##### 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,
	2001                                             
|          
|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
than 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

The aggregate market value of the voting stock
held by non-affiliates of the Registrant was approximately
$405 million as of February 22, 2002, 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 41,587,801 shares of the
registrants Common Stock outstanding as of
February 22, 2002.

DOCUMENTS INCORPORATED BY REFERENCE:

Part III incorporates information by
reference from the Registrants Proxy Statement for its
2002 Annual Meeting of Stockholders.



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TABLE OF CONTENTS



|                  |                                                                                              |                                            |  |  |  |  |  | 
|----------------- | -------------------------------------------------------------------------------------------- | ------------------------------------------ |  |  |  |  |  | 
|TABLE OF CONTENTS
|PART I           
|                  | Item 1. Business                                                                            
|                  | Item 2. Properties                                                                          
|                  | Item 3. Legal Proceedings                                                                   
|                  | Item 4. Submission of Matters to a Vote of Security Holders                                 
|PART II          
|                  | Item 5. Market for Registrants Common Equity and Related Stockholder Matters               
|                  | Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations
|                  | Item 8. Financial Statements and Supplementary Data                                         
|                  |                                                                                              | CONSOLIDATED BALANCE SHEETS               
|                  |                                                                                              | CONSOLIDATED STATEMENTS OF OPERATIONS     
|                  |                                                                                              | CONSOLIDATED STATEMENTS OF CASH FLOWS     
|                  |                                                                                              | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|PART IV          
|                  | Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.                   
|SIGNATURES       
|POWER OF ATTORNEY
|Exhibit 10.9     
|Exhibit 10.10    
|Exhibit 10.11    
|Exhibit 10.14    
|Exhibit 10.42    
|Exhibit 10.43    
|Exhibit 10.44    
|Exhibit 10.58    
|Exhibit 10.59    
|Exhibit 10.60    
|Exhibit 10.64    
|Exhibit 10.65    
|Exhibit 10.66    
|Exhibit 10.67    
|Exhibit 10.68    
|Exhibit 10.71    
|Exhibit 10.72    
|Exhibit 21.1     
|Exhibit 23.1     



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##### Table of Contents



CORIXA CORPORATION

FORM 10-K

FOR THE FISCAL YEAR ENDED DECEMBER 31,
2001







TABLE OF CONTENTS


|           |  |                                                                                        |    |  |    | 
|---------- |  | -------------------------------------------------------------------------------------- | -- |  | -- | 
|           |  |                                                                                        |    | 
|PART I    
|Item 1.    |  | Business                                                                               |    |  | 2  | 
|Item 2.    |  | Properties                                                                             |    |  | 37 | 
|Item 3.    |  | Legal Proceedings                                                                      |    |  | 37 | 
|Item 4.    |  | Submissions of Matters to a Vote of Security
	Holders                                  |    |  | 37 | 
|PART II   
|Item 5.    |  | Market for Registrants Common Equity and
	Related Stockholder Matters                 |    |  | 38 | 
|Item 6.    |  | Selected Consolidated Financial Data                                                   |    |  | 40 | 
|Item 7.    |  | Managements Discussion and Analysis of
	Financial Condition and Results of Operations |    |  | 42 | 
|Item 8.    |  | Financial Statements and Supplementary Data                                            |    |  | 67 | 
|Item 9.    |  | Changes in and Disagreements with Accountants and
	Financial Disclosure                |    |  | 92 | 
|PART III  
|Item 10.   |  | Directors and Executive Officers of the Registrant                                     |    |  | 92 | 
|Item 11.   |  | Executive Compensation                                                                 |    |  | 92 | 
|Item 12.   |  | Security Ownership of Certain Beneficial Owners
	and Management                        |    |  | 92 | 
|Item 13.   |  | Certain Relationships and Related Transactions                                         |    |  | 92 | 
|PART IV   
|Item 14.   |  | Exhibits, Financial Statement Schedules and
	Reports on Form 8-K                       |    |  | 92 | 
|Signatures |  |                                                                                        | 98 | 



---

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

ANERGIX®, MELACINE®, MPL®,
CORIXA®, BEXXAR® and stylized Corixa logo® are
registered trademarks and ANERGIX.MGTM,
ANERGIX.MSTM, ANERGIX.RATM,
ANERVAXTM, ANERVAX.DBTM,
ANERVAX.RATM, DETOXTM, DETOX
B-SETM, PVACTM, RIBI-529TM,
ENHANZYNTM, BEXXAR and DesignTM, and
POWERED BY CORIXAtm 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.

1



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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 sections 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 immunotherapies with a
commitment to treating and preventing autoimmune diseases,
cancer and infectious diseases by understanding and directing
the immune system. We have a broad range of technology
platforms, which enable both integrated vaccine product design
and the use of our separate proprietary technologies 
antigens, monoclonal antibodies, adjuvants, antigen delivery
technology and tumor activated peptide, or TAP, pro-drug
technology  on a standalone, POWERED BY
CORIXATM basis. We exploit our expertise in
immunology and our proprietary technology platforms to discover
and develop vaccines, antigen-based products, including
therapeutic antibodies, novel adjuvants and targeted oncologics.
Corixa Corporation was originally incorporated in Delaware as
WWE Corporation on September 8, 1994. We are headquartered
in Seattle, Washington with additional operations in Hamilton,
Montana and South San Francisco, California.

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Our Antigen Discovery Capability

We believe our antigen discovery capability,
which uses numerous proprietary technologies, is one of our key
competitive strengths. Our ability to discover antigens and our
antigen validation expertise allows us to select those antigens
that will work most effectively in a vaccine or as the best
targets for developing antibody-based products. To make this
selection, we focus on antigens that are recognized by the
greatest percentage of individuals, stimulate the strongest
immune responses or are expressed by the greatest percentage of
pathogen strains or tumor types. In connection with autoimmune
diseases, we focus on discovering otherwise normal antigens, or
auto-antigens, that may trigger autoimmune responses.

Through a variety of proprietary
methods,

Corixa immunologically sieves for
antigens related to


autoimmune diseases, cancer, and infectious
diseases.


(GRAPHIC)

Novel and

Disease-specific


Antigens


To capitalize on our antigen discovery expertise,
a majority of our scientific personnel is involved in antigen
discovery and vaccine and therapeutic antibody product
development. We use discovery approaches and technologies that
include:



| |   |                                                                                         
| | - | ----------------------------------------------------------------------------------------
| |  | acquisition of normal and diseased tissue, and
	related clone DNA, or cDNA, and protein;
|
| |  | cDNA subtraction and analysis of differential
	gene expression;                         
|
| |  | quantitative protease chain reaction, or PCR;                                           
|
| |  | expression cloning of full-length cDNAs;                                                
|
| |  | immunohistochemistry to determine tissue
	distribution of candidate antigens;           
|
| |  | immunological characterization of candidate
	antigens; and                              
|
| |  | analysis of antigens as targets for developing
	antibody-based products.                

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Our antigen discovery approach also includes
correlating the antigens that we discover with patient immune
responses. We focus on identifying proteins that are recognized
by the human immune system and therefore are antigenic. Our
antigen discovery research culminates in isolating pathogen,
tumor or auto-antigen genes that encode antigens with
significant potential to form the basis of vaccines or other
immunotherapeutic products.

Our Novel Vaccine Design

Most currently available vaccines trigger
protective antibody responses that can destroy an invading
pathogen. However, these antibody responses cannot eliminate
tumors or certain infectious diseases. We believe that an
effective immune response against these diseases requires the
action of pathogen- or tumor-reactive T lymphocytes, or
T cells. Many of our vaccine programs focus on activating
specialized T cells known as cytotoxic T lymphocytes,
or CTL, that have the ability to recognize and kill
pathogen-infected tissue or tumor cells.

We have shown in preclinical studies that CTL can
eliminate either tumors or some pathogens in situations in which
antibody responses fail. These CTL not only prevent disease if
they are activated before pathogen infection, but also can
eliminate disease once the infection has occurred or, in the
case of cancer, once a tumor has developed. We believe vaccines
that activate specific T cell responses can form the basis
for a new class of products that may be used to treat or prevent
disease. We are using our proprietary antigens in potential
products that we believe will boost immune responses and enhance
CTL responses. Using recent advances in understanding molecular
mechanisms that control the way in which antigens are normally
presented to T cells, we are developing vaccines that
incorporate disease-specific antigens into biodegradable and
biocompatible microspheres. We believe that these vaccines may
give rise to potent CTL responses. Through our antigen discovery
program, we have identified antigens from many tumor types and
from infectious disease pathogens for which no vaccines
currently exist.

Our Product Categories

We utilize our expertise in immunology and our
proprietary technology platforms to discover and develop
vaccines and other antigen-based products targeting autoimmune
diseases, cancer and infectious diseases in the following
product categories:



| |   |                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------
| |  | vaccines, immunotherapeutics and other
	therapeutic products that effect the immune system;                         
|
| |  | monoclonal antibody-based therapeutics;                                                                             
|
| |  | adjuvants and antigen delivery systems to
	increase effectiveness of vaccines and immunotherapeutics;               
|
| |  | toxin-conjugated products that increase the
	effectiveness of antibody-based therapeutic or enzyme
	substraites; and
|
| |  | antigen-specific diagnostic products.                                                                               

Our strategy is to develop and commercialize
selected potential products ourselves and to partner other
selected technologies with numerous developers and marketers of
pharmaceutical and diagnostic products with the goal of making
our products available to patients worldwide.

Vaccines and Immunotherapeutics for Autoimmune
Diseases, Cancer and Infectious Diseases

Autoimmune Disease Technology Platforms.Our autoimmune disease technology
platforms consist of:



| |   |                      
| | - | ---------------------
| |  | PVACTM treatment; and
|
| |  | ANERGIX® complexes.  

We believe that we may have identified certain
immune system modulators through our adjuvant research programs.
We are developing one of these immune system modulators, PVAC
treatment, as a possible psoriasis therapeutic. We have
completed a PVAC Phase II clinical trial in the United
States and are

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currently in Phase II clinical trials in
Brazil under a U.S. investigational new drug application, or
IND. Data from the Phase II clinical trial in the United
States and a Phase I clinical trial in the Philippines
indicate that PVAC treatment may induce beneficial clinical
responses in patients with moderate to severe psoriasis.


Our ANERGIX complex-based products are in, or
have completed, randomized, blinded, placebo-controlled
Phase I clinical trials for treating rheumatoid arthritis,
or RA as well as multiple sclerosis, or MS and myasthenia
gravis, or MG. In the trials, the ANERGIX complex-based products
were demonstrated to be safe, and we observed beneficial
clinical responses in several ANERGIX-treated patients. We have
also commenced development of an ANERVAX.RATM vaccine
for RA, for which we have completed an initial Phase II clinical
trial that demonstrated that the product was well tolerated and
the results indicate that ANERVAX.RA vaccine may provide
clinical benefit.

Cancer and Infectious Disease Technology
Platforms.Our cancer and infectious
disease technology platforms are based on our specialization in
the discovery and development of a new class of therapeutic and
prophylactic products known as T cell vaccines. Using our
three-part technology platform, we design our vaccine products
to direct the immune system to recognize antigens in a way that
potent T cell responses result. This three-part vaccine
technology platform consists of:



| |   |                                      
| | - | -------------------------------------
| |  | proprietary antigens;                
|
| |  | proprietary adjuvants; and           
|
| |  | proprietary antigen delivery systems.

In addition to our vaccine programs, we discover
and develop other immunotherapeutic products for treating cancer
and infectious diseases. To date, our immunotherapeutic products
for treating cancer and infectious diseases have resulted from
our efforts in antigen and adjuvant discovery and our
acquisition and in-licensing activities. For example, we are
developing non-specific, immune enhancing compounds that may be
able to provide broad protection against multiple infectious
agents. We expect to continue to derive novel immunotherapies
from our internal and external research efforts.

Monoclonal Antibody-Based
Therapeutics

We believe that monoclonal antibodies directed
against our antigens may also be useful in treating autoimmune
diseases, cancer and infectious diseases. Consequently, we have
entered into a number of collaborations focused on monoclonal
antibody development. We intend to enter into additional
collaborations with companies to more rapidly develop
antibody-based therapeutics derived from our novel antigen
targets.

In some cases, the effectiveness of therapeutic
antibodies can be increased by attaching radioisotopes or other
cytotoxic agents for use as radioimmunotherapy or
chemoimmunotherapy. By using an antibody to deliver
a radioisotope or other cytotoxic agent to the targeted cells,
the effect of the radiation or cytotoxic agent can be
concentrated in the immediate vicinity of those cells.

BEXXAR®, our most advanced product
candidate, incorporates each of the principal attributes of an
effective radioimmunotherapy for treating Non-Hodgkins
lymphoma, or NHL. These attributes are:



| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | an antigen specific to B-cells;                                         
|
| |  | a therapeutically active monoclonal antibody
	targeted to that antibody;
|
| |  | the radioisotope appropriate for the disease
	profile; and              
|
| |  | an optimized therapeutic protocol.                                      

Adjuvants and Antigen Delivery Systems to
Increase Effectiveness of Vaccines and
Immunotherapeutics

By combining our antigen discovery capabilities
with our adjuvant and delivery technologies, we believe we can
accelerate the development of potential therapies for treating
or preventing autoimmune diseases, cancer and infectious
diseases. We also believe that many vaccines can be improved by
including our adjuvant

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and delivery components, leading to multiple new
products that are at least in part, POWERED BY
CORIXATM.


Targeted Oncologics

We believe that combining our TAP pro-drug
technology with our understanding of biochemical mechanisms
involved in metastasis may lead to broader therapeutic uses of
conventional chemotherapies. TAP pro-drug versions of existing
cytotoxic drugs are designed to be activated near metastatic
cancer cells, but remain stable in circulation and in normal
tissues. Accordingly, TAP-based products may cause larger
quantities of cytotoxic agents to reach and enter malignant
cells as opposed to normal cells, which could permit a
significant increase in maximum tolerated dosages, and
potentially overcome drug resistance in cancer cells currently
observed in more conventional therapies.

Our Strategy

Our goal is to be a leader in the development and
commercialization of products to prevent, treat or diagnose
autoimmune diseases, cancer and infectious diseases. By
understanding and directing the immune system and disease
mechanisms, we discover and develop vaccines, antigen-based
products, novel adjuvants and targeted oncologics. To accelerate
the commercial development of potential new therapeutic and
prophylactic T cell vaccines and other immunotherapeutic
products, we may retain the right to develop and commercialize
selected product candidates or we may establish corporate
partnerships for product development and commercialization at
various stages in the development process. The principal
elements of our strategy are as follows:

Build a Broad Integrated Product Pipeline
Focused on the Immune System.We
believe that we can best develop effective immunotherapeutic
products for autoimmune diseases, cancer and infectious diseases
by integrating our proprietary antigen, monoclonal antibody,
adjuvant and antigen delivery technologies. We also believe that
targeted immunotherapies, such as conjugated antibodies, and
targeted oncologics can improve the effectiveness of therapeutic
antibodies and existing chemotherapies.

Effectively Partner Core
Technologies.Because we believe
that other companies immunotherapeutic products may be
enhanced by components available from us, we seek to establish
corporate partnerships with major commercial entities for each
of our proprietary core technologies  our POWERED BY
CORIXA approach. Examples of these partnerships include both
antigen-specific collaborations aimed at generating new antibody
targets, and license and supply relationships involving vaccine
adjuvants, such as MPL® adjuvant or ENHANZYNTM
adjuvant. We believe that both types of partnerships should
enable improved immunotherapy based in part on our proprietary
technologies.

Enhance Our Product Pipeline by
Establishing Corporate Partnerships at Various Research and
Development Stages.We intend to
enter into corporate partnerships at various stages in the
research and development process. For those potential products
that show promise in the preclinical or clinical stage, we may
seek a corporate partner prior to initiating Phase II
clinical trials. In the case of selected technologies or
potential products, we may choose to retain development rights
and partner these products at a later stage. We believe our
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.                                                                            

Expand Sales and Marketing Capability.We intend to market and sell
selected products in the United States through a direct sales
force and, where appropriate, in collaboration with marketing
partners. We believe that this strategy should enable us to
establish a commercial presence in the cancer therapeutics

6



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market with BEXXAR, if approved, and create the
capability to sell other oncology based products that we develop
or in-license from other developers. As a result of our
acquisition of Coulter Pharmaceutical in December 2000, we
acquired a direct sales force and marketing personnel in
preparation for the launch of BEXXAR. However, our ability to
market BEXXAR, if approved, and to sell other oncology based
products will be contingent upon recruiting, training and
deploying the remainder of the necessary sales and marketing
force. We believe that an established sales and marketing
capability will enable us to compete more effectively for
opportunities to license or distribute later-stage product
candidates and approved products.


Selectively Acquire or In-License
Complementary Technologies.In
addition to developing technology internally, we have
in-licensed several significant product opportunities. We intend
to continue to pursue in-licensing efforts, and to continue to
evaluate acquisitions of companies with complementary
technologies. We believe that we can expand our existing
technology and product base by in-licensing and that future
acquisitions may lead to additional commercial opportunities.

Our Clinical Programs



| |                   
| | ------------------
| | Autoimmune Disease

We have six clinical programs in various stages
of clinical testing for a number of autoimmune diseases that are
considered important targets for new disease therapy. These six
programs are:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | MPL adjuvant, one of our vaccine adjuvants, is
	undergoing Phase III clinical testing in Europe for use in
	allergy vaccines that are marketed by Allergy Therapeutics and
	sold by Allergy Therapeutics on a named-patient basis in
	Germany. MPL adjuvant has completed Phase III clinical
	trials with GlaxoSmithKline, or GSK, hepatitis and herpes
	vaccines. In both cases MPL adjuvant improved vaccine efficacy;
|
| |  | PVAC treatment, an immunomodulator to potentially
	treat moderate to severe psoriasis, is licensed in Japan to
	Zenyaku Kogyo, Co., Ltd. or Zenyaku Kogyo, and in the United
	States and Canada to Medicis Pharmaceutical Corporation and has
	completed a randomized, blinded and controlled Phase II
	clinical trial in the United States;                                                                            
|
| |  | ANERGIX.RATM complex, a
	multihistocompatability complex, or MHC, -class II molecule
	loaded with a collagen peptide for treating RA, is licensed
	worldwide to Organon and has completed a Phase I/ II
	clinical trial;                                                                                                                                                                                                
|
| |  | ANERGIX.MSTM complex, an
	MHC-class II molecule loaded with a MS-associated peptide
	for treating MS, has completed a Phase I/ II clinical trial;                                                                                                                                                                                                                                                                       
|
| |  | ANERGIX.MGTM complex, an
	MHC-class II molecule loaded with a MG-associated peptide
	for treating MG, which we partnered with Beaufour Ipsen in late
	2001 is in pre-clinical development; and                                                                                                                                                                                                                          
|
| |  | ANERVAX.RA vaccine, a peptide vaccine for
	treating RA, has completed a Phase II clinical trial.                                                                                                                                                                                                                                                                                                                        



| |       
| | ------
| | Cancer

We are moving four of our novel cancer
therapeutics through clinical development. These four products,
in various stages of human testing, are:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | BEXXAR® therapy, a monoclonal antibody
	conjugated with a radioisotope for treating low-grade and
	transformed low-grade NHL. We have co-promotion rights in the
	United States with GSK through its wholly owned subsidiary,
	SmithKline Beecham Corporation and are collaborating with
	Amersham plc, or Amersham, to develop and commercialize this
	therapy in Europe. BEXXAR is the subject of a BLA under review
	by the Food and Drug Administration, or FDA;
|
| |  | MELACINE® vaccine, a melanoma vaccine for
	treatment of late-stage melanoma, for which Schering-Plough
	holds exclusive distribution rights, is currently approved for
	sale in Canada and has completed Phase III clinical trials
	in the United States;                                                                                                                                                                                                           

7



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| |   |                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | ENHANZYNTM adjuvant, a novel vaccine
	adjuvant is contained in both MELACINE and Biomiras
	THERATOPE® vaccine. ENHANZYN is currently in Phase III
	clinical trials of THERATOPE for treating breast cancer; and
|
| |  | Her-2/neu vaccine, for breast and ovarian cancer,
	is licensed worldwide to GSK, and is in Phase I clinical
	trials.                                                                                            



| |                   
| | ------------------
| | Infectious Disease

Our partners are evaluating our adjuvants in a
new generation of adult and pediatric vaccines designed to be
more safe and effective and to protect against a broader range
of diseases. MPL adjuvant is our flagship adjuvant. It is a
derivative of the lipid A molecule found in gram-negative
bacteria, and has been observed to be a potent immunostimulant.
Licenses for MPL adjuvant have been granted to several
affiliates of GSK and to Wyeth-Lederle Vaccines for development
in over 25 disease targets. Vaccines that incorporate MPL
adjuvant have completed or are now in late-stage clinical trials
to protect against infection from:



| |   |                             
| | - | ----------------------------
| |  | herpes virus;               
|
| |  | hepatitis B virus;          
|
| |  | human papilloma virus;      
|
| |  | malaria; and                
|
| |  | respiratory syncytial virus.

Our RIBI-529TM adjuvant is now in
Phase III clinical trials in Argentina as part of a
hepatitis B vaccine being developed in collaboration with
Rhein Biotech. Licenses to RIBI-529TM have been
granted to Wyeth-Lederle Vaccines for development in multiple
disease targets.

Our Products in Development

We have a number of product candidates in various
stages of development, many of which are the subject of
collaborations with corporate partners. The following table sets
forth the potential application(s) for a

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particular product candidate, the product
candidates present stage of development and the identity
of our corporate partner, if any. Partnerships with subsidiaries
of GSK are identified as GSK partnerships.


|                                                      |  |                                                                         |  |                                       |  |                                                                                 
|----------------------------------------------------- |  | ----------------------------------------------------------------------- |  | ------------------------------------- |  | --------------------------------------------------------------------------------
|                                                      |  |                                                                         |  | Development                           |  |                                                                                 
|Products                                              |  | Disease/Indication                                                      |  | Stage                                 |  | Partner(s)                                                                      
|                                                      |  |                                                                         |  |                                       |  |                                                                                 
|Autoimmune Disease MPL® adjuvant                      |  | Enhance efficacy of certain allergy vaccines                            |  | Phase III                             |  | Allergy Therapeutics holds co-exclusive rights;                                 
|PVACTMtreatment                                       |  | Moderate to severe psoriasis                                            |  | Phase II                              |  | Medicis Pharmaceutical and Zenyaku Kogyo                                        
|ANERGIX.RATMcomplex                                   |  | Rheumatoid arthritis                                                    |  | Phase I/II                            |  | Organon                                                                         
|ANERGIX.MSTMcomplex                                   |  | Multiple sclerosis                                                      |  | Phase I/II                            |  | Unpartnered                                                                     
|ANERVAX.RATMvaccine                                   |  | Rheumatoid arthritis                                                    |  | Phase I/II                            |  | Unpartnered                                                                     
|ANERGIX.MGTMcomplex                                   |  | Myasthenia gravis                                                       |  | Preclinical                           |  | Beaufour-Ipsen                                                                  
|MPL® adjuvant                                         |  | Enhance efficacy of certain allergy vaccines                            |  | Preclinical                           |  | GSK holds co-exclusive rights                                                   
|IFNAR                                                 |  | Several autoimmune indications                                          |  | Preclinical                           |  | Unpartnered                                                                     
|RIBI-529TMadjuvant                                    |  | Undisclosed autoimmune disease                                          |  | Preclinical                           |  | Wyeth-Lederle Vaccines                                                          
|                                                     
|Cancer                                                |  |                                                                         |  |                                       |  |                                                                                 
|BEXXAR® therapy                                       |  | Low-grade and transformed NHL                                           |  | BLA under review                      |  | GSK                                                                             
|MELACINE® vaccine                                     |  | Stage IV malignant melanoma                                             |  | Approved in Canada; Phase III in U.S. |  | Schering-Plough                                                                 
|MELACINE® vaccine                                     |  | Stage II malignant melanoma                                             |  | Phase III                             |  | Schering-Plough                                                                 
|ENHANZYNTMadjuvant                                    |  | Adjuvant component in THERATOPE® therapeutic
	vaccine for breast cancer |  | Phase III                             |  | Biormira holds exclusive rights for certain
	antigens; other targets unpartnered
|RIBI-529TMadjuvant                                    |  | Enhance efficacy of cancer and infectious disease
	vaccines             |  | Phase III in Argentina                |  | Rhein Biotech                                                                   
|BEXXAR® therapy                                       |  | Low-grade and transformed NHL                                           |  | Development
	in Europe                |  | Amersham                                                                        
|Her-2/neu vaccine                                     |  | Late-stage breast and ovarian cancer                                    |  | Phase I                               |  | GSK                                                                             
|Mammaglobin vaccine                                   |  | Breast cancer                                                           |  | Preclinical                           |  | GSK                                                                             
|WT-1 vaccine                                          |  | Leukemia                                                                |  | Preclinical                           |  | Unpartnered                                                                     
|Novel cancer vaccine                                  |  | Prostate cancer                                                         |  | Preclinical                           |  | GSK                                                                             
|MPL® adjuvant                                         |  | Enhance efficacy of certain cancer vaccines                             |  | Preclinical                           |  | GSK holds exclusive rights for certain antigens                                 
|RIBI-529TMadjuvant                                    |  | Infectious diseases                                                     |  | Preclinical                           |  | Wyeth-Lederle Vaccines                                                          
|CPI-0004                                              |  | TAP pro-drug                                                            |  | Preclinical                           |  | Unpartnered                                                                     
|Novel cancer vaccines                                 |  | Breast, colon and ovarian cancer                                        |  | Preclinical                           |  | GSK                                                                             
|Novel cancer vaccine                                  |  | Lung cancer                                                             |  | Preclinical                           |  | Pharmaceutical division of Japan Tobacco; Zambon
	Group                         
|Novel cancer vaccine                                  |  | Leukemia/lymphoma                                                       |  | Research                              |  | Unpartnered                                                                     
|Microsphere-based antigen delivery and LeIF
	adjuvant |  | Lung cancer                                                             |  | Research                              |  | Zambon Group holds certain license rights                                       

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|                                                                         |  |                                                                      |  |                                                           |  |                                                                 
|------------------------------------------------------------------------ |  | -------------------------------------------------------------------- |  | --------------------------------------------------------- |  | ----------------------------------------------------------------
|                                                                         |  |                                                                      |  | Development                                               |  |                                                                 
|Products                                                                 |  | Disease/Indication                                                   |  | Stage                                                     |  | Partner(s)                                                      
|                                                                         |  |                                                                      |  |                                                           |  |                                                                 
|Microsphere-based antigen delivery                                       |  | Enhance efficacy of multiple cancer and
	infectious disease vaccines |  | Phase I                                                   |  | GSK hold certain option rights                                  
|                                                                        
|Infectious Disease                                                       |  |                                                                      |  |                                                           |  |                                                                 
|MPL® adjuvant                                                            |  | Enhance efficacy of certain infectious disease
	vaccines             |  | Phase I, II and III                                       |  | Partnered for certain diseases with GSK;
	Wyeth-Lederle Vaccines
|Novel infectious disease vaccine                                         |  | Human leishmaniasis                                                  |  | Phase I                                                   |  | IDRI, Gates Foundation                                          
|Novel infectious disease vaccine                                         |  | Tuberculosis                                                         |  | Preclinical                                               |  | GSK                                                             
|Novel infectious disease vaccines                                        |  | Chlamydia trachomitis and Chlamydia pneumoniae                       |  | Research                                                  |  | GSK                                                             
|RIBI-529TMadjuvant                                                       |  | Enhance efficacy of certain infectious disease
	vaccines             |  | Research                                                  |  | Wyeth-Lederle Vaccines                                          
|Novel infectious disease vaccine                                         |  | Herpes virus                                                         |  | Research                                                  |  | Unpartnered                                                     
|AGPs as Monotherapy                                                     |  | Enhance immune response against multiple
	infectious disease agents  |  | Research                                                  |  | SPAWAR                                                          
|Diagnostic                                                               |  | Visceral leishmaniasis                                               |  | Commercialized, development                               |  | Several companies                                               
|Diagnostic                                                               |  | Chagas Disease                                                      |  | Commercialized                                            |  | Diamed                                                          
|Reference laboratory diagnostic                                          |  | Certain tick-borne diseases                                          |  | Commercialized                                            |  | Imugen                                                          
|Rapid diagnostic test                                                    |  | Tuberculosis                                                         |  | Commercialized                                            |  | ICT Diagnostics, a subsidiary of AMRAD                          
|                                                                        
|Other Partnered Programs                                                 |  |                                                                      |  |                                                           |  |                                                                 
|Adoptive Immunotherapy                                                   |  | Multiple cancers                                                     |  | Phase I                                                   |  | IDRI                                                            
|Cancer gene therapy (MDA- 7)                                             |  | Multiple cancers                                                     |  | Phase I                                                   |  | Introgen Therapeutics                                           
|Certain vaccine and diagnostic technologies for
	companion animal health |  | Various indications                                                  |  | Diagnostics are commercialized; vaccines are in
	research |  | Novartis                                                        
|Other diagnostic products                                                |  | Multiple cancers                                                     |  | Research                                                  |  | Unpartnered                                                     

In the column entitled Development
Stage:



| |   |                                                                                                                                                                          
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Research means the discovery or
	creation of prototype products and includes antigen discovery
	and characterization;                                                  
|
| |  | Development means testing of
	prototype diagnostic assays in a particular format and testing
	of such products;                                                        
|
| |  | Preclinical means product scale up,
	formulation and further testing in animals, including toxicology;                                                                 
|
| |  | Phase I means products that are
	currently in Phase I clinical trials, performed to evaluate
	the safety of a vaccine and its ability to stimulate an immune
	response;
|
| |  | Phase I/ Phase II means products that
	are currently in Phase I/ Phase II clinical testing,
	being tested to determine safety and preliminary efficacy;                
|
| |  | Phase II means products that are
	currently in Phase II dose-ranging clinical testing, being
	tested to further determine safety and efficacy;                         

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| |   |                                                                                                                                        
| | - | ---------------------------------------------------------------------------------------------------------------------------------------
| |  | Phase III means products that are
	currently in Phase III clinical testing, being tested to
	determine efficacy;                     
|
| |  | BLA means the product is currently
	the subject of a biologics license application under review by
	the FDA; and                     
|
| |  | Commercialized means sales to third
	parties for use in diagnostic applications, which have resulted
	in immaterial revenues to date.

Our Product Pipeline and Development
Status



| |                   
| | ------------------
| | Autoimmune Disease

MPL®Adjuvant for Allergy Desensitization.Allergies
caused by grasses, trees and house dust mites afflict an
estimated 20% of the population in developed countries. Allergy
Therapeutics Ltd., or ATL, and GSKs wholly owned
subsidiary, SmithKline Beecham plc, have each licensed
certain rights to our MPL adjuvant for use in allergen-based
allergy desensitization products. Under the terms of the
agreements with ATL and GSK, we may not grant further rights to
MPL adjuvant for allergen-based allergy products. Initially the
ATL collaboration will target products that relieve allergic
symptoms caused by pollens from grasses, trees and house dust
mites. Although current desensitization methods offer some
relief to most allergy sufferers, we believe the addition of MPL
adjuvant may allow the development of more effective, and more
easily administered allergy treatments.

In October 1999, ATL presented data from its
initial Phase II multi-center clinical trials for using MPL
adjuvant in its allergy product for grass at the Allergie 2000
meeting in Munich, Germany. The results suggested that adding
MPL adjuvant to desensitization products may result in a more
rapid response to treatment, fewer treatments with decreased
dosages, and a higher response rate. ATL continues to conduct
Phase II and Phase III clinical trials to assess
immunologic parameters and safety. In October 1999, ATL launched
allergy products containing MPL adjuvant on a named-patient
basis in Germany.

PVACTMTreatment for Psoriasis.Psoriasis is a
dermatological disorder that afflicts approximately 1% to 2% of
the North American and European populations. The disease is
characterized by chronic inflammatory lesions with red, scaling
plaques and is believed to be an autoimmune phenomenon initiated
by T cells. In collaboration with Genesis Research and
Development Corporation, we are testing PVAC treatment for use
as an immunotherapeutic product for psoriasis. PVAC treatment is
based on a proprietary process and formulation derived from
heat-killed Mycobacterium vaccae. We hold exclusive rights under
SR Pharmas intellectual property portfolio for the
use of Mycobacterium vaccae-derived products to treat psoriasis
and certain other autoimmune diseases. We have partnered our
PVAC treatment program with Medicis in the United States and
Canada and with Zenyaku Kogyo in Japan. We have completed a
Phase II clinical trial of PVAC treatment in the United
States and have a Phase II clinical trial in progress in
Brazil under a U.S. IND.

ANERGIX®Complex.Each ANERGIX complex is an
MHC-class II molecule loaded with a disease-specific
peptide. We have two forms of ANERGIX complex,
ANERGIX.RATM complex for treating RA and
ANERGIX.MS complex for treating MS. We are developing a
third ANERGIX complex, ANERGIX.MG complex for
treating MG.

RA is a chronic, progressive autoimmune disease
characterized by progressive joint destruction, deformity and
disability. The disease affects more than 8 million people
worldwide. Most drugs approved for treating RA treat the
symptoms of RA, not its underlying cause. In collaboration with
Organon, we have completed a randomized placebo-controlled
Phase I/II clinical trial of ANERGIX.RA complex in patients
with advanced RA. Data from an interim analysis of this
trial was presented at The American College of Rheumatology
meetings in November 1999. This interim analysis demonstrated
that ANERGIX.RA complex was well tolerated by treated patients
and indicated potential clinical benefit at the two top dose
levels studied. The interim results also indicated that clinical
results were most pronounced in patients who had peripheral
blood T cells capable of recognizing the synthetic collagen
peptide present in the ANERGIX.RA

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complex. In December 2000, we amended and
restated our agreement with Organon to include continued
development of our recombinant form of ANERGIX.RA.


MS is an autoimmune disease in which the
bodys T cells recognize the outer covering of nerves
in the central nervous system as foreign and attempt to destroy
this protective neural covering. The severity of MS fluctuates
and can lead to progressive impairment of mobility and
paralysis. There are more than 600,000 MS patients in the
world, with approximately 350,000 in the United States. In 1998,
we completed a randomized placebo-controlled Phase I/II
clinical trial of ANERGIX.MS complex in patients with secondary
progressive MS. Results of this trial indicated that the
product was well tolerated by treated patients, caused no
generalized immune suppression and demonstrated some evidence of
clinical efficacy. We are seeking a partner for the development
of ANERGIX.MS complex prior to initiating additional
Phase II trials.

MG is a chronic autoimmune neuromuscular disease
that causes varying degrees of weakness of the skeletal muscles
of the body; the Myasthenia Gravis Foundation of America
estimates that the prevalence of MG is approximately 14/100,000
in the United States.

The ANERGIX complex products that we have
evaluated in clinical trials are natural products. Due to the
high cost of manufacturing, these natural products are likely to
be difficult to commercialize. Our scientists have developed
recombinant forms of ANERGIX complex products that may be far
less expensive to produce and have demonstrated efficacy in both
in vitro and in vivo models of autoimmune disease. We intend to
select one of these recombinant solutions to use in continuing
and expanding clinical evaluation of ANERGIX complex products.

