<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

            (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997

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

                         Commission File Number 0-12406

                               IMMUNEX CORPORATION
             (exact name of registrant as specified in its charter)

            Washington                                   51-0346580
   (State or other jurisdiction of          (I.R.S. Employer Identification No.)
    incorporation or organization)

                        51 University Street, Seattle, WA
                      98101 (Address of principal executive
                                    offices)

        Registrant's telephone number, including area code (206) 587-0430

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

                                      None

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

                          Common Stock, $.01 par value

     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                    Yes X     No

     Indicate by check 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 amendments to
this Form 10-K. [ X ]

     The approximate aggregate market value of the voting stock held by
nonaffiliates of the registrant as of March 10, 1998 was: $1,223,324,000.

     Common stock outstanding at March 10, 1998: 39,737,721 shares.

Documents incorporated by reference:

(1)  Portions of the Company's definitive Proxy Statement for the annual meeting
     of shareholders to be held on April 30, 1998 are  incorporated by reference
     in Part III.

<PAGE>


                                     PART I

Item 1.  Business

     This document includes certain forward-looking statements made pursuant 
to the safe harbor provisions of the Private Securities Litigation Reform Act 
of 1995. The words "believes," "anticipates," "expects" and similar 
expressions are intended to identify such forward-looking statements, but 
their absence does not mean the statement is not forward-looking. Such 
statements are subject to certain risks and uncertainties that could cause 
actual results to differ materially from those anticipated by the statements 
made by Immunex Corporation ("Immunex" or the "Company"). Factors that could 
affect the Company's actual results are described in the "Risk Factors" 
section of this document. Readers are cautioned not to place undue reliance 
on these forward-looking statements, which speak only as of the date hereof. 
The Company undertakes no obligation to publicly release the result of any 
revisions to these forward-looking statements that may be made to reflect 
events or circumstances after the date hereof or to reflect the occurrence of 
unanticipated events.

PRODUCTS

     Immunex is a biopharmaceutical company that discovers, develops, 
manufactures and markets innovative therapeutic products for the treatment of 
human diseases, including cancer, infectious diseases and immunological 
disorders.

     Immunex is currently manufacturing and marketing Leukine-Registered 
Trademark- granulocyte-macrophage colony stimulating factor ("Leukine" or 
"GM-CSF"), and marketing Novantrone-Registered Trademark- (mitoxantrone) and 
five additional oncology products (the foregoing products other than Leukine, 
together with certain other products under development, are referred to 
herein as the "Non-Biological Oncology Products") in the United States 
("U.S."). As a result of the 1993 merger (the "Merger") of Immunex and 
Lederle Oncology Corporation, a subsidiary of American Cyanamid Company 
("Cyanamid") created for the purpose of merging Cyanamid's Lederle 
Laboratories oncology business in the U.S. and Canada ("North America") (the 
"Lederle Oncology Business") with the biopharmaceutical business of Immunex, 
Immunex was assigned certain rights relating to the Non-Biological Oncology 
Products in North America. Cyanamid currently owns approximately 54.1% of the 
outstanding common stock of Immunex. In November 1994, American Home Products 
Corporation ("AHP") acquired all of the common stock of Cyanamid. Prior to 
the acquisition of Cyanamid by AHP, Immunex and AHP entered into an agreement 
under which AHP agreed to protect Immunex's rights under its agreements with 
Cyanamid and be bound by Cyanamid's obligations under such agreements, 
including certain standstill restrictions agreed to by Cyanamid in connection 
with the Merger. As discussed below, AHP or various divisions or affiliates 
of AHP, including Wyeth-Ayerst Research, Wyeth-Ayerst Laboratories and 
Wyeth-Ayerst International, Inc., have assumed certain of the rights and 
obligations of Cyanamid under the various agreements that Immunex and 
Cyanamid entered into at the time of the Merger or thereafter. In the 
following discussion, "AHP" refers to AHP, or its various divisions or 
affiliates, including Cyanamid.

     Immunex, alone or with Wyeth-Ayerst Research, is testing three 
proprietary investigational biotechnology products in human clinical trials: 
Enbrel-TM-, a soluble tumor necrosis factor ("TNF") receptor fusion protein 
("Enbrel" or "TNFR:Fc") that binds to and neutralizes TNF; Mobist-TM-, a 
cytokine that induces the proliferation of blood progenitor cells and 
specialized immune cells ("Mobist" or "Flt3-L"); and Nuvance-TM-, a soluble 
Interleukin-4 ("IL-4") receptor ("Nuvance" or "IL-4R") that binds to and 
neutralizes IL-4. In addition, Immunex is testing Leukine and Novantrone in 
clinical trials for potential supplemental indications. Immunex also expects 
to clinically test another proprietary investigational biotechnology product, 
CD40 ligand ("CD40-L"), when sufficient drug supplies are available. Immunex 
is investigating certain other potential biotherapeutics in preclinical 
research, including Interleukin-1 ("IL-1") receptor Type II ("IL-1R Type 
II"), Interleukin-15 ("IL-15"), TNF Related Apoptosis Inducing Ligand 
("TRAIL"), Interleukin-17 receptor ("IL-17R") and 4-1BB ligand ("4-1BBL"). 
Immunex and Wyeth-Ayerst Research are jointly collaborating on a preclinical 
program to develop TNF-alpha converting enzyme ("TACE") antagonists. 
Wyeth-Ayerst Research is investigating certain non-biologic compounds for 
cancer treatment and prevention.
 
     Pharmaceutical products under development are required to undergo 
several phases of testing before receiving approval for marketing. In the 
preclinical phase, a product is evaluated in animal models of human disease 
to enable preparation of an investigational new drug application ("IND"). 
There are three phases of clinical trials. In general, Phase I trials 
determine the safety of a proposed therapeutic for administration to 
patients; Phase II trials examine efficacy and dosing; and Phase III trials, 
which are typically randomized, blinded, controlled studies, measure the 
efficacy of a proposed therapeutic in comparison to approved therapies. These 
trials generate the data required for regulatory approval to market products.

                                       2
<PAGE>

     Data from human trials are submitted to the U.S. Food and Drug 
Administration (the "FDA") in a new drug application ("NDA") or a biologics 
license application ("BLA") and, with respect to products to be marketed in 
Canada, to the Canadian Health Protection Bureau ("CHPB") in a new drug 
submission ("NDS"). Data regarding manufacturing and bioequivalence of 
generic drug products are submitted to the FDA in an abbreviated NDA ("ANDA") 
and to the CHPB in an abbreviated NDS ("A/NDS"). Preparing an NDA, BLA, NDS, 
ANDA or A/NDS involves considerable data collection, verification and 
analysis.

     A summary of the Company's products is provided in the following table. 
The information in the table is provided solely for convenience of reference 
and is qualified in its entirety by the detailed discussion of each product 
and the related research and development activities following the table.

     Products for which Immunex owns marketing rights or which are in human 
clinical trials are described in the table below.

<TABLE>
<CAPTION>

                            Geographic          Development
Product                       Market               Status         Clinical Indications
-----------------------     ----------          -----------       --------------------
<S>                         <C>                 <C>               <C>
Leukine-Registered          U.S.                Marketed (1)      Bone marrow transplant engraftment (autologous
  Trademark- (GM-CSF)                                             and allogeneic) or failure, acceleration of   
                                                                  neutrophil recovery and reduction of severe   
                                                                  and life-threatening infections in patients   
                                                                  with acute myelogenous leukemia ("AML"),      
                                                                  peripheral blood progenitor cell ("PBPC")     
                                                                  mobilization and post-transplantation support 
                                                                  
                                                BLA Filed (2)     Treatment of neutropenia resulting from 
                                                                  chemotherapy in solid tumors

                            U.S. and Canada     Phase II/III      Treatment of opportunistic infections in 
                                                                  patients infected with the human 
                                                                  immunodeficiency virus ("HIV"), vaccine 
                                                                  adjuvancy, malignant melanoma

Novantrone-Registered       U.S.                Marketed          Acute nonlymphocytic leukemia ("ANLL"), 
  Trademark-                                                      hormone refractory prostate cancer ("HRPC")
  mitoxantrone

                            U.S.                Phase II          Breast cancer, Non-Hodgkin's lymphoma ("NHL"), 
                                                                  multiple sclerosis ("MS")

Thioplex-Registered         U.S.                Marketed          Palliative treatment of a variety of tumors
  Trademark-
lyophilized thiotepa

                                                Phase II          Small cell lung cancer

Methotrexate injectable     U.S.                Marketed          Various neoplastic diseases

Amicar-Registered           U.S.                Marketed          Hemostasis
  Trademark-
  aminocaproic acid

Levoprome-Registered        U.S.                Marketed          Analgesia
  Trademark-
  methotrimeprazine

Leucovorin calcium          U.S.                Marketed          Methotrexate rescue, modulation of 5-fluorouracil 
                                                                  ("5-FU") drug therapy in advanced colorectal 
                                                                  cancer 

</TABLE>

                                       3
<PAGE>

<TABLE>
<CAPTION>

                            Geographic          Development
Product                       Market               Status         Clinical Indications
-----------------------     ----------          -----------       --------------------
<S>                         <C>                 <C>               <C>
Paclitaxel injection        Canada              Marketed (3)      Breast and ovarian cancers

                            U.S.                ANDA filed        Breast and ovarian cancers

Enbrel-TM- (TNFR:Fc)        U.S. and Canada     Phase III         Rheumatoid arthritis ("RA"), disease modification 
                                                                  of RA, juvenile RA

                                                Phase I/II        Congestive heart failure ("CHF")

Mobist-TM- (Flt3-L)         U.S. and Canada     Phase II          Peripheral blood stem cell mobilization and 
                                                                  transplantation, dendritic cell growth, NHL,
                                                                  breast cancer, prostate cancer, malignant melanoma 

                                                Preclinical       Vaccine adjuvancy

Nuvance-TM- (IL-4R)         U.S. and Canada     Phase I/II        Asthma

CD40-L                      Worldwide           U.S. IND filed    B-cell lymphomas, solid tumors

</TABLE>

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

     (1) Immunex also owns marketing rights for Leukine in Canada, but 
Leukine is not currently approved in Canada.

     (2) Leukine is approved in the U.S. for the clinical indications 
described in the foregoing table. Immunex has submitted amendments to its BLA 
for GM-CSF, seeking FDA approval for additional label indications for 
prophylaxis of chemotherapy-induced neutropenia ("CIN") in patients with 
solid tumors.

     (3) Boehringer-Ingelheim (Canada) Ltd. has acquired Canadian marketing 
rights for Immunex's paclitaxel injection ("Paclitaxel Injection") product 
and is responsible for product distribution.

Cytokine Products

     The Company's biotechnology products are recombinant analogs of 
cytokines and cytokine receptors. Cytokines are protein messengers that 
coordinate the functions of immune cells (white blood cells) and certain 
other cells and tissues. Immune cells include granulocytes and macrophages, 
which are scavenger cells specialized for uptake and disposal of foreign 
particles or infectious agents; B-cells, which produce antibodies to "flag" 
foreign particles or diseased cells for destruction; cytotoxic T-cells and 
natural killer cells, which recognize, contact and kill cancerous or 
virus-infected cells; helper T-cells, which control and coordinate the 
function of other immune cells; and dendritic cells, which take up and 
process protein antigens for presentation to T-cells and B-cells. Immunex has 
developed recombinant cytokine products capable of expanding and activating 
these immune cell populations, all of which must interact to provide a normal 
immune response. Immunex has also cloned and expressed genes encoding 
cytokine receptors. Using genetic engineering techniques, Immunex has 
produced soluble versions of cytokine receptors, including fusions of soluble 
receptors with fragments of human antibodies, that have been shown to be 
capable of suppressing cytokine-induced responses by specifically binding to 
and inactivating their target cytokines. Immunex has also cloned and 
expressed genes coding for certain enzymes that are involved in secretion of 
cytokines, intracellular signalling proteins involved in immune responses, 
and viral proteins that interact with human immune proteins. These enzymes, 
signalling proteins, and viral proteins are being investigated as targets for 
small molecule drug discovery or as protein therapeutics.

     Leukine (sargramostim, GM-CSF). Leukine GM-CSF stimulates the growth and 
differentiation of granulocytes, macrophages and dendritic cells. Leukine has 
been approved by the FDA for facilitating allogeneic and autologous bone 
marrow transplant ("BMT") therapies currently used for treatment of acute 
leukemia, lymphoma, and Hodgkin's disease and in rescuing patients whose BMT 
grafts have failed; for accelerating neutrophil recovery and reducing 
mortality in treatment of patients with AML; and for use in PBPC mobilization 
and post-transplantation support. Leukine is available in lyophilized and 
multi-dose liquid formulations.

                                       4
<PAGE>

     Leukine is the subject of regulatory filings and clinical trials 
intended to result in additional FDA-approved indications. These filings and 
trials are described below. In March 1993, Immunex filed an amendment to its 
BLA for Leukine to obtain FDA approval for an additional label indication for 
prophylaxis of CIN. Since the 1993 filing, Immunex has supplemented the 
original filing with additional data as it became available. In April 1995, 
the FDA Biological Response Modifiers Committee declined to recommend 
approval of Leukine for the CIN indication. The Committee's decision not to 
recommend approval contravened a prior agreement between the FDA and Immunex 
regarding the acceptability of surrogate clinical endpoints (e.g., neutrophil 
recovery data) as primary endpoints for approval. In view of this and certain 
other issues concerning the Committee's decision-making process, Immunex has 
continued to seek approval of this indication. Immunex has met with the FDA 
to discuss various approaches to approval of this indication and updated its 
amendment by filing supplemental data acquired from ongoing clinical trials. 
Thus, the BLA amendment for the CIN indication is still pending at the FDA. 
Although Immunex believes that this amendment to the BLA for Leukine is 
approvable, no assurances can be given regarding the duration or outcome of 
the FDA review process.

     Apart from the Company's efforts to secure approval of Leukine in CIN, a 
number of clinical trials were conducted in 1997 to investigate whether 
Leukine could be approved for other uses. These investigational uses include 
HIV infections, malignant melanoma, vaccine adjuvancy, and infection 
prevention in premature neonates. The results of a small Phase I trial of 
GM-CSF completed in the fourth quarter of 1997 indicate that GM-CSF may 
increase the number of CD4+ T-cells in patients with HIV, and that GM-CSF is 
not associated with an increase in the levels of HIV in patients receiving 
antiretroviral therapies. The Company is conducting a Phase III trial of 
GM-CSF in prevention of opportunistic infections in HIV.

     In 1997 the Company announced positive results of an open-label Phase II 
trial of GM-CSF as an adjuvant therapy following surgery to remove the 
tumor(s) in patients with advanced melanoma who were at high risk for relapse 
or death. This trial demonstrated that using GM-CSF as a therapy following 
surgery increased the one-year survival rate of patients with advanced stages 
of malignant melanoma when compared to matched historical control patients. 
The Company is evaluating whether controlled Phase III trials of GM-CSF 
should be conducted for this patient population. In addition, clinical trials 
are also being conducted with various third parties to investigate the 
potential of Leukine as a vaccine adjuvant. Finally, a Phase III clinical 
trial of GM-CSF therapy for preventing infections in premature neonates was 
completed in late 1997, and while GM-CSF was generally safe and well 
tolerated by the premature neonates in the trial, the primary endpoint, which 
was a significant reduction in the incidence of infections, was not achieved.

     Mobist (Flt3-L). In 1993, Immunex cloned cDNAs encoding a ligand for the 
Flt3 receptor ("Flt3-L"). Flt3-L binds to a receptor located on primitive 
hematopoietic cells, and has been shown to be capable of mobilizing PBPC 
alone, and in combination with other cytokines such as GM-CSF or 
granulocyte-colony stimulating factor ("G-CSF"). In 1997, Immunex completed 
Phase I safety trials of Mobist as a PBPC mobilizer. The trials, which were 
conducted in healthy volunteers, showed that both single and multiple doses 
of Mobist could be safely administered. The multiple-dose trial also showed 
that Mobist increased the number of circulating PBPCs. Phase II trials of 
Mobist, in conjunction with GM-CSF or G-CSF, were begun in 1997 in patients 
with breast cancer or NHL. Mobist may also be useful as an anti-tumor agent 
or vaccine adjuvant, as a result of its capacity to generate and activate 
dendritic cells. In 1997, Immunex also commenced Phase II trials of Mobist as 
an anti-tumor agent in patients with prostate cancers or NHL.

     CD40-L. Immunex has also cloned cDNAs encoding a ligand for the cell 
surface receptor CD40. This ligand appears to be a required signal in the 
development of an antibody-based immune response. Thus, CD40-L may be useful 
as a vaccine adjuvant. In addition, soluble CD40-L has been shown to be 
useful in directly arresting the growth of certain B-cell lymphomas and 
epithelial cancers in laboratory experiments. Immunex filed an IND with the 
FDA for CD40-L in 1997. Immunex expects to commence a Phase I trial of CD40-L 
in patients with B-cell NHL and solid tumors when sufficient drug supplies 
are available.

     Interleukin-2 ("IL-2"). IL-2 is a cytokine that controls the 
proliferation and activation of T-cells. It can both augment normal immune 
function and help restore deficient immune responses. In 1983, Immunex 
entered into license agreements with Hoffmann-La Roche, Inc. and its parent, 
F. Hoffmann La Roche & Company, Limited Company of Basel, Switzerland 
(collectively, "Roche"), pursuant to which Immunex is receiving royalties on 
worldwide sales of IL-2 products by Roche and its sublicensees, including 
Chiron Corporation ("Chiron"). Chiron's Proleukin-Registered Trademark- IL-2 
is approved in the U.S., Canada and many other countries as a treatment for 
metastatic renal cancers. In late 1997, an FDA advisory committee recommended 
that FDA approve Proleukin IL-2 as a treatment for metastatic melanoma. 
Proleukin is a trademark of Chiron.

     New Cytokines. Immunex scientists have cloned genes encoding several new 
cytokines that are now being characterized in preclinical studies.

                                       5
<PAGE>

          IL-15. Immunex has cloned and expressed cDNAs encoding a cytokine 
now known as IL-15, a T-cell growth factor that mimics certain effects of 
IL-2. In pre-clinical studies, IL-15 has been shown to protect intestinal 
epithelial cells in the mucosa from the harmful effects of chemotherapy or 
radiation. Other potential uses of IL-15 that have been suggested by 
preclinical studies include use as a treatment for HIV infection or as a 
treatment for muscle atrophy. Immunex is currently evaluating its development 
strategy for IL-15, which may include licensing IL-15 rights to a 
collaborator or strategic alliance partner for continued development.

          TRAIL; 4-1BBL. Immunex has cloned TRAIL, which induces apoptosis of 
a number of tumor cell types. Recombinant TRAIL has been shown to be 
effective at reducing tumor growth in experimental animals. Recombinant 
4-1BBL is a stimulator of anti-tumor immune responses and it is being 
produced and is expected to be tested in in vivo tumor models in 1998.

          Other New Cytokines. Several other novel cytokines are currently at 
earlier stages of in vitro assessment with third-party collaborators. Immunex 
has cloned and expressed cDNAs for a family of molecules known as "ligands 
for eph-related protein kinases" or "LERKS," and in 1995, Immunex granted an 
exclusive, royalty-bearing worldwide license for neurobiology uses under its 
LERKS patent rights and technology to Genentech, Inc. ("Genentech"). In 1996, 
Immunex entered into an agreement with Biogen, Inc. ("Biogen") for 
development outside the U.S. of anti-CD40-L antibodies in the areas of 
transplantation and inflammation.

Receptor Products

     Cytokines act upon their target cells by binding to specific cell 
surface receptors. The binding of a cytokine to its receptor triggers a 
complex series of events within a responsive cell that transmits the 
cytokine's signal to that cell. This signal can stimulate cell division or 
production of antibodies, enzymes or other cytokines. In this way, 
circulating cytokines can control and coordinate the function of immune cells 
located throughout the body.

