October 2001 whereby in the event of product approval in
Europe Amersham Health will market BEXXAR therapeutic regimen in
Europe. We and Amersham Health continue to pursue the
registration of the product in Europe.

Other Antibody-based
Therapeutics.We are developing a
monoclonal antibody-based cancer therapeutic in a collaborative
effort with Medarex, Inc., or Medarex. In 2000, we initiated a
collaboration with Medarex to discover and develop fully human
monoclonal antibodies against selected targets from our library
of proprietary cancer and infectious disease antigens. Medarex
contributed its HuMAb-Mouse® technology to the multiyear
collaboration, targeted to generate, screen and characterize
fully human monoclonal antibodies directed against our antigens.
In May 2002, we amended and restated this collaboration to cover
the development and potential commercialization of monoclonal
antibody products directed against one of our cancer antigens.

We are also developing a monoclonal
antibody-based therapeutic in collaboration with Purdue Pharma
L.P., or Purdue Pharma, for the potential treatment of female
reproductive tract cancer.

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Adjuvants and Vaccines



| |          
| | ---------
| | Adjuvants

An adjuvant is a formulated compound or additive
that, when combined with a vaccine, boosts the bodys
immune response to antigens contained in the vaccine. Our
adjuvant technology is based on the fact that certain microbial
products have long been recognized as potent immune system
regulators and have been shown to induce a broad range of known
cytokines, a class of substances that are produced by cells of
the immune system and can affect the immune response.
Modifications of these microbial products and their physical and
biological delivery to the immune system can influence the way
cytokines are expressed, as well as the recipients own
physiological responses. Such responses mimic the normal,
protective responses that are initiated during infection or
injury. With our partners, we are evaluating our adjuvants in
vaccines that are designed to be safer and more effective and to
protect against a broad range of diseases.

RC-529 Adjuvant.On
September 8, 2003 we announced the Argentinean approval of
SUPERVAX, Berna Biotechs prophylactic vaccine containing
our synthetic RC-529 adjuvant, for the prevention of Hepatitis B
infection. Developed by Berna Biotech, the vaccine combines
Berna Biotechs Hansenula polymorpha-based recombinant
Hepatitis B antigen with our RC-529 adjuvant. An adjuvant is a
formulated compound or additive that, when combined with a
vaccine, boosts the bodys immune response to the
antigen(s).

Clinical results for SUPERVAX showed
seroprotection of more than 95% of the individuals vaccinated
with SUPERVAX containing our RC-529 adjuvant after only two
vaccinations, one month apart, Berna Biotech expects to launch
SUPERVAX in Argentina in 2004.

On August 14, 2003, we and Apovia AG
announced a research, development and commercialization
agreement for our synthetic RC-529 adjuvant. The multiyear
agreement grants Apovia commercial rights to RC-529 adjuvant for
use in an undisclosed therapeutic vaccine. Both companies will
equally share research, development and commercialization costs,
as well as any potential product revenue.

MPL Adjuvant.Our
flagship adjuvant, MPL adjuvant, is a derivative of the lipid A
molecule found in gram-negative bacteria, one of the most potent
immune system stimulants. We also own patented technology for
extracting MPL adjuvant from bacterial cell walls. Several of
our partners are evaluating MPL adjuvant in vaccines for
development in allergy, cancer and infectious disease targets.
MPL adjuvant has been administered to more than
12,000 patients in more than 33,000 doses as a vaccine
adjuvant.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Hepatitis B  GSK
    Fendrix®. On May 12, 2003,
    we announced that our partner, GSK, has filed for regulatory
    approval of Fendrix with the European Agency for the Evaluation
    of Medicinal Products, or EMEA. Fendrix is a novel vaccine
    designed to prevent infection from Hepatitis B in high-risk
    groups such as pre-haemodialysis and haemodialysis patients and
    it includes the GSK Hepatitis B antigen with the addition of our
    MPL adjuvant. The Fendrix filing represents the first regulatory
    filing for approval of an infectious disease vaccine that
    contains our proprietary MPL adjuvant.                                                                                                                                                                                               
|
| |  | HPV  GSK
    CervarixTM.Cervical cancer is the second most common cause of cancer death
    in women worldwide, with approximately 500,000 new cases
    occurring annually. According to the World Health Organization,
    or the WHO, scientists believe that infections with oncogenic
    genotypes of HPV are responsible for most, if not all cervical
    cancers. In Phase II studies, Cervarix vaccine containing
    our MPL adjuvant demonstrated 100% effectiveness in preventing
    persistent infection by the two HPVs associated with the
    greatest incidence of cervical cancer: HPV 16 and HPV 18. GSK
    has reported that Cervarix has the potential to prevent more
    than 70% of cervical cancers. Two planned Phase III trials
    enrolling approximately 25,000 women are expected to begin in
    2004.
|
| |  | HSV  GSK
    SimplirixTM.Genital herpes is an infection caused by the herpes simplex
    virus. There are two types of HSV, HSV-1 and HSV-2, and both can
    cause genital herpes. According to the Centers for Disease
    Control and Prevention, 45 million people in the United
    States ages 12 and older, or 1 out of 5 of the total
    adolescent and adult population, are infected with HSV-2.
    Nationwide, since the late 1970s, the number of people with
    genital herpes infection has increased 30%.                                                                                                                                                                                                                                                                                                              

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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Thirteen clinical trials with more than 12,000
    volunteers have been completed evaluating Simplirix vaccine
    containing our MPL adjuvant. Results from two double-blind,
    randomized trials demonstrated that Simplirix vaccine was highly
    effective in protecting women against HSV-1 and HSV-2 genital
    herpes. GSK is currently conducting another Phase III
    pivotal trial in young adult women in collaboration with the
    National Institutes of Health, or NIH.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Allergies.Allergy
    Therapeutics Ltd., or ATL, incorporates MPL adjuvant as a
    component in ATLs Pollinex Quattro, an allergy vaccine,
    which is in Phase III clinical trials in Europe. ATL
    specifically targets allergies caused by grasses, trees, weeds
    and pollens. ATLs allergy vaccine has been approved for
    sale on a named patient basis in Germany, Spain, Italy and the
    U.K.

ENHANZYN Adjuvant  Biomira
Theratope®. The ENHANZYN adjuvant
consists of the MPL adjuvant and mycobacterial cell wall
skeleton, structural compounds from the bacteriums cell
wall. Biomira Inc., or Biomira, licensed ENHANZYN for use with
its Theratope vaccines for the potential treatment and
prevention of cancers in humans. Theratope has been used in a
completed Phase III clinical trial for metastatic breast
cancer and is in a Phase II clinical trial for treating
colorectal cancer. In June 2003 Biomira announced that the
Phase III clinical trial for metastatic breast cancer did
not meet the two pre-determined statistical endpoints of time to
disease progression and overall survival and Biomira has
indicated that it intends to discuss plans for moving forward
with the regulatory authorities in the second half of 2004.



| |         
| | --------
| | Vaccines

An important focus of our research and
development in cancer and infectious disease vaccines is to
target a therapeutic cellular immune response, or more
specifically the activation of specialized T cells that
recognize and kill pathogen-infected tissue or tumor cells. Most
marketed vaccines today stimulate a humoral, or antibody,
response involving specialized immune system cells known as B
cells. While vaccines that rely on humoral immunity have proven
useful in the setting of prophylaxis of infection, these
vaccines have typically failed to generate a sufficiently robust
cellular immune response to eliminate tumors and ongoing
infections. We believe that an effective therapeutic immune
response to particular cancers and infectious diseases is likely
to require components of both a humoral and a cellular immune
response.

To induce cytotoxic T cells for therapy of cancer
tumors, we focus our discovery efforts on three complementary
technologies: proprietary tumor-specific antigens, vaccine
adjuvants, and vaccine delivery systems. Since 1995, we have
aggressively researched and discovered numerous tumor-specific
antigens in the major solid and hematological tumors. Our
ability to characterize the immunological properties of these
antigens has allowed us to select the antigens that we believe
will work most effectively in a vaccine. In the selection
process, we focus on antigens that are recognized by the
greatest percentage of individuals, that stimulate the most
potent immune responses, and that are expressed by the greatest
percentage of patients. We then screen the antigens as vaccine
candidates with our proprietary adjuvants and vaccine delivery
systems to identify the most promising vaccine formulations.

Our primary focus in infectious disease vaccine
development is to create vaccines that can be used as
therapeutics. Therapeutic infectious disease vaccines require
antigens that are specific to the pathogen of interest and that
are capable of being recognized by the patients immune
system. As with cancer vaccines, our approach combines the
benefits of disease specific antigens, potent adjuvants to
amplify recognition by the immune system, and novel delivery
systems to enable site specific delivery of the antigen to
lymphocytes and antigen-presenting cells, or cells that present
processed antigens to the immune system. Our potential
infectious disease vaccines may, in addition to enabling
treatment of specific infections, also provide protection as
prophylactic vaccines.

HER-2/neu Breast Cancer
Vaccine.Under our vaccine development
collaboration with GSK, we have developed a potential breast
cancer vaccine based on HER-2/neu, a well-established target in
the development of tumor malignancy. According to the ACS, more
than 200,000 people will be diagnosed with breast cancer this
year and an estimated 40,000 will die in the United States
alone. HER-2/neu is a protein that is normally expressed at very
low levels by cells of the breast, ovaries, skin, lung, liver,
intestines and prostate, but that is overexpressed in 25-30% of
breast cancers. HER-2/neu is a growth factor receptor involved in

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normal cell growth and differentiation. Gene
amplification and protein overexpression of HER-2/neu are
associated with aggressive breast cancers and accelerated growth
rates. In preclinical models, potential vaccines can induce
antibody and T-cell responses against HER-2/neu protein that can
kill cancer cells that overexpress HER-2/neu. Accordingly, we
have identified a form of the HER-2/neu protein as a promising
candidate for therapeutic cancer vaccine development.


Under an FDA Investigational New Drug
Application, or IND, filed in GSKs name, we and GSK
initiated a Phase I clinical trial in 2003 to test the
safety of a new therapeutic breast cancer vaccine formulation
that is designed to potentially trigger both an antibody and T
cell response to tumors that overexpress the HER-2/neu protein.
We are testing the vaccine in patients who have HER-2/neu
positive breast cancer in remission, but who are at high risk
for relapse. The clinical trial will test three dose levels of
the vaccine to determine the safety of the vaccine and to begin
to identify the optimal dose. We and GSK designed the vaccine
formulation, which was derived in part from a series of
Phase I clinical trials conducted by the University of
Washington and us. The series of Phase I clinical trials
tested HER-2/neu vaccine formulations, including peptide- and
protein-based vaccines, in patients with breast and ovarian
cancer. The prior HER-2/neu vaccine trials conducted at the
University of Washington by Dr. Mary L. Disis validated
that HER-2/neu vaccines can induce both antibody and T cell
immune responses to HER-2/neu.

Lung Cancer Vaccine.We and our partner, Zambon Group spa and its subsidiaries,
collectively referred to herein as Zambon, are currently
evaluating a vaccine candidate for the treatment of non-small
cell lung cancer in a Phase I clinical trial initiated in
2003. According to the ACS, in the United States in 2003 an
estimated 171,900 new cases of lung and bronchus cancer were
diagnosed and an estimated 157,200 people died from such
diseases. Current therapeutic options for patients diagnosed
with lung cancer are limited, and metastasis of the cancer
following surgery of the primary lesion is a common outcome. We
have licensed rights to the vaccine candidate for Japan to Japan
Tobacco, Inc., or JT.

Tuberculosis
Vaccine.On January 14, 2004, we
and GSK announced that the FDA is allowing the initiation of a
Phase I clinical study to evaluate the safety and
immunogenicity of a novel, proprietary prophylactic vaccine
designed to induce protection against tuberculosis. The trial
will be conducted in the United States under an IND currently
held by us and will be the first study of a recombinant
tuberculosis vaccine to be conducted on human volunteers. Grants
awarded in the late 1990s from the National Institute of Allergy
and Infectious Diseases, or NIAID, part of the NIH, supported
research that uncovered the most effective protein-adjuvant
combination for this vaccine.

Each year, according to the WHO, approximately
8 million people worldwide become sick with tuberculosis.
According to the WHO statistics, an estimated 2 million die
annually from the disease. The WHO estimates that between 2000
and 2020 nearly 1 billion people will be newly infected
with tuberculosis, 150 million people will get sick and
36 million will die. According to the NIAID, an estimated
2 billion people are infected with tuberculosis, including
approximately 15 million people in the United States. Any
of these people may develop active tuberculosis during the
course of their lives.

The vaccine combines a proprietary, recombinant
tuberculosis protein antigen and a GSK proprietary formulation
that incorporates several adjuvants including our MPL adjuvant.
MPL is our flagship adjuvant, which is present in multiple GSK
vaccines now in late stage clinical development. The recombinant
tuberculosis antigen is a fusion protein of antigenic domains
taken from different Mycobacterium tuberculosis gene products
that are recognized by immune system cells harvested from
patients that had been infected with tuberculosis but who never
showed signs of disease. The fusion protein adjuvant combination
appears to have demonstrated protection against tuberculosis
infection in a number of relevant animal species including mice,
guinea pigs and monkeys.

Leishmaniasis
Vaccine.In January 2003, we initiated
a Phase I clinical trial in the United States to test the
safety and tolerability of an investigational vaccine to treat
various forms of leishmaniasis. The investigational vaccine,
identified as Leish-111f, consists of a fusion of three
Leishmania proteins in combination with our proprietary MPL
adjuvant. We designed the Phase I double-blind, randomized
clinical trial to evaluate the safety of Leish-111f vaccine
administered subcutaneously to healthy adult volunteers at three
dose levels, as compared to adjuvant-alone and placebo-alone
groups. The Phase I clinical trial will

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evaluate the safety of escalating doses of the
vaccine, as well as its effects on the immune response. In
December 2003, we granted an exclusive license to Leish 111-f
vaccine to the Infectious Disease Research Institute, or IDRI.


Prostate Cancer
Vaccine.Following completion of the
discovery phase of our vaccine collaboration agreement with GSK,
we and GSK have agreed to continue prostate cancer vaccine
development and to potentially conduct proof-of-principle
clinical trials. Under our new cancer vaccine collaboration with
GSK, we have identified a potential prostate cancer vaccine
based on our lead prostate cancer antigen. Other than skin
cancers, prostate cancer is the most commonly diagnosed cancer
in men in the United States. According to the ACS, in 2003 an
estimated 220,900 patients would be diagnosed with prostate
cancer and an estimated 28,900 would die in the United States
alone.

Hematologic
Vaccines.We have continued our
antigen discovery programs in leukemia by partnering our WT1
vaccine candidate for the treatment of hematologic, or
blood-based, tumors with Kirin Brewery Company, Ltd, or Kirin.
In December 2002, we granted Kirin exclusive rights to the WT1
vaccine candidate in Asia/ Australasia and co-development rights
in North America. The ACS projects that 30,600 new cases of
leukemia will be diagnosed in the United States in 2003, and
predicts that leukemia will cause 21,900 deaths in the United
States in 2003. Available treatments for hematologic tumors have
improved recently through the introduction of novel biological
antibody therapies. Our potential vaccine may provide an
immunotherapeutic that recruits the immune system to identify
and eliminate the tumor without the significant side effects of
current chemotherapeutic regimens.

TLR4 Agonists and Antagonists

The Innate Immune
Response.We have developed a class of
synthetic compounds that interact with a type of cell receptor
that, when stimulated, initiates the bodys innate immune
response. Innate immunity provides the first line of defense
against a variety of pathogens. A key component of innate
immunity is a family of cell-surface receptors that recognize
molecular signatures presented by invading
microorganisms and are involved in turning on and turning off
critical aspects of the innate immune response. Our synthetic
compounds present such molecular signatures to a class of these
cell-surface receptors know as toll-like receptors, or TLRs.

There are 10 kinds of TLRs, and each recognizes a
different type of antigen. Our synthetic compounds are
recognized by toll-like receptor 4, or TLR4, which can be found
on a range of antigen-presenting cell types, including
hematopoietic, or blood-forming, cells, many epithelial cells,
and cells associated with vascular stability. We are exploring
the use of these synthetic compounds as monotherapies based on
their recognition by TLR4s, and their possible lack of toxicity
associated with natural TLR4 immunostimulants such as
lipopolysaccharide.

We have discovered that some of our synthetic
compounds act as agonists, or stimulants, of the TLR4 based
innate immune response and some act as antagonists, or
deactivators, of this innate immune response. The structure of
each of our synthetic compounds differs slightly. Therefore, we
have screened each TLR4 agonist and antagonist for its ability
to protect the body from viral, bacterial, fungal and parasitic
infection. The variety of our compounds may give our TLR4
agonist and antagonist program multiple applications for
immunotherapy.

We intend to pursue several indications using our
TLR4 agonists and antagonists as stand alone immunotherapeutic
agents. Potential applications for the agonists include chronic
obstructive pulmonary disease, which is often triggered by
respiratory viral infections such that treatment with
antibiotics is often ineffective, upper airway resistance to
biological warfare agents, seasonal or constitutive rhinitis,
allergies and asthma. Potential applications for the antagonists
include inflammatory bowel disease, or IBD, and cystic fibrosis.

In June 2001, we were granted a $3.5 million
contract for a Defense Advanced Research Projects Agency, or
DARPA, sponsored program to develop methods of enhancing immune
responses to infectious diseases, including agents of biological
warfare. Pursuant to the DARPA program we have been studying the

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potential use of our TLR4 agonists and
antagonists for the potential treatment and prevention of
infectious disease.


In December 2003, the NIAID, part of the NIH,
awarded us an $11.6 million five year contract to develop
our proprietary synthetic molecules that act on TLR4. Our
research will focus on drug candidates with the potential to
generate protective immunity to a wide variety of infectious
agents for the purpose of treating and preventing infectious
disease.

TLR4 Agonists.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | CRX-675.SAR is
    characterized by an overproduction of the cytokines in the nasal
    mucosa and associated with atopic or allergic sensitization.
    Administration of our TLR4 agonist CRX-675 has been shown in
    animal models to significantly decrease allergic rhinitis. We
    are planning to initiate a Phase I human clinical trial in
    2004.                                                                                                                                                                                                                                                                                
|
| | Other.We are
    currently evaluating another TLR4 agonist candidate for use in
    the treatment of atopic diseases, or genetically determined
    hypersensitivity diseases such as hay fever and asthma. Our
    preclinical studies indicate that our TLR4 agonist candidate is
    absorbed into the body and is biologically active at mucosal, or
    mucous membrane, surfaces. The tolerability and effectiveness
    demonstrated by preclinical mucosal delivery models indicate
    that aqueous formulations of the agonist may have particular
    utility in treating or preventing atopic diseases of the
    respiratory tract.

TLR4 Antagonist.Our
TLR4 antagonist lead candidate has shown the ability to
quantitatively block signaling through TLR4 and therefore has
potential use as an anti-inflammatory compound in IBD and other
indications. Several formulations of the antagonist, including
an aqueous formula and stable emulsion formula may provide
unique benefits. We are also exploring whether the antagonist
may be formulated and delivered orally.

Corporate Partnerships

As a developer of immunotherapies, we remain
committed to existing collaborations and the pursuit of select
partnerships with pharmaceutical, biopharmaceutical and
diagnostic companies. We focus our partnership efforts on
broadly partnering our core technologies at various stages in
the research, development and commercialization processes. We
target partners that have the expertise and capability to
develop, manufacture and commercialize our products. In our
corporate partnerships we seek to fund our research, development
and commercialization expenses through research grants,
milestone payments, collaborative agreement credit lines and
option, technology or license fees. We also seek to retain
significant downstream participation in product sales through
either profit sharing or product royalties paid on annual net
sales.

Antibody-Based Therapeutics

GSK-BEXXAR Therapeutic
Regimen.Through our wholly-owned
subsidiary, Coulter Pharmaceutical, Inc., or Coulter, we are a
party to a collaboration agreement with GSK for the development
and commercialization of BEXXAR therapeutic regimen, which was
approved in June, 2003 by the FDA for the treatment of patients
with CD20 positive, follicular, NHL, with and without
transformation, whose disease is refractory to Rituximab and has
relapsed following chemotherapy. Under the agreement, as amended
in April 2000, GSKs territory was reduced to the United
States and, upon regulatory approval of BEXXAR therapeutic
regimen, GSK paid us a milestone payment. We and GSK are
co-promoting BEXXAR therapeutic regimen in the United States,
with each company contributing to the commercialization efforts
and both companies sharing profits and losses equally. In
addition, the agreement provides for the sharing of certain
costs by us and GSK related to clinical and manufacturing
development activities. Under the agreement, GSK provided us
with a $15 million credit line that was fully drawn by
Coulter in December 2000 and which we may choose to repay in
cash or in shares of our common stock on or prior to the
October 3, 2004 maturity date.

GSK Canada-BEXXAR Therapeutic
Regimen.In May 2003, we and GSK
Canada entered into an agreement whereby in the event of product
approval GSK Canada will market BEXXAR therapeutic regimen

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in Canada. Under the terms of the agreement, GSK
Canada is responsible for registration, marketing and sales of
the product in Canada. We are responsible for the manufacture
and supply of BEXXAR therapeutic regimen to GSK Canada for the
Canadian market. On August 25, 2003, we announced that the
BGTD of Health Canada accepted our NDS for BEXXAR therapeutic
regimen under a Priority Review.


Health Canadas Priority Review is a status
granted to eligible new drug submissions for human use with a
shortened review target period in comparison to 300 days
for non-priority. Priority Review status may be granted to drug
submissions intended for the treatment, prevention or diagnosis
of serious, life-threatening or severely debilitating illnesses
or conditions where there is no existing drug on the Canadian
market with the same profile or where the new product represents
a significant improvement in the benefit/risk profile over
existing products.

Amersham Health-BEXXAR Therapeutic
Regimen.In October 2001, we entered
into an agreement whereby Amersham Health will market BEXXAR
therapeutic regimen in Europe. We and Amersham Health will
cooperate to register the product in Europe. We will initially
be the holder of the Marketing Authorization Application, or MAA
(the European equivalent of a Biologics License Application, or
BLA), for BEXXAR therapeutic regimen in Europe, and after
certain conditions have been met, including approval for
commercial sale in Europe, we will transfer the MAA to Amersham
Health. We will be responsible for generating clinical trial
data to support the registration of BEXXAR therapeutic regimen
in Europe and Amersham Health will be responsible for
manufacture and sale of BEXXAR therapeutic regimen in Europe.
Under the terms of a stock purchase agreement with Amersham
Health, we had the option to sell up to a total of
$15 million of shares of our common stock to Amersham
Health. Following our partial option exercises in October 2001
and December 2002, on May 14, 2003, we completed the
exercise of our option to sell up to $15 million of shares
of our common stock to Amersham Health when we sold
721,814 shares of our common stock to Amersham Health at a
price per share of $6.927 for a total purchase price of
approximately $5 million. In addition, Amersham Health has
agreed to pay us milestone payments upon regulatory approval in
Europe as well as milestone payments based on achievement of
certain sales volume targets. Amersham Health has also agreed to
pay us royalties on all future product sales in Europe.

Medarex.In 2000, we
initiated a collaboration with Medarex to discover and develop
fully human monoclonal antibodies against selected targets from
our library of proprietary cancer and infectious disease
antigens. Medarex contributed its HuMAb-Mouse technology to the
multiyear collaboration, targeted to generate, screen and
characterize fully human monoclonal antibodies directed against
our antigens. In May 2002, we and Medarex amended and restated
this collaboration. In May 2002, Medarex also acquired our
proprietary Ultra-Potent Toxin, or UPT, technology for creating
antibody-toxin conjugates and certain preclinical product
development programs in the field of oncology and other disease
indications. In return, we received $23.5 million in cash
and shares of Medarex common stock. Medarex also purchased
certain equipment from us to support Medarexs continuing
research efforts for an additional $2.5 million.

Purdue Pharma.In
September 2000, we entered into an agreement with Purdue Pharma
to develop therapeutic antibodies directed against cell surface
antigens identified by our tumor-antigen discovery programs.
Under the terms of the agreement, Purdue Pharma has paid to us a
total of $2.5 million in license fees. In addition, Purdue
Pharma may be required to pay us success-based milestone
payments and royalties on potential product sales. In November
2002, Purdue Pharma exercised an option under the agreement and
licensed one of our antigens to use in its development of
monoclonal antibodies to be used as anti-tumor agents in
treatment of female reproductive tract cancer. Purdue Pharma has
agreed to pay for development and commercialization of a
monoclonal antibody based on our antigen and Purdue Pharma and
an affiliate will retain worldwide rights.

Abgenix.In March
2000, we entered into an agreement with Abgenix, Inc., or
Abgenix, to discover and develop human monoclonal antibodies
against selected targets from our library of proprietary cancer
and infectious disease antigens. Under the agreement, when we
and Abgenix determine antibodies to be worthy of clinical
investigation, a closed auction will be held between the two
parties for the rights to develop the specific antibody-based
product. The party that obtains the right to develop and
commercialize a particular product

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candidate agrees to pay the other party an
up-front fee, milestones based on clinical development and
royalties on any product sales.


Other Antibody
Partnerships.In our current vaccine
collaboration and license agreement with GSK, as well as in our
agreement with Zambon, our partners have either an option,
license or the right to develop novel antigens discovered under
the respective collaborations as targets for therapeutic
monoclonal antibodies. If our partners develop therapeutic
monoclonal antibodies, they agreed to pay us additional funding,
milestone payments and royalties on such products. In accordance
with the terms of our vaccine collaboration and license
agreement with GSK, we have licensed to GSK certain antibody
targets in prostate, colon and breast cancer.

Adjuvants and Vaccines

Berna Biotech.In
February 2002, we entered into a license and supply agreement
with Berna Biotechs subsidiary, Rhein Biotech N.V., or
Rhein, under which we granted Rhein a coexclusive, worldwide,
license to our RC-529 adjuvant for use in developing a Hepatitis
B vaccine. Under the agreement, Rhein paid us an up-front fee
and has agreed to pay us milestone payments, annual license fees
until commercial launch of a product and earned royalty payments
or annual license fees after launch of a product.

GSK.We have
licensed our MPL adjuvant to GSK under three separate agreements
for use in infectious disease vaccines, under one agreement for
use in cancer vaccines and under one agreement for use in
products to treat and prevent allergies. MPL is a component in
several late stage GSK vaccine candidates including Fendrix,
Cervarix and Simplirix. On May 12, 2003, GSK filed for
regulatory approval of Fendrix, a prophylactic Hepatitis B
vaccine that contains GSKs Hepatitis B antigen and our MPL
adjuvant, with the EMEA. In Phase II studies, GSKs
Cervarix vaccine, which contains our MPL adjuvant, demonstrated
100% effectiveness in preventing persistent infection by the two
HPVs associated with the greatest incidence of cervical cancer:
HPV 16 and HPV 18. GSK has reported that Cervarix has the
potential to prevent more than 70% of cervical cancers. Two
planned Phase III trials enrolling approximately 25,000
women are expected to begin in 2004. In addition, thirteen
clinical trials with more than 12,000 volunteers have been
completed evaluating GSKs Simplirix vaccine, which
contains our MPL adjuvant. Results from two double-blind,
randomized trials demonstrated that Simplirix vaccine was highly
effective in protecting women against HSV-1 and HSV-2 genital
herpes. GSK is currently conducting another Phase III
pivotal trial in young adult women in collaboration with the NIH.

Under the first agreement, entered into in 1991,
we granted GSK exclusive, worldwide rights to use MPL adjuvant
in vaccines in a number of infectious disease fields, including
Hepatitis B. Under the agreement, GSK has agreed to pay us
transfer payments for supplies of MPL adjuvant and royalties
upon commercialization of products developed under the agreement.

Under the second agreement, entered into in 1992,
we granted GSK the co-exclusive right to develop vaccines that
include MPL adjuvant against several bacterial infections as
well as combination vaccines that contain diphtheria, pertussis,
tetanus, Haemophilus influenza and polio antigens. In addition
to an annual license fee, GSK has agreed to pay us transfer
payments for supplies of MPL adjuvant and royalties upon
commercial sale of the vaccines.

Under the third agreement, effective in 1995, we
granted GSK rights to use MPL adjuvant in cancer vaccines. The
license is non-exclusive, with the option for exclusivity for up
to ten specific vaccine antigens. In addition to annual license
fees, GSK has agreed to pay us transfer payments for clinical
and commercial quantities of adjuvant and royalties on any
commercial sales of therapeutic or prophylactic cancer vaccines
incorporating MPL adjuvant.

Under the fourth agreement, effective in 1996, we
granted GSK rights to use MPL adjuvant in an additional group of
vaccines against infectious diseases, including tuberculosis.
The license is exclusive for HPV vaccines, co-exclusive for
tuberculosis vaccines, and nonexclusive for additional
infectious disease vaccines. In addition to annual license fees,
GSK has agreed to pay us transfer payments for clinical and

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commercial quantities of adjuvant and royalties
on any commercial sales of vaccines incorporating MPL adjuvant.


Under the fifth agreement, effective in 1999, GSK
has agreed to pay us annual license fees prior to, and minimum
annual royalties subsequent to, regulatory approval of any
allergy vaccine developed under the agreement. GSK will also
purchase its clinical and commercial quantities of MPL adjuvant
from us and pay royalties on any commercial sales of approved
allergy vaccines.

Allergy Therapeutics
Ltd.In 1996 we entered into a license
and supply agreement with ATL under which we licensed MPL
adjuvant to ATL for use in products to treat and prevent
allergies. Under our agreement with ATL, ATL has agreed to pay
us annual license fees prior to, and minimum annual royalties
subsequent to, regulatory approval of any allergy vaccine
developed under the agreement. ATL will also purchase its
clinical and commercial quantities of MPL adjuvant from us and
pay royalties on any commercial sales of approved allergy
vaccines.

Biomira Inc.In
1990, we entered into a collaboration with Biomira covering the
use of one of our formulations of ENHANZYN adjuvant in
Biomiras Theratope vaccines for the potential treatment of
breast, lung and gastrointestinal cancers. In 1996, Biomira
announced that final Phase II clinical data demonstrated
that its Theratope vaccine for metastatic breast cancer provided
a median survival of more than 26 months compared to less
than 10 months achieved historically with chemotherapy. In
June 2003 Biomira announced that its completed Phase III
clinical trial for metastatic breast cancer did not meet the two
pre-determined statistical endpoints of time to disease
progression and overall survival and Biomira has indicated that
it intends to discuss plans for moving forward with the
regulatory authorities in the second half of 2004. Under our
agreement with Biomira, Biomira has agreed to purchase the
ENHANZYN adjuvant exclusively from us at an agreed upon transfer
price.

Wyeth.We are also a
party to a license agreement and related supply agreement with
Wyeth that was amended and restated effective September 28,
2001. Under the amended and restated license agreement we
granted Wyeth co-exclusive use of RC-529 adjuvant and MPL
adjuvant in certain infectious and autoimmune disease fields and
non-exclusive use in one autoimmune disease field. Under the
supply agreement, we will provide Wyeth commercial quantities of
RC-529 adjuvant and MPL adjuvant for use in any vaccines that
Wyeth may develop under the license agreement. Under the
agreements, Wyeth has agreed to pay us an annual license fee
until a threshold level of earned royalties is met, transfer
payments for supplies of RC-529 adjuvant and MPL adjuvant and
annual minimum and earned royalty payments when commercial sale
of vaccines are made.

GSK.Effective
September 1998, we entered into a collaboration and license
agreement with GSKs wholly owned subsidiary,
SmithKlineBeecham plc., along with GSK referred to collectively
as GSK. Under the agreement, we granted GSK an exclusive
worldwide license to develop, manufacture and sell vaccine
products and certain dendritic cell therapy products that
incorporate antigens discovered or in-licensed under this
corporate partnership. We also granted GSK license rights to
develop, manufacture and sell passive immunotherapy products,
such as T cell or antibody therapeutics, and therapeutic drug
monitoring products in each case that incorporate these
antigens. GSKs rights under the agreement are co-exclusive
with us in Japan with respect to tuberculosis.

The rights that we granted to GSK under the
agreement covered:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | our cancer antigen discovery programs in breast,
    colon, ovarian and prostate cancer;                              
|
| |  | our HER-2/neu breast and ovarian cancer vaccine
    program;                                                          
|
| |  | our mammaglobin breast cancer vaccine
    program; and                                                                
|
| |  | our infectious disease antigen discovery programs
    in C. pneumoniae, C. trachomatis and Mycobacterium tuberculosis.

In January 2003, we and GSK entered into new
agreements to further advance the development of multiple solid
tumor vaccines. Following expiration of the funded research
period for the cancer fields under

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the original agreement, one of the new agreements
extends the companies collaborative efforts into vaccine
development and potential proof-of-principle clinical trials.
Under the terms of this new agreement, GSK granted us a
worldwide, exclusive license to develop a vaccine-candidate for
prostate cancer and a vaccine candidate for breast cancer. As a
part of this agreement, GSK retains the option to buy-back
exclusive worldwide rights for either or both vaccine candidates
following the completion of proof-of-principle clinical trials.
If GSK exercises its buy-back rights, we have the option of
participating in further development, up to and including a
sharing of promotion rights in the United States. In the event
GSK does not exercise its buy-back option, we will be free to
develop the vaccines alone or with other partners and we have
agreed to pay GSK success-based milestones and royalties in the
event of product sales. Under this new agreement, we will be
responsible for providing resources and development funding of
up to $32 million to complete proof-of-principle clinical
studies over a period of time in excess of five years. This
funding will be used to pay for Good Manufacturing Practice, or
GMP, grade material, production and clinical trials for prostate
and breast vaccine development efforts.


Under the original agreement, GSK will continue
development of an alternative version of the prostate cancer
vaccine at its own expense and has agreed to pay us milestones
and royalties on potential product sales. Under the original
agreement, GSK is also continuing the development of our
HER-2/neu vaccine. A proprietary formulation of this vaccine has
been manufactured by GSK and is the subject of a Phase I
clinical trial.

In a related, new agreement, we acquired vaccine
and antibody development rights to all ovarian cancer antigens,
whose discovery resulted from the original agreement, as well as
all cancer diagnostic rights and T cell adoptive cancer
immunotherapy rights, for all antigens discovered by us in the
breast, prostate, colon and ovarian cancer fields.

In the area of infectious disease, GSK will
continue to fund our research and development efforts under the
original agreement for the further development of chlamydia and
tuberculosis vaccines at least through August 2004.

Pursuant to the original agreement, GSK purchased
427,807 shares of our common stock at a premium to its fair
market value. In addition, under the original agreement, we have
an outstanding loan in the principal amount of $5 million,
which amount was due on September 1, 2003. At GSKs
option, GSK may elect to receive repayment of this loan in cash
or shares of our common stock at a specified premium to the five
day average closing price of our common stock for the period
immediately preceding September 1, 2003. GSK has not yet
made its election regarding the form of repayment and
accordingly the $5 million loan remains outstanding.

To the extent that clinical and commercial
milestones in the programs are achieved by GSK under the 1998
agreement or in connection with any program GSK repurchases
under the 2003 agreement, GSK is required to pay us additional
amounts. The individual amounts of such payments vary, depending
on the milestones achieved and the types of product sold. GSK is
also required, under the 1998 agreement and in connection with
any program GSK repurchases under the 2003 agreement, to pay us
future royalty payments on all product sales, which royalties
vary depending on the types of products sold.

Zambon Group and JT.During May and June 1999, we entered into corporate partnerships
with Zambon and JT, respectively, for the research, development
and commercialization of vaccine products aimed at preventing
and treating lung cancer. Zambon has exclusive rights to develop
and sell vaccine products in Europe, the former countries of the
Soviet Union, Argentina, Brazil and Columbia and co-exclusive
rights in China. Under the June 1999 agreement, we granted JT
exclusive rights to develop and sell vaccine products outside of
the territory licensed to Zambon, including the United States
and Japan, and co-exclusive rights to develop and sell vaccine
products in China. We also granted Zambon a nonexclusive license
and JT an option to formulate vaccines that may result from the
collaboration using our microsphere delivery system with our
proprietary adjuvants. During 2002, the 3-year research terms of
the agreements expired and the respective research funding
obligations ceased. In November 2002, we and Zambon amended our
agreement so that we jointly fund clinical testing of a
non-small cell lung cancer vaccine. In January 2003, we amended
and restated our agreement with JT so that we hold exclusive
rights to all antigens discovered in our lung cancer vaccine

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program in all countries previously licensed to
JT, with the exception of rights associated with
commercialization of a non-small cell, lung carcinoma vaccine
candidate in Japan. Under the terms of our amended agreement
with JT, JT will continue to hold an exclusive license to this
vaccine candidate for development and commercialization in
Japan, and we will hold all rights in North America and in those
territories not previously licensed to Zambon. In connection
with the restructuring of the JT agreement, we and JT have
agreed to pay each other fees, milestones and royalties in the
event that development milestones and product sales are achieved.


Kirin Brewery Company,
Ltd.In December 2002, we entered into
a multiyear development and commercialization agreement with
Kirin for a potential cancer vaccine for the treatment of
multiple forms of cancer, including leukemia, myelodysplasia and
melanoma. Under the agreement we grant Kirin exclusive rights to
develop and market vaccine products resulting from our WT1
vaccine candidate in Asia/ Australasia. We and Kirin have agreed
to share WT1 vaccine commercialization rights and Kirin has
agreed to fund one-half of the research and development costs in
North America. We will retain marketing rights for the potential
vaccine in Europe. Under the terms of the agreement, Kirin has
agreed to co-fund development of our WT1 vaccine candidate and
will pay us success-based milestone payments and royalties on
future product sales in Asia/ Australasia.

TLR4 Agonists and Antagonists

DARPA.In June 2001,
we entered into a $3.5 million DARPA sponsored program to
develop methods of enhancing immune responses to infectious
diseases, including agents of biological warfare. The contract
will expire in November 2004. In connection with the DARPA
sponsored program we are conducting preclinical testing of our
proprietary portfolio of synthetic compounds that contain TLR4
agonists, or in some cases, TLR4 antagonists. These drugs act on
TLR4 to generate protective immunity to a wide variety of
infectious agents. Certain TLRs are present in the upper airways
and stimulation of these receptors may induce the immune system
to prevent infections of various types, especially those
transmitted by inhalation. Our scientists have already
demonstrated that administration of some of these potential
drugs by the intranasal route is highly efficient at protecting
against influenza virus infection in experimental animal models.

NIAID/ NIH.In
December 2003, we entered into an $11.6 million five year
contract from the NIAID to develop drug candidates with the
potential to generate protective immunity to a wide variety of
infectious agents. In connection with the NIAID sponsored
program we will be conducting preclinical testing of our
proprietary TLR4 targeted compounds. Our existing preclinical
research has shown that an experimental nasal spray can suppress
infection with influenza virus and another common virus, the
respiratory syncitial virus, as well as a number of bacterial
organisms that infect the airways. We have shown that a single
intranasal dose can provide a window of protection that lasts
approximately one week. We hope to develop a new type of vaccine
that provides continuous protection within 12-24 hours
after the first intranasal dose is delivered (other vaccines can
take weeks to months to generate protection).

Other Partnered Programs

Introgen.In July
1999, we entered into a license agreement with Introgen
Therapeutics, Inc., or Introgen, under which we granted Introgen
an exclusive license to the MDA-7 gene that induces apoptosis in
a diverse group of cancer cells. Introgens INGN 241
product candidate, which includes the MDA-7 gene, is undergoing
safety and efficacy testing in a Phase I/ II clinical trial
to evaluate anti-tumor activity. This trial has demonstrated
that in patients with various solid tumors, INGN 241 is well
tolerated, produces the desired pharmacologic protein that is in
turn biologically active, displays minimal toxicity and can lead
to tumor regression.

IDRI.In December
2003 we granted to IDRI an exclusive worldwide license to
Leish-111f, our investigational vaccine for the treatment of
various forms of leishmaniasis. Pursuant to a service agreement
between us and IDRI, we will complete the Leish 111-f vaccine
Phase I clinical trial in the United States that we
initiated in January 2003. We currently anticipate that all
U.S. Phase I clinical trial activities will be

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completed in 2004. IDRI will be responsible for
all other development and commercialization activities in
connection with Leish 111-f vaccine.


Other License Agreements

Dana-Farber Cancer Institute,
Inc.Pursuant to the April 1994
agreement between Coulter Corporation and Dana-Farber Cancer
Institute, Inc., or DFCI, the 1995 assignment agreement between
Coulter Corporation and us, and the December 1998 agreement
regarding sublicenses among us, DFCI and Coulter Corporation, we
have acquired an exclusive, worldwide, royalty-bearing
sublicense to the B1 antibody for therapeutic applications and a
non-exclusive license for diagnostic applications along with the
right to use the hybridoma from which the B1 antibody was
derived.

University of
Michigan.In November of 1994 we
entered into a commercialization agreement with the University
of Michigan pursuant to which the University of Michigan granted
us an exclusive, worldwide, royalty-bearing license to
technology related to using anti-CD20 antibodies in
radioimmunotherapy of Lymphoma.

In addition, we are party to other exclusive
license agreements under which academic institutions grant
licenses to us, including the following:



| |   |                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------
| |  | DFCI for the use of certain microsphere
    technology;                                                                            
|
| |  | the University of Washington for the use of
    HER-2/neu technology in all fields;                                                
|
| |  | Massachusetts Institute of Technology for the use
    of WT1, a leukemia-related gene and protein, in therapeutic
    applications;
|
| |  | Columbia University for use of MDA-7 in
    therapeutic and prophylactic applications; and                                         
|
| |  | Southern Research Institute, or SRI, for use of
    certain microsphere technology.                                                

Some of these agreements require us or other
parties to achieve certain performance obligations to retain
rights under the agreements or require us to make payments in
order to obtain or maintain rights to the subject technology.

Patents and Proprietary Technology

Our success depends in part on our ability to
obtain, protect and enforce commercially valuable patents. We
try to protect our proprietary positions by filing United States
and foreign patent applications related to our proprietary
technology, inventions and improvements that are important to
developing our business. As of December 31, 2003, we owned,
had licensed or had options to license 202 issued United States
patents that expire at various times between July 2004 and June
2022, and had 207 patent applications pending with the United
States Patent and Trademark Office.

Our patent position is generally uncertain and
involves complex legal and factual questions. Legal standards
relating to the validity and scope of claims in the
biotechnology and biopharmaceutical fields are still evolving.
Accordingly, the degree of future protection for our patent
rights is uncertain. The risks and uncertainties that we face
with respect to our patents and the patents licensed to us
include the following:



| |   |                                                                                                                                                                                                    
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the pending patent applications that we have
    filed or to which we have exclusive rights may not result in
    issued patents or may take longer than we expect to result in
    issued patents;
|
| |  | the claims of any patents that are issued may not
    provide meaningful protection;                                                                                                               
|
| |  | we may be unable to develop additional
    proprietary technologies that are patentable;                                                                                                           
|
| |  | the patents licensed or issued to us may not
    provide a competitive advantage;                                                                                                                  
|
| |  | other companies may challenge patents licensed or
    issued to us;                                                                                                                                

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| |   |                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | disputes may arise regarding the invention and
    corresponding ownership rights in inventions and know-how
    resulting from the joint creation or use of intellectual
    property by us, our licensors, corporate partners and other
    scientific collaborators; and
|
| |  | other companies may design around our patented
    technologies.                                                                                                                                                                                                           

We have licensed several patent applications from
SRI related to our microsphere encapsulation technology. One of
these patent applications is currently the subject of opposition
proceedings before the European Patent Office. In the
opposition, the European Patent Office has revoked a previously
issued European patent. Although SRI has appealed this decision,
it is uncertain whether SRI will ultimately prevail in this
opposition proceeding.