ANERVAX.RATMVaccine.ANERVAX.RA vaccine is a therapeutic
peptide vaccine for treating advanced RA. Although results of a
53-patient randomized placebo-controlled Phase I/II
clinical trial demonstrated that the product was well tolerated
by treated patients and reduced disease severity in several
patients, our scientists have been working to improve the
ANERVAX.RA vaccine formulation prior to continuing clinical
evaluation. We believe the addition of one of our proprietary
adjuvants to the ANERVAX.RA vaccine may improve its efficacy in
animal models of autoimmune disease. We are reformulating this
peptide vaccine to incorporate this novel adjuvant technology
and are seeking to partner this program before entering into
additional clinical trials.



| |       
| | ------
| | Cancer

BEXXAR®.NHLs are blood-borne cancers of
the immune system, all of which involve proliferation of
malignant B lymphocytes, or B cells. According to
statistics from the National Cancer Institute, approximately
280,000 people are afflicted with NHL in the United States. More
than 58,000 new cases are expected to be diagnosed in 2002. NHL
is the sixth leading cause of death among cancers in the United
States and has the second fastest growing mortality rate. NHL is
categorized by histology as either low-, intermediate-or
high-grade disease. These classifications differ significantly
with respect to the speed of disease progression, the pattern of
response to and relapse after conventional chemotherapy and the
patients average life expectancy. In relapsed low-grade
patients, the disease can transform to an intermediate- or
high-grade histology, referred to as transformed low-grade NHL.
In the United States approximately 145,000 patients have
low-grade or transformed low-grade NHL, approximately 104,000
have intermediate-grade NHL and approximately 31,000 have
high-grade NHL.

Our most advanced product candidate, BEXXAR
immunotherapy (tositumomab, iodine I 131 tositumomab),
consists of a monoclonal antibody conjugated with a
radioisotope. BEXXAR is the subject of a collaboration agreement
with GSK under which we would comarket BEXXAR with GSK in the
United States if and when the FDA approves BEXXAR for commercial
sale. We are seeking initial approval of BEXXAR for treating
low-grade and transformed low-grade NHL in patients who have
relapsed after, or are refractory to chemotherapy, while
simultaneously pursuing clinical trials to expand the potential
use of BEXXAR to other indications.

In September 2000, we submitted a Biological
License Application, or BLA, for BEXXAR immunotherapy to the
FDA. In October 2000, the FDA assigned priority review status to
the BEXXAR BLA, and

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subsequently accepted the application for filing
in November. To date, no radioimmunotherapy products have been
approved in the United States for treating people with cancer.


On March 16, 2001, we received a complete
review letter from the FDA following the agencys
6 month review of the BEXXAR BLA. Issuance of the complete
review letter satisfied the FDAs performance goal for
priority review under the Prescription Drug User Fee Act. In the
complete review letter, the FDA requested additional clinical
and manufacturing information as a result of the review. The FDA
requested updated and/or final safety and efficacy data from
ongoing, recently completed and other additional trials to
establish safety and effectiveness. We and GSK believe that
safety and efficacy data from recently completed trials, beyond
those contained in the BEXXAR BLA, may fulfill FDAs
requests. Recently completed trials have:



| |   |                                                                                                                                                            
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Examined comparative safety and efficacy in
	low-grade NHL patients treated either with BEXXAR or the
	unlabeled antibody in BEXXAR;                       
|
| |  | Assessed clinical safety and efficacy of BEXXAR
	treatment of relapsed, refractory low-grade NHL patients who did
	not respond to Rituxan® (rituximab); and
|
| |  | Assessed BEXXAR safety and efficacy as front-line
	therapy in low-grade NHL patients.                                                                      

The FDA also requested:



| |   |                                                                                                                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Further documentation and analysis of patient
	diagnosis and confirmation of response from pivotal and
	non-pivotal trials that involved treatment of low-grade lymphoma
	patients, including those patients with transformed low-grade
	lymphoma;
|
| |  | Additional information or source documentation
	regarding:                                                                                                                                                                                        



| |   |                                                                                          
| | - | -----------------------------------------------------------------------------------------
| |  | Certain adverse events,                                                                  
|
| |  | Long-term follow-up on patient thyroid function
	and HAMA response,                      
|
| |  | White blood cell counts following BEXXAR
	administration, and                            
|
| |  | Dosimetry calculations on certain patients whose
	response data was submitted in the BLA;



| |   |                                                                                                                                                                                                                  
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Further documentation and analysis supporting
	comparability of tositumomab manufactured by different suppliers
	during the course of BEXXAR clinical development; and                                           
|
| |  | Additional documentation and test results related
	to validation of various production processes and release tests
	as well as additional information concerning processes and
	procedures used in drug shipment.

We submitted our response to the FDA request,
which was accepted by the FDA on September 10, 2001.

MELACINE®Vaccine. Melanoma, if not detected and treated early, can be
highly metastatic and is the most deadly form of skin cancer.
Death due to malignant melanoma is usually caused by
complications after the disease has spread to the lungs, liver,
brain or other organs. Standard therapy for primary skin tumors
includes surgery followed by observation.

Our MELACINE melanoma vaccine, a potential
therapeutic for treating melanoma, is available for sale in
Canada. MELACINE vaccine consists of lysed (broken) cells from
two human melanoma cell lines combined with our proprietary
DETOX adjuvant. DETOX adjuvant, named ENHANZYN adjuvant for
other uses, includes MPL adjuvant and mycobacterial cell wall
skeleton, both of which activate the human immune system in the
context of vaccination. MELACINE vaccine is administered as a
two-shot vaccination once a week for five weeks. In addition,
patients may receive a second course of therapy and maintenance
therapy of one vaccination a month. We have granted worldwide
distribution rights for MELACINE vaccine to Schering-Plough
Corporation, a leader in cancer therapy.

In February 2000, the Southwest Oncology Group,
or SWOG, released preliminary data from a Phase III
clinical trial, designed to determine the ability of MELACINE
vaccine to prevent recurrence of disease in patients with
Stage II melanoma with primary skin tumors between 1.5 and
4 mm in depth. The study

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compared 346 patients who had skin tumors
surgically removed and were treated with MELACINE vaccine to 343
patients who had tumors removed followed by observation but who
did not receive MELACINE vaccine.


Patient accrual in this trial was completed in
late 1996. Eighty-nine of the patients, some from the treatment
group and some from the observation group, were later determined
to be ineligible for the clinical trial, in most cases because
tumor size was either less than 1.5 mm (41 cases) or
greater than 4 mm (23 cases) in depth.

The evaluation of disease-free survival was
performed on both the eligible patients and on all
689 randomized patients (the intent-to-treat population).
An analysis of the eligible patient population found no
statistically significant difference in disease-free survival
between the patients randomized to be treated with
MELACINE® vaccine and patients randomized to observation
alone. However, the results of the intent-to-treat analysis on
the total population indicated there was a statistically
significant difference in disease-free survival between the
patients treated with MELACINE vaccine and patients randomized
to observation alone (p=0.04). The majority of adverse events
reported were mild to moderate with local injection site
reaction as the primary toxic event. We worked with SWOG to
update the database reflecting patient status in 2000. The
results of that data sweep showed that MELACINE continued to
provide an improvement in overall disease free survival,
although the statistical significance of that conclusion was
lost with the convergence of the resultant disease free survival
cures (p>0.05). However, analysis of clinical benefit
following completion of the data sweep in patients who were
positive for expression of either Class I MHC HLA A2 or
C3 genes continues to show a highly statistically
significant clinical benefit of MELACINE vs. observation in
terms of increased disease free survival (p=0.005). Furthermore,
our analysis demonstrated a statistically significant
improvement in overall survival in class I MHC HLA A2 or C3
positive patients that received MELACINE vs. observation
(p=0.003). As a result, we have begun discussion with the FDA
regarding the design of an additional trial in Stage II
melanoma.

In the first quarter of 1998, we filed a license
application for MELACINE vaccine with the European Agency for
the Evaluation of Medicinal Products. We withdrew the
application in November 1998 after the European Agency requested
additional clinical and product data, and we preserved the right
to refile the application later with the requested data. We
continue to communicate with the FDA regarding future
development of MELACINE in the United States.

ENHANZYNTMAdjuvant.ENHANZYN adjuvant is a composition that
we believe activates the human immune system in the context of
vaccination. Human clinical data have been published that
demonstrate that one of our formulations of ENHANZYN adjuvant,
DETOX B-SETM adjuvant, may play an important role in
generating an immune response with the Theratope therapeutic
cancer vaccines of Biomira, Inc. or Biomira. Biomira has
licensed DETOX B-SE adjuvant for the clinical development
and potential commercialization of Theratope products. In 1996,
Biomira announced that final Phase II clinical data
indicated that its Theratope product for metastatic breast
cancer provided a median survival of more than 26 months
compared to less than 10 months achieved historically with
chemotherapy. In November 1998, Biomira announced the start of a
pivotal Phase III clinical trial to evaluate the efficacy
of Theratope therapeutic vaccine in treating metastatic breast
cancer. Biomira has announced that the trial will include
75 to 80 centers worldwide studying approximately
900 evaluable patients. Primary endpoints for the trial are
time to disease progression and survival. In March 2001, Biomira
announced it has recruited 950 patients in its Phase
III clinical trial with Theratope vaccine for metastatic
breast cancer. Biomira has planned two interim analyses for the
Theratope vaccine trial to make this product candidate available
to cancer patients as soon as possible, should the preliminary
data demonstrate therapeutic benefit before the final analysis.

Her-2/neu Vaccine.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. In some
instances, tumor cells derived from these tissues express the
Her-2/neu protein at an elevated level. Accordingly, we believe
Her-2/neu protein is an appropriate candidate for a vaccine
antigen. As a result, we are conducting a number of Phase I
clinical trials designed to test the effects of various
Her-2/neu vaccine product formulations. These trials are
evaluating peptide vaccines based on the Her-2/neu antigen for
treating breast and ovarian cancer. The clinical trials are

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intended primarily to test the vaccines
safety; however, we also intend to measure the induction of
immune responses to the Her-2/neu antigen. One of these trials
also involves our proprietary microsphere antigen delivery
system. Our Her-2/neu vaccine program is included in our current
collaboration and license agreement with GSK.


Other Cancer
Vaccines.We are currently engaged
in discovering antigens for many of the worlds most
widespread forms of cancer, including breast, prostate, lung,
colon and ovarian carcinoma and leukemia. According to the
American Cancer Society, or ACS, the number of new cases
projected for these six diseases in 2001 was approximately
3.0 million patients worldwide, with just over 24%, or
714,400, of these estimated to occur in the United States. Most
of these patients undergo chemotherapy, radiation therapy and
surgery, yet the vast majority of these patients are likely to
relapse with malignant disease within ten years following
surgery. We believe that our vaccines will initially be useful
in those patients who have undergone such therapies. Our breast,
prostate, colon and ovarian cancer antigen discovery programs
are the subject of our current collaboration and license
agreement with GSK.

We have identified many gene sequences that may
be either uniquely expressed or markedly over-expressed in solid
tumors. We have filed patent applications on a significant
number of these tumor gene sequences. We continue to analyze the
immunological characteristics of these tumor gene sequences with
the goal of selecting several antigens for use in vaccines for
each of breast, ovarian, colon and prostate carcinoma.

Building on our progress in cancer antigen
discovery, we have initiated additional discovery programs in
several other tumor types, including lung cancer and leukemia.
According to 2000 estimates, lung cancer remains the most common
cancer in terms of worldwide mortality, accounting for over
800,000 deaths annually. The ACS predicted that in the United
States, an estimated 169,500 new cases would be diagnosed in
2001 and an estimated 157,400 people would die in 2001 from the
disease. For leukemia, 31,500 new cases were projected by the
ACS to be diagnosed in the United States in 2001, with 21,500
deaths predicted in the United States in 2001. Due to the
magnitude and severity of these diseases and the lack of
effective therapies, we have begun antigen discovery and vaccine
development efforts for lung cancer and leukemia using
approaches similar to those we use for other cancers. Our lung
cancer antigen discovery program is the subject of our May 1999
collaboration agreement with Zambon Group and our June 1999
collaboration agreement with the pharmaceutical division of
Japan Tobacco, which is now in preclinical development. In
addition to our internal discovery efforts for leukemia
antigens, we have in-licensed a novel and patented gene from the
Massachusetts Institute of Technology for potential development
in a leukemia vaccine. The gene, known as WT-1, is expressed in
a significant percentage of most leukemias and may, therefore,
be useful as a vaccine antigen.

CPI-0004 TAP
pro-drug.Our lead preclinical TAP
candidate is a pro-drug version of doxorubicin known as CPI-0004
or Super-Leu-Dox. Doxorubicin is an off-patent chemotherapeutic
drug, that is used in treating a number of solid tumor cancers,
including breast, prostate, ovarian and soft-tissue sarcoma
cancers. The TAP pro-drug technology is based on an
understanding of the biochemical mechanisms utilized by cancer
cells to metastasize and the identification of a potential means
for exploiting these mechanisms. As a result, relatively larger
quantities of cytotoxic agents are expected to reach and enter
malignant cells as opposed to normal cells, which permits a
significant increase in maximum tolerated dosages, potentially
overcoming drug resistance in cancer cells.



| |                    
| | -------------------
| | Infectious Diseases

Adjuvants in Infectious Disease Vaccines.A number of our partners are
evaluating our adjuvants for use in infectious disease vaccines.
Several GSK affiliates and Wyeth-Lederle Vaccines are evaluating
MPL adjuvant in a generation of adult and pediatric vaccines
designed to protect against a broader range of diseases.
Vaccines that incorporate MPL adjuvant are in clinical trials
against herpes virus, hepatitis B virus, human papilloma
virus, malaria and respiratory syncytial virus. In December
1998, GSKs wholly owned subsidiary, GlaxoSmithKline
Biologicals, announced Phase III safety and efficacy
results of a hepatitis B vaccine containing our MPL
adjuvant. GlaxoSmithKline Biologicals developed this vaccine to
address low or non-responding patients to GSKs current
hepatitis B vaccine, Engerix-B. Engerix-B is currently the
worlds

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leading hepatitis B vaccine, with over
450 million doses administered worldwide. The new vaccine
combines the antigen from Engerix-B with GSKs adjuvant,
SBAS4, which contains our MPL adjuvant.


In the clinical trial involving nonresponders and
comparing Engerix-B with the new vaccine, investigators measured
seroconversion rates (protective antibody levels) one month
after each of three vaccine doses; at zero, one and six months.
After the first dose, 78% of the group given the new vaccine
seroconverted versus 59% of the Engerix-B group. After two
doses, 96% versus 76% seroconverted. After the third and final
treatment, 98% of patients receiving the vaccine containing MPL
adjuvant seroconverted compared to only 81% of patients given
Engerix-B.

In a multicenter study of healthy individuals,
more than 98% of those vaccinated with Engerix-B containing MPL
adjuvant achieved protective anti-hepatitis B antibody levels
after just two doses, whereas three doses of the current
Engerix-B product were required to obtain a similar level of
protection.

In addition to the hepatitis B vaccine, our
MPL adjuvant is included in a number of other vaccines that GSK
is developing. GSK recently completed a Phase III clinical trial
of a genital herpes vaccine containing MPL adjuvant in which
women were shown to have benefited from vaccination. Also, GSK
has begun clinical trials of vaccines that include MPL adjuvants
to treat papilloma virus, malaria and respiratory syncytial
virus infections. GSKs experience with MPL
adjuvant-containing vaccines includes 10,000 subjects
receiving over 25,000 doses. GSK has reported positive
safety and immunogenicity results. In addition, Wyeth-Lederle
Vaccines is in development of both pediatric and adult vaccines
that contain MPL adjuvant.

Our RIBI-529 adjuvant is now in Phase III
clinical trials in Argentina as part of a hepatitis B
vaccine that we are developing in collaboration with Rhein
Biotech. In addition, Wyeth-Lederle Vaccines is evaluating
RIBI-529 adjuvant in vaccines designed to protect against
various diseases.

Leishmaniasis Vaccine.Leishmaniasis is a skin and
visceral disease endemic in South America, Africa, the Middle
East and the Indian sub-continent, and according to the World
Health Organization, or WHO, kills approximately
500,000 people annually. Leishmaniasis is caused by the
parasite Leishmania, which is carried by sand flies. A prototype
leishmaniasis vaccine containing antigens discovered by us has
been tested on a compassionate-use basis in Phase I
clinical trials in a small number of leishmaniasis patients in
Brazil. In March 2000, the Infectious Disease Research
Institute, IDRI, received a $15 million grant from the
Bill & Melinda Gates Foundation to fund its ongoing
effort with us to develop a vaccine to prevent leishmaniasis. We
intend to conduct Phase I clinical trials in the United
States as well as larger Phase I/II clinical trials in
Brazil, Peru, Iran and Sudan.

Tuberculosis.Mycobacterium tuberculosis, or
Mtb, infection causes more deaths than any other infectious
disease in the world. According to the National Institute of
Allergy and Infectious Diseases, or NIAID, an estimated
2.0 billion people are infected with Mtb, including
approximately 15 million people in the United States. Any
of these people may develop active tuberculosis during some
stage of their lives. The NIAID estimates that each year,
approximately 8 million people worldwide contract active
tuberculosis and 3 million people die annually from the
disease. The NIAID predicts that between 2000 and 2020 nearly
1 billion people will be newly infected with tuberculosis,
200 million people will get sick and 35 million will
die. In addition, the WHO estimates that more than
50 million people worldwide may be infected with
drug-resistant strains of Mtb. Our goal is to develop specific
vaccines for both conventional and drug-resistant strains of Mtb.

From more than 100 candidate Mtb gene
products, we have identified as candidate vaccine antigens a
number of antigens that specifically trigger appropriate helper
T cell responses in vitro. The Mtb gene products are the
subject of several of our patent applications covering
composition of matter and vaccine and diagnostic methods of use.
We selected several of the candidate vaccine antigens for skin
testing in both infected-healthy and infected-diseased
individuals in South America to determine which of these
antigens are recognized by patients immune systems. Based
on results from these tests and continued analysis of patient
T cell responses in vitro, we have begun preclinical
studies for both therapeutic and prophylactic vaccines in mouse,
guinea pig and monkey models of Mtb infection. We are conducting
these preclinical studies in order to select a vaccine candidate
for Phase I clinical trials. We are currently targeting
initiation of Phase I clinical trials in 2002.

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Chlamydia Trachomitis.Chlamydia trachomitis, or
C. trachomitis, causes the most common sexually transmitted
disease in the United States. Although C. trachomitis can
be transmitted during sexual contact with an infected partner,
it is often not diagnosed and treated until complications
develop. Studies show that 70%-75% of women and 50% of men with
chlamydial infections have no symptoms whatsoever. The CDC
estimates that in the United States alone, over 4 million
new cases arise each year. The highest rates of chlamydial
infections are among 15 to 19 year olds, regardless of
demographics or geographic location. Complications from the
disease include Pelvic Inflammatory Disease, a serious cause of
infertility among women of childbearing age. Further, a woman
may pass the infection to her newborn during delivery, with
subsequent neonatal eye infection or pneumonia. The WHO
estimates that in 1999 there were, approximately 92 million
new cases of C. trachomitis infections worldwide including
9 million new cases in North America and Western Europe. We
are currently identifying candidate C. trachomitis antigens
for use in a potential preventative vaccine for this pathogen.
This program is one of the three infectious disease programs
covered under our current collaboration and license agreement
with GSK.

Chlamydia Pneumoniae.Chlamydia pneumoniae, or
C. pneumoniae, is a major cause of pneumonia, bronchitis
and sinusitis. C. pneumoniae is a human pathogen that is
transmitted by the respiratory route. Retrospective studies made
using serum bank investigations indicate that C. pneumoniae
infection is as prevalent today as it was in 1963. According to
the CDC, more than half of the adults in the United States and
many other countries worldwide have antibodies specific to
C. pneumoniae, indicating widespread prior infection. The
incidence of pneumonia in the United States is about one in
80 persons each year, and virtually everyone is infected at
some point in life, with reinfection common. The CDC reports
that one effect of C. pneumoniae infection is
atherosclerosis. Seroepidemiological studies have associated
C. pneumoniae infection with the related conditions of
coronary artery disease, myocardial infarction and
cerebrovascular disease. The association of C. pneumoniae with
atherosclerosis has been corroborated by the presence of the
organism in atherosclerotic lesions throughout the arterial
tree, and the near absence of the organism in healthy arterial
tissue. We are now currently engaged in the discovery of
candidate C. pneumoniae antigens for use in a potential
preventative or therapeutic vaccine for this pathogen. This
program is one of the three infectious disease programs covered
under our current collaboration and license agreement with GSK.

Other Infectious Diseases.We are also discovering candidate
antigens with the goal of developing potential vaccines for
infections stemming from Herpes Virus (Type 1 and
Type 2) and Proprionibacterium acnes. We believe our
antigen discovery technology will be useful in identifying
antigens for use in vaccines that may either prevent or treat
the widespread diseases caused by Herpes Virus and P. acnes, which afflict over 100 million people world wide. Our
efforts with respect to Herpes Virus and P. acnesare in
early stages of research.

Other Products in Development

Adoptive Immunotherapy Products.T cells, particularly CTL,
are generally believed to be essential to protective immunity
against cancer. As a result, for many years scientists and
clinicians have studied the potential of growing a
patients own CTL or antigen presenting cells, or APC,
outside the body, or ex vivo, and then using those CTL or APC in
treating the patients advanced cancer. CTL grown ex vivo
have been shown to shrink and/or eliminate tumors, both in
animal models and in clinical trials. This therapeutic approach,
called adoptive immunotherapy, is limited by the difficulty of
growing sufficient numbers of tumor antigen reactive CTL or APC
ex vivo for re-infusion into cancer patients. We believe that
several of our core technologies may be useful in developing
adoptive immunotherapy procedures for cancer treatment, and we
have identified several tumor antigens that we or our corporate
partners may use to stimulate in vitro growth of tumor-reactive
CTL. In addition, we have demonstrated that our microsphere and
adjuvant technologies enhance the in vitro generation and growth
of tumor antigen-reactive CTL. In March 1999, we entered into a
research agreement with IDRI pursuant to which IDRI will provide
us grant funding for three years to fund research and
development of adoptive immunotherapy products for treating
cancer. We intend to pursue additional research and corporate
partnership opportunities in the field of adoptive immunotherapy
of cancer.

Cancer Gene Therapy.In recent years a number of
so-called tumor suppressor genes have been discovered. The
expression of tumor suppressor genes in tumor cells eliminates
the malignant phenotype and

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returns the tumor cell to a state resembling a
normal tissue cell, under the control of cellular processes that
keep the cell from entering a state of rapid division or
malignancy. Following our acquisition of GenQuest in 1998, we
obtained rights to a particular tumor suppressor gene, called
MDA-7. Expression of MDA-7 in tumor cells stops tumor cell
growth both in vitro and in vivo experiments. In 1999, we
licensed the MDA-7 gene to Introgen Therapeutics, or
Introgen, for use in gene therapy applications for treating
cancer. Introgen commenced a Phase I clinical trial of
MDA-7 patients with various solid tumors in November 2000.
The results of the Phase I clinical trial demonstrated that
MDA-7 is potentially a key tumor suppressor gene whose function
is lost as melanoma tumors grow more aggressively.


Animal Health Products.We believe that certain of our
human vaccine and diagnostic products also may have applications
in diagnosing and treating disease in animals. For instance,
Europe is the primary market for products targeting
leishmaniasis, which can infect dogs. We are collaborating with
Heska and Novartis Animal Health Inc., a developer and marketer
of companion animal diagnostics and therapeutics, to develop and
commercialize diagnostics and vaccines for leishmaniasis in dogs.

Core Technologies

Our Antigen-Discovery Capabilities

Our ability to discover numerous antigens allows
us to select those that will work most effectively in a given
vaccine or as the best targets for developing antibody-based
products. When making this selection, we focus on antigens that
are recognized by the greatest percentage of individuals,
stimulate the strongest immune responses and are expressed by
the greatest percentage of pathogen strains or tumor types. In
connection with autoimmune diseases, we focus on discovering
otherwise normal antigens, or auto-antigens, that trigger
autoimmune responses and disrupt the pathway that leads to the
destruction of healthy tissue.

A majority of our scientific personnel are
involved in antigen discovery. We use discovery approaches and
technologies that include:



| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | acquisition of normal and diseased tissue, and
	related cDNA and protein;    
|
| |  | cDNA subtraction and analysis of differential
	gene expression;              
|
| |  | quantitative PCR;                                                            
|
| |  | expression cloning of full-length cDNAs;                                     
|
| |  | immunohistochemistry to determine tissue
	distribution of candidate antigens;
|
| |  | immunological characterization of candidate
	antigens; and                   
|
| |  | analysis of antigens as targets for developing
	antibody-based products.     

Our discovery approach also includes correlating
the antigens that we discover with patient immune responses. In
this way, we focus on identifying proteins that are recognized
by the human immune system and are therefore antigenic.

Our antigen discovery research culminates in the
isolation of pathogen, tumor or auto-antigen genes that encode
antigens with significant potential to be the basis of vaccines
or other immunotherapeutic products. These antigens may be in
the form of either recombinant proteins or
biosynthetically-produced peptides. We have discovered multiple
pathogen and tumor gene and protein sequences. As a result, we
have filed numerous patent applications seeking both composition
of matter and/or vaccine and diagnostic method of use claims. We
have also filed a number of applications for the potential use
of our antigens or adjuvant-based technology for use in
diagnosing, preventing or treating certain autoimmune diseases.

Our Novel Vaccine Design

The majority of available vaccines trigger
protective antibody responses that can destroy invading
pathogens. Antibodies are protein-based products of specialized
immune system cells called B cells. Antibodies recognize
and attach to a pathogens antigens and trigger the
non-specific elimination of the

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pathogen. Antigens are components of the invading
pathogen that are recognized by cells of the immune system.
Todays vaccines are made of either whole organisms that
contain antigens or the antigens themselves. These antigens can
be peptides, proteins or carbohydrates. Typically these vaccines
are formulated by combining antigens with an adjuvant, an immune
system booster.


The antibody responses triggered by available
vaccines usually cannot eliminate tumors or certain infectious
diseases. We believe that an effective immune response against
these diseases requires the action of pathogen-reactive or
tumor-reactive T cells. Our vaccine program focuses on
activating specialized T cells known as CTL, that recognize and
kill pathogen-infected tissue or tumor cells.

The bodys immune response is a complex
series of events that begins when a specialized immune system
cell called an antigen presenting cell, or APC, processes
antigens. Antigens are processed by APCs through two different
pathways, the Class I and Class II Pathways. The
antibody response produced by currently available vaccines
results from antigen-processing only through the Class II
Pathway. The Class II Pathway breaks down antigens into
specific peptides that are then presented on the surface of an
APC by major histocompatibility, or MHC, Class II proteins.
Antigen presentation by MHC Class II proteins results in
activation of CD4 positive helper T cells. These
helper cells produce immune system hormones called cytokines
that help generate various components of both
cellular and antibody-based immune responses. Depending on the
specific cytokines that helper T cells produce, the helper
T cell response is classified as either Th1
or Th2. Th1 responses help generate and activate CTL
and lead to antibody production by B cells. In this way, a
Th1 response may lead to pathogen elimination.

Th1-induced antibody production can be sufficient
to prevent or eliminate pathogen infection in the case of some
diseases. However, antibody responses alone are not sufficient
in other diseases, such as cancer. In these diseases, a cellular
immune response that includes generating CTL is necessary to
achieve protective immunity. Although the Class II Pathway
can lead to Th1 responses helpful in generating CTL, CTL
activation cannot occur without antigen presentation through the
Class I Pathway. The Class I Pathway breaks down
antigens into specific peptides that are then presented on the
surface of an APC by MHC Class I proteins. Antigen
presentation by MHC Class I proteins results in CTL
generation and activation. We believe that CTL are necessary to
eliminate tumors and various pathogens that antibodies alone
cannot destroy.

We have shown in preclinical studies that CTL can
eliminate tumors or certain pathogens in situations in which
antibody responses fail. These CTL not only can prevent disease
if they are activated before pathogen infection but also can
eliminate disease once the infection has occurred or, in the
case of cancer, once a tumor has developed. We believe vaccines
that activate specific T cell responses can form the basis
for a new class of products that may be used to treat or prevent
disease. Using recent advances in understanding molecular
mechanisms that control how antigens are normally presented to
T cells, we are designing vaccines that incorporate
disease-specific antigens into biodegradable and biocompatible
microspheres. We believe that these vaccines may give rise to
potent CTL responses. Through our antigen discovery program, we
have identified antigens from many tumor types and from
infectious disease pathogens for which no vaccines currently
exist.

Our Autoimmune Disease Therapeutics

Autoimmune diseases include psoriasis, RA, MS, MG
and diabetes. Autoimmune diseases are caused by the abnormal
destruction of healthy body tissues when T cells and
antibodies react to normal tissue. T cells in the immune
system normally regulate the identification and destruction of
foreign substances and malignant cells. In autoimmune diseases,
otherwise normal antigens, or auto-antigens, trigger autoimmune
responses. We are developing technology that may interrupt the
chain of events involved in autoimmune disease. In contrast to
todays therapies for autoimmune diseases, which often
suppress the overall immune system, we believe that our
technologies may provide a means to target the disease process
while leaving the normal immune system unaffected.

We believe that our ANERGIX complex vaccine
technology offers the potential to treat a number of major
autoimmune diseases. The ANERGIX complex technology may enable
the selective destruction or inactivation of T cells involved in
autoimmune disease. Our ANERVAX vaccine technology may stimulate

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the immune system to produce antibodies or
T cells that interfere with the presentation of
auto-antigens to destructive T cells.


The ANERGIX complex technology platform is based
on creating therapeutics that are a complex of an MHC or human
leukocyte antigen, or HLA-derived protein and an autoimmune
disease-specific auto-antigenic peptide. Selection of a
particular HLA molecule is based on our understanding of
patients genetic susceptibility to various autoimmune
diseases. For instance, patients with MS predominantly express
HLA DR2 and patients with RA predominantly express
HLA DR4. That information guides our selection of relevant
HLA molecules for complexing with suspected disease-causing
auto-antigens. Our scientists have performed research that
demonstrates that delivery of the ANERGIX complex selectively
inactivates, or induces anergy in, disease-causing T cells.
We are focusing our efforts on two ANERGIX complex
Phase I/II programs, the first in RA, which we have
partnered with Organon, and the second in MS, which we have
presently not partnered.

The ANERVAX vaccine technology platform is a
family of therapeutic MHC-derived peptide vaccines designed to
stimulate production of a neutralizing immune response to
selectively block the autoimmune cascade. The design of an
ANERVAX vaccine molecule is based on knowledge of patients
genetic susceptibility to autoimmune disease. That
susceptibility has been mapped to a particular region of the
MHC molecule in each autoimmune disease. Specifically
blocking or down-regulating that region is the basis
of the action of ANERVAX vaccines in RA and Type I
diabetes, programs that are in Phase II clinical trials and
preclinical development, respectively.

Our Monoclonal Antibody-Based
Therapeutics

We believe that our antibody products may promote
tumor elimination or shrinkage, which will result in improved
cancer patient response or survival rates. For example, we
believe that monoclonal antibodies directed against antigens on
the surface of tumor cells may be used either directly to
destroy these targets or as carriers of other therapeutic
compounds for the destruction of tumor cells.

We believe that we can increase the effectiveness
of antibodies by attaching radioisotopes or other cytotoxic
agents to them for use in radioimmunotherapy or
chemoimmunotherapy. The effect of the radiation or
cytotoxic agent can be concentrated in the immediate vicinity of
those cells by using an antibody to deliver a radioisotope or
other cytotoxic agent to the targeted cells. Development of
effective radioimmunotherapies, however, presents an additional
set of challenges, including the need to select an appropriate
radioisotope for the intended therapy, to develop a reliable
means of linking the radioisotope to the antibody and to develop
a therapeutic protocol that optimizes therapeutic effect while
minimizing undesirable side effects. The development of
effective chemoimmunotherapies presents similar challenges.

We believe that radioimmunotherapies will emerge
as important treatments for blood-borne cancers due to the
radiosensitivity of these malignancies and the ready
accessibility of the blood and lymph systems to monoclonal
antibodies. Radioimmunotherapy also may become an important
adjunctive therapy for treating certain solid tumor cancers
following surgery, radiation therapy or chemotherapy, in which
instances it may be useful in eliminating circulating and other
undetected malignant cells missed by primary therapies. In the
future, we may use our expertise in conjugated antibodies to
expand beyond radioimmunotherapy to develop potentially
effective chemoimmunotherapies for treating certain cancers.

We believe that many of the antigens we have
discovered through our antigen discovery efforts may also have
applications in disease diagnosis. Antigens themselves may be
used in diagnostic tests to determine if antibodies, which bind
to these antigens, are present in patient sera, suggesting
infection or disease. In addition, monoclonal antibodies may be
useful for diagnostic purposes if used to determine the presence
of target antigens associated with the existence of a particular
disease.

Our Adjuvants

Adjuvants are formulations and/or additives that
are routinely combined with vaccines to boost immune responses
directed against the antigens in the vaccines. Because available
vaccines depend on the generation of

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antibody responses to injected antigens,
commercially available adjuvants have been developed primarily
to enhance these antibody responses. To date, the only
FDA-approved adjuvant for use with human vaccines is aluminum
hydroxide, or alum. Although alum is useful in boosting antibody
responses to vaccine antigens, it has no effect on the immune
responses that our T cell vaccines are meant to generate.
As a result, we are interested in discovering new adjuvants that
can be used to boost T cell immune responses after vaccine
administration.


Our technology is based on the potent capacities
of certain microbial products to act as adjuvants and modulate
the cascade of immune system regulators, known as cytokines,
produced by cells in man and other animals. Slight modifications
of these products and/or their physical and biological delivery
to the immune system can influence the manner in which cytokines
are modulated, as well as the recipients physiological
responses. By activating macrophages, lymphocytes and other
cells relating to the immune system, these adjuvants stimulate a
cascade of cytokines that complements the normal, protective
responses that are initiated during infection or injury. Our
adjuvants include both natural and synthetic derivatives of
immunomodulatory bacterial components. The adjuvants work by
activating and focusing key cells within the immune system to
effectively modulate a desired immune response.

MPL adjuvant, our flagship adjuvant, is a
derivative of the lipid A molecule found in gram-negative
bacteria, one of the most potent immunostimulants. We also own
patented technology for extracting MPL adjuvant from bacterial
cell walls. A number of our partners are evaluating MPL adjuvant
in vaccines for development in allergy, cancer and infectious
disease targets. ENHANZYN adjuvant consists of MPL adjuvant and
mycobacterial cell wall skeleton. ENHANZYN adjuvant is a key
component of our MELACINE melanoma vaccine and is a component in
Biomiras Theratope vaccine for adenocarcinomas.

We are also conducting research related to the
development of synthetic adjuvants. These synthetic adjuvants
are small molecules that may possess a spectrum of properties,
including potent adjuvant and anti-tumor activity. We hope to
develop these synthetic components to build an even broader
vaccine adjuvant platform with considerable potential for
preventing and treating human diseases. The small molecule
synthetic adjuvant, RIBI-529 adjuvant, is in Phase III
clinical trials in Argentina as part of a hepatitis B
vaccine being developed by our partner, Rhein Biotech.
Wyeth-Lederle has licensed RIBI-529 adjuvant for development
vaccines to treat a variety of infectious diseases and one
autoimmune disease. We are involved in a number of additional
partnership discussions pertaining to this novel vaccine
adjuvant.

Our Microsphere Antigen Delivery
Systems

We believe that microsphere-mediated antigen
delivery may be superior to other approaches used to target
antigen presentation pathways in terms of versatility,
stability, safety and cost. These other approaches include, for
example, the use of various gene therapies or liposome or
recombinant protein-lipid formulations. Only APCs take up
microspheres of the particular sizes that we use. This is not
true for formulations containing genes or lipids, where
significant amounts of the delivered product are taken up by
non-APCs or lost in the blood stream or elsewhere in the body.
Additionally, a single microsphere formulation may be useful for
many vaccine products. In February 1999, we initiated a
Phase I clinical trial of a microsphere-encapsulated,
Her-2/neu vaccine for breast and ovarian cancer.

We have an exclusive, worldwide license to a
number of patents and pending patent applications from the
Southern Research Institute covering the composition, use and
production of microspheres of a particular size range for
augmenting immune responses. In addition, we have an exclusive,
worldwide license from the Dana-Farber Cancer Institute to
patents and patent applications claiming the composition and use
of microspheres for the purpose of activating CTL. Internally,
we are also developing additional microsphere technology.