     Using genetic engineering techniques, Immunex scientists have produced 
soluble versions of cytokine receptors. A soluble cytokine receptor retains 
the ability to bind to a specific cytokine, but lacks that portion of the 
natural receptor that is attached to a cell. This property enables the 
soluble cytokine receptor to circulate in the body after administration, 
where it can bind to and inactivate circulating cytokines, preventing 
interaction of the cytokines with immune cells and thereby neutralizing the 
development of an autoimmune or inflammatory response. In view of results 
obtained in certain preclinical and clinical studies, Immunex believes that 
soluble cytokine receptors may be effective as therapeutics to counteract 
autoimmune or inflammatory diseases.

     Immunex owns exclusive rights to TNF receptor ("TNFR"), IL-4R, IL-1R, 
and Interleukin-7 receptor ("IL-7R") (together, the "Receptor Products") for 
North America. Pursuant to a 1990 agreement, Immunex granted exclusive rights 
to the Receptor Products to Behringwerke AG ("Behringwerke"), a former 
subsidiary of Hoechst AG ("Hoechst"), for all parts of the world outside of 
North America. This grant was made in consideration of a grant by 
Behringwerke to Immunex of U.S. co-marketing rights for GM-CSF and certain 
other colony stimulating factor ("CSF") products. Immunex is entitled to 
royalties on future sales of Receptor Products by Behringwerke. In 1992, 
Immunex reacquired ex-North American rights to TNFR from Behringwerke. See 
"Relationship with Hoechst AG." At the effective date of the Merger, 
Immunex's ex-North American rights to TNFR were licensed to Cyanamid and are 
currently held by AHP. See "Relationship with AHP and Cyanamid." In 1994, 
Immunex and Cyanamid re-acquired all rights in GM-CSF previously held by 
Behringwerke.

     Immunex has developed a comprehensive array of soluble cytokine receptor 
technologies, which has led to proprietary rights relating to IL-1 receptors, 
TNF receptor (p80), IL-4R, IL-7R, G-CSF receptor, IL-15 receptor and IL-17R. 
Immunex is conducting clinical trials of Enbrel, a TNF receptor fusion 
protein, as a treatment for RA and CHF, and Nuvance as a therapy for asthma. 
Immunex is evaluating whether to proceed with the development of a natural 
soluble form of IL-1R Type II as a potential treatment for osteoporosis or 
inflammation. IL-17R may be useful as a treatment for solid organ transplant 
rejection. Immunex has also commenced a licensing program under its cytokine 
receptor patents to enable other companies to use patented cytokine receptors 
in drug screening. Under this program, Immunex granted a license to use G-CSF 
receptor for drug screening to one company in 1997, and is continuing license 
discussions with other companies interested in using G-CSF receptor or IL-1 
receptors in drug screening.

     Enbrel (TNFR:Fc). TNF is a cytokine produced by activated T-cells and 
macrophages in the course of severe immune reactions. TNF has been implicated 
in the pathogenesis of RA, sepsis, asthma, graft-versus-host disease, 
inflammatory bowel disease, insulin-dependent diabetes, CHF and numerous 
other clinical conditions. Immunex has produced a soluble TNF receptor fusion 
protein (TNFR:Fc) that combines two p80 TNF-binding domains derived from TNF 
receptor with a fragment of a human antibody molecule. TNFR:Fc exhibits a 
long serum half-life and has been shown to be capable of rapidly lowering 
serum TNF levels.

                                       6
<PAGE>

     Immunex is developing TNFR:Fc as a new therapy for RA based on TNF 
inhibition. In September 1997, Immunex announced the results of its pivotal 
Phase III randomized, placebo-controlled, blinded clinical trial of TNFR:Fc 
in advanced RA, a progressively crippling disorder. Positive and 
statistically significant results in favor of treatment with TNFR:Fc were 
achieved with respect to all primary and secondary clinical endpoints, the 
key measurements used to judge the drug's effectiveness. Both doses of 
TNFR:Fc administered in the trial (10 milligrams and 25 milligrams) were 
effective, with the 25 milligram dose demonstrating the most effectiveness. 
The drug was found to be generally safe and well tolerated. These new data 
confirmed results previously reported from the similarly designed Phase II 
trial of TNFR:Fc in advanced RA.

     The Company expects to submit a BLA with the FDA for Enbrel for advanced 
RA during the second quarter of 1998. In March 1998, the Company announced 
that the FDA designated Enbrel as a "Fast Track Product" for the treatment of 
advanced RA patients. Under the FDA Modernization Act of 1997, Fast Track 
Product designation means that the FDA will take appropriate actions to 
expedite the development and review of Enbrel. The designation of Enbrel as a 
`Fast Track Product' by the FDA initiates the application and review process 
for Enbrel. Portions of the Company's BLA for Enbrel were submitted to the 
FDA in March 1998. Upon submission of the remaining portions of the BLA for 
Enbrel, the FDA will establish the formal BLA submission date for Enbrel. The 
Company intends to submit the results of its Phase III clinical trial of 
TNFR:Fc as part of the BLA, combined with the results of its earlier Phase II 
randomized, placebo-controlled, blinded clinical trial of TNFR:Fc, which was 
completed in November 1995. Positive and statistically significant results in 
favor of treatment with TNFR:Fc were achieved with respect to multiple 
clinical endpoints in the Phase II clinical trial. Immunex also intends to 
submit safety data from all completed TNFR:Fc trials, as well as numerous 
ongoing TNFR:Fc trials, as part of the BLA.

     In March 1998, Immunex announced the results of a Phase III randomized, 
placebo-controlled, blinded clinical trial of TNFR:Fc in combination with 
methotrexate versus methotrexate alone in patients with RA. The results 
demonstrated that RA patients treated with TNFR:Fc in combination with 
methotrexate experienced a statistically significant decrease in disease 
activity and an increase in their functional ability when compared to 
methotrexate alone. In addition, the results indicated that the combination 
therapy of TNFR:Fc and methotrexate was generally well tolerated, and that 
there was no significant difference in the rate of occurrence of side effects 
between the treatment groups in the trial.

     In June 1997, the Company announced that TNFR:Fc appeared to be 
generally safe in an open-label safety study of TNFR:Fc administration to 
patients that received the drug in the earlier Phase II clinical trial, with 
some patients having received the drug for up to one year. In 1998 Immunex 
intends to continue an open-label trial of TNFR:Fc in patients with RA who 
have been treated with TNFR:Fc or placebo in previous Immunex clinical trials 
with TNFR:Fc. In early 1998, Immunex completed a pharmacokinetic study with 
TNFR:Fc demonstrating comparability of product manufactured at Immunex's 
Bothell, Washington mammalian cell-based protein manufacturing facility and 
product manufactured by Immunex's contract manufacturer.

     Significant tasks remain to be accomplished before Enbrel can be 
commercialized. These tasks include, but are not limited to, broadening 
Immunex's safety database of patients who have received therapy with TNFR:Fc 
in Immunex's various clinical trials, completing preparation of a BLA for 
Enbrel for filing with the FDA, obtaining a favorable recommendation for 
Enbrel from the Arthritis Advisory Committee of the FDA, completing a 
long-term supply agreement with Immunex's contract manufacturer of the 
product, successfully manufacturing commercial inventory of the product, 
receiving FDA approval of Enbrel, and satisfactorily addressing relevant 
patent claims of third parties which might be asserted to cover the 
manufacture or sale of Enbrel. Since there are other companies developing TNF 
inhibitors for RA, any delay could have a material adverse effect on the 
Company's ability to gain market share for Enbrel.

     There can be no assurance that the BLA for Enbrel will in fact be 
submitted in the second quarter of 1998, or that, if submitted, the FDA will 
accept such BLA submission for review. In addition, there can be no assurance 
that if the Company submits the BLA to the FDA as expected, the FDA will 
approve the BLA for Enbrel, nor can the time of any such approval (if 
received) be predicted with certainty. Furthermore, there can be no assurance 
that Enbrel, even if approved by the FDA, will achieve commercial success or 
that competitive products will not preempt any market opportunity which might 
exist for Enbrel.

     Immunex is conducting additional clinical trials of TNFR:Fc, which may 
form the basis for supplemental indications for Enbrel. In 1998 Immunex 
intends to continue a large Phase III randomized, placebo-controlled, blinded 
clinical trial of TNFR:Fc in earlier-stage methotrexate-naive RA patients. 
This Phase III clinical trial is aimed at documenting the ability of TNFR:Fc 
to slow the progression of joint damage in RA disease over a year of 
treatment. Enrollment in this trial has been completed. In 1998 Immunex also 
intends to complete a clinical trial of TNFR:Fc in patients with juvenile RA, 
which began in 1997, and if the results of this trial are positive, Immunex 
intends to file data from such trial with the FDA in 1998.

                                       7
<PAGE>

     Immunex intends to study TNFR:Fc in other indications in addition to RA. 
In November 1997, results were announced of a small Phase I clinical trial of 
TNFR:Fc in patients with CHF. The results indicated that a single dose of 
TNFR:Fc reduced circulating levels of TNF and improved certain clinical 
parameters. A multiple-dose, Phase II clinical trial of TNFR:Fc in patients 
with CHF is currently underway, and if the results of the multiple dose trial 
are positive, in 1998 the Company intends to begin Phase II/III randomized, 
placebo-controlled, blinded clinical trials of TNFR:Fc in patients with CHF.

     Nuvance (IL-4R). IL-4 is a cytokine that promotes production of specific 
types of antibodies, including the IgE antibody involved in allergic and 
asthmatic reactions. Soluble IL-4R has been shown to inhibit IL-4-dependent 
immune responses in animal models. Based on these preclinical studies, and on 
the results of certain clinical trials, Immunex believes that soluble IL-4R 
may be effective in the treatment of asthma or allergy. In February 1997, the 
Company announced the results of a Phase I clinical trial of IL-4R in mild 
asthmatic patients. This dose escalating trial, which involved a single dose 
of IL-4R by inhalation of a nebulized aqueous formulation, showed that the 
product was well tolerated at the doses tested. During the course of the 
trial, patients reported reduced use of steroids and a decrease in asthma 
symptoms. In 1997, the Company repeated this Phase I trial of IL-4R in 
moderate asthmatic patients, adding a placebo-control group, and similar 
results were obtained. Immunex is currently focusing its efforts on 
development of an efficient manufacturing process for IL-4R, conducting 
pharmacokinetic studies of the metabolism of IL-4R in the lung, and 
identifying a suitable formulation and method of administration for treatment 
of allergic asthma. The Company intends to continue clinical development of 
IL-4R in Phase II clinical trials in moderate asthmatics as drug supplies are 
made available.

     IL-1R. IL-1R is a molecule that binds both IL-1 alpha and IL-1 beta. 
IL-1 alpha and IL-1 beta bind to cell surface receptors of two types: type I 
and type II. Overproduction or inappropriate production of IL-1 has been 
implicated in the development of autoimmune, inflammatory and allergic 
diseases such as diabetes, asthma, systemic lupus erythematosus and 
inflammatory bowel disease, and also in the development of osteoporosis and 
septic shock. Immunex has produced genetically engineered soluble IL-1 
receptors of two types, designated Type I and Type II, and has conducted 
clinical studies of IL-1R Type I. Recent studies indicate that IL-1R Type II 
is superior to IL-1R Type I as an antagonist of IL-1, and Immunex is 
currently focused on preclinical testing of IL-1R Type II. Based upon data 
obtained in preclinical and Phase I clinical trials, Immunex believes that 
IL-1R Type II may be of therapeutic value in the treatment of a number of 
inflammatory diseases and osteoporosis.

     IL-17R. The IL-17R has been identified by Immunex, and preliminary 
studies have shown that a dimeric IL-17R:Fc fusion protein can prevent graft 
rejection in a mouse model of solid organ transplant. Further studies are 
being conducted to assess the utility of IL-17R in the transplant setting.

Non-Biological Oncology Products

     Effective as of the Merger, Immunex acquired certain intellectual 
property rights, including marketing rights, in North America relating to the 
Non-Biological Oncology Products, including Novantrone mitoxantrone, 
leucovorin calcium, thiotepa (including Thioplex), Amicar aminocaproic acid, 
Levoprome methotrimeprazine, methotrexate injectable, etoposide injection, 
and certain other products under development. The rights acquired by Immunex 
as a result of the Merger include patents, know-how, trademarks, clinical and 
other supporting data, registrations and approvals from the FDA and the CHPB. 
Cyanamid also transferred to Immunex its U.S. oncology marketing and sales 
force. In 1996, as part of the Company's renegotiation of its research and 
development relationship with AHP (see "Relationship with AHP and Cyanamid"), 
the Company relinquished rights to certain products under development, 
including humanized monoclonal antibody toxin conjugates, a multidrug 
resistance reversal agent and an oral CSF inducer. In 1997, Immunex sold its 
rights to etoposide injection to Supergen, Inc.

     Cyanamid did not transfer any manufacturing facilities, research assets, 
other tangible assets or other personnel to Immunex. At the effective time of 
the Merger (the "Effective Time"), Immunex, Cyanamid and certain of its 
subsidiaries entered into agreements providing for, among other things, 
Immunex's contribution to and participation in oncology research by Cyanamid, 
the supply and toll manufacturing of the Non-Biological Oncology Products by 
Cyanamid and Lederle Parenterals, Inc. ("LPI") and Cyanamid's provision of 
certain other services to Immunex. See "Relationship with AHP and Cyanamid."

                                       8
<PAGE>

     Novantrone. Novantrone is currently approved for the initial therapy of 
ANLL and, in combination with steroids, for treatment of patients with pain 
related to HRPC. Novantrone is an anthracenedione similar in chemical 
structure to anthracyclines (doxorubicin and idarubicin), yet lacking an 
amino sugar component that is thought to contribute to the cardiotoxicity 
characteristic of anthracyclines. Novantrone has a more favorable 
nonhematological toxicity profile than anthracyclines; while the use of 
Novantrone may result in toxicities similar to those commonly occurring with 
other chemotherapeutic agents (nausea, vomiting, alopecia, mucositis and 
cardiotoxicity), these can be less frequent and less severe with Novantrone 
than with competing anthracycline products. When used in combination with 
steroids, therapy with Novantrone has been demonstrated to significantly 
reduce pain and improve quality of life in patients with HRPC.

     Immunex is sponsoring Phase II clinical trials using high dosage 
Novantrone alone and in combination with other oncology agents in breast 
cancer and in NHL. One of the protocols tested involved use of Novantrone in 
combination with paclitaxel in breast cancer patients. In addition, 
Novantrone is being tested by Wyeth-Ayerst in two European Phase II clinical 
trials in patients with MS, and data from the smaller European clinical trial 
was positive. If the data from the larger European clinical trial of 
Novantrone in patients with MS is also positive, Immunex intends to evaluate 
the data and may pursue a new indication for Novantrone in the U.S. in this 
patient population.

     In June 1997, the FDA authorized Immunex to augment the approved 
labeling for Novantrone to cite clinical results showing its potential, in 
combination with corticosteroids, to reduce levels of prostate-specific 
antigen ("PSA"). Novantrone is the first chemotherapy product in the U.S. 
with labeling describing its potential to reduce PSA levels, an important 
marker used by many physicians and patients to monitor prostate cancer.

     Leucovorin calcium. Leucovorin is a racemic mixture of the dextro- and 
levo- isomers of leucovorin used in methotrexate rescue therapy and in 
modulation of 5-FU drug therapy in advanced colorectal cancer. Immunex sells 
both liquid and tablet formulations of leucovorin. Leucovorin has significant 
generic competition. A liquid formulation of leucovorin has been developed 
and an ANDA for the liquid formulation was filed with the FDA in November 
1996.

     Thiotepa and Thioplex. Thiotepa is a cytotoxic agent approved for the 
palliative treatment of a wide variety of tumor types, including 
adenocarcinomas of the breast and ovary, superficial papillary bladder 
cancers and other lymphomas such as lymphosarcomas and Hodgkin's disease, and 
for the control of intracavity effusions secondary to localized or diffuse 
neoplastic disease of serosal cavities. Following FDA approval of an NDA for 
Thioplex in December 1994, Immunex has been selling and distributing this 
lyophilized formulation of thiotepa in the U.S. Thioplex is more stable and 
has a longer shelf life than thiotepa.

     Methotrexate injectable. Methotrexate injectable is an antimetabolite 
used in the treatment of certain neoplastic diseases. Methotrexate injectable 
has significant generic competition. Immunex distributes methotrexate 
injectable in the U.S. pursuant to a distribution agreement with Cyanamid.

     Amicar aminocaproic acid. Amicar is a fibrinolysis-inhibitory agent 
useful in enhancing hemostasis when fibrinolysis contributes to bleeding, 
which is sometimes associated with neoplastic diseases.

     Levoprome methotrimeprazine. Levoprome is a potent injectable analgesic 
that is indicated for the relief of pain of moderate to marked degree of 
severity in nonambulatory patients. Immunex intends to discontinue sales of 
Levoprome in 1998 once existing inventory is depleted.

Oncology Discovery Research by Wyeth-Ayerst Research

     Wyeth-Ayerst Research and Immunex are also researching and developing 
certain new technologies for which Immunex has the option to acquire North 
American rights. These research programs are focused on developing inhibitors 
of specific molecular targets thought to be important in cancer development 
and progression. Such research programs include the screening of Wyeth-Ayerst 
Research chemical libraries for products with anti-cancer potential. In 1997, 
the Company elected not to co-develop a rapamycin analog and an EGFR 
antagonist that were presented to Immunex by Wyeth-Ayerst Research as 
potential IND filing candidates.

Paclitaxel

     Paclitaxel is a chemotherapeutic agent that is used in treatment of 
various cancers. Bristol-Myers Squibb Company ("BMS") currently markets 
paclitaxel for treatment of metastatic breast and ovarian cancers in North 
America under the trademark Taxol-Registered Trademark-. BMS's marketing 
exclusivity for paclitaxel in the U.S. under the Drug Price Competition and 
Patent Term Restoration Act of 1984 ("Waxman-Hatch Legislation") expired 
December 29, 1997. In 1994, Cyanamid entered into an exclusive supply 
agreement with Hauser Chemical Research, Inc. ("Hauser") under which Hauser 
agreed to supply Cyanamid with Immunex's requirements for paclitaxel for 
development and marketing in North America. At that same time, Immunex and 
Cyanamid entered into a taxane agreement under which Cyanamid and Immunex 
agreed to collaborate in obtaining regulatory approval of paclitaxel in their 
respective territories. Additionally, Cyanamid agreed to manufacture

                                       9
<PAGE>

and supply finished  paclitaxel product to Immunex for sale in North America. 
In 1996,  Cyanamid  converted its supply  arrangement with Hauser to a 
nonexclusive basis,  permitting  Hauser to supply  paclitaxel  bulk drug to 
other  parties in territories  outside  North  America.  In 1997,  Cyanamid  
informed  Immunex  of Cyanamid's intent to terminate its manufacturing 
obligations with respect to the supply of finished paclitaxel product to 
Immunex, effective December 31, 1998.

     In July 1997, Immunex received the first approval from the CHPB to 
market Paclitaxel Injection in Canada. Boehringer-Ingelheim (Canada) Ltd. has 
acquired Canadian marketing rights for Immunex's Paclitaxel Injection product 
and is currently marketing and distributing the product in Canada.

     Immunex submitted an ANDA for generic Paclitaxel Injection on August 8, 
1997, which was accepted for review by the FDA on October 7, 1997. The 
Immunex ANDA contains a certification by the Company, known as a "Paragraph 
IV" certification, that U.S. Patents 5,641,803 and 5,670,537 held by BMS and 
relating to methods of using Taxol in the treatment of cancer patients, are 
invalid and not infringed by the filing of the Immunex paclitaxel ANDA. On 
January 8, 1998, BMS filed a complaint in the U.S. District Court in Newark, 
New Jersey, alleging infringement by Immunex of these two U.S. patents 
pertaining to Taxol. See "Legal Proceedings" below, under Item 3. The legal 
action by BMS was anticipated by Immunex, and because of BMS's legal action, 
the FDA will withhold approval of Immunex's ANDA until the earlier of June 
2000, which is approximately seven and one-half years after the original 
approval of Taxol, or until a court enters a final judgment finding the BMS 
patents invalid, unenforceable or not infringed. As an incentive for a 
successful patent challenge, the first applicant to file an ANDA and meet FDA 
requirements is accorded 180 days of marketing co-exclusivity with the 
reference listed drug (in this case Taxol). Immunex believes that its ANDA is 
the first filed for a generic paclitaxel product. The FDA is expected to 
continue its review of the Immunex ANDA during the litigation. However, there 
can be no assurance that Immunex will be successful or be granted 
co-exclusivity, that the FDA will approve Immunex's ANDA, or that BMS will 
not obtain or enforce additional patents relating to Taxol. If such events 
occur, Immunex may discontinue development of its paclitaxel product.