Biogen Idec Inc., or Biogen Idec, has challenged
the validity of our United States Patent Nos. 5,595,721,
5,843,398, 6,015,542, 6,090,365, 6,022,521, 6,251,362 and
6,287,537 related to BEXXAR therapeutic regimen by seeking
declaratory judgment of invalidity of these patents. Biogen Idec
is also seeking a declaratory judgment that its Zevalin product
for the treatment of NHL is not infringing the patents. We, GSK
and the Regents of the University of Michigan are parties to a
lawsuit against Biogen Idec alleging patent infringement of our
United States Patent Nos. 5,595,721, 6,015,542, 6,090,365 and
6,287,537 by Zevalin and seeking monetary damages and permanent
injunctive relief. Claims in the patents at issue in the
litigation cover composition of matter and methods-of-use in the
treatment of NHL. On October 14, 2003, the United States
District Court, Southern District of California granted Biogen
Idecs motion for summary judgment that the 5,595,721,
6,015,542, 6,090,365 and 6,287,537 patents are unenforceable due
to inequitable conduct before the United States Patent and
Trademark Office. On November 13, 2003 Corixa, GSK and the
Regents of the University of Michigan filed a motion for
reconsideration with the United States District Court, Southern
District of California requesting that the court reconsider
its October 14, 2003 order. On January 22, 2004,
the United States District Court, Southern District of
California granted the motion for reconsideration, vacated the
October 14, 2003 order and denied Biogen Idecs motion
for summary judgment of inequitable conduct.

On June 2, 2003, Biogen Idec moved to amend
its complaint to add a claim for declaratory judgment relief of
non-infringement and invalidity of our U.S. Patent
No. 6,565,827. Issued Patent No. 6,565,827 covers
composition of matter used in the treatment of NHL. On that same
day, Biogen Idec also filed a separate lawsuit in the United
States District Court, Southern District of California, seeking
declaratory judgment of non-infringement and invalidity of this
same patent. On August 11, 2003, the judge denied Biogen
Idecs motion to amend the complaint to include this patent
in the originally filed lawsuit or, alternatively, to
consolidate the first filed lawsuit with the one filed on
June 2, 2003. Subsequently, on December 16, 2003,
Biogen Idec filed with the United States District Court,
Southern District of California, a notice of voluntary dismissal
without prejudice for the June 2, 2003 lawsuit.

In addition, on February 25, 2003, Biogen
Idec filed a complaint in the United States District Court,
Southern District of California, against us and GSK for patent
infringement of United States Reissue Patent No. RE38,008,
which claims, among other things, methods of enhancing the
delivery of conjugated specific antibodies to solid tumor target
cells.

On March 1, 2004 we announced that we and
GSK have reached a settlement with Biogen Idec regarding all
outstanding patent litigation between us and Biogen Idec. The
settlement, which serves as the basis for the dismissal of all
patent litigation between the parties, provides for Biogen Idec
to pay to us and GSK a $20 million upfront settlement
payment, as well as a one-time milestone payment based on future
Zevalin sales performance, and royalty payments on Zevalin sales
from January 1, 2004 until the expiration of all BEXXAR
therapeutic regimen patents that were the subject of the
litigation. We and GSK will also enter into a worldwide,
cross-license agreement with Biogen Idec relating to each
partys patents in suit.

Under the publication provisions of the American
Inventors Protection Act of 1999, pending United States patent
applications will publish 18 months after the earliest
claimed priority date and the file histories for these
applications will be open for public inspection. Our patent
applications and the related file histories that are subject to
the American Inventors Protection Act will then be available for
review by others, including

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our competitors. Pre-issuance publications could
allow us to recover damages from pre-issuance infringers of
published claims that ultimately issue as patents. Pre-issuance
damages will be contingent on publication of claims that are
substantially identical to claims that actually issue and on
notifying infringers regarding subject applications. We may
elect not to publish some or all of our pending United States
patent applications if we do not file internationally. If we
elect not to publish, we will not be able to seek pre-issuance
damages.


Patent applications filed in the United States
prior to the effect of the American Inventors Protection Act of
1999, are presently maintained in secrecy until the patents are
issued. Patent applications in certain foreign countries
generally are not published until many months or years after
they are filed. Scientific and patent publications often occur
long after the date of the scientific developments disclosed in
those publications. Accordingly, we cannot be certain that we or
one of our corporate partners was the first to invent the
subject matter covered by any patent application or that we or
one of our corporate partners was the first to file a patent
application for any such invention.

Our success also depends in part on our ability
to protect trade secrets that are not patentable or for which
patents are difficult to enforce. To protect our proprietary
rights, we rely primarily on confidentiality agreements with
employees and third parties, and protective contractual
provisions such as those contained in license agreements and
research agreements. Nevertheless, other companies may
inadvertently develop similar or alternative technologies or
duplicate our technologies that are not protected by patents or
otherwise obtain and use information that we regard as
proprietary. Other parties may breach confidentiality agreements
and other protective contracts we have entered into, and we may
not become aware of, or have adequate remedies in the event of,
any breach.

Our success also depends in part on our ability
to gain access to third party patent and proprietary rights and
to operate our business without infringing on third party patent
rights. We may be required to obtain licenses to patents or
other proprietary rights from third parties to develop,
manufacture and commercialize our product candidates. Licenses
required under third-party patents or proprietary rights may not
be available on terms acceptable to us, if at all. If we do not
obtain the required licenses, we could encounter delays in
product development while we attempt to redesign products or
methods or we could be unable to develop, manufacture or sell
products requiring these licenses at all.

We attempt to protect our trademarks by filing
for United States and foreign registrations for marks that are
important to developing our business. However, the laws of some
foreign countries do not allow for protection of our proprietary
rights to the same extent as do the laws of the United States,
and effective trademark protection may not be available in other
jurisdictions. Our trademark, MPL adjuvant is currently the
subject of opposition proceedings before the Office for the
Harmonization in the Internal Market, which handles initial
prosecution and opposition of European trademarks. We may not
ultimately prevail in this opposition proceeding. As a result,
we may not receive trademark protection for MPL adjuvant in
Europe.

Government Regulation

Any products that we develop are subject to
regulation by federal, state and local governmental authorities
in the United States, including the FDA, and by similar agencies
in other countries. Any product that we develop must receive all
relevant regulatory approvals or clearances before it may be
marketed in a particular country.

The regulatory process, which includes extensive
preclinical studies and clinical trials of each clinical
candidate in order to study its safety and efficacy, is
uncertain, can take many years and requires the expenditure of
substantial resources. We cannot assure you that the clinical
trials of our product candidates under development will
demonstrate the safety and efficacy of those product candidates
to the extent necessary to obtain regulatory approval.

The nature and extent of the governmental
premarket review process for our potential products will vary,
depending on the regulatory categorization of particular
products. We believe that the FDA and comparable regulatory
bodies in other countries will regulate our vaccine and other
immunotherapeutic products and

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related pharmaceutical products as biologics. The
necessary steps before a new biological product may be marketed
in the United States ordinarily include the following:




| |   |                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | preclinical laboratory and animal studies;                                                                                                              
|
| |  | submission to the FDA of an IND, which must
    become effective before clinical trials may commence;                                                   
|
| |  | completion of adequate and well-controlled human
    clinical trials to establish the safety and efficacy of the
    proposed drug for its intended use;
|
| |  | submission to the FDA of a BLA; and                                                                                                                     
|
| |  | FDA review and approval of the BLA before the
    product is commercially sold or shipped.                                                              

Preclinical tests include evaluating the product
in the laboratory, as well as animal studies to assess the
potential safety and efficacy of the product. Preclinical
studies must be conducted by laboratories that comply with FDA
regulations regarding good laboratory practices. The results of
preclinical studies, together with manufacturing information,
analytical data and proposed clinical trial protocols, are
submitted to the FDA as part of an IND, which must become
effective before the clinical trials can begin. The IND will
automatically become effective 30 days after the FDA
receives it, unless the FDA indicates prior to the end of the
30-day period that the proposed protocol raises concerns that
must be resolved to the FDAs satisfaction before the
trials may proceed. If the FDA raises concerns, we may be unable
to resolve the proposed protocol to the FDAs approval in a
timely fashion, if at all. In addition, the FDA may impose a
clinical hold on an ongoing clinical trial if, for example,
safety concerns arise, in which case the study cannot recommence
without FDA authorization under terms sanctioned by the agency.

Clinical trials involve administering the product
to healthy volunteers or to patients being supervised by a
qualified principal investigator. Clinical trials must be
conducted according to good clinical practices under protocols
that detail the trials objectives, inclusion and exclusion
criteria, the parameters to be used to monitor safety and the
efficacy criteria to be evaluated. Each protocol must be
submitted to the FDA as part of the IND. Further, each clinical
trial must be reviewed and approved by an independent
institutional review board. The institutional review board will
consider, among other things, ethical factors and the safety of
human subjects. The institutional review board may require
changes in a protocol, which may delay initiation or completion
of a study.

Clinical trials generally are conducted in three
sequential phases that may overlap. In Phase I, the product
is introduced into healthy human or patients; the product is
tested to assess safety, metabolism, pharmacokinetics and
pharmacological actions associated with increasing doses.
Phase II usually involves studies in a limited patient
population to assess the following:



| |   |                                                                  
| | - | -----------------------------------------------------------------
| |  | determine the efficacy for specific, targeted
    indications;   
|
| |  | determine dosage tolerance and optimum
    dosage; and           
|
| |  | further identify possible adverse reactions and
    safety risks.

Once a compound is determined to be effective and
to have an acceptable safety profile in Phase II clinical
trials, Phase III trials are undertaken to evaluate further
clinical efficacy in comparison to standard therapies, within a
broader patient population, generally at geographically
dispersed clinical sites. Phase I, Phase II or
Phase III clinical trials may not be completed successfully
within any specific period of time, if at all, with respect to
any of our potential products. Furthermore, we, the FDA or an
institutional review board may suspend a clinical trial at any
time for various reasons, including a finding that the healthy
individuals or the patients are being exposed to an unacceptable
health risk.

The results of pharmaceutical development,
preclinical studies and clinical trials are submitted to the FDA
in the form of a BLA for approval of the manufacture, marketing
and commercial shipment of the product. The testing and approval
process is likely to require substantial time, effort and
resources, and we

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may be unable to obtain approval on a timely
basis, if at all. Regarding any BLA, the FDA may take a number
of actions, including the following:




| |   |                                                                                                  
| | - | -------------------------------------------------------------------------------------------------
| |  | deny the BLA if applicable regulatory criteria
    are not satisfied;                            
|
| |  | require additional testing or information; or                                                    
|
| |  | require postmarket testing and surveillance to
    monitor the safety or efficacy of the product.

Delays in obtaining regulatory approvals:



| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | would adversely affect the marketing of any
    product we develop;                           
|
| |  | could impose significant additional costs on us;                                              
|
| |  | would diminish any competitive advantages that we
    may attain; and                         
|
| |  | could adversely affect our ability to receive
    royalties and generate revenues and profits.

In addition, even if marketing approval is
granted, the FDA may require post-marketing clinical trials,
which typically entail extensive patient monitoring and may
result in restricted marketing of an approved product for an
extended period of time.

Any diagnostic products developed by us or our
corporate partners are likely to be regulated as medical
devices. In the United States, medical devices are classified
into one of three classes on the basis of the controls deemed by
the FDA to be necessary to reasonably ensure their safety and
effectiveness:



| |   |                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------
| |  | Class I  (general
    controls)  e.g., labeling, premarket notification and
    adherence to GMP and quality system regulation, or QSR;
|
| |  | Class II  (general controls and
    special controls)  e.g., performance standards and
    postmarket surveillance; and                
|
| |  | Class III  (premarket approval).                                                                                                        

Before a new device can be marketed, its
manufacturer generally must obtain marketing clearance through
either a premarket notification under Section 510(k) of the
Federal Food, Drug and Cosmetic Act or approval of a premarket
approval application, or PMA. A 510(k) clearance typically will
be granted if a company establishes that its device is
substantially equivalent to a legally marketed
Class I or II medical device or to a Class III
device for which the FDA has not yet required the submission of
a PMA. A 510(k) clearance must contain information to support
the claim of substantial equivalence, which may include
laboratory test results or the results of clinical trials.
Commercial distribution of a device subject to the 510(k)
requirement may begin only after the FDA issues an order finding
the device to be substantially equivalent to a predicate device.
It generally takes from 4 to 12 months from the date of
submission to obtain clearance of a 510(k) submission. The FDA
may determine that a proposed device is not substantially
equivalent to a legally marketed device, that additional
information is needed before a substantial equivalence
determination may be made, or that the product must be approved
through the PMA process. An FDA determination of not
substantially equivalent, a request for additional
information, or the requirement of a PMA could delay market
introduction of products that fall into this category.
Furthermore, modifications or enhancements that could
significantly affect safety or effectiveness, or constitute a
major change in the intended use of any device, cleared through
the 510(k) process would require new 510(k) submissions.

If a device does not qualify for the 510(k)
premarket notification procedure, a company must file a PMA. The
PMA requires more extensive pre-filing testing than required for
a 510(k) premarket notification and usually involves a
significantly longer review process. A PMA must be supported by
valid scientific evidence that typically includes extensive
data, including preclinical and clinical trial data, to
demonstrate the devices safety and efficacy. If clinical
trials are required, and the device presents a significant
risk, an investigational device exemption application must
be filed with the FDA and become effective prior to the
commencement of clinical trials. If the device presents a
nonsignificant risk to trial subjects, clinical
trials may begin on the

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basis of appropriate institutional review board
approval. Clinical investigation of medical devices may involve
risks similar to those involved in the clinical investigation of
pharmaceutical products.


A PMA may be denied if applicable regulatory
criteria are not satisfied, and the FDA may impose certain
conditions upon the applicant, such as postmarket testing and
surveillance. The PMA review and approval process can be
expensive, uncertain and lengthy, and approvals may not be
granted on a timely basis, if at all.

Regulatory approval, if granted, may entail
limitations on the indicated uses for which the approved product
may be marketed. These limitations could reduce the size of the
potential market for the product. Product approvals, once
granted, may be withdrawn if problems occur after initial
marketing. Further, manufacturers of approved products are
subject to ongoing regulation, including compliance with
detailed FDA regulations governing GMP. Failure to comply with
manufacturing regulations can result in, among other things,
warning letters, fines, injunctions, civil penalties, recall or
seizure of products, total or partial suspension of production,
refusal of the government to renew marketing applications and
criminal prosecution.

For clinical investigation and marketing of
products outside the United States, we and our corporate
partners may be subject to regulation by regulatory authorities
in other countries. The requirements governing the conduct of
clinical trials, marketing authorization and pricing and
reimbursement vary widely from country to country. The
regulatory approval process in other countries entails
requirements similar to those associated with FDA approval.

Our research and development involves the
controlled use of hazardous chemicals, radioactive and
biological materials. We are subject to federal, state and local
laws and regulations governing the use, storage, handling and
disposal of these materials and related waste products
including, among others, the Occupational Safety and Health Act,
the Environmental Protection Act, the Nuclear Energy and
Radiation Control Act, the Toxic Substances Control Act, the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation, and Liability Act,
Title III of the Superfund Amendments and Reauthorization
Act (Community Right-to-Know and Emergency Response Act),
national restrictions on technology transfer, federal
regulations on the protection of human subjects in clinical
studies, the protection of animal welfare in preclinical
studies, import, export and customs regulations and other
present or possible future local, state or federal regulation.
From time to time congressional committees and federal agencies
have indicated an interest in implementing further regulation of
biotechnology and its applications. Although we believe that our
safety procedures for handling, storing and disposing of these
materials and related waste comply with legally prescribed
standards, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. In the event of an
accident, we could be held liable for damages or penalized with
fines, and this liability could exceed our resources.

Competition

The biotechnology and biopharmaceutical
industries are intensely competitive. Many companies and
institutions compete with us in developing alternative therapies
to treat or prevent cancers and infectious diseases, including
the following:



| |   |                              
| | - | -----------------------------
| |  | pharmaceutical companies;    
|
| |  | biotechnology companies;     
|
| |  | academic institutions; and   
|
| |  | other research organizations.

Moreover, technology controlled by third parties
that may be advantageous to our business may be acquired or
licensed by our competitors, thereby preventing us from
obtaining technology on commercially reasonable terms, if at all.

Biogen Idecs product, Zevalin, received FDA
approval for commercial sale in the United States in February
2002. Zevalin has been approved for the treatment of NHL, the
indication for which we obtained approval to sell BEXXAR
therapeutic regimen on June 30, 2003 in the United States.
In addition, in January

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2004, the Committee for Proprietary Medicinal
Products, a scientific committee that reviews drug product
applications for the European Union, approved the commercial
sale of Zevalin in Europe. Consequently, Biogen Idec could have
a significant advantage over us and GSK in sales and marketing
of products for the treatment of NHL in the United States and
the European Union.


Many of the companies developing competing
technologies and products have significantly greater financial
resources and expertise in research and development,
manufacturing, preclinical and clinical development, obtaining
regulatory approvals and marketing than we do. Other smaller
companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and
established companies. Academic institutions, government
agencies and other public and private research organizations may
also conduct research, seek patent protection and establish
collaborative arrangements for research and development,
manufacturing, preclinical and clinical development, obtaining
regulatory approval and marketing of products similar to ours.
These companies and institutions compete with us in recruiting
and retaining qualified scientific and management personnel as
well as in acquiring and developing technologies complementary
to our programs. We face competition with respect to the
following:



| |   |                                          
| | - | -----------------------------------------
| |  | product efficacy and safety;             
|
| |  | timing and scope of regulatory approvals;
|
| |  | availability of resources;               
|
| |  | reimbursement coverage;                  
|
| |  | product price; and                       
|
| |  | patent position.                         

Our ability to compete effectively and develop
products that can be manufactured cost-effectively and marketed
successfully will depend on our ability to perform the following:



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | advance our technology platforms;                                                       
|
| |  | license additional technology;                                                          
|
| |  | maintain a proprietary position in our
    technologies and products;                   
|
| |  | obtain required government and other public and
    private approvals on a timely basis;
|
| |  | availability of reimbursement from third-party
    payors;                              
|
| |  | attract and retain key personnel; and                                                   
|
| |  | enter into corporate partnerships.                                                      

Manufacturing

We have manufactured pharmaceutical-grade product
to supply some of our previous and ongoing clinical trials. In
addition, we have manufactured preclinical and clinical supplies
of adjuvants and protein for our corporate partners, for
government agencies and for numerous academic researchers. We
believe that our existing facilities will be sufficient to
accommodate manufacturing of initial production quantities of
selected product candidates. Should we require additional
capacity in the future, we have space to expand our
manufacturing facility in Hamilton, Montana. We have no
immediate plans to manufacture any radioimmunotherapeutic
products in-house.

However, our current manufacturing facilities may
not be sufficient to support our needs for clinical quantities
of our product candidates or commercial quantities of our
current adjuvant products. We have limited experience producing
commercial quantities of any product, or in producing
clinical-grade or commercial amounts of our proprietary
antigen-based products, including recombinant proteins or
antibodies. Although we currently manufacture limited quantities
of some antigens and several adjuvants, and are capable of
clinical GMP manufacturing of both adjuvants and some finished
vaccine products, we intend to rely on

23



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##### Table of Contents



third-party contract manufacturers to produce
larger quantities of recombinant protein or other cell
culture-based biologicals for clinical trials and product
commercialization. We expect this strategy to allow the
following:




| |   |                                                                            
| | - | ---------------------------------------------------------------------------
| |  | accelerate the scale-up of manufacturing
    processes to commercial scale;
|
| |  | reduce initial capital investment;                                         
|
| |  | result in competitive manufacturing
    costs; and                         
|
| |  | provide access to a wide range of manufacturing
    technologies.          

We intend to use contract manufacturers for most
of the preclinical and clinical requirements for BEXXAR
therapeutic regimen and for all of our commercial needs with
respect to BEXXAR therapeutic regimen. Our collaboration
agreement with GSK provides for GSK participation in the
planning, management and funding of manufacturing development.
We have entered into an agreement with Boehringer Ingelheim
Pharma KG, or BI Pharma KG, to produce Tositumomab, a key
component for BEXXAR therapeutic regimen, for use in ongoing
clinical trials and to meet commercial requirements, as well as
provide for fill, finish and packaging services. We have
committed to minimum annual order quantities of Tositumomab from
BI Pharma KG. The minimum annual order for 2004 is approximately
$2.9 million. BI Pharma KG has limited experience
producing, labeling and packaging Tositumomab, and they may be
unable to produce our requirement in commercial quantities or
with acceptable quality. We have entered into an agreement with
MDS Nordion, Inc., or Nordion, for radiolabeling the Tositumomab
component of BEXXAR therapeutic regimen at Nordions
centralized radiolabeling facility.

Production of BEXXAR therapeutic regimen consists
of (i) producing bulk Tositumomab by BI Pharma KG,
(ii) filling and labeling of individual product vials with
Tositumomab by another third-party supplier or BI Pharma KG, and
(iii) radiolabeling of Tositumomab at Nordion. Although we
plan to develop additional suppliers for these services, we
expect to rely on our current suppliers for all or a significant
portion of our requirements for BEXXAR therapeutic regimen for
the foreseeable future. We are aware of only a limited number of
manufacturers capable of producing Tositumomab in commercial
quantities or radiolabeling the antibody with the (131)I
radioisotope on a commercial scale. Establishing and qualifying
a new facility to centrally radiolabel antibodies could take
three years or longer and could involve significant expense.
Radiolabeled antibody cannot be stockpiled against future
shortages due to the 8-day half-life of the (131)I radioisotope.
Accordingly, any change in our existing or planned contractual
relationships with, or interruption in supply from, our producer
of unlabeled antibody or our radiolabeler would harm our ability
to complete our ongoing clinical trials and to market BEXXAR
therapeutic regimen.

Marketing and Distribution

Following the approval of BEXXAR therapeutic
regimen in June of 2003, we began to build our direct sales
force for BEXXAR therapeutic regimen and anticipate having such
sales force in place by the middle of 2004. Our ability to
market and sell BEXXAR therapeutic regimen will be contingent on
recruiting, training and deploying the necessary sales force, as
well as performance by GSK under our BEXXAR therapeutic regimen
collaboration agreement. The unique properties of BEXXAR
therapeutic regimen require tightly controlled distribution of
the product. Due to its radioactive component, BEXXAR
therapeutic regimen is shipped in shielded containers and must
arrive at its destination within 24 to 48 hours of
production. BEXXAR therapeutic regimen must also be temperature
controlled during shipment. We rely on many third-party
suppliers to process orders and to package, store and ship
BEXXAR therapeutic regimen. We are working with suppliers to
minimize risk and loss of inventory and provide efficient
service to customers. These third party suppliers may be unable
to handle BEXXAR therapeutic regimen in a manner that will
minimize loss of or damage to inventory. We have entered into a
contract for storing and shipping of BEXXAR therapeutic regimen
in the United States. We may negotiate other contracts for
handling of BEXXAR therapeutic regimen before it is delivered to
the customer. We may be unable to maintain or establish
relationships with third parties or build in-house distribution
capabilities requirements for North America.

24



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##### Table of Contents



Under the terms of our May 2003 agreement with
GSK Canada, GSK Canada is responsible for registration and, in
the event of product approval, marketing and sales of BEXXAR
therapeutic regimen in Canada. We are responsible for the
manufacture and supply of BEXXAR therapeutic regimen to GSK
Canada for the Canadian market.

We and Amersham Health have agreed to register
BEXXAR therapeutic regimen in Europe for the treatment of
certain types of NHL and we have agreed that Amersham Health
will market BEXXAR therapeutic regimen in Europe. We will be
responsible for generation of clinical trial data to support
registration in Europe. Amersham Health will be responsible for
manufacture and sale of BEXXAR therapeutic regimen in Europe.
BEXXAR therapeutic regimen will be registered under a different
trade name in Europe. We may be unable to attain market approval
in Europe. Following potential European approval, we may be
unable to maintain or establish relationships with third parties
to effectively commercialize BEXXAR therapeutic regimen in
Europe.

Employees

As of December 31, 2003, we had 334
employees, 53 of whom hold degrees at the doctorate level. Of
these employees, 187 are engaged in, or directly support
research and development activities, 51 are in production, and
96 are in administration and business positions. Each of our
employees has signed a confidentiality agreement and none are
covered by a collective bargaining agreement. We have never
experienced employment-related work stoppages and consider our
employee relations to be good.






|        |           
|------- | ----------
|Item 2. | Properties

We conduct operations at three sites. Our
headquarters are in Seattle, Washington, where we lease
approximately 96,000 square feet of laboratory, discovery,
research and development, manufacturing and general
administration space. In South San Francisco, California,
we maintain an additional 151,000 square feet of
laboratory, research and development, and general administration
space. We currently utilize approximately 26,000 square
feet of our South San Francisco facility for our
operations, and, during 2003 we subleased approximately
125,000 square feet of our South San Francisco
facility. In addition, we own a 35-acre complex near Hamilton,
Montana which includes a 60,000 square foot building
containing laboratory, pilot plant, commercial manufacturing,
marketing and administrative facilities. The lease for the
Seattle facility expires in January 2005, with an option to
renew for two additional 5-year periods. The lease for the South
San Francisco facility expires in 2010, with an option to
renew for two additional 5-year periods. We believe our existing
facilities are adequate to meet our immediate needs and that
suitable additional space will be available in the future on
commercially reasonable terms as needed.

On October 15, 2002, we entered into a lease
agreement with Life Sciences Building, LLC to house our future
headquarters at the Ninth and Stewart Lifesciences Building in
Seattle, Washington. The lease provides us with approximately
138,000 square feet of office and laboratory space. The
lease will commence on November 1, 2004 if certain
improvements to the building are substantially completed and the
term of the lease is 15 years. In January 2003 we
guaranteed a portion of our obligations under the lease in the
form of a letter of credit in the amount of approximately
$4.5 million.

On December 22, 2003, we and BN Builders,
Inc., or BN Builders, entered into a standard form of agreement
between owner and contractor pursuant to which BN Builders will
construct the tenant improvements at our future headquarters
located at the Ninth and Stewart Lifesciences Building in
Seattle, Washington. The guaranteed maximum cost to us for the
improvements to be completed under the agreement is
approximately $17.5 million, including construction costs
and contractor fees. Subject to adjustment under certain
circumstances, the agreement requires BN Builders to achieve
substantial completion of the tenant improvements by
July 16, 2004.






|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Biogen Idec has challenged the validity of our
United States Patent Nos. 5,595,721, 5,843,398, 6,015,542,
6,090,365, 6,022,521, 6,251,362 and 6,287,537 related to BEXXAR
therapeutic regimen by seeking declara-

25



---



##### Table of Contents



tory judgment of invalidity of these patents.
Biogen Idec is also seeking a declaratory judgment that its
Zevalin product for the treatment of NHL is not infringing the
patents. We, GSK and the Regents of the University of Michigan
are parties to a lawsuit against Biogen Idec alleging patent
infringement of our United States Patent Nos. 5,595,721,
6,015,542, 6,090,365 and 6,287,537 by Zevalin and seeking
monetary damages and permanent injunctive relief. Claims in the
patents at issue in the litigation cover composition of matter
and methods-of-use in the treatment of NHL. On October 14,
2003, the United States District Court, Southern District of
California granted Biogen Idecs motion for summary
judgment that the 5,595,721, 6,015,542, 6,090,365 and 6,287,537
patents are unenforceable due to inequitable conduct before the
United States Patent and Trademark Office. On November 13,
2003 Corixa, GSK and the Regents of the University of Michigan
filed a motion for reconsideration with the United States
District Court, Southern District of California requesting that
the court reconsider its October 14, 2003 order. On
January 22, 2004, the United States District Court,
Southern District of California granted the motion for
reconsideration, vacated the October 14, 2003 order and
denied Biogen Idecs motion for summary judgment of
inequitable conduct.


On June 2, 2003, Biogen Idec moved to amend
its complaint to add a claim for declaratory judgment relief of
non-infringement and invalidity of our U.S. Patent
No. 6,565,827. Issued Patent No. 6,565,827 covers
composition of matter used in the treatment of NHL. On that same
day, Biogen Idec also filed a separate lawsuit in the United
States District Court, Southern District of California, seeking
declaratory judgment of non-infringement and invalidity of this
same patent. On August 11, 2003, the judge denied Biogen
Idecs motion to amend the complaint to include this patent
in the originally filed lawsuit or, alternatively, to
consolidate the first filed lawsuit with the one filed on
June 2, 2003. Subsequently, on December 16, 2003,
Biogen Idec filed with the United States District Court,
Southern District of California, a notice of voluntary dismissal
without prejudice for the June 2, 2003 lawsuit.

In addition, on February 25, 2003, Biogen
Idec filed a complaint in the United States District Court,
Southern District of California, against us and GSK for patent
infringement of United States Reissue Patent No. RE38,008,
which claims, among other things, methods of enhancing the
delivery of conjugated specific antibodies to solid tumor target
cells.

On March 1, 2004 we announced that we and
GSK have reached a settlement with Biogen Idec regarding all
outstanding patent litigation between us and Biogen Idec. The
settlement, which serves as the basis for the dismissal of all
patent litigation between the parties, provides for Biogen Idec
to pay to us and GSK a $20 million upfront settlement
payment, as well as a one-time milestone payment based on future
Zevalin sales performance, and royalty payments on Zevalin sales
from January 1, 2004 until the expiration of all BEXXAR
therapeutic regimen patents that were the subject of the
litigation. We and GSK will also enter into a worldwide,
cross-license agreement with Biogen Idec relating to each
partys patents in suit.






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

No matters were submitted to a vote of securities
holders during the fourth quarter of 2003.




PART II





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

Price range of common stock

Our common stock has been quoted on Nasdaq under
the symbol CRXA since our initial public offering in
October 1997. Prior to this date our common stock did not trade
publicly.

26



---



##### Table of Contents



The following table shows our high and low sales
prices of our common stock as quoted on Nasdaq for each of the
quarters indicated.

|               |  |      |       |     |  |   |      | 
|-------------- |  | ---- | ----- | --- |  | - | ---- | 
|               |  | High |       | Low
|               |  |      |       |    
|2002           |  |      |       |     |  |   |      | 
|First Quarter  |  | $    | 16.00 |     |  | $ | 5.38 | 
|Second Quarter |  |      | 7.19  |     |  |   | 4.48 | 
|Third Quarter  |  |      | 6.98  |     |  |   | 5.25 | 
|Fourth Quarter |  |      | 9.23  |     |  |   | 6.03 | 
|2003           |  |      |       |     |  |   |      | 
|First Quarter  |  |      | 6.92  |     |  |   | 5.16 | 
|Second Quarter |  |      | 8.92  |     |  |   | 6.40 | 
|Third Quarter  |  |      | 9.89  |     |  |   | 6.69 | 
|Fourth Quarter |  |      | 9.00  |     |  |   | 5.22 | 

As of March 3, 2004 we had 1,638 holders of
record of our common stock.

Dividend Policy

We have never paid cash dividends on our common
stock and have no plans to do so in the foreseeable future.

Securities Authorized for Issuance Under
Equity Compensation Plans

Equity Compensation Plan Information

|                                                               |       |                            |            |                               |  |                                |       |       |  |  |           |           | 
|-------------------------------------------------------------- | ----- | -------------------------- | ---------- | ----------------------------- |  | ------------------------------ | ----- | ----- |  |  | --------- | --------- | 
|                                                               |       |                            |            |                               |  | Number of securities remaining
|                                                               |       | Number of securities to be |            |                               |  | available for future issuance 
|                                                               |       | issued upon exercise of    |            | Weighted-average exercise     |  | under equity compensation     
|                                                               |       | outstanding options,       |            | price of outstanding options, |  | plans (excluding securities   
|                                                               |       | warrants and rights        |            | warrants and rights           |  | reflected in column(a))       
|                                                               |       |                            |            |                               |  |                               
|Plan category                                                  |       | (a)                        |            | (b)                           |  | (c)                           
|                                                               |       |                            |            |                               |  |                               
|Equity compensation plans approved by security
    holders     |       |                            | 10,467,752 |                               |  | $                              | 11.19 |       |  |  | 2,967,610 |          
|Equity compensation plans not approved by
    security holders |       |                            |           |                               |  |                                |      |       |  |  |          |          
|                                                               |       |                            |            |                               |  |                                |       |       |  |  |           |          
|                                                               | Total |                            |            | 10,467,752                    |  |                                | $     | 11.19 |  |  |           | 2,967,610 | 
|                                                               |       |                            |            |                               |  |                                |       |       |  |  |           |          






|        |                                         
|------- | ----------------------------------------
|Item 6. | Selected Consolidated Financial
    Data

The following selected consolidated financial
data should be read in conjunction with the consolidated
financial statements and related notes included in this Annual
Report, as well as the section of this report

27



---



##### Table of Contents



entitled Managements Discussion and
Analysis of Financial Condition and Results of Operations.
Historical results are not necessarily indicative of future
results.


|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |         |        | 
|------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------- | ---------------------------------------- | ------- | ------ | ------- | ---- | -------- | ------- | ------- | ---- | -------- | ------- | ------- | - | -------- | ------- | ------- | - | ------- | ------- | ------ | 
|                                                                                                                                                  |                                                 |                                         
|                                                                                                                                                  |                                                 | Year Ended December 31,                 
|                                                                                                                                                  |                                                 |                                         
|                                                                                                                                                  |                                                 | 2003                                     |         | 2002   |         | 2001 |          | 2000    |         | 1999
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |     
|                                                                                                                                                  |                                                 |                                         
|                                                                                                                                                  |                                                 | (In thousands, except per share amounts)
|Consolidated Statement of Operations
    Data:                                                                                                    |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Revenue:                                                                                                                                          |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|                                                                                                                                                  | Collaborative agreements                        |                                          | $       | 48,307 |         |      | $        | 46,134  |         |      | $        | 55,128  |         |   | $        | 34,643  |         |   | $       | 25,035  |       
|                                                                                                                                                  | Government grants                               |                                          |         | 2,403  |         |      |          | 2,604   |         |      |          | 2,937   |         |   |          | 2,331   |         |   |         | 1,463   |       
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|                                                                                                                                                  |                                                 | Total revenue                            |         |        | 50,710  |      |          |         | 48,738  |      |          |         | 58,065  |   |          |         | 36,974  |   |         |         | 26,498 | 
|Operating expenses:                                                                                                                               |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|                                                                                                                                                  | Research and development                        |                                          |         | 95,556 |         |      |          | 99,722  |         |      |          | 139,873 |         |   |          | 61,945  |         |   |         | 41,962  |       
|                                                                                                                                                  | Sales, general and administrative               |                                          |         | 21,697 |         |      |          | 18,400  |         |      |          | 22,650  |         |   |          | 6,702   |         |   |         | 3,743   |       
|                                                                                                                                                  | Intangible amortization                         |                                          |         | 439    |         |      |          | 439     |         |      |          | 56,084  |         |   |          | 4,457   |         |   |         | 587     |       
|                                                                                                                                                  | Impairment of lease-related assets(1)           |                                          |         | 18,491 |         |      |          |        |         |      |          |        |         |   |          |        |         |   |         |        |       
|                                                                                                                                                  | Acquired in-process research and Development(2) |                                          |         |       |         |      |          |        |         |      |          |        |         |   |          | 629,700 |         |   |         | 37,637  |       
|                                                                                                                                                  | Goodwill impairment(3)                          |                                          |         |       |         |      |          | 161,060 |         |      |          |        |         |   |          |        |         |   |         |        |       
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|                                                                                                                                                  |                                                 | Total operating expenses                 |         |        | 136,183 |      |          |         | 279,621 |      |          |         | 218,607 |   |          |         | 702,804 |   |         |         | 83,929 | 
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Loss from operations                                                                                                                              |                                                 |                                          | (85,473 | )      |         |      | (230,883 | )       |         |      | (160,542 | )       |         |   | (665,830 | )       |         |   | (57,431 | )      
|Interest and other income, net                                                                                                                    |                                                 |                                          | 1,554   |        |         |      | 23,484   |         |         |      | 12,505   |         |         |   | 4,999    |         |         |   | 2,673   |        
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Loss before cumulative effect of change in
    accounting principle                                                                               |                                                 |                                          | (83,919 | )      |         |      | (207,399 | )       |         |      | (148,037 | )       |         |   | (660,831 | )       |         |   | (54,758 | )      
|Cumulative effect of change in accounting
    principle                                                                                           |                                                 |                                          |        |        |         |      |         |         |         |      |         |         |         |   | (6,338   | )       |         |   |        |        
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Net loss                                                                                                                                          |                                                 |                                          | (83,919 | )      |         |      | (207,399 | )       |         |      | (148,037 | )       |         |   | (667,169 | )       |         |   | (54,758 | )      
|Preferred stock dividend                                                                                                                          |                                                 |                                          | (948    | )      |         |      | (767     | )       |         |      | (1,730   | )       |         |   | (9,887   | )       |         |   | (6,008  | )      
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Net loss applicable to common stockholders                                                                                                        |                                                 | $                                        | (84,867 | )      |         | $    | (208,166 | )       |         | $    | (149,767 | )       |         | $ | (677,056 | )       |         | $ | (60,766 | )      
|Basic and diluted loss per share before
    cumulative effect of change in accounting principle(4)                                                |                                                 | $                                        | (1.60   | )      |         | $    | (4.67    | )       |         | $    | (3.66    | )       |         | $ | (32.00   | )       |         | $ | (3.91   | )      
|Cumulative effect of change in accounting
    principle per share                                                                                 |                                                 |                                          |        |        |         |      |         |         |         |      |         |         |         |   | (0.30    | )       |         |   |        |        
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Basic and diluted net loss per common share(5)                                                                                                    |                                                 | $                                        | (1.60   | )      |         | $    | (4.67    | )       |         | $    | (3.66    | )       |         | $ | (32.30   | )       |         | $ | (3.91   | )      
|Shares used in computation of basic and diluted
    net loss per common share                                                                     |                                                 |                                          | 52,981  |        |         |      | 44,611   |         |         |      | 40,961   |         |         |   | 20,961   |         |         |   | 15,528  |        
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Pro forma amounts assuming the accounting change
    is applied retroactively(4):                                                                 |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|                                                                                                                                                  | Net loss                                        |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   | $       | (54,042 | )     
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|                                                                                                                                                  | Net loss per common share                       |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   | $       | (3.48   | )     
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Net loss applicable to common stockholders, as if
    FAS 141 and 142 had been adopted at the beginning of
    January 1, 2000 (See Note 6 below) |                                                 |                                          |         |        |         |      |          |         |         | $    | (94,122  | )       |         | $ | (673,039 | )       |         |   |         |        
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        
|Basic and diluted net loss per share as adjusted                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         | $    | (2.30    | )       |         | $ | (32.11   | )       |         |   |         |        
|                                                                                                                                                  |                                                 |                                          |         |        |         |      |          |         |         |      |          |         |         |   |          |         |         |   |         |        



---



|    |                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------
|(1) | See Note 1 of Notes to Consolidated
    Financial Statements for an explanation of the 2003
    lease-related asset impairment charge.

28



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##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The $629.7 million reflects the amount of
    allocated in-process research and development, or IPR&D,
    that we acquired in the 2000 Coulter acquisition and the
    $37.6 million reflects the amount of IPR&D that we
    acquired in the 1999 Ribi ImmunoChem Research, Inc. and Anergen,
    Inc. acquisitions.
|   
|(3) | See Note 1 of Notes to Consolidated
    Financial Statements for an explanation of the 2002 goodwill
    impairment charge.                                                                                                                                                                                           
|   
|(4) | Effective January 1, 2000, we changed our
    method of accounting for nonrefundable up-front license fees
    based on the guidance provided in SEC Staff Accounting Bulletin
    No. 101 Revenue Recognition in Financial
    Statements. See Note 1 of Notes to Consolidated
    Financial Statements.           
|   
|(5) | See Note 1 of Notes to Consolidated
    Financial Statements for an explanation of the computation of
    the number of shares and the method used to calculate basic and
    diluted net loss per share.                                                                                                             
|   
|(6) | Effective January 1, 2002, we adopted
    Statement of Financial Accounting Standards, or SFAS 141
    Business Combinations and SFAS 142
    Goodwill and Other Intangible Assets. See
    Note 1 of Notes to Consolidated Financial Statements.                                                                 

|                                                             |  |                |            |      |  |      |            |      |  |      |          |   |  |   |          |   |  |   |         |  
|------------------------------------------------------------ |  | -------------- | ---------- | ---- |  | ---- | ---------- | ---- |  | ---- | -------- | - |  | - | -------- | - |  | - | ------- | -
|                                                             |  |               
|                                                             |  | December 31,  
|                                                             |  |               
|                                                             |  | 2003           |            | 2002 |  | 2001 |            | 2000 |  | 1999
|                                                             |  |                |            |      |  |      |            |      |  |     
|                                                             |  |               
|                                                             |  | (In thousands)
|Consolidated Balance Sheet Data:                             |  |                |            |      |  |      |            |      |  |      |          |   |  |   |          |   |  |   |         |  
|Cash, cash equivalents and securities
    available-for-sale |  | $              | 191,985    |      |  | $    | 116,757    |      |  | $    | 118,723  |   |  | $ | 194,738  |   |  | $ | 45,553  |  
|Working capital                                              |  |                | 107,519    |      |  |      | 55,792     |      |  |      | 41,824   |   |  |   | 144,504  |   |  |   | 20,919  |  
|Total assets                                                 |  |                | 250,566    |      |  |      | 196,106    |      |  |      | 367,382  |   |  |   | 504,334  |   |  |   | 92,480  |  
|Long-term obligations, less current portion                  |  |                | 108,138    |      |  |      | 6,920      |      |  |      | 27,657   |   |  |   | 33,422   |   |  |   | 11,426  |  
|Redeemable common stock                                      |  |                |           |      |  |      |           |      |  |      | 2,000    |   |  |   | 2,000    |   |  |   | 2,000   |  
|Accumulated deficit                                          |  |                | (1,194,560 | )    |  |      | (1,110,641 | )    |  |      | (903,242 | ) |  |   | (755,205 | ) |  |   | (88,036 | )
|Total stockholders equity                                   |  |                | 80,956     |      |  |      | 128,392    |      |  |      | 281,765  |   |  |   | 404,575  |   |  |   | 58,781  |  






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

The following discussion should be read together
with our consolidated financial statements and the accompanying
notes included elsewhere in this Annual Report.

Summary of Critical Accounting
Policies

The preparation of financial statements in
accordance with accounting principles generally accepted in the
United States requires that management make a number of
assumptions and estimates that affect the reported amounts of
assets, liabilities, revenues and expenses in our consolidated
financial statements and accompanying notes. Management bases
its estimates on historical information and assumptions believed
to be reasonable. Although these estimates are based on
managements best knowledge of current events and
circumstances that may impact us in the future, actual results
may differ from these estimates. We believe the following
critical accounting policies affect the more significant
judgments and estimates used in preparing our consolidated
financial statements:



| |        
| | -------
| | Revenue

Revenue associated with up-front license,
technology access and research and development funding payments
under collaborative agreements is recognized ratably over the
relevant periods specified in the agreement, generally the
research and development period. Generally, our collaborative
agreements include a research and development phase that spans a
specified time period. However, in certain cases the
collaborative agreement specifies a research and development
phase which culminates with the completion of a development
work-plan but does not have a fixed date and requires us to
estimate the time period over which the work plan will be
performed and therefore, the period over which revenue should be
recognized. Our estimated time periods are based on
managements estimate of the time required to achieve a
particular development

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milestone considering experience with similar
projects, level of effort and stage of development. If our
estimate of the research and development time period increases
the amount of revenue we recognize related to up-front license
and technology access fees for a given period would decrease.




| |                 
| | ----------------
| | Asset Impairment

On January 1, 2002, we adopted
SFAS 142, Goodwill and Other Intangible
Assets.Upon adoption, we performed a transitional
impairment test on our recorded intangible assets that consisted
primarily of acquisition related goodwill and lease intangibles.
We also performed a subsequent interim impairment test on
March 13, 2002, due to the presence of impairment
indicators as described in Note 1 to the Consolidated
Financial Statements. This impairment test involved a two-step
approach. Step one required estimating the fair value of the
company and comparing it to the carrying value of recorded and
unrecorded assets. Since the carrying value of the recorded and
unrecorded assets exceeded the estimated fair value, we
performed the second step that required allocating the fair
value to all of our assets and liabilities, including unrecorded
intangibles, to determine the deemed fair value, if any, of
goodwill. Both steps required us to make significant assumptions
and estimates, including determining our fair value and the fair
value of our assets and liabilities. In addition, this process
required us to estimate future cash flows from our research and
development projects in process and the applicable discount
rates. We engaged an independent third-party valuation
specialist to assist us in our impairment analysis. The analysis
resulted in a $161.1 million goodwill impairment charge in
the first quarter of 2002, which represented the write-off of
all goodwill existing as of the date of the test. In the event
that future acquisitions result in goodwill, we will be required
to perform this test on at least an annual basis.