Our Targeted Oncologics

We believe that our TAP pro-drug technology, may
lead to significantly broader therapeutic uses of cytotoxic
agents. The TAP pro-drug technology is based on an
understanding of the biochemical mechanisms utilized by cancer
cells to metastasize and the identification of a potential means
for exploiting these

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mechanisms. Our TAP pro-drug technology is
being developed in collaboration with the Université
Catholique de Louvain, Belgium. TAP pro-drugs are designed
to be:




| |   |                                                                              
| | - | -----------------------------------------------------------------------------
| |  | activated preferentially at the tumor site by
	enzymes secreted by the tumor;
|
| |  | stable in circulation and in normal tissues; and                             
|
| |  | unable to penetrate normal cells or malignant
	cells until activated.        

As a result, relatively larger quantities of
cytotoxic agents are expected to reach and enter malignant cells
as opposed to normal cells, which permits a significant increase
in maximum tolerated dosages, potentially overcoming drug
resistance in cancer cells. Our lead preclinical pro-drug
candidate is a pro-drug version of doxorubicin known as
Super-Leu-Dox. Doxorubicin is an off-patent chemotherapeutic
drug, that is used in treating a number of solid tumor cancers,
including breast, prostate, ovarian and soft-tissue sarcoma
cancers.

Additional Technologies

We believe that we or our corporate partners may
be able to introduce certain of our proprietary cancer genes
into tumor cells to potentially kill them or slow their growth.
Also, we and our corporate partners may be able to develop
techniques that use our discovery methodologies or gene products
to search for low molecular weight compounds that inhibit tumor
cell growth or metastasis. These compounds may prove useful as
cancer therapeutics.

Corporate Partnerships

Part of our strategy is to establish corporate
partnerships with pharmaceutical, biopharmaceutical and
diagnostic companies. We focus our partnership efforts on
broadly partnering our core technologies at various stages in
the research and development process. We target partners that
have the expertise and capability to discover, develop,
manufacture and market our products. In our corporate
partnerships we seek to cover our research and development
expenses through research funding, milestone payments 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. We have focused on four discrete types of product
collaborations:



| |   |                                                                                                                                  
| | - | ---------------------------------------------------------------------------------------------------------------------------------
| |  | vaccines and immunotherapeutics for autoimmune
	diseases, cancer and infectious diseases;                                        
|
| |  | monoclonal antibody-based therapeutics;                                                                                          
|
| |  | toxin-conjugated product that increase
	effectiveness of antibody-based therapeutics or enzyme
	substraites; and                 
|
| |  | adjuvants and delivery systems to increase
	effectiveness of vaccines and immunotherapeutics for a wide
	range of human diseases.

Vaccines and Immunotherapeutics

Beaufour Ipsen.On December 31, 2001, we
entered into an agreement with Beaufour Ipsen to develop and
commercialize an autoimmune vaccine for MG, based on our
proprietary ANERGIX vaccine platform. The Myasthenia Gravis
Foundation of America estimates that the prevalence of MG is
approximately 14/100,000 in the United States. We have
granted Beaufour Ipsen exclusive worldwide rights to develop and
market its ANERGIX.MG technology for the treatment of MG.
Beaufour Ipsen will manage product development, including
clinical trials and regulatory submissions. Along with supplying
guaranteed research support, Beaufour Ipsen will pay us an
up-front license fee, success-based milestone payments and
royalties on future sales of licensed products. The
collaboration will be overseen by a joint steering committee
made up of representatives from both companies.

Medicis Pharmaceutical Corporation.In August 2000, we entered into a
multi-year development, commercialization and license agreement
covering our psoriasis immunotherapeutic product, PVAC
treatment, with Medicis Pharmaceutical Corporation, or Medicis.
The agreement provides Medicis with exclusive

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rights to PVAC treatment in the United States and
Canada. We are predominantly responsible for development and
manufacturing, and Medicis will be responsible for
commercialization and distribution. PVAC treatment recently
completed Phase II clinical trials for treating moderate to
severe psoriasis. Medicis may be required to pay us license
fees, research funding and milestone payments of up to
$107 million under the terms of the agreement. We received
a nonrefundable payment of $17 million and may receive
development milestone payments of up to $35 million, and
commercialization and cumulative net sales threshold milestone
payments of up to $55 million. Additionally, Medicis may
purchase inventory from us and pay a royalty on net sales of the
product upon commercial sale of the product.


Zenyaku Kogyo.In August 1999, we entered into a
corporate partnership with Zenyaku Kogyo for researching and
developing PVAC treatment. The agreement grants Zenyaku Kogyo
exclusive rights to PVAC treatment in Japan. Under the terms of
the agreement, we will receive license fees and research funding
of up to $6 million, milestone payments based on successful
clinical and commercial progress and a royalty stream on future
product sales.

Pharmaceutical Division of Japan Tobacco.Effective July 1999, we entered
into a license and collaboration research agreement with the
pharmaceutical division of Japan Tobacco for the research,
development and commercialization of vaccine and antibody-based
products aimed at the preventing and/or treating lung cancer. We
granted Japan Tobacco an exclusive license to develop and sell
the vaccine products in North America, Japan and all other
countries not previously exclusively licensed to Zambon Group.
Japan Tobaccos rights are co-exclusive with Zambon Group
in China. We also granted Japan Tobacco an option to a
nonexclusive license to formulate the vaccines in our
microsphere delivery system with our proprietary protein
adjuvants. We also agreed to supply preclinical and clinical
grade materials to Japan Tobacco in connection with the
collaboration. Japan Tobacco may also elect to require us to
supply commercial materials for products licensed to Japan
Tobacco under the agreement.

Under the agreement, we could receive over
$40 million in license fees, research funding and clinical
and commercial milestone payments. We received a $1 million
payment in July 2001 as a result of our collaboration and
license agreement with Japan Tobacco, to support our development
of therapeutic lung cancer vaccines. The individual amounts of
the milestone payments vary, depending on the milestones
achieved and the types of products sold. We are also entitled to
receive future royalties on all product sales, which royalties
vary depending on the amount and type of products sold.

Zambon Group.In May 1999, we entered into a
collaboration agreement with Zambon Group for the research,
development and commercialization of vaccine products aimed at
preventing and/or treating lung cancer. We granted Zambon Group
an exclusive license to develop and sell these vaccine products
and therapeutic drug monitoring products in Europe, the
countries of the former Soviet Union, Argentina, Brazil and
Columbia and a co-exclusive right in China. We also granted
Zambon Group the non-exclusive right to formulate the vaccines
in our microsphere delivery system with our proprietary protein
adjuvants and agreed to supply preclinical and clinical-grade
materials, as well as commercial materials, to Zambon Group in
connection with the collaboration.

Under the agreement, we could receive over
$21.5 million in license fees, research funding, equity
financing and clinical and commercial milestone payments.
Pursuant to the agreement, Zambon Group purchased 141,576 shares
of our common stock at a premium to its fair market value. The
individual amounts of the milestone payments vary, depending on
the milestones achieved and the types of products sold. We are
also entitled to receive future royalty or profit-sharing
payments on all product sales, which royalties vary depending on
the amount and types of products sold.

GSK.Effective September 1998, we
entered into a collaboration and license agreement with
GSKs wholly owned subsidiary, SmithKline Beecham plc. This
agreement replaced and significantly expanded the scope of our
then-existing agreements with SmithKline Beecham Manufacturing
and SmithKline Beecham Biologicals. Under the agreement, GSK
holds 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, rights are co-exclusive with
us in Japan with respect to tuberculosis.

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Under the collaboration and license agreement,
GSK is obligated to pay for work that is performed under:



| |   |                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------
| |  | 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;                                                                                        
|
| |  | our infectious disease antigen discovery programs
	in Chlamydia pneumoniae, Chlamydia trachomatis and Mycobacterium
	tuberculosis; and
|
| |  | one additional antigen discovery program in a
	disease field to be agreed upon.                                                       

For certain of these disease areas, GSK also
holds license rights to develop, manufacture and sell passive
immunotherapy products, such as T cell or antibody therapeutics,
and therapeutic drug monitoring products.

Under the agreement, GSK is obligated to fund
$43.6 million for work to be performed during the initial
four-year term of the agreement in the above programs. We and
GSK may mutually agree to extend the research and development
programs beyond the initial four-year term. Pursuant to the
agreement, GSK purchased 427,807 shares of our common stock at a
premium to its fair market value. The initial equity investment
combined with the discovery program payment results in aggregate
funding to us of $46.1 million during the first four years
of the agreement. In addition, under the agreement, we have an
outstanding loan in the amount of $5 million, which amount,
together with all accrued unpaid interest is due on
September 1, 2003. At GSKs option, GSK may choose to
receive the outstanding principal and accrued unpaid interest in
cash or shares of our common stock at an undisclosed premium to
our then-current fair market value. To the extent that clinical
and commercial milestones in the programs are achieved, we are
entitled to receive additional payments, which in the aggregate
could exceed $150 million. The individual amounts of such
payments vary, depending on the milestones achieved and the
types of product sold. We are also entitled to receive future
royalty payments on all product sales, which royalties vary
depending on the types of products sold.

Schering-Plough.In 1998, we entered into a
worldwide license granting exclusive marketing rights for our
MELACINE vaccine to Schering-Plough. In addition to license
fees, Schering-Plough will pay us transfer payments for supplies
of MELACINE vaccine and will be entitled to royalties upon
commercial sale of MELACINE vaccine. See Our Product
Pipeline and Development Status  Cancer 
MELACINE vaccine for a discussion of the clinical trial
status of this vaccine.

Organon.In
1996, we entered into a product development and license
agreement with Organon, the pharmaceutical division of the
Akzo-Nobel Group. The Organon partnership targets the
development of an ANERGIX.RAcomplex that incorporates
Organons proprietary RA peptide into our ANERGIX®
complex. We have completed a Phase I/ II clinical trial of
ANERGIX.RA in patients with moderate to severe RA. Under the
terms of the product development and license agreement, Organon
will pay the majority of current clinical trials costs and in
the event of our success, Organon will pay us milestone and
royalty payments. Effective January 3, 2001, we amended and
restated the agreement to cover the continued development of the
recombinant form of our ANERGIX.RA complex treating RA. Under
the terms of the amended agreement, Organon and Corixa will
share ANERGIX.RA complex project costs through Phase II clinical
trial and will also share profits in the event of product sales.
We retain the option to co-promote ANERGIX.RA with Organon in
the United States.

Adjuvants and Delivery Systems

Autoimmune Disease.We have granted rights to two of
our corporate partners to use MPL adjuvant in products to treat
and prevent allergies. Our partners are ATL, under a 1996
license and supply agreement, and SmithKline Beecham plc, under
a 1999 license and supply agreement. Under each of these
agreements, we will receive annual license fees prior to, and
minimum annual royalties subsequent to, regulatory approval of
any allergy vaccine developed under the applicable agreement. We
will also receive supply payments for clinical and commercial
quantities of MPL adjuvant and royalties on any commercial sales
of approved allergy

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vaccines. In October 2001, we licensed our
RIBI-529 adjuvant to Wyeth-Lederle Vaccines for use in
developing a vaccine to treat an undisclosed autoimmune disease.


Cancer.In
1995, we entered into a license and supply agreement granting
GSK a nonexclusive, worldwide license to use MPL adjuvants in
cancer vaccines. Under the agreement GSK has an option to obtain
exclusivity in connection with a limited number of GSKs
proprietary cancer antigens. GSK will pay us an annual license
fee and milestone payments for each GSK vaccine incorporating
MPL adjuvant that is submitted for regulatory review. GSK will
also pay us milestone payments upon any regulatory approval of
such vaccines. In addition to transfer payments for commercial
quantities of MPL adjuvant, GSK will pay us royalties on any
commercial sales of vaccines that incorporate MPL adjuvant.

In 1990, we entered into a collaboration with
Biomira covering the use of one of our formulations of ENHANZYN
adjuvant, DETOX B-SE 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 November 1998,
Biomira announced the start of a pivotal Phase III clinical
trial to evaluate the effectiveness of Theratope vaccine in
treating metastatic breast cancer. Under our agreement with
Biomira, Biomira will purchase the ENHANZYN adjuvant exclusively
from us at an agreed upon transfer price.

Infectious Disease Vaccines.We have licensed MPL adjuvant to a
number of our corporate partners for use in infectious disease
vaccines. We have licensed MPL adjuvant to GSK under three
separate agreements for use in infectious disease vaccines.
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 will 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 b and polio antigens. In addition
to an annual license fee, GSK will pay us transfer payments for
supplies of MPL adjuvant and royalties upon commercial sale of
the vaccines.

We and GSK are party to a third infectious
disease vaccine license agreement, effective December 31,
1996, under which we granted GSK rights to use MPL adjuvant in
an additional group of vaccines against infectious diseases,
including tuberculosis. The license is exclusive for human
papilloma virus vaccines, co-exclusive for tuberculosis
vaccines, and nonexclusive license for specified additional
infectious disease vaccines. In addition to annual license fees,
GSK will pay us transfer payments for clinical and commercial
quantities of adjuvant and royalties on any commercial sales of
vaccines incorporating MPL adjuvant.

We are also a party to a license agreement and
related supply agreement, that was amended and restated
effective October 29, 2001, with American Home Products
Corporation, acting through the Wyeth-Lederle Vaccines business
unit of its Wyeth-Ayerst Laboratories division. Under the
amended and restated license agreement we granted Wyeth-Lederle
co-exclusive use of MPL adjuvant in certain infectious disease
fields licensed co-exclusively to SmithKline Beecham under our
1992 agreement with SmithKline Beecham, as well as adding new
infectious disease fields. Under the supply agreement, we will
provide commercial quantities of MPL adjuvant for use in any
vaccines that Wyeth-Lederle may develop under the license
agreement. The agreements with Wyeth-Lederle provide that
Wyeth-Lederle will pay us an annual license fee until a
threshold level of earned royalties is met, transfer payments
for supplies of MPL adjuvant and annual minimum and earned
royalty payments when commercial sale of vaccines are made. The
agreement includes access to an oil-based formulation of MPL.
The amended and restated agreement also grants Wyeth Lederle
Vaccines the right to include our Ribi-529 adjuvant in vaccines
to prevent or treat a variety of diseases, including certain
infectious diseases and one autoimmune disease.

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Monoclonal Antibody-Based
Therapeutics

Amersham.In
October 2001, we entered into an agreement whereby Amersham
Health will market BEXXAR in Europe. We and Amersham Health will
cooperate to register the product in Europe. We will be
responsible for the generation of clinical trial data to support
registration in Europe. Amersham Health will be responsible for
manufacture and sale of radiolabeled antibody in the territory.
Under the terms of a stock purchase agreement with Amersham
Health, at our option, we may choose to sell up to
$10 million of additional shares of Corixa common stock to
Amersham Health at fair market value, which is determined
according to the average of the closing prices of our common
stock over a specified period surrounding the date of issuance.
Upon execution of the agreement Amersham purchased 271,343
shares of our common stock 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. In addition, Amersham Health will pay us multi-million
dollar milestone payments upon regulatory approval in the
territory as well as million dollar milestone payments based on
achievement of certain sales volume targets. Amersham Health
will pay us royalties on all future product sales in Europe.

Medarex.In
June 2000, we entered into a collaboration with Medarex, Inc.,
or Medarex, to discover and develop human monoclonal antibodies
against selected targets from our library of proprietary
autoimmune disease, cancer and infectious disease antigens.
Medarex will contribute its HuMAb-Mouse technology to the
multi-year collaboration, which is targeted to generate, screen
and characterize fully human monoclonal antibodies directed
against our antigens. We, and in some cases, Medarex, will then
be responsible for determining whether the characterized
antibodies have an immunotherapeutic effect in tissue culture
experiments and in animal models of human disease. Under the
agreement, when we and Medarex 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 candidate will
pay the other party an up-front fee, milestones based on
clinical development, and royalties on any product sales.

Abgenix.In
March 2000, we entered into a collaboration with Abgenix, Inc.
to discover and develop human monoclonal antibodies against
selected targets from our library of proprietary autoimmune
disease, 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 candidate will
pay the other party an up-front fee, milestones based on
clinical development, and royalties on any product sales.

GlaxoSmithKline.As a result of our acquisition of
Coulter, we acquired the 1998 collaboration agreement between
Coulter and GSK for the development and commercialization of
BEXXAR, which has completed Phase III clinical trials in
the United States and is the subject of a BLA currently under
review by the FDA for the treatment of NHL. Under the agreement
as amended in April 2000, we and GSK agreed to co-promote BEXXAR
in the United States following regulatory approval, with each
company fielding its own sales force and both companies sharing
profits equally. The agreement was amended in April 2000 to
reduce GSKs territory under the agreement to the United
States. Under the terms of the amended agreement, Corixa and GSK
will jointly market and sell BEXXAR in the United States
following regulatory approval and the two companies will share
profits and losses equally. The agreement provides for the
sharing of certain costs related to clinical and manufacturing
development activities. Under the agreement, at our option, we
may choose to pay the outstanding principal amount of $15
million together with all accrued unpaid interest in cash or
shares of Corixa common stock valued at the closing price of
Corixa common stock on the last trading day preceding the
payment date to GSK.

In our current vaccine collaboration and license
agreement with GSK, as well as in our agreement with Zambon and
the pharmaceutical division of Japan Tobacco, our partners have
either an option, license or the right to develop novel antigens
discovered under the respective collaboration as targets for
therapeutic monoclonal antibodies. If therapeutic monoclonal
antibodies are developed, we will receive additional funding,
milestone payments and royalties on such products. In accordance
with the terms of our vaccine collaboration

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and license agreement with GSK, certain antibody
targets in prostate and breast cancer have been licensed to GSK.


Antigen-Based Diagnostic Products

We have entered into and intend to continue to
pursue corporate partnerships in the fields of cancer and
infectious disease diagnostics to complement our therapeutic
research efforts and to expand our scientific platform. We have
established corporate partnerships for the development of
diagnostic products for infectious diseases with several
diagnostic companies. Under these arrangements, we generally
grant a nonexclusive license to our antigens for use in
specified infectious disease indications and diagnostic product
formats. In exchange, we generally receive the respective
corporate partners agreement to make certain payments upon
achieving development milestones, a commitment to purchase a
minimum number of reagents and an agreement to pay royalties on
any product sales. In connection with our current vaccine
collaboration and license agreement with GSK and the Zambon
Group collaboration agreement, we granted each of our
partners rights to diagnostic products for monitoring
patient eligibility and response to therapy in connection with
the therapeutic products that may be developed under those
agreements. Under our vaccine collaboration and license
agreement, GSK also holds a right of first refusal on other
diagnostic applications.

Other Partnered Programs

Cancer Gene Therapy.In August 1999, we entered into a
license agreement with Introgen, pursuant to which we granted an
exclusive worldwide license to MDA-7, a tumor suppressor gene
that we in-licensed from Columbia University, for use in gene
therapy. MDA-7 may enhance cancer treatment options and may be
utilized synergistically with the existing therapeutic
approaches of surgery, chemotherapy and radiotherapy. Under the
terms of the agreement, we granted Introgen an exclusive,
worldwide license, to the MDA-7 gene for use in all gene therapy
applications with the right to sublicense. In exchange for the
exclusive license and the research and development services that
we performed for Introgen prior to executing the agreement,
Introgen paid us an up-front license fee, and may be required to
pay us milestone payments, research and development payments and
royalties on potential product sales. Introgen is currently
testing MDA-7 in Phase I adenoviral gene therapy trial.

Adoptive Immunotherapy Products.In March 1999, we entered into a
research agreement with IDRI, pursuant to which it has provided
us $12.0 million in grant funding over a three year term to
fund research and development of adoptive immunotherapy products
for treating cancer. The agreement grants us ownership of all
intellectual property and product rights that we develop. We
will be required to pay IDRI a percentage of proceeds that we
receive in connection with adoptive immunotherapy products
resulting from the research and development funded by IDRI.

Animal Health Products.In March 1996, we entered into a
license and research agreement pursuant to which we granted
Heska an exclusive worldwide license to use leishmaniasis-based
technologies in certain of Heskas companion animal
products, including LeIF as a vaccine adjuvant and a stand-alone
vaccine against canine leishmaniasis. In addition, we granted
Heska a license to our diagnostic leishmania antigen, K39, for
use in detecting canine leishmaniasis. The worldwide K39 license
is exclusive, except in Central and South America. Heska paid an
up-front license fee and agreed to make future payments when it
achieved certain development milestones, as well as royalty
payments on any product sales. In December 1997, Heska announced
commercial availability of the first product, a diagnostic test
for use in clinical laboratories, and paid us a corresponding
milestone payment. In 2001, we amended and restated our
agreement with Heska to transfer the canine leishmaniasis
vaccine rights to Novartis and continue the K39 diagnostic
license for canine leishmaniasis with Heska.

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Other Strategic Relationships

We seek to obtain technologies that complement
and expand our existing technology base. When consistent with
our strategy, we have licensed and intend to continue to license
product and marketing rights from research and academic
institutions in order to capitalize on the capabilities and
technology bases of these entities. Under our license agreements
with research and academic institutions, we generally seek to
obtain unrestricted sublicense rights consistent with our
partner-driven strategy. We are generally obligated under these
license agreements to diligently pursue product development,
make development milestone payments and pay royalties on any
product sales.

Incyte Genomics, Inc.In February 2000, we entered into
a collaborative agreement with Incyte Genomics, Inc, (formerly
Incyte Pharmaceuticals) a California-based genomics company.
Under the agreement, we gained access to Incytes LifeSeq
databases of expressed human genes. Some of these gene sequences
may be useful in our antigen-based vaccines. Under the terms of
the agreement, we have the right to obtain licenses under Incyte
patents and patent applications covering sequences in
Incytes LifeSeq database. Under these licenses we would be
required to pay license fees and royalties to Incyte.

SR Pharma plc.In December 1998, we entered into
an exclusive worldwide license agreement with Stanford Rook, or
SR Pharma, pursuant to which SR Pharma granted us rights to its
M. vaccae-related intellectual property in connection with the
development and commercialization of PVAC(TM )treatment for
treating psoriasis, RA, MS and diabetes. We also were granted an
option to certain additional autoimmune disease fields which we
exercised at the end of 2000. Under the license agreement, we
agreed to pay SR Pharma license fees, milestone payments and a
percentage of any revenues that we receive from product sales.
Pursuant to a February 1999 amendment to the agreement SR Pharma
granted us manufacturing rights. In February 1999, we also
entered into a non-exclusive worldwide license agreement with SR
Pharma pursuant to which SR Pharma granted us rights under its
M. vaccae-related intellectual property for the manufacture,
development and commercialization of specified M. vaccae-derived
products for use as adjuvants in our proprietary vaccines other
than tuberculosis vaccines.

ImmGenics Pharmaceuticals.In November 1998, we entered into
an exclusive agreement with ImmGenics Pharmaceuticals, or
ImmGenics, to utilize ImmGenics proprietary Selected
Lymphocyte Antibody Method technology to develop therapeutic and
diagnostic monoclonal antibodies specific to our proprietary
antigens in cancer and infectious disease. Under the agreement,
we will make research and development payments to ImmGenics and,
if ImmGenics achieves certain milestones, we will make
additional milestone payments and royalty payments on future
product sales. Our agreement with ImmGenics continues to be in
effect following the acquisition of ImmGenics by Abgenix.

Genesis Research and Development.In January 1998, we entered into a
collaborative research and development agreement with Genesis
Research and Development to develop and commercialize the
M. vaccae-derived product, PVAC treatment, for psoriasis.
Under the agreement, we will share the costs of product
development and the revenue received related to PVAC treatment
with Genesis. If one party incurs more than 50% of product
development costs, that party will receive a pro rata increased
portion of revenues related to product sales. Under the
agreement, Genesis also granted us an exclusive worldwide right
to develop the M. vaccae-derived product for certain other
autoimmune diseases, including RA, MS and diabetes. We also
entered into a separate agreement with Genesis, effective in
January 1998, to research and develop M. vaccae-derived
products as vaccine adjuvants. Under the agreement Genesis
granted us an exclusive license to use these adjuvant products
in our proprietary vaccines. Our chairman and chief executive
officer is a member of Genesis board of directors.

Infectious Disease Research Institute.In September 1994, we entered into
a research services and intellectual property agreement with
IDRI, a not-for-profit, private research institute. Under this
agreement, as amended and restated effective January 1997, we
agreed to provide IDRI with research funding and administrative
and facilities support, including use of a limited amount of our
research laboratory space. IDRI pays us a services fee for the
administrative and facilities support that we provide and rent
for the use of laboratory space. Our funded research that IDRI
performs is in the area of infectious disease. Under the
agreement, IDRI must disclose to us all significant developments
relating to information or inventions

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discovered at IDRI. Under the research services
and intellectual property agreement, we will own, on a
royalty-free basis, all of IDRIs interest in inventions
and patent rights arising out of the research IDRI performs with
our funding during the term of the agreement (other than
inventions and patent rights arising out of research that is or
in the future may be funded by certain governmental or
not-for-profit organizations). With respect to rights arising
out of research funded by governmental and not-for-profit
organizations, IDRI granted us a royalty-bearing, worldwide,
perpetual license, exclusive except as to rights held by the
governmental or not-for-profit organizations. In late 1999, IDRI
relocated to facilities outside of our facilities. Since this
move, we have provided only limited services to IDRI.


Other License Agreements.Additionally, we are party to
other exclusive license agreements with academic institutions,
including:



| |   |                                                                                                                                                                                                  
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the University of Washington for the use of
	Her-2/neu technology in all fields;                                                                                                                 
|
| |  | Washington University in St. Louis, Missouri for
	the use of mammaglobin, a breast cancer-related gene and
	protein, for prophylactic and therapeutic treatment and
	diagnosis of adenocarcinoma;
|
| |  | Health Research for the use of a proprietary
	mouse model for human cancer;                                                                                                                      
|
| |  | Pharma Pacific Pty. Ltd. and affiliates for
	interferon receptor technology;                                                                                                                     
|
| |  | Catholique Universite do Louvain, Belgium for
	intellectual property underlying TAP pro-drug technology;                                                                                         
|
| |  | Kyowa Hakko Kogyo Co., Ltd. for certain
	ultrapotent compounds;                                                                                                                                  
|
| |  | Dana-Farber Cancer Institute for the use of the
	anti-B1 antibody used in BEXXAR® therapy and for certain
	microsphere technology;                                                               
|
| |  | University of Michigan for the use of BEXXAR;                                                                                                                                                    
|
| |  | Massachusetts Institute of Technology for the use
	of WT-1, a leukemia-related gene and protein, in therapeutic
	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 in order 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 U.S. and
foreign patent applications related to our proprietary
technology, inventions and improvements that are important to
developing our business. As of December 31, 2001, we owned,
had licensed or had options to license 185 issued U.S. patents
that expire at various times between May 2002 and November 2019,
and 380 pending U.S. patent applications.

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 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;                                                                                                            

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| |   |                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | other companies 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 companies may design around our patented
	technologies.                                                                                                                                                                                                  

We have licensed several patent applications from
SRI related to our microsphere encapsulation technology. Two of
these patent applications are currently the subject of
opposition proceedings before the European Patent Office. In one
of the oppositions, 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 or any other opposition proceeding.

On September 10, 2001 IDEC Pharmaceuticals,
Inc., or IDEC, filed a complaint in the U.S. District Court,
Southern District of California, against us and the Regents of
the University of Michigan seeking declaratory judgment of
non-infringement and invalidity of certain patents related to
IDECs Zevalin product for the treatment of
non-Hodgkins lymphoma. On September 12, 2001 we and
GSK filed a lawsuit in the U.S. District Court, District of
Delaware, alleging that IDECs activities since the
Oncologic Drugs Advisory Committees recommendation for
approval of Zevalin infringes Corixas U.S. Patent Nos.
5,595,721, 6,015,542 and 6,090,365. Issued claims in the subject
patents cover imaging, composition of matter and methods-of-use
in the treatment of non-Hodgkins lymphoma. Pursuant to our
lawsuit against IDEC, we and GSK are requesting that the court
declare that IDEC is willingly infringing our patents. In
addition, we are seeking available remedies under the patent
laws including monetary damages and permanent injunctive relief.
On September 28, 2001 we and GSK amended the complaint to
add the Regents of the University of Michigan as an additional
plaintiff. On February 13, 2002, we, GSK and the Regents of
the University of Michigan filed an answer and counterclaims to
IDECs amended complaint in the U.S. District Court,
Southern District of California. By way of order of
February 25, 2002, the Delaware District Court has ordered
the case transferred to the U.S. District Court, Southern
District of California.

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
application and the related file histories that are subject to
the American Inventors Protection Act will then be available for
review by others, including our competitors. Pre-issuance
publications would allow us to recover damages from pre-issuance
infringers of published applications 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 U.S. patent applications if we do not file
internationally. If we elect not to publish, we will not be able
to seek pre-issuance damages.

Subject to the effect of the American Inventors
Protection Act of 1999, patent applications in the United States
are presently maintained in secrecy until 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 publication often occurs 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.

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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 try to protect our trademarks by filing for
U.S. 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. Our registered trademarks, MPL® and
MELACINE®, are currently the subjects 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 MPL or MELACINE 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 related pharmaceutical products
as biologics. The necessary steps before a new biological
product may be marketed in the United States ordinarily include:



| |   |                                                                                                                                                   
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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.

31



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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 at the institutions at which the
trial will be conducted. 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:



| |   |                                                               
| | - | --------------------------------------------------------------
| |  | 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 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:



| |   |                                                                                               
| | - | ----------------------------------------------------------------------------------------------
| |  | 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 effect 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 Good Manufacturing Practices, or GMP, and quality
	system regulation, or QSR;

32



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| |   |                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------
| |  | 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 four 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 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

33



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##### Table of Contents



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 autoimmune diseases, cancer and infectious
diseases, including:



| |   |                              
| | - | -----------------------------
| |  | 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.

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 are seeking approval to sell BEXXAR in
the U.S. Consequently, IDEC could have a significant
advantage over Corixa in sales and marketing of ZEVALIN due to
the fact that ZEVALIN has progressed further in the regulatory
approval process than BEXXAR.

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:



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

34



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



| |   |                                                                                      
| | - | -------------------------------------------------------------------------------------
| |  | 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 do not intend to
manufacture any radioimmunotherapeutic products.

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 quantifies
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 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:



| |   |                                                                         
| | - | ------------------------------------------------------------------------
| |  | 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 and for
all of our commercial needs with respect to BEXXAR. 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
Ingleheim Pharma KG, or BI Pharma KG, to produce
bulk Anti-B1 antibody, a key component for BEXXAR, 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 order quantities of the Anti-B1 antibody
from BI Pharma KG. The maximum penalty that we would
be required to pay if we did not place orders to purchase any
antibody from BI Pharma KG is approximately
$4.4 million. BI Pharma KG has limited experience
producing, labeling and packaging the Anti-B1 antibody, 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., or Nordion, for radiolabeling the Anti-B1 Antibody at
Nordions centralized radiolabeling facility. Under our
agreement with Amersham Health, Amersham will be responsible for
radiolabling the Anti-B1 Antibody and distributing the product
in Europe. However, neither Nordion nor Amersham may be unable
to produce sufficient radiolabeled antibodies to meet

35



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our clinical requirements and, if BEXXAR is
approved and is successful in the market, our commercial
requirements for the respective territories.


If the FDA approves BEXXAR for marketing, we
expect that production for commercialization will consist of
(i) producing bulk Anti-B1 Antibody by
BI Pharma KG, (ii) filling and labeling of
individual product vials with Anti-B1 Antibody by another
third-party supplier and/or BI Pharma KG, and
(iii) radiolabeling of Anti-B1 Antibody at Nordion.
Although we plan to develop additional suppliers of these
services, we expect to rely on our current suppliers for all or
a significant portion of our requirements for BEXXAR for the
foreseeable future. We are aware of only a limited number of
manufacturers capable of producing the Anti-B1 antibody 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 and could involve significant
expense. Radiolabeled antibody cannot be stockpiled against
future shortages due to the eight-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, if approved.

We believe that it is possible that any products
we may develop in our TAP pro-drug program may be capable
of being produced with standard chemical synthesis processes and
if so, we may utilize our manufacturing facility in Montana or
third parties to meet clinical trial and any commercial
requirements for any such potential products. If we determine
not to manufacture potential TAP pro-drug products
ourselves, we will need to contract with other companies to
manufacture. We cannot assure you that we will be successful in
manufacturing such potential products at our Montana
manufacturing facility or that we will enter into agreements in
a timely manner or under acceptable terms or that the material
produced under the agreements will be suitable for human use.

Marketing and Distribution

As a result of our acquisition of Coulter, we
acquired a direct sales force and marketing personnel in
preparation for the launch of BEXXAR. However, our ability to
market BEXXAR, if approved, will be contingent upon recruiting,
training and deploying the remainder of the necessary sales and
marketing force, as well as GSKs performance under our
BEXXAR collaboration agreement. Additionally, in an effort to
minimize expenses during the delay in approval of BEXXAR, we
entered into an agreement with Nycomed Amersham Imaging in which
our U.S. sales force will co-promote Nycomed
Amershams METASTRON® in exchange for financial
incentives based on specific sales levels.

The unique properties of BEXXAR therapy require
tightly controlled distribution of the product. Due to its
radioactive component, BEXXAR is shipped in shielded containers
and must arrive at its destination within
24 - 48 hours of production. BEXXAR must also be
temperature controlled during shipment. We will rely on many
third party suppliers to process orders and to package, store
and ship BEXXAR. We are working with suppliers to establish a
commercial-scale system for the product that will minimize risk
and loss of inventory and provide efficient service to customers
in the event BEXXAR is approved for commercial sale. These third
party suppliers may be unable to handle BEXXAR in a manner that
will minimize loss of or damage to inventory. We have entered
into a contract for storing and shipping of BEXXAR in the United
States. We are negotiating other contracts for handling of
BEXXAR 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.

We and Amersham Health have agreed to register
BEXXAR in Europe for the treatment of certain types of NHL, a
cancer of the white blood cells, and that Amersham Health will
market BEXXAR 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 in Europe. BEXXAR will be registered by Amersham Health
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 in Europe.

36



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##### Table of Contents



Employees

As of December 31, 2001, we had 496
employees, 112 of whom hold degrees at the doctorate level.
Of these employees, 305 are engaged in, or directly support
research and development activities, 19 are in production,
33 are in sales and marketing and 139 are in
administration and business development 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. In March 2001, we reduced total
headcount by approximately 15%.




Item 2.     Properties

We currently operate at three sites. Our
headquarters are in Seattle, Washington, where we lease
approximately 85,000 square feet of laboratory, discovery,
research and development, manufacturing and general
administration space. We maintain an additional
98,000 square feet of laboratory, research and development,
and general administration space in South San Francisco,
California and will be completing construction of approximately
48,000 additional square feet. 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
five-years periods. The lease for the South San Francisco
facility expires in 2010, with an option to renew for two
additional five-years 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.




Item 3.     Legal
Proceedings

On September 10, 2001 IDEC Pharmaceuticals,
Inc., or IDEC, filed a complaint in the U.S. District
Court, Southern District of California, against us and the
Regents of the University of Michigan seeking declaratory
judgment of non-infringement and invalidity of certain patents
related to IDECs Zevalin product for the treatment of
non-Hodgkins lymphoma. On September 12, 2001 we and
GSK filed a lawsuit in the U.S. District Court, District of
Delaware, alleging that IDECs activities since the
Oncologic Drugs Advisory Committees recommendation for
approval of Zevalin infringes Corixas U.S. Patent
Nos. 5,595,721, 6,015,542 and 6,090,365. Issued claims
in the subject patents cover imaging, composition of matter and
methods-of-use in the treatment of non-Hodgkins lymphoma.
Pursuant to our lawsuit against IDEC, we and GSK are requesting
that the court declare that IDEC is willingly infringing our
patents. In addition, we are seeking available remedies under
the patent laws including monetary damages and permanent
injunctive relief. On September 28, 2001 we and GSK amended
the complaint to add the Regents of the University of Michigan
as an additional plaintiff. On February 13, 2002, we, GSK
and the Regents of the University of Michigan filed an answer
and counterclaims to IDECs amended complaint in the
U.S. District Court, Southern District of California. By
way of order of February 25, 2002, the Delaware District
Court has ordered the case transferred to the U.S. District
Court, Southern District of California.