RELATIONSHIP WITH AHP AND CYANAMID

     At a special meeting of stockholders held June 1, 1993, the stockholders 
of predecessor Immunex Corporation ("Predecessor") approved and adopted an 
Amended and Restated Agreement and Plan of Merger dated as of December 15, 
1992 (the "Merger Agreement") among Predecessor, Cyanamid, LPI and Lederle 
Oncology Corporation, a wholly owned subsidiary of Cyanamid ("Merger 
Subsidiary"). Pursuant to the Merger Agreement, Predecessor was merged with 
and into Merger Subsidiary in accordance with the General Corporation Law of 
the State of Delaware, with Merger Subsidiary as the surviving corporation. 
In 1994, the Company re-incorporated in the state of Washington. Prior to the 
Merger, Cyanamid and LPI contributed to Merger Subsidiary certain assets and 
contractual obligations of the Lederle Oncology Business, together with $350 
million in cash.

     As a result of the Merger, the separate corporate existence of 
Predecessor ceased, and the assets and liabilities of Predecessor and Merger 
Subsidiary became the assets and liabilities of a new corporation that was 
renamed "Immunex Corporation." Each share of Predecessor Common Stock 
outstanding immediately prior to the Effective Time was converted into the 
right to receive $21 in cash (the "Cash Consideration"), and one share of 
common stock ("Common Stock") of the surviving corporation. A substantial 
portion of the $350 million contributed to Merger Subsidiary by Cyanamid was 
used to pay the Cash Consideration.

     The common stock of Merger Subsidiary outstanding immediately prior to 
the Effective Time, all of which was held by Cyanamid and LPI, was converted 
into that number of shares of the Company's Common Stock equal to 53.5% of 
the total number of shares of Common Stock and dilutive securities 
outstanding immediately following the Effective Time on a fully diluted 
basis. When it acquired all of the common stock of Cyanamid in late 1994, AHP 
became the effective owner of the shares of the Company's Common Stock held 
by Cyanamid.

     Simultaneously with entering into the Merger Agreement, Predecessor, 
Cyanamid and Merger Subsidiary entered into an Amended and Restated 
Governance Agreement ("Governance Agreement"), which sets forth, among other 
things, certain agreements of the parties relating to (i) the corporate 
governance of Immunex, including the composition of its Board of Directors 
(the "Immunex Board"), (ii) rights of Cyanamid to purchase additional shares 
of Immunex Common Stock from Immunex upon the occurrence of certain events, 
(iii) future acquisitions and dispositions of Immunex securities by Cyanamid, 
(iv) the right of members of the Immunex Board designated by Cyanamid to 
approve certain corporate actions of Immunex, (v) the requirement that a 
supermajority of the members of the Immunex Board approve certain corporate 
actions of Immunex, and (vi) payments to be made by Cyanamid to Immunex in 
the event that products of the Lederle Oncology Business and certain other 
products of Immunex do not achieve net sales targets. AHP has agreed to 
protect Immunex's rights under the Governance Agreement and be bound by 
certain standstill restrictions set forth therein.

                                       10
<PAGE>

The  provisions  governing  Cyanamid's  acquisition  and  disposition of 
Immunex Common Stock now prohibit AHP from  acquiring  additional  Immunex  
Common Stock except (a) in  purchases  from  Immunex to maintain  AHP's  
percentage  interest following the issuance of Immunex Common Stock or other 
voting  securities,  (b) in open market purchases,  provided that AHP 
previously  publicly  disclosed its intentions  to the Immunex Board and the 
public,  and provided  that  Cyanamid's interest does not exceed 70% after 
such purchases, (c) pursuant to a cash tender offer if immediately after such 
tender offer AHP's interest does not exceed 70%, or (d) pursuant to a cash 
tender offer for all of the  remaining  shares that is (i)  disclosed  to the 
 Immunex  Board  promptly  after the  decision is made to propose  the   
transaction,   (ii)   approved  by  a  majority  of  the  non-AHP 
shareholders,  (iii)  deemed  fair in the  opinion  of a  nationally  
recognized investment  banking firm retained by the Immunex  Board,  and (iv) 
approved by a two-thirds majority of the Immunex Board (excluding  directors 
designated by AHP and including at least two  independent  directors).  The 
standstill  provisions also bar AHP, with certain exceptions,  from 
participating in any proxy fight or proxy  solicitation,  alone or in 
combination  with other firms holding  Immunex Common Stock, or communicating 
with the shareholders regarding the merits of any offer. The foregoing  
restrictions  expire June 1, 1998. The practical effect of the lapse of these 
 restrictions  will be to make Immunex more  susceptible to a hostile  tender 
offer by AHP for the shares of Immunex  Common Stock it does not own. In 
addition to the  restrictions  upon the  acquisition  of Immunex  Common 
Stock, restrictions on transfer prohibit AHP from transferring shares of 
Immunex Common  Stock  except  pursuant  to  an  underwritten  public  
offering,  or  in accordance with the volume and manner of sale  limitations 
of Rule 144 under the Securities Act of 1933, as amended, or to a 
wholly owned  subsidiary.  Moreover, except  pursuant to an  underwritten  
public  offering,  AHP may not transfer an amount in excess of 1% of the 
outstanding  shares of Immunex Common Stock on any given day, nor in any 
event may any AHP transfer  result in the creation of a 5% shareholder of 
Immunex  Common Stock.  AHP may,  however,  transfer all, but not less than 
all, of its shares of Immunex Common Stock provided that the purchaser has 
offered to acquire all  outstanding  shares on the same terms,  and provided 
further that Immunex has first been notified and allowed three months to find 
an alternative purchaser.  These restrictions on transfer will continue 
beyond June 1, 1998.

     Regarding AHP's payment obligations under the Governance Agreement, the 
relevant specified net sales target for the Lederle Oncology Business was 
$216.5 million in 1997. This target was not achieved for 1997, and thus AHP 
was required to pay Immunex $60 million in respect of the 1997 sales year, 
which amount was paid to Immunex in February 1998. The 1997 sales year was 
the last year for which any payment obligation could accrue to AHP under 
these provisions.

     Pursuant to the Merger Agreement, Cyanamid, Immunex and certain of their 
respective subsidiaries entered into certain agreements (collectively, the 
"Related Agreements"). The Related Agreements included a Research and 
Development Agreement, which was replaced in 1996 by a new Research Agreement 
among Immunex, Cyanamid and AHP. This new Research Agreement and another 
Related Agreement together provide for the commercialization of new oncology 
products by Immunex in North America, and by AHP elsewhere. To the extent 
Immunex develops products or technology other than new oncology products and 
determines not to market such products or technology itself, Immunex has 
agreed to offer to AHP exclusive marketing rights to any such products or 
technology before offering any marketing rights to third parties. Other 
Related Agreements provide for, among other matters, the supply and toll 
manufacture by Cyanamid or its subsidiaries for Immunex or its subsidiaries 
of the Non-Biological Oncology Products, and various other implementing 
licenses and distribution agreements. The Related Agreements, together with 
the Governance Agreement, establish the framework for the ongoing 
relationship between Immunex and AHP.

     In December 1995, AHP and Immunex entered into certain research and 
license agreements under which Immunex granted AHP exclusive worldwide rights 
to develop compounds that inhibit an enzyme known as TACE. TACE is involved 
in the processing of cell-bound TNF to provide circulating TNF. There is 
evidence that inhibiting this enzyme may be beneficial in treating 
inflammatory diseases and conditions such as RA. Under the agreements, AHP 
will screen compounds using recombinant TACE provided by Immunex. Immunex 
will receive license fees, research payments, commercial development 
milestones and royalties on any compounds that are commercialized by AHP. In 
September 1997, in conjunction with the Enbrel Promotion Agreement with AHP 
discussed below, AHP and Immunex amended one of the TACE agreements in order 
to substantially increase the royalty payable by AHP to Immunex on the first 
TACE molecule approved by the FDA, if any.

     On July 17, 1996, the Immunex Board approved the terms of revised and 
amended research agreements among Immunex, Cyanamid and AHP relating to 
oncology products and TNFR:Fc. Following such approval, Immunex, Cyanamid and 
AHP entered into a new Research Agreement effective July 1, 1996, which 
terminates and replaces the Research and Development Agreement between 
Immunex and Cyanamid dated as of June 1, 1993. Immunex and AHP also (i) 
entered into a new TNFR License and Development Agreement effective as of 
July 1, 1996 (the "TNFR Agreement") and (ii) amended the Immunex New Oncology 
Product License Agreement between Immunex and Cyanamid dated June 1, 1993 
(the "INOP Agreement") effective as of July 1, 1996 (the "INOP Amendment").

                                       11
<PAGE>

     Under the terms of the superseded Research and Development Agreement, 
Immunex was obligated to contribute $26.1 million in 1996, up to $38.3 
million in 1997 and 50% of AHP's oncology research and development expenses 
thereafter. Under the terms of the revised Research Agreement, Immunex 
currently funds 50% of AHP's oncology discovery research expenditures, up to 
a maximum amount of $16 million per year (adjusted annually for inflation 
beginning in 1997) and Immunex has the option to elect which products it will 
continue to support beyond the discovery stage. Also, under the terms of the 
new and amended agreements, Immunex retains North American marketing rights 
to Enbrel and those oncology products resulting from its own research. AHP 
retains ex-North American rights to oncology products discovered by Immunex.

     Immunex's rights with respect to AHP oncology products were converted 
into an option to obtain North American marketing rights to oncology products 
arising from certain discovery research activities conducted by Wyeth-Ayerst 
Research that are supported by Immunex contributions. Immunex's product 
rights do not extend to any products resulting from third-party 
collaborations of AHP, products or technology acquired by AHP from third 
parties, or certain non-small molecule products developed by AHP.

     The option held by Immunex will be exercisable for a period of 90 days 
following receipt by Immunex of notice from Wyeth-Ayerst Research that a 
product has been selected by Wyeth-Ayerst Research for preclinical and 
clinical development, together with certain relevant information concerning 
such product. If Immunex exercises its option, the parties will negotiate and 
develop the terms of a product license and development agreement under which 
Immunex will be granted exclusive marketing rights in North America, and the 
parties will equally share development expenses for such product for the 
North American and European markets. If Immunex elects not to exercise its 
option, all rights in the product will revert to Wyeth-Ayerst Research and 
AHP without further obligations of any kind on Immunex. Immunex will also be 
entitled to discontinue its support of the development process at certain 
decision events coordinated with the product development cycle. If its 
decision to discontinue development occurs following the completion of Phase 
II or Phase III trials, Immunex will be entitled to a royalty or revenue 
sharing if AHP continues to develop the product or licenses the product to a 
third party in North America.

     Under the terms of the INOP Amendment, Immunex will provide notice to 
Cyanamid if an Immunex product is selected by Immunex for preclinical and 
clinical development, together with certain relevant information concerning 
such product. Following receipt of such notice and information, Cyanamid will 
have 90 days in which to notify Immunex that it intends to retain its rights 
in such product. If Cyanamid elects to retain its rights, the parties will 
negotiate and develop the terms of a product development agreement governing 
the ongoing development and commercialization of the retained product, 
including the equal sharing of development expenses for such product for the 
North American and European markets. If Cyanamid does not elect to retain its 
rights, all rights in the product will revert to Immunex without further 
obligations of any kind to Cyanamid or AHP.

     The right of first refusal (the "ROFR") previously held by Cyanamid that 
applies to Immunex products and technology was transferred to AHP under the 
new Research Agreement and amended to address the diversity of technologies 
and opportunities that may result from Immunex research, as well as the data 
needed by Wyeth-Ayerst Research to make a decision regarding exercise of the 
ROFR. The ROFR was extended to include Enbrel and Immunex oncology products. 
A 90-day, rather than 180-day, decision period for the ROFR applies to these 
products. At Immunex's request, AHP will review any product prior to 
completion of Phase I clinical trials to exclude products of no interest to 
AHP.

     Immunex and AHP entered into a new TNFR Agreement that restates AHP's 
exclusive rights to TNFR:Fc outside of North America and addresses joint 
project management, cost sharing, manufacturing responsibilities, 
intellectual property protection and disposition of rights upon 
relinquishment or termination of product development. Previously, AHP's 
rights in TNFR:Fc had been stated in the Research and Development Agreement 
between Immunex and Cyanamid. The Research and Development Agreement has been 
terminated and replaced by the new Research Agreement discussed above. 
Pursuant to the TNFR Agreement, Immunex and AHP have also agreed to negotiate 
the terms of a supply agreement for the commercial supply of TNFR:Fc to AHP 
outside North America.

     Immunex and AHP entered into a Flt-3 Ligand License and Development 
Agreement (the "Flt3-L Agreement") effective as of July 1, 1996, which states 
AHP's exclusive rights to Flt3-L outside North America. AHP pays Immunex a 
royalty equal to 5% of the net sales of Flt3-L outside North America. The 
Flt3-L Agreement also addresses joint project management, cost sharing, 
manufacturing responsibilities, intellectual property protection and 
disposition of rights upon relinquishment or termination of product 
development. Pursuant to the Flt3-L Agreement, Immunex and AHP have also 
agreed to negotiate the terms of a manufacturing agreement for the commercial 
supply of Flt3-L to AHP outside North America.

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<PAGE>

     On September 25, 1997, Immunex and AHP entered into an Enbrel Promotion 
Agreement (the "Promotion Agreement"), pursuant to which AHP, acting through 
its Wyeth-Ayerst Laboratories division, will, upon regulatory approval 
promote Enbrel to all appropriate customer segments in North America for all 
approved indications other than oncology. Immunex has reserved the right to 
promote Enbrel in North America for any approved oncology indications. Under 
the terms of this long-term Promotion Agreement, Immunex may receive up to 
$100 million from AHP in nonrefundable milestone payments for the North 
American promotion rights to Enbrel. Milestone payments include $15 million 
upon signing of the Promotion Agreement, which payment was received in 
September 1997, $20 million if and when an acceptable BLA for Enbrel for 
advanced RA is submitted to the FDA, $30 million if and when such FDA 
approval for Enbrel is received, $15 million if and when a disease 
modification claim for Enbrel is obtained from the FDA, and two separate 
payments of $10 million each if and when certain net sales goals for Enbrel 
in North America are achieved. No assurance can be given that Enbrel will be 
approved by the FDA or that, if approved by the FDA, any of the other 
milestone payments referenced in this paragraph will be payable to Immunex.

     Under the Promotion Agreement, AHP has agreed to reimburse Immunex for 
more than a majority of the clinical and regulatory expenses made by or on 
behalf of Immunex in connection with the filing and approval of any new 
indications for Enbrel in North America, excluding oncology and RA 
indications. AHP's reimbursement of such clinical and regulatory expenses 
under the Promotion Agreement is in addition to the existing cost-sharing 
arrangement between the parties for certain development costs related to 
Enbrel as set forth in the TNFR Agreement. The additional AHP reimbursement 
for clinical and regulatory expenses under the Promotion Agreement, a portion 
of which is payable upon regulatory filing of any such new indication and the 
remainder of which is payable upon regulatory approval of any such new 
indication, if any, applies with respect to that portion of the North 
American clinical and regulatory expenses for Enbrel for which Immunex is 
otherwise financially responsible for in accordance with the cost sharing 
provisions in the TNFR Agreement. AHP has also agreed to reimburse Immunex 
under the Promotion Agreement for less than a majority of certain patent 
expenses related to Enbrel, including any patent litigation expenses. In 
addition, AHP has agreed to pay substantially more than a majority of the 
commercial expenses (meaning marketing expenses and sales force costs) for 
Enbrel incurred prior to any commercial launch of Enbrel in North America, 
and to pay a declining but still majority percentage of the commercial 
expenses incurred during the two years following any commercial launch of 
Enbrel in North America. Thereafter, the parties will share such commercial 
expenses in North America on an equal basis.

     Pursuant to the Promotion Agreement, in the event Enbrel receives 
regulatory approval in any country in North America, Immunex may elect at any 
time to supplement AHP's detailing (meaning visits and communications with 
specified physicians by AHP's sales representatives to increase physician 
prescribing preferences for Enbrel) and promotion of Enbrel in such North 
American country with Immunex's own sales force to detail Enbrel for any 
approved indications promoted by AHP. Immunex will pay the majority of its 
sales force costs for two years commencing on the date, if any, its sales 
force begins detailing Enbrel, with the parties sharing such sales force 
costs on an equal basis thereafter.

     Immunex will record any and all product sales of Enbrel in North America 
under the Promotion Agreement, and Immunex will pay AHP a percentage of any 
and all annual gross profits of Enbrel in North America attributable to all 
indications other than oncology indications on a scale that increases as 
gross profits increase, with Immunex always retaining a majority percentage 
of such gross profits on an annual basis. Additionally, Immunex will pay AHP 
certain residual royalties on a declining scale based on any and all net 
sales of Enbrel in North America in the three years following the expiration 
or termination of AHP's detailing and promotion of Enbrel.

     If AHP sells or otherwise distributes a product in North America that is 
directly competitive with Enbrel, as defined in the Promotion Agreement, and 
subject to certain exclusions, AHP will give Immunex prior written notice 
and, upon Immunex's request, the parties will attempt in good faith to either 
establish mutually acceptable terms pursuant to which Immunex will co-promote 
such competitive product (or other terms for a commercial relationship), or 
negotiate an adjustment to the gross profits allocated to AHP under the 
Promotion Agreement. If the parties are unable to establish such terms within 
90 days of Immunex's request, Immunex may at its option reacquire all 
marketing rights to Enbrel in North America and terminate the Promotion 
Agreement, subject to Immunex's payments of certain amounts to AHP. In the 
event that AHP obtains a product that is directly competitive with Enbrel 
through the acquisition of another company and Immunex reacquires the 
marketing rights to Enbrel in North America, AHP's primary field sales force 
that had detailed Enbrel in the relevant territory within North America for a 
specified period may not sell, detail or otherwise distribute the competitive 
product for a specified period in North America.

     The Promotion Agreement requires the parties to form the Enbrel 
Management Committee, which will be composed of an equal number of 
representatives from Immunex and from AHP. The Enbrel Management Committee 
will have responsibility for such areas as strategic planning, approval of an 
annual marketing plan and product pricing.

                                       13
<PAGE>

     Commencing when the Promotion Agreement was signed on September 25, 
1997, AHP will make working capital loans for a portion of the U.S. launch 
inventory for Enbrel available to Immunex during a specified period, provided 
that the aggregate principal amount of such working capital loans outstanding 
at any one time will not exceed $25 million. Immunex may prepay such loans 
without premium or penalty.

     In December 1997, Immunex received $4 million from LPI for the sale of 
all of Immunex's Canadian rights and ownership to certain existing products, 
including Novantrone, Thioplex, Amicar, methotrexate injectable, and 
leucovorin calcium. Immunex retains the North American rights to Leukine and 
any future Immunex oncology products and other products.