In the second and third quarters of 2003 we
subleased approximately 117,000 square feet of our leased
facilities in South San Francisco. In accordance with
Statement of Financial Accounting Standard, or SFAS,
No. 144, Accounting for the Impairment or Disposal
of Long-Lived Assets, or SFAS No. 144, long-lived
assets must be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of
those long-lived assets might not be recoverable. Upon entering
into the sublease agreements an estimate of the undiscounted
future cash flows attributable to the subleases was performed
and was determined to be less than the carrying amount of the
intangible asset acquired lease, related leasehold improvements
and furniture and fixtures. Because the carrying value exceeded
the fair value, we recognized an impairment charge of
$12.6 million and a $5.9 million in the second and
third quarters of 2003, respectively, related to these assets.



| |                              
| | -----------------------------
| | Commitments and Contingencies

We are involved in certain legal proceedings as
discussed in Note 12 to the Consolidated Financial
Statements. We do not believe these legal proceedings will have
a material adverse effect on our consolidated financial
position, results of operations or cash flows. We have not
accrued for any legal contingencies, as the probable outcomes of
the cases are not known.

Overview

We are a developer of innovative
immunotherapeutic products designed to affect the immune system
and treat debilitating and life-threatening conditions caused by
cancer and infectious disease.

Originally founded to pursue development of
leading, proprietary antigen discovery technology, we are
emerging as a product development company with multiple product
candidates, many in late-stage human clinical trials. We are
driven by an aggressive commercialization strategy that we
believe will give us an opportunity for sustained and consistent
commercial success. Our development efforts are focused on core
areas of immunotherapy expertise, including monoclonal
antibodies, vaccines and adjuvants, and small molecules called
TLR4 agonists and antagonists that stimulate innate immunity.

In June, 2003 we received approval from the FDA
of BEXXAR therapeutic regimen for the treatment of patients with
CD20 positive, follicular, non-Hodgkins lymphoma, or NHL,
with and without transformation, whose disease is refractory to
Rituximab and has relapsed following chemotherapy. We and GSK
are co-

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promoting BEXXAR therapeutic regimen in the
United States, with each company contributing to the
commercialization efforts and both companies sharing profits and
losses equally.


We generate revenue from technology licenses,
collaborative research and development arrangements, cost
reimbursement contracts, co-promotion revenues under our
agreement with GSK for BEXXAR therapeutic regimen and research
adjuvants. Revenue under technology licenses and collaborative
agreements typically consists of non-refundable and/or
guaranteed technology license fees, collaborative research
funding, technology access fees, and various milestone and
future product royalty or profit-sharing payments.

Revenue associated with up-front license,
technology access and research and development funding payments
under collaborative agreements is recognized ratably over the
relevant periods specified in the respective agreements,
generally the research and development period. Revenue from
substantive at-risk milestones is recognized upon completion of
the milestones and future product royalties are recognized when
earned, as defined in the respective agreements. Revenue under
cost reimbursement contracts is recognized as the related costs
are incurred. Co-promotion revenue or expense under our
agreement with GSK for BEXXAR therapeutic regimen is determined
based on the calculation of joint profit or loss (as defined in
the agreement). Revenue from adjuvant sales is recognized upon
customer acceptance of the product. Payments received in advance
of recognition as revenue are recorded as deferred revenue.

For the years ended December 31, 2003, 2002
and 2001, approximately 95%, of our revenue resulted from
collaborative agreements, and approximately 5% of our revenue
resulted from funds awarded through government grants. As of
December 31, 2003, we had total stockholders equity
of $81.0 million.

We have entered into, and intend to continue to
enter into, collaborative agreements at various stages in the
research and development process. We believe that this active
corporate partnering strategy provides four distinct advantages:



| |   |                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------
| |  | it focuses on our fundamental strength in
    immunotherapeutic product discovery and selected product
    development; 
|
| |  | it capitalizes on our corporate partners
    strengths in product development, manufacturing and
    commercialization;
|
| |  | it may enable us to retain significant downstream
    participation in product sales; and                               
|
| |  | it reduces our financing requirements.                                                                                  

Our material collaborative agreements that
continue to provide us with funding include the following:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | GSK.Effective
    September 1998, we entered into a comprehensive corporate
    partnership with GSK. Under the agreement we granted GSK an
    exclusive worldwide license to develop, manufacture and sell
    vaccine products and certain dendritic cell therapy products
    that incorporate antigens discovered or in-licensed under this
    corporate partnership. We also granted GSK license rights to
    develop, manufacture and sell passive immunotherapy products,
    such as T cell or antibody therapeutics, and therapeutic drug
    monitoring products, in each case that incorporate these
    antigens. GSKs rights under the agreement are co-exclusive
    with us in Japan with respect to tuberculosis.

The rights that we granted to GSK under the
collaboration and license agreement covered:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | our cancer antigen discovery programs in breast,
    colon, ovarian and prostate cancer;                              
|
| |  | our HER-2/neu breast and ovarian cancer vaccine
    program;                                                          
|
| |  | our mammaglobin breast cancer vaccine
    program; and                                                                
|
| |  | our infectious disease antigen discovery programs
    in C. pneumoniae, C. trachomatis and Mycobacterium tuberculosis.



| |  |                                                                                                                                                                                                                                                                                                                                
| |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | To the extent that clinical and commercial
    milestones in the programs are achieved, GSK is required to make
    payments to us. The individual amounts of such payments vary,
    depending on the milestones achieved and the types of product
    sold. GSK is also required to pay us future royalty payments on
    all

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | products sales, which royalties vary depending on
    the types of products sold. On August 31, 2002 the funded
    research and development period of our collaboration and license
    agreement with GSK terminated in all of the cancer fields
    covered by the agreement. GSK extended the funded research and
    development period for an additional 2 years through August
    2004 for the research and development programs for tuberculosis
    and chlamydia vaccines. Under the terms of the extension, GSK is
    required to fund one-half of the actual cost of the tuberculosis
    program and the cost of the chlamydia program for a 2-year
    period.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | In January 2003, we and GSK entered into new
    agreements to further advance the development of multiple solid
    tumor vaccines. Following expiration of the funded research
    period for the cancer fields under the original agreement, one
    of the new agreements extends our and GSKs collaborative
    efforts into vaccine development and potential
    proof-of-principle clinical trials. Under the terms of this new
    agreement, GSK granted us a worldwide, exclusive license to
    develop a vaccine candidate for prostate cancer and a vaccine
    candidate for breast cancer. As a part of this agreement, GSK
    retains the option to buy-back exclusive worldwide rights for
    either or both vaccine candidates following the completion of
    proof-of-principle clinical trials. If GSK exercises its
    buy-back rights, we have the option of participating in further
    development, up to and including a sharing of promotion rights
    in the United States. The buy-back price will be based on our
    research costs incurred under this new agreement, plus a premium
    of 25% and up to an additional $3.0 million depending on
    the stage of development at the time GSK exercises its buy-back
    option. In the event GSK does not exercise its buy-back option,
    we will be free to develop the vaccines alone or with other
    partners and have agreed to pay GSK success-based milestones and
    royalties in the event of product sales. Under our new
    agreement, we will be responsible for providing resources and
    development funding of up to $32 million to complete
    proof-of-principle clinical studies over a period of time in
    excess of five years. This funding will be used to pay for GMP
    grade material, production and clinical trials for prostate and
    breast cancer vaccine development efforts.
|
| |  | Under the original agreement, GSK will continue
    development of an alternative version of the prostate cancer
    vaccine at its own expense and has agreed to pay us milestones
    and royalties on potential product sales. Under the original
    agreement, GSK is also continuing the development of our
    HER-2/neu vaccine. A proprietary formulation of this vaccine has
    been manufactured by GSK and an IND application has been
    approved for the products clinical testing in the United
    States. GSK has also agreed to pay us milestones and royalties
    on potential product sales of our HER-2/neu vaccine.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | In a related new agreement, we acquired vaccine
    and antibody development rights from GSK to all ovarian cancer
    antigens whose discovery resulted from the original agreement.
    In this related agreement we also acquired from GSK all cancer
    diagnostic rights and T cell adoptive cancer immunotherapy
    rights for all cancer antigens discovered by us in the breast,
    prostate, colon and ovarian cancer fields as well as for the
    HER-2/neu and mammaglobin antigens.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | GSK has the right to terminate any of these
    agreements in the event of our material default of such
    agreement, or our bankruptcy or insolvency. If we materially
    breach our original agreement with GSK, GSK may as an
    alternative to terminating the agreement, continue its licenses
    with a reduction in the amounts owed to us as potential
    milestones and royalties. Under our original agreement, GSK also
    has the right for any reason with 6 months prior notice to
    terminate its licenses in the breast, prostate and colon fields
    and for the HER-2/neu and mammaglobin antigens, although this
    termination right does not apply to the breast cancer vaccine
    candidate and prostate cancer vaccine candidate that GSK has
    licensed to us under one of the new agreements. Also under the
    original agreement, GSK has the right for any reason with
    6 months prior notice to terminate its licenses in the
    tuberculosis and chlamydia fields after August 2004. In
    addition, under our original agreement, if an acquisition of us
    results in a material breach of that agreement, GSK would have
    the right to terminate that agreement and we and any of our
    employees that remain employees of us or our acquiror would be
    precluded from working in any of the disease fields covered by
    our original agreement with GSK for 2 years after such
    termination.                                                                                                                                                                                                                                                                                                                                                                                                                                                  

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | If we materially breach our new agreement for the
    development of a breast cancer vaccine candidate and prostate
    cancer vaccine candidate because of our failure to perform the
    development program, the rights to those vaccine candidates will
    revert to GSK and we will also be deemed to be in material
    breach of our new agreement under which we acquired from GSK the
    ovarian cancer rights and diagnostic and T cell product rights
    related to our cancer antigens that were included in our
    original agreement. If GSK terminates our new agreement that
    covers ovarian cancer, diagnostics and T cell products, because
    of our material breach, all of the rights under that agreement
    will revert to GSK with the exception of any rights we may have
    granted to any third parties before the termination, and we will
    be required to pay GSK twice the amount of revenues we receive
    from those third parties as would have paid had the agreement
    not been terminated for our material breach.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | We have a collaboration agreement with GSK for
    the development and commercialization of BEXXAR therapeutic
    regimen, which was approved in June, 2003 by the FDA for the
    treatment of patients with CD20 positive, follicular, NHL, with
    and without transformation, whose disease is refractory to
    Rituximab and has relapsed following chemotherapy. Under the
    agreement, as amended in April 2000, GSKs territory was
    reduced to the United States and, upon regulatory approval of
    BEXXAR therapeutic regimen, GSK paid us a milestone payment.
    Under the terms of the agreement, both companies contribute to
    the commercialization efforts of BEXXAR therapeutic regimen in
    the United States and share profits and losses from GSKs
    sales of BEXXAR therapeutic regimen equally. We recognize the
    costs we incur associated with BEXXAR therapeutic regimen
    related activities such as the cost of co-promotion revenue and
    sales and promotion costs in our statement of operations. We and
    GSK then prepare a quarterly calculation of the joint profit or
    loss which considers all revenue and costs associated with
    BEXXAR therapeutic regimen commercial activities incurred by us
    and GSK and the equal sharing of the joint profit or loss. If
    the quarterly joint profit or loss calculation results in a
    reimbursement to Corixa, we record that amount as revenue. If
    the quarterly joint profit or loss calculation results in a
    payment by Corixa, we record that amount as additional operating
    expense. Prior to commercialization, we recorded our share of
    the net reimbursement or payment from the joint profit or loss
    calculation in sales, general and administrative expenses. For
    the year ended December 31, 2003 our actual commercial
    costs related to BEXXAR therapeutic regimen and the payment
    resulting from the joint profit or loss calculation are included
    in sales, general and administrative expenses. BEXXAR sales were
    $1.2 million in 2003.
|
| |  | Under the agreement, GSK provided us with a
    $15 million credit line that was fully drawn by Coulter in
    December 2000 (terms and conditions of the credit line are
    discussed further in Footnote 2 in the Notes to the
    Consolidated Financial Statements) and which we may choose to
    repay in cash or in shares of our common stock on or prior to
    the October 3, 2004 maturity date. Under the terms of the
    agreement, GSK has agreed to reimburse us for certain clinical
    and manufacturing development costs and pay us for the
    achievement of certain defined clinical development, regulatory
    and sales milestones. In 2003, we recognized revenue of
    $5.2 million for the reimbursement of clinical and other
    development costs from GSK.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|
| |  | We have several license and supply agreements
    with GSK, granting GSK licenses to certain adjuvants for use in
    vaccines for infectious diseases, cancers and allergies that GSK
    is developing. These agreements grant GSK exclusive and
    co-exclusive license rights depending on the disease field and
    territory. Under the terms of the agreements, GSK pays annual
    license fees, milestones, transfer payments and future royalty
    payments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|
| |  | We have an outstanding loan from GSK in the
    principal amount of $5 million, which amount was due on
    September 1, 2003. At GSKs option, GSK may choose to
    receive repayment of this loan in cash or shares of our common
    stock at a specified premium to the five day average closing
    price of our common stock for the period immediately preceding
    September 1, 2003. GSK has not yet made its election
    regarding the form of repayment and accordingly the
    $5 million loan remains outstanding.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

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| |  |                                                                                                                                                                                                                                                                         
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Amounts receivable from GSK at December 31,
    2003 and 2002 were $4.1 and $6.2 million, respectively. For
    the years ended December 31, 2003, 2002 and 2001,
    approximately 49%, 47% and 49% of our revenue resulted from
    collaborative agreements with GSK.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Amersham Health.In
    October 2001, we entered into an agreement whereby Amersham
    Health has agreed to market BEXXAR therapeutic regimen in
    Europe. We and Amersham Health will cooperate to register BEXXAR
    therapeutic regimen in Europe. We will initially be the holder
    of the MAA for BEXXAR therapeutic regimen in Europe, and after
    certain conditions have been met, including approval for
    commercial sale in Europe, we will transfer the MAA to Amersham
    Health. We will be responsible for generating clinical trial
    data to support the registration of BEXXAR therapeutic regimen
    in Europe and Amersham Health will be responsible for the
    manufacture and sale of BEXXAR therapeutic regimen in Europe.
    Under the terms of a stock purchase agreement with Amersham
    Health, we had the option to sell up to a total of
    $15 million of shares of our common stock to Amersham
    Health. Upon execution of the agreement Amersham Health
    purchased 271,343 shares of our common stock for
    approximately $5 million at a price of $18.43 per
    share, which represented a forty percent premium of
    approximately $1.4 million to the then current market value
    of our common stock. The premium has been accounted for as a
    nonrefundable up-front license payment and was deferred and is
    being recognized as revenue ratably over the term of the
    agreement, consistent with our revenue recognition policy.
    Following our partial option exercises in October 2001 and
    December 2002, on May 14, 2003, we completed the exercise
    of our option to sell up to $15 million of shares of our
    common stock to Amersham Health when we sold 721,814 shares
    of our common stock to Amersham Health at a price per share of
    $6.927 for a total purchase price of approximately
    $5 million. In addition, Amersham Health has agreed to pay
    us milestone payments upon regulatory approval in Europe as well
    as milestone payments based on achievement of certain sales
    volume targets. Amersham Health has also agreed to pay us
    royalties on all future product sales in Europe. Amersham Health
    has the right to terminate our agreement for our material
    breach, insolvency, after October 2004 or if commercialization
    of BEXXAR therapeutic regimen in Europe is blocked because
    another product is or if the EMEA does not validate our MAA
    because the EMEA determines that the MAA is not sufficient.
|
| |  | Wyeth.We have
    license and supply agreements with Wyeth, granting Wyeth
    licenses to certain adjuvants for use in vaccines for certain
    infectious and autoimmune disease fields that Wyeth is
    developing. These agreements grant Wyeth exclusive, co-exclusive
    and non-exclusive license rights depending on the disease field.
    Under the terms of the agreements, Wyeth pays annual license
    fees, milestones, transfer payments and future royalty payments.
    We recognized revenue related to our agreements with Wyeth of
    $2.5 million, $2.0 million and $906,000 in 2003, 2002
    and 2001, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|
| |  | Zambon Group and JT.During May and June 1999, we entered into corporate partnerships
    with Zambon and JT, respectively, for the research, development
    and commercialization of vaccine products aimed at preventing
    and treating lung cancer. Zambon has exclusive rights to develop
    and sell vaccine products in Europe, the countries of the former
    Soviet Union, Argentina, Brazil and Columbia and co-exclusive
    rights in China. Under the June 1999 agreement we granted JT
    exclusive rights to develop and sell vaccine products outside of
    the territory licensed to Zambon, including the United States
    and Japan, and co-exclusive rights to develop and sell vaccine
    products in China. We also granted Zambon a nonexclusive license
    and JT an option to formulate vaccines that may result from the
    collaboration using our microsphere delivery system with our
    proprietary adjuvants. During 2002, the 3-year research terms of
    the agreements expired and the respective research funding
    obligations ceased. In November 2002, we and Zambon amended our
    agreement so that we jointly fund clinical testing of a
    non-small cell lung cancer vaccine. In December 2002, we
    recorded a milestone payment of $1.0 million from Zambon in
    connection with the filing of our IND for a lung cancer vaccine
    candidate in the United States. In January 2003, we amended and
    restated our agreement with JT so that we hold exclusive rights
    to all antigens discovered in our lung cancer vaccine program,
    in all countries previously licensed to JT, with the exception
    of rights associated with commercialization of a non-small                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | cell, lung carcinoma vaccine candidate in Japan.
    Under the terms of our amended agreement with JT, JT will
    continue to hold an exclusive license to this vaccine candidate
    for development and commercialization in Japan, and we will hold
    all rights in North America and in those territories not
    previously licensed to Zambon. In connection with the
    restructuring of the JT agreement, we and JT have agreed to pay
    each other fees, milestones and royalties in the event that
    development milestones and product sales are achieved.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|
| |  | Kirin.In December
    2002, we entered into a multiyear development and
    commercialization agreement with Kirin for potential cancer
    vaccine for the treatment of multiple forms of cancer, including
    leukemia, myelodysplasia and melanoma. Under the agreement we
    granted Kirin exclusive rights to develop and market vaccine
    products resulting from our WT1 vaccine candidate in Asia/
    Australasia. We and Kirin have agreed to share WT1 vaccine
    commercialization rights and Kirin has agreed to fund one-half
    of the research and development costs in North America. We will
    retain marketing rights for the potential vaccine in Europe.
    Upon effectiveness of the agreement, Kirin paid us
    $3 million in up-front license fees, which is being
    recognized as revenue over the estimated research and
    development term. Under the terms of the agreement, Kirin has
    agreed to co-fund development of WT1 vaccine candidate and pay
    us success-based milestone payments and royalties on future
    product sales in Asia/ Australasia. In connection with this
    agreement, we recognized revenue of $2.3 million in 2003.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Kirin has the right to terminate our agreement in
    the event of our material breach. If Kirin terminates our
    agreement because of our material breach within 18 months
    after the effective date of the agreement, Kirin may choose to
    have us pay a termination fee rather than pursue any other
    rights and remedies. Kirin may also choose not to terminate the
    agreement for our material breach, no matter when the breach
    occurs, but instead may keep its licenses intact rather than
    pursue any other rights and remedies, in which case all of
    Kirins payment obligations to us will be reduced. Kirin
    also has the right to terminate our agreement at any time in
    North America, Asia or both territories, and in any of these
    cases Kirin must pay us a termination fee. Both we and Kirin
    have the right to terminate the agreement before commercial
    launch of the first product if together we determine there are
    no products worthy of further development or if any product
    causes a serious adverse event. However, if Kirin chooses to
    terminate the agreement for development or adverse event
    reasons, we have the right to continue product development
    ourselves and depending on further development Kirin may be
    obligated to pay us a termination fee. If we choose to terminate
    the agreement for development or adverse event reasons, Kirin
    will have the right to continue product development and pay us
    royalties in the event of product sales. Kirin also has the
    right to terminate our agreement in the event product
    development and commercialization is prevented due to certain
    third party intellectual property positions. Kirin also has the
    right to terminate our agreement if no product has successfully
    completed clinical trials by ten years after the effective date,
    if no product has achieved regulatory approval in the United
    States or Japan by 12 years after the effective date, our
    performance is delayed by at least 18 months as a result of
    force majeure or we terminate or breach a third party license
    under which Kirin is a sublicensee and as a result Kirin is sued
    or Kirins rights under our agreement are materially
    diminished. In addition, Kirin also has the right to terminate
    the agreement for our bankruptcy or insolvency.



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Medicis and Zenyaku
    Kogyo.In August 2000, we entered into
    a multiyear development, commercialization and license agreement
    covering our psoriasis immunotherapeutic product, PVAC
    treatment, with Medicis. Under the agreement we provide Medicis
    exclusive rights to PVAC treatment in the United States and
    Canada. Medicis made a nonrefundable payment of $17 million
    upon effectiveness of the agreement.



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In August 1999, we entered into a corporate
    partnership with Zenyaku Kogyo for researching and developing
    PVAC treatment. Under the agreement we granted Zenyaku Kogyo
    exclusive rights to PVAC treatment in Japan. In May 2002 the
    3-year research term of the agreement expired and Zenyaku
    Kogyos research funding obligation ceased. Under the terms
    of the agreement, Zenyaku Kogyos rights to PVAC treatment
    in Japan continue and they are required to make future milestone
    payments based on successful clinical and commercial progress,
    and a royalty stream on future product sales.

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| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | In December 2003 we announced that we have
    discontinued development of PVAC treatment due to phase II
    trial results that confirmed PVAC therapy failed to provide a
    statistically significant benefit versus placebo. We also
    terminated our license agreement with Medicis. In connection
    with the termination of the license agreement, Medicis has no
    additional funding obligations. As a result of discontinuing
    development of PVAC treatment, we recognized $5 million of
    revenue and $2.5 million of expense that was previously
    deferred and was related to the initial Medicis payment received
    in 2000.

As of December 31, 2003, our accumulated
deficit was approximately $1.2 billion, of which
$679.4 million is attributable to the write-off of acquired
IPR&D costs associated with our acquisitions,
$221.2 million is attributable to goodwill related charges
and $18.5 million is attributable to lease-related
impairment charges. We may incur substantial additional
operating losses over the next several years. Such losses have
been and may continue to be principally the result of various
costs associated with our discovery, research and development
programs and the purchase of technology. As noted above, the
funded research phase of certain of our collaborative agreements
has expired and we may bear a larger portion of the related
research program costs in the future. Additionally, as research
programs progress from early stages into clinical development
the costs continue to increase. Substantially all of our revenue
to date has resulted from corporate partnerships, other
research, development and licensing arrangements, research
grants and interest income. Our ability to achieve a consistent,
profitable level of operations depends in large part on entering
into corporate partnerships for product discovery, research,
development and commercialization, obtaining regulatory
approvals for our products and successfully manufacturing and
marketing our products once they are approved. Even if we are
successful in the aforementioned activities our operations may
not be profitable. In addition, payments under corporate
partnerships and licensing arrangements are subject to
significant fluctuations in both timing and amount. Therefore,
our operating results for any period may fluctuate significantly
and may not be comparable to the operating results for any other
period.

Results of Operations



| |                                                 
| | ------------------------------------------------
| | Years Ended December 31, 2003, 2002
    and 2001

Revenue

Our revenue was $50.7 million for 2003,
$48.7 million in 2002 and $58.1 million in 2001. The
2003 increase compared with 2002 is primarily due to revenue
received from our collaborative agreements with GSK, the
majority of which results from milestone revenue received under
our agreement for BEXXAR therapeutic regimen, revenue which had
previously been deferred from our collaboration with Medicis of
$5.0 million as a result of discontinuing development of
PVAC in December 2003 and increased revenue of $2.3 million
related to our WT-1 cancer vaccine agreement with Kirin. These
increases were partially offset by the anticipated expiration of
the funded research phases of certain of our collaborative
agreements, including decreases of $6.9 million related to
our vaccine development agreement with GSK, $4.0 million
related to our lung cancer vaccine partnership with JT,
$1.9 million related to our lung cancer vaccine partnership
with Zambon, $1.4 million related to our therapeutic
antibody agreement with Purdue Pharma. In addition,
reimbursement revenue from our collaborative agreement for
BEXXAR therapeutic regimen with GSK decreased $1.7 million
and revenue from our collaborative agreement with Beaufour Ipsen
related to our proprietary ANERGIX vaccine platform decreased
approximately $1.0 million.

The 2002 decrease compared with 2001 was
primarily due to payments received in 2001, including a
milestone payment for the achievement of certain clinical trial
related milestones in connection with BEXXAR therapeutic regimen
from our collaborative agreement with GSK, $2.3 million
from our ex-vivo agreement with IDRI and $2.0 million
related to the expiration of the research phase of our vaccine
development collaborative agreement with GSK. These decreases
were partially offset by increased revenue of approximately
$2.7 million from our collaborative agreement with Beaufour
Ipsen related to our proprietary ANERGIX vaccine platform.
Revenue in 2002 included a milestone payment of $1 million
from Zambon for the filing of our IND for a lung cancer vaccine
in the United States.

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Revenue under government grants and contracts was
$2.4 million in 2003, $2.6 million in 2002 and
$2.9 million in 2001.

We expect revenue to fluctuate in the future
depending on our ability to enter into new collaboration
agreements, timing and amounts of payments under our existing
collaboration agreements and our ability to commercialize our
potential products.

Expenses



| |                                      
| | -------------------------------------
| | Research and Development
    Expenses

Our research and development expenses were
$95.6 million for 2003, $99.7 million in 2002 and
$139.9 million in 2001. The 2003 decrease as compared with
2002 is due primarily to reduced early stage research and
development expense of $7.2 million as we focus on programs
with the highest chance of near term commercial success, a
reduction in deferred compensation expense of $1.2 million
related to options assumed in the Coulter acquisition and a
reduction in South San Francisco facilities expense of
$1.0 million due to buildings that we subleased in 2003.
These decreases were partially offset by an increase in BEXXAR
therapeutic regiment production cost of $4.9 million and
$2.5 million resulting from fees paid to Genesis Research
and Development Corporation, Ltd., or Genesis, that were
previously deferred and amortized over the estimated development
period prior to discontinuing development of PVAC in December
2003 and $1.7 million resulting from manufacturing
development activities associated with our adjuvants and TLR4
product candidates.

The 2002 decrease compared with 2001 was due
primarily to a reduction in deferred compensation expense of
$11.9 million related to options assumed in the Coulter
acquisition, a reduction in the purchase of third-party
manufactured materials of $8 million, payroll and personnel
expenses of $8.2 million related to our workforce reduction
in South San Francisco, and a decrease in clinical
development activity of $5.8 million, offset by an increase
of $3.9 million in facility expenses due in part to
additional leased space in South San Francisco. We intend
to offset South San Francisco facilities cost through
subleases in the future. We expect research and development
expenses to increase or remain stable in the future as we
continue to pursue our clinical and preclinical activities.

Our research and development activities can be
divided into research and preclinical programs and clinical
development programs to treat cancer and infectious disease. We
estimate the costs associated with research and preclinical
programs and clinical development programs approximate the
following (in millions):

|                                  |  |      |      |      |  |      |      |  |  |   |       | 
|--------------------------------- |  | ---- | ---- | ---- |  | ---- | ---- |  |  | - | ----- | 
|                                  |  | 2003 |      | 2002 |  | 2001
|                                  |  |      |      |      |  |     
|Research and preclinical programs |  | $    | 39.5 |      |  | $    | 45.0 |  |  | $ | 74.3  | 
|Clinical development programs     |  |      | 56.1 |      |  |      | 54.7 |  |  |   | 65.6  | 
|                                  |  |      |      |      |  |      |      |  |  |   |       | 
|Total research and development    |  | $    | 95.6 |      |  | $    | 99.7 |  |  | $ | 139.9 | 
|                                  |  |      |      |      |  |      |      |  |  |   |       | 

Because of the large number of research projects
we have ongoing at any one time, and the ability to utilize
resources across several projects, the majority of our research
and development costs are not directly tied to any individual
project and are allocated among multiple projects. We manage our
projects by reviewing scientific data and by supplementing this
data with our cost allocations. Our cost allocations are based
primarily on human resource time incurred on each project. The
costs allocated to a project as a result do not necessarily
reflect the actual costs of the project. Accordingly, we do not
maintain actual cost incurred information for our projects on a
project-by-project basis. Costs attributed to research and
preclinical projects largely represent our pipeline generating
activities. Costs associated with clinical development programs
represent the advancement of these activities into product
candidates.

Most of our product development programs are at
an early stage and may not result in any approved products.
Product candidates that may appear promising at early stages of
development may not reach the market for a number of reasons.
Product candidates may be found ineffective or cause harmful
side effects during clinical trials, may take longer to pass
through clinical trials than had been anticipated, may fail to

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receive necessary regulatory approvals and may
prove impracticable to manufacture in commercial quantities at
reasonable cost and with acceptable quality. Furthermore, as
part of our business strategy, we may enter into collaborative
arrangements with third parties to complete the development and
commercialization of our product candidates and it is uncertain
which of our product candidates would be subject to future
collaborative arrangements. The participation of a collaborative
partner may accelerate the time to completion and reduce the
cost to us of a product candidate or it may delay the time and
increase the cost to us due to the alteration of our existing
strategy. The risks and uncertainties associated with our
research and development projects are discussed more fully in
the section of this report titled  Important
Factors That May Affect Our Business, Our Results of Operations
and Our Stock Price. Because of these risks and
uncertainties, we cannot predict when or whether we will
successfully complete the development of our product candidates
or the ultimate product development cost.


We recorded deferred compensation of
$29.2 million associated with the Coulter acquisition in
2000, which represents the intrinsic value of the unearned
options of Coulter employees existing at the date of
acquisition. Deferred compensation is being amortized on a
graded vesting method over the remaining vesting period of the
options, generally four years. We amortized $188,000,
$1.3 million and $13.2 million of deferred
compensation to research and development expense in 2003, 2002
and 2001, respectively. We expect deferred compensation expense
to decrease in 2004 and future years due to employee attrition
and the declining impact from using the graded vesting approach
for calculating deferred compensation expense.



| |                                               
| | ----------------------------------------------
| | Sales, General and Administrative
    Expenses

Our sales, general and administrative expenses
were $21.7 million for 2003, $18.4 million in 2002 and
$22.7 million in 2001. The increase in 2003 as compared
with 2002 is primarily due to the cost associated with the
commercialization of BEXXAR therapeutic regimen and legal fees
related to our patent infringement litigation with Biogen Idec.

The decrease in 2002 as compared with 2001 was
due primarily to reduced marketing and sales expenses of
$1.7 million related to our workforce reduction in South
San Francisco and a reduction in deferred compensation
expense of $1.3 million related to options assumed in the
Coulter merger. These decreases were partially offset by an
increase in 2002 in facility expenses of $730,000 due in part to
additional leased space in South San Francisco. We expect
sales, general and administrative expenses to increase in the
future to support the expansion of our business activities as we
expand our sales and marketing capabilities.



| |                                                    
| | ---------------------------------------------------
| | Intangible Amortization and Goodwill
    Impairment

Our intangible amortization expense was $439,000
for 2003 and 2002 compared to $56.1 million for 2001.
Effective January 1, 2002, we adopted SFAS 141,
Business Combinationsand SFAS 142,
Goodwill and Other Intangible Assets.Under
SFAS 142, goodwill and intangible assets deemed to have
indefinite lives will no longer be amortized but will be subject
to an annual impairment test, or more frequently if impairment
indicators arise. We will continue to amortize separable
intangible assets that are not deemed to have indefinite useful
lives. As such, we will continue to amortize the remaining
acquired lease and adjuvant know-how over their useful lives.

On March 12, 2002, we received a second
complete review letter from the FDA regarding our BLA for BEXXAR
therapeutic regimen. In the complete review letter, the FDA
stated that additional clinical studies would be required to
provide sufficient evidence of the safety and net clinical
benefit of BEXXAR therapeutic regimen.

Upon announcement on March 13, 2002 of the
receipt of the complete review letter from the FDA, the value of
our common stock declined. In managements opinion, this
decline in our stock price represented an indication of
impairment of recorded goodwill. In accordance with
SFAS 142, an interim test of goodwill impairment was
performed as of March 13, 2002. The impairment test
involves a two step approach. Under step one of the test we
compared our estimated fair value based upon the market price of
our common stock to the carrying value of our equity. Because
the carrying value of our equity exceeded our fair value, we
performed step-two of the test which involved allocating our
fair value (the reporting unit) to all of our assets

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and liabilities to determine how much, if any, of
the excess value should be allocated to goodwill. The results of
the impairment test indicated that the entire balance of
goodwill was impaired and accordingly we recognized a
$161.1 million goodwill impairment charge in the first
quarter of 2002.


Interest Income

Our interest income decreased to
$3.4 million for 2003, from $4.3 million in 2002 and
from $9.3 million in 2001. The decrease in 2003 as compared
with 2002 is due primarily to lower yields on our investments in
2003. We expect interest income to be higher in future periods
due to higher cash balances resulting from financing
transactions completed in June 2003.

Interest Expense

Our interest expense was $4.4 million in
2003 as compared with $2.3 million for each of the years
ended December 31, 2002 and 2001. The increase in 2003 as
compared with 2002 was primarily attributable to higher loan
balances primarily due to the issuance of $100 million of
convertible notes in June 2003. Outstanding debt at
December 31, 2003, 2002 and 2001 was $133.8 million,
$32.1 million and $33.4 million, respectively.

Other Income

Our other income was $2.5 million for 2003
compared with $21.5 million in 2002 and $5.5 million
in 2001. The decrease in 2003 as compared to 2002 is due
primarily to the sale of specific preclinical assets and other
equipment to Medarex in the second quarter of 2002 which
resulted in other income of $22.0 million. Other income in
2003 includes a $2.5 million gain from additional
consideration received from our 2002 asset sale to Medarex.
Other income for 2001 included a gain of $4.5 million on
the sale of our investment in Abgenix.

Cumulative Effect of Change in Accounting
Principle

Effective January 1, 2000, we changed our
method of accounting for nonrefundable up-front license fees
based on the guidance provided in SEC Staff Accounting Bulletin
No. 101, Revenue Recognition in Financial
Statementsto recognize such fees over the term of the
related research and development collaboration arrangement on a
straight-line basis, as this method best matches the effort
provided. The $6.3 million cumulative effect of the change
in accounting principle, calculated as of January 1, 2000,
was reported as a charge in the year ended December 31,
2000. The cumulative effect was initially recorded as deferred
revenue and will be recognized as revenue over the remaining
term of the research and development collaboration agreements.
For the year ended December 31, 2000, the impact of the
change in accounting was to increase net loss by
$3.9 million, or $0.19 per share, comprised of the
$6.3 million cumulative effect of the change as described
above ($0.30 per share) less $2.4 million of the
deferred revenue related to the cumulative effect adjustment
that was recognized as revenue during the year ($0.11 per
share). Revenue includes $1.5 million for 2002 and
$2.4 million for 2001 that was previously recognized and
included in the cumulative effect adjustment.

Liquidity and Capital Resources

We have financed our operations primarily through
funding from collaborative agreements and the issuance of equity
and debt instruments. For the previous three years, we have
received cash of approximately $159.6 million from
collaborative research agreements and grants, approximately
$96.3 million from the sale of convertible subordinated
notes, approximately $28.4 million from the sale of
3.7 million newly issued shares of our common stock and
669,435 five-year warrants to purchase common stock in a private
placement to select institutional and other accredited
investors, approximately $42.8 million from the sale of
7.3 million newly issued shares of our common stock and
1.2 million five-year warrants to purchase our common stock
in a private placement to select institutional and other
accredited investors, $21 million from the sale of
preclinical assets to Medarex, $17.9 million from bank
loans, approximately $15 million from the issuance of

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common stock under a collaborative agreement with
Amersham Health and $5.1 million from the issuance of
common stock under our equity line facility with CMI. During
2003, 2002 and 2001 we received total research and development
funding of $18.6 million under our vaccine discovery
collaboration with GSK.


As of December 31, 2003, future funding
available under terms of our existing agreements is
approximately $42.3 million excluding milestone payments,
which are contingent upon the success of the research. As of
December 31, 2003, we had approximately $192.0 million
in cash, cash equivalents and securities available-for-sale.

The following are contractual commitments at
December 31, 2003 associated with debt obligations, lease
obligations and credit lines (in thousands):

|                              |  |                        |         |        |  |           |        |           |  |            |        |  |  |   |         |  |  |   |        | 
|----------------------------- |  | ---------------------- | ------- | ------ |  | --------- | ------ | --------- |  | ---------- | ------ |  |  | - | ------- |  |  | - | ------ | 
|                              |  |                       
|                              |  | Payments Due by Period
|                              |  |                       
|Contractual Commitment        |  | Total                  |         | 1 year |  | 2-3 years |        | 4-5 Years |  | Thereafter
|                              |  |                        |         |        |  |           |        |           |  |           
|Long-term obligations         |  | $                      | 133,795 |        |  | $         | 25,657 |           |  | $          | 5,342  |  |  | $ | 102,796 |  |  | $ |       | 
|Operating leases              |  |                        | 119,850 |        |  |           | 10,134 |           |  |            | 19,636 |  |  |   | 18,432  |  |  |   | 71,648 | 
|BI Pharma                     |  |                        | 2,926   |        |  |           | 2,926  |           |  |            |       |  |  |   |        |  |  |   |       | 
|                              |  |                        |         |        |  |           |        |           |  |            |        |  |  |   |         |  |  |   |        | 
|Total contractual commitments |  | $                      | 256,571 |        |  | $         | 38,717 |           |  | $          | 24,978 |  |  | $ | 121,228 |  |  | $ | 71,648 | 
|                              |  |                        |         |        |  |           |        |           |  |            |        |  |  |   |         |  |  |   |        | 

Included in short-term obligations is a
$15 million line of credit that has been fully drawn and at
our option may be paid in cash or in shares of our common stock
on or prior to the October 2004 maturity date.

We are responsible for providing resources and
development funding of up to $32 million over a period in
excess of five years related to a collaborative agreement with
GSK. The funding will consist of our personnel and external
costs associated with preclinical and clinical development
activities.

We are also required to pay dividends on our
preferred stock. The dividend can be paid in cash or common
stock, at our option. The maximum amount of cash that would be
paid in a year would be $2.5 million and the maximum number
of shares of common stock that would be issued is 146,828.

In June 2003, we sold $100 million of
4.25% convertible subordinated notes due in 2008 to a
qualified institutional buyer pursuant to Rule 144A under
the Securities Act of 1933, as amended. The notes are
convertible into our common stock at a conversion price of
$9.175 subject to adjustment in certain circumstances. We will
pay interest on the notes on January 1 and July 1 of each
year, beginning on January 1, 2004. The notes mature on
July 1, 2008.

During 2003, we used $53.6 million of cash
in our operations, compared with $45.0 million in 2002 and
$65.8 million in 2001. The increase in cash used in
operations in 2003 as compared to 2002 is due primarily to the
cost associated with the commercialization of BEXXAR therapeutic
regimen. Our investing activities used cash of
$91.8 million in 2003, compared with cash provided of
$9.5 million in 2002 and cash provided of
$50.1 million in 2001. The increase in cash used by
investing activities in 2003 was primarily due to the purchase
of available-for-sale-securities. Our financing activities
provided cash of $134.9 million in 2003 as compared to
$49.5 million in 2002 and $1.9 million in 2001. The
increase in 2003 of cash received from financing activities was
due primarily to the net proceeds of approximately
$96.3 million from our sale of 4.25% convertible
subordinated notes.

For 2003, 2002 and 2001, we invested
$6.7 million, $6.3 million and $18.1 million,
respectively, in property and equipment.

We believe that our existing capital resources,
together with committed payments under our existing corporate
partnerships, bank credit agreements, equipment financing and
interest income will be sufficient to fund our current and
planned operations over at least the next 18 months.
However, we intend to seek additional corporate partnerships,
and also may seek additional funding through



| |   |                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------
| |  | public or private equity financings, which could
    result in significant dilution to our stockholders;
|
| |  | public or private debt financings; and                                                                  

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| |   |                                       
| | - | --------------------------------------
| |  | additional capital lease transactions.

However, additional financing may be unavailable
on acceptable terms, if at all. If sufficient capital is not
available, we may be forced to limit some or all of our research
and development programs and related operations, curtail
commercialization of our product candidates and, ultimately,
cease operations.

Our future capital requirements will depend on
many factors, including, among others:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | continued scientific progress in our discovery,
    research and product development programs;                    
|
| |  | progress with preclinical studies and clinical
    trials;                                                        
|
| |  | the magnitude and scope of our discovery,
    research and development programs;                                  
|
| |  | our ability to maintain existing, and establish
    additional, corporate partnerships and licensing arrangements;
|
| |  | the time and costs involved in obtaining
    regulatory approvals;                                                
|
| |  | the time and costs involved in expanding and
    maintaining our manufacturing facilities;                        
|
| |  | the costs involved in preparing, filing,
    prosecuting, maintaining, defending and enforcing patent claims;     
|
| |  | the potential need to develop, acquire or license
    new technologies and products; and                          
|
| |  | other factors not within our control.                                                                             

New Accounting Pronouncements

In May 2003, the Financial Accounting Standards
Board, or FASB, issued Statements of Financial Accounting
Standards No. 150 Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and
Equity, or SFAS 150. SFAS 150 establishes
standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities
and equity. SFAS 150 is effective for financial instruments
entered into or modified after May 31, 2003. This Standard
does not currently have any impact on our consolidated results
of operations, financial position or disclosure.

In January 2003, the FASB issued FASB
Interpretation No. 46, Consolidation of Variable
Interest Entities, or FIN No. 46. FIN No. 46
addresses consolidation by business enterprises of variable
interest entities that possess certain characteristics. The
interpretation requires that if a business enterprise has a
controlling financial interest in a variable interest entity,
the assets, liabilities and results of operations of the
variable interest entity must be included in the consolidated
financial statements with those of the business enterprise. This
interpretation applies immediately to variable interest entities
created after January 31, 2003 and to variable interest
entities in which an enterprise obtains an interest after that
date. In December 2003, the FASB issued FASB Interpretation
No. 46R, Consolidation of Variable Interest Entities
an interpretation of ARB 51 (revised December 2003), or
FIN No. 46R, which includes significant amendments to
previously issued FIN No. 46. Among other provisions, FIN
No. 46R includes revised transition dates for public
entities. We are now required to adopt the provisions of FIN
No. 46R no later than the end of the first reporting period
that ends after March 15, 2004. The adoption of this
interpretation is not expected to have a material effect on our
financial statements or results of operations.