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 2001.

37



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##### Table of Contents






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.

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
|                                    |  |      |       |    
|2000                                |  |      |       |     |  |  |       | 
|First Quarter                       |  |      | 70.13 |     |  |  | 17.25 | 
|Second Quarter                      |  |      | 47.44 |     |  |  | 22.88 | 
|Third Quarter                       |  |      | 53.63 |     |  |  | 31.75 | 
|Fourth Quarter                      |  |      | 51.94 |     |  |  | 20.00 | 
|2001                                |  |      |       |     |  |  |       | 
|First Quarter                       |  |      | 30.13 |     |  |  | 7.06  | 
|Second Quarter                      |  |      | 22.50 |     |  |  | 6.25  | 
|Third Quarter                       |  |      | 17.91 |     |  |  | 6.87  | 
|Fourth Quarter                      |  |      | 16.90 |     |  |  | 9.50  | 
|2002                                |  |      |       |     |  |  |       | 
|First Quarter (through February 22) |  |      | 16.00 |     |  |  | 9.75  | 

On February 22, 2002, the last reported
sales price of our common stock on Nasdaq was $10.54 per share.
As of February 22, 2002 we had 1,456 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.



| |                                            
| | -------------------------------------------
| | Recent Issuance of Unregistered
	Securities

On December 29, 2001 in connection with our
Preferred Stock dividend to Castle Gate LLC, we issued
73,299 shares of our common stock with a fair market value
of approximately $1.1 million as payment of our preferred
stock dividend. We issued the shares in a private placement
exempt from registration under Rule 506 of
Regulation D and Section 4(2) of the Securities Act of
1933, or the Securities Act.

On December 3, 2001 we entered into a
financing agreement with BNY Capital Markets, Inc., or CMI,
providing for the potential future issuance of shares of our
common stock. In consideration for the services of Shoreline
Pacific, LLC, or Shoreline, as placement agent in connection
with the equity line facility, we issued warrants to purchase an
aggregate of 100,000 shares of our common stock to certain
employees of Shoreline. We issued the warrants in a private
placement exempt from registration under Rule 506 of
Regulation D and Section 4(2) of the Securities Act.

Of the warrants issued to the Shoreline
employees, warrants to purchase an aggregate of
50,000 shares of our common stock may be exercised at any
time after issuance and before December 3, 2006, warrants
to purchase an aggregate of 25,000 shares of our common
stock may be exercised at any time after December 3, 2002
and before December 3, 2007 and warrants to purchase the
remaining 25,000 shares of our common stock may be
exercised at any time after December 3, 2003 and before
December 3, 2008.

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The exercise prices for the warrants are as
follows:



| |   |                                                                                                                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | an aggregate of 50,000 shares at an exercise
	price of $15.49 per share;                                                                                                                                                                                                  
|
| |  | an aggregate of 25,000 shares at an exercise
	price equal to the average of the closing prices of our common
	stock on Nasdaq for the fifteen trading days immediately
	preceding and the fifteen trading days immediately succeeding
	and including December 3, 2002; and
|
| |  | an aggregate of 25,000 shares at an exercise
	price equal to the average of the closing prices of our common
	stock on Nasdaq for the fifteen trading days immediately
	preceding and the fifteen trading days immediately succeeding
	and including December 3, 2003.    

The exercise prices are subject to customary
anti-dilution adjustments upon such events as a split or
subdivision of our common stock or a dividend payable in common
stock or any similar event.

The warrant holders are entitled to a
cashless exercise option. This option entitles the
warrant holder to elect to receive fewer shares of common stock
without paying the cash exercise price. The number of shares to
be issued would be determined by a formula based on the total
number of shares to which the warrant holder is entitled, the
fair market value of the common stock on the date of exercise
and the applicable exercise price of the warrants.

On October 29, 2001 in connection with our
collaboration agreement with Amersham Health, we issued
271,343 shares of our common stock for an aggregate
purchase price of $5 million. The common stock was
purchased at a forty percent premium to the current market value
of our common stock. We issued the shares in a private placement
exempt from registration under Rule 506 of
Regulation D and Section 4(2) of the Securities Act.

39



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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 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,                 
|                                                                                                |                                              |                                         
|                                                                                                |                                              | 2001                                     |          | 2000    |         | 1999 |          | 1998    |         | 1997
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |     
|                                                                                                |                                              |                                         
|                                                                                                |                                              | (in thousands, except per share amounts)
|Consolidated Statement of Operations
	Data:                                                     |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Revenue:                                                                                        |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|                                                                                                | Collaborative agreements                     |                                          | $        | 55,128  |         |      | $        | 34,643  |         |      | $       | 25,035  |        |   | $       | 17,003  |        |   | $      | 13,390 |       
|                                                                                                | Government grants                            |                                          |          | 2,937   |         |      |          | 2,331   |         |      |         | 1,463   |        |   |         | 1,267   |        |   |        | 977    |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|                                                                                                |                                              | Total revenue                            |          |         | 58,065  |      |          |         | 36,974  |      |         |         | 26,498 |   |         |         | 18,270 |   |        |        | 14,367 | 
|Operating expenses:                                                                             |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|                                                                                                | Research and development                     |                                          |          | 138,621 |         |      |          | 61,911  |         |      |         | 41,962  |        |   |         | 27,436  |        |   |        | 16,398 |       
|                                                                                                | Sales, general and administrative            |                                          |          | 22,361  |         |      |          | 6,694   |         |      |         | 3,743   |        |   |         | 2,672   |        |   |        | 2,033  |       
|                                                                                                | Intangible amortization                      |                                          |          | 57,625  |         |      |          | 4,499   |         |      |         | 587     |        |   |         |        |        |   |        |       |       
|                                                                                                | Acquired in-process research and development |                                          |          |        |         |      |          | 629,700 |         |      |         | 37,637  |        |   |         | 12,021  |        |   |        |       |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|                                                                                                |                                              | Total operating expenses                 |          |         | 218,607 |      |          |         | 702,804 |      |         |         | 83,929 |   |         |         | 42,129 |   |        |        | 18,431 | 
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Loss from operations                                                                            |                                              |                                          | (160,542 | )       |         |      | (665,830 | )       |         |      | (57,431 | )       |        |   | (23,859 | )       |        |   | (4,064 | )     
|Interest and other income, net                                                                  |                                              |                                          | 12,505   |         |         |      | 4,999    |         |         |      | 2,673   |         |        |   | 2,543   |         |        |   | 1,388  |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Loss before cumulative effect of change in
	accounting principle                                |                                              |                                          | (148,037 | )       |         |      | (660,831 | )       |         |      | (54,758 | )       |        |   | (21,316 | )       |        |   | (2,676 | )     
|Cumulative effect of change in accounting
	principle                                            |                                              |                                          |         |         |         |      | (6,338   | )       |         |      |        |         |        |   |        |         |        |   |       |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Net loss                                                                                        |                                              |                                          | (148,037 | )       |         |      | (667,169 | )       |         |      | (54,758 | )       |        |   | (21,316 | )       |        |   | (2,676 | )     
|Preferred stock dividend                                                                        |                                              |                                          | (1,730   | )       |         |      | (9,887   | )       |         |      | (6,008  | )       |        |   |        |         |        |   |       |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Net loss applicable to common stockholders                                                      |                                              | $                                        | (149,767 | )       |         | $    | (677,056 | )       |         | $    | (60,766 | )       |        | $ | (21,316 | )       |        | $ | (2,676 | )     
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Basic and diluted loss per share before
	cumulative effect of change in accounting principle(1) |                                              | $                                        | (3.66    | )       |         | $    | (32.00   | )       |         | $    | (3.91   | )       |        | $ | (1.75   | )       |        | $ | (0.55  | )     
|Cumulative effect of change in accounting
	principle per share                                  |                                              |                                          |         |         |         |      | (0.30    | )       |         |      |        |         |        |   |        |         |        |   |       |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Basic and diluted net loss per common share(2)                                                  |                                              | $                                        | (3.66    | )       |         | $    | (32.30   | )       |         | $    | (3.91   | )       |        | $ | (1.75   | )       |        | $ | (0.55  | )     
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Shares used in computation of basic and diluted
	net loss per common share                      |                                              |                                          | 40,961   |         |         |      | 20,961   |         |         |      | 15,528  |         |        |   | 12,172  |         |        |   | 4,891  |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|Pro forma amounts assuming the accounting change
	is applied retroactively:                     |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|                                                                                                | Net loss                                     |                                          |          |         |         |      |          |         |         |      | $       | (54,042 | )      |   | $       | (28,370 | )      |   |        |        |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       
|                                                                                                | Net loss per common share                    |                                          |          |         |         |      |          |         |         |      | $       | (3.87   | )      |   | $       | (2.33   | )      |   |        |        |       
|                                                                                                |                                              |                                          |          |         |         |      |          |         |         |      |         |         |        |   |         |         |        |   |        |       



---



|    |                                                                                                                                                                    
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Effective January 1, 2000, we changed our
	method of accounting for nonrefundable up-front license fees.
	See Note 1 of Notes to Consolidated Financial Statements.

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|    |                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | 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.

|                                                          |  |                |          |      |  |      |          |      |  |      |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------- |  | -------------- | -------- | ---- |  | ---- | -------- | ---- |  | ---- | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                          |  |               
|                                                          |  | December 31,  
|                                                          |  |               
|                                                          |  | 2001           |          | 2000 |  | 1999 |          | 1998 |  | 1997
|                                                          |  |                |          |      |  |      |          |      |  |     
|                                                          |  |               
|                                                          |  | (in thousands)
|Consolidated Balance Sheet Data:                          |  |                |          |      |  |      |          |      |  |      |         |   |  |   |         |   |  |   |         |  
|Cash, cash equivalents and securities
	available-for-sale |  | $              | 121,064  |      |  | $    | 197,078  |      |  | $    | 45,553  |   |  | $ | 45,141  |   |  | $ | 56,318  |  
|Working capital                                           |  |                | 53,946   |      |  |      | 146,844  |      |  |      | 20,919  |   |  |   | 36,979  |   |  |   | 53,962  |  
|Total assets                                              |  |                | 367,382  |      |  |      | 504,334  |      |  |      | 92,480  |   |  |   | 61,184  |   |  |   | 61,807  |  
|Long-term obligations, less current portion               |  |                | 27,657   |      |  |      | 33,422   |      |  |      | 11,426  |   |  |   | 11,835  |   |  |   | 6,924   |  
|Redeemable common stock                                   |  |                | 2,000    |      |  |      | 2,000    |      |  |      | 2,000   |   |  |   |        |   |  |   |        |  
|Accumulated deficit                                       |  |                | (903,242 | )    |  |      | (755,205 | )    |  |      | (88,036 | ) |  |   | (33,278 | ) |  |   | (11,962 | )
|Total stockholders equity                                |  |                | 281,765  |      |  |      | 404,575  |      |  |      | 58,781  |   |  |   | 42,184  |   |  |   | 51,285  |  

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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 and contains
forward-looking statements that involve substantial risks and
uncertainties. Our actual results could differ materially from
those expressed or implied in these forward-looking statements
as a result of various factors, including those discussed in
Important Factors That May Affect Our Business, Our
Results of Operations and Our Stock Price below.

Overview

Our goal is to be a leader in the development and
commercialization of products to prevent, treat or diagnose
autoimmune diseases, cancer and infectious diseases. Our
strategy consists of integrating our core antigen, monoclonal
antibody, adjuvant, antigen delivery and tumor-activated, or TAP
pro-drug technologies into a strong product pipeline. To
implement this strategy, we develop select technologies and
potential products ourselves and establish corporate
collaborations for other select technologies at various stages
in the research and development process, including partnerships
for discovery, clinical development, manufacturing and
marketing. We believe that this development and partner-driven
approach will create significant scientific, operational and
financial advantages and accelerate the commercial development
of new therapeutic and prophylactic immunotherapeutic products.
For the years ended December 31, 2001, 2000 and 1999,
approximately 95%, 94% and 94%, respectively, of our revenue
resulted from collaborative agreements, and approximately 5%, 6%
and 6%, of our revenue resulted from funds awarded through
government grants. As of December 31, 2001, we had total
stockholders equity of $281.8 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.                                                                            

When entering into corporate partnering
relationships, we seek to cover our research and development
expenses through research funding, milestone payments,
collaborative agreement credit lines, and technology and license
fees. We also endeavor to retain significant downstream
participation in product sales through either profit-sharing or
product royalties paid on annual net sales.

We generate revenue from technology licenses,
collaborative research and development arrangements, and cost
reimbursement contracts. Revenue under technology licenses and
collaborative agreements typically consists of nonrefundable
and/or guaranteed technology license fees, collaborative
research funding, technology access fees, and various milestone
and future product royalty or profit-sharing payments.

We recognize revenue associated with up-front
license, technology access and research and development funding
payments under collaborative agreements ratably over the
relevant periods specified in the agreement, generally the
research and development period. Revenue from substantive
at-risk milestones and future product royalties is recognized as
earned based on the completion of the milestones and product
sales, as defined in the respective agreements. Revenue under
cost reimbursement contracts is recognized as the related costs
are incurred. Payments received in advance of recognition as
revenue are recorded as deferred revenue.

Our material collaborative agreements include the
following:



| |   |                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Amersham Health.In October 2001, we entered into
	an agreement whereby Amersham Health will market BEXXAR in
	Europe. We and Amersham Health will cooperate to register BEXXAR
	in

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | Europe. We will be responsible for the generation
	of clinical trial data to support registration in Europe.
	Amersham Health will be responsible for manufacture and sale of
	BEXXAR in Europe. Under the terms of a stock purchase agreement
	with Amersham Health, at our option, we may choose to sell up to
	$10 million of additional shares of Corixa common stock to
	Amersham Health at fair market value, which is determined
	according to the average of the closing prices of our common
	stock over a specified period surrounding the date of issuance.
	Upon execution of the agreement Amersham Health purchased
	271,343 shares of our common stock 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 license payment and was deferred and will be
	recognized as revenue ratably over the applicable term of the
	agreement, consistent with our revenue recognition policy. In
	addition, Amersham Health will pay us multi-million dollar
	milestone payments upon regulatory approval in Europe as well as
	million dollar milestone payments based on achievement of
	certain sales volume targets. Amersham Health will pay us
	royalties on all future product sales in Europe. Amersham Health
	has the right to terminate our agreement for Corixas
	material breach, insolvency, after October 2004 or if
	commercialization of BEXXAR in Europe is blocked because another
	product is given orphan drug status or if the EMEA does not
	validate our MAA because the EMEA determines that the MAA is not
	sufficient.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|
| |  | Medicis and Zenyaku Kogyo.In August 2000, we entered into a
	multi-year development, commercialization and license agreement
	covering our psoriasis immunotherapeutic product,
	PVAC treatment, with Medicis. The agreement
	provides Medicis with exclusive rights to PVACtreatment
	in the United States and Canada. We are predominately
	responsible for development and manufacturing, and Medicis will
	be responsible for commercialization and distribution. Under the
	terms of the agreement, Medicis may be required to pay us
	license fees, research funding and milestone payments of up to
	$107 million. Upon effectiveness of the agreement, we
	received a nonrefundable payment of $17 million and may
	receive development milestone payments of up to
	$35 million, and commercialization and cumulative net sales
	threshold milestone payments of up to $55 million.
	Additionally, upon commercial sale of the product, Medicis will
	pay a royalty on net sales of the product and may purchase
	inventory from us. In August 1999, we entered into a corporate
	partnership with Zenyaku Kogyo for research and development
	related to PVACtreatment. The agreement provides Zenyaku
	Kogyo with exclusive rights to PVACtreatment in Japan.
	Under the terms of the agreement, we will receive license fees
	and research funding of up to $6 million, milestone
	payments based on successful clinical and commercial progress,
	and a royalty stream on future product sales. Each of Medicis
	and Zenyaku has the right to terminate its respective agreement
	upon our material default or insolvency. In addition, Medicis
	has the right to terminate our agreement if we fail to meet
	development milestones as a result of force majuere. Medicis
	also has the right to terminate our supply agreement if we fail
	to supply two or more times in any five year period or three
	times during the term of the agreement or if, after a failure to
	supply, we cannot resume supply within 18 months. If
	Medicis terminates our supply agreement for any of these
	reasons, our royalty from Medicis would materially decease.
	Zenyaku Kogyo has the right to terminate our agreement after
	receipt of the final report from our next PVAC Phase II
	clinical trial, if we and Zenyaku Kogyo decide not to proceed
	with PVAC Phase III clinical trials or after commercial
	launch of PVAC, if PVAC is not sufficiently profitable or the
	sale of PVAC is barred by the Japanese government.
|
| |  | Zambon Group and the Pharmaceutical
	Division of Japan Tobacco.During
	May and June 1999, we entered into corporate partnerships with
	Zambon Group, or Zambon and the pharmaceutical division of Japan
	Tobacco, respectively, for the research, development and
	commercialization of vaccine products aimed at preventing and/or
	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 with Japan Tobacco in China. Japan Tobacco has 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 Japan Tobacco an option to formulate vaccines that may
	result from the collaboration using our microsphere delivery
	system with our proprietary adjuvants. The                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | agreements have three-year research terms and, in
	the aggregate, provide for committed research funding of
	$16.5 million, as well as milestone payments to us that
	vary depending on the milestones that we achieve. In addition,
	Zambon purchased $2.0 million of our common stock. The
	agreement allows Zambon to sell the common stock back to us at
	the original price at the end of the research program term if
	Zambon determines that a commercial product is not viable. Each
	of Japan Tobacco and Zambon has the right to terminate its
	respective agreement upon our material default or insolvency.
	Japan Tobacco has the right to terminate our agreement following
	July 19, 2002 if the program does not have sufficient
	commercial potential. Zambon has the right to terminate our
	agreement following May 21, 2002 if the program does not
	have sufficient commercial potential. If Zambon terminates the
	agreement because the program does not have sufficient
	commercial potential, Zambon has the right to require us to
	repurchase our common stock that Zambon purchased in connection
	with our collaboration agreement at Zambons original
	purchase price.                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | Infectious Disease Research Institute.In March 1999, we entered into a
	research agreement with the IDRI, to research and develop ex
	vivo therapies for treating cancer. Pursuant to the terms of
	the agreement, IDRI committed $12 million of research
	funding over a three-year term. The agreement provides us with
	exclusive rights to all resulting intellectual property and
	product rights. IDRI will receive a percentage of our proceeds
	related to ex vivotherapy products resulting from
	research and development funded by IDRI. IDRI has the right to
	terminate our agreement upon our material default or insolvency
	or for any reason after March 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| |  | GlaxoSmithKline.During 1998, we entered into a
	broad corporate partnership with GSKs wholly owned
	subsidiary, SmithKline Beecham plc, for vaccine discovery
	for breast, prostate, ovarian and colon cancer, tuberculosis
	vaccine discovery and development programs, and vaccine
	discovery programs for two chronic infectious pathogens,
	chlamydia trachomatis and chlamydia pneumoniae. We also granted
	GSK an exclusive worldwide license to develop, manufacture and
	sell vaccine products resulting from our clinical program based
	on Her-2/neu for treating breast and ovarian cancer, as well as
	our preclinical program based on Mammaglobin, a novel gene
	product associated with breast cancer. For certain of these
	disease areas, we granted GSK rights to develop, manufacture and
	sell passive immunotherapy products. These products include
	T cell, dendritic cell and antibody therapeutics and
	therapeutic drug monitoring products. GSK has committed
	$43.6 million to fund work in these discovery programs
	during a four-year research term, which is due to expire in
	September 2002. Extended research and development programs
	beyond the initial four-year term may be agreed upon by GSK and
	us. GSK has the right to terminate our agreement for our
	material default or insolvency or for any reason after September
	2002. An acquisition of Corixa would constitute a material
	default of our agreement with GSK, entitling GSK to terminate
	the agreement. We and our employees are precluded from working
	in any of the disease fields covered by our agreement with GSK
	for two years after the termination.
|
| |   | In addition, GSK purchased $2.5 million of
	our common stock in 1998 at a premium to our fair market value.
	Under a collaborative agreement with GSK, we have an outstanding
	loan in the amount of $5 million, which amount, together
	with all accrued unpaid interest is due on September 1,
	2003. At GSKs option, GSK may choose to receive the
	outstanding principal and accrued unpaid interest in cash or
	shares of our common stock at an undisclosed premium to the
	then-current fair market value of our common stock.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|
| |   | We have several license and supply agreements
	with GSK, granting GSK licenses to certain adjuvants for use in
	vaccines for infectious diseases, cancer and allergy 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|
| |   | As a result of our acquisition of Coulter, we
	acquired the 1998 collaboration agreement between Coulter and
	GSKs wholly owned subsidiary, SmithKline Beecham
	Corporation, for developing and commercializing BEXXAR, which
	has completed Phase III clinical trials in the United
	States and is                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

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##### Table of Contents



| |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the subject of a BLA currently under review by
	the FDA, for treating non-Hodgkins lymphoma, or NHL. The
	agreement was amended in April 2000 to reduce GSKs
	territory under the agreement to the United States. Under the
	terms of the amended agreement, we and GSK will jointly market
	and sell BEXXAR in the United States following regulatory
	approval, and we and GSK will share profits and losses equally.
	The agreement provides for the sharing of certain costs related
	to clinical and manufacturing development activities. The
	agreement also provides for a $15 million credit line,
	which was fully drawn in December 2000 (terms and conditions of
	the credit line are discussed further in Footnote 2 in the
	Notes to the Consolidated Financial Statements).



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under the terms of the agreement, GSK will
	reimburse us for certain development costs and pay us for the
	achievement of certain defined clinical development, regulatory
	and sales milestones. In 2001, we recognized milestone revenue
	of $6.0 million upon Institutional Review Board approval of
	two clinical protocols and $6.9 million for the
	reimbursement of clinical and other development cost.                                          
|
| | We and GSK will co-market BEXXAR in the United
	States and will share revenue, cost of goods sold, sales and
	marketing costs and other costs associated with BEXXAR related
	activities. Currently, we share the pre-launch cost of marketing
	associated with preparation of the potential commercialization
	of BEXXAR. For 2001, our share of these expenses was
	$3.5 million and has been classified as sales, general and
	administrative expense.
|
| | Amounts receivable from GSK at December 31,
	2001 and 2000 were $2.9 million and $9.7 million, respectively.                                                                                                                                                                                                                                                                                                                                             
|
| | For the years ended December 31, 2001, 2000
	and 1999, approximately 49%, 41% and 41% of our revenue resulted
	from collaborative agreements with GSK.                                                                                                                                                                                                                                                                                                   

We have acquired the following companies since
1999:



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Coulter.On
	December 22, 2000, we acquired Coulter, a biopharmaceutical
	company engaged in developing novel drugs and therapies for
	treating cancer and autoimmune diseases. We purchased Coulter
	for approximately $917.1 million, which consideration
	consisted of approximately 19,114,649 shares of our common stock
	valued at $806.8 million, assumed Coulter stock options
	valued at $132.4 million, less $29.2 million
	associated with the intrinsic value of unvested options, and
	transaction costs of approximately $7.1 million. The
	$29.2 million was recorded as deferred compensation and is
	being amortized as compensation expense over the remaining
	vesting periods of up to four years. As a result of the
	acquisition, we recorded an acquired in-process research and
	development charge of $629.7 million and
	acquisition-related intangibles of $223.9 million, which
	includes goodwill of $204.6 million, an assumed lease
	arrangement of $15.4 million and an assembled workforce of
	$3.9 million. The FDA accepted the BLA filing for
	Coulters lead product, BEXXAR, in November 2000. If we do
	not receive FDA approval for BEXXAR, a significant portion of
	the value assigned to acquired in-process research and
	development will not be realized and the value assigned to the
	intangible assets related to this acquisition will be impaired.
|
| |  | Ribi.On
	October 6, 1999, we completed the acquisition of Ribi, a
	pharmaceutical company focused on developing novel agents that
	modulate the human immune response to prevent or treat certain
	diseases, including cancer, infectious diseases and
	cardiovascular injury. We purchased Ribi for approximately
	$57.5 million, which consideration consisted of 3,610,766
	shares of our common stock and stock options valued at
	$47.9 million, cash of $7.9 million paid by us to Ribi
	for the redemption of Ribi Series A preferred stock and
	transaction costs of approximately $1.7 million. As a
	result of the acquisition, we recorded an in-process research
	and development charge of $26.0 million and
	acquisition-related intangibles of $15.1 million, which
	includes goodwill of $11.0 million, adjuvant know-how of
	$3.1 million and assembled workforce of $1.0 million.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Anergen.On
	February 10, 1999, we acquired all of the outstanding
	shares of common stock of Anergen, a biotechnology company
	focused on treating autoimmune diseases through the discovery
	and development of proprietary therapeutics that selectively
	interrupt the disease process. We purchased Anergen for
	approximately $9.6 million, which consideration consisted
	of 1,058,031 shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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| |  |                                                                                                                                                                                                                                                                               
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | of our common stock with a market value of
	approximately $8.7 million, approximately $200,000 in cash
	and approximately $700,000 in transaction costs. We recorded an
	acquired in-process research and development charge of
	$11.6 million as a result of the acquisition.

As of December 31, 2001, our accumulated
deficit was approximately $903.2 million, of which
$679.4 million is attributable to the write-off of acquired
in-process research and development costs associated with our
acquisitions. 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. Substantially all of our revenue
to date has resulted from corporate partnerships, other
research, development and licensing arrangements, and research
grants. 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 commercial
products. We may be unable to achieve consistent profitability.
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



| |                                                     
| | ----------------------------------------------------
| | Fiscal Years Ended December 31, 2001,
	2000 and 1999

Revenue

Our revenue increased to $58.1 million for
2001, from $37.0 million in 2000 and from
$26.5 million in 1999. Revenue includes milestone payments
of $6.0 million, $1.5 million and $800,000 in 2001,
2000, 1999, respectively. The 2001 increase is primarily the
result of revenue recognized under collaborative agreements with
GSK, Medicis, Purdue Pharma and Zenyaku Kogyo. The
$6 million milestone revenue in 2001 resulted from the
achievement of certain clinical trial related milestones in
connection with BEXXAR. The 2000 increase, as compared with
1999, resulted from revenue recognized from collaborative
agreements with GSK, the pharmaceutical division of Japan
Tobacco, Medicis and Purdue Pharma. The 2000 milestone revenue
of $1.5 million resulted from the completion of our Initial
Phase I/ Phase II clinical trial related to ANERGIX.RA and
acceptance of the Investigational New Drug (IND) application
related to PVAC for psoriasis. The 1999 milestone revenue of
$800,000 resulted from the approval of MELACINE in Canada.
Revenue under government grants and contracts in 2001 was
$2.9 million, up from $2.3 million in 2000 and
$1.5 million in 1999. 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.

Effective January 1, 2000, we changed our
method of accounting for nonrefundable up-front license fees.
Revenue for 1999 was recognized under our previous method of
accounting. See Change in Accounting Principle below.

Expenses



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

Our research and development expenses increased
to $138.6 million for 2001, up from $61.9 million in
2000 and from $42.0 million in 1999. The 2001 increase was
primarily the result of increased payroll and personnel
expenses, legal fees, outside manufacturing, rent, outside
services, consulting, lab supplies and travel due in part to our
acquisition of Coulter in December 2000, as well as increased
clinical and drug fees associated with BEXXAR and the expense of
raw material purchased in anticipation of regulatory approval in
2001. In accordance with our accounting policy regarding
research and development expenses, we do not capitalize such
costs prior to product approval. The 2000 increase compared with
1999 was primarily the result of increased payroll and personnel
expenses attributable in part to our acquisitions, new
technology acquisition expenses, increased clinical trial
expenses related to PVAC treatment, MELACINE and ANERGIX and

46



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increased preclinical research activities. 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 autoimmune disease, cancer and
infectious disease. We estimate the costs associated with
research and preclinical programs and clinical development
programs approximate the following (in millions):

|                                  |  |      |       |      |  |      |      |  |  |   |      | 
|--------------------------------- |  | ---- | ----- | ---- |  | ---- | ---- |  |  | - | ---- | 
|                                  |  | 2001 |       | 2000 |  | 1999
|                                  |  |      |       |      |  |     
|Research and preclinical programs |  | $    | 73.0  |      |  | $    | 41.9 |  |  | $ | 35.5 | 
|Clinical development programs     |  |      | 65.6  |      |  |      | 20.0 |  |  |   | 6.5  | 
|                                  |  |      |       |      |  |      |      |  |  |   |      | 
|Total research and development    |  | $    | 138.6 |      |  | $    | 61.9 |  |  | $ | 42.0 | 
|                                  |  |      |       |      |  |      |      |  |  |   |      | 

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 project
candidates.

The increase in our total research and
development costs in 2001 compared to 2000 and 1999 represents
the growth in our product pipeline, primarily due to our
acquisition of Coulter in December 2000, and the advancement of
existing programs from early stage research into preclinical and
clinical development. Generally, the cost of a program increases
as it advances from research to preclinical to clinical stage
development.

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
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 value of the unearned options of
Coulter employees existing at the date of acquisition. Deferred
compensation is being amortized over the remaining vesting
period of the options. We amortized $13.2 million of
deferred compensation to research and development expense in
2001. We expect deferred compensation expense to decrease in
2002 and future years due to employee termination, employee
stock options vesting and the use of the multiple option
approach for calculating deferred compensation.

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

Our sales, general and administrative expenses
increased to $22.4 million for 2001, from $6.7 million
in 2000 and from $3.7 million in 1999. The 2001 increase
was primarily the result of increased payroll and personnel
expenses attributable to our acquisition of Coulter in December
2000, specifically as it relates to the acquired sales and
marketing functions and legal fees. We have also recognized
expense of $3.5 million for our portion of the pre-launch
marketing costs associated with BEXXAR. 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.

We amortized $1.5 million of deferred
compensation to sales, general and administrative expense in
2001. We expect deferred compensation expense to decrease in
2002 and future years due to employee termination, employee
stock options vesting and the use of the multiple option
approach for calculating deferred compensation.



| |             
| | ------------
| | Amortization

Our intangible amortization increased to
$57.6 million for 2001, from $4.5 million in 2000 and
$587,000 in 1999. The intangible amortization for 2001 consisted
of $54.7 million associated with the Coulter acquisition
and $2.9 million associated with the Ribi acquisition. In
July 2001 the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards
(SFAS) No. 142, Goodwill and Other
Intangibles, which requires use of a nonamortization
approach to account for purchased goodwill and certain
intangibles, effective January 1, 2002. Under this
nonamortization approach, goodwill and certain intangibles will
not be amortized into results of operations, but instead will be
reviewed for impairment and written down and charged to results
of operations only in the periods in which the recorded value of
goodwill and certain intangibles is more than its fair value.
Assembled workforce will be reclassified to goodwill in
accordance with the Statement and will be evaluated accordingly.
We will continue to amortize the acquired lease and adjuvant
know-how over their estimated remaining useful life. We expect
adoption of this accounting standard to substantially reduce our
amortization of goodwill and intangibles commencing
January 1, 2002.



| |                                              
| | ---------------------------------------------
| | Acquired In-Process Research and
	Development

For 2001, acquired in-process research and
development (IPR&D) expense was zero compared to
$629.7 million in 2000 and $37.6 million in 1999. The
$629.7 million reflects the amount allocated to IPR&D
that we acquired in the Coulter acquisition compared with
$37.6 million in the Ribi and Anergen acquisitions in 1999.

Acquired IPR&D for each of the above
acquisitions represents the present value of the estimated
after-tax cash flows expected to be generated by the purchased
technology, which, at the acquisition dates, had not yet reached
technological feasibility. The cash flow projections for
revenues were based on estimates of growth rates and the
aggregate size of the respective markets for each product;
probability of technical success given the stage of development
at the time of acquisition; royalty rates based on prior
licensing agreements; product sales cycles; and the estimated
life of a products underlying technology. Estimated
operating expenses and income taxes were deducted from estimated
revenue projections to arrive at estimated after-tax cash flows.
Projected operating expenses include general and administrative
expenses, and research and development costs. The rate utilized
to discount projected cash flows ranged from 30% to 55% for
in-process technologies and was based primarily on venture
capital rates of return and the weighted average cost of capital
for us at the time of acquisition.

At the acquisition date, Coulters IPR&D
projects consisted of BEXXAR, a radioisotope, (131)Iodine, or
(131)I, combined with a monoclonal antibody that recognizes and
binds to the CD20 antigen, an antigen commonly expressed on the
surface of B-cells primarily during that stage of their life
cycle when NHL arises; 64G12, a monoclonal antibody that binds
to sub-unit one of the type I interferon receptor and
neutralizes the activity of all type I interferons and may
provide therapeutic benefit in a number of autoimmune diseases,
including rheumatoid arthritis, systemic lupus erythematosus,
Crohns disease, graft-versus-host disease and

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solid organ transplantation rejection and
CPI-0004, a tumor activated peptide, or TAP, a proprietary
molecule based on a peptide of four amino acids that is linked
to doxorubicin. CPI-0004 is designed to deliver significantly
higher levels of doxorubicin to a tumor site relative to normal
tissues. Doxorubicin,is an off-patent chemotherapeutic drug that
currently is used in treating a number of solid tumor cancers.


At the acquisition date, Ribis IPR&D
projects consisted of MPL, an adjuvant immunostimulant for
potential application in improving the efficacy of a variety of
vaccines that are at various stages of preclinical and clinical
development; RC-529, a next-generation synthetic adjuvant;
MELACINE, a therapeutic vaccine to treat melanoma;
ENHANZYNTM, which is being developed by Biomira for
use in MELACINE vaccine and in Theratope, as a therapeutic
vaccine for breast, lung, gastrointestinal and colon cancer; and
RC-552, a synthetic compound that is being developed for use in
protecting against reperfusion injury in patients undergoing
cardiac surgery or angioplasty. In November 1999, we received
approval of MELACINE for treating Stage IV malignant
melanoma in Canada. In March 2000, we also received data from
U.S. Phase III clinical trials for MELACINE for treating
Stage II and Stage IV malignant melanoma. On
January 15, 2002, we received notification from the FDA
that the Oncologic Drugs Advisory Committee, or ODAC, will
discuss appropriate study design and control for a proposed
second Phase III trial of MELACINE on February 27,
2002.

At the acquisition date, Anergens IPR&D
projects were potential therapies for treating autoimmune
diseases that focus on destroying or inactivating T cells
without affecting the protective functions of the immune system
and/or stimulating the immune system to produce antibodies that
may interfere with the presentation of auto-antigens to
destructive T cells. ANERGIX.RA, under development in
partnership with Organon, is the most advanced product.
ANERGIX.RA is a soluble version of the human leucocyte antigen
(HLA) Class II containing an autoantigenic peptide
known to interact with T cells involved in the development
of arthritis. ANERGIX.RA is designed to inactivate T cells
responsible for developing arthritic lesions. ANERGIX.RA
completed a randomized, double-blinded, controlled Phase I/
II clinical trial in 2000. ANERVAX.RA is a synthetic peptide
vaccine consisting of a small portion of the HLA Class II
molecule. ANERVAX.RA has completed a 53 patient randomized
Phase II double blinded clinical trial. We continue to
evaluate future opportunities for ANERVAX.RA. We are
reformulating this peptide vaccine to incorporate our novel
adjuvant technology and are seeking to partner this program
before entering into additional clinical trials.