RELATIONSHIP WITH HOECHST AG

     Pursuant to a 1984 research and license agreement that has been amended 
periodically, Immunex and Hoechst, through its former subsidiary 
Behringwerke, conducted collaborative research in the field of CSFs. 
Behringwerke has been assimilated into Hoechst and its separate corporate 
existence ceased in 1997. Under the agreement, Immunex granted exclusive 
worldwide license rights to Behringwerke to develop, manufacture and market 
CSF products in consideration for technology transfer payments, research 
support payments, and royalties on sales of licensed products. Immunex and 
Behringwerke, together with Behringwerke's U.S. affiliate, Hoechst-Roussel 
Pharmaceuticals, Inc. (now named Hoechst Marion Roussel Inc.) collaborated in 
the clinical development of GM-CSF (sargramostim) in the U.S. As a 
consequence of agreements with Behringwerke and Hoechst that were completed 
in 1989, 1993 and 1994, Immunex reacquired worldwide rights to Leukine GM-CSF 
and all related technologies in consideration of cash payments, licenses and 
technology transfers relating to soluble cytokine receptors, and royalties in 
respect of GM-CSF sales. In 1990, Immunex granted Behringwerke exclusive 
license rights to the Receptor Products for development and marketing outside 
North America. Pursuant to a 1992 agreement between Behringwerke and Immunex, 
Immunex reacquired Behringwerke's worldwide rights to TNFR, and Immunex 
subsequently licensed ex-North American rights to TNFR to AHP as part of the 
Merger. Immunex is entitled to certain payments and royalties on sales of the 
other Receptor Products licensed to Behringwerke or its sublicensees.

MARKETING AND DISTRIBUTION

     Immunex sells its products in the U.S. through a specialized 
oncology-based sales force that consists of approximately 106 sales 
representatives and sales managers. The Company sells its products both to 
pharmaceutical wholesalers and end users such as oncology clinics, hospitals 
and pharmacies. Orders are received and processed by the Company through a 
centralized customer service and sales support group. Shipping, warehousing 
and certain data processing services are provided on a fee basis by an 
outside contractor. If and when Enbrel receives final approval from the FDA, 
pursuant to the Promotion Agreement, the Wyeth-Ayerst Laboratories division 
of AHP will market Enbrel to appropriate customer segments in the U.S. for 
all approved indications other than oncology. The Company may elect to 
supplement AHP's detailing of Enbrel in the U.S. with the Company's own sales 
force for certain customer segments. See "Relationship with AHP and Cyanamid."

COMPETITION

     Competition in researching, developing, manufacturing and marketing 
biopharmaceuticals and other oncology products is intense. Immunex is 
marketing a group of cancer products and simultaneously developing an 
extensive portfolio of cytokines, cytokine receptors and other immunological 
therapeutic products. There are other companies, including established 
pharmaceutical and biotechnology companies, that are researching, developing 
and marketing products, based on related or competing technologies, that will 
compete with products being developed by Immunex. Most of the cancer products 
marketed by Immunex have established competitors. Significant competitors in 
the field of oncology include BMS and Amgen. These competitors, in certain 
cases, have substantially greater capital resources, greater marketing 
experience, and larger research and development staffs and manufacturing 
facilities than Immunex.

     Several companies are marketing or developing products that compete or 
are expected to compete with Leukine. One such company, Amgen, has been 
marketing its competing G-CSF product since early 1991 and has achieved a 
majority share of the U.S. market for CSFs. In late 1997, Neumega-Registered 
Trademark- IL-11 was approved by the FDA for treatment of thrombocytopenia 
caused by cancer chemotherapy. Since IL-11 is being marketed by an AHP 
subsidiary for use in combination with G-CSF in patient populations in which 
GM-CSF is now being used, sales of Leukine may be adversely affected. Immunex 
and AHP are cooperating to study the use of GM-CSF and IL-11 together in 
clinical trials in patients with breast cancer and AML. If such clinical 
trials are positive, both Immunex and AHP intend to pursue an expanded label 
in the U.S. for their respective products, GM-CSF and IL-11, to include the 
use of such products in combination in certain patient populations. In 
addition, Cangene Corporation ("Cangene") is developing a 
Streptomyces-derived GM-CSF product. Cangene commenced a Phase III 
multicenter clinical trial in the U.S. with its GM-CSF product in early 1998 
for the mobilization of peripheral blood stem cells in patients with breast 
cancer.
 
                                       14
<PAGE>

     Several companies, including those listed below, are developing products 
that are expected to compete with Enbrel. Centocor Inc. is developing a 
monoclonal antibody known as Avakine-TM-(infliximab), an anti-inflammatory 
agent that is currently in Phase III trials in RA. Centocor submitted a BLA 
to the FDA for infliximab for the treatment of moderate to severe Crohn's 
disease, including fistulizing Crohn's disease, in December 1997, and it is 
possible that the FDA could approve infliximab for such indication prior to 
any FDA decision with respect to the approval of Enbrel. If infliximab is 
approved for treatment of Crohn's disease, physicians may prescribe 
infliximab in RA prior to the time of any FDA approval of Enbrel. In 
addition, Amgen is developing Antril-TM- (anakinra), a 1L-1RA (receptor 
antagonist), as well as a TNFbp (binding protein); Bayer AG and BASF AG 
("BASF") are developing monoclonal antibodies or antibody fragments that bind 
to TNF; and Roche is developing Tenefuse-TM- (lenercept), a TNFR:Fc fusion 
protein based upon a distinct and different TNF receptor designated "p55." In 
late 1997, Roche terminated its Phase III trial of lenercept in RA. Roche may 
continue development of lenercept in clinical indications other than RA. 
Also, SmithKline Beecham plc ("SKB") is developing an anti-CD4 monoclonal 
antibody (IDEC-CE9.1) in collaboration with IDEC Pharmaceuticals Corporation 
("IDEC"). Although in June 1997, SKB and IDEC suspended further enrollment 
and treatment in their Phase III clinical trials of IDEC-CE9.1 for the 
treatment of RA, SKB is currently in clinical trials with a second-generation 
anti-CD4 antibody for RA known as IDEC-151.
 
     Other companies, including Hoechst Marion Roussel Inc. 
(Arava-TM-(leflunomide)), are developing non-biological products for patients 
with RA. Immunex does not currently expect such products to compete with 
Enbrel in patients with advanced RA, but there can be no assurance that such 
products, including leflunomide, will not compete directly with Enbrel in 
patients with earlier stage RA. Due to its mechanism of action, Immunex 
believes that Enbrel may be effective in combination with some of these 
products in development, as well as with some existing disease-modifying 
anti-rheumatic drugs ("DMARDs") for RA. This belief is based on clinical 
results demonstrating that RA patients treated with Enbrel in combination 
with the DMARD methotrexate experienced a statistically significant decrease 
in disease activity and an increase in their functional ability when compared 
to methotrexate alone.

     Immunex and other pharmaceutical firms compete primarily in performing 
research and clinical testing, acquiring patents, developing efficient 
manufacturing processes, securing regulatory approvals and marketing the 
resulting products to physicians. Immunex believes that its strategic focus 
on immunology has resulted in expertise that can be applied to reduce 
development times, create innovative and cost-saving research techniques, 
optimize product quality, and discover new products and applications. Immunex 
possesses manufacturing facilities to produce recombinant protein products 
using microbial or mammalian cell culture technologies. Professional 
clinical, legal, regulatory affairs, marketing and sales staffs have been 
developed to enhance the Company's scientific resources. Immunex possesses a 
specialized, well-trained oncology sales force and comprehensive professional 
services, including continuing medical educational programs, publications, 
literature searches and treatment information. These professional services 
are important because, historically, new anticancer drugs have provided 
incremental treatment advances, but few outright cures. Therefore, physicians 
rely heavily on peer-reviewed clinical data in making treatment decisions.

     Competition in the sale of generic pharmaceutical products is intense 
due to the entry of multiple sources for each product after expiration of 
patents and exclusivity grants previously covering such products. 
Manufacturers of generic products compete aggressively, primarily on the 
basis of price. Immunex currently faces aggressive generic competition from 
numerous suppliers on methotrexate injectable and leucovorin calcium, 
resulting in lower prices and lower sales. Thiotepa may be subject to generic 
competition in the future.

SUPPLY

     All finished dosage forms for the Non-Biological Oncology Products are 
manufactured by AHP subsidiaries or sourced by AHP from third-party 
manufacturers. Bulk active raw materials for the Non-Biological Oncology 
Products are either manufactured by AHP subsidiaries or sourced by AHP from 
third-party manufacturers. Aminocaproic acid for Amicar is sourced through an 
unaffiliated third-party vendor and manufactured by a sole-source supplier, 
Daiichi Pharmaceutical Co. Ltd., a Japanese company. Substantially all the 
raw materials used to manufacture Immunex's recombinant protein products are 
available from multiple sources.

     In 1997 Immunex signed agreements with an unaffiliated contract 
manufacturer with respect to manufacturing scale-up activities and 
manufacturing of Phase III clinical trial supplies for TNFR:Fc. Based on the 
successful manufacturing scale-up of TNFR:Fc to commercial quantities by the 
contract manufacturer in 1997, and the manufacturing of sufficient Phase III 
clinical trial supplies for TNFR:Fc, Immunex has initiated steps in an effort 
to ensure that inventory of Enbrel is available to meet Immunex's expected 
initial commercial requirements in the U.S. In late 1997, Immunex ordered 
certain quantities of U.S. launch inventory of Enbrel from the contract 
manufacturer, and expects to order additional quantities in 1998. Although 
the Phase III data for Enbrel released by Immunex in September 1997 were 
positive, there can be no assurance that Enbrel will be approved by the FDA, 
or if approved, that Enbrel will actually be

                                       15
<PAGE>

launched in the U.S., or if Enbrel is launched in the U.S., that Immunex's 
estimates of U.S. launch inventory requirements for Enbrel will reflect 
actual demand for the product. Immunex is also negotiating a long-term supply 
agreement with such contract manufacturer to manufacture commercial 
quantities of TNFR:Fc. Pending the completion of the long-term supply 
agreement, the contract manufacturer and Immunex are working under short-term 
arrangements to manufacture launch quantities of commercial inventory of 
Enbrel. No assurance can be given that Immunex will be able to execute such a 
long-term supply agreement with such contract manufacturer or with any other 
third party. Further, no assurance can be given that if Enbrel receives 
regulatory approval, any contract manufacturer will be able to successfully 
manufacture sufficient quantities of TNFR:Fc for commercial supply.
 
     Immunex presently does not have its own fill and finish capabilities for 
producing and labeling final drug products from bulk drug substances or bulk 
proteins. Immunex relies upon an unaffiliated third party and AHP for the 
fill and finish of all drug products marketed by Immunex.

GOVERNMENT REGULATION

     The manufacturing and marketing of pharmaceutical products in the U.S. 
requires the approval of the FDA under the Food, Drug and Cosmetic Act. 
Similar approvals by comparable agencies are required in foreign countries. 
The FDA has established mandatory procedures and safety standards that apply 
to the clinical testing, manufacture and marketing of pharmaceutical and 
biotechnology products. Obtaining FDA approval for a new therapeutic product 
may take several years and involve expenditure of substantial resources.

     The federal government regulates certain recombinant DNA research 
activity through National Institutes of Health guidelines for research 
involving recombinant DNA molecules (the "NIH Guidelines"). The Company 
complies with the NIH Guidelines which, among other things, restrict or 
prohibit certain recombinant DNA experiments and establish levels of 
biological and physical containment of recombinant DNA molecules that must be 
met for various types of research.

     The Company's operations are also subject to regulation under, among 
others, the Occupational Safety and Health Act, the Environmental Protection 
Act, the Nuclear Energy and Radiation Control Act, the Toxic Substances 
Control Act, the Resource Conservation and Recovery Act, the Comprehensive 
Environmental Response, Compensation, and Liability Act, Title III of the 
Superfund Amendments and Reauthorization Act (Community Right-to-Know and 
Emergency Response Act), national restrictions on technology transfer, 
federal regulations on the protection of human subjects in clinical studies, 
the protection of animal welfare in preclinical studies, import, export and 
customs regulations and other present or possible future local, state or 
federal regulation. From time to time Congressional Committees and federal 
agencies have indicated an interest in implementing further regulation of 
biotechnology and its applications.

PATENTS, LICENSES AND TRADEMARKS

     Patents, trade secrets and other proprietary rights are very important 
to the Company. Immunex has filed applications for U.S. and foreign patents 
covering numerous aspects of its technology. As of December 31, 1997, the 
Company has been granted and maintains 89 U.S. and 260 foreign patents, and 
has 101 patent applications pending in the U.S. Patent and Trademark Office 
(the "USPTO") and 312 applications pending abroad. There can be no assurance 
that any of its pending or future applications will result in issued patents 
or that the rights granted thereunder will provide competitive advantage to 
the Company or its licensees. The Company also relies upon trade secrets, 
unpatented proprietary know-how and continuing technological innovation to 
develop and maintain its competitive position. There can be no assurance that 
others will not acquire or independently develop the same or similar 
technology, or that the Company's issued patents will not be circumvented, 
invalidated or rendered obsolete by new technology.

     Due to unresolved issues regarding the scope of protection provided by 
certain of the Company's patents, as well as the possibility of patents being 
granted to others, there can be no assurance that the patents owned by or 
licensed to the Company and its licensees will provide substantial protection 
or commercial benefit. The rapid rate of development and the intense research 
efforts throughout the world in biotechnology, the significant time lag 
between the filing of a patent application and its review by appropriate 
authorities and the lack of significant legal precedent involving 
biotechnology inventions make it difficult to predict accurately the breadth 
or degree of protection that patents will afford the Company's or its 
licensees' biotechnology products or their underlying technology. It is also 
difficult to predict whether valid patents will be granted based on 
biotechnology patent applications or, if such patents are granted, to predict 
the nature and scope of the claims of such patents or the extent to which 
they may be enforceable.

     Under U.S. law, although a patent has a statutory presumption of 
validity, the issuance of a patent is not conclusive as to validity or as to 
the enforceable scope of its claims. Accordingly, there can be no assurance 
that the Company's patents will afford protection against competitors with 
similar inventions, nor can there be any assurance that the patents will not 
be infringed or designed around by others or that others will not obtain 
patents that the Company would need to license or design around.

                                       16
<PAGE>

     It is the Company's policy to respect the valid patent rights of others. 
Immunex has obtained patent licenses from various parties covering 
technologies relating to its products. The Company, however, may need to 
acquire additional licenses or, if such licenses are denied or are not 
available on commercially reasonable terms, successfully prevail in the event 
that litigation is commenced by patent owners to interfere with the 
development or commercialization of the Company's products.

     GM-CSF. Immunex has been issued three U.S. patents covering an altered, 
or analog, form of GM-CSF (sargramostim), that is marketed by the Company 
under the Leukine trademark. Since July 1990, a GM-CSF interference 
proceeding has been pending in the USPTO directed to human GM-CSF DNAs. The 
interference was declared between competing U.S. patent applications filed by 
or licensed to Immunex, Novartis, Research Corporation Technologies, Inc. 
("RCT"), Schering-Plough, Inc. ("Schering-Plough") and Biogen. As of February 
1995, all parties to the interference except Immunex and Novartis had been 
eliminated from future participation in the priority determination. 
Proceedings in the interference have been suspended since 1995 to permit the 
parties to negotiate a settlement of the interference. In 1997, the USPTO 
issued RCT a patent covering DNAs encoding mammalian GM-CSF proteins, 
including human, outside of the pending interference. Immunex and RCT entered 
into a royalty-bearing nonexclusive license under such patent in 1997. In 
January 1998, Novartis and Immunex signed a global GM-CSF Settlement 
Agreement. Under this agreement, Immunex agreed to concede priority to 
Novartis in the interference, and Novartis agreed not to assert its GM-CSF 
patent rights to prevent Immunex from making, using or selling sargramostim 
in the U.S., or making sargramostim in the U.S. for export to and sale in 
Canada or any country in which Novartis or Schering-Plough do not hold GM-CSF 
patent rights. In consideration of the foregoing immunity from suit, Immunex 
agreed to grant Novartis immunity from suit under certain patent rights owned 
by Immunex relating to methods of using GM-CSF, and to pay Novartis royalties 
in respect of Immunex's future sales of Leukine. In addition, as part of the 
resolution of the GM-CSF interference among the various parties, in early 
1998 Immunex paid Genetics Institute, Inc. $5 million.

     Enbrel. Enbrel (TNFR:Fc) is a fusion protein consisting of a dimer of 
two subunits, each comprising a TNF receptor domain derived from a TNF 
receptor known as "p80," fused to a segment derived from a human antibody 
molecule known as an "Fc domain." Immunex believes that it was the first to 
isolate a recombinant DNA encoding p80 TNFR and also the first to express the 
protein using recombinant DNA technology. The Company has been issued two 
U.S. patents covering DNAs encoding p80 TNFR, as well as a U.S. patent 
covering methods of using TNFR:Fc, including the treatment of RA, and was 
granted a European patent in December 1995 covering p80 TNFR DNAs, proteins 
and related technology. Two other companies, however, BASF and Yeda Research 
& Development Co. ("Yeda"), filed patent applications disclosing partial 
amino acid sequence information of certain TNF-binding proteins ("TBPs") 
shortly prior to the time Immunex filed its patent applications, claiming the 
full-length p80 TNFR DNAs and proteins corresponding in part to the TBPs 
disclosed by BASF and Yeda. BASF was issued a U.S. patent based on its TBP 
disclosure with claim limitations that exclude TNFR:Fc. This patent is 
currently involved in an interference with a pending TBP application filed by 
Yeda. No TBP protein patents have been issued to Yeda in the U.S., but two 
patents have been granted to Yeda by the European Patent Office ("EPO") that 
claim TBPs. Immunex has filed oppositions to the Yeda European TBP patents. 
Yeda has also filed applications regarding multimers of proteins related to 
TBPs. While no patent has issued in Europe, a patent has issued in the U.S., 
which is involved in an interference with an Immunex application. Immunex is 
the senior party in the interference, which is in its preliminary stages. 
Yeda has also filed applications claiming methods of using TBPs in treatment 
of various diseases, including RA. A patent has issued to Yeda in the U.S. 
that claims a method of using TBPs to treat RA. The Company believes that 
this patent may be invalid, and also that an interference may be declared 
between this patent and an Immunex patent application. Roche and Amgen, 
through Synergen Inc. ("Synergen"), also filed patent applications directed 
to p80 TNFR DNAs after the date Immunex filed its application. No patents 
have been issued to Roche. In January 1998, the EPO granted a patent to Amgen 
claiming DNA and amino acid sequences encoding a variant of p80 TNFR 
disclosed in the Synergen application that differs from that disclosed in the 
Immunex granted patents covering p80 TNFR. Since the applications giving rise 
to the Immunex patents covering TNFR were filed earlier than Synergen's, the 
Company believes that the Amgen patent cannot be legally asserted to cover 
TNFR:Fc, which includes the sequences patented by Immunex. If BASF, Roche, 
Amgen or Yeda were able to validly assert TNFR patents to cover TNFR:Fc, the 
Company's or AHP's commercialization of TNFR:Fc would be impeded in any 
territories in which such patents were in force. A U.S. patent has also been 
issued to the Board of Regents of the University of Texas System ("U.T.") 
that contains claims relating to TNFR:Fc fusions. U.T. has assigned this 
patent to Immunex. Immunex has also been granted a royalty-bearing worldwide 
exclusive license under patent rights jointly owned by Hoechst and 
Massachusetts General Hospital claiming cytokine receptor-Fc fusion proteins, 
including TNFR:Fc. Genentech has been issued U.S. patents having claims 
directed to certain fusion proteins comprising Fc domains, and has also filed 
corresponding European applications that have not yet been granted. Immunex 
has also completed a comprehensive analysis of the validity and scope of the 
Genentech patents, which indicates that substantial defenses may exist to the 
enforcement of such patents. If Genentech was able to validly assert its 
fusion patents to cover TNFR:Fc, the Company's or AHP's commercialization of

                                       17
<PAGE>

TNFR:Fc would be impeded in any territories in which such patents were in 
force. In  general,  with  respect to any of the  patents  discussed  above,  
it is the Company's  intention to mount a vigorous  defense  should any 
patent be asserted against  activities  relating to TNFR:Fc,  or, in 
appropriate  cases,  to take a license under  appropriate  terms. At this 
time,  however,  it remains uncertain whether any of these  patents will be 
asserted  against  activities  relating to TNFR:Fc, and, if so, the outcome 
of any litigation or licensing negotiations.

     Mobist Flt3-L. In 1996 Immunex was granted a U.S. patent covering Flt3-L 
DNA, and Immunex is currently seeking patents worldwide for Flt3-L proteins 
and various methods of using Flt3-L.