Effective prospectively for arrangements entered
into in fiscal periods beginning after June 15, 2003, EITF
Issue 00-21, Revenue Arrangements with Multiple
Deliverables, addresses the accounting by a vendor for
contractual arrangements in which multiple revenue-generating
activities will be performed by the vendor. In some situations,
the different revenue-generating activities
(deliverables) are sufficiently separable and there exists
sufficient evidence of fair values to account separately for the
different deliverables (that is, there are separate units of
accounting). In other situations, some or all of the different
deliverables are interrelated closely or there is not sufficient
evidence of fair value to account separately for the different
deliverables. EITF Issue 00-21 addresses when and, if so, how an
arrangement involving multiple deliverables should be divided
into separate units of accounting.

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The adoption of this Interpretation did not have
a material impact on our consolidated results of operations,
financial position or disclosure for the year-ended
December 31, 2003. EIFT Issue 00-21 was effective for us
beginning July 1, 2003.

In July 2002, the FASB issued
SFAS No. 146, Accounting for Costs Associated
with Exit or Disposal Activities, or
SFAS No. 146. SFAS No. 146, which is
effective prospectively for exit or disposal activities
initiated after December 31, 2002, applies to costs
associated with an exit activity, including restructurings, or
with a disposal of long-lived assets. Those activities can
include eliminating or reducing product lines, terminating
employees and contracts and relocating plant facilities or
personnel. SFAS No. 146 requires that exit or disposal
costs are recorded as an operating expense when the liability is
incurred and can be measured at fair value. We accounted for our
November 2003 restructuring, as discussed in Note 11, in
accordance with SFAS No. 146.

Subsequent Events

On March 1, 2004 we announced that we and
GSK have reached a settlement with Biogen Idec regarding all
outstanding patent litigation between us and Biogen Idec. The
settlement, which serves as the basis for the dismissal of all
patent litigation between the parties, provides for Biogen Idec
to pay to us and GSK a $20 million upfront settlement
payment, as well as a one-time milestone payment based on future
Zevalin sales performance, and royalty payments on Zevalin sales
from January 1, 2004 until the expiration of all BEXXAR
therapeutic regimen patents that were the subject of the
litigation. We and GSK will also enter into a worldwide,
cross-license agreement with Biogen Idec relating to each
partys patents in suit.

On March 4, 2004 NDC New Markets Investments
IV, L.P., or NDC, of which Wells Fargo Community Development
Corporation is a limited partner, pursuant to a promissory note
and credit agreement provided a loan of approximately
$14.6 million to us to support our construction costs at
the Ninth and Stewart Lifesciences Building in Seattle. The term
of the loan is seven years, during which we pay interest only
with a balloon principal payment on March 1, 2011. The note
bears interest at LIBOR plus 0.8%. NDC will forgive a portion of
the loan if we are in compliance the terms and conditions of the
note and the credit agreement. Pursuant to a security agreement,
the loan from NDC is fully secured by cash and cash equivalents.






|         |                                                              
|-------- | -------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosure
    About Market Risk



| |                   
| | ------------------
| | Interest Rate Risk

Our exposure to market risk for changes in
interest rates relates primarily to our investment portfolio and
our long-term debt. All of our cash equivalent and marketable
fixed income securities are designated as available-for-sale
and, accordingly, are presented at fair value on our balance
sheets. We generally invest our excess cash in A-rated or higher
short- to intermediate-term fixed income securities and money
market mutual funds. Fixed rate securities may have their fair
market value adversely affected due to a rise in interest rates,
and we may suffer losses in principal if forced to sell
securities that have declined in market value due to changes in
interest rates.

At December 31, 2003, we had long-term
obligations outstanding of approximately $108.1 million.
Our payment commitments associated with these debt instruments
are fixed during the corresponding terms and are comprised of
interest payments, principal payments, or a combination thereof.
The market value of our long-term debt will fluctuate with
movements of interest rates, increasing in periods of declining
rates of interest, and declining in periods of increasing rates
of interest.

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The table below summarizes the estimated effects
on certain assets and liabilities based on hypothetical
increases and decreases in interest rates. It is assumed the
changes occur immediately and uniformly to each category of
instrument containing interest rate risks. Significant
variations in market interest rates could produce changes in the
timing of repayments due to available prepayment options. The
fair value of such instruments could be affected and, therefore,
actual results might differ from those reflected in the
following table:

|             |                                                        |                   |   |                     |  |               |                 |                 |  |  |         |         |  |  |     |   | 
|------------ | ------------------------------------------------------ | ----------------- | - | ------------------- |  | ------------- | --------------- | --------------- |  |  | ------- | ------- |  |  | --- | - | 
|             |                                                        |                   |   | Estimated           |  | Fair Value    |                 | Hypothetical   
|             |                                                        |                   |   | Hypothetical        |  | After         |                 | Percentage     
|             |                                                        |                   |   | Change in           |  | Hypothetical  |                 | Decrease in    
|             |                                                        | Fair Value at     |   | Interest Rate       |  | Change in     |                 | Stockholders  
|             |                                                        | December 31, 2003 |   | (bp = basis points) |  | Interest Rate |                 | Equity         
|             |                                                        |                   |   |                     |  |               |                 |                
|             |                                                        |                   |   |                     |  |              
|             |                                                        |                   |   | (In thousands)      |  |              
|Assets:      |                                                        |                   |   |                     |  |               |                 |                 |  |  |         |         |  |  |     |  
|             | U.S. government agencies and corporate
    obligations |                   | $ | 155,095             |  |               |                 | 100 bp decrease |  |  | $       | 157,917 |  |  |     | * | 
|             |                                                        |                   |   |                     |  |               | 100 bp increase |                 |  |  | 152,354 |         |  |  | *   |  
|             |                                                        |                   |   |                     |  |               | 200 bp increase |                 |  |  | 149,691 |         |  |  | 1.9 | %
|             |                                                        |                   |   |                     |  |               | 300 bp increase |                 |  |  | 147,117 |         |  |  | 2.8 | %
|Liabilities: |                                                        |                   |   |                     |  |               |                 |                 |  |  |         |         |  |  |     |  
|             | Long-term obligations                                  |                   | $ | 108,138             |  |               |                 | 100 bp decrease |  |  | $       | 112,124 |  |  |     | * | 
|             |                                                        |                   |   |                     |  |               | 100 bp increase |                 |  |  | 104,331 |         |  |  | *   |  
|             |                                                        |                   |   |                     |  |               | 200 bp increase |                 |  |  | 100,695 |         |  |  | *   |  
|             |                                                        |                   |   |                     |  |               | 300 bp increase |                 |  |  | 97,221  |         |  |  | *   |  



---



|  |             
|- | ------------
|* | Less than 1%

Important Factors That May Affect Our
Businesses, Our Results of Operations and Our Stock
Price.



| |                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Acceptance of BEXXAR therapeutic regimen in
    the marketplace is uncertain and failure to achieve market
    acceptance will limit our potential co-promotion revenue from
    sales of BEXXAR therapeutic regimen.

BEXXAR therapeutic regimen requires medical
personnel to handle radioactive materials and requires
patient-specific dosing calculations. Doctors may prefer to
continue to treat NHL patients with conventional therapies, in
this case chemotherapy and non-radiolabeled biologics.
Oncologists and hematologists are not typically licensed to
administer radioimmunotherapies such as BEXXAR therapeutic
regimen and will need to engage a nuclear medicine physician or
receive specialty training to administer BEXXAR therapeutic
regimen. Nuclear Regulatory Commission regulations permit BEXXAR
therapeutic regimen to be administered on an outpatient basis in
most cases that we currently contemplate. Market acceptance
could, however, be adversely affected to the extent hospitals
are required under applicable state, local or individual
hospital regulations to administer BEXXAR therapeutic regimen on
an in-patient basis. In addition, continued expansion in the use
of Rituxan® (Rituximab) for maintenance therapy of NHL
could affect the ability of BEXXAR therapeutic regimen to gain
market share.



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If reimbursement is inadequate or
    unavailable for BEXXAR therapeutic regimen, demand for, or
    prices of, BEXXAR therapeutic regimen may be limited and our
    revenues may be substantially reduced.

The affordability to patients and customers of
BEXXAR therapeutic regimen depends substantially on whether
government health administration authorities, private health
insurers, health maintenance organizations, pharmacy benefit
management companies and other healthcare funders will reimburse
most of the cost of the product to our customers. Significant
uncertainty exists as to the reimbursement status of newly
approved healthcare products like BEXXAR therapeutic regimen
because third-party payors have very little experience upon
which to model pricing and reimbursement decisions. Although we
have received notification from several major third-party payors
that they plan to reimburse our customers for BEXXAR therapeutic

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regimen, including the Center for Medicare and
Medicaid Services, which has published reimbursement codes
specific to BEXXAR therapeutic regimen, in most cases we still
do not know the degree to which such third-party payors will
reimburse the cost of BEXXAR therapeutic regimen.


In addition, federal and state governments in the
United States, as well as foreign governments, continue to
propose and pass new legislation designed to contain or reduce
the costs of healthcare. Government cost-control initiatives
could decrease the reimbursement for BEXXAR therapeutic regimen.
For example, the U.S. Medicare program recently announced
that it is considering whether to cut reimbursement for certain
off-label uses for BEXXAR therapeutic regimen. Inadequate
reimbursement levels would reduce the demand for BEXXAR
therapeutic regimen or could force us to reduce the price of
BEXXAR therapeutic regimen to customers, or a combination of
both. Reduced demand for BEXXAR therapeutic regimen, or reduced
price, could limit our co-promotion revenues from BEXXAR
therapeutic regimen.



| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | We may be unable to manufacture commercial
    quantities of BEXXAR therapeutic regimen for sale.

BEXXAR therapeutic regimen contains a
radiolabeled antibody, which is an antibody linked to an
isotope. We have no existing internal capacity or experience
with respect to manufacturing radiolabeled antibodies for
large-scale clinical trials or commercial purposes. We have
entered into agreements with Nordion for radiolabeling the
Tositumomab component of BEXXAR therapeutic regimen at
Nordions centralized radiolabeling facility and for
supplying the (131) I radioisotope, which Nordion gets from
a single-source supplier. Under our agreement with Amersham
Health, Amersham Health is responsible for radiolabeling the
European supply of the Tositumomab component of BEXXAR
therapeutic regimen. Neither Nordion nor Amersham Health may be
able to produce sufficient radiolabeled antibodies to meet our
clinical requirements and, if BEXXAR therapeutic regimen is a
commercial success in the United States, or is approved and is a
commercial success in other countries, our commercial
requirements in the United States or in such other countries may
exceed the capacity of our current contract manufacturers. In
addition, radiolabeled antibody cannot be stockpiled against
future shortages due to the 8-day half-life of the (131) I
radioisotope. Accordingly, any interruption in supply from
Nordion, Amersham Health or another supplier could harm sales of
BEXXAR therapeutic regimen in the United States and in other
countries if and when it is approved for sale in such other
countries.

We have also entered into an agreement with BI
Pharma KG to produce bulk Tositumomab and fill the individual
product vials with Tositumomab. We have contracted with BI
Pharma KG and a third-party supplier for labeling and packaging
services. These manufacturers have limited experience producing,
labeling and packaging Tositumomab, and they may be unable to
produce our requirements in commercial quantities or with
acceptable quality.

We are aware of only a limited number of
manufacturers capable of producing Tositumomab in commercial
quantities or radiolabeling the antibody with the (131) I
radioisotope on a commercial scale. To establish and qualify a
new facility to centrally radiolabel antibodies could take three
years or longer. Accordingly, if Nordion is unable to
consistently produce sufficient radiolabeled antibodies to meet
our commercial requirements, our ability to market BEXXAR
therapeutic regimen in the United States could be harmed.
Nordions BEXXAR therapeutic regimen radiolabeling facility
will be shutdown for approximately two weeks each November
and/or December for routine preventative maintenance. This
annual shutdown will be scheduled but we anticipate that it may
have a negative impact on sales of BEXXAR therapeutic regimen
during the period encompassing the shutdown.



| |                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to establish or maintain
    distribution capabilities for BEXXAR therapeutic regimen, we may
    not successfully commercialize the product.

The unique properties of BEXXAR therapeutic
regimen require tightly controlled distribution of the product.
We may be unable to maintain or establish relationships with
third parties or build in-house distribution capabilities to
meet requirements for product supply. If we are unable to
establish or maintain these capabilities, we may not be able to
successfully commercialize the product. Due to its radioactive
component, BEXXAR therapeutic regimen is shipped in shielded
containers and must arrive at its destination

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within 24-48 hours after production. BEXXAR
therapeutic regimen must also be temperature controlled during
shipment. We rely on many third-party suppliers to process
orders and to package, store and ship BEXXAR therapeutic
regimen. We are working with suppliers to minimize risk and loss
of inventory and to provide efficient service to customers.
These third-party suppliers may be unable to handle BEXXAR
therapeutic regimen in a manner that will minimize loss of or
damage to inventory.




| |                                                                                                                                                                                   
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because we have limited sale and
    distribution capabilities, we may be unable to successfully
    commercialize BEXXAR therapeutic regimen or our other product
    candidates.

Following the approval of BEXXAR therapeutic
regimen in June of 2003, we began to build our direct sales
force for BEXXAR therapeutic regimen and anticipate having such
sales force in place by the middle of 2004. Our ability to
market and sell BEXXAR therapeutic regimen will be contingent on
recruiting, training and deploying the necessary sales force, as
well as performance by GSK under our BEXXAR therapeutic regimen
collaboration agreement. Developing an effective sales force
will require a significant amount of our financial resources and
time. We may be unable to establish and manage an effective
sales force in a timely or cost-effective manner, if at all, and
any sales force we do establish may not be capable of generating
sales of BEXXAR therapeutic regimen or other product candidates.

We intend to rely on our corporate partners to
market our products outside the United States and, in the case
of infectious disease products, worldwide. Our corporate
partners may not have effective sales forces and distribution
systems. If we are unable to maintain or establish relationships
and are required to market any of our products directly, we will
need to build a sales and marketing force with technical
expertise and with supporting distribution capabilities. We may
be unable to maintain or establish relationships with third
parties or build in-house sales and distribution capabilities.



| |                                                                                                                                                                 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Many of our product candidates are at an
    early stage of product development and we may not be able to
    successfully commercialize our product candidates.

We are at an early stage in the development of
the majority of our product candidates. The development of safe
and effective therapies for treating people with cancer and
infectious diseases is highly uncertain and subject to numerous
risks. Product candidates that may appear to be promising at
early stages of development may not reach the market for a
number of reasons. Product candidates may be found ineffective
or cause harmful side effects during clinical trials, may take
longer to progress through clinical trials than had been
anticipated, may fail to receive necessary regulatory approvals,
may prove impracticable to manufacture in commercial quantities
at reasonable cost and with acceptable quality or may fail to
achieve market acceptance.

On June 30, 2003, we and GSK announced that
the FDA had approved BEXXAR therapeutic regimen for the
treatment of patients with CD20 positive, follicular, NHL, with
and without transformation whose disease is refractory to
Rituximab and has relapsed following chemotherapy. We also have
an immunotherapeutic product that has been approved on a
named-patient basis in Germany, Spain, Italy and the United
Kingdom. The immunotherapeutic product incorporates MPL
adjuvant, our proprietary adjuvant, which is added to the
product to heighten the immune response to the products
allergens. In addition, we have received approval in Argentina
to sell RC-529 adjuvant as part of a prophylactic vaccine for
the prevention of Hepatitis B infection. RC-529 adjuvant is
added to the product to heighten the immune response to the
products antigens.

We may not be successful in obtaining regulatory
approval for any of our other product candidates, or in
commercializing BEXXAR therapeutic regimen or any product
candidates for which approval is obtained.



| |                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------
| | Our restructuring may place additional
    strain on our resources and may harm the morale and performance
    of our personnel.

On November 6, 2003, we announced that, as
part of a strategic restructuring, we would eliminate certain
research programs and supporting resources in an effort to focus
on priority programs that we believe have the greatest
opportunity for near term commercial success. This restructuring
reduced the scope and number of

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priority programs to allow us to concentrate more
resources on our core areas of expertise  monoclonal
antibodies, adjuvants and vaccines and TLR4 agonists and
antagonists. The programs we chose to continue and on which we
are focusing our resources may not result in any product
candidates, whereas we will miss or fail to take advantage of
opportunities that would have been presented by our discontinued
programs. We cannot be certain that we have chosen the best
programs for near term commercial success.


Our restructuring resulted in an approximate 18%
immediate reduction in our workforce, including the elimination
of unfilled open positions, as well as existing positions.
Following the workforce reduction, we had approximately 344
employees at facilities in Seattle, Washington, South
San Francisco, California and Hamilton, Montana. Our
restructuring plan may yield unanticipated consequences such as
attrition beyond our planned reduction in workforce. This
workforce reduction could place significant strain on our
administrative, operational and financial resources and result
in increased responsibilities for each of our management
personnel. As a result, our ability to respond to unexpected
challenges may be impaired and we may be unable to take
advantage of new opportunities. In addition, many of the
terminated employees possess specific knowledge or expertise,
and that knowledge or expertise may prove to have been important
to our operations. In that case, their absence may create
significant difficulties. In addition, this headcount reduction
may subject us to the risk of litigation, which could result in
substantial costs to us and could divert managements time
and attention away from business operations.



| |                                                                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our product candidates are subject to a
    government regulatory approval process that is uncertain,
    time-consuming and expensive and may not result in any approved
    products.

Any products that we develop are subject to
regulation by federal, state and local governmental authorities
in the United States, including the FDA, and by similar agencies
in other countries. Any product that we develop must receive all
relevant regulatory approvals or clearances before it may be
marketed in a particular country.

The approval process, which includes extensive
preclinical studies and clinical trials of each product
candidate in order to study its safety and efficacy, is
uncertain, can take many years and requires the expenditure of
substantial resources. Clinical trials of our product candidates
may not demonstrate safety and efficacy to the extent necessary
to obtain regulatory approvals for the indications being
studied, if at all. Companies in the pharmaceutical and
biotechnology industries have suffered significant setbacks in
advanced clinical trials, even after obtaining promising results
in earlier trials. The failure to demonstrate adequately the
safety and efficacy of any of our product candidates could delay
or prevent regulatory approval of the product candidate.



| |                                                                                                                                
| | -------------------------------------------------------------------------------------------------------------------------------
| | Delays in patient enrollment in clinical
    trials may occur, which may result in increased costs, program
    delays or both.

The timing and completion of current and planned
clinical trials of our product candidates depend on, among other
factors, the rate at which patients are enrolled, which is a
function of many factors, including:



| |   |                                                    
| | - | ---------------------------------------------------
| |  | the size of the patient population;                
|
| |  | the proximity of patients to the clinical sites;   
|
| |  | the number of clinical sites;                      
|
| |  | the eligibility criteria for the study;            
|
| |  | the existence of competing clinical
    trials; and
|
| |  | the existence of alternative available products.   

Data obtained from preclinical and clinical
activities are susceptible to varying interpretations, which
could delay, limit or prevent regulatory approval. In addition,
we may encounter delays, or the FDA may reject our product
candidates, based on changes in regulatory policy during the
period of product development,

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extension of the period of review of any
application for regulatory approval or other factors beyond our
control. Delays in obtaining regulatory approvals:




| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | would adversely affect the marketing of any
    products we develop;                          
|
| |  | could impose significant additional costs on us;                                              
|
| |  | would diminish any competitive advantages that we
    may attain; and                         
|
| |  | could adversely affect our ability to receive
    royalties and generate revenues and profits.

For example, we filed our BLA for BEXXAR
therapeutic regimen in June 1999 and did not receive regulatory
approval for BEXXAR therapeutic regimen until June 27,
2003. We may not be successful in obtaining regulatory approval
for any of our other product candidates, or in commercializing
any product candidates for which approval has been or is in the
future obtained.

Regulatory approval, if granted, may entail
limitations on the indicated uses for which the approved product
may be marketed. These limitations could reduce the size of the
potential market for the product. For example, BEXXAR
therapeutic regimen has only been approved for treatment of
patients with CD20 positive, follicular, NHL, with and without
transformation whose disease is refractory to Rituximab and has
relapsed following chemotherapy. Product approvals, once
granted, may be withdrawn if problems occur after initial
marketing. Further, manufacturers of approved products are
subject to ongoing regulation, including compliance with FDA
regulations governing current good manufacturing practice, or
cGMP. Failure to comply with manufacturing regulations, or other
FDA regulations, can result in, among other things, warning
letters, fines, injunctions, civil penalties, recall or seizure
of products, total or partial suspension of production, refusal
of the government to renew marketing applications and criminal
prosecution.



| |                                                                                                                            
| | ---------------------------------------------------------------------------------------------------------------------------
| | We have limited experience in manufacturing
    and may encounter problems or delays that could result in lost
    revenue.

Our current manufacturing facilities may not be
sufficient to support our needs for clinical quantities of our
product candidates or commercial quantities of our current
products. We have limited experience producing commercial
quantities of any product or in producing clinical-grade amounts
of our proprietary immunotherapeutic products, including
recombinant proteins or antibodies. We currently manufacture
only limited quantities of some antigens and several adjuvants.
Moreover, our manufacturing facilities must continually adhere
to cGMP regulations enforced by the FDA through its facilities
inspection program. If our facilities cannot pass a pre-approval
plant inspection, the FDA approval of our product candidates
that we manufacture in-house may be delayed or denied.

If we are unable to manufacture our product
candidates in accordance with cGMP regulations, the consequent
lack of supply of the product candidates could delay our
clinical programs, limit our sales of commercial products or
result in the breach or termination of our agreements to supply
products or product candidates to third parties. We intend to
rely on third-party contract manufacturers to produce larger
quantities of recombinant protein or other cell culture-based
biologicals for clinical trials and product commercialization.
Either we or our contract manufacturers may be unable to
manufacture our proprietary antigen vaccines or other
immunotherapeutic products at a cost or in quantities necessary
to make them commercially viable. Third-party manufacturers also
may be unable to meet our needs with respect to timing, quantity
or quality. If we are unable to contract for a sufficient supply
of required products on acceptable terms, or if we encounter
delays or difficulties in our relationships with these
manufacturers, our preclinical and clinical testing would be
delayed, thereby delaying submission of products for regulatory
approval, or the market introduction and commercial sale of the
products. Moreover, contract manufacturers that we may use must
continually adhere to cGMP regulations enforced by the FDA
through its facilities inspection program. If the facilities of
those manufacturers cannot pass a pre-approval plant inspection,
the FDA approval of our product candidates may be delayed or
denied.

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| |                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------
| | Any claims relating to our improper
    handling, storage or disposal of hazardous materials could be
    time-consuming and costly.

The manufacture and administration of BEXXAR
therapeutic regimen requires the handling, use and disposal of
(131) I isotope, a radioactive isotope of iodine. These
activities must comply with various state and federal
regulations. Violations of these regulations could significantly
delay completion of clinical trials and commercialization of
BEXXAR therapeutic regimen. For our ongoing clinical trials and
for commercial-scale production, we currently rely on Nordion to
radiolabel the Tositumomab with (131) I radioisotope at a
single location in Canada. Violations of safety regulations
could occur with Nordion and there is a risk of accidental
contamination or injury. In the event of any regulatory
noncompliance or accident, the supply of radiolabeled
Tositumomab for use in clinical trials or commercial sales could
be interrupted.

Our research and development involves the
controlled use of hazardous and radioactive materials and
biological waste. We are subject to federal, state and local
laws and regulations governing the use, manufacture, storage,
handling and disposal of these materials and waste products.
Although we believe that our safety procedures for handling and
disposing of these materials comply with legally prescribed
standards, we cannot completely eliminate the risk of accidental
contamination or injury from these materials. In the event of an
accident, we could be held liable for damages or penalized with
fines, and this liability could exceed our resources. We may
have to incur significant costs to comply with future
environmental laws and regulations.



| |                                                                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | We may be required to perform additional
    clinical trials or change the labeling of our products if we or
    others identify side effects after our products are on the
    market, which could harm sales of the affected
    products.

If we or others identify side effects after any
of our products are on the market, or if manufacturing problems
occur,



| |   |                                                                                                                                                                                          
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | regulatory approval may be withdrawn;                                                                                                                                                    
|
| |  | reformulation of our products, additional
    clinical trials, changes in labeling of our products or changes
    to or re-approvals of our manufacturing facilities may be
    required;
|
| |  | sales of the affected products may drop
    significantly;                                                                                                                               
|
| |  | our reputation in the marketplace may suffer;                                                                                                                                            
|
| |  | lawsuits, including class action suits, may be
    brought against us; and                                                                                                               
|
| |  | this could result in the breach or termination of
    our agreements to supply product candidates to third parties.                                                                      

Any of the above occurrences could harm or
prevent sales of the affected products or could increase the
costs and expenses of commercializing and marketing these
products.



| |                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Because we have limited sources of revenue,
    our results of operations are uncertain and may fluctuate
    significantly, which could cause the market price of our common
    stock to decrease.

To date, almost all of our revenue has resulted
from payments made under agreements with our corporate partners,
and we expect that most of our revenue will continue to result
from corporate partnerships until the successful
commercialization of BEXXAR therapeutic regimen or the approval
and commercialization of other products. Payments under
corporate partnerships and licensing arrangements are subject to
significant fluctuations in both timing and amount. We may not
receive anticipated revenue under existing corporate
partnerships, and we may be unable to enter into any additional
corporate partnerships.

Since our inception, we have generated only
minimal revenue from diagnostic product sales and no significant
revenue from therapeutic or prophylactic product sales. With the
exception of BEXXAR therapeutic regimen, MPL adjuvant, which has
been approved for sale as part of an immunotherapeutic product
on a named-patient basis in Germany, Spain, Italy and the United
Kingdom and RC-529 adjuvant,

48



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which has been approved for sale in Argentina as
part of a prophylactic vaccine for the prevention of Hepatitis B
infection, we cannot predict when, if ever, our research and
development programs will result in commercially available
immunotherapeutic products. We do not know when, if ever, we
will receive any significant revenue from commercial sales of
these products or any other of our product candidates that may
be approved for sale in the future.


As a result of our limited sources of revenue,
our operating results have varied significantly from quarter to
quarter and year to year in the past and we expect them to
continue to fluctuate. Because of these fluctuations, we believe
that period-to-period comparisons of our operating results are
not meaningful. In addition, our operating results for a
particular quarter or year may fall below the expectations of
securities analysts and investors, which could result in a
decrease in our stock price.



| |                                                                                    
| | -----------------------------------------------------------------------------------
| | We expect to incur future operating losses
    and may never achieve profitability.

We have experienced significant operating losses
in each year since our inception on September 8, 1994. As
of December 31, 2003, our accumulated deficit was
approximately $1.2 billion, of which $679.4 million is
attributable to the write-off of IPR&D costs associated with
our acquisitions, $221.2 million is attributable to
goodwill-related charges and $18.5 million is attributable
to a lease-related impairment charge. We may incur substantial
additional operating losses over at least the next several
years. Operating losses have been and may continue to be
principally the result of the various costs associated with our
acquisition activities, including the expenses associated with
the write-off of IRP&D, research and development programs,
preclinical studies and clinical activities. We may never
achieve profitability, and our ability to achieve a consistent,
profitable level of operations depends in large part on our
ability to successfully:



| |   |                                                                                                          
| | - | ---------------------------------------------------------------------------------------------------------
| |  | commercialize BEXXAR therapeutic regimen;                                                                
|
| |  | enter into corporate partnerships for product
    discovery, research, development and commercialization;
|
| |  | obtain regulatory approvals for our product
    candidates; and                                          
|
| |  | manufacture and market our products once they are
    approved for sale.                                 

Even if we are successful in the above
activities, our operations may not be profitable.



| |                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------
| | We may need additional capital, and our
    ability to implement our existing financing plans and secure
    additional funding is uncertain.

We may be unable to raise on acceptable terms, if
at all, any additional capital resources necessary to conduct
our operations. If we are unable to raise any additional capital
as may be required, we may be forced to limit some or all of our
research and development programs and related operations or
curtail commercialization of our product candidates. Our future
capital requirements will depend on many factors, including:



| |   |                                                                                                                   
| | - | ------------------------------------------------------------------------------------------------------------------
| |  | continued scientific progress in our discovery
    and research programs;                                         
|
| |  | progress with preclinical studies and clinical
    trials;                                                        
|
| |  | the magnitude and scope of our discovery,
    research and development programs;                                  
|
| |  | our ability to maintain existing, and establish
    additional, corporate partnerships and licensing arrangements;
|
| |  | the time and costs involved in obtaining
    regulatory approvals;                                                
|
| |  | the costs of building and maintaining a marketing
    and sales force;                                            
|
| |  | the costs of marketing a product;                                                                                 
|
| |  | the time and costs involved in expanding and
    maintaining our manufacturing facilities;                        

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| |   |                                                                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the costs involved in preparing, filing,
    prosecuting, maintaining, defending and enforcing patent claims,
    and the cost of any judgment that may be enforced against us for
    legal fees or other costs of other parties to such claims;
|
| |  | the potential need to develop, acquire or license
    new technologies and products; and                                                                                                                                                         
|
| |  | other factors beyond our control.                                                                                                                                                                                                                

We believe that our existing capital resources,
together with committed payments under existing corporate
partnerships, bank credit arrangements and interest and
investment income, will be sufficient to fund our current and
planned operations over at least the next 18 months.
However, we intend to seek additional funding through corporate
partnerships, and also may seek additional funding through:



| |   |                                       
| | - | --------------------------------------
| |  | public or private equity financings;  
|
| |  | public or private debt financings; and
|
| |  | capital lease transactions.           

Additional financing may be unavailable on
acceptable terms, if at all. If sufficient capital is not
available, we may be forced to limit some or all of our research
and development programs and related operations or curtail
commercialization of our product candidates.



| |                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------
| | Our financings and other transactions may
    result in dilution and a decline in the price of our common
    stock.

In August 2002, as part of a private placement of
approximately 7.3 million shares of our common stock, we
also issued warrants to purchase approximately 1.2 million
shares of our common stock at an exercise price of
$6.13 per share to selected institutional and other
accredited investors. In addition, in June 2003, as part of a
private placement of approximately 3.7 million shares of
our common stock, we issued warrants to purchase approximately
670,000 shares of our common stock at an exercise price of
$8.044 per share to institutional investors. If these
warrants are exercised, the issuance of shares of common stock
will have a dilutive effect on the ownership percentage of our
existing stockholders.

We have outstanding $100 million aggregate
principal amount of convertible notes due in 2008. The holders
of these notes have the option of converting the principal and
unpaid interest on the notes, at any time prior to the maturity
date, into common stock at a fixed conversion rate of
$9.175 per share. If the notes were converted in full,
10,899,180 shares of our common stock would be issued to
the noteholders; this issuance would have a dilutive effect on
the ownership percentage of our existing stockholders.

In addition to any dilution resulting from
issuances under the equity line facility or upon exercise of
warrants, we are also obligated, or in some cases have the
option, to issue additional shares of our common stock under
collaboration and other strategic agreements.

Under our collaborative agreement for BEXXAR
therapeutic regimen with GSK, GSK provided us with a
$15 million credit line that was fully drawn by Coulter in
December 2000 and which we may choose to repay in cash or in
shares of our common stock on or prior to the October 3,
2004 maturity date. Under a different collaborative agreement
with GSK, we have an outstanding loan from GSK in principal
amount of $5 million which was due on September 1,
2003. At GSKs option, GSK may choose to receive repayment
of this loan in cash or shares of our common stock at a
specified premium to the five day average closing price of our
common stock for the period immediately preceding
September 1, 2003. GSK has not yet made its election
regarding the form of repayment and accordingly the
$5 million loan remains outstanding.

Under an assignment agreement between Coulter,
Beckman Coulter, Inc., InterWest Partners V, L.P. and
InterWest Investors V, relating to portions of the
technology underlying BEXXAR therapeutic regimen, Beckman
Coulter, Inc. is entitled to receive the first $4.5 million
of royalties upon commercial sale of BEXXAR therapeutic regimen,
if any, that would otherwise have been due to DFCI under the
licenses that were sublicensed to Coulter; thereafter, any such
royalties shall be payable to DFCI. Beckman Coulter, Inc.

50



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has the option, in lieu of receiving cash for
such royalties, to receive shares of our common stock valued at
the then current fair market value of our common stock.


We are also required to pay dividends on our
outstanding preferred stock. The dividend can be paid in cash or
common stock, at our option. The maximum amount of cash that
would be paid in a year would be $2.5 million and the
maximum number of shares of common stock that would be issued is
146,828.

The issuance of additional stock under these
agreements, as dividends on our preferred stock or pursuant to
other transactions will have a dilutive effect on the ownership
percentage of our existing stockholders. From time to time, we
expect to enter into new partnerships, acquisitions and other
strategic transactions in which we may agree to issue additional
shares of common stock.



| |                                                                                                
| | -----------------------------------------------------------------------------------------------
| | We have a significant amount of debt, which
    could adversely affect our financial condition.

We have outstanding $100 million aggregate
principal amount of convertible notes bearing interest at 4.25%
and due in 2008 and as of December 31, 2003, we had
outstanding bank loans to BNP Paribas and GE Capital totaling
$13.8 million, which, along with our March 4, 2004
loan of $14.6 million from NDC, collectively, is a
significant amount of debt and debt service obligations. If we
are unable to generate sufficient cash flow or otherwise obtain
funds necessary to make required payments on the notes,
including from cash and cash equivalents on hand, we will be in
default under the terms of the loan agreements, or indentures,
which could, in turn, cause defaults under our other existing
and future debt obligations. These notes also could have a
negative effect on our earnings per share, depending on the rate
of interest we earn on cash balances.

Even if we are able to meet our debt service
obligations, the amount of debt we have could adversely affect
us in a number of ways, including by



| |   |                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | limiting our ability to obtain any necessary
    financing in the future for working capital, capital
    expenditures, debt service requirements, or other purposes;                                               
|
| |  | limiting our flexibility in planning for, or
    reacting to, changes in our business;                                                                                                                              
|
| |  | placing us at a competitive disadvantage relative
    to our competitors who have lower levels of debt;                                                                                                             
|
| |  | making us more vulnerable to a downturn in our
    business or the economy generally; or                                                                                                                            
|
| |  | requiring us to use a substantial portion of our
    cash to pay principal and interest on our debt, instead of
    contributing those funds to other purposes such as working
    capital and capital expenditures.

In addition, we could lose the tax deduction for
interest expense associated with the convertible notes if, under
certain circumstances, we issue senior unsecured debt or incur
any obligation to provide consideration for an acquisition of
stock or assets of a newly acquired corporation. We also could
lose the tax deduction for interest expense associated with the
convertible notes if we were to invest in non-taxable
investments.



| |                                                                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If our corporate partnerships are
    unsuccessful or if we are unable to establish corporate
    partnerships in the future, our revenue growth and product
    development may be limited.

The success of our business strategy depends in
part on our ability to enter into multiple corporate
partnerships and to manage effectively the numerous
relationships that may result from this strategy. For the years
ended December 31, 2003, 2002 and 2001, approximately 95%
of our revenue resulted from collaboration agreements. If our
corporate partnerships are unsuccessful or if we are unable to
establish corporate partnerships, we may be prevented from
commercializing our products or product candidates or
effectively partnering our products or product candidates.

Our licenses, in combination with our proprietary
discoveries, enable us to enter into partnerships to progress
some of our product candidates. Our corporate partnerships
generally provide our partners with the

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right to use technologies owned or licensed by us
in research, development and commercialization activities. Our
material corporate partnerships include the following:




| |   |                                                                                                                                                                                                                                                                                                                      
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | a corporate partnership with GSK to develop and
    commercialize BEXXAR therapeutic regimen in the United States;                                                                                                                                                                                                   
|
| |  | a license and supply agreement with GSK Canada to
    commercialize BEXXAR therapeutic regimen in Canada;                                                                                                                                                                                                            
|
| |  | a corporate partnership with Amersham Health to
    develop and commercialize BEXXAR therapeutic regimen in Europe;                                                                                                                                                                                                  
|
| |  | a corporate partnership with Kirin for the
    research, development and commercialization of vaccine products
    aimed at treating multiple forms of cancer, including leukemia,
    myelodysplasia and melanoma;                                                                                                  
|
| |  | a corporate partnership with Zambon for the
    research, development and commercialization of vaccine products
    aimed at preventing and treating lung cancer;                                                                                                                                                    
|
| |  | a corporate partnership with GSK that provides
    for vaccine development of breast, prostate and colon cancer
    vaccines, vaccine discovery and development for tuberculosis,
    and vaccine discovery programs for two chronic infectious
    pathogens, Chlamydia trachomatis and Chlamydia
    pneumonia; and
|
| |  | several license and supply agreements with GSK,
    which grant GSK licenses to certain adjuvants for use in
    vaccines for infectious diseases, cancers and allergies that GSK
    is developing.                                                                                                                 

Management of our relationships with our
corporate partners requires:



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | significant time and effort from our management
    team;                               
|
| |  | coordination of our research with the research
    priorities of our corporate partners;
|
| |  | effective allocation of our resources to multiple
    projects; and                     
|
| |  | an ability to attract and retain key management,
    scientific and other personnel.    

Our corporate partners may terminate our current
partnerships. Our agreements with GSK for commercialization of
BEXXAR therapeutic regimen in the United States, Amersham Health
for marketing BEXXAR therapeutic regimen in Europe and GSK
Canada for marketing BEXXAR therapeutic regimen in Canada
contain milestone-based termination provisions that provide that
if we fail to meet specified development or regulatory
milestones, the licensor may terminate the agreement. In
addition, all of these license agreements may be terminated by
the licensor for our material breach or insolvency, or after a
specified termination date. Some of our corporate partners have
options to license aspects of our technology. Any of these
corporate partners may not exercise its option to license this
technology.

The process of establishing new corporate
partnerships is difficult and time-consuming. Our discussions
with potential partners may not lead to the establishment of new
corporate partnerships on favorable terms, if at all. If we
successfully establish new corporate partnerships, such
partnerships may never result in the successful development of
our product candidates or the generation of significant revenue.

Because we generally enter into research and
development collaborations with corporate partners at an early
stage of product development, our success largely depends on the
performance of our corporate partners. We do not directly
control the amount or timing of resources devoted by our
corporate partners to collaborative activities. Our corporate
partners may not commit sufficient resources to our research and
development programs or the commercialization of our products
and product candidates. If any corporate partner fails to commit
sufficient resources, our preclinical or clinical development
related to the corporate partnership could be delayed or
terminated. Also, our current corporate partners or future
corporate partners, if any, may pursue existing or other
development-stage products or alternative technologies in
preference to those being developed in collaboration with us.

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| |                                                                                                                                                                                               
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Our inability to license technology from
    third parties or our inability to maintain exclusive licenses
    may impair our ability to develop and commercialize our product
    candidates.

Our success also depends on our ability to enter
into and maintain licensing arrangements with commercial or
academic entities to obtain technology that is advantageous or
necessary to developing and commercializing our product
candidates. If we cannot obtain or maintain these licenses on
acceptable terms, we may be required to expend significant time
and resources to develop or in-license similar technology. If we
are unable to do so, we may be prevented from developing and
commercializing our product candidates.

We currently have various license agreements that
provide us rights to use technologies owned or licensed by third
parties in research, development and commercialization
activities. Our material third-party licensing arrangements
include the following:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | a license with the DFCI for the use of the
    anti-B1 antibody used in BEXXAR therapeutic regimen; and               
|
| |  | a license with the University of Michigan related
    to using anti-CD20 antibodies in radioimmunotherapy of Lymphoma.

Many of our third-party license agreements
contain milestone-based termination provisions, in which case
our failure to meet any agreed milestones may allow the licensor
to terminate the agreement. Further, we may be unable to
negotiate additional license agreements in the future on
acceptable terms, if at all. Many of our license agreements
grant us exclusive licenses to the underlying technologies. If
we are unable to maintain the exclusivity of our exclusive
licenses, we may be unable to commercialize our product
candidates or face competition from other parties that may
obtain licenses to the same technologies.



| |                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to obtain, protect and
    enforce our patent rights, we may be unable to effectively
    protect or exploit our proprietary technology, inventions and
    improvements.

Our success depends in part on our ability to
obtain, protect and enforce commercially valuable patents. If we
fail to obtain and maintain patent protection for our
proprietary technology, inventions and improvements, our
competitors could develop and commercialize products that would
otherwise infringe our patents. We try to protect our
proprietary positions by filing United States and foreign patent
applications related to our proprietary technology, inventions
and improvements that are important to developing our business.

Our patent position is generally uncertain and
involves complex legal and factual questions. Legal standards
relating to the validity and scope of claims in the
biotechnology and biopharmaceutical fields are still evolving.
Accordingly, the degree of future protection for our patent
rights is uncertain. The risks and uncertainties that we face
with respect to our patents include the following:



| |   |                                                                                                                                                                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the pending patent applications we have filed or
    to which we have exclusive rights may not result in issued
    patents or may take longer than we expect to result in issued
    patents;                                                                             
|
| |  | the claims of any patents that issue may not
    provide meaningful protection;                                                                                                                                                                                            
|
| |  | we may be unable to develop additional
    proprietary technologies that are patentable;                                                                                                                                                                                   
|
| |  | the patents licensed or issued to us may not
    provide a competitive advantage;                                                                                                                                                                                          
|
| |  | other parties may challenge patents licensed or
    issued to us;                                                                                                                                                                                                          
|
| |  | disputes may arise regarding the invention and
    corresponding ownership rights in inventions and know-how
    resulting from the joint creation or use of intellectual
    property by us, our licensors, corporate partners and other
    scientific collaborators; and
|
| |  | other parties may design around our patented
    technologies.                                                                                                                                                                                                             

We have licensed several patent applications from
Southern Research Institute, or SRI, related to our microsphere
encapsulation technology. One of these patent applications is
currently the subject of opposition proceedings before the
European Patent Office. The European Patent Office has revoked
the previously issued

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European patent. Although SRI has appealed this
decision, it is uncertain whether SRI will prevail in this
opposition proceeding. As a result, this patent may not issue in
Europe.


Biogen Idec has challenged the validity of our
U.S. Patent Nos. 5,595,721, 5,843,398, 6,015,542,
6,090,365, 6,022,521, 6,251,362 and 6,287,537 related to BEXXAR
therapeutic regimen by seeking declaratory judgment of
invalidity of these patents. Biogen Idec is also seeking a
declaratory judgment that its Zevalin product for the treatment
of NHL is not infringing the patents. We, GSK and the Regents of
the University of Michigan are parties to a lawsuit against
Biogen Idec alleging patent infringement of our U.S. Patent
Nos. 5,595,721, 6,015,542, 6,090,365 and 6,287,537 by Zevalin
and seeking monetary damages and permanent injunctive relief.
Claims in the patents at issue in the litigation cover
composition of matter and methods-of-use in the treatment of
NHL. On October 14, 2003, the United States District Court,
Southern District of California granted Biogen Idecs
motion for summary judgment that the 5,595,721, 6,015,542,
6,090,365 and 6,287,537 patents are unenforceable due to
inequitable conduct before the United States Patent and
Trademark Office. On November 13, 2003 Corixa, GSK and the
Regents of the University of Michigan filed a motion for
reconsideration with the United States District Court, Southern
District of California requesting that the court reconsider
its October 14, 2003 order. On January 22, 2004,
the United States District Court, Southern District of
California granted the motion for reconsideration, vacated the
October 14, 2003 order and denied Biogen Idecs motion
for summary judgment of inequitable conduct.

On June 2, 2003, Biogen Idec moved to amend
its complaint to add a claim for declaratory judgment relief of
non-infringement and invalidity of our U.S. Patent
No. 6,565,827. Issued Patent No. 6,565,827 covers
composition of matter used in the treatment of NHL. On that same
day, Biogen Idec also filed a separate lawsuit in the United
States District Court, Southern District of California, seeking
declaratory judgment of non-infringement and invalidity of this
same patent. On August 11, 2003, the judge denied Biogen
Idecs motion to amend the complaint to include this patent
in the originally filed lawsuit or, alternatively, to
consolidate the first filed lawsuit with the one filed on
June 2, 2003. Subsequently, on December 16, 2003,
Biogen Idec filed with the United States District Court,
Southern District of California, a notice of voluntary dismissal
without prejudice for the June 2, 2003 lawsuit.