We based all of the estimates and projections
related to the IPR&D projects for Coulter, Ribi, and Anergen
on assumptions we believed to be reasonable at the time of each
acquisition but that are inherently uncertain and unpredictable.
If we do not successfully develop these projects, our business,
operating results, and financial condition may be adversely
affected. As of the date of each acquisition, we concluded that
once completed, the technologies under development can only be
economically used for their specific and intended purposes and
that such in-process technologies have no alternative future use
after taking into consideration the overall objectives of the
project, progress toward the objectives, and uniqueness of
developments to these objectives. If the projects fail, the
economic contribution expected to be made by the in-process
research and development will not materialize. The risk of
untimely completion includes the risk that competitors will
develop alternative products.

Interest Income

Our interest income increased to
$9.3 million for 2001, from $5.4 million in 2000 and
from $2.8 million in 1999. The change in interest income is
based on increased average investment balances during the year.

Interest Expense

Our interest expense increased to
$2.3 million for the year ended December 31, 2001,
from $810,000 for the same period in 2000 and from $797,000 in
1999. The increase was primarily attributable to higher loan and
capital lease financing balances.

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Other Income

Our other income was $5.5 million for 2001
compared with $431,000 in 2000 and $677,000 in 1999. The
increase in other income for 2001 is primarily attributable to a
gain of $4.5 million on the sale of our investment in
Abgenix. Other income for 2000 includes a gain of $216,000 on
the partial sale of our investment in Abgenix and $208,000 in
sublease rental receipts. Other income for 1999 includes
$400,000 and $250,000 in proceeds from the recovery of a
collaboration receivable that was previously charged to expense
and sublease rental receipts, respectively.

Change in Accounting Principle

Effective January 1, 2000, we changed our
method of accounting for nonrefundable up-front license fees 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). Had the change in accounting
been in effect retroactively as of January 1, 1999, net
loss for the year ended December 31, 1999 would have been
$54.0 million, or $3.87 per share. Revenue for both 2001
and 2000 includes $2.4 million of revenue 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
securities and debt instruments. For the previous three years,
we have received cash of approximately $133.1 million from
collaborative research agreements and grants, $50.0 million
from the issuance of Series A and Series B preferred
stock under an equity line of credit and $13.5 million from
a bank loan. During 2001, 2000 and 1999 we received total
research and development funding of $32.5 million under our
vaccine discovery collaboration with GSK. We will receive
$4.2 million under this agreement in 2002 prior to the
expiration of the research term on August 31, 2002. We will
continue to develop certain technologies related to these
vaccine programs. As of December 31, 2001, future funding
under terms of our existing agreements is approximately
$44 million excluding milestone payments, which are
contingent upon the success of the research. As of
December 31, 2001, we had approximately $121.1 million
in cash, cash equivalents and securities available-for-sale.
Working capital decreased to $53.9 million at
December 31, 2001 from $146.8 million in 2000. At
December 31, 2001, noncurrent securities available-for-sale
includes certificate of deposits of $9.8 million that
secure a financing agreement and $2.3 million that secure
letters of credit related to our leased properties.

The following are contractual commitments at
December 31, 2001 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         |  | $                      | 33,220 |        |  | $           | 5,563  |             |  | $          | 26,250 |  |  | $ | 1,407  |  |  | $ |       | 
|Capital Lease Obligations     |  |                        | 85     |        |  |             | 85     |             |  |            |       |  |  |   |       |  |  |   |       | 
|Operating Leases              |  |                        | 52,102 |        |  |             | 9,805  |             |  |            | 18,511 |  |  |   | 9,613  |  |  |   | 14,173 | 
|BI Pharma                     |  |                        | 4,400  |        |  |             | 4,400  |             |  |            |       |  |  |   |       |  |  |   |       | 
|Other                         |  |                        | 107    |        |  |             | 107    |             |  |            |       |  |  |   |       |  |  |   |       | 
|                              |  |                        |        |        |  |             |        |             |  |            |        |  |  |   |        |  |  |   |        | 
|Total Contractual Commitments |  | $                      | 89,914 |        |  | $           | 19,960 |             |  | $          | 44,761 |  |  | $ | 11,020 |  |  | $ | 14,173 | 
|                              |  |                        |        |        |  |             |        |             |  |            |        |  |  |   |        |  |  |   |        | 

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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.

During 2001, we used $65.8 million of cash
in our operations, compared with $21.3 million in 2000 and
$5.7 million in 1999. This increase in cash used in
operations is due to increased research and development
activities and the addition of sales and marketing functions.
Our investing activities provided cash of $50.1 million in
2001, compared with cash used of $30.7 million in 2000 and
$16.4 million in 1999. The increase in cash provided by
investing activities was primarily due to the sale of
available-for-sale-securities. Our financing activities provided
cash of $1.9 million in 2001 compared with
$100.7 million in 2000 and $13.8 million in 1999. Cash
received from financing activities decreased in 2001 due
primarily to proceeds of $56.6 million from our follow-on
public offering of common stock and our issuance of
Series B preferred stock of $37.5 that did not occur in
2001.

Under our equity line facility with CMI, we may,
subject to certain conditions, sell to CMI up to
$75 million of our common stock from time to time over a
period of two years beginning December 3, 2001. The number
of shares and price per share will depend on the market price
and trading volume of the shares during the applicable one to
twenty-day draw down period for any sale. Although we may have
funds available under the CMI equity line facility after the
registration statement with respect to the facility is declared
effective by the SEC, CMI is not obligated to purchase shares of
our common stock unless a number of conditions have been
satisfied. First, it generally has no obligation to purchase
shares to the extent that the volume weighted average price of
our common stock during the specified valuation period following
the exercise of our right to sell shares to CMI under the equity
line facility is below $5.00 per share. There can be no
assurance that the price of our common stock will meet this
minimum trading price condition to enable us to draw down funds
under the equity line facility. Second, CMI is only obligated at
any given request to purchase shares in a minimum aggregate
amount of $500,000 and in a maximum aggregate amount of
$3.5 million. Furthermore, CMI has no obligation to
purchase shares on a given day if our daily trading volume falls
below a specified minimum. Finally, on trading days where the
common stock is not listed and approved for trading on the
principal trading exchange of our common stock or where trading
is restricted, we might not have the right to sell any shares to
CMI.

For 2001, 2000 and 1999, we invested
$18.1 million, $3.0 million and $3.1 million,
respectively, in property and equipment.

We believe that our existing capital resources,
committed payments under our existing corporate partnerships,
bank credit agreements, the CMI equity line facility, equipment
financing and interest income will be sufficient to fund our
current and planned operations over at least the next
18 months. However, a substantial number of the payments to
be made by our corporate partners and other licensors depend on
us achieving development and regulatory milestones. Failure to
achieve these milestones may reduce the period which we are able
to fund operations without additional capital resources. 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                          

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| |   |                                      
| | - | -------------------------------------
| |  | other factors not within our control.

We are currently negotiating to obtain a lease
financing in the amount of approximately $5 million to be
secured by lab equipment. In addition, we intend to seek
additional funding through 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                                                               
|
| |  | 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 required to delay, reduce the scope of,
eliminate or divest one or more of our discovery, research,
preclinical or clinical programs or manufacturing efforts.

Recent Accounting Pronouncement

In June 2001, the Financial Accounting Standards
Board, or FASB, issued Statement of Financial Accounting
Standards No. 141 Business Combinations, and
No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15,
2001. Under the new rules, goodwill and intangible assets deemed
to have indefinite lives will no longer be amortized but will be
subject to an annual impairment test in accordance with the
Statement. Other intangible assets will continue to be amortized
over their useful lives. Assembled workforce will be
reclassified to goodwill in accordance with the Statement and
will be evaluated accordingly.

We will apply the new rules on accounting for
goodwill and other intangible assets beginning in the first
quarter of 2002. We had previously expected to record
amortization expense of $55.6 million during 2002 related
to goodwill and workforce that will not be amortized due to the
adoption of the new statement. We are evaluating the impact of
the impairment rules, if any, on the earnings and financial
position of the Company.

In October 2001, FASB issued Statement of
Financial Accounting Standards No. 144, Accounting for
Impairment or Disposal of Long-Lived Assetseffective for
fiscal years beginning after December 15, 2001, with
transition provisions for certain matters. The FASBs new
rules on asset impairment supersedes FASB Statement
No. 121, Accounting for Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of,and provide a
single accounting model for long-lived assets to be disposed of.
We will evaluate the implementation of the impairment rules, if
any on the earnings and financial position of the Company.

Recent Developments

Although we have been preparing for a February
2002 panel review of the safety and efficacy of BEXXAR, the FDA
has advised us that review of BEXXAR by ODAC will not occur at
its February 2002 meeting. As a result of the extensive amount
of material that we submitted in response to the complete review
letter we received on March 16, 2001, and our subsequent
discussions with the FDA, the FDA has concluded that ODAC would
not be prepared to review BEXXAR in February 2002. The next ODAC
meeting is tentatively scheduled for June 6-7, 2002.
Although we can provide no assurances, we are hopeful that the
safety and efficacy of BEXXAR will be reviewed at the next ODAC
meeting.

Market Risk Disclosures



| |                   
| | ------------------
| | 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,

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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, 2001, we had long-term
obligations outstanding of approximately $27.7 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.

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         |  |                  |                 |                     
|             |                                                    |                   |   | Hypothetical      |  | Fair Value After |                 | Hypothetical        
|             |                                                    |                   |   | Change in         |  | Hypothetical     |                 | Percentage          
|             |                                                    | Fair Value at     |   | Interest Rate     |  | Change in        |                 | Decrease in         
|             |                                                    | December 31, 2001 |   | (bp=basis points) |  | Interest Rate    |                 | Stockholders Equity
|             |                                                    |                   |   |                   |  |                  |                 |                     
|             |                                                    |                  
|             |                                                    | (In thousands)   
|Assets:      |                                                    |                   |   |                   |  |                  |                 |                      |  |  |        |        |  |  |     |  
|             | U.S. government agencies and corporate obligations |                   | $ | 85,385            |  |                  |                 | 100 bp decrease      |  |  | $      | 87,064 |  |  |     | * | 
|             |                                                    |                   |   |                   |  |                  | 100 bp increase |                      |  |  | 83,759 |        |  |  | *   |  
|             |                                                    |                   |   |                   |  |                  | 200 bp increase |                      |  |  | 82,180 |        |  |  | 1.0 | %
|             |                                                    |                   |   |                   |  |                  | 300 bp increase |                      |  |  | 80,656 |        |  |  | 1.5 | %
|Liabilities: |                                                    |                   |   |                   |  |                  |                 |                      |  |  |        |        |  |  |     |  
|             | Long-term obligations                              |                   | $ | 27,657            |  |                  |                 | 100 bp decrease      |  |  | $      | 28,222 |  |  |     | * | 
|             |                                                    |                   |   |                   |  |                  | 100 bp increase |                      |  |  | 27,107 |        |  |  | *   |  
|             |                                                    |                   |   |                   |  |                  | 200 bp increase |                      |  |  | 26,576 |        |  |  | *   |  
|             |                                                    |                   |   |                   |  |                  | 300 bp increase |                      |  |  | 26,057 |        |  |  | *   |  



---



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

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



| |                                                                                                                  
| | -----------------------------------------------------------------------------------------------------------------
| | We are at an early stage of development and
	may be unable to successfully commercialize our product
	candidates.

We are at an early stage in the development of
the majority of our therapeutic, prophylactic and diagnostic
product candidates. The development of safe and effective
therapies for treating people with autoimmune diseases, cancer
or 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.

We have not commercialized any products, other
than MELACINE, which is approved for sale in Canada, and an
immunotherapeutic product that has been approved on a
named-patient basis in Germany, which product incorporates our
MPL adjuvant, our proprietary adjuvant added to the product to
heighten the immune response to the antigens in the product. We
receive payments from Schering Plough Limited for supply of
MELACINE for commercial sale. The FDA has up to six months from
September 10, 2001, to provide a regulatory decision on our
most advanced product candidate, BEXXAR. However, we may not be

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successful in obtaining regulatory approval for
BEXXAR or any of our other product candidates, or in
commercializing these product candidates if approval is obtained.




| |                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 regulatory 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 the
product candidates by us could delay or prevent regulatory
approval of the product candidate.

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; and     
|
| |  | the existence of competing clinical trials.     

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

Data obtained from preclinical and clinical
activities are susceptible to varying interpretations, which
could delay, limit or prevent regulatory approval. Data from a
Phase III clinical trial of MELACINE®, our melanoma
vaccine, with the primary endpoint being the comparison of
disease-free survival between patients with Stage II melanoma
who, following surgical removal, received MELACINE vaccine
versus observation only, showed no statistically significant
difference in disease-free survival of the eligible patient
population. Recent discussions with the FDA regarding the
outcome of this trial have determined that approval of MELACINE
in the United States will require an additional clinical trial.
We may not perform an additional trial and, even if we do,
MELACINE may not be approved by the FDA.

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,
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 a BLA for BEXXAR in June
1999. In August 1999, the FDA sent us a refusal to file letter.
We resubmitted the BEXXAR BLA in September 2000 and in March
2001 we received a complete review letter from the FDA following
the agencys six-month review of the BEXXAR BLA. In
response to the complete review letter, on September 10,
2001, we submitted additional clinical and manufacturing

54



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information. As a result of the extensive amount
of material that we submitted and our subsequent discussions
with the FDA, the FDA has concluded that ODAC would not be
prepared to review BEXXAR at its February 2002 meeting. The next
ODAC meeting is tentatively scheduled for June 2002. The FDA may
conclude, however, that it needs additional time to review the
materials that we submitted in response to the complete review
letter which would further delay FDA review of BEXXAR.


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 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.



| |                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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; and                                                                                                                               
|
| |  | lawsuits, including class action suits, may be
	brought against us.                                                                                                             

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.



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

If our most advanced product candidate, BEXXAR,
is approved, it would represent a significant departure from
currently approved methods of treatment for non-Hodgkins
lymphoma, or NHL, because it would require medical personnel to
handle radioactive materials. As with any new drug, doctors may
be inclined to continue to treat NHL patients with conventional
therapies, in this case chemotherapy and biologics. Further,
oncologists and hematologists are not typically licensed to
administer radioimmunotherapies such as BEXXAR and will need to
engage a nuclear medicine physician or receive specialty
training to administer BEXXAR. Nuclear Regulatory Commission
regulations permit BEXXAR to be administered on an outpatient
basis in most cases that we currently contemplate. However,
market acceptance could be adversely affected to the extent
hospitals are required under applicable state, local or
individual hospital regulations to administer the therapeutic
dose of BEXXAR on an in-patient basis.



| |                                                                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 approval and commercialization
of significant 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.

55



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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 MPL adjuvant, which has been approved for sale on a
named-patient basis in Germany, and MELACINE, which is available
for sale in Canada, 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.

As a result of our limited sources of revenue,
our results of operations 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 results of operations
are not meaningful. In addition, our results of operations 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, 2001, our accumulated deficit was
approximately $903.2 million, of which $679.4 million
is attributable to the write-off of in-process research and
development costs associated with the acquisitions of four
companies. We may incur substantial additional operating losses
over at least the next several years. These 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 in-process research
and development, 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:



| |   |                                                                                                                       
| | - | ----------------------------------------------------------------------------------------------------------------------
| |  | entering into agreements with corporate partners
	for product discovery, research, development and
	commercialization;
|
| |  | obtaining regulatory approvals for our product
	candidates; and                                                       
|
| |  | successfully manufacturing and marketing our
	products once they are approved for sale.                               

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



| |                                                                                                                                        
| | ---------------------------------------------------------------------------------------------------------------------------------------
| | We will 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, the substantial capital resources necessary to conduct
our operations. If we are unable to raise the required capital,
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:



| |   |                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------
| |  | 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 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 beyond our control.                                                                              

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Although we may have funds available under the
CMI equity line facility, CMI is not obligated to purchase
shares of our common stock unless a number of conditions have
been satisfied. First, it generally has no obligation to
purchase shares to the extent that the volume weighted average
price of our common stock during the specified valuation period
following the exercise of our right to sell shares to CMI under
the equity line facility is below $5.00 per share. There can be
no assurance that the price of our common stock will meet this
minimum trading price condition to enable us to draw down funds
under the equity line facility. Second, CMI is only obligated at
any given request to purchase shares in a minimum aggregate
amount of $500,000 and in a maximum aggregate amount of
$3.5 million. Furthermore, CMI has no obligation to
purchase shares on a given day if our daily trading volume falls
below a specified minimum. Finally, on trading days where the
common stock is not listed and approved for trading on the
principal trading exchange of our common stock or where trading
is restricted, we might not have the right to sell any shares to
CMI.

In addition to any funds available under the CMI
equity line facility, we intend to seek additional funding
through 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                                                               
|
| |  | capital lease transactions.                                                                          

We believe that our existing capital resources,
committed payments under existing corporate partnerships and
licensing arrangements, bank credit arrangements, the CMI equity
line facility, equipment financing and interest income will be
sufficient to fund our current and planned operations over at
least the next 18 months. However, a substantial number of
the payments to be made by our corporate partners and other
licensors depend on us achieving development and regulatory
milestones. Failure to achieve these milestones may reduce the
period during which we will be able to fund operations without
additional capital resources.



| |                                                                                                                                                                                    
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 largely
depends on our ability to enter into multiple corporate
partnerships and to manage effectively the numerous
relationships that may result from this strategy. We derived
95%, 94% and 94% of our revenue for the years ended
December 31, 2001, 2000 and 1999 from research and
development and other funding under our existing corporate
partnerships.

We have established relationships with various
corporate partners, including Medicis Pharmaceutical
Corporation, GlaxoSmithKline Biologicals, S.A., a subsidiary of
GlaxoSmithKline plc, Japan Tobacco, Inc., Inpharzam
International S.A., a wholly owned subsidiary of Zambon Group,
spa, Zenyaku Kogyo Co., Ltd., Schering Corporation,
Schering-Plough, Ltd., N.V. Organon, and Wyeth Lederle, among
others. The process of establishing 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.

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.    

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.
We have also entered into corporate partnerships with several
companies for the development, commercialization and sale of
diagnostic products

57



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incorporating our proprietary antigen technology.
These diagnostic corporate partnerships may never generate
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.
Finally, our corporate partners may terminate any of our current
partnerships, and we may be unable to establish additional
corporate partnerships in the future on acceptable terms, if at
all.



| |                                                                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 licenses to
technologies advantageous or necessary to develop and
commercialize our product candidates, 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 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. Many of
these agreements contain milestone-based termination provisions,
in which case our failure to meet any agreed milestones may
allow the licensor to terminate an agreement. In addition, some
of these agreements grant us exclusive licenses to the
underlying technologies. If we are unable to maintain the
exclusivity of our exclusive licenses, our competitive position
may be harmed. Further, we may be unable to negotiate additional
license agreements in the future on acceptable terms, if at all.



| |                                                                                                                                                                          
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If we are unable to 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 on our patents. We try to protect our
proprietary positions by filing U.S. 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 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
Southern Research Institute, or SRI, related to our microsphere
encapsulation technology. Two of these patent applications are
currently the subject of opposition proceedings before the
European Patent Office. In one of the oppositions, the European
Patent Office has revoked a previously issued European patent.
Although SRI has appealed this decision, it is uncertain whether
SRI will prevail in this or any other opposition proceeding. As
a result, these patents may not issue in Europe.

IDEC has challenged the validity of several of
our patents related to BEXXAR by seeking declaratory judgment of
invalidity of these patents. IDEC is also seeking a declaratory
judgment that its ZEVALIN product for the treatment of
non-Hodgkins lymphoma is not infringing the patents. We,
GSK, our collaboration partner for BEXXAR, and the Regents of
the University of Michigan, our licensor of the patents at
issue, have filed a lawsuit against IDEC alleging patent
infringement of certain of our patents by ZEVALIN and seeking
monetary damages and permanent injunctive relief. Claims in the
patents at issue in the litigation cover imaging, composition of
matter and methods-of-use in the treatment of non-Hodgkins
lymphoma. If IDEC is successful in these proceedings, IDEC would
be able to market its ZEVALIN product, without the need to
license from us any of our patents.



| |                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------
| | 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 at all.



| |                                                                                                                                                                                          
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 patents
	are difficult to enforce.

Our success 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 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 filing for
U.S. 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. Our
registered trademarks, MPL® and MELACINE®, are
currently the subjects of opposition proceedings before the
Office for the Harmonization in the Internal Market, which
handles initial prosecution and opposition of European

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trademarks. We may not ultimately prevail in
these opposition proceedings. As a result, we may not receive
trademark protection for MPL or MELACINE in Europe.




| |                                                                                                          
| | ---------------------------------------------------------------------------------------------------------
| | 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, including the IDEC
litigation, we may incur substantial expense and the proceedings
may divert the efforts of our technical and management
personnel. An adverse determination may 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.

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:



| |   |                                                                                       
| | - | --------------------------------------------------------------------------------------
| |  | assert 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.



| |                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------
| | 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
adjuvant products. We have no 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. 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.

If we are unable to manufacture our product
candidates in accordance with clinical GMP regulations, the
consequent lack of supply of the product candidates could delay
our clinical programs. 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. These contract
manufacturers and we may be unable to manufacture our
proprietary antigen vaccines 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 current GMP 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.



| |                                                                                                        
| | -------------------------------------------------------------------------------------------------------
| | Even if BEXXAR receives FDA approval, we
	may be unable to manufacture commercial quantities for
	sale.

BEXXAR is a radiolabeled antibody, 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 an agreement with BI Pharma KG to produce
bulk Anti-B1 Antibody and fill the individual product vials with
Anti-B1 Antibody. We have contracted with

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BI Pharma KG and a third-party supplier
for labeling and packaging services. These manufacturers have
limited experience producing, labeling and packaging the Anti-B1
Antibody, and they may be unable to produce our requirements in
commercial quantities or with acceptable quality.


We have entered into an agreement with
MDS Nordion, or Nordion, for radiolabeling the Anti-B1
Antibody at Nordions centralized radiolabeling facility.
However, Nordion may be unable to produce sufficient
radiolabeled antibodies to meet our clinical requirements and,
if BEXXAR is approved and is successful in the market, our
commercial requirements.

We are aware of only a limited number of
manufacturers capable of producing the Anti-B1 Antibody 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. Further,
radiolabeled antibody cannot be stockpiled against future
shortages due to the eight-day half-life of the
(131) I radioisotope. Accordingly, any change in our
existing 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, if approved. Although we
are evaluating additional sources of supply for production and
radiolabeling of the Anti-B1 Antibody, we may be unable to
secure additional sources on commercially reasonable terms or on
a timely basis, if at all.



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

As a result of our acquisition of Coulter
Pharmaceutical, Inc. in December, 2000, we have a sales and
marketing force focused on BEXXAR sales and marketing in the
United States. We have hired direct sales and marketing
personnel in preparation for the launch of BEXXAR. However, our
ability to market BEXXAR, if approved, will be contingent upon
recruiting, training and deploying the remainder of the
necessary sales and marketing force, as well as GSKs
performance under our 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 demand for BEXXAR 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 autoimmune and infectious disease products, worldwide. Our
corporate partners may not have the 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 marketing and sales 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.



| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | If we do not successfully integrate our
	recent or 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 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 of acquired
	companies;                                                                                                                           
|
| |  | 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;

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| |   |                                                                                                                                                                                                
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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
Pharmaceutical, Inc., or Coulter, a publicly held biotechnology
company specializing in, among other things, the development of
therapeutic antibodies, including BEXXAR. As a result of our
acquisition of Coulter, we acquired direct sales and marketing
personnel in preparation for the launch of BEXXAR. In an effort
to minimize expenses during the delay in the FDA review of
BEXXAR, 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. Regulatory approval by the FDA for BEXXAR may be
further delayed or rejected, in which case we may not gain
substantial benefit from the Coulter acquisition. If we do not
obtain regulatory approval of BEXXAR we may significantly reduce
or discontinue the integration process of Coulter,
notwithstanding the expenditure of a significant amount of time
and financial, personnel and other resources.



| |                                                                                                                                                  
| | -------------------------------------------------------------------------------------------------------------------------------------------------
| | 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.



| |                                                                                                                                            
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | 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 autoimmune diseases, 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

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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 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.

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 are seeking approval to sell BEXXAR in
the U.S. Consequently, IDEC could have a significant
advantage over Corixa in sales and marketing of ZEVALIN due to
the fact that ZEVALIN has progressed further in the regulatory
approval process than BEXXAR.



| |                                                                                       
| | --------------------------------------------------------------------------------------
| | Our stock price could be very volatile and
	your shares 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 pad for them. The market price
of our common 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 of our 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 intellectual property portfolio;                                                                             
|
| |  | developments or disputes concerning our
	proprietary rights;                                                                
|
| |  | issuance of new or changed securities
	analysts reports and recommendations regarding us or our
	competitors;              
|
| |  | changes in government regulations;                                                                                          
|
| |  | economic and other external factors;                                                                                        

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| |   |                                                                                                                                           
| | - | ------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 reached a high of $30.125 and
traded as low as $6.25 during 2001. The last reported sales
price of our common stock on December 31, 2001 was $15.07.
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.



| |                                                                         
| | ------------------------------------------------------------------------
| | Transactions by CMI may adversely affect
	the price of our common stock.

From time to time, within limitations specified
in the CMI equity line facility and subject to the applicable
laws, CMI may engage in short sales, short sales against the
box, puts and calls and other transactions in our common stock,
and may sell and deliver shares of our common stock issued under
the equity line facility in connection with these transactions.
If CMI engages in such transactions this will result in advance
sales of additional shares into the market for our common stock,
which could create downward pressure on our stock price.



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

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.

The manufacture and administration of BEXXAR
requires the handling, use and disposal of (131)I, 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. For our ongoing clinical trials and
for commercial-scale production, we rely on Nordion to
radiolabel the Anti-B1 Antibody with (131)I at a single location
in Canada. Violations of safety regulations could occur with
this manufacturer, and there is a risk of accidental
contamination or injury. In the event of any regulatory
noncompliance or accident, the supply of radiolabeled Anti-B1
Antibody for use in clinical trials or commercially could be
interrupted.



| |                                                                                                                                                      
| | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 that is inherent in the manufacturing, testing
and marketing of therapies for treating people with autoimmune
diseases, 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.
Defending a suit, regardless of its merit, could be costly and
could divert management attention.

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| |                                                                                                                                                                              
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | If reimbursement is unavailable for our
	products, or if laws are adopted restricting the prices we may
	charge for our products, our revenues may be substantially
	reduced.

In both domestic and foreign markets, sales of
our products will depend in part on the availability of
reimbursement from third-party payors such as:



| |   |                                              
| | - | ---------------------------------------------
| |  | government health administration authorities;
|
| |  | private health insurers;                     
|
| |  | health maintenance organizations;            
|
| |  | pharmacy benefit management companies; and   
|
| |  | other healthcare-related organizations.      

If reimbursement is not available for our
products, demand for these products may be limited.

Federal and state governments in the United
States and foreign governments continue to propose and pass new
legislation designed to contain or reduce the cost of
healthcare. Existing regulations affecting the pricing of
pharmaceuticals and other medical products may also change
before any of our products are approved for marketing. Cost
control initiatives could decrease the price that we receive for
any product we may develop in the future. In addition,
third-party payors are increasingly challenging the price and
cost-effectiveness of medical products and services. Significant
uncertainty exists as to the reimbursement status of newly
approved healthcare products, including pharmaceuticals. BEXXAR,
which could potentially be the first radioimmunotherapy for
cancer, faces particular uncertainties due to the absence of a
comparable, approved therapy to serve as a model for pricing and
reimbursement decisions. Further, if BEXXAR is not administered
in most cases on an outpatient basis, as is contemplated
currently by us, the projected cost of the therapy will be
higher than we anticipate. Our products may not be considered
cost effective, and adequate third-party reimbursement may be
unavailable to enable us to maintain price levels sufficient to
realize a return on our investment.



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

Under the equity line facility with CMI, we may,
subject to certain conditions, sell to CMI up to
$75 million of our common stock from time to time over a
period of two years beginning December 3, 2001. The number
of shares and price per share will depend on the market price
and trading volume of the shares during the applicable one to
twenty-day draw down period for any sale. The sale of shares
pursuant to the equity line facility will have a dilutive effect
on the percentage ownership of our existing stockholders.
Subsequent sales of these shares in the open market by CMI may
also have the effect of lowering our stock price, thereby
increasing the number of shares issuable under the equity line
facility (should we choose to sell additional shares to CMI) and
consequently further diluting our outstanding shares. These
sales could have an immediate adverse effect on the market price
of the shares and could result in dilution to the holders of our
shares.

In the event that we drew down the maximum amount
of approximately 8,100,000 shares under the facility, and issued
the additional 100,000 shares subject to warrants issued to the
placement agent in connection with the facility, these shares
would represent approximately 19.7% of our currently outstanding
shares. The perceived risk associated with the possible sale of
a large number of shares issued under the equity line facility
at prices as low as $4.90 per share, which is 98% of the $5.00
floor share price at which CMI has agreed to purchase our
shares, could cause some of our stockholders to sell their
stock, thus causing the price of our stock to decline. In
addition, actual or anticipated downward pressure on our stock
price due to actual or anticipated sales of stock under the
equity line facility could cause some institutions or
individuals to engage in short sales of our common stock, which
may itself cause the price of our stock to decline.

In addition to any dilution resulting from
issuances under the equity line facility, 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 a loan agreement with GSK, at our option,
we may choose to pay the outstanding principal amount of
$15 million together with all accrued unpaid interest
thereon in cash or shares of Corixa common

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stock valued at the closing price of Corixa
common stock on the last trading day preceding the payment date
to GSK. In addition, under a collaborative agreement with GSK,
we have an outstanding loan in the amount of $5 million,
which amount, together with all accrued unpaid interest is due
on September 1, 2003. At GSKs option, GSK may choose
to receive the outstanding principal and accrued unpaid interest
in cash or shares of our common stock at an undisclosed premium
to the then current fair market value of our common stock.


Under our stock purchase agreement with Amersham
Health, at our option, we may choose to sell up to
$10 million of additional shares of Corixa common stock to
Amersham Health at fair market value, which is determined
according to the average of the closing prices of our common
stock over a specified period surrounding the date of issuance.

Under a license assignment agreement with Beckman
Coulter, Beckman Coulter is entitled to receive royalties upon
commercial sale of products, if any, derived from the licenses.
For the first $4.5 million of royalties, Beckman Coulter has the
option, in lieu of receiving cash, to receive shares of Corixa
common stock valued at the then current fair market value of our
common stock.

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.

If we issue additional stock under these
agreements, as dividends on our preferred stock or pursuant to
other transactions, it will have a dilutive effect on the
percentage ownership of our existing stockholders. Although from
time to time, we expect to enter into new partnerships,
acquisitions and other strategic transactions in which we may
agree to issue additional common stock, we currently have no
present understandings, commitments or agreements with respect
to such additional transactions.



| |                                                                                                                                       
| | --------------------------------------------------------------------------------------------------------------------------------------
| | 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;                
|
| |  | 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;                        
|
| |  | specify that directors may be removed only with
	cause; 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 any 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 any 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,
2001 and 2000, and the related consolidated statements of
operations, stockholders equity, and cash flows for each
of the three years in the period ended December 31, 2001.
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, 2001 and 2000, and the consolidated results of
its operations and its cash flows for each of the three years in
the period ended December 31, 2001 in conformity with
accounting principles generally accepted in the United States.