     Nuvance IL-4R. Immunex has been issued a U.S. patent covering IL-4R 
proteins and pharmaceutical compositions, and an Immunex U.S. patent directed 
to IL-4R DNAs has been allowed by the USPTO. IL-4R patents have also been 
granted to Immunex in Europe and certain other foreign countries.

     Non-Biological Oncology Products. Novantrone (mitoxantrone) is a 
proprietary product that is covered by several U.S. and Canadian patents. The 
patent covering the mitoxantrone compound in the U.S. expired in August 1997. 
However, a separate U.S. patent covering pharmaceutical formulations 
containing mitoxantrone does not expire until July 2000. A U.S. patent 
covering methods of using mitoxantrone to treat leukemia and solid tumors 
does not expire until April 2006, and another U.S. patent covering methods of 
using mitoxantrone to treat neuroimmunologic diseases, including MS, does not 
expire until June 2005. AHP holds a manufacturing process patent on thiotepa 
in the U.S. and Canada. Although methotrexate is the subject of certain 
patents held by AHP, the protection afforded by such patents is not material. 
Immunex has no patent protection on leucovorin calcium, Amicar or Levoprome.

     Wyeth-Ayerst Research and Immunex are pursuing several collaborative 
preclinical research areas to discover or develop other new oncology 
products. AHP and Immunex intend to pursue all protection of all forms of 
intellectual property, including, but not limited to, patents, trade secrets, 
Orphan Drug exclusivity, and benefits of the Waxman-Hatch Legislation, for 
all inventions, discoveries and developments in these areas of research.

     Patent and Technology Licenses. Under its royalty-bearing patent and 
technology license agreements, Immunex is obligated to pay royalties on sales 
of products produced using the licensed technologies. Following the 
expiration of the Cohen-Boyer patents in 1997, Immunex is no longer obligated 
to pay royalties under such patents in respect of all recombinant DNA based 
products. However, Immunex continues to pay royalties to university licensors 
of certain yeast and mammalian-cell expression technologies employed in 
making Leukine and certain other products. Immunex is also obligated to pay 
royalties to Hoechst, Novartis and RCT in respect of the sales of Leukine, 
and has agreed to pay royalties to Hoechst and Massachusetts General Hospital 
in respect of the sales of Enbrel, if any. Immunex may elect to enter into 
additional royalty-bearing license agreements with licensors of patents 
claiming technologies related to Enbrel. Although the total royalty burden 
for Enbrel is subject to the successful completion of negotiations with such 
licensors, it is not expected to adversely affect the Company's ability to 
successfully commercialize Enbrel. There can be no assurance, however, that 
patent license negotiations with any licensors can be successfully maintained 
or completed, or that the total royalties payable under any agreements 
resulting from such negotiations will not have a material adverse effect on 
the Company's business.

     Trademarks. The Company is the owner of all of its trademarks used in 
its business.

PROPERTIES

     Immunex's principal place of business is located in two adjacent 
buildings located in the 1200 block of Western Avenue in Seattle, Washington. 
These buildings, comprising a total of 160,000 square feet, house its primary 
laboratory and office facilities, as well as a 10,000 square foot 
fermentation and pharmaceutical manufacturing facility that has been licensed 
by the FDA to produce Leukine. The current lease terms for these buildings 
extend through August 2000, with three three-year renewal options at market 
value. In addition to its primary facility, Immunex leases a total of 
approximately 70,000 square feet of additional office space in two other 
buildings located in downtown Seattle, and also a 13,000 square foot 
ancillary research facility in a third building in Seattle. The total current 
rent payments for the foregoing facilities was approximately $3.3 million in 
1997 and is forecast to be approximately $4.4 million in 1998.

     Immunex owns a manufacturing and development center in Bothell, 
Washington that includes a large-scale microbial manufacturing facility and a 
separate mammalian cell-based protein manufacturing facility. These 
facilities were used to produce TNFR:Fc for Immunex's clinical trials in 
1997; however, such facilities lack sufficient capacity to produce commercial 
quantities of TNFR:Fc. See "Supply." The microbial manufacturing facility and 
the mammalian cell facility have previously been used to conduct contract 
manufacturing for other companies. Immunex did not use the microbial 
manufacturing facility or the mammalian cell manufacturing facility for 
contract manufacturing for other companies in 1997. Immunex does not 
anticipate entering into any contract manufacturing agreements with other 
companies for such

                                       18
<PAGE>

facilities in the  foreseeable  future.  In 1998,  the Company  intends to 
begin construction of a new process science facility at the Company's site in 
Bothell, Washington.  This new process  science  facility  is  expected to 
speed  process improvements and development of the Company's recombinant 
products.

     The Company is currently exploring several alternatives in order to meet 
its long-term facility needs. The Company owns approximately 20 acres of 
undeveloped land adjacent to its manufacturing and development center in 
Bothell, Washington. In addition, Immunex has entered into a purchase and 
sale agreement with the Port of Seattle concerning the purchase of a 29-acre 
parcel of land located in Seattle, Washington, known as Terminal 88. Pursuant 
to the terms of the agreement, Immunex will not be committed to complete the 
purchase until it has approved the results of complete due diligence review 
of the property and obtained a master use permit and other governmental 
authorizations needed to enable the property to be developed and used in 
accordance with the Company's plans. Immunex anticipates that all of these 
conditions will be satisfied and that it will purchase Terminal 88 in the 
first half of 1998.

PERSONNEL

     As of December 31, 1997, Immunex and its wholly owned subsidiary, 
Immunex Manufacturing Corporation, employed a total of 886 persons, of whom 
109 hold doctoral degrees, 401 were engaged in research and development, 155 
in manufacturing and 149 in sales and marketing. Each employee has entered 
into a confidentiality agreement that contains provisions requiring 
disclosure of ideas, developments, discoveries or inventions conceived during 
employment, and assignment to the Company of all proprietary rights to such 
matters.

     None of the Company's employees is covered by a collective bargaining 
agreement.

     The Company's ability to maintain its competitive position will depend, 
in part, upon its continued ability to attract and retain qualified 
scientific and managerial personnel, and certain key employees. Competition 
for such personnel is intense, and there can be no assurance that the Company 
will be able to attract and retain such personnel.

RISK FACTORS

     The Company may from time to time make written or oral forward-looking 
statements. Written forward-looking statements may appear in documents filed 
with the Securities and Exchange Commission, in press releases, and in 
reports to shareholders. The Private Securities Litigation Reform Act of 1995 
contains a safe harbor for forward-looking statements on which the Company 
relies in making such disclosures. In connection with this safe harbor 
provision, the Company is hereby identifying important factors that could 
cause actual results to differ materially from those contained in any 
forward-looking statement made by or on behalf of the Company. Any such 
statement is qualified by reference to the following cautionary statements:

History of Operating Losses and Uncertainty of Financial Results

     The Company's revenues to date have consisted of product sales, royalty 
and contract revenue, and interest income. Historically, the Company's 
expenses have generally exceeded revenues and there can be no assurance that 
significant additional losses will not occur in the future or that the 
Company will be profitable in the future. The Company had an accumulated 
deficit as of December 31, 1997 of approximately $480 million. The Company 
anticipates that its operating expenses and capital expenditures may increase 
significantly in 1998 and in subsequent years as it adds the personnel and 
facilities associated with advancing products through development, clinical 
trials and manufacturing scale-up. The amounts and timing of expenditures 
will depend on the progress of ongoing research and development, the results 
of preclinical testing and clinical trials, the rate at which operating 
losses are incurred, the execution of any development and licensing 
agreements with corporate partners, the Company's development of products, 
the FDA regulatory process and other factors, many of which are beyond the 
Company's control. Incremental costs in the future may include, but are not 
limited to, those associated with the Company's own product development, 
preclinical studies, clinical trials, manufacturing scale-up, construction of 
a new process science facility at the Company's site in Bothell, Washington 
and, subject to completion of certain conditions, the acquisition of Terminal 
88 for the relocation of the Company's corporate offices and research 
facilities. Other incremental costs may also include, but are not limited to, 
sharing of development expenses with AHP under various research and 
development agreements entered into between the Company and AHP. Although the 
Company expects its current production facilities to be suitable for 
production of sufficient quantities of the Company's products for 
early-stage, and, in some cases, late-stage clinical trials of its 
recombinant products, such facilities will not be capable of or suitable for 
producing the quantity of some of the Company's products necessary for all 
clinical trials or commercial sale, including TNFR:Fc. If the Company chooses 
to establish additional manufacturing capability, significant capital 
expenditures would be required.

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<PAGE>

     The Company expects to incur additional operating losses in 1998. The 
ability of the Company to achieve profitability in subsequent years depends, 
among other things, on increasing sales of its existing products, 
successfully completing product development efforts and obtaining timely 
regulatory approvals of its lead clinical products, particularly Enbrel. The 
development of the Company's products will require the commitment of 
substantial resources to conduct the time-consuming research, preclinical 
development and clinical trials necessary to bring such products to market 
and to establish production capabilities. There can be no assurance that the 
Company will generate significant revenues or achieve profitability.

     The Company anticipates that its accumulated cash reserves, together 
with AHP's payment obligations to the Company, including milestone payments 
under the Promotion Agreement, should be sufficient to fund the Company's 
cash requirements through 1998. Beyond 1998, the Company intends to rely on 
accumulated cash reserves and cash generated from operations, which will be 
highly dependent on the Company's successful development and 
commercialization of Enbrel and its other products and technology. There can 
be no assurance that these products and technologies will be successfully 
developed or commercialized. Further, there can be no assurance that the 
underlying assumed levels of revenue and expense will prove to be accurate.

Uncertainty Associated With Preclinical and Clinical Testing

     Before obtaining regulatory approvals for the commercial sale of any of 
the Company's potential new products, the products will be subjected to 
extensive preclinical and clinical testing to demonstrate their safety and 
efficacy in humans. Results of initial preclinical and clinical testing of 
products under development by the Company are not necessarily indicative of 
results that will be obtained from subsequent or more extensive preclinical 
and clinical testing. Furthermore, there can be no assurance that clinical 
trials of products under development will be completed or will demonstrate 
the safety and efficacy of such products at all or to the extent necessary to 
obtain regulatory approvals. Companies in the biotechnology industry have 
suffered significant setbacks in advanced clinical trials, even after 
achieving promising results in earlier trials. The failure to adequately 
demonstrate the safety and efficacy of a therapeutic product under 
development could delay or prevent regulatory approval of such product.

     The rate of completion of clinical trials depends on, among other 
factors, the enrollment of patients. Patient accrual is a function of many 
factors, including the size of the patient population, the proximity of 
patients to clinical sites, the eligibility criteria for the study and the 
existence of competitive clinical trials. Delays in planned patient 
enrollment in the Company's current clinical trials or future clinical trials 
may result in increased costs, program delays or both.

No Assurance That New Products Will Be Successfully Developed

     The Company's realization of its long-term potential will be dependent 
upon the successful development and commercialization of products currently 
under development, particularly Enbrel. There can be no assurance that Enbrel 
or any of the other Company products under development will be developed 
successfully or receive regulatory approval. Furthermore, there can be no 
assurance that Enbrel or these other Company products, if developed and 
approved, can be successfully manufactured in quantities necessary for 
commercialization or that Enbrel or such other Company products will receive 
market acceptance.

Governmental Regulation; No Assurance of Product Approval

     The FDA and comparable agencies in foreign countries impose substantial 
requirements on biotechnology and pharmaceutical companies prior to the 
introduction of therapeutic products. These requirements include lengthy and 
detailed laboratory and clinical testing procedures, sampling activities and 
other costly and time-consuming procedures, all of which taken together 
involve the expenditure of substantial resources. Satisfaction of these 
requirements typically takes a number of years and varies substantially based 
on the type, complexity and novelty of the pharmaceutical. The Company cannot 
accurately predict when it might submit product applications or submissions 
for FDA or other regulatory review with respect to its products under 
development, including Enbrel. Governmental regulation also affects the 
manufacture and marketing of pharmaceutical products.

     Any future FDA or other governmental approval of products developed by 
the Company may entail limitations on the indicated uses for which such 
product may be marketed. Approved products may be subject to additional 
testing and surveillance programs as required by regulatory agencies. In 
addition, product approvals may be withdrawn or limited for noncompliance 
with regulatory standards or the occurrence of unforeseen problems following 
initial marketing.

                                       20
<PAGE>

     The effect of governmental regulation may be to delay marketing new 
products for a considerable period of time, to impose costly requirements on 
the Company's activities or to provide a competitive advantage to other 
companies that compete with the Company. There can be no assurance that FDA 
or other regulatory approval for any future products or for any additional 
indications for previously approved products developed by the Company will be 
granted on a timely basis, if at all. Adverse clinical results by others 
could have a negative impact on the regulatory process and timing. A delay in 
obtaining or failure to obtain regulatory approvals could adversely affect 
the marketing of the Company's products and the Company's liquidity and 
capital resources. In addition, future legislation or administrative action 
may result in governmental regulations adverse to the Company. The extent of 
potentially adverse governmental regulation that might arise from future 
legislation or administrative action cannot be predicted.

     The Company is also subject to various federal, state and local laws, 
regulations and recommendations relating to safe working conditions, 
laboratory and manufacturing practices, the experimental use of animals and 
the use and disposal of hazardous or potentially hazardous substances, 
including radioactive compounds and infectious disease agents, used in 
connection with its research work. See "Government Regulation."

Uncertain Availability of Third-Party Reimbursement and Product Pricing

     The Company's ability to commercialize products successfully will depend 
substantially on reimbursement of the costs of such products and related 
treatments at acceptable levels from government authorities, private health 
insurers and other organizations, such as health maintenance organizations 
("HMOs"). To date, efforts to obtain reimbursement in connection with the 
Company's marketed products have been largely successful; however, 
uncertainty exists, and will continue to exist, as to the reimbursement 
status of newly approved healthcare products. There can be no assurance that 
the extent of government or third-party reimbursement will permit the Company 
to realize an appropriate return on its investment in developing new 
therapies, including Enbrel, or, if available, will not be decreased in the 
future, or that reimbursement amounts will not reduce the demand for, or the 
price of, the Company's products, thereby adversely affecting its business. 
As a part of their efforts to control health care costs, government and other 
third-party payors have focused on limiting both coverage and the extent of 
reimbursement for new therapeutic products. If adequate coverage and 
reimbursement levels are not provided by government and third-party payors 
for uses of the Company's therapeutic products, including Enbrel, the market 
acceptance of these products would be adversely affected.

     Third-party payors are increasingly challenging the prices charged for 
medical products and services. Also, the trend toward managed healthcare in 
the U.S. and the concurrent growth of organizations, such as HMOs, that can 
control or significantly influence the purchase of healthcare services and 
products, as well as legislative proposals to reform healthcare or reduce 
government insurance programs, may result in lower prices for therapeutic 
products. The cost-containment measures that healthcare providers are 
instituting, including practice protocols and guidelines, clinical pathways, 
and the effect of any healthcare reform could materially adversely affect the 
Company's ability to sell its existing products and to sell additional 
products if successfully developed and approved. Moreover, the Company is 
unable to predict what additional legislation or regulation, if any, relating 
to the healthcare industry or third-party coverage and reimbursement may be 
enacted in the future or what effect such legislation or regulation would 
have on the Company's business.

Limited Manufacturing Capability

     The Company does not currently possess sufficient manufacturing capacity 
to manufacture its forecasted commercial requirements for Enbrel or all of 
its mammalian cell-based protein products under development. In 1997 the 
Company signed agreements with an unaffiliated contract manufacturer to 
manufacture Phase III clinical trial supplies for TNFR:Fc. The Company is 
negotiating a long-term supply agreement with the contract manufacturer to 
manufacture commercial quantities of TNFR:Fc. There can be no assurance that 
these negotiations will be successfully completed. No assurance can be given 
that, if Enbrel receives regulatory approval, any contract manufacturer will 
be able to successfully manufacture sufficient quantities of TNFR:Fc for 
commercial supply, or that the Company will not be required to invest 
substantial sums to construct facilities sufficient to meet its long-term 
manufacturing requirements for Enbrel and other products.

                                       21
<PAGE>

Dependence on Others

     All finished dosage forms for the Non-Biological Oncology Products are 
manufactured by AHP subsidiaries or sourced by AHP through third-party 
manufacturers. Bulk active raw materials for the Non-Biological Oncology 
Products are either manufactured by AHP subsidiaries or sourced by AHP from 
third-party manufacturers. AHP is dependent on a single supplier for all of 
its requirements of the essential raw material for Amicar. Substantially all 
the raw materials used to manufacture the Company's recombinant protein 
products are available from multiple sources. The Company also relies upon an 
unaffiliated third party and AHP for the fill and finish of all drug products 
marketed by the Company. If AHP subsidiaries or third-party manufacturers or 
suppliers were to cease production or otherwise fail to supply such materials 
or products to AHP or the Company, as the case may be, the Company could 
experience a disruption in obtaining these products. In addition, if the 
Company's contract manufacturer for TNFR:Fc were to cease production or 
otherwise fail to supply TNFR:Fc to the Company, the Company would experience 
a disruption in obtaining this product.

Risk of Competitive Conflict with AHP

     In December 1996, Genetics Institute, Inc. ("GI"), a major biotechnology 
concern that is developing immunology and oncology products, became a wholly 
owned subsidiary of AHP. Initially, GI operated as a separate subsidiary 
within AHP. In March 1998, AHP announced the integration of the research and 
development operations of GI and Wyeth-Ayerst Research, AHP's pharmaceutical 
research division, and appointed former senior managers of GI to fill senior 
management positions at Wyeth-Ayerst Research. Currently, Immunex is 
developing a number of products that may compete with products being 
developed by GI. In addition, since Immunex and GI have major research 
projects in molecular biology and immunology, the potential for additional 
competition exists among compounds and molecules that are in the early stage 
of development at Immunex and GI. AHP has acknowledged its fiduciary duty to 
the minority shareholders of Immunex as the majority shareholder, and has 
represented to Immunex that it will protect Immunex's proprietary scientific 
and business information and will not use Immunex's proprietary information 
to aid development of competitive AHP products or place any Immunex product 
at a competitive disadvantage. Also, certain of the agreements between AHP 
and Immunex contain confidentiality provisions, and Immunex has commenced 
discussions with AHP regarding the implementation of additional safeguards to 
protect Immunex's proprietary information. Notwithstanding the foregoing, 
however, there can be no assurance that Immunex's proprietary information or 
competitive position will be protected. Any failure to protect Immunex's 
proprietary information or competitive position could have a material adverse 
effect on Immunex's business and financial condition.

Uncertainty Relating to Patents and Proprietary Rights

     Because of the length of time and expense associated with bringing new 
products through development and the governmental approval process to the 
marketplace, the biotechnology and pharmaceutical industries rely on patent 
and trade secret protection for significant new technologies, products and 
processes. The Company, like other biotechnology and pharmaceutical firms, is 
seeking and maintaining patents for its products and technologies. The 
enforceability of patents issued to biotechnology and pharmaceutical firms 
can be highly uncertain. Federal court decisions indicating legal 
considerations surrounding the validity of patents in the field are in 
transition, and there can be no assurance that the historical legal standards 
surrounding questions of validity will continue to be applied or that current 
defenses as to issued patents in the field will, in fact, be considered 
substantial in the future. In addition, there can be no assurance as to the 
degree and range of protection any patents will afford, whether patents will 
issue or the extent to which the Company will be successful in avoiding 
infringement of patents granted to others.

     While the Company pursues patent protection for products and processes 
where appropriate, it also relies on trade secrets, know-how and continuing 
technological advancement to develop and maintain its competitive position. 
The Company's policy is to have each employee enter into a confidentiality 
agreement that contains provisions prohibiting the disclosure of confidential 
information to anyone outside the Company, and which also contains provisions 
requiring disclosure of ideas, developments, discoveries or inventions 
conceived during employment, and assignment to the Company of all proprietary 
rights to such matters. Research and development contracts and relationships 
between the Company and its scientific consultants provide access to aspects 
of the Company's know-how that is protected generally under confidentiality 
agreements with the parties involved. There can be no assurance, however, 
that these confidentiality agreements will be honored or that the Company can 
effectively protect its rights to its unpatented trade secrets. Moreover, 
there can be no assurance that others will not independently develop 
substantially equivalent proprietary information and techniques or otherwise 
gain access to the Company's trade secrets.