In addition, on February 25, 2003, Biogen
Idec filed a complaint in the United States District Court,
Southern District of California, against us and GSK for patent
infringement of U.S. Reissue Patent No. RE38,008,
which claims, among other things, methods of enhancing the
delivery of conjugated specific antibodies to solid tumor target
cells.

On March 1, 2004 we announced that we and
GSK have reached a settlement with Biogen Idec regarding all
outstanding patent litigation between us and Biogen Idec. The
settlement, which serves as the basis for the dismissal of all
patent litigation between the parties, provides for Biogen Idec
to pay to us and GSK a $20 million upfront settlement
payment, as well as a one-time milestone payment based on future
Zevalin sales performance, and royalty payments on Zevalin sales
from January 1, 2004 until the expiration of all BEXXAR
therapeutic regimen patents that were the subject of the
litigation. We and GSK will also enter into a worldwide,
cross-license agreement with Biogen Idec relating to each
partys patents in suit.



| |                                                                                                                             
| | ----------------------------------------------------------------------------------------------------------------------------
| | If we are unable to gain access to patent
    and proprietary rights of others, we may be unable to compete
    effectively.

Our success depends in part on our ability to
gain access to third-party patent and proprietary rights and to
operate our business without infringing on third-party patent
rights. We may be required to obtain licenses to patents or
other proprietary rights from third parties to develop,
manufacture and commercialize our product candidates. Licenses
required under third-party patents or proprietary rights may not
be available on terms acceptable to us, if at all. If we do not
obtain the required licenses, we could encounter delays in
product development while we attempt to redesign products or
methods or we could be unable to develop, manufacture or sell
products requiring these licenses.

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| |                                                                                                                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to protect our trade
    secrets, we may be unable to protect our interests in
    proprietary know-how that is not patentable or for which we have
    elected not to seek patent protection.

Our success depends in part on our ability to
protect trade secrets that are not patentable or for which we
have elected not to seek patent protection. To protect our trade
secrets, we rely primarily on confidentiality agreements with
employees and third parties, and protective contractual
provisions such as those contained in license agreements and
research agreements. Nevertheless, other parties may develop
similar or alternative technologies or duplicate our
technologies that are not protected by patents, or otherwise
obtain and use information that we regard as proprietary. Other
parties may breach confidentiality agreements and other
protective contracts we have entered into, and we may not become
aware of, or have adequate remedies in the event of, any breach.
Any material leak of confidential data into the public domain or
to third parties could harm our competitive position.



| |                                                                                         
| | ----------------------------------------------------------------------------------------
| | If we are unable to protect our trademarks,
    we may be unable to compete effectively.

We try to protect our trademarks by applying for
United States and foreign registrations for marks that are
important to developing our business. However, the laws of some
foreign countries do not protect our proprietary rights to the
same extent as do the laws of the United States, and effective
trademark protection may not be available in other
jurisdictions. If we are unable to protect our trademarks, we
may be unable to establish brand awareness for our products,
which could limit our ability to compete effectively. Of our
trademarks, CORIXA and MPL are currently the subject of
opposition proceedings before the Office for the Harmonization
in the Internal Market, which handles initial prosecution and
opposition of European trademarks. We may not ultimately prevail
in these opposition proceedings. As a result, we may not receive
trademark protection for CORIXA and MPL in Europe. Our trademark
application in Canada for ENHANZYN is currently the subject of
an opposition proceeding before the Canadian Intellectual
Property Office. We may not ultimately prevail in this
opposition proceeding. As a result, we may not receive trademark
protection for ENHANZYN in Canada.



| |                                                                                                                
| | ---------------------------------------------------------------------------------------------------------------
| | Litigation regarding intellectual property
    rights owned or used by us may be costly and
    time-consuming.

As a result of litigation, interferences,
opposition proceedings and other administrative proceedings in
which we are or may become involved, we have incurred
substantial expense and the proceedings may divert the efforts
of our technical and management personnel. An adverse
determination in proceedings of this type could subject us to
significant liabilities, allow our competitors to market
competitive products without obtaining a license from us, or
require us to seek licenses from third parties that may not be
available on commercially reasonable terms, if at all. If we
cannot obtain such licenses, we may be restricted or prevented
from developing and commercializing our product candidates. As a
result, an adverse determination could have a materially adverse
effect on our business, financial condition and operating
results.

The enforcement, defense and prosecution of
intellectual property rights, United States Patent and Trademark
Office interference proceedings and related legal and
administrative proceedings in the United States and elsewhere
involve complex legal and factual questions. As a result, these
proceedings are costly and time-consuming, and their outcome is
uncertain. Litigation may be necessary to:



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | defend against third-party claims of infringement;                                       
|
| |  | enforce our issued and licensed patents;                                                 
|
| |  | protect our trade secrets or know-how; or                                                
|
| |  | determine the enforceability, scope and validity
    of the proprietary rights of others.



| |                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------
| | If we do not successfully integrate
    potential future acquisitions, we may incur unexpected costs and
    disruptions to our business.

We have completed several acquisitions of
complementary technologies, product candidates and businesses.
In the future, we may acquire additional complementary
companies, products and product

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candidates or technologies. Managing these
acquisitions has entailed and may in the future entail numerous
operational and financial risks and strains, including:




| |   |                                                                                                                                                                                                         
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | exposure to unknown liabilities;                                                                                                                                                                        
|
| |  | higher-than-expected acquisition and integration
    costs;                                                                                                                                             
|
| |  | difficulty and cost in combining the operations
    and personnel of acquired businesses with our operations and
    personnel;                                                                         
|
| |  | disruption of our business and diversion of our
    managements time and attention to integrating or
    completing the development or commercialization of any acquired
    technologies;             
|
| |  | impairment of relationships with key customers of
    acquired businesses due to changes in management and ownership;                                                                                   
|
| |  | inability to retain key employees of acquired
    businesses; and                                                                                                                                       
|
| |  | increased amortization expenses if an acquisition
    results in significant intangible assets or potential
    write-downs of goodwill and other intangible assets due to
    impairment of the assets.

For example, in December 2000 we acquired
Coulter, a publicly held biotechnology company specializing in,
among other things, the development of therapeutic antibodies,
including BEXXAR therapeutic regimen. As a result of our
acquisition of Coulter, we acquired direct sales and marketing
personnel in preparation for the launch of BEXXAR therapeutic
regimen. In an effort to minimize expenses during the delay in
the FDA review of BEXXAR therapeutic regimen, we initiated
expense reductions, including a 15% reduction in total headcount
in March 2001. The majority of these reductions took place in
the operations that we acquired from Coulter. During the first
quarter of 2002, we experienced a decrease in the value of our
common stock subsequent to receiving the complete review letter
from the FDA regarding the BEXXAR therapeutic regimen BLA. As a
result, goodwill and other intangibles were re-evaluated and we
recognized a $161.1 million goodwill impairment charge.
BEXXAR therapeutic regimen may not be successful in the
marketplace, in which case we may not gain substantial benefit
from the Coulter acquisition. In May 2002, we sold specific
preclinical assets and equipment that we acquired from Coulter
to Medarex and, in connection with the asset sale, initiated a
further headcount reduction.



| |                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------
| | We depend heavily on the principal members
    of our management and scientific staff, the loss of any of whom
    could impair our ability to compete.

The loss of the services of any of the principal
members of our management and scientific staff could
significantly delay or prevent the achievement of our scientific
or business objectives. Competition among biotechnology and
biopharmaceutical companies for qualified employees is intense,
and the ability to retain and attract qualified individuals is
critical to our success. We may be unable to attract and retain
these individuals currently or in the future on acceptable
terms, if at all. In addition, we do not maintain key
person life insurance on any of our officers, employees or
consultants.

We also have relationships with scientific
collaborators at academic and other institutions, some of whom
conduct research at our request or assist us in formulating our
research, development or clinical strategy. These scientific
collaborators are not our employees and may have commitments to,
or consulting or advisory contracts with, other entities that
may limit their availability to us. We have limited control over
the activities of these scientific collaborators and can
generally expect these individuals to devote only limited
amounts of time to our activities. Failure of any of these
persons to devote sufficient time and resources to our programs
could harm our business. In addition, these collaborators may
have arrangements with other companies to assist the companies
in developing technologies that may compete with our products.

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| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to compete effectively in
    the highly competitive biotechnology and biopharmaceutical
    industries, our business will fail.

The biotechnology and biopharmaceutical
industries are intensely competitive, and we may be unable to
compete effectively in these industries. Many companies and
institutions compete with us in developing alternative therapies
to treat or prevent cancer and infectious diseases, including:



| |   |                           
| | - | --------------------------
| |  | pharmaceutical companies; 
|
| |  | biotechnology companies;  
|
| |  | academic institutions; and
|
| |  | research organizations.   

Moreover, technology controlled by third parties
that may be advantageous to our business may be acquired or
licensed by our competitors, thereby preventing us from
obtaining technology on commercially reasonable terms, if at all.

Many of the companies developing competing
technologies and products have significantly greater financial
resources and expertise in research and development,
manufacturing, preclinical and clinical development, obtaining
regulatory approvals and marketing than we do. Other smaller
companies may also prove to be significant competitors,
particularly through collaborative arrangements with large and
established companies. Academic institutions, government
agencies and other public and private research organizations may
also conduct research, seek patent protection and establish
collaborative arrangements for research and development,
manufacturing, and preclinical and clinical development, and
obtain regulatory approval of and market products similar to
ours. These companies and institutions compete with us in
recruiting and retaining qualified scientific and management
personnel, as well as in acquiring and developing technologies
complementary to our programs. We will face competition with
respect to:



| |   |                                          
| | - | -----------------------------------------
| |  | product efficacy and safety;             
|
| |  | timing and scope of regulatory approvals;
|
| |  | availability of resources;               
|
| |  | reimbursement coverage;                  
|
| |  | product price; and                       
|
| |  | patent position.                         

Competitors may develop more effective or more
affordable products, or may achieve earlier patent protection or
product commercialization, than we do. These competitive
products may achieve a greater market share or render our
products obsolete.

Biogen Idecs product, Zevalin, received FDA
approval for commercial sale in the United States in February
2002. Zevalin has been approved and is being marketed for the
treatment of certain types of NHL in the United States. In
addition, in January 2004, the Committee for Proprietary
Medicinal Products, a scientific committee that reviews drug
product applications for the European Union, approved the
commercial sales of Zevalin in Europe. Consequently, Biogen Idec
could have a significant advantage over us in sales and
marketing of products for the treatment of NHL in the United
States and the European Union.



| |                                                                                                            
| | -----------------------------------------------------------------------------------------------------------
| | Our stock price could be very volatile and
    shares of our common stock may suffer a decline in
    value

The market prices for securities of biotechnology
companies have in the past been, and are likely to continue in
the future to be, very volatile. As a result of the fluctuations
in the price of our common stock you may be unable to sell your
shares at or above the price you paid for them. The market price
of our common

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stock may be subject to substantial volatility
depending on numerous factors, many of which are beyond our
control, including:




| |   |                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------
| |  | announcements regarding the results of discovery
    efforts and preclinical and clinical activities by us or our
    competitors;              
|
| |  | progress or delay of our or our competitors
    regulatory approvals;                                                                          
|
| |  | announcements regarding the acquisition of
    technologies or companies by us or our competitors;                                              
|
| |  | changes in our existing corporate partnerships or
    licensing arrangements;                                                                   
|
| |  | establishment of additional corporate
    partnerships or licensing arrangements by us or our competitors;                                      
|
| |  | technological innovations or new commercial
    products developed by us or our competitors;                                                    
|
| |  | changes in our or our competitors
    intellectual property portfolio;                                                                         
|
| |  | developments or disputes concerning our or our
    competitors proprietary rights;                                                             
|
| |  | issuance of new or changed securities
    analysts reports and their recommendations regarding us or
    our competitors;                      
|
| |  | changes in government regulations;                                                                                                              
|
| |  | economic and other external factors;                                                                                                            
|
| |  | additions or departures of any of our key
    personnel;                                                                                        
|
| |  | operating losses by us; and                                                                                                                     
|
| |  | actual or anticipated fluctuations in our
    quarterly financial and operating results and degree of trading
    liquidity in our common stock.

Our common stock has traded as high as $72.00 and
as low as $4.48 since the beginning of 2000. The last reported
sales price of our common stock on March 3, 2004 was $6.35.
If our stock price declines significantly, we may be unable to
raise additional capital. Significant declines in the price of
our common stock could also impede our ability to attract and
retain qualified employees and reduce the liquidity of our
common stock.



| |                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Product liability claims may damage our
    reputation and if insurance proves inadequate, the product
    liability claims may harm our financial position.

Our business exposes us to the risk of product
liability claims inherent in manufacturing, testing and
marketing therapies for treating people with cancer and
infectious diseases. A product liability claim may damage our
reputation by raising questions about a products safety
and efficacy and could limit our ability to sell one or more
products by preventing or interfering with product
commercialization. Although we have product liability and
clinical trial liability insurance that we believe is
commercially reasonable, this coverage may be inadequate or may
be unavailable in the future on acceptable terms, if at all. In
addition, defending a suit, regardless of its merit, could be
costly and could divert management attention.



| |                                                                                                                                             
| | --------------------------------------------------------------------------------------------------------------------------------------------
| | State laws and our certificate of
    incorporation may inhibit potential acquisition bids that could
    be beneficial to our stockholders.

Provisions of our amended and restated
certificate of incorporation and bylaws, as well as provisions
of Delaware and Washington law, will make it more difficult for
a third party to acquire us, even if doing so would be
beneficial for our stockholders. This could limit the price that
certain investors might be willing to pay in the future for our
shares of common stock. For example, certain provisions of our
certificate of incorporation or bylaws:



| |   |                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------
| |  | allow our board to issue preferred stock without
    any vote or further action by the stockholders;
|
| |  | eliminate the right of stockholders to act by
    written consent without a meeting;                

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| |   |                                                                                            
| | - | -------------------------------------------------------------------------------------------
| |  | eliminate cumulative voting in the election of
    directors;                              
|
| |  | specify a supermajority requirement for
    stockholders to call a special meeting;        
|
| |  | specify restrictive procedures for director
    nominations by stockholders; and           
|
| |  | specify a supermajority requirement for
    stockholders to change the number of directors.

We are subject to certain provisions of Delaware
and Washington law, which could also delay or make more
difficult a merger, tender offer or proxy contest involving us.
In particular, Section 203 of the Delaware General
Corporation Law prohibits a Delaware corporation from engaging
in certain business combinations with an interested
stockholder for a period of three years unless specific
conditions are met. Similarly, Chapter 23B.19 of the
Washington Business Corporation Act prohibits corporations based
in Washington from engaging in certain business combinations
with an interested stockholder for a period of five
years unless specific conditions are met.

In addition, certain provisions of Delaware and
Washington law could have the effect of delaying, deferring or
preventing a change in control of us, including, without
limitation, discouraging a proxy contest or making more
difficult the acquisition of a substantial block of our common
stock. The provisions could also limit the price that investors
might be willing to pay in the future for shares of our common
stock.

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|        |                                                
|------- | -----------------------------------------------
|Item 8. | Financial Statements and Supplementary
    Data

REPORT OF ERNST & YOUNG LLP,
INDEPENDENT AUDITORS

The Board of Directors and Stockholders

Corixa Corporation


We have audited the accompanying consolidated
balance sheets of Corixa Corporation as of December 31,
2003 and 2002, and the related consolidated statements of
operations, stockholders equity, and cash flows for each
of the three years in the period ended December 31, 2003.
These financial statements are the responsibility of the
Companys management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion the financial statements referred
to above present fairly, in all material respects, the
consolidated financial position of Corixa Corporation at
December 31, 2003 and 2002, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2003 in conformity with
accounting principles generally accepted in the United States.

As discussed in Note 1 to the consolidated
financial statements, the Company adopted the full provisions of
Statement of Financial Accounting Standards No. 141,
Business Combinations, and No. 142, Goodwill and Other
Intangible Assets, effective January 1, 2002.



| |                      
| | ---------------------
| | ERNST & YOUNG
    LLP

Seattle, Washington

January 30, 2004, except for Note 13,


as to which the date is March 4, 2004


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CORIXA CORPORATION

CONSOLIDATED BALANCE SHEETS

|                                            |                                                    |                                                                                                             |         |            |         |  |        |            |         | 
|------------------------------------------- | -------------------------------------------------- | ----------------------------------------------------------------------------------------------------------- | ------- | ---------- | ------- |  | ------ | ---------- | ------- | 
|                                            |                                                    |                                                                                                            
|                                            |                                                    | December 31,                                                                                               
|                                            |                                                    |                                                                                                            
|                                            |                                                    | 2003                                                                                                        |         | 2002      
|                                            |                                                    |                                                                                                             |         |           
|                                            |                                                    |                                                                                                            
|                                            |                                                    | (In thousands)                                                                                             
|ASSETS                                     
|Current assets:                             |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            | Cash and cash equivalents                          |                                                                                                             | $       | 36,890     |         |  | $      | 47,363     |        
|                                            | Securities available-for-sale                      |                                                                                                             |         | 107,712    |         |  |        | 41,194     |        
|                                            | Accounts receivable                                |                                                                                                             |         | 7,090      |         |  |        | 8,919      |        
|                                            | Interest receivable                                |                                                                                                             |         | 1,204      |         |  |        | 789        |        
|                                            | Prepaid expenses and other current assets          |                                                                                                             |         | 8,847      |         |  |        | 7,130      |        
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            |                                                    | Total current assets                                                                                        |         |            | 161,743 |  |        |            | 105,395 | 
|Property and equipment, net                 |                                                    |                                                                                                             | 26,337  |            |         |  | 41,876 |           
|Securities available-for-sale, non-current  |                                                    |                                                                                                             | 47,383  |            |         |  | 28,200 |           
|Acquisition-related intangible assets, net  |                                                    |                                                                                                             | 3,199   |            |         |  | 13,929 |           
|Deferred charges, deposits and other assets |                                                    |                                                                                                             | 11,904  |            |         |  | 6,706  |           
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            |                                                    | Total assets                                                                                                |         | $          | 250,566 |  |        | $          | 196,106 | 
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           
|LIABILITIES AND STOCKHOLDERS
    EQUITY   
|Current liabilities:                        |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            | Accounts payable and accrued liabilities           |                                                                                                             | $       | 20,534     |         |  | $      | 15,100     |        
|                                            | Dividend payable                                   |                                                                                                             |         | 333        |         |  |        | 353        |        
|                                            | Current portion of deferred revenue                |                                                                                                             |         | 7,700      |         |  |        | 8,999      |        
|                                            | Current portion of long-term obligations           |                                                                                                             |         | 25,657     |         |  |        | 25,151     |        
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            |                                                    | Total current liabilities                                                                                   |         |            | 54,224  |  |        |            | 49,603  | 
|Deferred revenue, less current portion      |                                                    |                                                                                                             | 7,248   |            |         |  | 11,191 |           
|Long-term obligations, less current portion |                                                    |                                                                                                             | 108,138 |            |         |  | 6,920  |           
|Commitments and contingencies               |                                                    |                                                                                                             |         |            |         |  |        |           
|Stockholders equity:                       |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            | Convertible preferred stock, $0.001 par
    value: |                                                                                                             |         |            |         |  |        |            |        
|                                            |                                                    | Authorized  10,000,000                                                                                     |         |            |         |  |        |            |         | 
|                                            |                                                    | Designated Series A 
    12,500 shares; Issued and outstanding  12,500                                    |         |            |        |  |        |            |        | 
|                                            |                                                    | Designated Series B 
    37,500 shares; Issued and outstanding  37,500                                    |         |            |        |  |        |            |        | 
|                                            | Common stock, $0.001 par value:                    |                                                                                                             |         |            |         |  |        |            |        
|                                            |                                                    | Authorized  100,000,000 shares;
    Issued and outstanding  55,403,506 in 2003 and
    50,216,683 in 2002 |         |            | 55      |  |        |            | 50      | 
|                                            | Additional paid-in capital                         |                                                                                                             |         | 1,276,121  |         |  |        | 1,238,958  |        
|                                            | Deferred compensation                              |                                                                                                             |         | (404       | )       |  |        | (667       | )      
|                                            | Accumulated other comprehensive income (loss)      |                                                                                                             |         | (256       | )       |  |        | 692        |        
|                                            | Accumulated deficit                                |                                                                                                             |         | (1,194,560 | )       |  |        | (1,110,641 | )      
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            |                                                    | Total stockholders equity                                                                                  |         |            | 80,956  |  |        |            | 128,392 | 
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           
|                                            |                                                    | Total liabilities and stockholders equity                                                                  |         | $          | 250,566 |  |        | $          | 196,106 | 
|                                            |                                                    |                                                                                                             |         |            |         |  |        |           

See accompanying notes

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CORIXA CORPORATION

CONSOLIDATED STATEMENTS OF
OPERATIONS

|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |         |         | 
|----------------------------------------------------------------------------- | ---------------------------------- | ---------------------------------------- | ------- | ------ | ------- | ---- | -------- | ------- | ------- | - | -------- | ------- | ------- | 
|                                                                              |                                    |                                         
|                                                                              |                                    | Year Ended December 31,                 
|                                                                              |                                    |                                         
|                                                                              |                                    | 2003                                     |         | 2002   |         | 2001
|                                                                              |                                    |                                          |         |        |         |     
|                                                                              |                                    |                                         
|                                                                              |                                    | (In thousands, except per share amounts)
|Revenue:                                                                      |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|                                                                              | Collaborative agreements           |                                          | $       | 48,307 |         |      | $        | 46,134  |         |   | $        | 55,128  |        
|                                                                              | Government grants                  |                                          |         | 2,403  |         |      |          | 2,604   |         |   |          | 2,937   |        
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|                                                                              |                                    | Total revenue                            |         |        | 50,710  |      |          |         | 48,738  |   |          |         | 58,065  | 
|Operating expenses:                                                           |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|                                                                              | Research and development           |                                          |         | 95,556 |         |      |          | 99,722  |         |   |          | 139,873 |        
|                                                                              | Sales, general and administrative  |                                          |         | 21,697 |         |      |          | 18,400  |         |   |          | 22,650  |        
|                                                                              | Intangible asset amortization      |                                          |         | 439    |         |      |          | 439     |         |   |          | 56,084  |        
|                                                                              | Impairment of lease-related assets |                                          |         | 18,491 |         |      |          |        |         |   |          |        |        
|                                                                              | Goodwill impairment                |                                          |         |       |         |      |          | 161,060 |         |   |          |        |        
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|                                                                              |                                    | Total operating expenses                 |         |        | 136,183 |      |          |         | 279,621 |   |          |         | 218,607 | 
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|Loss from operations                                                          |                                    |                                          | (85,473 | )      |         |      | (230,883 | )       |         |   | (160,542 | )      
|Interest income                                                               |                                    |                                          | 3,414   |        |         |      | 4,287    |         |         |   | 9,349    |        
|Interest expense                                                              |                                    |                                          | (4,378  | )      |         |      | (2,275   | )       |         |   | (2,295   | )      
|Other income                                                                  |                                    |                                          | 2,518   |        |         |      | 21,472   |         |         |   | 5,451    |        
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|Net loss                                                                      |                                    |                                          | (83,919 | )      |         |      | (207,399 | )       |         |   | (148,037 | )      
|Preferred stock dividend                                                      |                                    |                                          | (948    | )      |         |      | (767     | )       |         |   | (1,730   | )      
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|Net loss applicable to common stockholders                                    |                                    | $                                        | (84,867 | )      |         | $    | (208,166 | )       |         | $ | (149,767 | )      
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|Basic and diluted net loss per common share                                   |                                    | $                                        | (1.60   | )      |         | $    | (4.67    | )       |         | $ | (3.66    | )      
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        
|Shares used in computation of basic and diluted
    net loss per common share |                                    |                                          | 52,981  |        |         |      | 44,611   |         |         |   | 40,961   |        
|                                                                              |                                    |                                          |         |        |         |      |          |         |         |   |          |        

See accompanying notes

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CORIXA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |          |  
|------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------- | -- | ------------ |  | ---------- | - | -------- |  | ------------- | ------ | ------------ |  | ------------- | -- | ------- |  | ------ | --------- | - |  | - | ------- | - |  | - | ---- | ----- | - | - | ---------- | -------- | - | - | ------- | -------- | -
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  | Other         |        |              |  |              
|                                                                                            |                                                          | Preferred stock |    | Common stock |  | Additional |   |          |  | accumulated   |        |              |  | Total        
|                                                                                            |                                                          |                 |    |              |  | paid-in    |   | Deferred |  | comprehensive |        | Accumulated  |  | stockholders
|                                                                                            |                                                          | Shares          |    | Amount       |  | Shares     |   | Amount   |  | capital       |        | compensation |  | income (loss) |    | deficit |  | equity
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |       
|                                                                                            |                                                          |                
|                                                                                            |                                                          | (In thousands) 
|Balance at December 31, 2000                                                                |                                                          |                 | 50 |              |  |            |  |          |  |               | 40,458 |              |  |               | 40 |         |  |        | 1,188,524 |   |  |   | (28,758 | ) |  |   | (26  | )     |   |   | (755,205   | )        |   |   | 404,575 |         
|Preferred stock dividend                                                                    |                                                          |                 |   |              |  |            |  |          |  |               | 73     |              |  |               |   |         |  |        | (625      | ) |  |   |        |   |  |   |     |       |   |   |           |          |   |   | (625    | )       
|Stock options exercised                                                                     |                                                          |                 |   |              |  |            |  |          |  |               | 629    |              |  |               | 1  |         |  |        | 3,525     |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 3,526   |         
|Issuance of common stock under the employee stock
    purchase Plan                         |                                                          |                 |   |              |  |            |  |          |  |               | 125    |              |  |               |   |         |  |        | 1,508     |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 1,508   |         
|Issuance of common stock for cash                                                           |                                                          |                 |   |              |  |            |  |          |  |               | 271    |              |  |               |   |         |  |        | 3,832     |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 3,832   |         
|Issuance of stock options in exchange for
    technology and services                       |                                                          |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | 444       |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 444     |         
|Stock warrants net exercised                                                                |                                                          |                 |   |              |  |            |  |          |  |               | 17     |              |  |               |   |         |  |        |          |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   |        |         
|Amortization of deferred compensation, net of
    $9,221 reversal for terminated employees  |                                                          |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | (9,221    | ) |  |   | 24,762  |   |  |   |     |       |   |   |           |          |   |   | 15,541  |         
|Comprehensive loss:                                                                         |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|                                                                                            | Net unrealized gain on securities
    available-for-sale |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      | 1,001 |   |   |            |         |   |   |         | 1,001    |  
|                                                                                            | Net loss                                                 |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      |      |   |   |            | (148,037 | ) |   |         | (148,037 | )
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|                                                                                            | Comprehensive loss                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         | (147,036 | )
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|Balance at December 31, 2001                                                                |                                                          |                 | 50 |              |  |            |  |          |  |               | 41,573 |              |  |               | 41 |         |  |        | 1,187,987 |   |  |   | (3,996  | ) |  |   | 975  |       |   |   | (903,242   | )        |   |   | 281,765 |         
|Preferred stock dividend                                                                    |                                                          |                 |   |              |  |            |  |          |  |               | 147    |              |  |               |   |         |  |        | 116       |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 116     |         
|Stock options exercised                                                                     |                                                          |                 |   |              |  |            |  |          |  |               | 52     |              |  |               |   |         |  |        | 90        |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 90      |         
|Issuance of common stock under the employee stock
    purchase plan                         |                                                          |                 |   |              |  |            |  |          |  |               | 138    |              |  |               |   |         |  |        | 736       |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 736     |         
|Issuance of common stock (net of offering costs
    of $2,622)                              |                                                          |                 |   |              |  |            |  |          |  |               | 8,298  |              |  |               | 9  |         |  |        | 50,038    |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 50,047  |         
|Remeasurement and issuance of stock options in
    exchange for consulting services         |                                                          |                 |   |              |  |            |  |          |  |               | 9      |              |  |               |   |         |  |        | (112      | ) |  |   |        |   |  |   |     |       |   |   |           |          |   |   | (112    | )       
|Reclassification of redeemable common stock to
    equity                                   |                                                          |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | 2,000     |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 2,000   |         
|Amortization of deferred compensation, net of
    $1,897 reversal for terminated employees  |                                                          |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | (1,897    | ) |  |   | 3,329   |   |  |   |     |       |   |   |           |          |   |   | 1,432   |         
|Comprehensive loss:                                                                         |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|                                                                                            | Net unrealized gain on securities
    available-for-sale |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      | (283  | ) |   |            |         |   |   |         | (283     | )
|                                                                                            | Net loss                                                 |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      |      |   |   |            | (207,399 | ) |   |         | (207,399 | )
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|                                                                                            | Comprehensive loss                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         | (207,682 | )
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|Balance at December 31, 2002                                                                |                                                          |                 | 50 |              |  |            |  |          |  |               | 50,217 |              |  |               | 50 |         |  |        | 1,238,958 |   |  |   | (667    | ) |  |   | 692  |       |   |   | (1,110,641 | )        |   |   | 128,392 |         
|Preferred stock dividend                                                                    |                                                          |                 |   |              |  |            |  |          |  |               | 147    |              |  |               |   |         |  |        | 19        |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 19      |         
|Stock options exercised                                                                     |                                                          |                 |   |              |  |            |  |          |  |               | 115    |              |  |               |   |         |  |        | 359       |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 359     |         
|Issuance of common stock under the employee stock
    purchase plan                         |                                                          |                 |   |              |  |            |  |          |  |               | 159    |              |  |               |   |         |  |        | 840       |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 840     |         
|Issuance of common stock (net of offering costs
    of $2,622)                              |                                                          |                 |   |              |  |            |  |          |  |               | 4,731  |              |  |               | 5  |         |  |        | 35,670    |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 35,675  |         
|Remeasurement and issuance of stock options in
    exchange for consulting services         |                                                          |                 |   |              |  |            |  |          |  |               | 34     |              |  |               |   |         |  |        | 355       |   |  |   |        |   |  |   |     |       |   |   |           |          |   |   | 355     |         
|Amortization of deferred compensation, net of
    $80,000 reversal for terminated employees |                                                          |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | (80       | ) |  |   | 263     |   |  |   |     |       |   |   |           |          |   |   | 183     |         
|Comprehensive loss:                                                                         |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|                                                                                            | Net unrealized gain on securities
    available-for-sale |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      | (948  | ) |   |            |         |   |   |         | (948     | )
|                                                                                            | Net loss                                                 |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      |      |   |   |            | (83,919  | ) |   |         | (83,919  | )
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|                                                                                            | Comprehensive loss                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         | (84,867  | )
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         
|Balance at December 31, 2002                                                                |                                                          |                 | 50 |              |  | $          |  |          |  |               | 55,403 |              |  | $             | 55 |         |  | $      | 1,276,121 |   |  | $ | (404    | ) |  | $ | (256 | )     |   | $ | (1,194,560 | )        |   | $ | 80,956  |         
|                                                                                            |                                                          |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |            |          |   |   |         |         

See accompanying notes

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CORIXA CORPORATION

CONSOLIDATED STATEMENTS OF CASH
FLOWS

|                                                                                |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |          |        |  
|------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ----------------------------------------- | ------- | -------- | ------ | ---- | -------- | ------- | ------ | - | -------- | -------- | ------ | -
|                                                                                |                                                                                      |                                          
|                                                                                |                                                                                      | Year Ended December 31,                  
|                                                                                |                                                                                      |                                          
|                                                                                |                                                                                      | 2003                                      |         | 2002     |        | 2001
|                                                                                |                                                                                      |                                           |         |          |        |     
|                                                                                |                                                                                      |                                          
|                                                                                |                                                                                      | (In thousands)                           
|Operating activities                                                            |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|Net loss                                                                        |                                                                                      | $                                         | (83,919 | )        |        | $    | (207,399 | )       |        | $ | (148,037 | )       
|Adjustments to reconcile net loss to net cash
    used in operating activities: |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|                                                                                | Impairment of lease-related assets                                                   |                                           |         | 18,491   |        |      |          |        |        |   |          |         |       
|                                                                                | Goodwill impairment                                                                  |                                           |         |         |        |      |          | 161,060 |        |   |          |         |       
|                                                                                | Amortization of deferred compensation                                                |                                           |         | 188      |        |      |          | 1,432   |        |   |          | 15,541   |       
|                                                                                | Depreciation and amortization                                                        |                                           |         | 10,119   |        |      |          | 12,606  |        |   |          | 66,500   |       
|                                                                                | Equity instruments remeasured and issued in
    exchange for technology and services |                                           |         | 355      |        |      |          | (112    | )      |   |          | 444      |       
|                                                                                | Gain on sale of equipment                                                            |                                           |         |         |        |      |          | (998    | )      |   |          | (4,513   | )     
|                                                                                | Gain on sale of securities available-for-sale                                        |                                           |         | (457     | )      |      |          |        |        |   |          |         |       
|                                                                                | Changes in certain assets and liabilities:                                           |                                           |         |          |        |      |          |         |        |   |          |          |       
|                                                                                |                                                                                      | Accounts receivable                       |         |          | 1,829  |      |          |         | (3,387 | ) |          |          | 8,304  |  
|                                                                                |                                                                                      | Interest receivable                       |         |          | (415   | )    |          |         | 368    |   |          |          | 898    |  
|                                                                                |                                                                                      | Prepaid expenses and other current assets |         |          | (2,016 | )    |          |         | 2,166  |   |          |          | 2,890  |  
|                                                                                |                                                                                      | Accounts payable and accrued liabilities  |         |          | 7,454  |      |          |         | (4,746 | ) |          |          | (3,722 | )
|                                                                                |                                                                                      | Deferred revenue                          |         |          | (5,242 | )    |          |         | (5,951 | ) |          |          | (4,083 | )
|                                                                                |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|Net cash used in operating activities                                           |                                                                                      |                                           | (53,613 | )        |        |      | (44,961  | )       |        |   | (65,778  | )       
|Investing activities                                                            |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|                                                                                | Purchases of securities available-for-sale                                           |                                           |         | (200,037 | )      |      |          | (79,896 | )      |   |          | (232,725 | )     
|                                                                                | Proceeds from maturities of securities
    available-for-sale                        |                                           |         | 38,679   |        |      |          | 27,565  |        |   |          | 206,785  |       
|                                                                                | Proceeds from sale of securities
    available-for-sale                              |                                           |         | 75,159   |        |      |          | 68,039  |        |   |          | 88,218   |       
|                                                                                | Purchases of property and equipment                                                  |                                           |         | (6,679   | )      |      |          | (6,255  | )      |   |          | (18,115  | )     
|                                                                                | Proceeds from leasehold improvement reimbursement                                    |                                           |         | 1,097    |        |      |          |        |        |   |          |         |       
|                                                                                | Proceeds from sale of investments                                                    |                                           |         |         |        |      |          |        |        |   |          | 5,974    |       
|                                                                                |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|Net cash (used in) provided by investing
    activities                         |                                                                                      |                                           | (91,781 | )        |        |      | 9,453    |         |        |   | 50,137   |         
|Financing activities                                                            |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|                                                                                | Proceeds from issuance of common stock                                               |                                           |         | 36,877   |        |      |          | 50,873  |        |   |          | 8,866    |       
|                                                                                | Principal payments on capital leases                                                 |                                           |         |         |        |      |          |        |        |   |          | (997     | )     
|                                                                                | Principal payments made on long-term obligations                                     |                                           |         | 1,724    |        |      |          | (6,118  | )      |   |          | (12,837  | )     
|                                                                                | Proceeds from short-term obligations                                                 |                                           |         |         |        |      |          |        |        |   |          | 2,344    |       
|                                                                                | Proceeds from long-term obligations, net                                             |                                           |         | 96,320   |        |      |          | 4,778   |        |   |          | 5,156    |       
|                                                                                | Dividends paid                                                                       |                                           |         |         |        |      |          |        |        |   |          | (625     | )     
|                                                                                |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|Net cash provided by financing activities                                       |                                                                                      |                                           | 134,921 |          |        |      | 49,533   |         |        |   | 1,907    |         
|Net (decrease) increase in cash and cash
    equivalents                        |                                                                                      |                                           | (10,473 | )        |        |      | 14,025   |         |        |   | (13,734  | )       
|Cash and cash equivalents at beginning of period                                |                                                                                      |                                           | 47,363  |          |        |      | 33,338   |         |        |   | 47,072   |         
|                                                                                |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|Cash and cash equivalents at end of period                                      |                                                                                      | $                                         | 36,890  |          |        | $    | 47,363   |         |        | $ | 33,338   |         
|                                                                                |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|Supplemental Disclosures of Cash Flow
    Information:                          |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|                                                                                | Interest paid                                                                        |                                           | $       | 2,296    |        |      | $        | 2,667   |        |   | $        | 2,458    |       
|Supplemental Schedule of Noncash Investing and
    Financing Activities:        |                                                                                      |                                           |         |          |        |      |          |         |        |   |          |         
|                                                                                | Common stock issued for payment of preferred
    stock dividend                      |                                           | $       | 967      |        |      | $        | 880     |        |   | $        | 1,105    |       
|                                                                                | Reclassification of redeemable common stock to
    equity                            |                                           | $       |         |        |      | $        | 2,000   |        |   | $        |         |       

See accompanying notes

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CORIXA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS



|   |                                                                           
|-- | --------------------------------------------------------------------------
|1. | Description of Business and Summary of
    Significant Accounting Policies



| |                                                      
| | -----------------------------------------------------
| | Description of Business and Basis of
    Presentation

We are a developer of innovative
immunotherapeutic products designed to affect the immune system
and treat debilitating and life-threatening conditions caused by
cancer and infectious disease.

Originally founded to pursue development of
leading, proprietary antigen discovery technology, we are
emerging as a product development company with multiple product
candidates, many in late-stage human clinical trials. Our
development efforts are focused on core areas of immunotherapy
expertise, including monoclonal antibodies, vaccines and
adjuvants, and small molecules called TLR4 agonists and
antagonists that stimulate innate immunity.

The consolidated financial statements include our
accounts and those of our wholly owned subsidiary, Coulter. All
significant intercompany account balances and transactions have
been eliminated in consolidation.



| |                          
| | -------------------------
| | Cash and Cash Equivalents

All short-term investments, which consist
primarily of bankers acceptances and certificates of
deposit, with maturities of three months or less at date of
purchase, are considered to be cash equivalents. The amounts are
recorded at cost, which approximates fair market value.



| |                              
| | -----------------------------
| | Securities Available-for-Sale

Our investment portfolio is classified as
available-for-sale and is segregated into current and
non-current portions based on the remaining term of the
instrument. Investments with outstanding maturity dates of two
years or longer are classified as non-current. Our primary
investment objectives are preservation of principal, a high
degree of liquidity and a maximum total return. We invest
primarily in (United States dollar denominated only): commercial
paper; short and mid-term corporate notes/bonds, with no more
than 10% of the portfolio in any one corporate issuer; and
federal agencies with terms not exceeding four years. Such
securities are stated at fair value, with the unrealized gains
and losses reflected in stockholders equity. Interest
earned on securities is included in interest income. The
amortized cost of investments is adjusted for amortization of
premiums and accretion of discounts to maturity. Such
amortization and accretions are included in interest income. The
cost of securities sold is calculated using the specific
identification method.



| |                       
| | ----------------------
| | Certain Concentrations

Credit Risk.We are
subject to concentrations of credit risk, primarily from our
investments. Credit risk for investments is managed by the
purchase of investment-grade securities, A1/P1 for money market
instruments and A or better for debt instruments, and
diversification of the investment portfolio among issuers and
maturities.

Suppliers.We have
contracted with a third-party manufacturer, BI Pharma KG, to
produce bulk Tositumomab, a key component of BEXXAR therapeutic
regimen for use in ongoing clinical trials and to meet
commercial requirements, as well as to provide for fill/finish
and packaging services. We have committed to purchase minimum
annual quantities of Tositumomab from BI Pharma KG. In February
2003, we amended our Supply Agreement with BI Pharma KG to
temporarily reduce our minimum annual order commitment for
Tositumomab following the commercial launch of BEXXAR
therapeutic regimen. The minimum annual order for 2004 is
approximately $2.9 million. We have also contracted with a
third-party manufacturer, Nordion, for radiolabeling supply of
the Tositumomab component of BEXXAR therapeutic regimen at
Nordions centralized radiolabeling facility. In June 2003
we signed a new seven-year manufacturing agreement with Nordion
replacing the existing supply agreement.

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##### Table of Contents



CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)



| |                       
| | ----------------------
| | Property and Equipment

Property and equipment is stated at cost and is
depreciated on the straight-line method over the assets
estimated useful lives, which range from three to seven years
for computers and equipment and twenty years for buildings.
Leasehold improvements are amortized over the lesser of their
estimated useful lives or the term of the lease.



| |                                          
| | -----------------------------------------
| | Acquisition-Related Intangible
    Assets

Effective January 1, 2002, we adopted
SFAS 141, Business Combinations and
SFAS 142, Goodwill and Other Intangible
Assets.SFAS 141 requires that the purchase
method of accounting be used for all business combinations
initiated after June 30, 2001, and also specifies the
criteria for the recognition of intangible assets separately
from goodwill. Under the new rules, goodwill is no longer
amortized but is subject to an impairment test at least annually
or more frequently if impairment indicators arise. Separately
identified and recognized intangible assets resulting from
business combinations completed before July 1, 2001, that
did not meet the new criteria for separate recognition of
intangible assets were subsumed in goodwill upon adoption. The
only intangible asset of the company that did not meet the
separate recognition criteria of SFAS 141 was our assembled
workforce. We continue to amortize intangible assets that meet
the new criteria over their useful lives.

A reconciliation of previously reported net loss
and net loss per share to the amounts adjusted for the exclusion
of goodwill amortization for the year-ended December 31,
2001 as if we had adopted FAS 142 on January 1, 2001,
is as follows (in thousands):

|                                                                       |  |   |          |  
|---------------------------------------------------------------------- |  | - | -------- | -
|Net loss applicable to common stockholders, as
    reported            |  | $ | (149,767 | )
|Add back: Amortized goodwill and assembled
    workforce               |  |   | 55,645   |  
|                                                                       |  |   |          |  
|Net loss applicable to common stockholders, as
    adjusted            |  | $ | (94,122  | )
|                                                                       |  |   |          |  
|Basic and diluted net loss per share as reported                       |  | $ | (3.66    | )
|                                                                       |  |   |          |  
|Add back: Goodwill amortization                                        |  | $ | 1.36     |  
|                                                                       |  |   |          |  
|Basic and diluted net loss per share, as adjusted                      |  | $ | (2.30    | )
|                                                                       |  |   |          |  
|Shares used in computation of basic and diluted
    net loss per share |  |   | 40,691   |  
|                                                                       |  |   |          |  

On March 12, 2002, we received a second
complete review letter from the FDA regarding our BLA for BEXXAR
therapeutic regimen. In the complete review letter, the FDA
stated that additional clinical studies would be required to
provide sufficient evidence of the safety and net clinical
benefit of BEXXAR therapeutic regimen.

Upon announcement on March 13, 2002 of the
receipt of the complete review letter from the FDA, the value of
our common stock declined which, in managements opinion
represented an indication of impairment of recorded goodwill. In
accordance with the requirements of SFAS 142, an interim
test of goodwill impairment was performed as of March 13,
2002. The impairment test involves a two-step approach. Under
step one of the test, we compared our estimated fair value (the
reporting unit) based upon the market price of our common stock
to the carrying value of our equity. Because the carrying value
of our equity exceeded our fair value, we performed step two of
the test, which involved allocating our fair value to all of our
assets and liabilities to determine how much, if any, of the
excess value should be allocated to goodwill. The results of the
impairment test indicated that no goodwill was present and
accordingly, we recognized a $161.1 million goodwill
impairment charge in the first quarter of 2002.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Acquisition-related intangible assets at
December 31, 2003, consist of adjuvant know-how and an
assumed lease with balances of approximately $1.2 million
and $2.0 million, respectively. Adjuvant know-how and the
acquired lease are amortized on the straight-line method over
periods of seven and ten years, respectively.