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

Seattle, Washington

January 25, 2002


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CORIXA CORPORATION






CONSOLIDATED BALANCE SHEETS

|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |           |    |         | 
|------------------------------------------- | ---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | --------- | -- | ------- | ------- | --------- | -- | ------- | 
|                                            |                                                |                                                                                                                                                  
|                                            |                                                | December 31,                                                                                                                                     
|                                            |                                                |                                                                                                                                                  
|                                            |                                                | 2001                                                                                                                                              |                                            | 2000     
|                                            |                                                |                                                                                                                                                   |                                            |          
|                                            |                                                |                                                                                                                                                  
|                                            |                                                | (In thousands,                                                                                                                                   
|                                            |                                                | except share data)                                                                                                                               
|ASSETS                                     
|Current assets:                             |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            | Cash and cash equivalents                      |                                                                                                                                                   | $                                          | 35,679    |    |         | $       | 49,413    |   
|                                            | Securities available-for-sale                  |                                                                                                                                                   |                                            | 52,227    |    |         |         | 127,163   |   
|                                            | Accounts receivable                            |                                                                                                                                                   |                                            | 5,532     |    |         |         | 13,836    |   
|                                            | Interest receivable                            |                                                                                                                                                   |                                            | 1,157     |    |         |         | 2,055     |   
|                                            | Prepaid expenses and other current assets      |                                                                                                                                                   |                                            | 4,911     |    |         |         | 6,848     |   
|                                            | Deposits                                       |                                                                                                                                                   |                                            | 1,825     |    |         |         | 1,759     |   
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            |                                                |                                                                                                                                                   | Total current assets                       |           |    | 101,331 |         |           |    | 201,074 | 
|Property and equipment, net                 |                                                |                                                                                                                                                   | 48,999                                     |           |    |         | 39,276  |          
|Securities available-for-sale, noncurrent   |                                                |                                                                                                                                                   | 33,158                                     |           |    |         | 20,502  |          
|Acquisition-related intangible assets, net  |                                                |                                                                                                                                                   | 176,969                                    |           |    |         | 234,076 |          
|Deferred charges, deposits and other assets |                                                |                                                                                                                                                   | 6,925                                      |           |    |         | 9,406   |          
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            |                                                |                                                                                                                                                   | Total assets                               |           | $  | 367,382 |         |           | $  | 504,334 | 
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|LIABILITIES AND STOCKHOLDERS
	EQUITY      
|Current liabilities:                        |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            | Accounts payable and accrued liabilities       |                                                                                                                                                   | $                                          | 23,595    |    |         | $       | 27,317    |   
|                                            | Dividend payable                               |                                                                                                                                                   |                                            | 469       |    |         |         | 469       |   
|                                            | Current portion of deferred revenue            |                                                                                                                                                   |                                            | 17,566    |    |         |         | 20,117    |   
|                                            | Current portion of long-term obligations       |                                                                                                                                                   |                                            | 5,755     |    |         |         | 6,327     |   
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            |                                                |                                                                                                                                                   | Total current liabilities                  |           |    | 47,385  |         |           |    | 54,230  | 
|Deferred revenue, less current portion      |                                                |                                                                                                                                                   | 8,575                                      |           |    |         | 10,107  |          
|Long-term obligations, less current portion |                                                |                                                                                                                                                   | 27,657                                     |           |    |         | 33,422  |          
|Commitments and contingencies               |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|Redeemable common stock                     |                                                |                                                                                                                                                   | 2,000                                      |           |    |         | 2,000   |          
|Stockholders equity:                       |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            | Convertible preferred stock, $0.001 par value: |                                                                                                                                                   |                                            |           |    |         |         |           |   
|                                            |                                                | Authorized  10,000,000                                                                                                                           |                                            |           |    |         |         |           |    |        
|                                            |                                                | Designated Series A  12,500
	shares; Issued and outstanding  12,500 in 2001 and
	2000.                                                          |                                            |           |   |         |         |           |   |        
|                                            |                                                | Designated Series B  37,500
	shares; Issued and outstanding  37,500 in 2001 and
	2000                                                           |                                            |           |   |         |         |           |   |        
|                                            | Common stock, $0.001 par value:                |                                                                                                                                                   |                                            |           |    |         |         |           |   
|                                            |                                                | Authorized  100,000,000 shares Issued
	and outstanding  41,573,398 in 2001 and 40,458,100 in 2000
	(including 141,576 redeemable common shares) |                                            |           | 41 |         |         |           | 40 |        
|                                            | Additional paid-in capital                     |                                                                                                                                                   |                                            | 1,187,987 |    |         |         | 1,188,524 |   
|                                            | Deferred compensation                          |                                                                                                                                                   |                                            | (3,996    | )  |         |         | (28,758   | ) 
|                                            | Accumulated other comprehensive income (loss)  |                                                                                                                                                   |                                            | 975       |    |         |         | (26       | ) 
|                                            | Accumulated deficit                            |                                                                                                                                                   |                                            | (903,242  | )  |         |         | (755,205  | ) 
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            |                                                |                                                                                                                                                   | Total stockholders equity                 |           |    | 281,765 |         |           |    | 404,575 | 
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          
|                                            |                                                |                                                                                                                                                   | Total liabilities and stockholders equity |           | $  | 367,382 |         |           | $  | 504,334 | 
|                                            |                                                |                                                                                                                                                   |                                            |           |    |         |         |          

See accompanying notes

68



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##### Table of Contents



CORIXA CORPORATION






CONSOLIDATED STATEMENTS OF
OPERATIONS


|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |        |        | 
|-------------------------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------- | -------- | ------- | ------- | ---- | -------- | ------- | ------- | - | ------- | ------ | ------ | 
|                                                                                             |                                              |                                         
|                                                                                             |                                              | Year Ended December 31,                 
|                                                                                             |                                              |                                         
|                                                                                             |                                              | 2001                                     |          | 2000    |         | 1999
|                                                                                             |                                              |                                          |          |         |         |     
|                                                                                             |                                              |                                         
|                                                                                             |                                              | (In thousands, except per share amounts)
|Revenue:                                                                                     |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|                                                                                             | Collaborative agreements                     |                                          | $        | 55,128  |         |      | $        | 34,643  |         |   | $       | 25,035 |       
|                                                                                             | Government grants                            |                                          |          | 2,937   |         |      |          | 2,331   |         |   |         | 1,463  |       
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|                                                                                             |                                              | Total revenue                            |          |         | 58,065  |      |          |         | 36,974  |   |         |        | 26,498 | 
|Operating expenses:                                                                          |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|                                                                                             | Research and development                     |                                          |          | 138,621 |         |      |          | 61,911  |         |   |         | 41,962 |       
|                                                                                             | Sales, general and administrative            |                                          |          | 22,361  |         |      |          | 6,694   |         |   |         | 3,743  |       
|                                                                                             | Intangible amortization                      |                                          |          | 57,625  |         |      |          | 4,499   |         |   |         | 587    |       
|                                                                                             | Acquired in-process research and development |                                          |          |        |         |      |          | 629,700 |         |   |         | 37,637 |       
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|                                                                                             |                                              | Total operating expenses                 |          |         | 218,607 |      |          |         | 702,804 |   |         |        | 83,929 | 
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Loss from operations                                                                         |                                              |                                          | (160,542 | )       |         |      | (665,830 | )       |         |   | (57,431 | )     
|Interest income                                                                              |                                              |                                          | 9,349    |         |         |      | 5,378    |         |         |   | 2,793   |       
|Interest expense                                                                             |                                              |                                          | (2,295   | )       |         |      | (810     | )       |         |   | (797    | )     
|Other income                                                                                 |                                              |                                          | 5,451    |         |         |      | 431      |         |         |   | 677     |       
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Loss before cumulative effect of change in
	accounting principle                             |                                              |                                          | (148,037 | )       |         |      | (660,831 | )       |         |   | (54,758 | )     
|Cumulative effect of change in accounting
	principle                                         |                                              |                                          |         |         |         |      | (6,338   | )       |         |   |        |       
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Net loss                                                                                     |                                              |                                          | (148,037 | )       |         |      | (667,169 | )       |         |   | (54,758 | )     
|Preferred stock dividend                                                                     |                                              |                                          | (1,730   | )       |         |      | (9,887   | )       |         |   | (6,008  | )     
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Net loss applicable to common stockholders                                                   |                                              | $                                        | (149,767 | )       |         | $    | (677,056 | )       |         | $ | (60,766 | )     
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Basic and diluted loss per share before
	cumulative effect of change in accounting principle |                                              | $                                        | (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                                                  |                                              | $                                        | (3.66    | )       |         | $    | (32.30   | )       |         | $ | (3.91   | )     
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Shares used in computation of basic and diluted
	net loss per common share                   |                                              |                                          | 40,961   |         |         |      | 20,961   |         |         |   | 15,528  |       
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Pro forma amounts assuming the accounting change
	is applied retroactively:                  |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Net loss attributable to common stockholders                                                 |                                              |                                          |          |         |         |      |          |         |         | $ | (54,042 | )     
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       
|Net loss per common share                                                                    |                                              |                                          |          |         |         |      |          |         |         | $ | (3.87   | )     
|                                                                                             |                                              |                                          |          |         |         |      |          |         |         |   |         |       

See accompanying notes

69



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##### Table of Contents



CORIXA CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS
EQUITY

|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |          |  
|--------------------------------------------------------------------------------------------------------- | ----------------------------------------------------- | --------------- | -- | ------------ |  | ---------- | - | -------- |  | ------------- | ------ | ------------ |  | ------------- | -- | ------- |  | ------ | --------- | - |  | - | ------- | - |  | - | ---- | ----- | - | - | -------- | -------- | - | - | ------- | -------- | -
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  | Accumulated   |        |              |  |              
|                                                                                                          |                                                       | Preferred stock |    | Common stock |  | Additional |   |          |  | other         |        |              |  | Total        
|                                                                                                          |                                                       |                 |    |              |  | paid-in    |   | Deferred |  | comprehensive |        | Accumulated  |  | stockholders
|                                                                                                          |                                                       | Shares          |    | Amount       |  | Shares     |   | Amount   |  | capital       |        | compensation |  | income (loss) |    | deficit |  | equity
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |       
|                                                                                                          |                                                       |                
|                                                                                                          |                                                       | (In thousands) 
|Balance at January 1, 1999.                                                                               |                                                       |                 |   |              |  |            |  |          |  |               | 13,401 |              |  |               | 13 |         |  |        | 76,539    |   |  |   | (1,180  | ) |  |   | 90   |       |   |   | (33,278  | )        |   |   | 42,184  |         
|Issuance of Series A convertible preferred
	stock and common stock warrants (net of offering cost of $16) |                                                       |                 | 12 |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | 12,484    |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 12,484  |         
|Preferred stock dividend                                                                                  |                                                       |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | (469      | ) |  |   |        |   |  |   |     |       |   |   |         |          |   |   | (469    | )       
|Stock options exercised                                                                                   |                                                       |                 |   |              |  |            |  |          |  |               | 97     |              |  |               |   |         |  |        | 263       |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 263     |         
|Issuance of common stock under the employee stock
	purchase plan                                          |                                                       |                 |   |              |  |            |  |          |  |               | 26     |              |  |               |   |         |  |        | 134       |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 134     |         
|Issuance of common stock and options in exchange
	for technology and services                             |                                                       |                 |   |              |  |            |  |          |  |               | 20     |              |  |               |   |         |  |        | 866       |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 866     |         
|Issuance of common stock for acquisitions                                                                 |                                                       |                 |   |              |  |            |   |          |  |               | 4,839  |              |  |               | 6  |         |  |        | 58,109    |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 58,115  |         
|Stock warrants net exercised                                                                              |                                                       |                 |   |              |  |            |  |          |  |               | 103    |              |  |               |   |         |  |        |          |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   |        |         
|Amortization of deferred compensation                                                                     |                                                       |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        |          |   |  |   | 739     |   |  |   |     |       |   |   |         |          |   |   | 739     |         
|Comprehensive loss:                                                                                       |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         
|                                                                                                          | Net unrealized loss on securities
	available-for-sale |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      | (777  | ) |   |          |         |   |   |         | (777     | )
|                                                                                                          | Net loss                                              |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      |      |   |   |          | (54,758  | ) |   |         | (54,758  | )
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         
|                                                                                                          | Comprehensive loss                                    |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         | (55,535  | )
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         
|Balance at December 31, 1999.                                                                             |                                                       |                 | 12 |              |  |            |  |          |  |               | 18,486 |              |  |               | 19 |         |  |        | 147,926   |   |  |   | (441    | ) |  |   | (687 | )     |   |   | (88,036  | )        |   |   | 58,781  |         
|Issuance of Series B convertible preferred
	stock and common stock warrants                               |                                                       |                 | 38 |              |  |            |   |          |  |               |       |              |  |               |   |         |  |        | 37,500    |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 37,500  |         
|Preferred stock dividend                                                                                  |                                                       |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        | (625      | ) |  |   |        |   |  |   |     |       |   |   |         |          |   |   | (625    | )       
|Issuance of common stock (net of offering costs
	of $4,198)                                               |                                                       |                 |   |              |  |            |  |          |  |               | 1,900  |              |  |               | 2  |         |  |        | 56,600    |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 56,602  |         
|Stock options exercised                                                                                   |                                                       |                 |   |              |  |            |  |          |  |               | 592    |              |  |               |   |         |  |        | 5,296     |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 5,296   |         
|Issuance of common stock under the employee stock
	purchase plan                                          |                                                       |                 |   |              |  |            |  |          |  |               | 63     |              |  |               |   |         |  |        | 948       |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 948     |         
|Issuance of common stock options in exchange for
	technology and services                                 |                                                       |                 |   |              |  |            |  |          |  |               | 24     |              |  |               |   |         |  |        | 1,700     |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   | 1,700   |         
|Issuance of common stock for acquisitions                                                                 |                                                       |                 |   |              |  |            |   |          |  |               | 19,115 |              |  |               | 19 |         |  |        | 939,179   |   |  |   | (29,212 | ) |  |   |     |       |   |   |         |          |   |   | 909,986 |         
|Stock warrants net exercised                                                                              |                                                       |                 |   |              |  |            |  |          |  |               | 137    |              |  |               |   |         |  |        |          |   |  |   |        |   |  |   |     |       |   |   |         |          |   |   |        |         
|Amortization of deferred compensation                                                                     |                                                       |                 |   |              |  |            |  |          |  |               |       |              |  |               |   |         |  |        |          |   |  |   | 895     |   |  |   |     |       |   |   |         |          |   |   | 895     |         
|Comprehensive loss:                                                                                       |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         
|                                                                                                          | Net unrealized gain on securities
	available-for-sale |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      | 661   |   |   |          |         |   |   |         | 661      |  
|                                                                                                          | Net loss                                              |                 |    |             |  |            |   |         |  |               |        |             |  |               |    |        |  |        |           |  |  |   |         |  |  |   |      |      |   |   |          | (667,169 | ) |   |         | (667,169 | )
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         
|                                                                                                          | Comprehensive loss                                    |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         | (666,508 | )
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         
|Balance at December 31, 2000.                                                                             |                                                       |                 | 50 |              |  |            |  |          |  |               | 40,317 |              |  |               | 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 |              |  | $          |  |          |  |               | 41,432 |              |  | $             | 41 |         |  | $      | 1,187,987 |   |  | $ | (3,996  | ) |  | $ | 975  |       |   | $ | (903,242 | )        |   | $ | 281,765 |         
|                                                                                                          |                                                       |                 |    |              |  |            |   |          |  |               |        |              |  |               |    |         |  |        |           |   |  |   |         |   |  |   |      |       |   |   |          |          |   |   |         |         

See accompanying notes

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CORIXA CORPORATION






CONSOLIDATED STATEMENTS OF CASH
FLOWS


|                                                                             |                                                                         |                                           |          |          |        |      |          |         |        |   |         |         |       |  
|---------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ----------------------------------------- | -------- | -------- | ------ | ---- | -------- | ------- | ------ | - | ------- | ------- | ----- | -
|                                                                             |                                                                         |                                          
|                                                                             |                                                                         | Year Ended December 31,                  
|                                                                             |                                                                         |                                          
|                                                                             |                                                                         | 2001                                      |          | 2000     |        | 1999
|                                                                             |                                                                         |                                           |          |          |        |     
|                                                                             |                                                                         |                                          
|                                                                             |                                                                         | (In thousands)                           
|Operating activities                                                         |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|Net loss                                                                     |                                                                         | $                                         | (148,037 | )        |        | $    | (667,169 | )       |        | $ | (54,758 | )      
|Adjustments to reconcile net loss to net cash
	used in operating activities: |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|                                                                             | Acquired in-process research and development                            |                                           |          |         |        |      |          | 629,700 |        |   |         | 37,637  |      
|                                                                             | Cumulative effect of accounting change                                  |                                           |          |         |        |      |          | 6,338   |        |   |         |        |      
|                                                                             | Amortization of deferred compensation                                   |                                           |          | 15,541   |        |      |          | 895     |        |   |         | 739     |      
|                                                                             | Depreciation and amortization                                           |                                           |          | 66,500   |        |      |          | 8,268   |        |   |         | 3,801   |      
|                                                                             | Equity instruments issued in exchange for
	technology and services      |                                           |          | 444      |        |      |          | 1,700   |        |   |         | 866     |      
|                                                                             | Gain on sale of investment                                              |                                           |          | (4,513   | )      |      |          |        |        |   |         |        |      
|                                                                             | Changes in certain assets and liabilities:                              |                                           |          |          |        |      |          |         |        |   |         |         |      
|                                                                             |                                                                         | Accounts receivable                       |          |          | 8,304  |      |          |         | (3,449 | ) |         |         | 1,357 |  
|                                                                             |                                                                         | Interest receivable                       |          |          | 898    |      |          |         | (734   | ) |         |         | (192  | )
|                                                                             |                                                                         | Prepaid expenses and other current assets |          |          | 2,890  |      |          |         | (9,966 | ) |         |         | 512   |  
|                                                                             |                                                                         | Accounts payable and accrued expenses     |          |          | (3,722 | )    |          |         | (2,580 | ) |         |         | (759  | )
|                                                                             |                                                                         | Deferred revenue                          |          |          | (4,083 | )    |          |         | 15,650 |   |         |         | 5,090 |  
|                                                                             |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|Net cash used in operating activities                                        |                                                                         |                                           | (65,778  | )        |        |      | (21,347  | )       |        |   | (5,707  | )      
|Investing activities                                                         |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|                                                                             | Purchases of securities available-for-sale                              |                                           |          | (232,725 | )      |      |          | (92,608 | )      |   |         | (43,791 | )    
|                                                                             | Proceeds from maturities of securities
	available-for-sale              |                                           |          | 206,785  |        |      |          | 29,589  |        |   |         | 15,096  |      
|                                                                             | Proceeds from sale of securities
	available-for-sale                    |                                           |          | 88,218   |        |      |          | 29,429  |        |   |         | 19,226  |      
|                                                                             | Purchases of property and equipment                                     |                                           |          | (18,115  | )      |      |          | (3,019  | )      |   |         | (3,090  | )    
|                                                                             | Net cash received (paid) in acquisitions                                |                                           |          |         |        |      |          | 4,397   |        |   |         | (1,609  | )    
|                                                                             | Proceeds from sale of investments (purchases of
	investment securities) |                                           |          | 5,974    |        |      |          | 1,539   |        |   |         | (2,250  | )    
|                                                                             |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|Net cash provided by (used in) investing
	activities                         |                                                                         |                                           | 50,137   |          |        |      | (30,673  | )       |        |   | (16,418 | )      
|Financing activities                                                         |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|                                                                             | Proceeds from issuance of redeemable common stock                       |                                           |          |         |        |      |          |        |        |   |         | 2,000   |      
|                                                                             | Proceeds from issuance of common stock                                  |                                           |          | 8,866    |        |      |          | 62,846  |        |   |         | 397     |      
|                                                                             | Proceeds from issuance of preferred stock                               |                                           |          |         |        |      |          | 37,500  |        |   |         | 12,484  |      
|                                                                             | Principal payments on capital leases                                    |                                           |          | (997     | )      |      |          | (937    | )      |   |         | (1,059  | )    
|                                                                             | Principal payments made on long-term obligations                        |                                           |          | (12,837  | )      |      |          | (2,131  | )      |   |         | (2,015  | )    
|                                                                             | Proceeds from short-term obligations                                    |                                           |          | 2,344    |        |      |          | 1,000   |        |   |         |        |      
|                                                                             | Proceeds from long-term obligations                                     |                                           |          | 5,156    |        |      |          | 3,000   |        |   |         | 2,000   |      
|                                                                             | Dividends paid                                                          |                                           |          | (625     | )      |      |          | (625    | )      |   |         |        |      
|                                                                             |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|Net cash provided by financing activities                                    |                                                                         |                                           | 1,907    |          |        |      | 100,653  |         |        |   | 13,807  |        
|Net (decrease) increase in cash and cash
	equivalents                        |                                                                         |                                           | (13,734  | )        |        |      | 48,633   |         |        |   | (8,318  | )      
|Cash and cash equivalents at beginning of period                             |                                                                         |                                           | 49,413   |          |        |      | 780      |         |        |   | 9,098   |        
|                                                                             |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|Cash and cash equivalents at end of period                                   |                                                                         | $                                         | 35,679   |          |        | $    | 49,413   |         |        | $ | 780     |        
|                                                                             |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|Supplemental Disclosures of Cash Flow
	Information:                          |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|                                                                             | Interest paid                                                           |                                           | $        | 2,458    |        |      | $        | 607     |        |   | $       | 844     |      
|Supplemental Schedule of Noncash Investing and
	Financing Activities:        |                                                                         |                                           |          |          |        |      |          |         |        |   |         |        
|                                                                             | Equity instruments issued for acquisitions                              |                                           | $        |         |        |      | $        | 939,198 |        |   | $       | 58,109  |      
|                                                                             | Common stock issued for payment of preferred
	stock dividend            |                                           | $        | 1,105    |        |      | $        |        |        |   | $       |        |      

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

We are a developer of immunotherapies with a
commitment to treating and preventing autoimmune diseases,
cancer and infectious diseases by understanding and directing
the immune system. We exploit our expertise in immunology and
our proprietary technology platforms to discover and develop
vaccines, antigen-based products, including therapeutic
antibodies, novel adjuvants and targeted oncologics. The
consolidated financial statements include the accounts of Corixa
and its wholly owned subsidiaries, Coulter Pharmaceutical, Inc.,
or Coulter, Coulter Pharma Belgium, SA and Corixa UK Limited.
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
(U.S. 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. At
December 31, 2001, noncurrent securities available-for-sale
includes certificate of deposits of $9.8 million that
secure a financing agreement and $2.3 million that secure
letters of credit related to our leased properties.



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

Credit Risk.We are
subject to concentration 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, Boehringer Ingleheim
Pharma KG, or BI Pharma KG, to produce the Anti-B1
antibody monoclonal antibody in BEXXAR®. We have committed
to purchase minimum antibody quantities of the Anti-B1 Antibody
from BI Pharma KG. The maximum purchase commitment
that we would pay if we did not place orders to purchase any
antibody is approximately $4.4 million. We have also
contracted with a third-party manufacturer, MDS Nordion,
Inc., or Nordion, for the radiolabeling of the Anti-B1 Antibody
in a centralized facility. However, if we are unable to obtain
sufficient quantities of the Anti-B1 antibody from
BI Pharma KG or radiolabeled Anti-B1 Antibody from
Nordion, or additional suppliers, certain research and
development activities may be delayed or sufficient quantities
of commercial inventory may not be available in future periods.

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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. Amortization of
assets recorded under capital leases is included in depreciation.



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

Intangible assets consist of acquired workforce,
adjuvant know-how, an acquired lease and goodwill and are
amortized on the straight-line method over periods of four to
seven years. Assembled workforce will be reclassified to
goodwill on January 1, 2002 in accordance with the
Statement of Financial Accounting Standards No. (SFAS) 142
(see New Accounting Standards below). Under SFAS No. 142,
goodwill and intangible assets deemed to have indefinite lives
will no longer be amortized but will be subject to an annual
impairment test in accordance with SFAS No. 142. We will
continue to amortize the acquired lease and adjuvant know-how
over their useful life. In accordance with SFAS No. 121,
Accounting for the Impairment of Long-Lived Assets and
for Long-Lived Assets to be Disposed of, the carrying
value of intangible assets and other long-lived assets is
reviewed on a regular basis for the existence of facts or
circumstances, both internal and external, that may suggest
impairment. To date, no such impairment has been indicated.
Should there be impairment in the future, we will measure the
amount of the impairment based on discounted future cash flows
from the impaired assets. The cash flow estimates that will be
used will contain managements best estimates, using
assumptions and projections appropriate and customary at the
time. At December 31, 2001 and 2000, we had approximately
$62.7 million and $5.1 million, respectively, of
accumulated amortization.



| |                         
| | ------------------------
| | 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. Pro
forma disclosure of net loss and net loss per share under
SFAS 123 is provided in Note 9.

Stock compensation expense for options granted to
nonemployees has been determined in accordance with
SFAS 123 and Emerging Issues Task Force, or 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, 2001 and
December 31, 2000, 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.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



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

We generate revenue from technology licenses,
collaborative research and development arrangements, and cost
reimbursement contracts. Revenue under technology licenses and
collaborative agreements typically consists of nonrefundable
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 agreement, generally the
research and development period. Revenue from substantive
at-risk milestones and future product royalties is recognized as
earned based on the completion of the milestones and product
sales, as defined in the respective agreements. Revenue under
cost reimbursement contracts is recognized as the related costs
are incurred. Payments received in advance of recognition as
revenue are recorded as deferred revenue. We recognized 84% of
our collaborative revenue in 2001 from five collaborative
partners, 68% and 73% of our collaborative revenue in 2000 and
1999, respectively from three collaborative partners.

We previously recognized nonrefundable up-front
license fees as revenue when the technology was transferred and
when all significant contractual obligations relating to the
fees had been fulfilled. Effective January 1, 2000, we
changed our method of accounting for nonrefundable up-front
license fees to recognize such fees over the period of our
continuing involvement, generally the term of the related
research and development collaboration arrangement on a
straight-line basis, as this method best matches the effort
provided. We believe the change in accounting principle is
preferable based on guidance provided in SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial
Statements. 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 is being recognized as revenue
over the remaining research and development period. 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, composed 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 resulting
from the cumulative effect adjustment that was recognized as
revenue during 2000 ($0.11 per share). Had the change in
accounting been in effect retroactively as of January 1,
1999, net loss for the year ended December 31, 1999 would
have been $54.0 million, or $3.87 per share. The pro
forma amounts shown on the statement of operations have been
adjusted for the effects of retroactive application on revenue
that would have been made had the new method been in effect
during the period presented. Revenue for both 2001 and 2000
includes $2.4 million of revenue previously recognized and
included in the cumulative effect adjustment.



| |                                   
| | ----------------------------------
| | 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 in-process research and development 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

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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 Standards

In June 2001, the Financial Accounting Standards
Board or FASB, issued Statements of Financial Accounting
Standards No. 141 Business Combinations, and
No. 142, Goodwill and Other Intangible Assets,
effective for fiscal years beginning after December 15,
2001. Under the new rules, goodwill and intangible assets deemed
to have indefinite lives will no longer be amortized but will be
subject to an annual impairment test in accordance with the
Statements. Other intangible assets will continue to be
amortized over their useful lives.

We will apply the new rules on accounting for
goodwill and other intangible assets beginning in the first
quarter of 2002. We had previously expected to record
amortization expense of $55.6 million during 2002 related
to goodwill and workforce that will not be amortized due to the
adoption of the new standard. We are evaluating the impact of
the impairment rules, if any, on the operations or financial
position of the Company.

In October 2001, FASB issued Statements of
Financial Accounting Standards No. 144, Accounting for
the Impairment or Disposal of Long-Lived Assetseffective
for fiscal years beginning after December 15, 2001, with
transition provisions for certain matters. The FASBs new
rules on asset impairment supersedes FASB Statement
No. 121, Accounting for Impairment of Long-Lived Asses
and for Long-Lived Assets to be Disposed Of, and provide a
single accounting model for long-lived assets to be disposed of.
We do not expect the adoption of this statement to have a
material effect on the operations or financial position of the
Company.



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

Certain reclassifications have been made to the
prior years financial statements to conform to the 2001
presentation.

2.     Scientific
Collaborative and License Agreements

Amersham Health.In
October 2001, we entered into an agreement whereby Amersham
Health will market BEXXAR in Europe. We and Amersham Health will
cooperate to register the product in Europe. We will be
responsible for the generation of clinical trial data to support
registration in Europe. Amersham Health will be responsible for
manufacture and sale of radiolabled antibody in the territory.
Under the terms of the agreement Amersham Health will purchase a
total of up to $15 million of Corixas common stock,
$5 million of which was purchased at the execution of the
agreement and the remaining portion to be purchased at our
then-fair market value at our election during a period of
eighteen months from the date of the agreement. Upon execution
of the agreement Amersham purchased 271,343 shares of our common
stock at a price of $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
applicable term of the agreement, consistent with our revenue
recognition policy. In addition, Amersham Health will pay us
multi-million dollar milestone payments upon regulatory approval
in the territory as well as million dollar milestone payments
based on achievement of certain sales volume targets. Amersham
Health will pay us royalties on all future product sales in
Europe. We recognized revenue from this agreement of
approximately $65,000 in 2001.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Medicis.In August
2000, we entered into a development, commercialization and
license agreement with Medicis Pharmaceutical Corporation
covering our novel psoriasis immunotherapeutic product,
PVACTM treatment. The agreement provides Medicis with
exclusive rights to PVAC treatment in the United States and
Canada. We are predominantly responsible for development and
manufacturing, and Medicis will be responsible for
commercialization and distribution. Under the terms of the
agreement, Medicis will pay us license fees, research funding
and milestone payments of up to $107 million. Upon
effectiveness of the agreement, we received a nonrefundable
payment of $17 million with additional potential
development milestone payments of $35 million, and
commercialization and cumulative net sales threshold milestone
payments of $55 million. Additionally, upon commercial sale
of the product, Medicis will purchase inventory from us and pay
a royalty on net sales of the product. Research and development
funding payments received are being recognized over the
estimated research and development period of approximately four
and a half years. The estimated research and development period
was extended from three years due to delays in clinical trials.
We recognized revenue from this agreement of $4.6 million
and $1.4 million in 2001 and 2000, respectively.

We developed PVACtreatment in
collaboration with New Zealand-based Genesis Research and
Development Corporation. 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 are being amortized over the related period the Medicis
revenues are being recognized.

Zenyaku Kogyo.In
August 1999, we entered into a corporate partnership with
Zenyaku Kogyo Co. Ltd for research and development related to
PVACTM treatment. The agreement provides
Zenyaku Kogyo with exclusive rights to PVACin Japan.
Under the terms of the agreement, we will receive license fees
and research funding of up to $6 million, milestone
payments based on successful clinical and commercial progress,
and a royalty stream on future product sales. We recognized
revenue of $2.2 million in 2001, $969,000 in 2000 and
$531,000 in 1999, in connection with the agreement.

Zambon Group and the Pharmaceutical Division
of Japan Tobacco.During May and June
1999, we entered into corporate partnerships with Zambon Group
spa and the pharmaceutical division of Japan Tobacco,
respectively, for the research, development and
commercialization of vaccine and antibody-based products aimed
at preventing and/or treating lung cancer. Zambon has exclusive
rights to develop and sell products in Europe, the former
countries of the Soviet Union, Argentina, Brazil and Columbia
and co-exclusive rights in China. Japan Tobacco has 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 Japan Tobacco an option to formulate vaccines that may
result from the collaboration in our microsphere delivery system
with our proprietary protein adjuvants. The agreements have
three-year terms and, in the aggregate, provide for committed
research funding of $16.5 million, as well as milestone
payments that vary depending on the milestones achieved. In
addition, Zambon purchased $2.0 million of our common
stock. The collaboration agreement allows Zambon to sell the
common stock back to us at the original price under certain
conditions (see Note 9). We recognized revenue of
$7.7 million, $6.7 million and $4.7 million in
connection with the Zambon and Japan Tobacco agreements in 2001,
2000 and 1999, respectively. Revenue for both 2001 and 2000
includes $500,000 recognized as a result of the cumulative
effect adjustment. Amounts receivable from Zambon were
approximately $562,000 and $505,000, at December 31, 2001
and December 31, 2000, respectively.

Infectious Disease Research
Institute.In March 1999, we entered
into a research agreement with the Infectious Disease Research
Institute (IDRI) to research and develop ex vivotherapies for treating cancer. Pursuant to the terms of the
agreement, IDRI committed $12.0 million of research funding
over the agreements three-year term. The agreement
provides us exclusive rights to resulting intellectual property
and

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

product rights, while IDRI will receive a
percentage of our proceeds related to ex vivotherapy
products resulting from such research and development. We
recognized revenue of $3.0 million, $3.8 million and
$4.5 million in connection with this agreement in 2001,
2000 and 1999, respectively.

GlaxoSmithKline.In
October 1998, we entered into a collaboration and license
agreement effective September 1, 1998 with
GlaxoSmithKlines, or GSKs, wholly owned subsidiary,
SmithKline Beecham plc. GSK has committed to funding
$43.6 million for research work that is performed in
multiple discovery programs during the four-year term. Extended
research and development programs beyond the initial four-year
term may be agreed upon by GSK and us. We recognized revenue of
$13.7 million, $12.7 million and $10.6 million in
2001, 2000 and 1999, respectively, from this agreement. Revenue
for both 2001 and 2000 includes $1.9 million recognized as
a result of the cumulative effect adjustment.

In addition, GSK purchased $2.5 million of
our common stock in 1998 at a premium to our fair market value.
Additionally, with respect to the $5.0 million loan from
GSK under a prior collaboration agreement, GSK may elect to have
us repay such amount on September 1, 2003 or convert such
amounts into the purchase of our common stock at a premium to
our then-current fair market value. This amount is recorded as a
long-term obligation at December 31, 2001 and 2000.

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 $2.8 million in 2001 and
$3.5 million in 2000 in connection with these agreements.

As a result of our acquisition of Coulter, we
acquired a collaborative agreement with GSK for developing and
commercializing BEXXAR, which has completed Phase III clinical
trials in the United States and is the subject of a BLA
currently under review by the Food and Drug Administration, or
FDA, for treating non-Hodgkins lymphoma, or NHL. Coulter
and GSK executed the agreement in 1998 and amended it in April
2000 to reduce GSKs territory to the United States. Under
the terms of the amended agreement, we and GSK will jointly
market and sell BEXXAR in the United States following regulatory
approval.

Under the terms of the agreement, GSK will
reimburse us for certain development cost and pay us for the
achievement of certain defined clinical development, regulatory
and sales milestones. In 2001, we recognized milestone revenue
of $6.0 million upon Institutional Review Board
(IRB) approval of two clinical protocols and
$6.9 million for the reimbursement of clinical and other
development costs.

We and GSK will co-market BEXXAR in the United
States and will share revenue, cost of goods sold, sales and
marketing costs and other costs associated with BEXXAR related
activities. Currently, we share the pre-launch cost of marketing
associated with preparation of the potential commercialization
of BEXXAR. For 2001, our share of these expenses was
$3.5 million and has been classified as sales, general and
administrative expense.

Amounts receivable from GSK under these
agreements at December 31, 2001 and 2000 were
$2.9 million and $9.7 million, respectively.

The agreement also provided for a
$15.0 million credit line, which was fully drawn by Coulter
in December 2000 prior to the acquisition. No amounts remain
available under the credit line. Borrowings under the credit
line are due in October 2003. We are subject to certain
financial covenants including liquidity and net worth covenants
as defined in the agreement. At December 31, 2001, 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 2001 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.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

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, 2001, 2000 and 1999 are reimbursements
approximating $9.1 million, $4.6 million and
$2.9 million, respectively. Certain 2001 collaborative
agreements extend into fiscal years 2002 and 2003, and as of
December 31, 2001, we are committed to reimburse these
universities and institutions approximately $893,000 in 2002 and
$10,000 in 2003.

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 2001, 2000 and 1999, we paid initial license
and/or option fees approximating $1.2 million,
$3.4 million and $1.8 million, respectively. In
addition, we issued 23,809 and 19,697 shares of common stock and
options valued at $1,022,275 and $270,000 during 2000 and 1999,
respectively, in exchange for such rights. No common stock or
options were issued in 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.

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 $99.6 million,
$37.3 million and $29.7 million in 2001, 2000 and
1999, respectively

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.     Business
Combinations



| |                                             
| | --------------------------------------------
| | Acquisition of Coulter Pharmaceutical,
	Inc.

On December 22, 2000, we acquired all of the
outstanding shares of common stock of Coulter, a company focused
on developing products for treating cancer. The acquisition was
accounted for as a purchase transaction. Aggregate consideration
was approximately $917.1 million, which consisted of
19,114,649 shares of our common stock, with a market value of
approximately $806.8 million, assumed Coulter stock options
valued at approximately $132.4 million, less
$29.2 million associated with the intrinsic value of
unvested options and transaction costs of $7.1 million. The
$29.2 million was recorded as deferred compensation and is

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

being amortized to compensation expense over the
remaining vesting periods. The aggregate purchase price was
allocated, based on estimated fair values on the acquisition
date, as follows (in thousands):

|                                             |                                 |   |         |         | 
|-------------------------------------------- | ------------------------------- | - | ------- | ------- | 
|Assets acquired                              |                                 | $ | 108,807 |        
|Liabilities assumed                          |                                 |   | (45,296 | )      
|Acquired in-process research and development |                                 |   | 629,700 |        
|Assumed lease                                |                                 |   | 15,405  |        
|Assembled workforce                          |                                 |   | 3,900   |        
|Goodwill                                     |                                 |   | 204,556 |        
|                                             |                                 |   |         |        
|                                             | Total purchase price allocation |   | $       | 917,072 | 
|                                             |                                 |   |         |        

Certain Coulter employees were granted
approximately 25,000 shares of common stock that will vest upon
Food and Drug Administration approval of BEXXAR, Coulters
lead product candidate. Vesting will occur regardless of
employment status at the time of approval. These shares will be
valued and expensed at the time of approval.



| |                                               
| | ----------------------------------------------
| | Acquisition of Ribi ImmunoChem Research,
	Inc.

On October 6, 1999, we acquired all of the
outstanding shares of common stock of Ribi, a company focused on
developing novel agents that modulate the human immune response
to prevent or treat certain diseases including cancer,
infectious diseases and cardiovascular injury. The acquisition
was accounted for as a purchase transaction. Aggregate
consideration for the acquisition was approximately
$57.5 million, which consisted of 3,610,766 shares of our
common stock and stock options valued at $47.9 million,
cash of $7.9 million paid by us to Ribi for the redemption
of Ribi Series A preferred stock and transaction costs of
approximately $1.7 million. The aggregate purchase price
was allocated, based on estimated fair values on the acquisition
date, as follows (in thousands):

|                                             |                      |   |        |        | 
|-------------------------------------------- | -------------------- | - | ------ | ------ | 
|Acquired in-process research and development |                      | $ | 26,024 |       
|Assets acquired                              |                      |   | 23,868 |       
|Liabilities assumed                          |                      |   | (7,505 | )     
|Assembled workforce                          |                      |   | 1,033  |       
|Adjuvant know-how                            |                      |   | 3,076  |       
|Goodwill                                     |                      |   | 11,033 |       
|                                             |                      |   |        |       
|                                             | Total purchase price |   | $      | 57,529 | 
|                                             |                      |   |        |       



| |                             
| | ----------------------------
| | Acquisition of Anergen, Inc.

On February 10, 1999, we acquired all of the
outstanding shares of common stock of Anergen, a biotechnology
company focused on treating autoimmune diseases through the
discovery and development of proprietary therapeutics that
selectively interrupt the disease process. The acquisition was
accounted for as a purchase transaction. Aggregate consideration
for the acquisition was approximately $9.6 million, which
consisted of 1,058,031 shares of our common stock, with a market
value of approximately $8.7 million, approximately $200,000
in cash, and approximately $700,000 in acquisition costs. The
aggregate purchase price exceeded the fair value of net tangible
assets by approximately $11.6 million, which amount was
allocated to acquired in-process research and development, or
IPR&D, during the first quarter of 1999. On January 5,
2001, Anergen merged into Coulter in a direct merger in which
Coulter was the surviving entity.