                                       22
<PAGE>

     The Company may be required to obtain licenses to patents or other 
proprietary rights from third parties. There can be no assurance that any 
licenses required under any patents or proprietary rights will be made 
available on terms acceptable to the Company, if at all. If the Company does 
not obtain required licenses, it could encounter delays in product 
development while it attempts to redesign products or methods or it could 
find that the development, manufacture or sale of products requiring such 
licenses could be foreclosed. In addition, the Company could incur 
substantial costs in defending any patent litigation brought against it or in 
asserting the Company's patent rights, including those licensed to the 
Company by others, in a suit against another party. Competitors of the 
Company have obtained or are seeking patents which, if issued or granted, may 
have a material adverse effect on the Company's ability to successfully 
commercialize TNFR:Fc. See "Patents, Licenses and Trademarks."

Technological Change and Competition

     The Company is engaged in fields characterized by extensive research 
efforts and rapid technological development. New drug discoveries and 
developments in the fields of genomics, rational drug design and other drug 
discovery technologies are accelerating. There are many companies and 
institutions, both public and private, including pharmaceutical companies, 
chemical companies, specialized biotechnology companies and research, 
government or academic institutions, that are engaged in developing synthetic 
pharmaceuticals and biotechnological products for human therapeutic 
applications, including the applications targeted by the Company.

     A number of competitors of the Company have substantially more capital, 
research and development, regulatory, manufacturing, marketing, human and 
other resources and experience than the Company. The trend among large 
pharmaceutical companies toward increasing consolidation has increased the 
resources available to the major companies and further concentrated 
intellectual property assets in such competitors. Such competitors may 
succeed in developing products that are more effective or less costly than 
any developed by, or that may be developed by, the Company and may also be 
more successful than the Company in production and marketing. There can be no 
assurance that competitors will not succeed in developing technologies and 
products that are more effective than any being developed by the Company or 
that would render the Company's technology and products obsolete or 
noncompetitive. See "Competition."

Potential Product Liability

     The testing and marketing of biotechnology and pharmaceutical products 
entail an inherent risk of product liability. Such risk exists in human 
clinical trials and even with respect to those products that receive 
regulatory approval for commercial sale. There can be no assurance that the 
Company can avoid significant product liability exposure. The Company 
currently maintains product liability insurance coverage, which management 
believes to be adequate, based on the Company's product portfolio, sales 
volumes and claims experience to date. It is intended that the Company will 
continue such coverage. Such insurance is expensive and may become 
unavailable or difficult to obtain in the future, or available coverage may 
become more limited. There can be no assurance that the Company will be able 
to obtain or maintain such insurance in the future on acceptable terms or 
that such insurance will provide adequate coverage against potential 
liabilities either for clinical trials or commercial sales. The Company's 
business may be adversely affected by successful product liability claims in 
excess of its insurance coverage.

Hazardous Materials; Environmental Matters

     The Company's research and development activities involve the controlled 
use of hazardous materials, chemicals, viruses and radioactive compounds. The 
Company is subject to federal, state and local laws and regulations governing 
the use, manufacture, storage, handling and disposal of such materials and 
certain waste products. Although the Company believes that its safety 
procedures for the handling and disposal of such materials comply with the 
standards prescribed by such laws and regulations, the risk of accidental 
contamination or injury from these materials cannot be completely eliminated. 
In the event of such an accident, the Company could be held liable for any 
damages that result and any such liability could exceed the Company's 
resources. The Company may be required to incur significant costs to comply 
with environmental laws and regulations in the future. The Company's 
operations, business or assets may be materially adversely affected by 
current or future environmental laws or regulations. See "Government 
Regulation."

                                       23
<PAGE>

Item 2.  Properties

     See "Properties" above, under Item 1.

Item 3.  Legal Proceedings

     Immunex is currently a party to several interference proceedings in the 
USPTO. In addition to the GM-CSF interference, which Immunex and Novartis 
have agreed to settle, Immunex is involved in other interferences, including 
an interference involving a patent issued to Yeda that discloses and claims 
certain TBP multimers. See "Patents and Trademarks" above, under Item 1. In 
the Company's opinion, an adverse result in any of the other pending 
interference proceedings would not have a material adverse effect on the 
Company's operations or prospects. However, additional interferences may be 
declared involving other products or technologies being developed by Immunex, 
including TNFR:Fc, Flt3-L or CD40-L.

     On January 8, 1998, BMS filed a complaint in the U.S. District Court in 
Newark, New Jersey, alleging infringement by Immunex of two U.S. patents held 
by BMS pertaining to Taxol. See "Paclitaxel" above, under Item 1. Immunex 
filed an answer to the complaint on February 9, 1998. In the Company's 
opinion, an adverse result in this lawsuit would not have a material adverse 
effect on the Company's operations or prospects.

     Immunex is not a party to any other material litigation.

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

     No matters were submitted to a vote of the Company's security holders 
during the fourth quarter of its fiscal year ended December 31, 1997.

                                       24



<PAGE>

                                     PART II


Item 5.   Market Price of the Registrant's Common Stock and Related 
          Stockholder Matters

     The Company's common stock is traded on The Nasdaq Stock Market-sm- 
under the symbol IMNX.

     The following table sets forth for each period indicated the high and low
sales prices for the Company's common stock as quoted on The Nasdaq Stock
Market.-sm-

<TABLE>
<CAPTION>

                                  1997                        1996
                          --------------------        ------------------

                          High          Low           High          Low
                          ----          ---           ----          ---
<S>                        <C>         <C>            <C>          <C>  


  1st Quarter             33           18 7/8         17           15 1/8

  2nd Quarter             39           23 1/4         16 1/2       13 5/8


  3rd Quarter             68 1/4       32 7/8         14 1/8       11 1/2

  4th Quarter             80 3/8       45 1/4         19 1/2       12 5/8

</TABLE>

     There were approximately 1,334 holders of record of the Company's common
stock as of March 10, 1998, which does not include the number of shareholders
whose shares are held of record by a broker or clearing agency, but does include
such a broker or clearing agency as a holder of record.

     The Company has not paid any cash dividends since its inception. The
Company currently does not intend to pay any cash dividends in the foreseeable
future, but intends to retain all earnings, if any, for use in its business
operations.

     In connection with the Company's stock option plan, the Company has issued
shares of Immunex Common Stock upon exercise of employee stock options. Under
the terms of the Governance Agreement with AHP, AHP has the right to purchase
shares from Immunex to maintain AHP's percentage ownership interest following
the issuance of Immunex Common Stock. See "Relationship with Cyanamid and AHP"
in Item 1, above. In November 1997, AHP exercised their right under the
Governance Agreement and Immunex issued 28,223 shares of common stock to AHP for
$1,280,000. The Company believes that the sale of these securities were exempt
from registration under the Securities Act of 1933, as amended, pursuant to
Section 4.2 thereof.


Item 6.  Selected Financial Data (in thousands, except per share amounts)

     On June 1, 1993, the Company was merged with and into Lederle Oncology
Corporation, a wholly owned subsidiary of American Cyanamid Company. See the
notes to the consolidated financial statements in Item 8 below for a description
of the Merger. The selected financial data as of and for the years ended
December 31, 1997, 1996, 1995 and 1994, respectively, and the period June 2,
1993 to December 31, 1993, are those of the Company subsequent to the Merger.
The selected financial data for the period January 1, 1993 to June 1, 1993 are
those of the Company prior to the Merger.

<TABLE>
<CAPTION>
                                                                                               Period          Period
                                                                                               6/2/93          1/1/93
                                                                                                 to              to
                                   1997           1996           1995            1994         12/31/93         6/1/93
                               -----------     -----------    -----------    -----------     -----------    ---------
<S>                            <C>             <C>            <C>            <C>             <C>            <C>

Revenues                       $   185,297     $   151,198     $  156,616    $   144,332     $    95,310    $    27,556
Net loss                           (15,772)        (53,632)       (11,300)       (33,104)       (366,135)       (64,167)
Net loss per common share            (0.40)         (1.35)          (0.29)         (0.85)          (9.58)         (4.17)
Total assets                       227,333         177,787        174,037        192,665         204,118              -
Long-term debt and obligations,
  including current portion          9,093          12,071          5,324         50,611          23,450              -
Shareholders' equity               176,156         137,710        136,643        111,927         137,863              -

</TABLE>

                                       25
<PAGE>


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

INTRODUCTION

     The following discussion of results of operations, liquidity and capital
resources includes certain forward-looking statements made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. The
words "believes," "anticipates," "expects" and similar expressions are intended
to identify such forward-looking statements, but their absence does not mean a
statement is not forward-looking. Such statements are based on current
expectations and are subject to certain risks and uncertainties that could cause
actual results to differ materially from those anticipated by the statements
made by Immunex Corporation ("Immunex" or the "Company"). Certain risk factors
have been identified that could affect the Company's actual results and are
described in the "Risk Factors" section in Item 1 above. Readers are cautioned
not to place undue reliance on these forward-looking statements, which speak
only as to the date hereof. The Company undertakes no obligation to publicly
release the result of any revisions to these forward-looking statements that may
be made to reflect events or circumstances after the date hereof or to reflect
the occurrence of unanticipated events.

RESULTS OF OPERATIONS

Overview

     For the year ended December 31, 1997, the Company incurred a net loss of 
$15.8 million, compared to net losses of $53.6 million and $11.3 million for 
the years ended December 31, 1996 and 1995, respectively. The 1997 operating 
results reflect growth in sales of the Company's two lead products, 
Novantrone-Registered Trademark- (mitoxantrone) and Leukine-Registered 
Trademark- (sargramostim), as compared to sales levels in fiscal 1996 and 
1995. In addition, following the announcement that the results of a pivotal 
Phase III study for Enbrel-TM- (TNFR:Fc) were positive, the Company entered 
into an Enbrel Promotion Agreement ("Promotion Agreement") with American Home 
Products Corporation ("AHP") which contributed to increased contract revenues 
during the year. The increase in operating revenues during 1997 was partially 
offset by increased spending on the Company's near-term product 
opportunities, discovery research and selling and marketing programs.

Revenues

     Product sales increased in 1997 to $149.7 million, versus $129.5 million
and $137.6 million in 1996 and 1995, respectively. The Company believes that the
increase in product sales in 1997 resulted from two key events. In November
1996, the Company received an expanded label indication for Novantrone and in
January 1997, the Company launched a multi-dose liquid formulation of Leukine.
These developments were followed by sales and marketing programs designed to
capitalize on these opportunities. The higher product sales in 1997 were
partially offset by the continued erosion of leucovorin calcium sales levels.
Leucovorin calcium has experienced intense generic competition over the past
several years, resulting in decreased sales of this product in each of the years
presented. Product sales for 1996, as compared to 1995, reflected a decline in
sales of Novantrone that were affected by distributor buying patterns late in
1995.

     Net sales of Leukine totaled $52.7 million, $43.1 million, and $41.4
million in 1997, 1996, and 1995, respectively. After several years of little or
no growth in sales of Leukine, sales volumes increased substantially during
1997. This performance is attributable to several factors. In late 1995, the
Company received United States Food & Drug Administration ("FDA") approval to
market Leukine for treatment of acute myelogenous leukemia, allogenic bone
marrow transplantation and for mobilizing and post-transplantation support of
peripheral blood progenitor cells. These additional indications contributed to
sales growth in the hospital setting during fiscal 1996 and 1997. The growth in
1996 in the hospital setting, however, was largely offset by a decrease in the
use of Leukine in the outpatient setting. Prior to November 1996, Leukine was
only available in a lyophilized formulation that required reconstitution prior
to administration. Hospitals utilized specialized mixing equipment, not widely
available in the outpatient setting, to reconstitute Leukine. In November 1996,
the FDA approved a multi-dose liquid formulation of Leukine that did not require
reconstitution, thereby offering increased convenience for all patient settings.
The improved formulation, coupled with the Company's sales and marketing
strategies, resulted in an increase in Leukine sales during 1997.

     Net sales of Novantrone totaled $51.6 million, $36.7 million and $43.0
million in 1997, 1996 and 1995, respectively. In November 1996, the Company
received FDA approval to market Novantrone for use, in combination with
steroids, for treatment of patients with pain related to hormone refractory
prostate cancer ("HRPC"). Sales of Novantrone benefited immediately from this
approval as oncologists' use of Novantrone in 1997 as a treatment therapy for
HRPC increased significantly from historical levels. Sales of Novantrone during
fiscal 1996 decreased, as compared to 1995, primarily due to distributor
purchasing patterns in late 1995 which adversely affected sales levels in early
1996. During the last quarter of 1995, wholesalers and oncology distributors
increased their purchases of Novantrone above historical purchasing levels. This
was followed by a much lower than anticipated sales level during the first
quarter of 1996.


                                       26
<PAGE>

     Net sales of leucovorin calcium declined to $8.2 million in 1997 from $12.1
million in 1996 and $18.4 million in 1995. Leucovorin calcium is a generic
product that has been subject to intense competition over the past several years
resulting in declining sales volumes and selling prices. In June 1997, a
competitor received FDA approval to market a 350 mg vial of leucovorin calcium,
the only remaining leucovorin calcium product the Company markets that did not
have direct competition. This development accelerated the decline in sales of
leucovorin calcium to the point that leucovorin calcium is not, nor is expected
to be in the future, a significant revenue source for the Company.

     Royalty and contract revenue increased to $35.6 million in 1997, compared
to $21.7 million and $19.0 million in 1996 and 1995, respectively. The amount of
revenues recognized each year has been largely dependent upon business
opportunities identified during the year and the achievement of milestones under
existing contracts. Due to the nature of these agreements and the dynamic nature
of intellectual property transactions in the biotechnology industry, the timing
and amounts of these revenues may fluctuate significantly from year to year. In
September 1997, following the unblinding of the results of a pivotal Phase III
study for Enbrel, the Company and AHP entered into a Promotion Agreement
pursuant to which AHP, acting through its Wyeth-Ayerst Laboratories division,
has agreed to promote Enbrel in North America, if and when the product receives
regulatory approval. Upon signing of the Promotion Agreement in September 1997,
the Company received $15.0 million from AHP. In addition, in December 1997, the
Company sold its rights to certain products marketed in Canada to a wholly owned
subsidiary of AHP for $4.0 million.

     The incremental royalty and contract revenues earned during fiscal 1997
were partially offset by a drop in license fee income, as compared to fiscal
1996. License fee income in 1997, 1996 and 1995 totaled $7.8 million, $10.8
million and $6.6 million, respectively, of which $6.0 million was earned in each
of the years presented under license agreements with AHP. In 1995, the Company
initiated a program to use surplus capacity at its manufacturing development
center to perform contract manufacturing services for certain customers. Due to
the internal manufacturing needs for the development and manufacturing of the
Company's clinical and preclinical product candidates, the Company ceased
initiating new contract manufacturing arrangements in 1996. Revenue recognized
from performing these services decreased to $3.3 million in 1996, compared to
$6.4 million in 1995. No related revenue was earned in 1997, nor is any such
revenue expected to be earned for the foreseeable future. The Company earns
royalty income under several technology license agreements. Royalties earned by
the Company under such agreements in 1997, 1996, and 1995 totaled $6.9 million,
$5.7 million and $5.8 million, respectively.

Operating Expenses

     Cost of product sales was $24.6 million, or 16.4% of product sales, $21.9
million, or 16.9% of product sales and $24.6 million, or 17.8% of product sales,
for the years ended December 31, 1997, 1996 and 1995, respectively. Cost of
product sales, as a percentage of product sales, varies from period to period
due to the relative mix of the products sold during each period presented and
fluctuations in costs not charged to a specific manufacturing lot ("Period
Costs") from year to year. Period Costs consist primarily of product stability
testing, standard material variances and excess capacity charges. A decrease in
the cost of product sales percentage occurred during fiscal 1997 due to
favorable changes in the mix of products during the year to include a relatively
higher percentage of the Company's more profitable products. This decrease was
partially offset, however, by a moderate increase in Period Costs incurred
during the year and, to a lesser extent, deteriorating margins on sales of
leucovorin calcium. The decrease in the cost of product sales percentage during
1996, as compared to 1995, was due primarily to a decrease in Period Costs and
changes in product mix.

     Research and development expense increased to $109.3 million in 1997
compared to $96.6 million and $83.5 million in 1996 and 1995, respectively. The
increase in each of the years presented is due primarily to increased
expenditures related to the Company's development research activities, which
include charges for production of clinical material, manufacturing production
scale-up and the costs of conducting clinical studies. Following the positive
results of a Phase II clinical study of TNFR:Fc in patients with rheumatoid
arthritis in late 1995, the Company began making substantial investments in the
development of Enbrel. In 1997, accelerating development of this product
candidate became a primary focus of the Company and spending levels increased
significantly. The Company has been conducting numerous clinical studies with
Enbrel, including a pivotal Phase III study in patients with advanced rheumatoid
arthritis, which was completed in the third quarter of 1997. The Company has
also been working with a contract manufacturer for the production of clinical
material and, during the third quarter of 1997, successfully completed the
manufacturing scale-up of Enbrel to commercial quantities. Spending on other
product candidates, including Mobist-TM- (Flt3-L), Nuvance-TM- (IL-4 receptor)
and CD40 ligand has also increased during each of the years presented. To a
lesser extent, the increase in research and development expense in the current
year represents increased investment in discovery research as the Company
increased staffing levels in this area. In 1996, discovery research expense
decreased, as compared to 1995, as resources were re-allocated to support the
Company's clinical development programs.


                                       27
<PAGE>

     In July 1996, Immunex and AHP amended their agreements related to research
and development of new oncology products and development of Enbrel and Mobist.
Under the terms of the revised research agreement, the Company will contribute
50%, up to a maximum amount of $16 million per year (adjusted annually for
inflation beginning in 1997), to support AHP's discovery research in oncology.
If the Company elects to retain its North American product rights to any
clinical products emerging from certain internal AHP oncology discovery
programs, the Company and AHP will share the related development costs. Expenses
incurred under these agreements totaled $16.2 million in 1997 compared to $21.2
million and $15.8 million in 1996 and 1995, respectively. Immunex and AHP also
established joint project management systems for development of Enbrel and
Mobist and agreed to share the costs of developing these products in North
America and Europe. Under the terms of these agreements, Immunex retains North
American marketing rights and AHP retains marketing rights for territories
outside North America. To date, Immunex has been incurring a significant
majority of these development costs and, accordingly, has been receiving
reimbursement from AHP for its share of these costs. With the increased spending
on development of Enbrel in 1997, AHP's obligation for shared development costs
also increased, totaling $18.7 million in 1997 compared to $3.9 million in 1996.
In addition to its agreements with AHP, the Company has entered into several
other collaborative research agreements to facilitate the achievement of its
research and development goals. Expenses under these other agreements totaled
$4.5 million, $1.6 million and $1.1 million in 1997, 1996 and 1995,
respectively.

     Selling, general and administrative expenses totaled $71.3 million, $70.0
million and $59.3 million in 1997, 1996 and 1995, respectively. The growth in
expense levels during both 1997 and 1996 was due primarily to an increase in
selling and marketing expenses. Beginning in 1996, and continuing in 1997, the
Company increased spending on selling and marketing programs in order to promote
expanded label indications for both Novantrone and Leukine and a multi-dose
liquid formulation for Leukine. Also, in 1997, selling expenses increased as
additional sales programs were implemented and the Company's sales force was
expanded. In addition, beginning in 1996, the Company increased spending on
corporate infrastructure, primarily through investment in information
technology, which continued into 1997. Finally, the Company incurred legal fees
and expenses in 1997 in connection with patent procurement and patent defense
activities.