In the second and third quarters of 2003 we
subleased approximately 117,000 square feet of our leased
facilities in South San Francisco. In accordance with
SFAS No. 144, long-lived assets must be reviewed for
impairment whenever events or changes in circumstances indicate
that the carrying amount of those long-lived assets might not be
recoverable. Upon entering into the sublease agreements an
estimate of the undiscounted future cash flows attributable to
the subleases was performed and was determined to be less than
the carrying amount of the intangible asset acquired lease,
related leasehold improvements and furniture and fixtures.
Because the carrying value exceeded the fair value, we
recognized an impairment charge of $12.6 million and
$5.9 million in the second and third quarters of 2003,
respectively, related to these assets.

Amortization of the remaining acquired lease is
recorded as additional rent expense. The expected future annual
amortization expense of our other acquisition-related intangible
assets is as follows (in thousands):

|                            |  |              |       | 
|--------------------------- |  | ------------ | ----- | 
|                            |  | Expected    
|                            |  | Amortization
|Year Ending December 31,    |  | Expense     
|                            |  |             
|2004                        |  | $            | 727   | 
|2005                        |  |              | 727   | 
|2006                        |  |              | 617   | 
|2007                        |  |              | 288   | 
|2008                        |  |              | 288   | 
|Thereafter                  |  |              | 552   | 
|                            |  |              |       | 
|Total expected amortization |  | $            | 3,199 | 
|                            |  |              |       | 

At December 31, 2003 and 2002, we had
approximately $1.3 million and $4.6 million,
respectively, of accumulated amortization related to intangible
assets.



| |                         
| | ------------------------
| | Stock-Based Compensation

We have adopted the disclosure-only provisions of
SFAS No. 123, Accounting for Stock-Based
Compensationand apply Accounting Principles Board
Opinion No. 25, or APB 25, and related interpretations
in accounting for our stock option plans. Accordingly, our
employee stock-based compensation expense is recognized based on
the intrinsic value of the option on the date of grant.

At December 31, 2003 we had two stock-based
employee compensation plans, which are described more fully in
Note 7. No stock-based employee compensation cost, other
than compensation associated with options assumed in
acquisitions, is reflected in net loss, as all options granted
under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. The
following table illustrates

67



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

the effect on net loss and net loss per share if
we had applied the fair value recognition of SFAS 123,
Accounting for Stock-Based Compensation, to stock-based
employee compensation.

|                                                                                                                 |                    |                                       |         |         |   |      |         |          |   |  |         |          |  
|---------------------------------------------------------------------------------------------------------------- | ------------------ | ------------------------------------- | ------- | ------- | - | ---- | ------- | -------- | - |  | ------- | -------- | -
|                                                                                                                 |                    |                                      
|                                                                                                                 |                    | Year Ended December 31,              
|                                                                                                                 |                    |                                      
|                                                                                                                 |                    | 2003                                  |         | 2002    |   | 2001
|                                                                                                                 |                    |                                       |         |         |   |     
|                                                                                                                 |                    |                                      
|                                                                                                                 |                    | (In thousands, except per share data)
|Net loss applicable to common shareholders:                                                                      |                    |                                       |         |         |   |      |         |          |   |  |         |         
|                                                                                                                 | As reported        |                                       | $       | (84,867 | ) |      | $       | (208,166 | ) |  | $       | (149,767 | )
|Additional stock-based employee compensation
    expense determined under fair value based method for all awards |                    |                                       | (10,936 | )       |   |      | (16,822 | )        |   |  | (21,896 | )       
|                                                                                                                 |                    |                                       |         |         |   |      |         |          |   |  |         |         
|                                                                                                                 | Pro forma net loss |                                       | $       | (95,803 | ) |      | $       | (224,988 | ) |  | $       | (171,663 | )
|                                                                                                                 |                    |                                       |         |         |   |      |         |          |   |  |         |         
|Net loss per share:                                                                                              |                    |                                       |         |         |   |      |         |          |   |  |         |         
|                                                                                                                 | As reported        |                                       | $       | (1.60   | ) |      | $       | (4.67    | ) |  | $       | (3.66    | )
|                                                                                                                 | Pro forma          |                                       |         | (1.81   | ) |      |         | (5.04    | ) |  |         | (4.19    | )

Stock compensation expense for options granted to
nonemployees has been determined in accordance with SFAS 12
and EITF 96-18, Accounting for Equity Instruments That
Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services,as the
fair value of the consideration received or the fair value of
the equity instruments issued, whichever is more reliably
measured. The fair value of options granted to nonemployees is
periodically re-measured as the underlying options vest.



| |                 
| | ----------------
| | Use of Estimates

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



| |                            
| | ---------------------------
| | Other Financial Instruments

As of December 31, 2003 and
December 31, 2002, the carrying value of financial
instruments such as receivables and payables approximated their
fair values, based on the short-term maturities of these
instruments. Additionally, the carrying value of long-term
liabilities approximated their fair values because the
underlying interest rates approximate market rates at the
balance sheet dates.



| |        
| | -------
| | Revenue

We generate revenue from technology licenses,
collaborative research and development arrangements, cost
reimbursement contracts, co-promotion revenues under our
agreement with GSK for BEXXAR therapeutic regimen and sales of
research adjuvants. Revenue under technology licenses and
collaborative agreements typically consists of non-refundable
and/or guaranteed technology license fees, collaborative
research funding, technology access fees, and various milestone
and future product royalty or profit-sharing payments.

Revenue associated with up-front license,
technology access and research and development funding payments
under collaborative agreements is recognized ratably over the
relevant periods specified in the respective agreements,
generally the research and development period. Revenue from
substantive at-risk milestones and future product royalties is
recognized upon completion of the milestones and adjuvant sales,
as defined in the respective agreements. Revenue under cost
reimbursement contracts is recognized as the related costs are
incurred. Co-promotion revenue or expense under our agreement
with GSK for BEXXAR therapeutic regimen is determined based on
the calculation of joint profit or loss (as defined in the
agreement). Such amounts were not significant through
December 31, 2003. Revenue from adjuvant sales is

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

recognized upon customer acceptance of the
product. Payments received in advance of recognition as revenue
are recorded as deferred revenue. We recognized 77% of our
collaborative revenue in 2003 from five collaborative partners,
73% from five collaborative partners in 2002 and 84% from five
collaborative partners in 2001.



| |                                      
| | -------------------------------------
| | Research and Development
    Expenses

Pursuant to SFAS No. 2,
Accounting for Research and Development Costs,our research and development costs are expensed as incurred.
The value of acquired IPR&D is charged to expense on the
date of acquisition. Research and development expenses include,
but are not limited to, payroll and personnel expense, lab
supplies, preclinical, outside manufacturing, legal fees and
consulting.



| |                   
| | ------------------
| | Net Loss Per Share

Basic net loss per share is calculated by
dividing net loss applicable to common stockholders by the
weighted average number of common shares outstanding. Diluted
net loss per share is calculated by dividing the net loss
applicable to common stockholders by the weighted average common
shares outstanding plus the dilutive effect of outstanding stock
options, stock warrants and preferred stock. Because we report a
net loss, diluted net loss per share is the same as basic net
loss per share because the effect of outstanding stock options,
stock warrants and preferred stock being added to weighted
average shares outstanding would reduce the loss per share.
Therefore, outstanding stock options, stock warrants and
preferred stock are not included in the calculation.



| |                    
| | -------------------
| | Segment Information

We currently operate as a single segment under
SFAS No. 131, Disclosures About Segments of
an Enterprise and Related Information.



| |                              
| | -----------------------------
| | New Accounting Pronouncements

In May 2003, FASB issued SFAS 150.
SFAS 150 establishes standards for how an issuer classifies
and measures certain financial instruments with characteristics
of both liabilities and equity. SFAS 150 is effective for
financial instruments entered into or modified after
May 31, 2003. This Standard does not currently have any
impact on our consolidated results of operations, financial
position or disclosure.

In January 2003, the FASB issued FIN No. 46.
FIN No. 46 addresses consolidation by business enterprises
of variable interest entities that possess certain
characteristics. The interpretation requires that if a business
enterprise has a controlling financial interest in a variable
interest entity, the assets, liabilities and results of
operations of the variable interest entity must be included in
the consolidated financial statements with those of the business
enterprise. This interpretation applies immediately to variable
interest entities created after January 31, 2003 and to
variable interest entities in which an enterprise obtains an
interest after that date. In December 2003, the FASB issued FIN
No. 46R, which includes significant amendments to
previously issued FIN No. 46. Among other provisions, FIN
No. 46R includes revised transition dates for public
entities. We are now required to adopt the provisions of FIN
No. 46R no later than the end of the first reporting period
that ends after March 15, 2004. The adoption of this
interpretation is not expected to have a material effect on our
financial statements or results of operations.

Effective prospectively for arrangements entered
into in fiscal periods beginning after June 15, 2003, EITF
Issue 00-21, Revenue Arrangements with Multiple
Deliverables, addresses the accounting by a vendor for
contractual arrangements in which multiple revenue-generating
activities will be performed by the vendor. In some situations,
the different revenue-generating activities
(deliverables) are sufficiently separable and there exists
sufficient evidence of fair values to account separately for the
different deliverables (that is,

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

there are separate units of accounting). In other
situations, some or all of the different deliverables are
interrelated closely or there is not sufficient evidence of fair
value to account separately for the different deliverables. EITF
Issue 00-21 addresses when and, if so, how an arrangement
involving multiple deliverables should be divided into separate
units of accounting.

The adoption of this Interpretation did not have
a material impact on our consolidated results of operations,
financial position or disclosure for the year-ended
December 31, 2003. EIFT Issue 00-21 was effective for us
beginning July 1, 2003.

In July 2002, the FASB issued
SFAS No. 146. SFAS No. 146, which is
effective prospectively for exit or disposal activities
initiated after December 31, 2002, applies to costs
associated with an exit activity, including restructurings, or
with a disposal of long-lived assets. Those activities can
include eliminating or reducing product lines, terminating
employees and contracts and relocating plant facilities or
personnel. SFAS No. 146 requires that exit or disposal
costs are recorded as an operating expense when the liability is
incurred and can be measured at fair value. We accounted for our
November 2003 restructuring, as discussed in Note 11, in
accordance with SFAS No. 146.



| |                  
| | -----------------
| | Reclassifications

Certain reclassifications have been made to the
prior years financial statements to conform to the 2003
presentation.



|   |                                                    
|-- | ---------------------------------------------------
|2. | Scientific Collaborative and License
    Agreements

GSK.In October
1998, we entered into a collaboration and license agreement
effective September 1, 1998 with GSK for multiple discovery
programs. In August 2002 the funded research and development
period of our collaboration and license agreement with GSK
terminated in all of the cancer fields covered by the agreement.
In October 2002 GSK extended the funded research and development
period for the programs for tuberculosis and chlamydia vaccines
through August 2004. We recognized revenue of $4.6 million,
$11.7 million and $13.7 million in 2003, 2002 and
2001, respectively, from this agreement.

In January 2003, we and GSK entered into a new
agreement which extends our and GSKs collaborative efforts
into vaccine development and potential proof-of-principle
clinical trials. Under the terms of the new agreement, GSK
granted us a worldwide, exclusive license to develop a vaccine
candidate for prostate cancer and a vaccine candidate for breast
cancer. As a part of the agreement, GSK retains the option to
buy-back exclusive worldwide rights for either or both vaccine
candidates following the completion of proof-of-principle
clinical trials. If GSK exercises its buy-back rights, we have
the option of participating in further development, up to and
including a sharing of promotion rights in the United States.
The buy-back price will be based on our research costs incurred
under this new agreement plus a premium of 25% and up to an
additional $3.0 million depending on the stage of
development at the time GSK exercises its buy-back option. In
the event GSK does not exercise its buy-back option, we will be
free to develop the vaccines alone or with other partners and
have agreed to pay GSK success-based milestones and royalties in
the event of product sales. Under our new agreement, we will be
responsible for providing resources and development funding of
up to $32 million to complete proof-of-principle clinical
studies over a period of time in excess of five years. This
funding will be used to pay for GMP grade material, production
and clinical trials for prostate and breast vaccine development
efforts.

GSK purchased $2.5 million of our common
stock in 1998 at a premium to our fair market value.
Additionally, the loan in principal amount of $5 million
from GSK under a prior collaboration agreement was due on
September 1, 2003. At GSKs option, GSK may chose to
receive repayment of this loan in cash or shares of our common
stock at a specified premium to the five day average closing
price of our common stock

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

for the period immediately preceding
September 1, 2003. GSK has not yet made its election
regarding the form or repayment and accordingly the
$5 million loan remains outstanding.

We have a collaborative agreement with GSK for
the development and commercialization of BEXXAR therapeutic
regimen, which was approved by the FDA on June 27, 2003 for
the treatment of patients with CD20 positive, follicular,
non-Hodgkins lymphoma, or NHL, with and without
transformation, whose disease is refractory to Rituximab and has
relapsed following chemotherapy. Under the terms of the
agreement, both companies contribute to the commercialization
efforts of BEXXAR therapeutic regimen in the United States and
share profits and losses from GSKs sales of BEXXAR
therapeutic regimen equally.

We recognize the costs we incur associated with
BEXXAR therapeutic regimen related activities such as the cost
of co-promotion revenue and sales and promotion costs in our
statement of operations. We and GSK then prepare a quarterly
calculation of the joint profit or loss which considers all
revenue and costs associated with BEXXAR therapeutic regimen
commercial activities incurred by us and GSK and the equal
sharing of the joint profit or loss. If the quarterly joint
profit or loss calculation results in a reimbursement to Corixa,
we record that amount as revenue. If the quarterly joint profit
or loss calculation results in a payment by Corixa, we record
that amount as additional operating expense. Prior to
commercialization, we recorded our share of the net
reimbursement or payment from the joint profit or loss
calculation in sales, general and administrative expenses. For
the year ended December 31, 2003 our actual commercial
costs related to BEXXAR therapeutic regimen and the payment
resulting from the joint profit or loss calculation are included
in sales, general and administrative expenses.

Additionally, the agreement provides that we and
GSK will share certain costs related to clinical and
manufacturing development activities and that we will receive
additional payments from the achievement of certain clinical
development and regulatory milestones. Development expenses are
included in research and development expenses, and reimbursement
revenue is included in revenue from collaborative agreements. In
the second quarter of 2003 we recognized milestone revenue from
our collaborative agreement with GSK for the FDA approval of
BEXXAR therapeutic regimen.

We recognized reimbursement and milestone revenue
of $5.2 million, $7 million and $12.9 million in
2003, 2002 and 2001, respectively under the terms of this
agreement.

We also have an outstanding balance of
$15 million under a credit line related to our
collaborative agreement with GSK for BEXXAR therapeutic regimen
as described in footnote 6. Borrowings under the credit
line are due in October 2004. We are subject to certain
financial covenants including liquidity and net worth covenants
as defined in the agreement. At December 31, 2003, we were
in compliance with these covenants. Quarterly interest payments,
due in arrears, are at a fixed interest rate of 9.5%. Interest
expense for 2003 was approximately $1.4 million. At our
sole discretion, we may repay the principal in either cash or
common stock. Payment in our common stock would be based upon
the fair market value of our common stock at the time of payment.

We have several license and supply agreements
with GSK whereby we have licensed certain adjuvants for use in
vaccines that GSK is developing for infectious diseases, cancer
and allergy. These agreements grant GSK exclusive and
co-exclusive license rights depending on the disease field and
territory. Under the terms of the agreements, GSK pays annual
license fees, milestones, transfer payments and future royalty
payments. We recognized revenue of $4.8 million in 2003 and
$4.3 million in 2002 and $2.8 million in 2001 in
connection with these agreements. Amounts receivable from GSK
under these agreements at December 31, 2003 and 2002 were
$4.1 million and $6.2 million, respectively.

Amersham Health.In
October 2001, we entered into an agreement whereby Amersham
Health has agreed to market BEXXAR therapeutic regimen in
Europe. We and Amersham Health will cooperate to register the
product in Europe. We will initially be the holder of the MAA
for BEXXAR therapeutic regimen in Europe, and after certain
conditions have been met, including approval for commercial sale
in Europe, we

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

will transfer the MAA to Amersham Health. We will
be responsible for generating clinical trial data to support the
registration of BEXXAR therapeutic regimen in Europe and
Amersham Health will be responsible for manufacture and sale of
BEXXAR therapeutic regimen in Europe. Under the terms of a stock
purchase agreement with Amersham Health we had the option to
sell up to a total of $15 million of shares of our common
stock to Amersham Health. Upon execution of the agreement
Amersham Health purchased 271,343 shares of our common
stock for a total of $5 million, or $18.43 per share,
which represented a premium to the then current market value of
our common stock of approximately forty percent or
$1.4 million. The premium has been accounted for as a
nonrefundable license payment and was deferred and will be
recognized as revenue ratably over the term of the agreement,
consistent with our revenue recognition policy. Following our
partial option exercises in October 2001 and December 2002, on
May 14, 2003, we completed the exercise of our option to
sell up to $15 million of shares of our common stock to
Amersham Health when we sold 721,814 shares of our common
stock to Amersham Health at a price per share of $6.927 for a
total purchase price of approximately $5 million. In
addition, Amersham Health has agreed to pay us milestone
payments upon regulatory approval in the territory and
achievement of certain sales volume targets. Amersham Health has
agreed to pay us royalties on all future product sales in
Europe. We recognized revenue from this agreement of
approximately $389,000 in 2003 and 2002.

Wyeth.We have
several license and supply agreements with Wyeth, granting Wyeth
licenses to certain adjuvants for use in vaccines for certain
infectious and autoimmune disease fields that Wyeth is
developing. These agreements grant Wyeth exclusive, co-exclusive
and non-exclusive license rights depending on the disease field.
Under the terms of the agreements, Wyeth pays annual license
fees, milestones, transfer payments and future royalty payments.
We recognized revenue of $2.5 million, $2.0 million
and $906,000 in 2003, 2002 and 2001, respectively.

Zambon Group and JT.During May and June 1999, we entered into corporate partnerships
with Zambon and JT, respectively, for the research, development
and commercialization of vaccine products aimed at preventing
and treating lung cancer. Zambon has exclusive rights to develop
and sell vaccine products in Europe, the countries of the former
Soviet Union, Argentina, Brazil and Columbia and co-exclusive
rights in China. Under the June 1999 agreement, we granted JT
exclusive rights to develop and sell vaccine products outside of
the territory licensed to Zambon, including the United States
and Japan, and co-exclusive rights to develop and sell vaccine
products in China. We also granted Zambon a nonexclusive license
and JT an option to formulate vaccines that may result from the
collaboration using our microsphere delivery system with our
proprietary adjuvants. During 2002, the three-year research
terms of the agreements expired and the respective research
funding obligations ceased. In November 2002, we and Zambon
amended our agreement so that we jointly fund clinical testing
of a non- small cell lung cancer vaccine. In December 2002, we
recorded a milestone payment of $1.0 million from Zambon in
connection with the filing of our IND for a lung cancer vaccine
candidate in the United States. In January 2003, we amended and
restated our agreement with JT so that we hold exclusive rights
to all antigens discovered in our lung cancer vaccine program in
all countries previously licensed to JT, with the exception of
rights associated with commercialization of a non small cell,
lung carcinoma vaccine candidate in Japan. Under the terms of
our amended agreement with JT, JT will continue to hold an
exclusive license to this vaccine candidate for development and
commercialization in Japan, and we will hold all rights in North
America and in those territories not previously licensed to
Zambon. In connection with the restructuring of the JT
agreement, we and JT have agreed to pay each other fees,
milestones and royalties in the event that development
milestones and product sales are achieved. We recognized revenue
of $993,000, $6.9 million and $7.7 million in
connection with the Zambon and JT agreements in 2003, 2002 and
2001, respectively. Amounts receivable from Zambon at
December 31, 2003 were zero as compared to
$1.2 million at December 31, 2002.

Kirin.In December
2002, we entered into a multiyear development and
commercialization agreement with Kirin for potential cancer
vaccine for the treatment of multiple forms of cancer, including
leukemia, myelodysplasia and melanoma. Under the agreement we
grant Kirin exclusive rights to develop and market

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

vaccine products resulting from our WT1 antigen
vaccine program in Asia/ Australasia. We and Kirin have agreed
to share WT1 vaccine commercialization rights and Kirin will
fund one-half of the research and development cost in North
America. We will retain marketing rights for the potential
vaccine in Europe. Upon effectiveness of the agreement, Kirin
paid us $3 million in up-front license fees which will be
recorded as revenue over the estimated research and development
term of the agreement of approximately nine years. Under the
terms of the agreement, Kirin will co-fund development of WT1
vaccine products and has agreed to pay us success-based
milestone payments and royalties on future product sales in
Asia/ Australasia. We recognized revenue related to this
agreement of approximately $2.3 million in 2003.

Medicis and Zenyaku
Kogyo.In August 2000, we entered into
a multiyear development, commercialization and license agreement
with Medicis covering our psoriasis immunotherapeutic product,
PVAC treatment. Under the agreement we grant Medicis exclusive
rights to PVAC treatment in the United States and Canada.
Medicis made a nonrefundable payment of $17 million upon
effectiveness of the agreement. We recognized revenue from this
agreement of $7.9 million, $3.1 million and
$4.6 million in 2003, 2002 and 2001, respectively.

In August 1999, we entered into a corporate
partnership with Zenyaku Kogyo for researching and developing
PVAC treatment in Japan. In May 2002, the three year research
term of the agreement expired and Zenyaku Kogyos research
funding obligation ceased. Zenyaku Kogyos exclusive rights
to PVAC treatment in Japan continue and they are responsible for
future milestone payments based on successful clinical and
commercial progress, and royalties on future product sales. We
recognized revenue of approximately $1.3 million in 2003,
as compared to $2.0 million in 2002 and $2.2 million
in 2001, in connection with the agreement.

In December 2003 we announced that we have
discontinued development of PVAC treatment due to phase II
trial results that confirmed PVAC therapy failed to provide a
statistically significant benefit versus placebo. We also
terminated our license agreement with Medicis. As a result of
discontinuing development of PVAC treatment, we recognized
$5 million of revenue and $2.5 million of expense that
was previously deferred and was related to the initial Medicis
payment received in 2000.

We developed PVAC treatment in collaboration with
New Zealand-based Genesis. We paid Genesis $8.1 million in
2000, as a result of payments received from Medicis. We also
paid $900,000 to SR Pharma, our licensor for certain
intellectual property related to PVAC treatment. These payments
were being amortized over the period the related Medicis
revenues were being recognized. As a result of the
discontinuance of the development of PVAC treatment, we
recognized the remaining balance of $2.5 million.

Other Agreements.We
have various other collaborative research agreements with
academic universities and research institutions, which expire at
various intervals through 2003. Certain agreements stipulate the
reimbursement by us of research costs incurred by these
universities and institutions on our behalf. Included in
research and development expenses for the years ended
December 31, 2003, 2002 and 2001 are reimbursements by us
to these universities and institutions of approximating
$5.6 million, $8.7 million and $9.1 million,
respectively. Certain 2003 collaborative agreements extend into
2004, and as of December 31, 2003, we are committed to
reimburse these universities and institutions approximately
$272,000 in 2004.

We have entered into certain license agreements
and obtained options to negotiate license agreements under the
terms of which we received license, technology and patent
rights. During 2003, 2002 and 2001, we paid initial license
and/or option fees approximating $881,000, $776,000 and
$1.2 million, respectively. In addition, we issued
9,599 shares of common stock and options valued at $55,637
during 2002, in exchange for such rights. No common stock or
options were issued in 2003 or 2001. All such amounts were
expensed when paid and are included in research and development
expense as the related technology was in development, and did
not have alternative future uses.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Certain agreements call for royalty and milestone
payments to be paid by us. The agreements are for terms from 10
to 17 years or the expiration of the last issued patent
within the licensed technology, unless terminated earlier for
certain specified events, as defined in the respective
agreements.

Additionally, we have entered into research and
license and supply agreements and granted rights to other
parties to negotiate license agreements under the terms of which
we provide license, technology and patent rights and quantities
of product for research and clinical development purposes. Under
the terms of the agreements, we will receive additional license
fees, option fees and/or reimbursement of certain research and
development costs and product sales revenue. The agreements may
also provide for one-time payments upon achieving certain
milestones and the payment of royalties based on product sales.

We estimate that research and development
expenses incurred under these scientific collaborative and
license agreements were approximately $76.4 million,
$75.0 million and $99.6 million in 2003, 2002 and 2001.

Because of the large number of research projects
we have ongoing at any one time, and the ability to utilize
resources across several projects, the majority of our research
and development costs are not directly tied to any individual
project and are allocated among multiple projects. Our project
management is based primarily on scientific data and
supplemented by these cost allocations, which are based
primarily on human resource time incurred on each project. The
costs allocated to a project as a result do not necessarily
reflect the actual costs of the project. Accordingly, we do not
maintain actual cost incurred information for our projects on a
project-by-project basis. Costs attributed to research and
preclinical projects largely represent our pipeline generating
activities. Costs associated with clinical development programs
represent the advancement of these activities into product
candidates.



|   |                              
|-- | -----------------------------
|3. | Securities Available-For-Sale

Securities available-for-sale consists of the
following (in thousands):

|                  |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |        | 
|----------------- | -------------------------- | --------- | ------- | ---------- |  | ---------- | --- | ------ |  | - | ---- | ---- | - | - | ------- | ------ | 
|                  |                            |           |         | Gross      |  | Gross      |     | Fair  
|                  |                            | Amortized |         | Unrealized |  | Unrealized |     | Market
|                  |                            | Cost      |         | Gain       |  | Loss       |     | Value 
|                  |                            |           |         |            |  |            |     |       
|December 31, 2003 |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |       
|                  | U.S. government agencies   |           | $       | 91,313     |  |            | $   | 117    |  |   | $    | (527 | ) |   | $       | 90,903 | 
|                  | U.S. corporate obligations |           |         | 60,014     |  |            |     | 293    |  |   |      | (146 | ) |   |         | 60,161 | 
|                  | Other                      |           |         | 4,031      |  |            |     |       |  |   |      |     |   |   |         | 4,031  | 
|                  |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |       
|                  |                            | $         | 155,358 |            |  | $          | 410 |        |  | $ | (673 | )    |   | $ | 155,095 |       
|                  |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |       
|December 31, 2002 |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |       
|                  | U.S. government agencies   |           | $       | 28,769     |  |            | $   | 185    |  |   | $    | (4   | ) |   | $       | 28,950 | 
|                  | U.S. corporate obligations |           |         | 33,027     |  |            |     | 532    |  |   |      | (21  | ) |   |         | 33,538 | 
|                  | Other                      |           |         | 6,906      |  |            |     |       |  |   |      |     |   |   |         | 6,906  | 
|                  |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |       
|                  |                            | $         | 68,702  |            |  | $          | 717 |        |  | $ | (25  | )    |   | $ | 69,394  |       
|                  |                            |           |         |            |  |            |     |        |  |   |      |      |   |   |         |       

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Our gross realized gains or losses were
immaterial on sales of available-for-sale securities for fiscal
2003, 2002 and 2001 and are therefore not shown. The contractual
maturities of our available-for-sale securities are shown below
(in thousands):

|                  |                                    |           |         |         |  |   |         |         | 
|----------------- | ---------------------------------- | --------- | ------- | ------- |  | - | ------- | ------- | 
|                  |                                    |           |         | Fair   
|                  |                                    | Amortized |         | Market 
|                  |                                    | Cost      |         | Value  
|                  |                                    |           |         |        
|December 31, 2003 |                                    |           |         |         |  |   |         |        
|                  | Due in one year or less            |           | $       | 48,472  |  |   | $       | 48,232  | 
|                  | Due in one year through four years |           |         | 106,886 |  |   |         | 106,863 | 
|                  |                                    |           |         |         |  |   |         |        
|                  |                                    | $         | 155,358 |         |  | $ | 155,095 |        
|                  |                                    |           |         |         |  |   |         |        



|   |                       
|-- | ----------------------
|4. | Property and Equipment

Property and equipment consists of the following
(in thousands):

|                                          |  |              |         |      |  |   |         |  
|----------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                                          |  |             
|                                          |  | December 31,
|                                          |  |             
|                                          |  | 2003         |         | 2002
|                                          |  |              |         |     
|Laboratory equipment                      |  | $            | 18,399  |      |  | $ | 17,050  |  
|Land and buildings                        |  |              | 8,723   |      |  |   | 8,723   |  
|Leasehold improvements                    |  |              | 12,632  |      |  |   | 29,471  |  
|Construction in progress                  |  |              | 4,726   |      |  |   | 281     |  
|Computers and office equipment            |  |              | 14,182  |      |  |   | 15,577  |  
|                                          |  |              |         |      |  |   |         |  
|                                          |  |              | 58,662  |      |  |   | 71,102  |  
|Accumulated depreciation and amortization |  |              | (32,325 | )    |  |   | (29,226 | )
|                                          |  |              |         |      |  |   |         |  
|                                          |  | $            | 26,337  |      |  | $ | 41,876  |  
|                                          |  |              |         |      |  |   |         |  

Depreciation expense was $8.8 million,
$10.6 million and $8.9 million for 2003, 2002 and
2001, respectively.



|   |                                             
|-- | --------------------------------------------
|5. | Accounts Payable and Accrued
    Liabilities

Accounts payable and accrued liabilities consist
of the following (in thousands):

|                                           |  |              |        |      |  |   |        | 
|------------------------------------------ |  | ------------ | ------ | ---- |  | - | ------ | 
|                                           |  |             
|                                           |  | December 31,
|                                           |  |             
|                                           |  | 2003         |        | 2002
|                                           |  |              |        |     
|Trade accounts payable                     |  | $            | 5,469  |      |  | $ | 3,022  | 
|Accrued clinical trial fees                |  |              | 1,161  |      |  |   | 1,432  | 
|Employee compensation and related expenses |  |              | 3,447  |      |  |   | 3,712  | 
|Accrued legal fees                         |  |              | 949    |      |  |   | 2,079  | 
|Accrued research and development expenses  |  |              | 1,106  |      |  |   | 1,922  | 
|Accrued interest                           |  |              | 2,383  |      |  |   | 43     | 
|Other accrued liabilities                  |  |              | 6,019  |      |  |   | 2,890  | 
|                                           |  |              |        |      |  |   |        | 
|                                           |  | $            | 20,534 |      |  | $ | 15,100 | 
|                                           |  |              |        |      |  |   |        | 

75



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)



|   |                                                
|-- | -----------------------------------------------
|6. | Long-term Obligations and Lease
    Obligations

Long-term obligations consist of the following
(in thousands):

|                                            |                             |              |         |         |  |   |        |       | 
|------------------------------------------- | --------------------------- | ------------ | ------- | ------- |  | - | ------ | ----- | 
|                                            |                             |             
|                                            |                             | December 31,
|                                            |                             |             
|                                            |                             | 2003         |         | 2002   
|                                            |                             |              |         |        
|Convertible notes                           |                             | $            | 100,000 |         |  | $ |       |      
|Credit line and loan from corporate partner |                             |              | 20,000  |         |  | $ | 20,000 |      
|Bank loans                                  |                             |              | 13,795  |         |  |   | 12,071 |      
|                                            |                             |              |         |         |  |   |        |      
|                                            |                             |              | 133,795 |         |  |   | 32,071 |      
|Less current portion of obligations         |                             |              | 25,657  |         |  |   | 25,151 |      
|                                            |                             |              |         |         |  |   |        |      
|                                            | Total long-term obligations |              | $       | 108,138 |  |   | $      | 6,920 | 
|                                            |                             |              |         |         |  |   |        |      

The credit line and loan from a corporate partner
consists of a $5 million loan received in exchange for
options to license two of our early-stage cancer vaccines under
a prior collaboration agreement and a $15 million credit
line related to our collaboration agreement for BEXXAR
therapeutic regimen (refer to Note 2 with regard to the
terms and conditions of the credit line). The $15 million
line matures in October 2004 and accrues interest at a fixed
rate per annum of 9.5%, or the maximum permissible by law,
whichever is less. Under the terms of the note, we are required
to meet the following minimum covenants: (i) remaining
months liquidity, (ii) debt service coverage ratio,
(iii) tangible net worth, and (iv) leverage ratio. As
of December 31, 2003, we were in compliance with these
covenants. The $5 million loan is non-interest bearing and
matured on September 1, 2003. At GSKs option, GSK may
elect to receive the repayment in cash or shares of our common
stock at a specified premium to the five day average closing
price of our common stock for the period immediately preceding
September 1, 2003. GSK has not yet made its election
regarding the form of repayment and accordingly the
$5 million loan remains outstanding.

As of December 31, 2003, we had outstanding
bank loans of $13.8 million. This amount is composed of
loans with two financial institutions (BNP Paribas and GE
Capital).

The BNP loans require quarterly interest and
principal payments and begin maturing in May 2004 through August
2005. The loans bear an average rate of interest of 2.6%, which
is a function of either the London InterBank Offering Rate, or
LIBOR, or the prime rate of a major bank or federal fund.

Under the terms of the notes, we are required to
meet the following minimum covenants: (i) tangible net
worth, (ii) net cash calculated based on the sum of the
principal balance plus the interest reserve under the note plus
a multiple of our actual cash burn or $37,500,000, whichever is
greater, (iii) total debt to net worth ratios, and
(iv) current ratio. As of December 31, 2003, we were
in compliance with the covenants.

The GE Capital loans require monthly interest and
principal payments and expire beginning in February 2005 through
November 2008. The loans bear interest at an average rate of
4.5%. Deferred charges, deposits and other assets include
$3.5 million that secures our obligations under the GE
Capital loans.

In June 2003, we sold $100 million of
4.25% convertible subordinated notes due in 2008 to a
qualified institutional buyer pursuant to Rule 144A under
the Securities Act of 1933, as amended. The notes are
convertible into our common stock at a conversion price of
$9.175, subject to adjustment in certain circumstances. At the
initial conversion price, each $1,000 in principal amount of
notes will be convertible into approximately
108.9918 shares of our common stock. The initial conversion
price represents a 25% premium over the last reported sale of
our common stock on June 9, 2003. The notes will be
subordinate to our existing and future senior indebtedness. We
will pay interest on the notes on January 1 and July 1 of
each year, beginning on January 1, 2004. The notes mature
on July 1, 2008. We received net proceeds of approximately
$96.3 million after deducting underwriting commissions and
offering expenses. Debt issuance costs of

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

$3.7 million are being amortized to interest
expense over the term of the notes using the effective interest
method.

On or after July 5, 2005, we may redeem the
notes, in whole or in part, at the redemption price, which is
100% of the principal amount, plus accrued and unpaid interest,
if any, to the date of redemption; provided, however, that if
the redemption date is before July 1, 2007, we may redeem
the notes only if the closing price of our common stock exceeds
140% of the conversion price for at least 20 trading days in any
consecutive 30-day trading period and if certain other
conditions are met. In certain circumstances, the holders of the
notes may require us to repurchase the notes upon a change
in control, as defined in the agreement.

Minimum future debt payments under all long-term
obligations at December 31, 2003 are as follows (in
thousands):

|                         |                        |             |         |                   |  |            |        |        |  |   |       |        | 
|------------------------ | ---------------------- | ----------- | ------- | ----------------- |  | ---------- | ------ | ------ |  | - | ----- | ------ | 
|                         |                        |             |         | Credit Line and   |  |           
|                         |                        | Convertible |         | Loan from         |  |           
|Year Ending December 31, |                        | Notes       |         | Corporate Partner |  | Bank Loans
|                         |                        |             |         |                   |  |           
|2004                     |                        | $           |        |                   |  | $          | 20,000 |        |  | $ | 5,657 |       
|2005                     |                        |             |        |                   |  |            |       |        |  |   | 3,692 |       
|2006                     |                        |             |        |                   |  |            |       |        |  |   | 1,650 |       
|2007                     |                        |             |        |                   |  |            |       |        |  |   | 1,439 |       
|2008                     |                        |             | 100,000 |                   |  |            |       |        |  |   | 1,357 |       
|                         |                        |             |         |                   |  |            |        |        |  |   |       |       
|                         | Total minimum payments |             | $       | 100,000           |  |            | $      | 20,000 |  |   | $     | 13,795 | 
|                         |                        |             |         |                   |  |            |        |        |  |   |       |       

We rent office and research facilities for our
Seattle operations under a noncancelable-operating lease that
expires in January 2005. We have issued an irrevocable standby
letter of credit in the amount of $750,000 as a security deposit
on the lease. We have the option to renew the lease for two
additional five-year terms. We rent office and research
facilities for our South San Francisco operations under an
operating lease that expires in November 2010, with an option to
renew for two additional five-year periods. We have issued a
standby letter of credit in the amount of $2.2 million and
have a security deposit of $225,000 in connection with this
lease. At December 31, 2003, non-current securities
available-for-sale included certificates of deposit of
$4.3 million that secure a financing agreement and
$2.2 million that secure letters of credit related to our
leased properties.

In October 2002, we entered into a lease
agreement with Life Sciences Building, LLC to house our future
headquarters at the Ninth & Stewart Lifesciences
Building in Seattle, Washington. The lease provides us with
approximately 138,000 square feet of office and laboratory
space. The lease will commence on November 1, 2004 if
certain improvements to the building are substantially completed
and the term of the lease is 15 years. In January 2003 we
guaranteed a portion of our obligations under the lease in the
form of a letter of credit in the amount of approximately
$4.5 million.

77



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Minimum future rental payments under all lease
agreements at December 31, 2003 are as follows (in
thousands):

|                         |                        |           |        |         | 
|------------------------ | ---------------------- | --------- | ------ | ------- | 
|                         |                        | Operating
|Year Ending December 31, |                        | Leases   
|                         |                        |          
|2004                     |                        | $         | 10,134 |        
|2005                     |                        |           | 10,725 |        
|2006                     |                        |           | 8,912  |        
|2007                     |                        |           | 9,139  |        
|2008                     |                        |           | 9,293  |        
|Thereafter               |                        |           | 71,648 |        
|                         |                        |           |        |        
|                         | Total minimum payments |           | $      | 119,851 | 
|                         |                        |           |        |        

Rent expense under operating leases was
$7.4 million in 2003, $10.7 million in 2002 and
$9.8 million in 2001.



|   |                     
|-- | --------------------
|7. | Stockholders Equity



| |                
| | ---------------
| | Preferred Stock

In April 1999, we entered into an agreement with
Castle Gate, L.L.C., an investment partnership focused primarily
on health-care and biomedical companies, to provide us with an
equity line of credit of up to $50 million, or the Line.
Upon execution of the agreement, we completed an initial draw
under the Line of $12.5 million, or the Initial Draw, and
issued Castle Gate 12,500 shares of Series A preferred
stock and warrants to purchase 1,037,137 shares of common
stock, or the Initial Closing Warrants. The Initial Closing
Warrants consist of warrants to purchase 312,500 and
724,637 shares of common stock at exercise prices of
$8.50 per share and $8.28 per share, respectively. The
conversion price for the Series A preferred stock issued in
the Initial Draw is $8.50 per share.

Under the terms of the agreement, we issued
warrants on the first and second anniversaries of the Line equal
to $1.125 million and $1.0 million of common stock
respectively, based on the value of our common stock. These
warrants had a value of $5.3 million at the time we entered
into the agreement and were included in equity. Accordingly, on
April 8, 2001 and April 8, 2000, we issued warrants to
purchase 130,028 and 30,540 shares of common stock at $7.69
and $36.84 per share, respectively.

On December 29, 2000, we drew down the
remaining $37.5 million under the Line by issuing
37,500 shares of Series B preferred stock. The
Series B preferred stock has the same rights and
preferences as the Series A preferred stock issued at the
time of the Initial Draw in April 1999. In addition, we issued
warrants to purchase 237,500 shares of common stock,
consisting of a warrant to purchase 187,500 shares of
common stock as required under the terms of the Line and an
additional warrant to purchase 50,000 shares of common
stock, at an exercise price of $18.22 per share. The
conversion price of the Series B preferred stock is
$25.58 per share.

On the dates of the initial and remaining draws,
the effective conversion prices of the Series A and B
preferred stock (after allocating a portion of the proceeds to
the common stock warrants based on the relative fair values of
the two instruments) were at a discount to the price of the
common stock into which the preferred stock was convertible. The
discount of $5.5 million in 1999 and $9.3 million in
2000 related to the Series A and Series B preferred
stock, was recorded as preferred stock dividends.

The preferred stock has an annual cumulative
dividend rate of 5% and may be paid, at our option, in cash or
in shares of our common stock. If we elect to pay in common
stock the number of shares issued is calculated as the cash
dividend amount divided by the stated conversion price of the
respective preferred

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

stock. The Preferred Stock may be converted into
common stock at the option of Castle Gate at any time following
issuance. Beginning on the fourth anniversary of issuance,
shares of outstanding preferred stock will be converted into
common stock if the price of our common stock exceeds the
preferred stock conversion price by at least 30%, as specified
in the agreement. Additionally, any shares of Preferred Stock
that have not been converted previously will be converted
automatically on the seventh anniversary of issuance.
Series A and Series B preferred shares have voting
rights based on the number of common shares into which the
preferred shares are convertible. In the event of liquidation,
the preferred stockholders share pro rata with common
stockholders.

We elected to pay the 2002 annual dividend on the
Series A preferred stock in shares of our common stock by
issuing 73,529 shares of common stock in April 2003. The
value of these shares at the time of issuance was approximately
$529,000, which was approximately $96,000 less than the cash
dividend value of $625,000. In addition, we elected to pay the
2003 annual dividend on the Series B preferred stock in
shares of our common stock by issuing 73,299 shares of our
common stock in December 2003. The value of these shares at the
time of issuance was approximately $438,000, which was
approximately $1.5 million less than the cash dividend
value of $1.9 million. The dividends have been recorded
based on the fair value of the common stock issued.

We are accruing the dividend at the lower of the
cash dividend amount or the current fair value of the shares to
be issued.



| |             
| | ------------
| | Common Stock

On September 11, 2003, we delivered a draw
down notice to BNY Capital Markets, Inc., or CMI, in accordance
with the terms of the equity line financing agreement between us
and CMI and, as a result, a draw down period commenced on
September 15, 2003 and terminated on October 10, 2003.
Pursuant to the equity line financing agreement, CMI purchased
an aggregate of 291,334 shares of our common stock at an
average price per share of $8.58 for a total purchase price of
approximately $2,500,000. The price at which CMI purchased these
shares from us was established under the equity line financing
agreement by reference to prices of our common stock on the
Nasdaq National Market for the period beginning on
September 15, 2003 and ending on October 10, 2003, net
of a discount of 2%.

In June 2003, we completed the sale of
3,719,085 shares of newly issued common stock and issued
five-year warrants to purchase 669,435 shares of our common
stock at an exercise price of $8.044 per share, in a
private placement to institutional investors. We sold the newly
issued common stock for $8.044 per share and we issued the
warrants at a purchase price of $0.125 per share. We
received net proceeds of approximately $28.4 million, after
deducting underwriting fees and offering expenses.

In April 2003, we exercised our option to sell
721,814 shares of common stock to Amersham Health at a
price per share of $6.927, for a total purchase price of
$5 million. We sold the shares of common stock pursuant to
our October 2001 collaboration agreement with Amersham Health.