For each of the above acquisitions, acquired
IPR&D represents the present value of the estimated
after-tax cash flows expected to be generated by the purchased
technology, which, at the acquisition dates, had not

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

yet reached technological feasibility. The cash
flow projections for revenues were based on estimates of growth
rates and the aggregate size of the respective market for each
product, probability of technical success given the stage of
development at the time of acquisition, royalty rates based on
prior licensing agreements, products sales cycles; and the
estimated life of a products underlying technology.
Estimated operating expenses and income taxes were deducted from
estimated revenue projections to arrive at estimated after-tax
cash flows. Projected operating expenses include general and
administrative expenses, and research and development costs. The
rates utilized to discount projected cash flows were 30% to 55%
for in-process technologies used, depending on the relative risk
of each in-process technology, and were based primarily on
venture capital rates of return and the weighted average cost of
capital for us at the time of acquisition.

All of the foregoing estimates and projections
regarding the Coulter, Ribi, and Anergen acquisitions were based
on assumptions we believed to be reasonable at the time of the
acquisitions, but which are inherently uncertain and
unpredictable. If these projects are not successfully developed,
our business, operating results and financial condition may be
adversely affected. As of the date of each acquisition, we
concluded that once completed, the technologies under
development can only be economically used for their specific and
intended purposes and that such in-process technology has no
alternative future use after taking into consideration the
overall objectives of the project, progress toward the
objectives, and uniqueness of developments to these objectives.
If we fail in our efforts, no alternative economic value will
result. If the projects fail, the economic contribution expected
to be made by the IPR&D will not materialize. The risk of
untimely completion includes the risk that alternative vaccines,
immunotherapeutics or diagnostics will be developed by
competitors.

4.     Securities
Available-For-Sale

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

|                  |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |         | 
|----------------- | -------------------------- | -------------- | ------- | ---------- |  | ---------- | ----- | ------ |  | - | ---- | ---- | - | - | ------- | ------- | 
|                  |                            |                |         | Gross      |  | Gross      |       |       
|                  |                            |                |         | Unrealized |  | Unrealized |       | Market
|                  |                            | Amortized Cost |         | Gain       |  | Loss       |       | Value 
|                  |                            |                |         |            |  |            |       |       
|December 31, 2001 |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |        
|                  | U.S. government agencies   |                | $       | 19,771     |  |            | $     | 247    |  |   | $    | (4   | ) |   | $       | 20,014  | 
|                  | U.S. corporate obligations |                |         | 54,858     |  |            |       | 839    |  |   |      | (107 | ) |   |         | 55,590  | 
|                  | Other                      |                |         | 9,781      |  |            |       |       |  |   |      |     |   |   |         | 9,781   | 
|                  |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |        
|                  |                            | $              | 84,410  |            |  | $          | 1,086 |        |  | $ | (111 | )    |   | $ | 85,385  |        
|                  |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |        
|December 31, 2000 |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |        
|                  | U.S. government agencies   |                | $       | 29,135     |  |            | $     | 67     |  |   | $    | (20  | ) |   | $       | 29,182  | 
|                  | U.S. corporate obligations |                |         | 114,556    |  |            |       | 414    |  |   |      | (487 | ) |   |         | 114,483 | 
|                  | Other                      |                |         | 4,000      |  |            |       |       |  |   |      |     |   |   |         | 4,000   | 
|                  |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |        
|                  |                            | $              | 147,691 |            |  | $          | 481   |        |  | $ | (507 | )    |   | $ | 147,665 |        
|                  |                            |                |         |            |  |            |       |        |  |   |      |      |   |   |         |        

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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
2001, 2000 and 1999 and are therefore not shown. The contractual
maturities of our available-for-sale securities are shown below
(in thousands):

|                  |                                    |           |         |             |  |   |         |        | 
|----------------- | ---------------------------------- | --------- | ------- | ----------- |  | - | ------- | ------ | 
|                  |                                    |           |         | Estimated  
|                  |                                    | Amortized |         | Fair Market
|                  |                                    | Cost      |         | Value      
|                  |                                    |           |         |            
|December 31, 2001 |                                    |           |         |             |  |   |         |       
|                  | Due in one year or less            |           | $       | 28,395      |  |   | $       | 28,727 | 
|                  | Due in one year through four years |           |         | 56,015      |  |   |         | 56,658 | 
|                  |                                    |           |         |             |  |   |         |       
|                  |                                    | $         | 84,410  |             |  | $ | 85,385  |       
|                  |                                    |           |         |             |  |   |         |       
|December 31, 2000 |                                    |           |         |             |  |   |         |       
|                  | Due in one year or less            |           | $       | 90,849      |  |   | $       | 91,851 | 
|                  | Due in one year through four years |           |         | 56,842      |  |   |         | 55,814 | 
|                  |                                    |           |         |             |  |   |         |       
|                  |                                    | $         | 147,691 |             |  | $ | 147,665 |       
|                  |                                    |           |         |             |  |   |         |       

5.     Property and
Equipment

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

|                                          |  |              |         |      |  |   |         |  
|----------------------------------------- |  | ------------ | ------- | ---- |  | - | ------- | -
|                                          |  |             
|                                          |  | December 31,
|                                          |  |             
|                                          |  | 2001         |         | 2000
|                                          |  |              |         |     
|Laboratory equipment                      |  | $            | 17,669  |      |  | $ | 15,267  |  
|Land and buildings                        |  |              | 8,352   |      |  |   | 7,942   |  
|Leasehold improvements                    |  |              | 16,374  |      |  |   | 15,770  |  
|Construction in progress                  |  |              | 11,610  |      |  |   | 750     |  
|Computers and office equipment            |  |              | 14,657  |      |  |   | 10,358  |  
|                                          |  |              |         |      |  |   |         |  
|                                          |  |              | 68,662  |      |  |   | 50,087  |  
|Accumulated depreciation and amortization |  |              | (19,663 | )    |  |   | (10,811 | )
|                                          |  |              |         |      |  |   |         |  
|                                          |  | $            | 48,999  |      |  | $ | 39,276  |  
|                                          |  |              |         |      |  |   |         |  

At December 31, 2001 and 2000, we held
equipment under capitalized leases with an original cost of
approximately $6.7 million and $6.8 million,
respectively, and a net book value of approximately $245,000 and
$826,000, respectively. These leases are secured by the
underlying assets.

Depreciation expense was $8.9 million,
$3.8 million and $3.2 million for 2001, 2000 and 1999,
respectively.

6.     Investments



| |             
| | ------------
| | Abgenix Inc.

In February 2001 and May 2001, we exercised our
option to sell our shares of Abgenix Inc. (formerly ImmGenics)
acquired in May 2000 to Abgenix for cash. We recognized a gain
of approximately $4.5 million from the sale of the stock.



| |                                
| | -------------------------------
| | LigoCyte Pharmaceuticals,
	Inc.

In October 1999, we signed a licensing and
collaborative research agreement with LigoCyte to utilize
LigoCyte technology for developing of therapeutic and vaccine
products that target infections arising from Candida albicans.
We terminated our collaborative research agreement with LigoCyte
in 2001. Under the

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

terms of the agreement and related agreements, we
paid a one-time license fee of $250,000 and research funding of
$225,000 over a one-year period. We also purchased 293,255
shares of Series B preferred stock for $1.0 million.
Our senior vice president and general counsel is a member of
Ligocytes board of directors. We account for our
investment in LigoCyte on the cost method.

7.     Accounts
Payable and Accrued Liabilities

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

|                                           |  |              |        |      |  |   |        | 
|------------------------------------------ |  | ------------ | ------ | ---- |  | - | ------ | 
|                                           |  |             
|                                           |  | December 31,
|                                           |  |             
|                                           |  | 2001         |        | 2000
|                                           |  |              |        |     
|Trade accounts payable                     |  | $            | 9,492  |      |  | $ | 10,547 | 
|Accrued clinical trial fees                |  |              | 2,317  |      |  |   | 1,962  | 
|Employee compensation and related expenses |  |              | 3,637  |      |  |   | 6,337  | 
|Accrued legal fees                         |  |              | 2,461  |      |  |   | 890    | 
|Accrued research and development expenses  |  |              | 2,370  |      |  |   | 2,587  | 
|Environmental contingency                  |  |              |       |      |  |   | 2,600  | 
|Other                                      |  |              | 3,318  |      |  |   | 2,394  | 
|                                           |  |              |        |      |  |   |        | 
|                                           |  | $            | 23,595 |      |  | $ | 27,317 | 
|                                           |  |              |        |      |  |   |        | 

8.     Long-Term
Obligations and Lease Obligations

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

|                                            |  |              |        |      |  |   |        | 
|------------------------------------------- |  | ------------ | ------ | ---- |  | - | ------ | 
|                                            |  |             
|                                            |  | December 31,
|                                            |  |             
|                                            |  | 2001         |        | 2000
|                                            |  |              |        |     
|Credit line and loan from corporate partner |  | $            | 20,000 |      |  | $ | 20,000 | 
|Bank loans                                  |  |              | 13,220 |      |  |   | 18,447 | 
|Capital lease obligations                   |  |              | 85     |      |  |   | 1,193  | 
|Other                                       |  |              | 107    |      |  |   | 109    | 
|                                            |  |              |        |      |  |   |        | 
|                                            |  |              | 33,412 |      |  |   | 39,749 | 
|Less current portion of obligations         |  |              | 5,755  |      |  |   | 6,327  | 
|                                            |  |              |        |      |  |   |        | 
|                                            |  | $            | 27,657 |      |  | $ | 33,422 | 
|                                            |  |              |        |      |  |   |        | 

The credit line and loan from corporate partner
consists of two arrangements at December 31, 2001, as
follows:

We received a $5 million loan 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 the commercialization of BEXXAR (refer to
Note 2 with regard to the terms and conditions of the
credit lines). The $15 million line matures in October 2003
and accrues interest at a fixed rate per annum equal to the
prime rate in effect on the date the loan is advanced (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,
2001, we were in compliance with these covenants. The
$5 million loan is non-interest bearing and matures in
September 2003. GSK may elect to have us repay such amount on
September 1, 2003 or convert such amounts into the purchase
of our common stock at a premium to our then-current fair market
value.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

As of December 31, 2001, we had outstanding
bank loans of $13.2 million. This amount is composed of
three bank loans, which require quarterly interest and principal
payments and mature in May 2003, September 2004 and August 2005.
The loans bear interest at a rate that is a function of either
the London InterBank Offering Rate, or LIBOR, or the prime rate
of a major bank or federal fund rates (3.61% to 8.61% at
December 31, 2001). 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, 2001, we were in compliance with the notes
covenants.

Minimum future debt payments under all credit
lines from corporate partners and bank loans at
December 31, 2001 are as follows (in thousands):

|                         |                        |                   |        |            |  |   |       |        | 
|------------------------ | ---------------------- | ----------------- | ------ | ---------- |  | - | ----- | ------ | 
|                         |                        | Credit Line       |        |           
|                         |                        | and loan from     |        |           
|Year Ending December 31, |                        | Corporate Partner |        | Bank Loans
|                         |                        |                   |        |           
|2002                     |                        | $                 |       |            |  | $ | 5,563 |       
|2003                     |                        |                   | 20,000 |            |  |   | 3,375 |       
|2004                     |                        |                   |        |            |  |   | 2,875 |       
|2005                     |                        |                   |       |            |  |   | 1,407 |       
|2006                     |                        |                   |       |            |  |   |      |       
|Thereafter               |                        |                   |       |            |  |   |      |       
|                         |                        |                   |        |            |  |   |       |       
|                         | Total minimum payments |                   | $      | 20,000     |  |   | $     | 13,220 | 
|                         |                        |                   |        |            |  |   |       |       

Capital lease obligations are secured by the
underlying equipment. The outstanding balance at
December 31, 2001, of $85,000 is due in 2002.

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 $2.3 million and
have a security deposit of $225,000 in connection with this
lease. At December 31, 2001, noncurrent securities
available-for-sale included certificate of deposits of
$2.3 million that secure letters of credit related to our
leased properties.

Minimum future rental payments under all lease
agreements at December 31, 2001 are as follows (in
thousands):

|                         |                        |           |        |        | 
|------------------------ | ---------------------- | --------- | ------ | ------ | 
|                         |                        | Operating
|Year Ending December 31, |                        | Leases   
|                         |                        |          
|2002                     |                        |           | 9,805  |       
|2003                     |                        |           | 9,536  |       
|2004                     |                        |           | 8,975  |       
|2005                     |                        |           | 5,641  |       
|2006                     |                        |           | 3,972  |       
|Thereafter               |                        |           | 14,173 |       
|                         |                        |           |        |       
|                         | Total minimum payments |           | $      | 52,102 | 
|                         |                        |           |        |       

Rent expense was $9.8 million in 2001,
$3.7 million in 2000, and $3.5 million in 1999.

83



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

9.     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 (the Line). Upon
execution of the agreement, we completed an initial draw under
the Line of $12.5 million (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 (the
Initial Closing Warrants). The Initial Closing Warrants consist
of warrants to purchase 312,500 and 724,637 shares of common
stock at an exercise price 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)
were at a discount to the price of the common stock into which
the preferred stock was convertible. The discount of
$5.5 million and $9.3 million related to the
Series A and Series B preferred stock, respectively
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 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 2001 annual dividend on the
Series B preferred stock in shares of our common stock by
issuing 73,299 shares of common stock in December 2001. The
value of these shares at the time of issuance was
$1.1 million, which was approximately $770,000 less than
the cash dividend value of $1.9 million. The dividend has
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.

84



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)



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

In December 2001, we entered into an agreement
with BNY Capital Markets, Inc., or CMI, a subsidiary of Bank of
New York , for a $75 million equity line of credit. CMI has
agreed to purchase Corixa common stock at a two percent discount
to the market price and the financing will be available to us,
subject to certain conditions, at our option on an as-needed
basis over a period of twenty-four months. Subject to certain
limitation, we have the right to determine the timing and amount
of each sale. No funds have been drawn from the equity line of
credit at December 31, 2001. Funding from the line will be
available upon effectiveness of the registration statement
related to the transaction.



| |                        
| | -----------------------
| | 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, Zambon may 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 is not viable. Accordingly, we have not included the
common shares in stockholders equity. The aggregate amount
paid represented a premium of approximately $230,000 over the
fair market value of the stock at the time of issuance and was
included with the amount of redeemable common stock.



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

Effective June 1, 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 (3%) 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 option to
purchase approximately 5,614,535 shares. As of December 31,
2001, the 2001 Plan had 10,661,023 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 (the Directors Plan) on July 25, 1997. As of
December 31, 2001, 372,084 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 (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

85



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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

common stock (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.

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

|                             |                                 |             |            |                 |   |          |                |                 |  |     |       |       | 
|---------------------------- | ------------------------------- | ----------- | ---------- | --------------- | - | -------- | -------------- | --------------- |  | --- | ----- | ----- | 
|                             |                                 |             |            |                 |   | Weighted
|                             |                                 |             |            |                 |   | Average 
|                             |                                 | Options     |            |                 |   | Exercise
|                             |                                 | Outstanding |            | Price Per Share |   | Price   
|                             |                                 |             |            |                 |   |         
|Balance at January 1, 1999   |                                 |             | 1,439,326  |                 |   | $        | 0.33 - $ 13.5  |                 |  | 0 $ | 3.38  |      
|                             | Options granted                 |             |            | 1,816,779       |   |          |                | 8.63 -   17.81  |  |     |       | 12.03 | 
|                             | Options assumed in acquisitions |             |            | 371,937         |   |          |                | 6.15 -  178.83  |  |     |       | 33.66 | 
|                             | Options exercised               |             |            | (96,578         | ) |          |                | 0.33 -   14.84  |  |     |       | 2.73  | 
|                             | Options forfeited               |             |            | (114,908        | ) |          |                | 0.33 -  178.83  |  |     |       | 30.83 | 
|                             |                                 |             |            |                 |   |          |                |                 |  |     |       |      
|Balance at December 31, 1999 |                                 |             | 3,416,556  |                 |   |          | 0.33 -  169.89 |                 |  |     | 10.39 |      
|                             | Options granted                 |             |            | 3,157,393       |   |          |                | 19.00 -   69.44 |  |     |       | 27.15 | 
|                             | Options assumed in acquisition  |             |            | 4,262,041       |   |          |                | 0.30 -   42.87  |  |     |       | 20.65 | 
|                             | Options exercised               |             |            | (591,322        | ) |          |                | 0.33 -   47.48  |  |     |       | 8.94  | 
|                             | Options forfeited               |             |            | (98,328         | ) |          |                | 0.99 -   71.53  |  |     |       | 15.68 | 
|                             |                                 |             |            |                 |   |          |                |                 |  |     |       |      
|Balance at December 31, 2000 |                                 |             | 10,146,340 |                 |   |          | 0.30 -  169.89 |                 |  |     | 19.89 |      
|                             | Options granted                 |             |            | 3,362,085       |   |          |                | 8.00 -   27.63  |  |     |       | 14.18 | 
|                             | Options exercised               |             |            | (629,247        | ) |          |                | 0.30 -   23.55  |  |     |       | 15.87 | 
|                             | Options forfeited               |             |            | (3,505,731      | ) |          |                | 0.75 -   73.77  |  |     |       | 25.06 | 
|                             |                                 |             |            |                 |   |          |                |                 |  |     |       |      
|Balance at December 31, 2001 |                                 |             | 9,373,447  |                 |   |          | 0.30 -  169.89 |                 |  |     | 16.88 |      
|                             |                                 |             |            |                 |   |          |                |                 |  |     |       |      

The following table summarizes information about
the stock options outstanding at December 31, 2001:

|                 |  |                     |           |                     |  |          |      |        |  |          |       |  |  |  |           |  |  |   |       | 
|---------------- |  | ------------------- | --------- | ------------------- |  | -------- | ---- | ------ |  | -------- | ----- |  |  |  | --------- |  |  | - | ----- | 
|                 |  |                     |           |                     |  |         
|                 |  | Options Outstanding |           |                    
|                 |  |                     |           | Options Exercisable
|                 |  |                     |           | Weighted            |  |          |      |       
|                 |  | Number              |           | Average             |  | Weighted |      |        |  | Weighted
|                 |  | Outstanding         |           | Remaining           |  | Average  |      |        |  | Average 
|Range of         |  | on December 31,     |           | Contractual         |  | Exercise |      |        |  | Exercise
|Exercise Prices  |  | 2001                |           | Life                |  | Price    |      | Shares |  | Price   
|                 |  |                     |           |                     |  |          |      |        |  |         
|$ 0.30  $  9.50 |  |                     | 1,713,611 |                     |  |          | 6.11 |        |  | $        | 6.55  |  |  |  | 1,445,764 |  |  | $ | 6.27  | 
|$10.39  $ 12.69 |  |                     | 747,124   |                     |  |          | 8.90 |        |  |          | 11.45 |  |  |  | 179,436   |  |  |   | 12.50 | 
|$12.97  $ 13.45 |  |                     | 1,911,495 |                     |  |          | 9.82 |        |  |          | 13.44 |  |  |  | 683,624   |  |  |   | 13.45 | 
|$13.50  $ 25.13 |  |                     | 4,195,945 |                     |  |          | 8.26 |        |  |          | 20.50 |  |  |  | 1,915,546 |  |  |   | 21.70 | 
|$25.30  $169.89 |  |                     | 805,272   |                     |  |          | 7.77 |        |  |          | 33.18 |  |  |  | 360,691   |  |  |   | 34.51 | 
|                 |  |                     |           |                     |  |          |      |        |  |          |       |  |  |  |           |  |  |   |       | 
|$ 0.30  $169.89 |  |                     | 9,373,447 |                     |  |          | 8.19 |        |  |          | 16.88 |  |  |  | 4,585,061 |  |  |   | 16.25 | 
|                 |  |                     |           |                     |  |          |      |        |  |          |       |  |  |  |           |  |  |   |       | 

At December 31, 2000 and 1999, we had
3,171,982 and 1,305,736 options exercisable, respectively.

86



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##### Table of Contents



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 $14.7 million, $895,000 and
$738,000 was recognized for the years ended December 31,
2001, 2000 and 1999, respectively. In 2001, approximately
$9.2 million of deferred compensation was reversed related
to employees that terminated employment during the year.

Included in options outstanding at
December 31, 2001 are approximately 182,000 options granted
to consultants for services. Expense of approximately $444,000,
$678,000 and $596,000 was recorded in 2001, 2000 and 1999,
respectively, related to options granted to consultants.



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

On July 25, 1997, we adopted the 1997
Employee Stock Purchase Plan (the Purchase Plan). On Effective
June 1, 2001, we amended and restated the
1997 Employee Stock Purchase Plan and redesignated it the
2001 Employee Stock Purchase Plan, or 2001 ESPP. The
amendment provides for an 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, 2001, 375,425 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 2001, 2000 and 1999, 124,575, 62,969 and
25,826 shares were issued under the 2001 ESPP at prices ranging
from $8.84 to $23.48, $10.61 to $23.69 and $4.89 to $7.33,
respectively.



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

Pro forma information regarding net loss and loss
per share required by SFAS 123 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 
|                        |  |                |     |               
|                        |  | 2001           |     | 2000           |  | 1999 |     | 2001 |  | 2000 |     | 1999
|                        |  |                |     |                |  |      |     |      |  |      |     |     
|Expected life (years)   |  |                | 4   |                |  |      | 4   |      |  |      | 4   |      |  |  | 1   |   |  |  | 1   |   |  |  | 1   |  
|Expected volatility     |  |                | 90  | %              |  |      | 80  | %    |  |      | 67  | %    |  |  | 90  | % |  |  | 80  | % |  |  | 67  | %
|Risk-free interest rate |  |                | 4.2 | %              |  |      | 5.2 | %    |  |      | 4.9 | %    |  |  | 4.2 | % |  |  | 5.2 | % |  |  | 5.2 | %
|Expected dividend yield |  |                | 0.0 | %              |  |      | 0.0 | %    |  |      | 0.0 | %    |  |  | 0.0 | % |  |  | 0.0 | % |  |  | 0.0 | %

The weighted average fair value of options
granted during 2001, 2000 and 1999 was $10.54, $19.86 and $7.95,
respectively.

87



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##### Table of Contents



CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

Under SFAS 123, if we had elected to
recognize the compensation cost based on the fair value of the
options granted at the grant date, net loss would have been
increased as follows (the estimated fair value of the options is
amortized to expense over the options vesting period):

|                    |             |                                       |   |          |   |      |   |          |   |  |   |         |  
|------------------- | ----------- | ------------------------------------- | - | -------- | - | ---- | - | -------- | - |  | - | ------- | -
|                    |             |                                      
|                    |             | Year Ended December 31,              
|                    |             |                                      
|                    |             | 2001                                  |   | 2000     |   | 1999
|                    |             |                                       |   |          |   |     
|                    |             |                                      
|                    |             | (in thousands, except per share data)
|Net loss:           |             |                                       |   |          |   |      |   |          |   |  |   |        
|                    | As reported |                                       | $ | (149,767 | ) |      | $ | (677,056 | ) |  | $ | (60,766 | )
|                    | Pro forma   |                                       |   | (171,663 | ) |      |   | (684,610 | ) |  |   | (64,066 | )
|Net loss per share: |             |                                       |   |          |   |      |   |          |   |  |   |        
|                    | As reported |                                       | $ | (3.66    | ) |      | $ | (32.30   | ) |  | $ | (3.91   | )
|                    | Pro forma   |                                       |   | (4.19    | ) |      |   | (32.66   | ) |  |   | (4.13   | )



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

We had common stock warrants outstanding to
purchase 1,604,629 shares of common stock as of
December 31, 2001 at a weighted average exercise price of
approximately $10.22 per share, which warrants expire between
2004 and 2010. Included in the total common stock warrants
outstanding at December 31, 2001, are warrants to purchase
50,000 shares of common stock issued in connection with a line
of credit with an exercise price of $15.49. Common stock
warrants outstanding at December 31, 2001, includes 25,000
warrants that become exercisable at any time after
December 3, 2002 and 25,000 warrants that become
exercisable at any time after December 3, 2003. Warrants
that become exercisable after December 3, 2002 and 2003
will become exercisable at an average price of our common stock
fifteen trading days immediately preceding and succeeding
December 3, 2002 and 2003. Included in the total common
stock warrants outstanding at December 31, 2001, are
69,424 warrants issued prior to 1997, in connection with
certain collaborative agreements with exercise prices ranging
from $0.0033 to $6.60. 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, 2001:

|                                  |       |  |           |            | 
|--------------------------------- | ----- |  | --------- | ---------- | 
|Stock options outstanding         |       |  | 9,373,447 |           
|Warrants to purchase common stock |       |  | 1,604,629 |           
|Employee stock purchase plan      |       |  | 375,425   |           
|Stock options available for grant |       |  | 1,659,660 |           
|Conversion of preferred stock     |       |  | 2,936,577 |           
|                                  |       |  |           |           
|                                  | Total |  |           | 15,949,738 | 
|                                  |       |  |           |           

10.     Income
Taxes

At December 31, 2001 and 2000, we had net
operating loss carryforwards of approximately
$390.4 million and $337.1 million, respectively, and
research and experimentation credit carryforwards of
approximately $18.4 million and $13.8 million,
respectively, which begin to expire in 2009. 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 (the Code). During
the period 1995 through 2000, 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.

88



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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
$30.1 million during 2001 and $73.1 million during
2000. The effects of temporary differences and carryforwards
that give rise to deferred tax assets and liabilities are as
follows (in thousands):

|                          |                                                                           |              |         |          |   |   |         |          |  
|------------------------- | ------------------------------------------------------------------------- | ------------ | ------- | -------- | - | - | ------- | -------- | -
|                          |                                                                           |             
|                          |                                                                           | December 31,
|                          |                                                                           |             
|                          |                                                                           | 2001         |         | 2000    
|                          |                                                                           |              |         |         
|Deferred tax assets:      |                                                                           |              |         |          |   |   |         |         
|                          | Net operating loss carryforwards                                          |              | $       | 132,722  |   |   | $       | 112,475  |  
|                          | Research and experimentation credit and foreign
	tax credit carryforwards |              |         | 18,479   |   |   |         | 13,852   |  
|                          | Depreciation                                                              |              |         | 92       |   |   |         | 739      |  
|                          | Deferred revenue                                                          |              |         | 8,889    |   |   |         | 6,840    |  
|                          | Financial statement expenses not deducted on tax
	return                  |              |         | 4,610    |   |   |         | 682      |  
|                          |                                                                           |              |         |          |   |   |         |         
|                          |                                                                           |              | 164,792 |          |   |   | 134,588 |         
|Deferred tax liabilities: |                                                                           |              |         |          |   |   |         |         
|                          | Tax return expenses not charged against financial
	statements             |              |         | (313     | ) |   |         | (250     | )
|                          |                                                                           |              |         |          |   |   |         |         
|                          |                                                                           |              | (313    | )        |   |   | (250    | )       
|                          |                                                                           |              |         |          |   |   |         |         
|                          | Net deferred tax assets                                                   |              |         | 164,479  |   |   |         | 134,338  |  
|                          | Less valuation allowance                                                  |              |         | (164,479 | ) |   |         | (134,338 | )
|                          |                                                                           |              |         |          |   |   |         |         
|Net deferred tax assets   |                                                                           | $            |        |          |   | $ |        |         
|                          |                                                                           |              |         |          |   |   |         |         

11.     401(k)
Plan

We have a tax-qualified employee savings and
retirement plan (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 ($10,500 in 2001) 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
$577,000 in 2001, $280,000 in 2000 and $224,000 in 1999.

12.     Related-Party
Transactions

Employee loans totaling $830,000 and
$1.1 million are included in other assets on the
accompanying balance sheets as of December 31, 2001 and
2000, respectively. The loans are non-interest-bearing with
various terms ranging from four to ten years and are secured by
a second deed of trust on the employees residence. The
forgiven amount and the repaid amount is calculated on a
pro-rata basis over years one through ten of continued
employment. In the event the employee ceases to be employed by
us, the loan becomes interest-bearing and due within a
reasonable period not to exceed three months.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

In 2001, we extended loans totaling approximately
$200,000 to executive officers. The loans are secured by a
second deed of trust on the employees residence. Each of the
notes has a term of four years and bears interest at
approximately 5.5%. The full balance of principal and
accumulated interest is due at maturity.

13.     Commitments
and Contingencies

On September 10, 2001 IDEC Pharmaceuticals,
Inc., or IDEC, filed a complaint in the U.S. District
Court, Southern District of California, against us and the
Regents of the University of Michigan seeking declaratory
judgment of non-infringement and invalidity of certain patents
related to IDECs Zevalin product for the treatment of
non-Hodgkins lymphoma. On September 12, 2001 we and
GSK filed a lawsuit in the U.S. District Court, District of
Delaware, alleging that IDECs activities since the
Oncologic Drugs Advisory Committees recommendation for
approval of Zevalin infringes Corixas U.S. Patent
Nos. 5,595,721, 6,015,542 and 6,090,365. Issued claims in
the subject patents cover imaging, composition of matter and
methods-of-use in the treatment of non-Hodgkins lymphoma.
Pursuant to our lawsuit against IDEC, we and GSK are requesting
that the court declare that IDEC is willingly infringing our
patents. In addition, we are seeking available remedies under
the patent laws including monetary damages and permanent
injunctive relief. On September 28, 2001 we and GSK amended
the complaint to add the Regents of the University of Michigan
as an additional plaintiff. On February 13, 2002, we, GSK
and the Regents of the University of Michigan filed an answer
and counterclaims to IDECs amended complaint in the
U.S. District Court, Southern District of California. By
way of order of February 25, 2002, the Delaware District
Court has ordered the case transferred to the U.S. District
Court, Southern District of California. Litigation is ongoing
and we are unable to predict an outcome at this time. However,
an unfavorable outcome of this matter could have a materially
adverse affect on the Companys business, future results of
operations, financial position or cash flows.

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.

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CORIXA CORPORATION


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)

14.     Quarterly
Financial Data (Unaudited)

The following table contains selected unaudited
statement of operations information for each quarter of 2001 and
2000. The Company believes that the following information
reflects all 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)
|2001                                                                                         |  |                                       |         |    |  |    |         |    |  |   |         |   |  |   |          |  
|Revenue                                                                                      |  | $                                     | 13,501  |    |  | $  | 15,625  |    |  | $ | 14,048  |   |  | $ | 14,891   |  
|Net loss                                                                                     |  |                                       | (41,972 | )  |  |    | (31,793 | )  |  |   | (40,027 | ) |  |   | (34,245  | )
|Basic and diluted net loss per common share                                                  |  |                                       | (1.05   | )  |  |    | (0.79   | )  |  |   | (0.99   | ) |  |   | (0.83    | )
|2000                                                                                         |  |                                       |         |    |  |    |         |    |  |   |         |   |  |   |          |  
|Revenue                                                                                      |  | $                                     | 9,513   |    |  | $  | 7,889   |    |  | $ | 7,997   |   |  | $ | 11,575   |  
|Loss before cumulative effect of change in
	accounting principle                             |  |                                       | (8,295  | )  |  |    | (8,660  | )  |  |   | (6,554  | ) |  |   | (637,322 | )
|Cumulative effect of change in accounting
	principle(1)                                      |  |                                       | 6,338   |    |  |    |        |    |  |   |        |   |  |   |         |  
|Net loss(2)                                                                                  |  |                                       | (14,633 | )  |  |    | (8,660  | )  |  |   | (6,554  | ) |  |   | (637,322 | )
|Basic and diluted loss per share before
	cumulative effect of change in accounting principle |  |                                       | (0.45   | )  |  |    | (0.43   | )  |  |   | (0.32   | ) |  |   | (27.81   | )
|Basic and diluted net loss per common share                                                  |  |                                       | (0.79   | )  |  |    | (0.43   | )  |  |   | (0.32   | ) |  |   | (27.81   | )



---



|    |                                                                                                                                                                                                                                        
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | As a result of our change in accounting method
	for nonrefundable up-front fees as of January 1, 2000,
	certain fees recognized in prior periods have been deferred and
	are being recognized over the terms of the related agreements.
|   
|(2) | The quarter ended December 31, 2000 includes
	our in-process research and development charge of
	$629.7 million.                                                                                                                       

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

None.

PART III

Item 10.     Directors
and Executive Officers of the Registrant

The information required by this item is
incorporated by reference to the information set forth under the
caption Executive Officers in our 2002 Proxy
Statement to be filed within 120 days after the end of our
fiscal year ended December 31, 2001.

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
2002 Proxy Statement to be filed within 120 days after the
end of our fiscal year ended December 31, 2001.

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 2002 Proxy Statement to be
filed within 120 days after the end of our fiscal year
ended December 31, 2001.

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 2002 Proxy Statement to be filed
within 120 days after the end of our fiscal year ended
December 31, 2001.