     Although total selling, general and administrative expenses increased by
only $1.3 million during 1997 as compared to 1996, and by $12.0 million compared
to 1995, the Company was able to increase its investment in selling and
marketing programs and spending on corporate infrastructure by an amount greater
than reflected in the year to year expense comparisons. Expenditures in 1996 and
1995 include certain significant expenses that did not occur during 1997. In
November 1996, the Company agreed to settle ongoing litigation with Cistron
Biotechnology, Inc. ("Cistron"). Legal defense costs related to the litigation
totaled $4.7 million and $3.7 million in 1996 and 1995, respectively. In
addition, in the third quarter of 1996, severance payments under an employment
agreement, totaling approximately $1.0 million, were made to a former officer of
the Company. Finally, following AHP's November 1995 offer to purchase all
outstanding shares of the Company's common stock, the Company incurred costs
related to the adoption of certain employee retention programs, investment
banking, legal and other fees of approximately $1.5 million and $2.2 million in
1996 and 1995, respectively.

Other Income (Expense)

     In 1997, interest income increased to $3.8 million from $2.2 million in
1996 and $1.1 million in 1995. The Company's average cash and investment balance
has increased during each of the last three years, resulting in increased
interest income during each successive year. This improvement is due largely to
the $56.0 million, $45.3 million and $35.8 million paid to the Company by AHP in
1997, 1996 and 1995, respectively, as settlement of its annual revenue shortfall
obligation. AHP was required to make payments to the Company if revenues from
certain products did not meet established annual amounts ("Revenue Guaranty")
through December 31, 1997.

     Interest expense totaled $0.6 million, $0.3 million and $1.1 million in
1997, 1996 and 1995, respectively. In the first quarter of 1995, the Company
paid the $34.0 million outstanding balance on its loan with AHP and made the
final $10.6 million payment on a construction loan. No additional borrowings
have been made since that time and as a result, interest expense decreased
significantly from 1995 to 1996. The increase in interest expense during 1997
represents the imputed interest related to the obligation recorded pursuant to
the settlement of the Cistron litigation in November 1996. The Company recorded
a charge of $18.1 million to other expense as its share of the obligation under
the settlement.


                                       28
<PAGE>

Provision for Income Taxes

     The Company's provision for income tax consists of the tax obligation of
the Company's operations in the states in which the Company sells its products.
At December 31, 1997, the Company had a net operating tax loss carryforward of
approximately $252 million. The provision for income taxes is not expected to be
significant until such time that the Company becomes profitable.

LIQUIDITY AND CAPITAL RESOURCES

     Cash, cash equivalents and marketable securities totaled $86.5 million and
$23.9 million at December 31, 1997 and 1996, respectively. The increase during
1997 was due to the receipt of $56.0 million in February 1997 from AHP as
payment of the 1996 Revenue Guaranty combined with cash generated from operating
activities of $15.1 million. These funds were added to the Company's cash
reserves and are held in a variety of interest-bearing instruments, including
government and corporate obligations and money market funds.

     Following the positive clinical results in September 1997 from a pivotal
Phase III study of Enbrel for treatment of advanced rheumatoid arthritis, the
Company began implementing plans for the possible commercialization of Enbrel.
The Company is working with AHP, under the terms of the Promotion Agreement for
Enbrel, to coordinate the sales, marketing, distribution, customer service and
other necessary systems to support sales of Enbrel in the United States, if and
when it is approved by the FDA. Under the terms of the Promotion Agreement, AHP
will assume a majority of the pre-launch commercial expenses. However, the
Company is expected to incur additional costs related to the development of the
Company's infrastructure to support the possible launch and sale of Enbrel,
which will not be shared by AHP. In addition, based on the successful
manufacturing scale-up of Enbrel to commercial quantities by the contract
manufacturer utilized by the Company, certain steps have been initiated in an
effort to ensure that inventory of Enbrel is available to meet the Company's
expected initial commercial requirements. The Company has made orders of launch
inventory of Enbrel from the contract manufacturer and expects to order
additional quantities in 1998. The launch inventory requirements of Enbrel are
expected to be invoiced to the Company beginning in mid-1998. Completion of
these commercialization related steps, as discussed above, will require
significant cash investments by the Company. However, the timing and amount of
these expenditures are uncertain and dependent on several factors including the
manufacturing schedule for producing Enbrel, the Company's approach for selling,
distributing and marketing Enbrel and the timing of regulatory approval.
Although the Phase III data for Enbrel released by the Company in September 1997
were positive, there can be no assurance that Enbrel will be approved by the FDA
or, if approved, that Enbrel will actually be launched in the United States, or
if launched, whether the Company's estimates of launch inventory requirements
will reflect actual demand for the product. Certain risk factors have been
identified which could affect the Company's ability to commercialize Enbrel and
are described in the "Risk Factors" section in Item 1 above, including those
related to competition, patents, regulatory approval, supply and third-party
reimbursement. Accordingly, any amounts recorded as launch inventory of Enbrel
and any related purchase commitments are subject to risk until such
uncertainties are resolved.

     Investments in capital equipment totaled $7.4 million during 1997,
primarily for purchases of computer systems and improvements to existing
systems. Spending in this area is expected to increase further in 1998 as
additional projects are initiated and existing projects continue. In addition,
purchases of research equipment are expected to increase moderately in 1998 from
what has been a maintenance level of investment over the past several years.

     Management has initiated a comprehensive review of its computer systems to
identify the systems that could be affected by the "Year 2000" issue. The Year
2000 issue is the result of computer programs being written using two digits
rather than four to define the applicable year. Any of the Company's computer
systems that have time-sensitive software may recognize a date using "00" as the
year 1900 rather then the year 2000. This could result in a system failure or
miscalculations with respect to current programs. The Company expects to incur
internal staff costs and may incur consulting and other expenses in order to
prepare the Company's computer systems for the year 2000. The extent of the
Company's exposure is uncertain at this time, but the Company believes that the
Year 2000 issue will not pose significant operational problems. However, if any
required modifications or conversions necessary as a result of the Year 2000
issue are not completed in a timely manner, there could be a material impact on
the operations of the Company.


                                       29
<PAGE>

     The Company has identified a need to improve its ability to scale-up
manufacturing of multiple products in an accelerated time-frame and to increase
its capacity to manufacture clinical grade material to support clinical trials.
This would allow the Company to more effectively exploit its product pipeline
opportunities by eliminating an existing bottleneck in the Company's current
clinical material manufacturing process. In order to address these issues, the
Company expects to begin construction of a process science facility during 1998.

     The Company has reached capacity at its current corporate facilities. In
order to accommodate planned growth during 1998, the Company has entered into a
lease for additional office space. To meet its long-term facilities needs, the
Company has entered into a purchase and sale agreement for property in the
vicinity of its corporate headquarters. Development of this property would allow
for the consolidation of its corporate office and research facilities in a
single location and allow for future growth of the organization. The current
amendment to the purchase and sale agreement expires in March 1998 and
expenditures for the property are estimated at $15 million.

     Financing activities provided $56.0 million during 1997. In February 1997,
the Company received $56.0 million from AHP as payment of the 1996 Revenue
Guaranty. At December 31, 1997, the Company recorded a receivable from AHP of
$60.0 million related to the 1997 Revenue Guaranty, which was received in
February 1998. This payment was the final AHP Revenue Guaranty payment the
Company will receive. Proceeds from the exercise of stock options and issuance
of common stock provided $3.0 million. The above financing proceeds were offset
by the $2.2 million payment under the Cistron settlement obligation for 1997,
together with payments of $0.7 million under other obligations.

     During 1998, the Company expects to continue to utilize its cash reserves
and the final payment under the AHP Revenue Guaranty for investment in property,
plant and equipment and the costs associated with the possible commercialization
of Enbrel, including the anticipated purchase of commercial inventory of Enbrel.
In addition, if necessary, under the terms of the Promotion Agreement, AHP has
agreed to make available a working capital loan of up to $25.0 million toward
the purchase of commercial launch inventory of Enbrel. Beyond 1998, the Company
intends to rely on accumulated cash reserves and cash generated from operations,
which will be highly dependent on the Company's successful development and
commercialization of Enbrel and its other products and technology.

OUTLOOK

     The Company made significant progress during 1997, achieving its goals with
respect to development of Enbrel, growth in sales of its core products and
advancement of its other clinical opportunities. However, the near-term growth
of the Company is dependent upon both the approval of Enbrel by the FDA and the
successful commercialization of Enbrel, if and when it is approved by the FDA.
The Company will increase spending significantly in 1998 in order to capitalize
on this opportunity. In addition, investment in discovery research and other
product candidates is expected to increase and the Company intends to continue
to maintain an increased level of spending to support the selling and marketing
of its existing products. Accordingly, the Company expects that operating losses
will continue to be incurred until such time it is able to generate significant
growth in product sales.

     Additional label indications for both Leukine and Novantrone and the launch
of an improved formulation of Leukine contributed to increased sales in 1997.
Continued growth of these products is dependent upon increased market acceptance
and the development of opportunities in new markets. The growth in sales of
Novantrone during 1997 occurred largely with oncologists who treat HRPC with
chemotherapy. Although the Company will continue its programs to promote
Novantrone in this setting, a large percentage of the patients with HRPC are
treated by urologists. Accordingly, the Company is implementing educational
programs intended to increase referrals of patients with HRPC from urologists to
oncologists. In an effort to increase the market opportunities for Leukine,
certain clinical studies of Leukine are being conducted, including its use for
treatment of opportunistic and viral infections, malignant melanoma and vaccine
adjuvancy.


                                       30
<PAGE>

     A portion of the Company's revenues will continue to be derived from
existing license and royalty agreements. The Company has existing agreements
under which revenues may be earned if certain milestones are achieved. The
timing and achievement of a milestone is never certain and, accordingly, the
revenues from these existing agreements cannot be predicted. The Promotion
Agreement with AHP to promote Enbrel in North America, if and when the product
receives regulatory approval, includes certain nonrefundable milestone payments.
The Company received $15.0 million upon signing of the Promotion Agreement in
September 1997, and the Company can earn $20.0 million upon acceptance for
review of a biologics license application ("BLA") for Enbrel for advanced
rheumatoid arthritis by the FDA and $30.0 million if the BLA is approved by the
FDA. The Company expects to submit the BLA for Enbrel to the FDA during the
second quarter of 1998. There can be no assurance that the BLA will be submitted
to the FDA in the second quarter of 1998, or that, if submitted, the FDA will
accept the BLA for review or, if accepted, if or when the FDA may approve the
BLA. The Company may enter into additional agreements to license its marketing
rights and technology patent rights. The timing of such agreements, if any, and
the revenue recognized therefrom cannot be predicted.

     For several years, the Company has been a party to a GM-CSF patent
interference proceeding. In January 1998, the Company reached a settlement with
the remaining party to the proceeding. Under the terms of the settlement, the
Company will incur additional royalties on future net sales of Leukine.

     In 1998, spending for clinical trials and product development is expected
to continue near 1997 expense levels. The Company will continue numerous
clinical trials for Enbrel, Leukine and Mobist. In addition, in 1998, the
Company intends to continue clinical development of Nuvance and to commence a
clinical trial of CD40 ligand when sufficient drug supplies are available. The
Company also expects that spending on discovery research will increase during
1998. Finally, the Company expects to enter into an agreement in the first half
of 1998 to reacquire the ex-North American rights to IL-1 receptor, IL-4
receptor and IL-7 receptor for $10 million. These costs will be charged to
research and development expense.

     Growth in selling, general and administrative expense during 1998 will be
due largely to the costs of preparing for the possible commercialization of
Enbrel, as discussed above. In addition, investment in information technology
will continue to increase, as well as facility and other costs to support
anticipated staffing increases during 1998.


Item 7A.  Qualitative and Quantitative Disclosures About Market Risk
N/A

Item 8.   Financial Statements and Supplementary Data

<TABLE>
<CAPTION>
                                                                                                 Page in
                                                                                                Form 10-K
                                                                                                ----------
<S>                                                                                             <C>  
 Consolidated Balance Sheets at December 31, 1997 and 1996.                                        32

 Consolidated Statements of Operations for the years ended December 31, 1997,
 1996 and 1995.                                                                                    33

 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1997,
 1996 and 1995.                                                                                    34

 Consolidated Statements of Cash Flows for the years ended December 31, 1997,
 1996 and 1995.                                                                                    35

 Notes to Consolidated Financial Statements for the years ended December 31, 1997,
 1996 and 1995.                                                                                  36 - 46

 Report of Ernst & Young LLP, Independent Auditors.                                                47
</TABLE>

                                       31
<PAGE>



                               IMMUNEX CORPORATION
                           Consolidated Balance Sheets
                        (In thousands, except share data)




<TABLE>
                                                                                         December 31,
                                                                                  1997                 1996
<S>                                                                 <C>                  <C>  

Assets

Current assets:
    Cash and cash equivalents                                        $            66,176  $            23,861
    Marketable securities                                                         20,364                    -
    Accounts receivable - trade, net                                              13,741               15,675
    Accounts receivable - related parties                                          3,555                2,401
    Inventories                                                                    9,031                8,893
    Prepaid expenses and other current assets                                      3,726                3,781
                                                                     -------------------  -------------------

      Total current assets                                                       116,593               54,611

Property, plant and equipment, net                                                73,645               80,021

Other assets:
    Property held for future development                                           5,768                5,687
    Investment in common stock                                                     6,859               11,759
    Intangible product rights, net                                                 6,924                7,700
    Goodwill, net                                                                 11,182               13,239
    Patent costs and other, net                                                    6,362                4,770
                                                                     -------------------  -------------------

      Total assets                                                   $           227,333  $           177,787
                                                                     -------------------  -------------------
                                                                     -------------------  -------------------
Liabilities and Shareholders' Equity
Current liabilities:
    Accounts payable                                                 $            29,007  $            20,579
    Accounts payable - related parties                                             1,917                1,726
    Accrued compensation and related items                                         8,572                4,858
    Current portion of long-term obligations                                       3,460                3,491
    Other current liabilities                                                      2,588                  843
                                                                     -------------------  -------------------

       Total current liabilities                                                  45,544               31,497

Long-term obligations                                                              5,633                8,580

Commitments and contingencies

Shareholders' equity:
    Preferred stock, $.01 par value, 5,000,000 shares authorized,
      none outstanding                                                                 -                    -
    Common stock, $.01 par value, 100,000,000
      shares authorized, 39,718,023 and 39,602,225
      outstanding at December 31, 1997 and 1996, respectively                    711,485              648,475
    Guaranty payment receivable from AHP                                         (60,032)             (56,000)
    Unrealized gain on investments                                                 4,646                9,406
    Accumulated deficit                                                         (479,943)            (464,171)
                                                                     -------------------- --------------------

      Total shareholders' equity                                                 176,156              137,710
                                                                     -------------------  -------------------

       Total liabilities and shareholders' equity                    $           227,333  $           177,787
                                                                     -------------------  -------------------
                                                                     -------------------  -------------------



</TABLE>


                             See accompanying notes.


                                       32
<PAGE>

                               IMMUNEX CORPORATION
                      Consolidated Statements of Operations
                    (In thousands, except per share amounts)


<TABLE>

                                                                     Year ended December 31,
                                                          1997                 1996                 1995
                                                  -------------------  -------------------  -------------------
<S>                                               <C>                  <C>                 <C>  
Revenues:
    Product sales                                 $           149,672  $           129,528  $           137,639
    Royalty and contract revenue                               35,625               21,670               18,977
                                                  -------------------  -------------------  -------------------
                                                              185,297              151,198              156,616
Operating expenses:
    Cost of product sales                                      24,552               21,860               24,555
    Research and development                                  109,312               96,612               83,463
    Selling, general and administrative                        71,275               69,968               59,318
                                                  -------------------  -------------------  -------------------
                                                              205,139              188,440              167,336
                                                  -------------------  -------------------  -------------------
Operating loss                                                (19,842)             (37,242)             (10,720)

Other income (expense):
    Interest income                                             3,790                2,156                1,123
    Interest expense                                             (596)                (293)              (1,145)
    Other income (expense), net                                 1,088              (18,093)                (312)
                                                  -------------------  -------------------- -------------------
                                                                4,282              (16,230)                (334)
                                                  -------------------  -------------------  -------------------
Loss before income taxes                                      (15,560)             (53,472)             (11,054)

Provision for income taxes                                        212                  160                  246
                                                  -------------------  -------------------  -------------------
Net loss                                          $           (15,772) $           (53,632) $           (11,300)
                                                  -------------------  -------------------  -------------------
                                                  -------------------  -------------------  -------------------

Net loss per common share                         $             (0.40) $             (1.35) $             (0.29)
                                                  -------------------  -------------------  -------------------
                                                  -------------------  -------------------  -------------------

Number of shares used for per share amounts                    39,637               39,602               39,590
                                                  -------------------  -------------------  -------------------
                                                  -------------------  -------------------  -------------------


</TABLE>




                             See accompanying notes.



                                       33
<PAGE>

                               IMMUNEX CORPORATION
                 Consolidated Statements of Shareholders' Equity
                        (In thousands, except share data)
<TABLE>


                                                                      Guaranty
                                                                       Payment     Unrealized
                                               Common Stock          Receivable   Gain (Loss)     Accumu-
                                              $.01 Par Value            from           on          lated
                                           Shares        Amount          AHP       Investments      Deficit       Total
                                        -----------   -----------   ------------- ------------  ------------- ------------
<S>                                      <C>          <C>           <C>           <C>           <C>           <C>

Balance, January 1, 1995                 39,449,199   $   547,182   $    (35,768) $       (248) $   (399,239) $    111,927
    Issuance of common stock upon
      the redemption of warrants            152,700             -              -             -             -             -
    Guaranty payment received
      from AHP                                    -             -         35,768             -             -        35,768
    Guaranty payment receivable
      from AHP                                    -        45,288        (45,288)            -             -             -
    Unrealized gain on investments                -             -                          248             -           248
    Net loss for the year ended
      December 31, 1995                           -             -              -             -       (11,300)      (11,300)
                                        -----------   -----------   ------------  ------------  ------------- -------------

Balance, December 31, 1995               39,601,899       592,470        (45,288)            -      (410,539)      136,643
                                        -----------   -----------   ------------- ------------  ------------- ------------
    Issuance of common stock upon
      the exercise of stock options             326             5              -             -             -             5
    Guaranty payment received
      from AHP                                    -             -         45,288             -             -        45,288
    Guaranty payment receivable
      from AHP                                    -        56,000        (56,000)            -             -             -
    Unrealized gain  on investment                -             -              -         9,406             -         9,406
    Net loss for the year ended
      December 31, 1996                           -             -              -             -       (53,632)      (53,632)
                                        -----------   -----------   ------------  ------------  ------------- -------------

Balance, December 31, 1996               39,602,225       648,475        (56,000)        9,406      (464,171)      137,710
                                        -----------   -----------   ------------- ------------  ------------- ------------
    Issuance of common stock upon
      the exercise of stock options          87,575         1,698              -             -             -         1,698
    Net proceeds from issuance of
      common stock to AHP                    28,223         1,280              -             -             -         1,280
    Guaranty payment received
      from AHP                                    -             -         56,000             -             -        56,000
    Guaranty payment receivable
      from AHP                                    -       60,032         (60,032)            -             -             -
    Net unrealized loss on
      investments                                 -             -              -        (4,760)            -        (4,760)
    Net loss for the year ended
      December 31, 1997                           -             -              -             -       (15,772)      (15,772)
                                        -----------   -----------   ------------  ------------  ------------- -------------

Balance, December 31, 1997               39,718,023   $   711,485   $    (60,032) $      4,646  $   (479,943) $    176,156
                                        -----------   -----------   ------------- ------------  ------------- ------------
                                        -----------   -----------   ------------- ------------  ------------- ------------



</TABLE>



                                                 See accompanying notes.