In August 2002, we completed the sale of
7,322,562 shares of newly issued common stock and issued
five-year warrants to purchase 1,244,836 shares of our
common stock at an exercise price of $6.13 per share, in a
private placement to select institutional and other accredited
investors. We sold the newly issued common stock for
$6.13 per share and we issued the warrants at a purchase
price of $.125 per share. We received net proceeds of
approximately $42.8 million, after deducting underwriting
discounts and commissions and before deducting expenses payable
by us.



| |                        
| | -----------------------
| | Redeemable Common Stock

In May 1999, we issued 141,576 shares of our
common stock for $2,000,000, or $14.13 per share, to Zambon
in connection with a collaboration agreement. Under the terms of
the collaboration agreement,

79



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##### Table of Contents



CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Zambon had the right to sell the common stock
back to us for the original purchase price at the end of the
research program term if Zambon determines that a commercial
product was not viable. This right expired in December 2002
subsequent to the end of the research program term. The
redeemable common stock has been reclassified on the
December 31, 2002 balance sheet into stockholders
equity.



| |                   
| | ------------------
| | Stock Option Plans

In June 2001, we amended and restated the Amended
and Restated 1994 Stock Option Plan, and redesignated it the
2001 Stock Incentive Plan, or 2001 Plan. The amendment provides
for an increase in the shares available for issuance by
924,950 shares to 7,500,000 shares subject to an
annual increase equal to three percent of the outstanding common
stock as of the last trading day of the prior fiscal year, up to
a maximum annual increase of 2,000,000 shares. In addition,
under the merger agreement with Coulter, we assumed their stock
option plans. As a result, we assumed options to purchase
approximately 5,614,535 shares. As of December 31,
2003, the 2001 Plan had 10,467,752 shares of common stock
reserved for issuance to employees, directors and consultants.
The amendment also provides that we may grant stock awards and
stock appreciation rights, or SARs, under the 2001 plan. Options
granted under the 2001 Plan may be designated as incentive or
nonqualified at the discretion of the plan administrator.

Generally, options become exercisable over a
four-year period with 25% vesting on the first year anniversary
of the date of grant and the remainder vesting monthly
thereafter. All options expire no later than ten years from the
date of grant. Incentive stock options are exercisable at not
less than the fair market value of the stock at the date of
grant, and nonqualified stock options are exercisable at prices
determined at the discretion of the plan administrator, but not
less than 85% of the fair market value of the stock at the date
of grant. The plan administrator has the discretion to grant
options that are exercisable for unvested shares of common stock
and, to the extent that an optionee holds options for such
unvested shares upon termination, we have the right to
repurchase any or all of the unvested shares at the per-share
exercise price paid by the optionee for the unvested shares.

We adopted the 1997 Directors Stock Option
Plan, or the Directors Plan, on July 25, 1997. As of
December 31, 2003, 422,084 shares of common stock were
reserved for issuance under the Directors Plan. The number
of shares reserved for issuance is subject to an automatic
increase on the first trading day of each of the five calendar
years beginning in 1998 and ending in 2002, in an amount equal
to 50,000 shares or such lesser amount as the board of
directors may establish. The Directors Plan provides for
the grant of nonqualified stock options to nonemployee
directors. The Directors Plan provides that each person
who first became a nonemployee director shall be granted
nonqualified stock options to purchase 15,000 shares of
common stock, or the First Option. Thereafter, on the first day
of each fiscal year, commencing in fiscal 1998, each nonemployee
director shall be automatically granted an additional option to
purchase 5,000 shares of common stock, or a Subsequent
Option, if, on such date, he or she shall have served on our
board of directors for at least six months. The First Options
and Subsequent Options generally vest over 36 and
12 months, respectively, and have 10-year terms. The
exercise price of such options shall be equal to the fair market
value of our common stock on the date of grant. The
Directors Plan has a 10-year term, unless terminated
earlier.

In April and June of 2001, we cancelled
approximately 1.9 million employee stock options with
exercise prices ranging from $25.13 to $51.19. We granted
approximately 1.8 million replacement options in October
and December 2001 with exercise prices equal to the then current
fair market value of the underlying stock. Each replacement
option has an equivalent vesting schedule to the option that was
exchanged.

80



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##### Table of Contents



CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

A summary of our stock option activity and
related information follows:

|                             |                      |                  |           |            |   |                |            |            |   |   |       |       | 
|---------------------------- | -------------------- | ---------------- | --------- | ---------- | - | -------------- | ---------- | ---------- | - | - | ----- | ----- | 
|                             |                      |                  |           |            |   | Weighted      
|                             |                      | Shares Available |           | Number of  |   | Average       
|                             |                      | for Grant        |           | Options    |   | Exercise Price
|                             |                      |                  |           |            |   |               
|Balance at January 1, 2001   |                      |                  | 969,657   |            |   |                | 10,146,340 |            |   | $ | 19.89 |      
|                             | Authorized for grant |                  |           | 1,713,160  |   |                |            |           |   |   |       |      | 
|                             | Granted              |                  |           | (3,362,085 | ) |                |            | 3,362,085  |   |   |       | 14.18 | 
|                             | Exercised            |                  |           |           |   |                |            | (629,247   | ) |   |       | 15.87 | 
|                             | Cancelled            |                  |           | 3,505,731  |   |                |            | (3,505,731 | ) |   |       | 25.06 | 
|                             | Expired options      |                  |           | (1,166,803 | ) |                |            |           |   |   |       |       | 
|                             |                      |                  |           |            |   |                |            |            |   |   |       |      
|Balance at December 31, 2001 |                      |                  | 1,659,660 |            |   |                | 9,373,447  |            |   |   | 16.88 |      
|                             | Authorized for grant |                  |           | 1,321,020  |   |                |            | 3,038,900  |   |   |       | 6.05  | 
|                             | Granted              |                  |           | (3,038,900 | ) |                |            |            |   |   |       |       | 
|                             | Exercised            |                  |           |           |   |                |            | (52,225    | ) |   |       | 9.85  | 
|                             | Cancelled            |                  |           | 2,703,901  |   |                |            | (2,703,901 | ) |   |       | 22.21 | 
|                             |                      |                  |           |            |   |                |            |            |   |   |       |      
|Balance at December 31, 2002 |                      |                  | 2,645,681 |            |   |                | 9,656,221  |            |   |   | 12.06 |      
|                             | Authorized for grant |                  |           | 1,506,501  |   |                |            |           |   |   |       |       | 
|                             | Granted              |                  |           | (1,893,950 | ) |                |            | 1,893,950  |   |   |       | 6.50  | 
|                             | Exercised            |                  |           |           |   |                |            | (114,734   | ) |   |       | 3.11  | 
|                             | Cancelled            |                  |           | 967,685    |   |                |            | (967,685   | ) |   |       | 11.59 | 
|                             | Shares granted       |                  |           | (33,500    | ) |                |            |           |   |   |       |      | 
|                             | Expired              |                  |           | (224,807   | ) |                |            |           |   |   |       |      | 
|                             |                      |                  |           |            |   |                |            |            |   |   |       |      
|Balance at December 31, 2003 |                      |                  | 2,967,610 |            |   |                | 10,467,752 |            |   |   | 11.19 |      
|                             |                      |                  |           |            |   |                |            |            |   |   |       |      

The following table summarizes information about
the stock options outstanding at December 31, 2003:

|                         |  |                     |            |                     |  |          |      |        |  |          |       |  |  |  |           |  |  |   |       | 
|------------------------ |  | ------------------- | ---------- | ------------------- |  | -------- | ---- | ------ |  | -------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                         |  |                     |            |                    
|                         |  | Options Outstanding |            | Options Exercisable
|                         |  |                     |            |                    
|                         |  | Number              |            | Weighted            |  | Weighted |      |        |  | Weighted
|                         |  | Outstanding on      |            | Average             |  | Average  |      |        |  | Average 
|                         |  | December 31,        |            | Remaining           |  | Exercise |      |        |  | Exercise
|Range of Exercise Prices |  | 2003                |            | Contractual Life    |  | Price    |      | Shares |  | Price   
|                         |  |                     |            |                     |  |          |      |        |  |         
|$0.30  $ 0.99           |  |                     | 378,111    |                     |  |          | 2.88 |        |  | $        | 0.82  |  |  |  | 378,111   |  |  | $ | 0.82  | 
|$1.20  $ 5.70           |  |                     | 2,250,233  |                     |  |          | 8.34 |        |  |          | 5.63  |  |  |  | 922,268   |  |  |   | 5.54  | 
|$6.15  $ 12.69          |  |                     | 2,252,788  |                     |  |          | 8.82 |        |  |          | 6.70  |  |  |  | 536,732   |  |  |   | 7.40  | 
|$12.97  $ 13.45         |  |                     | 3,134,541  |                     |  |          | 7.00 |        |  |          | 11.91 |  |  |  | 2,797,992 |  |  |   | 11.91 | 
|$13.50  $169.89         |  |                     | 2,452,079  |                     |  |          | 6.37 |        |  |          | 21.10 |  |  |  | 2,114,121 |  |  |   | 21.62 | 
|                         |  |                     |            |                     |  |          |      |        |  |          |       |  |  |  |           |  |  |   |       | 
|$0.30  $169.89          |  |                     | 10,467,752 |                     |  |          | 7.38 |        |  |          | 11.19 |  |  |  | 6,749,224 |  |  |   | 13.10 | 
|                         |  |                     |            |                     |  |          |      |        |  |          |       |  |  |  |           |  |  |   |       | 

At December 31, 2002 and 2001, we had
5,512,155 and 4,585,061 options exercisable, respectively.

In 2003 we issued 33,500 shares of common
stock previously granted to certain former Coulter employees
upon the FDA approval of BEXXAR therapeutic regimen. We recorded
expense of $247,000 as a result of the stock issuance.

81



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Deferred compensation of approximately
$29.2 million was recorded at December 31, 2000, as a
result of the merger with Coulter, which represented the
difference between the exercise prices of options assumed from
Coulter and their fair market values. Deferred compensation
expense of approximately $188,000, $1.5 million and
$14.7 million was recognized for the years ended
December 31, 2003, 2002 and 2001, respectively. In 2003 and
2002, approximately $80,000 and $1.9 million, respectively
of deferred compensation was reversed related to employees that
terminated employment during the year.

Included in options outstanding at
December 31, 2003 are approximately 182,000 options granted
to consultants for services. Expense of approximately $101,000
and $444,000 was recorded in 2003 and 2001, respectively,
related to options granted to consultants. A reduction to
expense of $168,000 was recorded in 2002 related to options
granted to consultants due to the decline in our stock price.



| |                             
| | ----------------------------
| | Employee Stock Purchase Plan

On July 25, 1997, we adopted the 1997
Employee Stock Purchase Plan, or the Purchase Plan. Effective
June 1, 2001, we amended and restated the Purchase Plan and
redesignated it the 2001 Employee Stock Purchase Plan, or the
2001 ESPP. The amendment provided for an immediate increase in
the shares available for issuance by 375,000 shares to
500,000 shares subject to an annual increase of not more
than 500,000 shares in any calendar year. As of
December 31, 2003, 340,847 shares of common stock were
reserved for issuance under the 2001 ESPP. The 2001 ESPP permits
eligible employees to enroll in a two year offering period with
eight three-month purchase periods and to purchase shares of our
common stock through payroll deductions at a price equal to 85%
of the fair market value of our common stock on the first day of
the applicable two year offering period or the last day of the
date of applicable purchase six-month offering period, whichever
is lower.

The number of authorized shares is subject to
automatic increase on the first trading day of each of the 20
calendar years beginning in 1998 and ending in 2017. If the
number of shares reserved for issuance is less than 1% of the
outstanding common stock, the number of shares reserved for
issuance shall be increased until it equals 1% of the
outstanding common stock (up to a maximum of 500,000 shares
in any calendar year), or such lower amount as determined by the
board of directors. The board of directors has the power to
amend or terminate the 2001 ESPP as long as such action does not
adversely affect any outstanding rights to purchase stock under
the 2001 ESPP. The 2001 ESPP has a 20-year term, unless
terminated earlier.

In 2003, 159,153 shares were issued under
the 2001 ESPP at $5.28 per share. In 2002,
137,663 shares were issued under the 2001 ESPP at a price
of $5.24 per share. In 2001, 124,575 shares were
issued under the 2001 ESPP at prices ranging from $8.84 to
$23.48 per share.



| |                      
| | ---------------------
| | Pro Forma Information

Pro forma information regarding net loss and loss
per share required by SFAS 123 as disclosed in Note 1
has been determined as if we had accounted for our employee
stock options under the fair value method of SFAS 123. The
fair value for these options was estimated at the date of grant
using a Black-Scholes option pricing model with the following
weighted-average assumptions on the option grant date.

|                        |  |                |     |                |  |      |     |      |  |      |     |      |  |  |     |   |  |  |     |   |  |  |     |  
|----------------------- |  | -------------- | --- | -------------- |  | ---- | --- | ---- |  | ---- | --- | ---- |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                        |  |                |     |               
|                        |  | Employee Stock |     | Employee Stock
|                        |  | Option         |     | Purchase Plan 
|                        |  |                |     |               
|                        |  | 2003           |     | 2002           |  | 2001 |     | 2003 |  | 2002 |     | 2001
|                        |  |                |     |                |  |      |     |      |  |      |     |     
|Expected life (years)   |  |                | 4   |                |  |      | 4   |      |  |      | 4   |      |  |  | 1   |   |  |  | 1   |   |  |  | 1   |  
|Expected volatility     |  |                | 90  | %              |  |      | 90  | %    |  |      | 90  | %    |  |  | 90  | % |  |  | 90  | % |  |  | 90  | %
|Risk-free interest rate |  |                | 4.0 | %              |  |      | 4.0 | %    |  |      | 4.2 | %    |  |  | 4.0 | % |  |  | 4.0 | % |  |  | 4.2 | %
|Expected dividend yield |  |                | 0.0 | %              |  |      | 0.0 | %    |  |      | 0.0 | %    |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | %

82



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

The weighted average fair value of options
granted during 2003, 2002 and 2001 was $4.98, $4.66 and $10.54,
respectively.



| |               
| | --------------
| | Stock Warrants

We had common stock warrants outstanding to
purchase 3,518,900 shares of common stock as of
December 31, 2003 at a weighted average exercise price of
approximately $8.31 per share, which warrants expire
between 2004 and 2010. Included in the total common stock
warrants outstanding at December 31, 2003, are warrants to
purchase 100,000 shares of common stock issued in
connection with a line of credit with a weighted average
exercise price of $11.06 per share and
1,244,836 shares of common stock issued in connection with
a private placement to select institutional and other accredited
investors with an exercise price of $6.13 per share.
Included in the total common stock warrants outstanding at
December 31, 2003, are 69,424 warrants issued prior to
1997, in connection with certain collaborative agreements with
exercise prices ranging from $0.0033 to $6.60 per share.
Vesting of 68,182 warrants is contingent upon the achievement of
certain scientific milestones.



| |                      
| | ---------------------
| | Common Stock Reserved

Common stock was reserved for the following
purposes at December 31, 2003:

|                                  |       |  |            |            | 
|--------------------------------- | ----- |  | ---------- | ---------- | 
|Stock options outstanding         |       |  | 10,467,752 |           
|Warrants to purchase common stock |       |  | 3,518,900  |           
|Employee stock purchase plan      |       |  | 340,847    |           
|Stock options available for grant |       |  | 2,967,610  |           
|Conversion of preferred stock     |       |  | 2,936,577  |           
|                                  |       |  |            |           
|                                  | Total |  |            | 20,231,686 | 
|                                  |       |  |            |           



|   |             
|-- | ------------
|8. | Income Taxes

At December 31, 2003 and 2002, we had net
operating loss carryforwards of approximately
$511.8 million and $446.5 million, respectively, and
research and experimentation credit carryforwards of
approximately $22.4 million and $20.6 million,
respectively, which begin to expire in 2005. Utilization of net
operating loss and research and development tax credit
carryforwards is subject to certain limitations under
Section 382 of the Internal Revenue Code, or the Code.
During the period 1995 through 2003, we experienced ownership
changes as defined by the Code. Accordingly, our use of losses
incurred through the date of any ownership changes will be
limited on an annual basis during the carryforward period,
therefore some of the carryforwards will expire without being
fully utilized.

83



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Deferred income taxes reflect the net tax effects
of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts
used for income tax purposes. We have recognized a valuation
allowance equal to the deferred tax assets due to the
uncertainty of realizing the benefits of the assets. The
valuation allowance for deferred tax assets increased
$23.2 million during 2003, $18.5 million during 2002
and $30.1 million during 2001. The effects of temporary
differences and carryforwards that give rise to deferred tax
assets and liabilities are as follows (in thousands):

|                          |                                                                              |              |         |          |   |   |         |          |  
|------------------------- | ---------------------------------------------------------------------------- | ------------ | ------- | -------- | - | - | ------- | -------- | -
|                          |                                                                              |             
|                          |                                                                              | December 31,
|                          |                                                                              |             
|                          |                                                                              | 2003         |         | 2002    
|                          |                                                                              |              |         |         
|Deferred tax assets:      |                                                                              |              |         |          |   |   |         |         
|                          | Net operating loss carryforwards                                             |              | $       | 174,028  |   |   | $       | 151,796  |  
|                          | Research and experimentation credit and foreign
    tax credit Carryforwards |              |         | 22,951   |   |   |         | 21,175   |  
|                          | Deferred revenue                                                             |              |         | 5,082    |   |   |         | 6,865    |  
|                          | Financial statement expenses not deducted on tax
    return                  |              |         | 4,610    |   |   |         | 3,632    |  
|                          |                                                                              |              |         |          |   |   |         |         
|                          |                                                                              |              | 206,671 |          |   |   | 183,468 |         
|Deferred tax liabilities: |                                                                              |              |         |          |   |   |         |         
|                          | Tax return expenses not charged against financial
    Statements             |              |         | (514     | ) |   |         | (496     | )
|                          |                                                                              |              |         |          |   |   |         |         
|                          |                                                                              |              | (514    | )        |   |   | (496    | )       
|                          |                                                                              |              |         |          |   |   |         |         
|                          | Net deferred tax assets                                                      |              |         | 206,157  |   |   |         | 182,972  |  
|                          | Less valuation allowance                                                     |              |         | (206,157 | ) |   |         | (182,972 | )
|                          |                                                                              |              |         |          |   |   |         |         
|Net deferred tax assets   |                                                                              | $            |        |          |   | $ |        |         
|                          |                                                                              |              |         |          |   |   |         |         



|   |            
|-- | -----------
|9. | 401(k) Plan

We have a tax-qualified employee savings and
retirement plan, or the 401(k) Plan, covering all of our
employees. Pursuant to the 401(k) Plan, employees may elect to
reduce their current compensation by up to the statutorily
prescribed annual limit ($12,000 in 2003) and to have the amount
of such reduction contributed to the 401(k) Plan. Effective
January 1, 1998, we implemented a 401(k) matching program
whereby we contribute twenty-five cents for each dollar a
participant contributes, with a maximum contribution of 25% of
the first 8% of a participants earnings not to exceed 25%
of the prescribed annual limit. The 401(k) Plan is intended to
qualify under Section 401 of the Code so that contributions
by employees or by us to the 401(k) Plan, and income earned on
401(k) Plan contributions, are not taxable to employees until
withdrawn from the 401(k) Plan, and so that contributions by us,
if any, will be deductible by us when made. At the direction of
each participant, we invest the assets of the 401(k) Plan in any
of eleven investment options. Our contributions under the 401(k)
Plan were approximately $486,000 in 2003, $500,000 in 2002 and
$577,000 in 2001.



|    |                                    
|--- | -----------------------------------
|10. | Sale of Technology and Other Assets

In May 2002, Medarex purchased our proprietary
UPT technology for creating antibody-toxin conjugates and
certain preclinical product development programs in the field of
oncology and other disease indications. In return, we received
$21 million, which was paid in six equal monthly payments.
These payments are included in other income in the accompanying
statement of operations. Medarex also purchased certain
equipment to support Medarexs continuing research efforts
from Corixa for an additional $2.5 million. We recorded a
gain on the sale of fixed assets to Medarex of approximately
$1 million in the second quarter of 2002. In 2003 we
received an additional $2.5 million contingent
consideration related to the preclinical asset sale.

84



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)



|    |                      
|--- | ---------------------
|11. | Restructuring charges

In November 2003, we announced the restructuring
of our operations including a workforce reduction of
approximately 18 percent, which includes the elimination of
unfilled open positions, as well as select existing positions.
The restructuring charge for the fourth quarter of 2003 was
$2.3 million and consisted of employee severance, benefits
and outplacement services. As of December 31, 2003 we had
paid $1.4 million of the total restructuring charge. The
remaining severance, benefits and outplacement services will be
paid in 2004.



|    |                              
|--- | -----------------------------
|12. | Commitments and Contingencies

Biogen Idec, has challenged the validity of our
United States Patent Nos. 5,595,721, 5,843,398, 6,015,542,
6,090,365, 6,022,521, 6,251,362 and 6,287,537 related to BEXXAR
therapeutic regimen by seeking declaratory judgment of
invalidity of these patents. Biogen Idec is also seeking a
declaratory judgment that its Zevalin product for the treatment
of NHL is not infringing the patents. We, GSK and the Regents of
the University of Michigan are parties to a lawsuit against
Biogen Idec alleging patent infringement of our United States
Patent Nos. 5,595,721, 6,015,542, 6,090,365 and 6,287,537 by
Zevalin and seeking monetary damages and permanent injunctive
relief. Claims in the patents at issue in the litigation cover
composition of matter and methods-of-use in the treatment of
NHL. On October 14, 2003, the United States District Court,
Southern District of California granted Biogen Idecs
motion for summary judgment that the 5,595,721, 6,015,542,
6,090,365 and 6,287,537 patents are unenforceable due to
inequitable conduct before the United States Patent and
Trademark Office. On November 13, 2003 Corixa, GSK and the
Regents of the University of Michigan filed a motion for
reconsideration with the United States District Court, Southern
District of California requesting that the court reconsider
its October 14, 2003 order. On January 22, 2004,
the United States District Court, Southern District of
California granted the motion for reconsideration, vacated the
October 14, 2003 order and denied Biogen Idecs motion
for summary judgment of inequitable conduct.

On June 2, 2003, Biogen Idec moved to amend
its complaint to add a claim for declaratory judgment relief of
non-infringement and invalidity of our U.S. Patent
No. 6,565,827. Issued Patent No. 6,565,827 covers
composition of matter used in the treatment of NHL. On that same
day, Biogen Idec also filed a separate lawsuit in the United
States District Court, Southern District of California, seeking
declaratory judgment of non-infringement and invalidity of this
same patent. On August 11, 2003, the judge denied Biogen
Idecs motion to amend the complaint to include this patent
in the originally filed lawsuit or, alternatively, to
consolidate the first filed lawsuit with the one filed on
June 2, 2003. Subsequently, on December 16, 2003,
Biogen Idec filed with the United States District Court,
Southern District of California, a notice of voluntary dismissal
without prejudice for the June 2, 2003 lawsuit.

In addition, on February 25, 2003, Biogen
Idec filed a complaint in the United States District Court,
Southern District of California, against us and GSK for patent
infringement of United States Reissue Patent No. RE38,008,
which claims, among other things, methods of enhancing the
delivery of conjugated specific antibodies to solid tumor target
cells.

See Note 13 for recent developments related
to this litigation.

We are party to routine claims and litigation
incidental to our business. We believe the ultimate resolution
of these routine matters will not have a material adverse effect
on our financial position and results of operations or cash
flows.



|    |                  
|--- | -----------------
|13. | Subsequent Events

On March 1, 2004 we announced that we and
GSK have reached a settlement with Biogen Idec regarding all
outstanding patent litigation between us and Biogen Idec. The
settlement, which serves as the basis for the dismissal of all
patent litigation between the parties, provides for Biogen Idec
to pay to us and GSK a $20 million upfront settlement
payment, as well as a one-time milestone payment based on future

85



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS   (Continued)

Zevalin sales performance, and royalty payments
on Zevalin sales from January 1, 2004 until the expiration
of all BEXXAR therapeutic regimen patents that were the subject
of the litigation. We and GSK will also enter into a worldwide,
cross-license agreement with Biogen Idec relating to each
partys patents in suit.

On March 4, 2004 NDC New Markets Investments
IV, L.P., or NDC, of which Wells Fargo Community Development
Corporation is a limited partner, pursuant to a promissory note
and credit agreement provided a loan of approximately
$14.6 million to us to support our construction costs at
the Ninth and Stewart Lifesciences Building in Seattle. The term
of the loan is seven years, during which we pay interest only
with a balloon principal payment on March 1, 2011. The note
bears interest at LIBOR plus 0.8%. NDC will forgive a portion of
the loan if we are in compliance the terms and conditions of the
note and the credit agreement. Pursuant to a security agreement,
the loan from NDC is fully secured by cash and cash equivalents.



|    |                                     
|--- | ------------------------------------
|14. | Quarterly Financial Data (Unaudited)

The following table contains selected unaudited
statement of operations information for each quarter of 2003 and
2002. We believe that the following information reflects all
adjustments, consisting of only normal recurring adjustments,
necessary for a fair presentation of the information for the
periods presented. The operating results for any quarter are not
necessarily indicative of results of any future period.



| |                          
| | -------------------------
| | Quarterly Financial Data:

|     |                                            |                                       |   |          |   |    |   |         |   |  |   |         |   |  |   |         |  
|---- | ------------------------------------------ | ------------------------------------- | - | -------- | - | -- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|     |                                            | Q1                                    |   | Q2       |   | Q3 |   | Q4     
|     |                                            |                                       |   |          |   |    |   |        
|     |                                            |                                      
|     |                                            | (In thousands, except per share data)
|2003 |                                            |                                       |   |          |   |    |   |         |   |  |   |         |   |  |   |        
|     | Revenue                                    |                                       | $ | 9,125    |   |    | $ | 20,009  |   |  | $ | 7,391   |   |  | $ | 14,185  |  
|     | Net loss                                   |                                       |   | (18,695  | ) |    |   | (20,623 | ) |  |   | (27,759 | ) |  |   | (16,842 | )
|     | Basic net loss per common share            |                                       |   | (0.38    | ) |    |   | (0.41   | ) |  |   | (0.51   | ) |  |   | (0.31   | )
|     | Diluted net loss per common share          |                                       |   | (0.38    | ) |    |   | (0.41   | ) |  |   | (0.51   | ) |  |   | (0.31   | )
|2002 |                                            |                                       |   |          |   |    |   |         |   |  |   |         |   |  |   |        
|     | Revenue                                    |                                       | $ | 15,566   |   |    | $ | 13,886  |   |  | $ | 9,876   |   |  | $ | 9,410   |  
|     | Net income (loss)(1)                       |                                       |   | (176,690 | ) |    |   | 5,331   |   |  |   | (16,581 | ) |  |   | (19,459 | )
|     | Basic net income (loss) per common share   |                                       |   | (4.25    | ) |    |   | 0.13    |   |  |   | (0.37   | ) |  |   | (0.40   | )
|     | Diluted net income (loss) per common share |                                       |   | (4.25    | ) |    |   | 0.12    |   |  |   | (0.37   | ) |  |   | (0.40   | )



---



|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The quarter ended March 31, 2002 includes a
    goodwill impairment charge of $161.1 million. The quarter
    ended June 30, 2002 includes other income of
    $21 million attributable to the sale of specific
    preclinical assets to Medarex.

86



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|        |                                                                           
|------- | --------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with
    Accountants and Financial Disclosure

None.






|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Our chief executive officer and our chief
financial officer, after evaluating the effectiveness of our
disclosure controls and procedures (as defined in
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange
Act of 1934) as of the end of the period covered by this annual
report, have concluded that as of that date, our disclosure
controls and procedures were effective in ensuring that
information required to be disclosed by us in this annual report
is accumulated and communicated by our management, to allow
timely decisions regarding required disclosure.

There were no significant changes in our internal
controls during the period covered by this annual report that
have materially affected, or are reasonably likely to materially
affect, our internal controls.




PART III





|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant

The information required by this item, including,
without limitation, disclosure regarding our Code of Ethics, is
incorporated by reference to the information set forth under the
caption Directors and Executive Officers in our 2004
Proxy Statement to be filed within 120 days after the end
of our fiscal year ended December 31, 2003.






|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation

The information required by this item is
incorporated by reference to the information set forth under the
caption Compensation of Executive Officers in our
2004 Proxy Statement to be filed within 120 days after the
end of our fiscal year ended December 31, 2003.






|         |                                                                   
|-------- | ------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial
    Owners and Management

The information required by this item is
incorporated by reference to the information set forth under the
caption Common Stock Ownership of Certain Beneficial
Owners and Management in our 2004 Proxy Statement to be
filed within 120 days after the end of our fiscal year
ended December 31, 2003.






|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions

The information required by this item is
incorporated by reference to the information set forth under the
caption Certain Relationships and Related
Transactions in our 2004 Proxy Statement to be filed
within 120 days after the end of our fiscal year ended
December 31, 2003.






|         |                                           
|-------- | ------------------------------------------
|Item 14. | Principal Accounting Fees and
    Services

The information required by this item is
incorporated by reference to the information set forth under the
caption Independent Auditors in our 2004 Proxy
Statement to be filed within 120 days after the end of our
fiscal year ended December 31, 2003.




PART IV





|         |                                                                     
|-------- | --------------------------------------------------------------------
|Item 15. | Exhibits, Financial Statement Schedules and
    Reports on Form 8-K.

(a) The following documents are filed as
part of this report:



| |                                                           
| | ----------------------------------------------------------
| | (1) Report of Ernst & Young LLP,
    Independent Auditors.



| |                                                                  
| | -----------------------------------------------------------------
| | Consolidated Balance Sheets as of
    December 31, 2003 and 2002.

87



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##### Table of Contents





| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Consolidated Statements of Operations 
    Years Ended December 31, 2003, 2002 and 2001.              
|
| | Consolidated Statements of Stockholders
    Equity  Years Ended December 31, 2003, 2002 and
    2001.
|
| | Consolidated Statements of Cash Flows 
    Years Ended December 31, 2003, 2002 and 2001.              

Notes to Consolidated Financial Statements.



| |                                  
| | ---------------------------------
| | (2) Financial Statement Schedules

All schedules are omitted because they are not
applicable or the required information is shown in the
consolidated financial statements or notes thereto.



| |                                                                                              
| | ---------------------------------------------------------------------------------------------
| | (3) Index to Exhibits filed in response to
    Item 601 of Regulation S-K is set forth below.

EXHIBIT INDEX

|        |     |                     |  |                                                                                                                                                                            |  |  |      | 
|------- | --- | ------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |     |                     |  |                                                                                                                                                                           
|Number  |     | Exhibit Description |  | Page                                                                                                                                                                      
|        |     |                     |  |                                                                                                                                                                           
|        | 3.1 |                     |  | Fifth Amended and Restated Certificate of
    Incorporation of Corixa                                                                                                      |  |  |     | 
|       
|        | 3.2 |                     |  | Certificate of Designation of Series A
    Preferred Stock                                                                                                                 |  |  | (D)  | 
|       
|        | 3.3 |                     |  | Certificate of Decrease of Shares Designated as
    Series A Preferred Stock                                                                                               |  |  | (Z)  | 
|       
|        | 3.4 |                     |  | Certificate of Designation of Series B
    Preferred Stock                                                                                                                 |  |  | (E)  | 
|       
|        | 3.5 |                     |  | Certificate of Amendment of Certificate of
    Incorporation                                                                                                               |  |  | (LL) | 
|       
|        | 3.5 |                     |  | Bylaws of Corixa Corporation                                                                                                                                               |  |  | (JJ) | 
|       
|        | 4.1 |                     |  | Indenture dated June 13, 2003 between Corixa
    Corporation and Wells Fargo Bank, National Association, as
    Trustee, for 4.25% Convertible Subordinated Notes due 2008 |  |  | (BB) | 
|       

| |       |                                       |  |                                                                                                                                                                                                                                                                                      |  |  |      | 
| | ----- | ------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---- | 
| |       | Bexxar Therapeutic Regimen Agreements |  |                                                                                                                                                                                                                                                                                     
| |       |                                       |  |                                                                                                                                                                                                                                                                                     
| | 10.1  |                                       |  | Assignment Agreement between Coulter
    Pharmaceutical, Inc., Beckman Coulter and certain investors,
    dated February 24, 1995                                                                                                                                                    |  |  | (G)  | 
|
| | 10.2+ |                                       |  | Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                                                                      |  |  | (H)  | 
| | 10.3+ |                                       |  | Amendment No. 1, dated November 30,
    1998, to the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                 |  |  | (H)  | 
|
| | 10.4+ |                                       |  | Letter Agreement between Coulter Pharmaceutical,
    Inc. and SmithKline Beecham Corporation, dated April 20,
    2000, amending the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                 |  |  | (O)  | 
|
| | 10.5+ |                                       |  | Letter Agreement between Corixa Corporation and
    SmithKline Beecham Corporation, dated February 12, 2001,
    amending the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                        |  |  | (O)  | 
|
| | 10.6+ |                                       |  | Letter Agreement between Corixa Corporation and
    SmithKline Beecham Corporation, dated October 18, 2001,
    amending the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                         |  |  | (O)  | 
|
| | 10.7+ |                                       |  | Letter Agreement among Corixa Corporation,
    Coulter Pharmaceutical, Inc. and SmithKline Beecham Corporation,
    dated May 22, 2003, amending the Collaboration Agreement
    between Coulter Pharmaceutical, Inc. and SmithKline Beecham
    Corporation, dated October 23, 1998 |  |  | (CC) | 
|
| | 10.8+ |                                       |  | Supply Agreement between Coulter Pharmaceutical,
    Inc. and Boehringer Ingelheim Pharma KG, dated November 3,
    1998                                                                                                                                                             |  |  | (H)  | 

88



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|        |        |                                       |  |                                                                                                                                                                                                                                                            |  |  |      | 
|------- | ------ | ------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |        |                                       |  |                                                                                                                                                                                                                                                           
|Number  |        | Bexxar Therapeutic Regimen Agreements |  | Page                                                                                                                                                                                                                                                      
|        |        |                                       |  |                                                                                                                                                                                                                                                           
|       
|        | 10.9+  |                                       |  | Amendment No. 1, dated February 24,
    2003, between Corixa Corporation and Boehringer Ingelheim Pharma
    GmbH & Co. KG to the Supply Agreement between Coulter
    Pharmaceutical, Inc. and Boehringer Ingelheim Pharma KG, dated
    November 3, 1998 |  |  | (AA) | 
|       
|        | 10.10+ |                                       |  | Development, Commercialization and License
    Agreement dated October 26, 2001 between Corixa Corporation
    and Amersham PLC                                                                                                                            |  |  | (U)  | 
|       
|        | 10.11+ |                                       |  | Manufacturing and Supply Agreement dated
    October 26, 2001 between Corixa Corporation and Amersham PLC                                                                                                                                                  |  |  | (V)  | 
|       
|        | 10.12+ |                                       |  | Agreement dated April 1, 1994 between
    Coulter Corporation and Dana-Farber Cancer Institute, Inc.                                                                                                                                                       |  |  | (Y)  | 
|       
|        | 10.13+ |                                       |  | Agreement Regarding Sublicenses dated
    December 2, 1998 between Coulter Pharmaceutical, Inc. and
    Dana-Farber Cancer Institute, Inc.                                                                                                                 |  |  | (Y)  | 
|       
|        | 10.14+ |                                       |  | Commercialization Agreement dated
    November 1, 1994 between Coulter Corporation and the
    Regents of the University of Michigan                                                                                                                       |  |  | (Y)  | 
|       
|        | 10.15+ |                                       |  | Assignment of Commercialization Agreement dated
    April 1, 1995 among Coulter Pharmaceutical, Inc., Coulter
    Corporation and the Regents of the University of Michigan                                                                                |  |  | (Y)  | 
|       
|        | 10.16+ |                                       |  | Amendment to Commercialization Agreement dated
    June 1, 1997 between the Regents of the University of
    Michigan and Coulter Pharmaceutical, Inc.                                                                                                     |  |  | (Y)  | 
|       
|        | 10.17+ |                                       |  | BEXXAR Supply Agreement dated July 1, 2003
    among MDS (Canada) Inc., through its division MDS Nordion,
    Coulter Pharmaceutical, Inc. and Corixa Corporation                                                                                          |  |  | (DD) | 

| |        |                                                                     |  |                                                                                                                                                                                                                                                                               |  |  |     | 
| | ------ | ------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
| |        | Other License, Development, Commercialization and Supply Agreements |  |                                                                                                                                                                                                                                                                              
| |        |                                                                     |  |                                                                                                                                                                                                                                                                              
| | 10.18+ |                                                                     |  | Multi-Field Vaccine Discovery Collaboration and
    License Agreement between Corixa Corporation and SmithKline
    Beecham plc, dated September 1, 1998                                                                                                                      |  |  | (C) | 
|
| | 10.19+ |                                                                     |  | Amendment No. 1, dated May 25, 2000, to
    the Multi-Field Vaccine Discovery Collaboration and License
    Agreement between Corixa Corporation and SmithKline Beecham plc,
    dated September 1, 1998                                                                      |  |  | (I) | 
| | 10.20+ |                                                                     |  | Letter Agreement, dated August 16, 2001,
    between Corixa Corporation and SmithKline Beecham plc, amending
    the Multi-Field Vaccine Discovery Collaboration and License
    Agreement between Corixa Corporation and SmithKline Beecham plc,
    dated September 1, 1998 |  |  | (O) | 
|
| | 10.21+ |                                                                     |  | Amendment No. 2, dated January 28,
    2003, to the Multi-Field Vaccine Discovery Collaboration and
    License Agreement between Corixa Corporation and SmithKline
    Beecham plc, dated September 1, 1998                                                                  |  |  | (Y) | 
|
| | 10.22+ |                                                                     |  | Collaboration and License Agreement dated
    January 28, 2003 between Corixa Corporation and SmithKline
    Beecham plc                                                                                                                                                      |  |  | (Y) | 
|
| | 10.23+ |                                                                     |  | Corixa License Agreement dated January 28,
    2003 between Corixa Corporation and SmithKline Beecham plc                                                                                                                                                                     |  |  | (Y) | 
|
| | 10.24+ |                                                                     |  | Collaboration Agreement dated May 21, 1999
    between Corixa Corporation Inpharzam International                                                                                                                                                                             |  |  | (N) | 
|
| | 10.25+ |                                                                     |  | Letter Agreement dated November 19, 2001
    between Corixa Corporation and Inpharzam International, amending
    the Collaboration Agreement dated May 21, 1999 between
    Corixa Corporation Inpharzam International                                                       |  |  | (Y) | 
|
| | 10.26+ |                                                                     |  | Letter Agreement dated November 15, 2002
    between Corixa Corporation and Inpharzam International, amending
    the Collaboration Agreement dated May 21, 1999 between
    Corixa Corporation Inpharzam International                                                       |  |  | (Y) | 
|
| | 10.27+ |                                                                     |  | Amended and Restated License and Collaborative
    Research Agreement dated as of December 19, 2002 between Corixa
    Corporation and Japan Tobacco Inc.                                                                                                                     |  |  | (Y) | 

89



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##### Table of Contents



|        |        |                                                                     |  |                                                                                                                                                                                                                                      |  |  |      | 
|------- | ------ | ------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---- | 
|Exhibit |        |                                                                     |  |                                                                                                                                                                                                                                     
|Number  |        | Other License, Development, Commercialization and Supply Agreements |  | Page                                                                                                                                                                                                                                
|        |        |                                                                     |  |                                                                                                                                                                                                                                     
|       
|        | 10.28+ |                                                                     |  | Development and License Agreement dated
    August 16, 1999 between Zenyaku Kogyo Co., Ltd. and Corixa
    Corporation                                                                                                               |  |  | (O)  | 
|       
|        | 10.29+ |                                                                     |  | Letter Agreement between Corixa Corporation and
    Zenyaku Kogyo Co., Ltd. dated August 6, 2001 amending the
    Development and License Agreement dated August 16, 1999
    between Zenyaku Kogyo Co., Ltd. and Corixa Corporation |  |  | (O)  | 
|       
|        | 10.30+ |                                                                     |  | License, Development and Commercialization
    Agreement dated November 27, 2002 between Corixa
    Corporation and Kirin Brewery Company, Ltd.                                                                                      |  |  | (R)  | 
|       
|        | 10.31+ |                                                                     |  | License and Supply Agreement dated May 27,
    2003 among Corixa Corporation, Coulter Pharmaceutical, Inc. and
    GlaxoSmithKline Inc.                                                                                              |  |  | (CC) | 

| |        |                                       |  |                                                                                                                                                                                                                                   |  |  |      | 
| | ------ | ------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
| |        | Debt and Equity Investment Agreements |  |                                                                                                                                                                                                                                  
| |        |                                       |  |                                                                                                                                                                                                                                  
| | 10.32+ |                                       |  | Equity Line of Credit and Securities Purchase
    Agreement between Corixa Corporation and Castle Gate, L.L.C.,
    dated April 8, 1999                                                                                           |  |  | (D)  | 
|
| | 10.33+ |                                       |  | Amendment No. 1, dated December 21,
    2000, to the Equity Line of Credit and Securities Purchase
    Agreement between Corixa Corporation and Castle Gate, L.L.C.,
    dated April 8, 1999                                      |  |  | (E)  | 
|
| | 10.34+ |                                       |  | Amendment No. 2, dated December 29,
    2000, to the Equity Line of Credit and Securities Purchase
    Agreement between Corixa Corporation and Castle Gate, L.L.C.,
    dated April 8, 1999                                      |  |  | (E)  | 
|
| | 10.35+ |                                       |  | Registration Rights Agreement between Corixa
    Corporation and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                         |  |  | (D)  | 
|
| | 10.36+ |                                       |  | Standstill Agreement between Corixa Corporation
    and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                                  |  |  | (D)  | 
|
| | 10.37+ |                                       |  | Warrant Number CG-1 issued by Corixa Corporation
    to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                      |  |  | (D)  | 
|
| | 10.38+ |                                       |  | Warrant Number CG-2 issued by Corixa Corporation
    to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                      |  |  | (D)  | 
|
| | 10.39+ |                                       |  | Form of Warrant Number CG-3 to be issued by
    Corixa Corporation to Castle Gate, L.L.C. on the occurrence of
    certain events in accordance with the terms of the Equity Line
    of Credit and Securities Purchase Agreement |  |  | (D)  | 
|
| | 10.40+ |                                       |  | Form of Warrant Number CG-4 to be issued by
    Corixa Corporation to Castle Gate, L.L.C. on the occurrence of
    certain events in accordance with the terms of the Equity Line
    of Credit and Securities Purchase Agreement |  |  | (D)  | 
|
| | 10.41+ |                                       |  | Warrant Number CG-5 issued by Corixa Corporation
    to Castle Gate, L.L.C. on December 29, 2000                                                                                                                                  |  |  | (E)  | 
|
| | 10.42+ |                                       |  | Loan Agreement between Coulter Pharmaceutical,
    Inc. and SmithKline Beecham Corporation, dated October 23,
    1998                                                                                                            |  |  | (H)  | 
|
| | 10.43  |                                       |  | First Amendment dated June 28, 2002 to the
    Loan Agreement between Coulter Pharmaceutical, Inc. and
    SmithKline Beecham Corporation, dated October 23, 1998                                                                 |  |  | (S)  | 
|
| | 10.44  |                                       |  | Second Amendment, dated August 26, 2003, to
    the Loan Agreement between Coulter Pharmaceutical, Inc. and
    SmithKline Beecham Corporation, dated October 23, 1998                                                            |  |  | (EE) | 
|
| | 10.45+ |                                       |  | Security Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                        |  |  | (H)  | 
|
| | 10.46+ |                                       |  | Grant of Security Interest between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                |  |  | (H)  | 
|
| | 10.47  |                                       |  | Registration Rights Agreement dated
    August 26, 2003 between Corixa Corporation and SmithKline
    Beecham Corporation                                                                                                         |  |  | (EE) | 
|
| | 10.48  |                                       |  | Form of Warrant issued by Corixa Corporation to
    employees of Shoreline Pacific, LLC on December 3, 2001                                                                                                                       |  |  | (M)  | 
|
| | 10.49  |                                       |  | Loan Agreement between Corixa Corporation and BNP
    Paribas, dated August 3, 2001                                                                                                                                               |  |  | (P)  | 