PART IV







Item 14.     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, 2001 and 2000.                                   
| |     | Consolidated Statements of Operations 
	Years Ended December 31, 2001, 2000 and 1999.           
| |     | Consolidated Statements of Stockholders
	Equity  Years Ended December 31, 2001, 2000 and
	1999.
| |     | Consolidated Statements of Cash Flows 
	Years Ended December 31, 2001, 2000 and 1999.           
| |     | 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 are set forth below.

|        |     |                     |  |                                                                                                                                                 |  |  |     | 
|------- | --- | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |     |                     |  |                                                                                                                                                
|Number  |     | Exhibit Description |  | Reference                                                                                                                                      
|        |     |                     |  |                                                                                                                                                
|        | 3.1 |                     |  | Amended and Restated Certificate of Incorporation
	of Corixa Corporation                                                                        |  |  | (A) | 
|        | 3.2 |                     |  | Certificate of Designation of Series A
	Preferred Stock                                                                                         |  |  | (E) | 
|        | 3.3 |                     |  | Certificate of Designation of Series B
	Preferred Stock                                                                                         |  |  | (F) | 
|        | 3.4 |                     |  | Bylaws of Corixa Corporation                                                                                                                    |  |  | (T) | 
|        | 4.1 |                     |  | Amended and Restated Investors Rights
	Agreement dated as of May 10, 1996 between Corixa
	Corporation and certain holders of its capital stock |  |  | (A) | 

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|        |       |                     |  |                                                                                                                                                                                                                                                                          |  |  |     | 
|------- | ----- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                                                         
|Number  |       | Exhibit Description |  | Reference                                                                                                                                                                                                                                                               
|        |       |                     |  |                                                                                                                                                                                                                                                                         
|        | 10.1  |                     |  | 2001 Stock Incentive Plan                                                                                                                                                                                                                                                |  |  | (R) | 
|        | 10.2  |                     |  | 1997 Directors Stock Option Plan and form
	of stock option agreement                                                                                                                                                                                                    |  |  | (A) | 
|        | 10.3  |                     |  | 2001 Employee Stock Purchase Plan and form of
	subscription agreement                                                                                                                                                                                                    |  |  | (S) | 
|        | 10.4  |                     |  | Corixa Corporation 401(k) Savings &
	Retirement Plan                                                                                                                                                                                                                     |  |  | (A) | 
|        | 10.5  |                     |  | Form of Indemnification Agreement between Corixa
	Corporation and each director and officer of Corixa Corporation                                                                                                                                                        |  |  | (A) | 
|        | 10.6  |                     |  | 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) | 
|        | 10.7  |                     |  | Second Amendment to Columbia Building Lease dated
	as of September 25, 1998, between Corixa Corporation and
	Alexandria Real Estate Equities, Inc., successor in interest to
	Fred Hutchinson Cancer Research Center                                                     |  |  | (C) | 
|        | 10.8  |                     |  | Lease dated May 31, 1996 between Corixa
	Corporation and Health Science Properties, Inc.                                                                                                                                                                                 |  |  | (A) | 
|        | 10.9  |                     |  | First Amendment to Lease dated January 31,
	1997 between Corixa Corporation and Health Science Properties,
	Inc.                                                                                                                                                         |  |  |    | 
|        | 10.10 |                     |  | Second Amendment to Lease dated June 30,
	1997 between Corixa Corporation and Alexandria Real Estate
	Equities, Inc., formerly known as Health Science Properties, Inc.                                                                                                  |  |  |    | 
|        | 10.11 |                     |  | Third Amendment to Lease dated November 1,
	1998 between Corixa Corporation and Alexandria Real Estate
	Equities, Inc., formerly known as Health Science Properties, Inc.                                                                                                |  |  |    | 
|        | 10.12 | +                   |  | Multi-Field Vaccine Discovery Collaboration and
	License Agreement between Corixa Corporation and SmithKline
	Beecham plc, dated September 1, 1998                                                                                                                       |  |  | (D) | 
|        | 10.13 | +                   |  | Amendment No. 1, dated May 25, 2000, to
	the Multi-Field Vaccine Discovery Collaboration and License
	Agreement, dated October 28, 1998, by and between Corixa
	Corporation and SmithKline Beecham plc                                                                   |  |  | (Q) | 
|        | 10.14 | *                   |  | Letter Agreement, dated as of August 16,
	2001, between Corixa Corporation and SmithKline Beecham plc,
	regarding the Multi-Field Vaccine Discovery Collaboration and
	License Agreement between Corixa Corporation and SmithKline
	Beecham plc, dated September 1, 1998 |  |  |    | 
|        | 10.15 | +                   |  | Equity Line of Credit and Securities Purchase
	Agreement between Corixa Corporation and Castle Gate, L.L.C.,
	dated April 8, 1999                                                                                                                                        |  |  | (E) | 
|        | 10.16 | +                   |  | Registration Rights Agreement between Corixa
	Corporation and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                                                                   |  |  | (E) | 
|        | 10.17 | +                   |  | Standstill Agreement between Corixa Corporation
	and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                                                                            |  |  | (E) | 
|        | 10.18 | +                   |  | Warrant Number CG-1 issued by Corixa Corporation
	to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                                                                |  |  | (E) | 
|        | 10.19 | +                   |  | Warrant Number CG-2 issued by Corixa Corporation
	to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                                                                |  |  | (E) | 
|        | 10.20 | +                   |  | 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                                                 |  |  | (E) | 
|        | 10.21 | +                   |  | 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                                                 |  |  | (E) | 
|        | 10.22 | +                   |  | Amendment No. 1, dated December 21,
	2000, to the Equity Line of Credit and Securities Purchase
	Agreement, dated April 8, 1999, by and between Corixa
	Corporation and Castle Gate, L.L.C.                                                                              |  |  | (F) | 

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|        |       |                     |  |                                                                                                                                                                                                                                                           |  |  |     | 
|------- | ----- | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                                          
|Number  |       | Exhibit Description |  | Reference                                                                                                                                                                                                                                                
|        |       |                     |  |                                                                                                                                                                                                                                                          
|        | 10.23 | +                   |  | Amendment No. 2, dated December 29,
	2000, to the Equity Line of Credit and Securities Purchase
	Agreement, dated April 8, 1999, by and between Corixa
	Corporation and Castle Gate, L.L.C.                                                               |  |  | (F) | 
|        | 10.24 | +                   |  | Warrant Number CG-5 issued by Corixa Corporation
	to Castle Gate on December 29, 2000                                                                                                                                                                     |  |  | (F) | 
|        | 10.25 | +                   |  | Distribution and Supply Agreement, dated
	March 11, 1998, by and between Corixa Corporation, Schering
	Corporation and RibiImmunoChem Research, Inc., as amended                                                                                          |  |  | (T) | 
|        | 10.26 | +                   |  | Distribution and Supply Agreement, dated
	March 11, 1998, by and between Corixa Corporation,
	Schering-Plough Ltd. and RibiImmunoChem Research, Inc., as
	amended                                                                                         |  |  | (T) | 
|        | 10.27 |                     |  | Separation Agreement between Corixa Corporation
	and Mark McDade, dated November 27, 2000                                                                                                                                                                 |  |  | (T) | 
|        | 10.28 | +                   |  | Development, Commercialization and License
	Agreement, dated August 15, 2000 by and between Corixa
	Corporation and Medicis Pharmaceutical Corporation                                                                                                    |  |  | (Q) | 
|        | 10.29 |                     |  | Coulter Pharmaceutical, Inc. 1996 Employee Stock
	Purchase Plan                                                                                                                                                                                           |  |  | (I) | 
|        | 10.30 |                     |  | Coulter Pharmaceutical, Inc. 1995 Equity
	Incentive Plan                                                                                                                                                                                                  |  |  | (I) | 
|        | 10.31 |                     |  | Coulter Pharmaceutical, Inc. 1996 Equity
	Incentive Plan                                                                                                                                                                                                  |  |  | (I) | 
|        | 10.32 |                     |  | Assignment Agreement between Coulter
	Pharmaceutical, Inc., Beckman Coulter and certain investors,
	dated February 24, 1995                                                                                                                               |  |  | (J) | 
|        | 10.33 | +                   |  | Development Agreement between Coulter
	Pharmaceutical, Inc. and MDS Nordion Inc., dated
	November 15, 1995                                                                                                                                                |  |  | (J) | 
|        | 10.34 | +                   |  | Contract Research and Development Agreement, by
	and between Coulter Pharmaceutical, Inc. and Dr. Karl
	Thomas GmbH, dated October 22, 1997                                                                                                               |  |  | (M) | 
|        | 10.35 | +                   |  | Supply Agreement between Coulter Pharmaceutical,
	Inc. and MDS Nordion Inc., dated August 31, 1998                                                                                                                                                        |  |  | (O) | 
|        | 10.36 | +                   |  | Facilities Agreement between Coulter
	Pharmaceutical, Inc. and MDS Nordion Inc., dated August 31,
	1998                                                                                                                                                   |  |  | (O) | 
|        | 10.37 | +                   |  | Security Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998                                                                                                                                      |  |  | (P) | 
|        | 10.38 | +                   |  | Grant of Security Interest between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998                                                                                                                              |  |  | (P) | 
|        | 10.39 | +                   |  | Loan Agreement between Coulter Pharmaceutical,
	Inc. and SmithKline Beecham Corporation, dated October 23,
	1998                                                                                                                                          |  |  | (P) | 
|        | 10.40 | +                   |  | Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998                                                                                                                                 |  |  | (P) | 
|        | 10.41 | +                   |  | Amendment No. 1, dated November 30,
	1998, to the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham, dated
	October 23, 1998                                                                                           |  |  | (P) | 
|        | 10.42 | *                   |  | Letter Agreement between Coulter Pharmaceutical,
	Inc. and SmithKline Beecham Corporation, dated April 20,
	2000, regarding the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998 |  |  |    | 
|        | 10.43 | *                   |  | Letter Agreement between Corixa Corporation and
	SmithKline Beecham Corporation, dated February 12, 2001,
	regarding the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998        |  |  |    | 

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|        |       |                     |  |                                                                                                                                                                                                                                                   |  |  |     | 
|------- | ----- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                                  
|Number  |       | Exhibit Description |  | Reference                                                                                                                                                                                                                                        
|        |       |                     |  |                                                                                                                                                                                                                                                  
|        | 10.44 | *                   |  | Letter Agreement between Corixa Corporation and
	SmithKline Beecham Corporation, dated October 18, 2001,
	regarding the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998 |  |  |    | 
|        | 10.45 | +                   |  | Supply Agreement between Coulter Pharmaceutical,
	Inc and Boehringer Ingelheim Pharma KG, dated November 3,
	1998                                                                                                                                 |  |  | (P) | 
|        | 10.46 |                     |  | Satisfaction Agreement, dated June 28, 2001
	between Michael F. Bigham and Corixa Corporation                                                                                                                                                     |  |  | (S) | 
|        | 10.47 |                     |  | Consulting Agreement, dated June 28, 2001
	between Michael F. Bigham and Corixa Corporation                                                                                                                                                       |  |  | (S) | 
|        | 10.48 |                     |  | Form of Bexxar Stock Award Agreement, dated
	October 15, 2000 between Corixa Corporation and certain
	directors and officers of Corixa Corporation                                                                                                |  |  | (S) | 
|        | 10.49 |                     |  | Schedule of officers and directors of Corixa
	Corporation party to Bexxar Stock Award Agreement                                                                                                                                                   |  |  | (S) | 
|        | 10.50 |                     |  | Form of Corixa Corporation Executive Employment
	Agreement                                                                                                                                                                                        |  |  | (S) | 
|        | 10.51 |                     |  | Schedule of officers party to Corixa Corporation
	Executive Employment Agreement                                                                                                                                                                  |  |  | (S) | 
|        | 10.52 | *                   |  | Development, Commercialization and License
	Agreement dated October 29, 2001 between Corixa Corporation
	and Amersham PLC                                                                                                                         |  |  | (U) | 
|        | 10.53 | *                   |  | Manufacturing and Supply Agreement dated
	October 29, 2001 between Corixa Corporation and Amersham PLC                                                                                                                                            |  |  | (U) | 
|        | 10.54 | *                   |  | Stock Purchase Agreement dated October 29,
	2001 between Corixa Corporation and Amersham Health, Inc.                                                                                                                                             |  |  | (U) | 
|        | 10.55 |                     |  | Private Equity Line Financing Agreement dated
	December 3, 2001 between Corixa Corporation and BNY Capital
	Markets, Inc.                                                                                                                         |  |  | (U) | 
|        | 10.56 |                     |  | Registration Rights Agreement dated
	December 3, 2001 between Corixa Corporation and BNY Capital
	Markets, Inc.                                                                                                                                   |  |  | (U) | 
|        | 10.57 |                     |  | Form of warrant issued by Corixa Corporation to
	employees of Shoreline Pacific, LLC on December 3, 2001                                                                                                                                          |  |  | (U) | 
|        | 10.58 |                     |  | Secured Promissory Note by Steven G. Reed, Ph.D.
	and Marianne T. Reed in favor of Corixa Corporation, dated
	December 31, 2001                                                                                                                   |  |  |    | 
|        | 10.59 |                     |  | Secured Promissory Note by Kenneth A. Grabstein,
	Ph.D. and Teresa A. Grabstein in favor of Corixa Corporation,
	dated December 31, 2001                                                                                                          |  |  |    | 
|        | 10.60 |                     |  | Loan Agreement between Corixa Corporation and BNP
	Paribas, dated as of August 3, 2001                                                                                                                                                            |  |  |    | 
|        | 10.61 | +                   |  | Collaboration Agreement dated May 21, 1999
	between Corixa Corporation and Inpharzam International                                                                                                                                                |  |  | (W) | 
|        | 10.62 | +                   |  | License and Collaborative Research Agreement
	dated June 15, 1999 between Corixa Corporation and Japan
	Tobacco Inc.                                                                                                                              |  |  | (W) | 
|        | 10.63 | +                   |  | Research Agreement dated March 26, 1999
	between Corixa Corporation and the Infectious Disease Research
	Institute                                                                                                                                |  |  | (V) | 
|        | 10.64 | *                   |  | Development and License Agreement dated
	August 16, 1999 between Zenyaku Kogyo Co., Ltd. and Corixa
	Corporation                                                                                                                                  |  |  |    | 
|        | 10.65 |                     |  | First Amendment dated February 28, 2002 to
	Private Equity Line Financing Agreement dated as of
	December 3, 2001, between Corixa Corporation and BNY
	Capital Markets, Inc.                                                                      |  |  |    | 
|        | 10.66 |                     |  | First Amendment dated February 28, 2002 to
	Registration Rights Agreement dated as of December 3, 2001,
	between Corixa Corporation and BNY Capital Markets, Inc.                                                                                 |  |  |    | 

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|        |       |                     |  |                                                                                                                                                                                                                                     |  |  |     | 
|------- | ----- | ------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                    
|Number  |       | Exhibit Description |  | Reference                                                                                                                                                                                                                          
|        |       |                     |  |                                                                                                                                                                                                                                    
|        |       |                     |  |                                                                                                                                                                                                                                     |  |  |    | 
|        | 10.67 | *                   |  | Letter Agreement between Corixa Corporation and
	Zenyaku Kogyo Co., Ltd, dated August 6, 2001, regarding the
	Development and License Agreement between Corixa Corporation and
	Zenyaku Kogyo Co., dated August 16, 1999.           |  |  |    | 
|        | 10.68 | *                   |  | Letter Agreement between Corixa Corporation and
	Japan Tobacco Inc., dated September 28, 2001, regarding the
	license and Collaborative Research Agreement between Corixa
	Corporation and Japan Tobacco Inc., dated June 15, 1999. |  |  | (M) | 
|        | 10.69 | +                   |  | Lease dated November 7, 1997 between HMS Gateway
	Office L.P. and Coulter Pharmaceutical                                                                                                                                            |  |  | (P) | 
|        | 10.70 | +                   |  | First Amendment to Lease dated November 10,
	1998 between HMS Gateway Office L.P. and Coulter Pharmaceutical                                                                                                                        |  |  |    | 
|        | 10.71 |                     |  | Second Amendment to Lease dated May 19, 2000
	between HMS Gateway Office L.P. and Coulter Pharmaceutical                                                                                                                            |  |  |    | 
|        | 10.72 | *                   |  | Lease dated May 19, 2000 between HMS Gateway
	Office L.P. and Coulter Pharmaceutical                                                                                                                                                |  |  |    | 
|        | 21.1  |                     |  | Subsidiaries of Corixa Corporation                                                                                                                                                                                                  |  |  |    | 
|        | 23.1  |                     |  | Consent of Ernst and Young, LLP, Independent
	Auditors                                                                                                                                                                              |  |  | (H) | 
|        | 24.1  |                     |  | Power of Attorney                                                                                                                                                                                                                   |  |  |     | 



---



|    |  |                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. 333-32147), filed with the Commission
	on August 11, 1998.                                                               
|   
|(C) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 333-32147), filed with the Commission
	on November 12, 1998.                                                             
|   
|(D) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 0-22891), filed with the Commission
	on October 28, 1998.                                                                 
|   
|(E) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 0-22891), filed with the Commission
	on April 23, 1999.                                                                   
|   
|(F) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 0-22891), filed with the Commission
	on January 4, 2001.                                                                  
|   
|(G) |  | Incorporated herein by reference to Item 4
	of this report on Form 10-K.                                                                                                                   
|   
|(H) |  | Incorporated herein by reference to the
	Power of Attorney granted below in this report on
	Form 10-K.                                                                                   
|   
|(I) |  | 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.                                   
|   
|(J) |  | 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.
|   
|(K) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-Q (File No. 000-21905),
	filed with the Commission on August 5, 1997.                                          
|   
|(L) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 8-K (File No. 000-21905),
	filed with the Commission on September 29, 1997.                                       
|   
|(M) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-K (File No. 000-21905),
	filed with the Commission on March 27, 1998.                                          
|   
|(N) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-Q (File No. 000-21905),
	filed with the Commission on August 13, 1998.                                         
|   
|(O) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-Q (File No. 000-21905),
	filed with the Commission on November 13, 1998.                                       
|   
|(P) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-K,(File No. 000-21905),
	filed with the Commission on March 30, 1999.                                          

96



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##### Table of Contents





|    |  |                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(Q) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on November 6, 2000.                       
|   
|(R) |  | 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.
|   
|(S) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on August 10, 2001.                        
|   
|(T) |  | Incorporated herein by reference to Corixas
	Form 10-K (File No. 000-22891), filed with the Commission
	on March 30, 2001.                         
|   
|(U) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 000-22891), filed with the Commission on
	December 17, 2001.                       
|   
|(V) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on May 6, 1999.                            
|   
|(W) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on August 9, 1999.                         
|   
|+   |  | Confidential treatment granted by order of the
	SEC.                                                                                                
|   
|*   |  | Confidential treatment sought by Corixa
	Corporation from the SEC.                                                                                  

(b) Reports on Form 8-K

On December 17, 2001 Corixa filed a Current
Report on Form 8-K stating under Item 5. Other
Events that on October 29, 2001, Corixa and Amersham
Health announced that they had entered into an agreement whereby
Amersham Health will market BEXXAR (tositumomab,
iodine I 131 tositumomab) in Europe.

On December 17, 2001 Corixa filed a Current
Report on Form 8-K stating under Item 5. Other
Events that on December 3, 2001, Corixa announced
that it had entered into a private equity line financing
agreement with BNY Capital Markets, Inc.

97



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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                            
| | Vice President and Chief Financial
	Officer

Date: March 1, 2002






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 1, 2002
|/s/ MICHELLE BURRISMichelle Burris     |  | Senior Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer) |  | March 1, 2002
|/s/ MARK MCDADEMark McDade             |  | Director                                                                                        |  | March 1, 2002
|/s/ MICHAEL F. BIGHAMMichael F. Bigham |  | Director                                                                                        |  | March 1, 2002
|/s/ JOSEPH L. LACOBJoseph L. Lacob     |  | Director                                                                                        |  | March 1, 2002
|/s/ ARNOLD ORONSKYArnold Oronsky       |  | Director                                                                                        |  | March 1, 2002
|/s/ JAMES YOUNGJames Young             |  | Director                                                                                        |  | March 1, 2002
|/s/ ROBERT MOMSENRobert Momsen         |  | Director                                                                                        |  | March 1, 2002
|/s/ SAMUEL R. SAKSSamuel R. Saks       |  | Director                                                                                        |  | March 1, 2002

98



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##### Table of Contents



EXHIBIT INDEX

|        |       |                     |  |                                                                                                                                                                                                                                                                          |  |  |     | 
|------- | ----- | ------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                                                         
|Number  |       | Exhibit Description |  | Page                                                                                                                                                                                                                                                                    
|        |       |                     |  |                                                                                                                                                                                                                                                                         
|        | 3.1   |                     |  | Amended and Restated Certificate of Incorporation
	of Corixa Corporation                                                                                                                                                                                                 |  |  | (A) | 
|        | 3.2   |                     |  | Certificate of Designation of Series A
	Preferred Stock                                                                                                                                                                                                                  |  |  | (E) | 
|        | 3.3   |                     |  | Certificate of Designation of Series B
	Preferred Stock                                                                                                                                                                                                                  |  |  | (F) | 
|        | 3.4   |                     |  | Bylaws of Corixa Corporation                                                                                                                                                                                                                                             |  |  | (T) | 
|        | 4.1   |                     |  | Amended and Restated Investors Rights
	Agreement dated as of May 10, 1996 between Corixa
	Corporation and certain holders of its capital stock                                                                                                                          |  |  | (A) | 
|        | 10.1  |                     |  | 2001 Stock Incentive Plan                                                                                                                                                                                                                                                |  |  | (R) | 
|        | 10.2  |                     |  | 1997 Directors Stock Option Plan and form
	of stock option agreement                                                                                                                                                                                                    |  |  | (A) | 
|        | 10.3  |                     |  | 2001 Employee Stock Purchase Plan and form of
	subscription agreement                                                                                                                                                                                                    |  |  | (S) | 
|        | 10.4  |                     |  | Corixa Corporation 401(k) Savings &
	Retirement Plan                                                                                                                                                                                                                     |  |  | (A) | 
|        | 10.5  |                     |  | Form of Indemnification Agreement between Corixa
	Corporation and each director and officer of Corixa Corporation                                                                                                                                                        |  |  | (A) | 
|        | 10.6  |                     |  | 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) | 
|        | 10.7  |                     |  | Second Amendment to Columbia Building Lease dated
	as of September 25, 1998, between Corixa Corporation and
	Alexandria Real Estate Equities, Inc., successor in interest to
	Fred Hutchinson Cancer Research Center                                                     |  |  | (C) | 
|        | 10.8  |                     |  | Lease dated May 31, 1996 between Corixa
	Corporation and Health Science Properties, Inc.                                                                                                                                                                                 |  |  | (A) | 
|        | 10.9  |                     |  | First Amendment to Lease dated January 31,
	1997 between Corixa Corporation and Health Science Properties,
	Inc.                                                                                                                                                         |  |  |    | 
|        | 10.10 |                     |  | Second Amendment to Lease dated June 30,
	1997 between Corixa Corporation and Alexandria Real Estate
	Equities, Inc., formerly known as Health Science Properties, Inc.                                                                                                  |  |  |    | 
|        | 10.11 |                     |  | Third Amendment to Lease dated November 1,
	1998 between Corixa Corporation and Alexandria Real Estate
	Equities, Inc., formerly known as Health Science Properties, Inc.                                                                                                |  |  |    | 
|        | 10.12 | +                   |  | Multi-Field Vaccine Discovery Collaboration and
	License Agreement between Corixa Corporation and SmithKline
	Beecham plc, dated September 1, 1998                                                                                                                       |  |  | (D) | 
|        | 10.13 | +                   |  | Amendment No. 1, dated May 25, 2000, to
	the Multi-Field Vaccine Discovery Collaboration and License
	Agreement, dated October 28, 1998, by and between Corixa
	Corporation and SmithKline Beecham plc                                                                   |  |  | (Q) | 
|        | 10.14 | *                   |  | Letter Agreement, dated as of August 16,
	2001, between Corixa Corporation and SmithKline Beecham plc,
	regarding the Multi-Field Vaccine Discovery Collaboration and
	License Agreement between Corixa Corporation and SmithKline
	Beecham plc, dated September 1, 1998 |  |  |    | 
|        | 10.15 | +                   |  | Equity Line of Credit and Securities Purchase
	Agreement between Corixa Corporation and Castle Gate, L.L.C.,
	dated April 8, 1999                                                                                                                                        |  |  | (E) | 
|        | 10.16 | +                   |  | Registration Rights Agreement between Corixa
	Corporation and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                                                                   |  |  | (E) | 
|        | 10.17 | +                   |  | Standstill Agreement between Corixa Corporation
	and Castle Gate, L.L.C., dated April 8, 1999                                                                                                                                                                            |  |  | (E) | 
|        | 10.18 | +                   |  | Warrant Number CG-1 issued by Corixa Corporation
	to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                                                                |  |  | (E) | 
|        | 10.19 | +                   |  | Warrant Number CG-2 issued by Corixa Corporation
	to Castle Gate, L.L.C. on April 8, 1999                                                                                                                                                                                |  |  | (E) | 



---



##### Table of Contents



|        |       |                     |  |                                                                                                                                                                                                                                                           |  |  |     | 
|------- | ----- | ------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                                          
|Number  |       | Exhibit Description |  | Page                                                                                                                                                                                                                                                     
|        |       |                     |  |                                                                                                                                                                                                                                                          
|        | 10.20 | +                   |  | 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                                  |  |  | (E) | 
|        | 10.21 | +                   |  | 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                                  |  |  | (E) | 
|        | 10.22 | +                   |  | Amendment No. 1, dated December 21,
	2000, to the Equity Line of Credit and Securities Purchase
	Agreement, dated April 8, 1999, by and between Corixa
	Corporation and Castle Gate, L.L.C.                                                               |  |  | (F) | 
|        | 10.23 | +                   |  | Amendment No. 2, dated December 29,
	2000, to the Equity Line of Credit and Securities Purchase
	Agreement, dated April 8, 1999, by and between Corixa
	Corporation and Castle Gate, L.L.C.                                                               |  |  | (F) | 
|        | 10.24 | +                   |  | Warrant Number CG-5 issued by Corixa Corporation
	to Castle Gate on December 29, 2000                                                                                                                                                                     |  |  | (F) | 
|        | 10.25 | +                   |  | Distribution and Supply Agreement, dated
	March 11, 1998, by and between Corixa Corporation, Schering
	Corporation and RibiImmunoChem Research, Inc., as amended                                                                                          |  |  | (T) | 
|        | 10.26 | +                   |  | Distribution and Supply Agreement, dated
	March 11, 1998, by and between Corixa Corporation,
	Schering-Plough Ltd. and RibiImmunoChem Research, Inc., as
	amended                                                                                         |  |  | (T) | 
|        | 10.27 |                     |  | Separation Agreement between Corixa Corporation
	and Mark McDade, dated November 27, 2000                                                                                                                                                                 |  |  | (T) | 
|        | 10.28 | +                   |  | Development, Commercialization and License
	Agreement, dated August 15, 2000 by and between Corixa
	Corporation and Medicis Pharmaceutical Corporation                                                                                                    |  |  | (Q) | 
|        | 10.29 |                     |  | Coulter Pharmaceutical, Inc. 1996 Employee Stock
	Purchase Plan                                                                                                                                                                                           |  |  | (I) | 
|        | 10.30 |                     |  | Coulter Pharmaceutical, Inc. 1995 Equity
	Incentive Plan                                                                                                                                                                                                  |  |  | (I) | 
|        | 10.31 |                     |  | Coulter Pharmaceutical, Inc. 1996 Equity
	Incentive Plan                                                                                                                                                                                                  |  |  | (I) | 
|        | 10.32 |                     |  | Assignment Agreement between Coulter
	Pharmaceutical, Inc., Beckman Coulter and certain investors,
	dated February 24, 1995                                                                                                                               |  |  | (J) | 
|        | 10.33 | +                   |  | Development Agreement between Coulter
	Pharmaceutical, Inc. and MDS Nordion Inc., dated
	November 15, 1995                                                                                                                                                |  |  | (J) | 
|        | 10.34 | +                   |  | Contract Research and Development Agreement, by
	and between Coulter Pharmaceutical, Inc. and Dr. Karl
	Thomas GmbH, dated October 22, 1997                                                                                                               |  |  | (M) | 
|        | 10.35 | +                   |  | Supply Agreement between Coulter Pharmaceutical,
	Inc. and MDS Nordion Inc., dated August 31, 1998                                                                                                                                                        |  |  | (O) | 
|        | 10.36 | +                   |  | Facilities Agreement between Coulter
	Pharmaceutical, Inc. and MDS Nordion Inc., dated August 31,
	1998                                                                                                                                                   |  |  | (O) | 
|        | 10.37 | +                   |  | Security Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998                                                                                                                                      |  |  | (P) | 
|        | 10.38 | +                   |  | Grant of Security Interest between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998                                                                                                                              |  |  | (P) | 
|        | 10.39 | +                   |  | Loan Agreement between Coulter Pharmaceutical,
	Inc. and SmithKline Beecham Corporation, dated October 23,
	1998                                                                                                                                          |  |  | (P) | 
|        | 10.40 | +                   |  | Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998                                                                                                                                 |  |  | (P) | 
|        | 10.41 | +                   |  | Amendment No. 1, dated November 30,
	1998, to the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham, dated
	October 23, 1998                                                                                           |  |  | (P) | 
|        | 10.42 | *                   |  | Letter Agreement between Coulter Pharmaceutical,
	Inc. and SmithKline Beecham Corporation, dated April 20,
	2000, regarding the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998 |  |  |    | 



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##### Table of Contents



|        |       |                     |  |                                                                                                                                                                                                                                                    |  |  |     | 
|------- | ----- | ------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                                   
|Number  |       | Exhibit Description |  | Page                                                                                                                                                                                                                                              
|        |       |                     |  |                                                                                                                                                                                                                                                   
|        | 10.43 | *                   |  | Letter Agreement between Corixa Corporation and
	SmithKline Beecham Corporation, dated February 12, 2001,
	regarding the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998 |  |  |    | 
|        | 10.44 | *                   |  | Letter Agreement between Corixa Corporation and
	SmithKline Beecham Corporation, dated October 18, 2001,
	regarding the Collaboration Agreement between Coulter
	Pharmaceutical, Inc. and SmithKline Beecham Corporation, dated
	October 23, 1998  |  |  |    | 
|        | 10.45 | +                   |  | Supply Agreement between Coulter Pharmaceutical,
	Inc and Boehringer Ingelheim Pharma KG, dated November 3,
	1998                                                                                                                                  |  |  | (P) | 
|        | 10.46 |                     |  | Satisfaction Agreement, dated June 28, 2001
	between Michael F. Bigham and Corixa Corporation                                                                                                                                                      |  |  | (S) | 
|        | 10.47 |                     |  | Consulting Agreement, dated June 28, 2001
	between Michael F. Bigham and Corixa Corporation                                                                                                                                                        |  |  | (S) | 
|        | 10.48 |                     |  | Form of Bexxar Stock Award Agreement, dated
	October 15, 2000 between Corixa Corporation and certain
	directors and officers of Corixa Corporation                                                                                                 |  |  | (S) | 
|        | 10.49 |                     |  | Schedule of officers and directors of Corixa
	Corporation party to Bexxar Stock Award Agreement                                                                                                                                                    |  |  | (S) | 
|        | 10.50 |                     |  | Form of Corixa Corporation Executive Employment
	Agreement                                                                                                                                                                                         |  |  | (S) | 
|        | 10.51 |                     |  | Schedule of officers party to Corixa Corporation
	Executive Employment Agreement                                                                                                                                                                   |  |  | (S) | 
|        | 10.52 | *                   |  | Development, Commercialization and License
	Agreement dated October 29, 2001 between Corixa Corporation
	and Amersham PLC                                                                                                                          |  |  | (U) | 
|        | 10.53 | *                   |  | Manufacturing and Supply Agreement dated
	October 29, 2001 between Corixa Corporation and Amersham PLC                                                                                                                                             |  |  | (U) | 
|        | 10.54 | *                   |  | Stock Purchase Agreement dated October 29,
	2001 between Corixa Corporation and Amersham Health, Inc.                                                                                                                                              |  |  | (U) | 
|        | 10.55 |                     |  | Private Equity Line Financing Agreement dated
	December 3, 2001 between Corixa Corporation and BNY Capital
	Markets, Inc.                                                                                                                          |  |  | (U) | 
|        | 10.56 |                     |  | Registration Rights Agreement dated
	December 3, 2001 between Corixa Corporation and BNY Capital
	Markets, Inc.                                                                                                                                    |  |  | (U) | 
|        | 10.57 |                     |  | Form of warrant issued by Corixa Corporation to
	employees of Shoreline Pacific, LLC on December 3, 2001                                                                                                                                           |  |  | (U) | 
|        | 10.58 |                     |  | Secured Promissory Note by Steven G. Reed, Ph.D.
	and Marianne T. Reed in favor of Corixa Corporation, dated
	December 31, 2001                                                                                                                    |  |  |    | 
|        | 10.59 |                     |  | Secured Promissory Note by Kenneth A. Grabstein,
	Ph.D. and Teresa A. Grabstein in favor of Corixa Corporation,
	dated December 31, 2001                                                                                                           |  |  |    | 
|        | 10.60 |                     |  | Loan Agreement between Corixa Corporation and BNP
	Paribas, dated as of August 3, 2001                                                                                                                                                             |  |  |    | 
|        | 10.61 | +                   |  | Collaboration Agreement dated May 21, 1999
	between Corixa Corporation and Inpharzam International                                                                                                                                                 |  |  | (W) | 
|        | 10.62 | +                   |  | License and Collaborative Research Agreement
	dated June 15, 1999 between Corixa Corporation and Japan
	Tobacco Inc                                                                                                                                |  |  | (W) | 
|        | 10.63 | +                   |  | Research Agreement dated March 26, 1999
	between Corixa Corporation and the Infectious Disease Research
	Institute                                                                                                                                 |  |  | (V) | 
|        | 10.64 | *                   |  | Development and License Agreement dated
	August 16, 1999 between Zenyaku Kogyo Co., Ltd. and Corixa
	Corporation                                                                                                                                   |  |  |    | 
|        | 10.65 |                     |  | First Amendment dated February 28, 2002 to
	Private Equity Line Financing Agreement dated as of
	December 3, 2001, between Corixa Corporation and BNY
	Capital Markets, Inc.                                                                       |  |  |    | 
|        | 10.66 |                     |  | First Amendment dated February 28, 2002 to
	Registration Rights Agreement dated as of December 3, 2001,
	between Corixa Corporation and BNY Capital Markets, Inc.                                                                                  |  |  |    | 



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##### Table of Contents



|        |       |                     |  |                                                                                                                                                                                                                                    |  |  |     | 
|------- | ----- | ------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --- | 
|Exhibit |       |                     |  |                                                                                                                                                                                                                                   
|Number  |       | Exhibit Description |  | Page                                                                                                                                                                                                                              
|        |       |                     |  |                                                                                                                                                                                                                                   
|        | 10.67 | *                   |  | Letter Agreement between Corixa Corporation and
	Zenyaku Kogyo Co., Ltd, dated August 6, 2001, regarding the
	Development and License Agreement between Corixa Corporation and
	Zenyaku Kogyo Co., dated August 16, 1999           |  |  |    | 
|        | 10.68 | *                   |  | Letter Agreement between Corixa Corporation and
	Japan Tobacco Inc., dated September 28, 2001, regarding the
	License and Collaborative Research Agreement between Corixa
	Corporation and Japan Tobacco Inc., dated June 15, 1999 |  |  |    | 
|        | 10.69 | +                   |  | Lease dated November 7, 1997 between HMS Gateway
	Office L.P. and Coulter Pharmaceutical                                                                                                                                           |  |  | (M) | 
|        | 10.70 | +                   |  | First Amendment to Lease dated November 10,
	1998 between HMS Gateway Office L.P. and Coulter Pharmaceutical                                                                                                                       |  |  | (P) | 
|        | 10.71 |                     |  | Second Amendment to Lease dated May 19, 2000
	between HMS Gateway Office L.P. and Coulter Pharmaceutical                                                                                                                           |  |  |    | 
|        | 10.72 | *                   |  | Lease dated May 19, 2000 between HMS Gateway
	Office L.P. and Coulter Pharmaceutical                                                                                                                                               |  |  |    | 
|        | 21.1  |                     |  | Subsidiaries of Corixa Corporation                                                                                                                                                                                                 |  |  |    | 
|        | 23.1  |                     |  | Consent of Ernst and Young, LLP, Independent
	Auditors                                                                                                                                                                             |  |  |    | 
|        | 24.1  |                     |  | Power of Attorney                                                                                                                                                                                                                  |  |  | (H) | 



---



|    |  |                                                                                                                                                                                            
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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. 333-32147), filed with the Commission
	on August 11, 1998.                                                               
|   
|(C) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 333-32147), filed with the Commission
	on November 12, 1998.                                                             
|   
|(D) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 0-22891), filed with the Commission
	on October 28, 1998.                                                                 
|   
|(E) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 0-22891), filed with the Commission
	on April 23, 1999.                                                                   
|   
|(F) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 0-22891), filed with the Commission
	on January 4, 2001.                                                                  
|   
|(G) |  | Incorporated herein by reference to Item 4
	of this report on Form 10-K.                                                                                                                   
|   
|(H) |  | Incorporated herein by reference to the
	Power of Attorney granted below in this report on
	Form 10-K.                                                                                   
|   
|(I) |  | 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.                                   
|   
|(J) |  | 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.
|   
|(K) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-Q (File No. 000-21905),
	filed with the Commission on August 5, 1997.                                          
|   
|(L) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 8-K (File No. 000-21905),
	filed with the Commission on September 29, 1997.                                       
|   
|(M) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-K (File No. 000-21905),
	filed with the Commission on March 27, 1998.                                          
|   
|(N) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-Q (File No. 000-21905),
	filed with the Commission on August 13, 1998.                                         
|   
|(O) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-Q (File No. 000-21905),
	filed with the Commission on November 13, 1998.                                       
|   
|(P) |  | Incorporated herein by reference to Coulter
	Pharmaceutical, Inc.s Form 10-K,(File No. 000-21905),
	filed with the Commission on March 30, 1999.                                          



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##### Table of Contents





|    |  |                                                                                                                                                     
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------
|(Q) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on November 6, 2000.                       
|   
|(R) |  | 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.
|   
|(S) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on August 10, 2001.                        
|   
|(T) |  | Incorporated herein by reference to Corixas
	Form 10-K (File No. 000-22891), filed with the Commission
	on March 30, 2001.                         
|   
|(U) |  | Incorporated herein by reference to Corixas
	Form 8-K (File No. 000-22891), filed with the Commission on
	December 17, 2001.                       
|   
|(V) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on May 6, 1999.                            
|   
|(W) |  | Incorporated herein by reference to Corixas
	Form 10-Q (File No. 000-22891), filed with the Commission
	on August 9, 1999.                         
|   
|+   |  | Confidential treatment granted by order of the
	SEC.                                                                                                
|   
|*   |  | Confidential treatment sought by Corixa
	Corporation from the SEC.