90



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##### Table of Contents



|        |       |                                       |  |                                                                                                                                                               |  |  |      | 
|------- | ----- | ------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |       |                                       |  |                                                                                                                                                              
|Number  |       | Debt and Equity Investment Agreements |  | Page                                                                                                                                                         
|        |       |                                       |  |                                                                                                                                                              
|       
|        | 10.50 |                                       |  | Master Security Agreement between Corixa
    Corporation and General Electric Capital Corporation dated
    February 25, 2002                                 |  |  | (W)  | 
|       
|        | 10.51 |                                       |  | Promissory Note dated December 31, 2003 in
    the principal amount of $7,000,000, by Corixa Corporation in
    favor of General Electric Capital Corporation |  |  |     | 
|       
|        | 10.52 |                                       |  | Securities Deposit Pledge Agreement dated
    December 31, 2004 by Corixa Corporation in favor of General
    Electric Capital Corporation                    |  |  |     | 
|       
|        | 10.53 |                                       |  | Securities Purchase Agreement dated
    August 9, 2002 among Corixa Corporation and the purchasers
    named therein                                          |  |  | (HH) | 
|       
|        | 10.54 |                                       |  | Registration Rights Agreement dated
    August 9, 2002 among Corixa Corporation and the investors
    named therein                                           |  |  | (HH) | 
|       
|        | 10.55 |                                       |  | Registration Rights Agreement dated June 13,
    2003 for 4.25% Convertible Subordinated Notes due
    July 1, 2008                                           |  |  | (BB) | 

| |        |                        |  |                                                                                                                                                                                                                        |  |  |      | 
| | ------ | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
| |        | Real Estate Agreements |  |                                                                                                                                                                                                                       
| |        |                        |  |                                                                                                                                                                                                                       
| | 10.56  |                        |  | Columbia Building Lease dated October 28,
    1994 and Columbia Building Lease First Amendment dated
    December 29, 1995, each between Corixa Corporation and Fred
    Hutchinson Cancer Research Center             |  |  | (A)  | 
|
| | 10.57  |                        |  | Second Amendment to Columbia Building Lease dated
    September 25, 1998 between Corixa Corporation and
    Alexandria Real Estate Equities, Inc., successor in interest to
    Fred Hutchinson Cancer Research Center |  |  | (B)  | 
|
| | 10.58  |                        |  | Lease dated May 31, 1996 between Corixa
    Corporation and Health Science
    Properties, Inc.                                                                                                                        |  |  | (A)  | 
|
| | 10.59  |                        |  | First Amendment to Lease dated January 31,
    1997 between Corixa Corporation and Health Science Properties,
    Inc.                                                                                                 |  |  | (P)  | 
|
| | 10.60  |                        |  | Second Amendment to Lease dated June 30,
    1997 between Corixa Corporation and Alexandria Real Estate
    Equities, Inc., formerly known as Health Science Properties, Inc.                                          |  |  | (P)  | 
|
| | 10.61  |                        |  | Third Amendment to Lease dated November 1,
    1998 between Corixa Corporation and Alexandria Real Estate
    Equities, Inc., formerly known as Health Science Properties, Inc.                                        |  |  | (P)  | 
|
| | 10.62+ |                        |  | Lease dated November 7, 1997 between HMS
    Gateway Office L.P. and Coulter Pharmaceutical, Inc.                                                                                                                      |  |  | (II) | 
|
| | 10.63+ |                        |  | First Amendment to Lease dated November 10,
    1998 between HMS Gateway Office L.P. and Coulter Pharmaceutical,
    Inc.                                                                                              |  |  | (H)  | 
|
| | 10.64  |                        |  | Second Amendment to Lease dated May 19, 2000
    between HMS Gateway Office L.P. and Coulter Pharmaceutical, Inc.                                                                                                      |  |  | (P)  | 
|
| | 10.65+ |                        |  | Lease dated May 19, 2000 between HMS Gateway
    Office L.P. and Coulter Pharmaceutical, Inc.                                                                                                                          |  |  | (O)  | 
|
| | 10.66+ |                        |  | First Amendment to Lease dated January 15,
    2002 between Gateway Boulevard Associates II, LLC, as
    successor interest to HMS Gateway Office L.P. and Coulter
    Pharmaceutical, Inc.                            |  |  | (Y)  | 
|
| | 10.67+ |                        |  | Lease Agreement dated October 15, 2002
    between Corixa Corporation and Lifesciences Building, LLC                                                                                                                   |  |  | (Q)  | 
|
| | 10.68+ |                        |  | Sublease Agreement dated April 4, 2003
    between Coulter Pharmaceutical, Inc. and Gryphon Therapeutics,
    Inc.                                                                                                     |  |  | (KK) | 
|
| | 10.69+ |                        |  | Sublease Agreement dated May 15, 2003
    between Coulter Pharmaceutical, Inc. and Corgentech, Inc.                                                                                                                    |  |  | (KK) | 
|
| | 10.70  |                        |  | Sublease Agreement dated September 11, 2003
    between Coulter Pharmaceutical, Inc. and Axys Pharmaceuticals,
    Inc.                                                                                                |  |  | (FF) | 

91



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|        |       |                        |  |                                                                                                                                                                     |  |  |      | 
|------- | ----- | ---------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |       |                        |  |                                                                                                                                                                    
|Number  |       | Real Estate Agreements |  | Page                                                                                                                                                               
|        |       |                        |  |                                                                                                                                                                    
|       
|        | 10.71 |                        |  | First Amendment dated September 29, 2003 to
    Sublease Agreement dated September 11, 2003 between Coulter
    Pharmaceutical, Inc. and Axys Pharmaceuticals, Inc. |  |  | (GG) | 
|       
|        | 10.72 |                        |  | Standard Form of Agreement Between Owner and
    Contractor dated December 22, 2003 between Corixa
    Corporation and BN Builders, Inc.                            |  |  |     | 

|        |       |                                    |  |                                                                    |  |  |     | 
|------- | ----- | ---------------------------------- |  | ------------------------------------------------------------------ |  |  | --- | 
|Exhibit |       |                                    |  |                                                                   
|Number  |       | Stock, Option and Retirement Plans |  | Page                                                              
|        |       |                                    |  |                                                                   
|        | 10.73 |                                    |  | 2001 Stock Incentive Plan                                          |  |  | (J) | 
|       
|        | 10.74 |                                    |  | 1997 Directors Stock Option Plan                                  |  |  | (A) | 
|       
|        | 10.75 |                                    |  | 2001 Employee Stock Purchase Plan                                  |  |  | (K) | 
|       
|        | 10.76 |                                    |  | Corixa Corporation 401(k) Savings &
    Retirement Plan            |  |  | (A) | 
|       
|        | 10.77 |                                    |  | Coulter Pharmaceutical, Inc. 1996 Employee Stock
    Purchase Plan |  |  | (F) | 
|       
|        | 10.78 |                                    |  | Coulter Pharmaceutical, Inc. 1995 Equity
    Incentive Plan        |  |  | (F) | 
|       
|        | 10.79 |                                    |  | Coulter Pharmaceutical, Inc. 1996 Equity
    Incentive Plan        |  |  | (F) | 

| |       |                                        |  |                                                                                                                                                                                                                                    |  |  |      | 
| | ----- | -------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
| |       | Agreements with Officers and Directors |  |                                                                                                                                                                                                                                   
| |       |                                        |  |                                                                                                                                                                                                                                   
| | 10.80 |                                        |  | Form of Indemnification Agreement between Corixa
    Corporation and each director and officer of Corixa Corporation                                                                                                               |  |  | (A)  | 
|
| | 10.81 |                                        |  | Form of Corixa Corporation Executive Employment
    Agreement                                                                                                                                                                      |  |  | (L)  | 
|
| | 10.82 |                                        |  | Schedule of officers party to Corixa Corporation
    Executive Employment Agreement                                                                                                                                                |  |  |     | 
|
| | 10.83 |                                        |  | Secured Promissory Note by Steve G.
    Reed, Ph.D. and Marianne T. Reed in favor of Corixa
    Corporation, dated December 31, 2001                                                                                               |  |  | (P)  | 
|
| | 10.84 |                                        |  | Secured Promissory Note by Kenneth A.
    Grabstein, Ph.D. and Teresa A. Grabstein in favor of Corixa
    Corporation, dated December 31, 2001                                                                                     |  |  | (P)  | 
|
| | 21.1  |                                        |  | Subsidiaries of Corixa Corporation                                                                                                                                                                                                 |  |  |     | 
|
| | 23.1  |                                        |  | Consent of Ernst and Young, LLP, Independent
    Auditors                                                                                                                                                                          |  |  |     | 
|
| | 24.1  |                                        |  | Power of Attorney                                                                                                                                                                                                                  |  |  | (MM) | 
|
| | 31.1  |                                        |  | Certification of Chief Executive Officer of
    Corixa Corporation required by Rule 13a-14(a) or Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended                                                             |  |  |     | 
|
| | 31.2  |                                        |  | Certification of Chief Financial Officer of
    Corixa Corporation required by Rule 13a-14(a) or Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended                                                             |  |  |     | 
|
| | 32.1  |                                        |  | Certification of Chief Executive Officer and
    Chief Financial Officer of Corixa Corporation required by Rule
    13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of
    1934, as amended, and 18 U.S.C. Section 1350 |  |  |     | 



---



|    |  |                                                                                                                                                                  
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | Incorporated herein by reference Corixas
    Form S-1, as amended, (File No. 333-32147), filed with
    the Commission on September 30, 1997.                   
|   
|(B) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 0-22891), filed with the
    Commission on November 12, 1998.                               
|   
|(C) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on November 10, 1998.                                
|   
|(D) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on April 23, 1999.                                   
|   
|(E) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on January 4, 2001.                                  
|   
|(F) |  | Incorporated herein by reference to Corixas
    Registration Statement on Form S-8 (File
    No. 333-52968), filed with the Commission on
    December 29, 2000.

92



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|     |  |                                                                                                                                                                                                     
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(G)  |  | Incorporated herein by reference to Coulter
    Pharmaceutical, Inc.s Registration Statement on
    Form S-1 (File No. 333-17661), as amended, filed with
    the Commission on September 29, 1997.
|    
|(H)  |  | Incorporated herein by reference to Coulter
    Pharmaceutical, Inc.s Form 10-K, (File
    No. 000-21905), filed with the Commission on March 30,
    1999.                                        
|    
|(I)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on November 6, 2000.                                                                 
|    
|(J)  |  | Incorporated herein by reference to Corixas
    Registration Statement on Form S-8 (File
    No. 333-65394), filed with the Commission on July 18,
    2001.                                       
|    
|(K)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on August 10, 2001.                                                                  
|    
|(L)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on November 13, 2001.                                                                
|    
|(M)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on December 17, 2001.                                                                 
|    
|(N)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on August 9, 1999.                                                                   
|    
|(O)  |  | Incorporated herein by reference to Corixas
    Form 10-K/ A (File No. 000-22891), filed with the
    Commission on June 24, 2002.                                                                 
|    
|(P)  |  | Incorporated herein by reference to Corixas
    Form 10-K (File No. 000-22891), filed with the
    Commission on March 1, 2002.                                                                    
|    
|(Q)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on October 21, 2002.                                                                  
|    
|(R)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on December 5, 2002.                                                                  
|    
|(S)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on August 13, 2002.                                                                  
|    
|(T)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on June 3, 2002.                                                                      
|    
|(U)  |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 000-22891), filed with the
    Commission on May 29, 2002.                                                                   
|    
|(V)  |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 000-22891), filed with the
    Commission on May 16, 2002.                                                                   
|    
|(W)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on May 15, 2002.                                                                     
|    
|(X)  |  | Incorporated herein by reference to Corixas
    Form S-3/ A (File No. 333-75282), filed with the
    Commission on May 6, 2002.                                                                    
|    
|(Y)  |  | Incorporated herein by reference to Corixas
    Form 10-K (File No. 000-22891), filed with the
    Commission on February 25, 2003.                                                                
|    
|(Z)  |  | Incorporated herein by reference to Corixas
    Amendment to Registration Statement on Form 8-A/ A, filed
    with the Commission on March 6, 2003.                                                
|    
|(AA) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on May 13, 2003.                                                                     
|    
|(BB) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on June 18, 2003                                                                        
|    
|(CC) |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 000-22891), filed with the
    Commission on July 29, 2003.                                                                  

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|     |  |                                                                                                                                                           
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|(DD) |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 0-22891), filed with the
    Commission on August 28, 2003                         
|    
|(EE) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on September 9, 2003                          
|    
|(FF) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on September 11, 2003                         
|    
|(GG) |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 0-22891), filed with the
    Commission on September 29, 2003                      
|    
|(HH) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on August 9, 2002                             
|    
|(II) |  | Incorporated herein by reference to Coulter
    Pharmaceutical, Inc.s Form 10-K (File
    No. 000-21905), filed with the commission on March 27,
    1998
|    
|(JJ) |  | Incorporated herein by reference to Corixas
    Form 10-K (File No. 000-22891), filed with the
    Commission on March 30, 2001                          
|    
|(KK) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on June 9, 2003                               
|    
|(LL) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 0-22891), filed with the
    Commission on August 14, 2000                           
|    
|(MM) |  | Incorporated herein by reference to the
    Power of Attorney granted below in this report on
    Form 10-K.                                            
|    
|+    |  | Confidential treatment granted by order of the
    SEC.                                                                                                   
|    
|*    |  | Confidential treatment sought by Corixa
    Corporation from the SEC.                                                                                     
|    
|    |  | Filed herewith.                                                                                                                                           

(b) Reports on Form 8-K

On October 16, 2003, we filed a current
report on Form 8-K regarding our response to the order of
the United States District Court, Southern District of
California declaring U.S. Patent Nos. 5,595,721, 6,015,542,
6,090,365 and 6,287,537 invalid based on a finding of
inequitable conduct of the inventors.

On November 6, 2003, we filed a current
report on Form 8-K regarding the restructuring of our
operations to focus on priority programs and commercialization
efforts.

On December 23, 2003, we filed a current
report on Form 8-K regarding our announcement with Genesis
Research and Development Corporation Ltd that we have
discontinued the development of PVAC treatment, a product
candidate for the treatment of psoriasis.

94



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##### Table of Contents






SIGNATURES

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



| |                   
| | ------------------
| | CORIXA CORPORATION



| |     |                    
| | --- | -------------------
| | By: | /s/ MICHELLE BURRIS

| |                                                      
| | -----------------------------------------------------
| |                                                      
| | Michelle Burris                                      
| | Senior Vice President and Chief Financial
    Officer

Date: March 8, 2004

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each
person whose signature appears below constitutes and appoints
Steve Gillis and Michelle Burris, jointly and severally, his or
her attorneys-in-fact, each with the power of substitution, for
him or her in any and all capacities, to sign any amendments to
this Report on Form 10-K, and to file the same, with
exhibits thereto and other documents in connection therewith
with the Securities and Exchange Commission, hereby ratifying
and confirming all that each of said attorneys-in-fact, or his
or her substitute or substitutes may do or cause to be done by
virtue hereof.

Pursuant to the requirements of the Securities
Exchange Act of 1934, the following persons on behalf of the
registrant and in the capacities and on the dates indicated have
signed this report below.

|                                       |  |                                                                                                    |  |               |  | 
|-------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ------------- |  | 
|                                       |  |                                                                                                    |  |              
|Signature                              |  | Title                                                                                              |  | Date         
|                                       |  |                                                                                                    |  |              
|                                      
|/s/ STEVEN GILLISSteven Gillis         |  | Chairman and Chief Executive Officer (Principal
    Executive Officer)                             |  | March 8, 2004
|                                      
|/s/ MICHELLE BURRISMichelle Burris     |  | Senior Vice President and Chief Financial Officer
    (Principal Financial and Accounting Officer) |  | March 8, 2004
|                                      
|/s/ RON HUNTRon Hunt                   |  | Director                                                                                           |  | March 8, 2004
|                                      
|/s/ MICHAEL F. BIGHAMMichael F. Bigham |  | Director                                                                                           |  | March 8, 2004
|                                      
|/s/ JOSEPH L. LACOBJoseph L. Lacob     |  | Director                                                                                           |  | March 8, 2004
|                                      
|/s/ ARNOLD ORONSKYArnold Oronsky       |  | Director                                                                                           |  | March 8, 2004
|                                      
|/s/ JAMES YOUNGJames Young             |  | Director                                                                                           |  | March 8, 2004

95



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|                                 |  |          |  |               |  | 
|-------------------------------- |  | -------- |  | ------------- |  | 
|                                 |  |          |  |              
|Signature                        |  | Title    |  | Date         
|                                 |  |          |  |              
|                                
|/s/ ROBERT MOMSENRobert Momsen   |  | Director |  | March 8, 2004
|                                
|/s/ SAMUEL R. SAKSSamuel R. Saks |  | Director |  | March 8, 2004

96



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EXHIBIT INDEX

|        |     |                     |  |                                                                                                                                                                            |  |  |      | 
|------- | --- | ------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |     |                     |  |                                                                                                                                                                           
|Number  |     | Exhibit Description |  | Page                                                                                                                                                                      
|        |     |                     |  |                                                                                                                                                                           
|        | 3.1 |                     |  | Fifth Amended and Restated Certificate of
    Incorporation of Corixa                                                                                                      |  |  |     | 
|       
|        | 3.2 |                     |  | Certificate of Designation of Series A
    Preferred Stock                                                                                                                 |  |  | (D)  | 
|       
|        | 3.3 |                     |  | Certificate of Decrease of Shares Designated as
    Series A Preferred Stock                                                                                               |  |  | (Z)  | 
|       
|        | 3.4 |                     |  | Certificate of Designation of Series B
    Preferred Stock                                                                                                                 |  |  | (E)  | 
|       
|        | 3.5 |                     |  | Certificate of Amendment of Certificate of
    Incorporation                                                                                                               |  |  | (LL) | 
|       
|        | 3.5 |                     |  | Bylaws of Corixa Corporation                                                                                                                                               |  |  | (JJ) | 
|       
|        | 4.1 |                     |  | Indenture dated June 13, 2003 between Corixa
    Corporation and Wells Fargo Bank, National Association, as
    Trustee, for 4.25% Convertible Subordinated Notes due 2008 |  |  | (BB) | 

| |        |                                       |  |                                                                                                                                                                                                                                                                                      |  |  |      | 
| | ------ | ------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | ---- | 
| |        | Bexxar Therapeutic Regimen Agreements |  |                                                                                                                                                                                                                                                                                     
| |        |                                       |  |                                                                                                                                                                                                                                                                                     
| | 10.1   |                                       |  | Assignment Agreement between Coulter
    Pharmaceutical, Inc., Beckman Coulter and certain investors,
    dated February 24, 1995                                                                                                                                                    |  |  | (G)  | 
|
| | 10.2+  |                                       |  | Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                                                                      |  |  | (H)  | 
|
| | 10.3+  |                                       |  | Amendment No. 1, dated November 30,
    1998, to the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                 |  |  | (H)  | 
|
| | 10.4+  |                                       |  | Letter Agreement between Coulter Pharmaceutical,
    Inc. and SmithKline Beecham Corporation, dated April 20,
    2000, amending the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                 |  |  | (O)  | 
|
| | 10.5+  |                                       |  | Letter Agreement between Corixa Corporation and
    SmithKline Beecham Corporation, dated February 12, 2001,
    amending the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                        |  |  | (O)  | 
|
| | 10.6+  |                                       |  | Letter Agreement between Corixa Corporation and
    SmithKline Beecham Corporation, dated October 18, 2001,
    amending the Collaboration Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                         |  |  | (O)  | 
|
| | 10.7+  |                                       |  | Letter Agreement among Corixa Corporation,
    Coulter Pharmaceutical, Inc. and SmithKline Beecham Corporation,
    dated May 22, 2003, amending the Collaboration Agreement
    between Coulter Pharmaceutical, Inc. and SmithKline Beecham
    Corporation, dated October 23, 1998 |  |  | (CC) | 
|
| | 10.8+  |                                       |  | Supply Agreement between Coulter Pharmaceutical,
    Inc. and Boehringer Ingelheim Pharma KG, dated November 3,
    1998                                                                                                                                                             |  |  | (H)  | 
|
| | 10.9+  |                                       |  | Amendment No. 1, dated February 24,
    2003, between Corixa Corporation and Boehringer Ingelheim Pharma
    GmbH & Co. KG to the Supply Agreement between Coulter
    Pharmaceutical, Inc. and Boehringer Ingelheim Pharma KG, dated
    November 3, 1998                           |  |  | (AA) | 
|
| | 10.10+ |                                       |  | Development, Commercialization and License
    Agreement dated October 26, 2001 between Corixa Corporation
    and Amersham PLC                                                                                                                                                      |  |  | (U)  | 
|
| | 10.11+ |                                       |  | Manufacturing and Supply Agreement dated
    October 26, 2001 between Corixa Corporation and Amersham PLC                                                                                                                                                                            |  |  | (V)  | 
|
| | 10.12+ |                                       |  | Agreement dated April 1, 1994 between
    Coulter Corporation and Dana-Farber Cancer Institute, Inc.                                                                                                                                                                                 |  |  | (Y)  | 
|
| | 10.13+ |                                       |  | Agreement Regarding Sublicenses dated
    December 2, 1998 between Coulter Pharmaceutical, Inc. and
    Dana-Farber Cancer Institute, Inc.                                                                                                                                           |  |  | (Y)  | 
|
| | 10.14+ |                                       |  | Commercialization Agreement dated
    November 1, 1994 between Coulter Corporation and the
    Regents of the University of Michigan                                                                                                                                                 |  |  | (Y)  | 

97



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| |        |                                       |  |                                                                                                                                                                             |  |  |      | 
| | ------ | ------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
| |        | Bexxar Therapeutic Regimen Agreements |  |                                                                                                                                                                            
| |        |                                       |  |                                                                                                                                                                            
| | 10.15+ |                                       |  | Assignment of Commercialization Agreement dated
    April 1, 1995 among Coulter Pharmaceutical, Inc., Coulter
    Corporation and the Regents of the University of Michigan |  |  | (Y)  | 
|
| | 10.16+ |                                       |  | Amendment to Commercialization Agreement dated
    June 1, 1997 between the Regents of the University of
    Michigan and Coulter Pharmaceutical, Inc.                      |  |  | (Y)  | 
|
| | 10.17+ |                                       |  | BEXXAR Supply Agreement dated July 1, 2003
    among MDS (Canada) Inc., through its division MDS Nordion,
    Coulter Pharmaceutical, Inc. and Corixa Corporation           |  |  | (DD) | 

| |        |                                                                     |  |                                                                                                                                                                                                          |  |  |     | 
| | ------ | ------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
| |        | Other License, Development, Commercialization and Supply Agreements |  |                                                                                                                                                                                                         
| |        |                                                                     |  |                                                                                                                                                                                                         
| | 10.18+ |                                                                     |  | Multi-Field Vaccine Discovery Collaboration and
    License Agreement between Corixa Corporation and SmithKline
    Beecham plc, dated September 1, 1998                                                 |  |  | (C) | 
|
| | 10.19+ |                                                                     |  | Amendment No. 1, dated May 25, 2000, to
    the Multi-Field Vaccine Discovery Collaboration and License
    Agreement between Corixa Corporation and SmithKline Beecham plc,
    dated September 1, 1998 |  |  | (I) | 

| |        |  |  |                                                                                                                                                                                                                                                                               |  |  |      | 
| | ------ |  |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
| | 10.20+ |  |  | Letter Agreement, dated August 16, 2001,
    between Corixa Corporation and SmithKline Beecham plc, amending
    the Multi-Field Vaccine Discovery Collaboration and License
    Agreement between Corixa Corporation and SmithKline Beecham plc,
    dated September 1, 1998 |  |  | (O)  | 
|
| | 10.21+ |  |  | Amendment No. 2, dated January 28,
    2003, to the Multi-Field Vaccine Discovery Collaboration and
    License Agreement between Corixa Corporation and SmithKline
    Beecham plc, dated September 1, 1998                                                                  |  |  | (Y)  | 
|
| | 10.22+ |  |  | Collaboration and License Agreement dated
    January 28, 2003 between Corixa Corporation and SmithKline
    Beecham plc                                                                                                                                                      |  |  | (Y)  | 
|
| | 10.23+ |  |  | Corixa License Agreement dated January 28,
    2003 between Corixa Corporation and SmithKline Beecham plc                                                                                                                                                                     |  |  | (Y)  | 
|
| | 10.24+ |  |  | Collaboration Agreement dated May 21, 1999
    between Corixa Corporation Inpharzam International                                                                                                                                                                             |  |  | (N)  | 
|
| | 10.25+ |  |  | Letter Agreement dated November 19, 2001
    between Corixa Corporation and Inpharzam International, amending
    the Collaboration Agreement dated May 21, 1999 between
    Corixa Corporation Inpharzam International                                                       |  |  | (Y)  | 
|
| | 10.26+ |  |  | Letter Agreement dated November 15, 2002
    between Corixa Corporation and Inpharzam International, amending
    the Collaboration Agreement dated May 21, 1999 between
    Corixa Corporation Inpharzam International                                                       |  |  | (Y)  | 
|
| | 10.27+ |  |  | Amended and Restated License and Collaborative
    Research Agreement dated as of December 19, 2002 between Corixa
    Corporation and Japan Tobacco Inc.                                                                                                                     |  |  | (Y)  | 
|
| | 10.28+ |  |  | Development and License Agreement dated
    August 16, 1999 between Zenyaku Kogyo Co., Ltd. and Corixa
    Corporation                                                                                                                                                        |  |  | (O)  | 
|
| | 10.29+ |  |  | Letter Agreement between Corixa Corporation and
    Zenyaku Kogyo Co., Ltd. dated August 6, 2001 amending the
    Development and License Agreement dated August 16, 1999
    between Zenyaku Kogyo Co., Ltd. and Corixa Corporation                                          |  |  | (O)  | 
|
| | 10.30+ |  |  | License, Development and Commercialization
    Agreement dated November 27, 2002 between Corixa
    Corporation and Kirin Brewery Company, Ltd.                                                                                                                               |  |  | (R)  | 
| | 10.31+ |  |  | License and Supply Agreement dated May 27,
    2003 among Corixa Corporation, Coulter Pharmaceutical, Inc. and
    GlaxoSmithKline Inc.                                                                                                                                       |  |  | (CC) | 

| |        |                                       |  |                                                                                                                                                                                              |  |  |     | 
| | ------ | ------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
| |        | Debt and Equity Investment Agreements |  |                                                                                                                                                                                             
| |        |                                       |  |                                                                                                                                                                                             
| | 10.32+ |                                       |  | Equity Line of Credit and Securities Purchase
    Agreement between Corixa Corporation and Castle Gate, L.L.C.,
    dated April 8, 1999                                                      |  |  | (D) | 
|
| | 10.33+ |                                       |  | Amendment No. 1, dated December 21,
    2000, to the Equity Line of Credit and Securities Purchase
    Agreement between Corixa Corporation and Castle Gate, L.L.C.,
    dated April 8, 1999 |  |  | (E) | 

98



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| |        |  |  |                                                                                                                                                                                                                                   |  |  |      | 
| | ------ |  |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
| | 10.34+ |  |  | Amendment No. 2, dated December 29,
    2000, to the Equity Line of Credit and Securities Purchase
    Agreement between Corixa Corporation and Castle Gate, L.L.C.,
    dated April 8, 1999                                      |  |  | (E)  | 
|
| | 10.35+ |  |  | Registration Rights Agreement between Corixa
    Corporation and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                         |  |  | (D)  | 
|
| | 10.36+ |  |  | Standstill Agreement between Corixa Corporation
    and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                                  |  |  | (D)  | 
|
| | 10.37+ |  |  | Warrant Number CG-1 issued by Corixa Corporation
    to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                      |  |  | (D)  | 
|
| | 10.38+ |  |  | Warrant Number CG-2 issued by Corixa Corporation
    to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                      |  |  | (D)  | 
|
| | 10.39+ |  |  | Form of Warrant Number CG-3 to be issued by
    Corixa Corporation to Castle Gate, L.L.C. on the occurrence of
    certain events in accordance with the terms of the Equity Line
    of Credit and Securities Purchase Agreement |  |  | (D)  | 
|
| | 10.40+ |  |  | Form of Warrant Number CG-4 to be issued by
    Corixa Corporation to Castle Gate, L.L.C. on the occurrence of
    certain events in accordance with the terms of the Equity Line
    of Credit and Securities Purchase Agreement |  |  | (D)  | 
|
| | 10.41+ |  |  | Warrant Number CG-5 issued by Corixa Corporation
    to Castle Gate, L.L.C. on December 29, 2000                                                                                                                                  |  |  | (E)  | 
|
| | 10.42+ |  |  | Loan Agreement between Coulter Pharmaceutical,
    Inc. and SmithKline Beecham Corporation, dated October 23,
    1998                                                                                                            |  |  | (H)  | 
|
| | 10.43  |  |  | First Amendment dated June 28, 2002 to the
    Loan Agreement between Coulter Pharmaceutical, Inc. and
    SmithKline Beecham Corporation, dated October 23, 1998                                                                 |  |  | (S)  | 
|
| | 10.44  |  |  | Second Amendment, dated August 26, 2003, to
    the Loan Agreement between Coulter Pharmaceutical, Inc. and
    SmithKline Beecham Corporation, dated October 23, 1998                                                            |  |  | (EE) | 
|
| | 10.45+ |  |  | Security Agreement between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                        |  |  | (H)  | 
|
| | 10.46+ |  |  | Grant of Security Interest between Coulter
    Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
    October 23, 1998                                                                                                |  |  | (H)  | 
|
| | 10.47  |  |  | Registration Rights Agreement dated
    August 26, 2003 between Corixa Corporation and SmithKline
    Beecham Corporation                                                                                                         |  |  | (EE) | 
|
| | 10.48  |  |  | Form of Warrant issued by Corixa Corporation to
    employees of Shoreline Pacific, LLC on December 3, 2001                                                                                                                       |  |  | (M)  | 
|
| | 10.49  |  |  | Loan Agreement between Corixa Corporation and BNP
    Paribas, dated August 3, 2001                                                                                                                                               |  |  | (P)  | 
|
| | 10.50  |  |  | Master Security Agreement between Corixa
    Corporation and General Electric Capital Corporation dated
    February 25, 2002                                                                                                     |  |  | (W)  | 
|
| | 10.51  |  |  | Promissory Note dated December 31, 2003 in
    the principal amount of $7,000,000, by Corixa Corporation in
    favor of General Electric Capital Corporation                                                                     |  |  |     | 
|
| | 10.52  |  |  | Securities Deposit Pledge Agreement dated
    December 31, 2004 by Corixa Corporation in favor of General
    Electric Capital Corporation                                                                                        |  |  |     | 
|
| | 10.53  |  |  | Securities Purchase Agreement dated
    August 9, 2002 among Corixa Corporation and the purchasers
    named therein                                                                                                              |  |  | (HH) | 
|
| | 10.54  |  |  | Registration Rights Agreement dated
    August 9, 2002 among Corixa Corporation and the investors
    named therein                                                                                                               |  |  | (HH) | 
|
| | 10.55  |  |  | Registration Rights Agreement dated June 13,
    2003 for 4.25% Convertible Subordinated Notes due
    July 1, 2008                                                                                                               |  |  | (BB) | 

99



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|        |        |                        |  |                                                                                                                                                                                                                        |  |  |      | 
|------- | ------ | ---------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |        |                        |  |                                                                                                                                                                                                                       
|Number  |        | Real Estate Agreements |  | Page                                                                                                                                                                                                                  
|        |        |                        |  |                                                                                                                                                                                                                       
|        | 10.56  |                        |  | Columbia Building Lease dated October 28,
    1994 and Columbia Building Lease First Amendment dated
    December 29, 1995, each between Corixa Corporation and Fred
    Hutchinson Cancer Research Center             |  |  | (A)  | 
|       
|        | 10.57  |                        |  | Second Amendment to Columbia Building Lease dated
    September 25, 1998 between Corixa Corporation and
    Alexandria Real Estate Equities, Inc., successor in interest to
    Fred Hutchinson Cancer Research Center |  |  | (B)  | 
|       
|        | 10.58  |                        |  | Lease dated May 31, 1996 between Corixa
    Corporation and Health Science
    Properties, Inc.                                                                                                                        |  |  | (A)  | 
|       
|        | 10.59  |                        |  | First Amendment to Lease dated January 31,
    1997 between Corixa Corporation and Health Science Properties,
    Inc.                                                                                                 |  |  | (P)  | 
|       
|        | 10.60  |                        |  | Second Amendment to Lease dated June 30,
    1997 between Corixa Corporation and Alexandria Real Estate
    Equities, Inc., formerly known as Health Science Properties, Inc.                                          |  |  | (P)  | 
|       
|        | 10.61  |                        |  | Third Amendment to Lease dated November 1,
    1998 between Corixa Corporation and Alexandria Real Estate
    Equities, Inc., formerly known as Health Science Properties, Inc.                                        |  |  | (P)  | 
|       
|        | 10.62+ |                        |  | Lease dated November 7, 1997 between HMS
    Gateway Office L.P. and Coulter Pharmaceutical, Inc.                                                                                                                      |  |  | (II) | 
|       
|        | 10.63+ |                        |  | First Amendment to Lease dated November 10,
    1998 between HMS Gateway Office L.P. and Coulter Pharmaceutical,
    Inc.                                                                                              |  |  | (H)  | 
|       
|        | 10.64  |                        |  | Second Amendment to Lease dated May 19, 2000
    between HMS Gateway Office L.P. and Coulter Pharmaceutical, Inc.                                                                                                      |  |  | (P)  | 
|       
|        | 10.65+ |                        |  | Lease dated May 19, 2000 between HMS Gateway
    Office L.P. and Coulter Pharmaceutical, Inc.                                                                                                                          |  |  | (O)  | 
|       
|        | 10.66+ |                        |  | First Amendment to Lease dated January 15,
    2002 between Gateway Boulevard Associates II, LLC, as
    successor interest to HMS Gateway Office L.P. and Coulter
    Pharmaceutical, Inc.                            |  |  | (Y)  | 
|       
|        | 10.67+ |                        |  | Lease Agreement dated October 15, 2002
    between Corixa Corporation and Lifesciences Building, LLC                                                                                                                   |  |  | (Q)  | 
|       
|        | 10.68+ |                        |  | Sublease Agreement dated April 4, 2003
    between Coulter Pharmaceutical, Inc. and Gryphon Therapeutics,
    Inc.                                                                                                     |  |  | (KK) | 
|       
|        | 10.69+ |                        |  | Sublease Agreement dated May 15, 2003
    between Coulter Pharmaceutical, Inc. and Corgentech, Inc.                                                                                                                    |  |  | (KK) | 
|       
|        | 10.70  |                        |  | Sublease Agreement dated September 11, 2003
    between Coulter Pharmaceutical, Inc. and Axys Pharmaceuticals,
    Inc.                                                                                                |  |  | (FF) | 
|       
|        | 10.71  |                        |  | First Amendment dated September 29, 2003 to
    Sublease Agreement dated September 11, 2003 between Coulter
    Pharmaceutical, Inc. and Axys Pharmaceuticals, Inc.                                                    |  |  | (GG) | 
|       
|        | 10.72  |                        |  | Standard Form of Agreement Between Owner and
    Contractor dated December 22, 2003 between Corixa
    Corporation and BN Builders, Inc.                                                                               |  |  |     | 

|        |       |                                    |  |                                                                    |  |  |     | 
|------- | ----- | ---------------------------------- |  | ------------------------------------------------------------------ |  |  | --- | 
|Exhibit |       |                                    |  |                                                                   
|Number  |       | Stock, Option and Retirement Plans |  | Page                                                              
|        |       |                                    |  |                                                                   
|        | 10.73 |                                    |  | 2001 Stock Incentive Plan                                          |  |  | (J) | 
|       
|        | 10.74 |                                    |  | 1997 Directors Stock Option Plan                                  |  |  | (A) | 
|       
|        | 10.75 |                                    |  | 2001 Employee Stock Purchase Plan                                  |  |  | (K) | 
|       
|        | 10.76 |                                    |  | Corixa Corporation 401(k) Savings &
    Retirement Plan            |  |  | (A) | 
|       
|        | 10.77 |                                    |  | Coulter Pharmaceutical, Inc. 1996 Employee Stock
    Purchase Plan |  |  | (F) | 
|       
|        | 10.78 |                                    |  | Coulter Pharmaceutical, Inc. 1995 Equity
    Incentive Plan        |  |  | (F) | 
|       
|        | 10.79 |                                    |  | Coulter Pharmaceutical, Inc. 1996 Equity
    Incentive Plan        |  |  | (F) | 

100



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|        |       |                                    |  |                                                                                                                                                                                                                                    |  |  |      | 
|------- | ----- | ---------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|Exhibit |       |                                    |  |                                                                                                                                                                                                                                   
|Number  |       | Stock, Option and Retirement Plans |  | Page                                                                                                                                                                                                                              
|        |       |                                    |  |                                                                                                                                                                                                                                   
|        | 10.80 |                                    |  | Form of Indemnification Agreement between Corixa
    Corporation and each director and officer of Corixa Corporation                                                                                                               |  |  | (A)  | 
|       
|        | 10.81 |                                    |  | Form of Corixa Corporation Executive Employment
    Agreement                                                                                                                                                                      |  |  | (L)  | 
|       
|        | 10.82 |                                    |  | Schedule of officers party to Corixa Corporation
    Executive Employment Agreement                                                                                                                                                |  |  |     | 
|       
|        | 10.83 |                                    |  | Secured Promissory Note by Steve G.
    Reed, Ph.D. and Marianne T. Reed in favor of Corixa
    Corporation, dated December 31, 2001                                                                                               |  |  | (P)  | 
|       
|        | 10.84 |                                    |  | Secured Promissory Note by Kenneth A.
    Grabstein, Ph.D. and Teresa A. Grabstein in favor of Corixa
    Corporation, dated December 31, 2001                                                                                     |  |  | (P)  | 
|       
|        | 21.1  |                                    |  | Subsidiaries of Corixa Corporation                                                                                                                                                                                                 |  |  |     | 
|       
|        | 23.1  |                                    |  | Consent of Ernst and Young, LLP, Independent
    Auditors                                                                                                                                                                          |  |  |     | 
|       
|        | 24.1  |                                    |  | Power of Attorney                                                                                                                                                                                                                  |  |  | (MM) | 
|       
|        | 31.1  |                                    |  | Certification of Chief Executive Officer of
    Corixa Corporation required by Rule 13a-14(a) or Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended                                                             |  |  |     | 
|       
|        | 31.2  |                                    |  | Certification of Chief Financial Officer of
    Corixa Corporation required by Rule 13a-14(a) or Rule 15d-14(a)
    of the Securities Exchange Act of 1934, as amended                                                             |  |  |     | 
|       
|        | 32.1  |                                    |  | Certification of Chief Executive Officer and
    Chief Financial Officer of Corixa Corporation required by Rule
    13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of
    1934, as amended, and 18 U.S.C. Section 1350 |  |  |     | 



---



|    |  |                                                                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(A) |  | Incorporated herein by reference Corixas
    Form S-1, as amended, (File No. 333-32147), filed with
    the Commission on September 30, 1997.                                                      
|   
|(B) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 0-22891), filed with the
    Commission on November 12, 1998.                                                                  
|   
|(C) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on November 10, 1998.                                                                   
|   
|(D) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on April 23, 1999.                                                                      
|   
|(E) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on January 4, 2001.                                                                     
|   
|(F) |  | Incorporated herein by reference to Corixas
    Registration Statement on Form S-8 (File
    No. 333-52968), filed with the Commission on
    December 29, 2000.                                   
|   
|(G) |  | Incorporated herein by reference to Coulter
    Pharmaceutical, Inc.s Registration Statement on
    Form S-1 (File No. 333-17661), as amended, filed with
    the Commission on September 29, 1997.
|   
|(H) |  | Incorporated herein by reference to Coulter
    Pharmaceutical, Inc.s Form 10-K, (File
    No. 000-21905), filed with the Commission on March 30,
    1999.                                        
|   
|(I) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on November 6, 2000.                                                                 
|   
|(J) |  | Incorporated herein by reference to Corixas
    Registration Statement on Form S-8 (File
    No. 333-65394), filed with the Commission on July 18,
    2001.                                       
|   
|(K) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on August 10, 2001.                                                                  
|   
|(L) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on November 13, 2001.                                                                
|   
|(M) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on December 17, 2001.                                                                 

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|     |  |                                                                                                                                                           
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|(N)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on August 9, 1999.                         
|    
|(O)  |  | Incorporated herein by reference to Corixas
    Form 10-K/ A (File No. 000-22891), filed with the
    Commission on June 24, 2002.                       
|    
|(P)  |  | Incorporated herein by reference to Corixas
    Form 10-K (File No. 000-22891), filed with the
    Commission on March 1, 2002.                          
|    
|(Q)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on October 21, 2002.                        
|    
|(R)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on December 5, 2002.                        
|    
|(S)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on August 13, 2002.                        
|    
|(T)  |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 000-22891), filed with the
    Commission on June 3, 2002.                            
|    
|(U)  |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 000-22891), filed with the
    Commission on May 29, 2002.                         
|    
|(V)  |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 000-22891), filed with the
    Commission on May 16, 2002.                         
|    
|(W)  |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on May 15, 2002.                           
|    
|(X)  |  | Incorporated herein by reference to Corixas
    Form S-3/ A (File No. 333-75282), filed with the
    Commission on May 6, 2002.                          
|    
|(Y)  |  | Incorporated herein by reference to Corixas
    Form 10-K (File No. 000-22891), filed with the
    Commission on February 25, 2003.                      
|    
|(Z)  |  | Incorporated herein by reference to Corixas
    Amendment to Registration Statement on Form 8-A/ A, filed
    with the Commission on March 6, 2003.      
|    
|(AA) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 000-22891), filed with the
    Commission on May 13, 2003.                           
|    
|(BB) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on June 18, 2003                              
|    
|(CC) |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 000-22891), filed with the
    Commission on July 29, 2003.                        
|    
|(DD) |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 0-22891), filed with the
    Commission on August 28, 2003                         
|    
|(EE) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on September 9, 2003                          
|    
|(FF) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on September 11, 2003                         
|    
|(GG) |  | Incorporated herein by reference to Corixas
    Form 8-K/ A (File No. 0-22891), filed with the
    Commission on September 29, 2003                      
|    
|(HH) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on August 9, 2002                             
|    
|(II) |  | Incorporated herein by reference to Coulter
    Pharmaceutical, Inc.s Form 10-K (File
    No. 000-21905), filed with the commission on March 27,
    1998
|    
|(JJ) |  | Incorporated herein by reference to Corixas
    Form 10-K (File No. 000-22891), filed with the
    Commission on March 30, 2001                          

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|     |  |                                                                                                                                
|---- |  | -------------------------------------------------------------------------------------------------------------------------------
|(KK) |  | Incorporated herein by reference to Corixas
    Form 8-K (File No. 0-22891), filed with the Commission
    on June 9, 2003    
|    
|(LL) |  | Incorporated herein by reference to Corixas
    Form 10-Q (File No. 0-22891), filed with the
    Commission on August 14, 2000
|    
|(MM) |  | Incorporated herein by reference to the
    Power of Attorney granted above in this report on
    Form 10-K.                 
|    
|+    |  | Confidential treatment granted by order of the
    SEC.                                                                        
|    
|*    |  | Confidential treatment sought by Corixa
    Corporation from the SEC.                                                          
|    
|    |  | Filed herewith.                                                                                                                

103