                                       34
<PAGE>


                               IMMUNEX CORPORATION
                      Consolidated Statements of Cash Flows
                                 (In thousands)



<TABLE>
                                                       

                                                                           Year ended December 31,
                                                               1997                 1996                 1995
                                                        -------------------  -------------------  -------------------
<S>                                                    <C>                   <C>                  <C>          

Cash flows from operating activities:
   Net loss                                             $           (15,772) $           (53,632) $           (11,300)
   Adjustments to reconcile net loss to net
     cash provided by (used in) operating activities:
       Depreciation and amortization                                 16,931               15,157               15,901
       Equity in loss of affiliate                                        -                    -                  514
       Cash flow impact of changes to:
         Trade and other receivables                                    780                2,269               (2,438)
         Inventories                                                   (138)                (591)               3,423
         Prepaid expenses and other current assets                     (816)              (1,990)               1,747
         Accounts payable, accrued
           compensation and other current liabilities                14,078               (4,262)               3,551
                                                        -------------------  -------------------  -------------------

           Net cash provided by (used in) operating                  15,063              (43,049)              11,398
           activities
Cash flows from investing activities:
   Purchases of property, plant and equipment                        (7,409)              (4,656)              (5,246)
   Proceeds from sales and maturities of marketable                  13,804                    -                9,897
   securities
   Purchases of marketable securities                               (33,158)                   -                    -
   Patent costs and other                                            (1,985)              (1,255)                (567)
                                                        -------------------- -------------------- -------------------

           Net cash provided by (used in) investing                 (28,748)              (5,911)               4,084
           activities
Cash flows from financing activities:
   Guaranty payment received from AHP                                56,000               45,288               35,768
   Deferred portion of settlement obligation                              -                7,703                    -
   Payment under settlement obligation                               (2,235)                   -                    -
   Proceeds from exercise of stock options                            1,698                    -                    -
   Proceeds from issuance of common stock                             1,280                    -                    -
   AHP line of credit                                                     -                    -              (34,000)
   Construction loan payments                                             -                    -              (10,600)
   Other                                                               (743)                (607)              (1,031)
                                                        -------------------- -------------------- -------------------

           Net cash provided by (used in) financing                  56,000               52,384               (9,863)
                                                        -------------------  -------------------  -------------------
           activities
Net increase in cash and cash equivalents                            42,315                3,424                5,619
Cash and cash equivalents, beginning of period                       23,861               20,437               14,818
                                                        -------------------  -------------------  -------------------

Cash and cash equivalents, end of period                $            66,176  $            23,861  $            20,437
                                                        -------------------  -------------------  -------------------
                                                        -------------------  -------------------  -------------------


</TABLE>


                             See accompanying notes.



                                       35
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 1.  Organization and Basis of Presentation

     Immunex Corporation ("Immunex" or the "Company") is a biopharmaceutical
company that discovers, develops, manufactures and markets innovative
therapeutic products for the treatment of human diseases, including cancer,
infectious diseases and immunological disorders.

     The Company operates in a highly regulated and competitive environment. The
manufacturing and marketing of pharmaceutical products requires approval from
and is subject to ongoing oversight by the Food and Drug Administration ("FDA")
in the United States and by comparable agencies in other countries. Obtaining
approval for a new therapeutic product is never certain and may take several
years and involve expenditure of substantial resources. Competition in
researching, developing and marketing pharmaceutical products is intense. Any of
the technologies covering the Company's existing products or products under
development could become obsolete or diminished in value by discoveries and
developments of other organizations.

     The Company's current market for pharmaceutical products is the United
States. The Company primarily uses wholesale distributors for the sale of its
products to clinics and hospitals. For the years ended December 31, 1997, 1996
and 1995, sales to two large wholesale distributors comprised 19% and 18%, 20%
and 19%, and 13% and 15% of total revenues, respectively.

     The consolidated financial statements are prepared in conformity with
generally accepted accounting principles which require management estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

     On June 1, 1993, the shareholders of predecessor Immunex Corporation (the
"Predecessor") approved an agreement pursuant to which the Predecessor was
merged (the "Merger") with a subsidiary of American Cyanamid Company
("Cyanamid"), creating the Company. Cyanamid received that number of shares
equal to 53.5% of the Company's common stock and dilutive securities
outstanding, immediately following the Merger. Shareholders of the Predecessor
exchanged their shares for an equal number of shares of the Company.

     In November 1994, all of the outstanding shares of common stock of Cyanamid
were acquired by American Home Products Corporation ("AHP"). AHP and certain of
its divisions or affiliates assumed the rights and obligations of Cyanamid under
the various agreements that the Company and Cyanamid entered into at the time of
the Merger or thereafter. As a result, AHP now holds a majority interest in
Immunex. All references to AHP include AHP and its various affiliates, divisions
and subsidiaries, including Cyanamid.

Note 2.  Summary of Significant Accounting Policies

Principles of consolidation

     The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.

Cash equivalents

     Cash equivalents consist principally of deposits in money market accounts
available on demand or securities with purchased maturities of 90 days or less.

Marketable securities

     Marketable securities consist of securities available-for-sale, which are
stated at fair value with the unrealized gains and losses included as a
component of shareholders' equity on the Company's balance sheet. Cost of
securities is calculated using the specific-identification method. Securities
available-for-sale at December 31, 1997 consist primarily of United States
government and corporate obligations, all of which mature within two years.




                                       36
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 2.  Summary of Significant Accounting Policies, continued

Inventories

     Inventories are stated at the lower of cost, using a weighted-average
method, or market. The components of inventories at December 31, 1997 and 1996
are as follows (in thousands):

<TABLE>

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

   Raw materials            $            1,069   $            2,453
   Work in process                       5,377                2,689
   Finished goods                        2,585                3,751
                            ------------------   ------------------

   Total inventory          $            9,031   $            8,893
                            ------------------   ------------------
                            ------------------   ------------------
</TABLE>

Depreciation and amortization

     Depreciation of buildings and equipment is calculated using the
straight-line method over the estimated useful lives of the related assets which
range from 3 to 31.5 years. Leasehold improvements are amortized on a
straight-line basis over the lesser of the estimated useful life or the term of
the lease. The costs of acquiring leasehold interests are amortized over the
remaining term of the lease.

Property held for future development

     The Company owns certain property intended for the possible future
expansion of its manufacturing facilities which are recorded at cost.

Investment in common stock

     The Company has an investment in Targeted Genetics Corporation ("TGC"), a
biotechnology company engaged in developing gene delivery technology and
therapies for treatment for cystic fibrosis and cancer. In 1996, following the
dilution of the Company's ownership interest in TGC to below 20%, the Company
began accounting for the investment as an available-for-sale security (see Note
3).

Goodwill and other intangible assets

     Goodwill is being amortized using the straight-line method over a ten-year
period. Accumulated amortization at December 31, 1997 and 1996 totaled
$9,384,000 and $7,327,000, respectively.

     Intangible product rights are amortized using the straight-line method over
their estimated useful lives, ranging from 11 to 15 years. Accumulated
amortization at December 31, 1997 and 1996 totaled $3,560,000 and $2,783,000,
respectively.

     The Company seeks patent protection on processes and products in various
countries. Patent application costs are capitalized and amortized over their
estimated useful lives, not exceeding 17 years, on a straight-line basis from
the date the related patents are issued. Accumulated amortization at December
31, 1997 and 1996 totaled $496,000 and $338,000, respectively.

Revenues

     Product sales are recognized when product is shipped. The Company performs
ongoing credit evaluations of its customers and does not require collateral.
Product sales are recorded net of reserves for estimated chargebacks, returns,
discounts, Medicaid rebates and administrative fees. The Company maintains
reserves at a level that management believes is sufficient to cover estimated
future requirements. Allowances for discounts, returns and bad debts, which are
netted against accounts receivable, totaled $8,653,000 and $7,181,000 at
December 31, 1997 and 1996, respectively. Reserves for chargebacks, Medicaid
rebates and administrative fees are included in accounts payable and totaled
$9,715,000 and $7,580,000 at December 31, 1997 and 1996, respectively.

     Revenues received under royalty, licensing and contract manufacturing
agreements are recognized based on the terms of the underlying contractual
agreements. Expenses related to the performance of contract manufacturing are
included in research and development expense.



                                       37
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 2.  Summary of Significant Accounting Policies, continued

Net loss per common share

     The Company adopted Statement of Financial Accounting Standards No. 128,
"Earnings per Share" effective December 31, 1997. However, given the net loss
position of the Company, there are no implications on the calculation of net
loss per share. Net loss per common share is calculated by dividing net loss by
the weighted average number of common shares outstanding.

Reclassifications

     Certain prior year amounts in the consolidated financial statements have
been reclassified to conform to current year presentations.

Impact of recently issued accounting standards

     In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income," which is effective for periods beginning
after December 15, 1997. Statement No. 130 establishes standards for reporting
comprehensive income and its components. The adoption of Statement No. 130 will
increase disclosure only and will have no impact on the Company's financial
position or results of operations.

Note 3.  Investments

     The Company's investments are considered available-for-sale and are stated
at fair value on the balance sheet with the unrealized gains and losses included
as a component of shareholders' equity. For the year ended December 31, 1997,
there were no material realized gains or losses. In 1996, the only investment
held by the Company was an investment in the common stock of TGC (see Investment
in Common Stock, Note 2), and there were no realized gains or losses during the
year. The unrealized gain related to the investment in TGC totaled $9,406,000 at
December 31, 1996. Information with respect to the Company's investments for the
year ended December 31, 1997 is as follows (in thousands):

<TABLE>

                                                                                            Gross                Gross
                                                  Fair               Amortized            Unrealized           Unrealized
Year ended December 31, 1997                     Value                 Cost                 Gains               Losses
----------------------------                     -----                 ----                 -----               ------
<S>                                       <C>                  <C>                  <C>                  <C>    

   Type of security:
     Commercial paper                     $            4,988   $             4,988   $                -   $            -
                                                                                                         
     Corporate debt securities                         3,048                 3,045                    3                -

     U.S. government and agency
        obligations                                   24,811                24,675                  136                -

     Common stock (see Note 2)                         6,859                 2,352                4,507                -
                                          ------------------   -------------------   ------------------   ------------------

                                          $           39,706   $            35,060   $            4,646   $            -
                                          ------------------   -------------------   ------------------   ------------------
                                          ------------------   -------------------   ------------------   ------------------
                                                                                                          
  Classification in the balance sheet:
     Cash and cash equivalents            $           12,483
     Marketable securities                            20,364
     Investment in common stock                        6,859
                                          ------------------

                                          $           39,706
                                          ------------------
                                          ------------------

</TABLE>


                                       38
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 4.  Property, Plant and Equipment

     Property, plant and equipment, at cost, consist of the following at
December 31, 1997 and 1996 (in thousands):


<TABLE>
                                                           1997                  1996
                                                   -------------------   ------------

<S>                                               <C>                   <C> 

  Land                                             $             2,140   $            2,140
  Buildings and improvements                                    50,001               49,698
  Equipment                                                     53,230               46,779
  Leasehold improvements                                        21,469               19,442
                                                   -------------------   ------------------
                                                               126,840              118,059
  Less accumulated depreciation and amortization               (53,195)             (38,038)
                                                   --------------------  -------------------

  Property, plant and equipment, net               $            73,645   $           80,021
                                                   --------------------  -------------------
                                                   --------------------  -------------------

</TABLE>

Note 5.  Long-term Obligations

     Long-term obligations consist of the following at December 31, 1997 and
1996 (in thousands):

<TABLE>
                                                                  1997                 1996
                                                                  ----                 ----
<S>                                                    <C>                  <C>  

  Deferred state sales tax on manufacturing facility,
      due in annual installments from 1998 to 2000       $            2,576  $            3,092
  Deferred portion of Cistron settlement obligation                   5,468               7,703
  Termination benefits payable to a former officer                      892                 915
  Other                                                                 157                 361
                                                         ------------------  ------------------
                                                                      9,093              12,071

  Less current portion                                               (3,460)             (3,491)
                                                         ------------------- ------------------

                                                         $            5,633  $            8,580
                                                         ------------------- ------------------
                                                         ------------------- ------------------


</TABLE>

     In November 1996, the Company settled litigation with Cistron
Biotechnology, Inc. In accordance with the terms of the settlement, a payment
was made at the time of the settlement, to be followed by four successive annual
payments. The deferred payments have been discounted using a rate of 7%.

     In 1993, the Board of Directors elected to award termination benefits to a
former Chief Executive Officer who retired from the Predecessor. Benefits are
payable over approximately 20 years in varying amounts and have been discounted
using a rate of 7%.

     Scheduled annual maturities of long-term obligations in 1999 through 2002
are as follows: $3,307,000, $1,514,000, $31,000 and $33,000, respectively, and
$748,000 thereafter.

     There was no interest paid on borrowings in 1997 and 1996. Interest paid on
all borrowings was $1,226,000 for the year ended December 31, 1995.


                                       39
<PAGE>


                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 6.  Fair Values of Financial Instruments

     At December 31, 1997 and 1996, the Company had several categories of
financial instruments. With the exception of the deferred state sales tax, the
balance sheet carrying value for all categories of financial instruments
approximates fair value at December 31, 1997 and 1996. The fair value of the
deferred state sales tax on the Company's manufacturing facility was estimated
by discounting future cash flows using the Company's current estimated
incremental borrowing rate. At December 31, 1997 and 1996, the fair value of the
deferred state sales tax was $2,203,000 and $2,524,000, respectively, compared
to a balance sheet carrying value of $2,576,000 and $3,092,000, respectively.

Note 7.  Shareholders' Equity

Stock options

     The Company has a stock option plan (the "Plan") that provides for the
issuance of incentive and non-qualified stock options to employees and officers.
There have been 6,225,267 shares of common stock reserved for the Plan. Options
are granted by a committee of the Company's Board of Directors. Under policy of
the Company, options are not granted at less than the fair market value of the
Company's common stock at the date of grant. Each outstanding option has a term
of ten years from the date of grant and, depending on the option, becomes
exercisable at a rate of 20% or 33% per year beginning one year from the date of
grant.

     The Company has a stock option plan with 100,000 shares of common stock
reserved for nonemployee directors which provides each independent director a
grant of an option to purchase 10,000 shares of common stock on the day such
director is initially elected or appointed to the Board of Directors and an
annual grant of 5,000 shares thereafter. Each option is granted at fair market
value of the Company's common stock at the date of grant. Each outstanding
option has a term of ten years from the date of grant and becomes exercisable at
a rate of 20% per year beginning one year from the date of grant.

     The Company has elected to follow Accounting Principles Board Opinion No.
25 "Accounting for Stock Issued to Employees" and adopted the disclosure-only
provisions of Statement of Financial Accounting Standards No. 123 "Accounting
for Stock-Based Compensation." Accordingly, since all options are granted at
fair market value, no compensation expense has been recognized for options
issued under the Plan. Had compensation expense been recognized based on the
estimated fair value at the date of grant for options awarded under the Plan,
the pro forma amounts of the Company's net loss and net loss per share for the
years ended December 31, 1997, 1996 and 1995 would have been as follows (in
thousands, except per share amounts):

<TABLE>
                                                      1997               1996               1995
                                                -----------------  -----------------  ----------
<S>                                            <C>                 <C>                <C>   

  Net loss - as reported                        $       (15,772)   $       (53,632)   $     (11,300)
  Net loss - pro forma                                  (20,643)           (55,336)         (11,843)
  Net loss per common share - as reported       $         (0.40)   $         (1.35)   $       (0.29)
  Net loss per common share - pro forma                   (0.52)             (1.40)           (0.30)

</TABLE>


     The estimated fair value of each option grant was calculated using the
Black-Scholes option pricing model and totaled $15.43, $8.33 and $8.08 per share
during 1997, 1996 and 1995, respectively. Fair value was estimated using an
expected option life of six years, no dividends and an expected volatility of
45% in each of the years presented. The risk-free interest rate at the date of
grant during 1997, 1996 and 1995 ranged from 6.0% to 6.6%, 6.3% to 6.7% and 6.2%
to 7.6%, respectively. The effect of applying Statement No. 123 for providing
pro-forma disclosures for each of the years presented is not likely to be
representative of the effects in future years because it does not take into
consideration pro-forma compensation expense related to grants made prior to
1995.




                                       40
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 7.  Shareholders' Equity, continued

     Information with respect to the Company's stock option plans is as follows:

<TABLE>
                                                                                                                Weighted-
                                                                 Shares Subject           Exercise              Average
                                                                   to Option             Price Range         Exercise Price
                                                              -------------------    --------------------  -------------------

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


     Options outstanding balance at December 31, 1994                     830,990     $    11.75 - 31.50    $            27.72
         Granted                                                          445,725          12.25 - 15.00                 14.82
         Canceled                                                        (191,345)         11.75 - 31.50                 25.32
                                                                 -----------------    ------------------    ------------------

     Options outstanding balance at December 31, 1995                   1,085,370     $    11.75 - 31.50    $            22.85
         Granted                                                        1,216,000          12.44 - 15.88                 15.79
         Exercised                                                           (326)         11.75 - 15.00                 14.00
         Canceled                                                        (228,480)         11.75 - 31.50                 21.53
                                                                 -----------------    ------------------    ------------------

     Options outstanding balance at December 31, 1996                   2,072,564     $    11.75 - 31.50    $            18.85
         Granted                                                        1,227,650          24.25 - 76.75                 30.75
         Exercised                                                        (87,575)         11.75 - 31.50                 19.43
         Canceled                                                        (110,111)         12.25 - 41.75                 21.62
                                                                 -------------------  --------------------  ------------------

     Options outstanding balance at December 31, 1997                   3,102,528     $     11.75 - 76.75   $            23.35
                                                                 -------------------  --------------------  ------------------
                                                                 -------------------  --------------------  ------------------

     Shares available for future grants at December 31, 1997            3,134,838
                                                                 -------------------
                                                                 -------------------

</TABLE>

         The following table summarizes information about options outstanding at
December 31, 1997:
<TABLE>

                                                   Outstanding                          Exercisable
                                            ---------------------------         ------------------------------

                           Weighted-
                            Average                               Weighted-                        Weighted-
      Range of             Remaining                               Average                          Average
   Exercise Prices     Contractual Life        Options          Exercise Price     Options      Exercise Price
--------------------  ------------------  -------------- ---------------------- ----------  -------------------
<C>                   <C>                 <C>            <C>                    <C>          <C>
$    11.75 - 15.00         7 years           415,747     $            14.44        213,347  $         14.57
     15.88 - 15.88         8 years         1,021,540                  15.88        186,660            15.88
     17.50 - 18.88         6 years           120,800                  18.76         74,220            18.73
     24.25 - 24.25         9 years           932,950                  24.25              -                -
     27.25 - 31.50         6 years           433,491                  30.89        307,518            31.25
     41.75 - 41.75        10 years            49,000                  41.75              -                -
     76.75 - 76.75        10 years           129,000                  76.75              -                -
------------------                    --------------     ------------------  -------------  ---------------

$    11.75 - 76.75                         3,102,528     $            23.35        781,745  $         21.84
------------------                    --------------     ------------------  -------------  ---------------
------------------                    --------------     ------------------  -------------  ---------------
</TABLE>

Guaranty payments receivable from AHP

     AHP was required to make payments or contribute products to the Company if
revenues from certain marketed products did not achieve established levels
through December 31, 1997. The revenue shortfall obligation was limited to a
maximum amount in each year. Such payments are treated as additional
contributions to the capital of the Company. The Company recorded a receivable
from AHP of $60,032,000, $56,000,000 and $45,288,000 for the revenue shortfall
for the years ended December 31, 1997, 1996 and 1995, respectively.



                                       41
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 8.  Income Taxes

     The Company's deferred tax assets consist primarily of the benefit to be
derived from unused net operating tax loss carryforwards of approximately $252
million and carryforwards of approximately $13 million for research and
experimental credits at December 31, 1997. The carryforwards expire from 1998
through 2012. Net operating tax loss carryforwards and research and experimental
credits of $2,400,000 and $170,000, respectively, expired in 1997. Due to the
uncertainty regarding the Company's ability to generate taxable income in the
future to realize the benefit from its net deferred tax assets at December 31,
1997 and 1996, valuation allowances of $101.7 million and $96.6 million,
respectively, have been recognized for financial reporting purposes to offset
the excess of the Company's deferred tax assets over its deferred tax
liabilities. This represents an increase in the valuation allowances of $5.1
million and $17.4 million for the years ended December 31, 1997 and 1996,
respectively. In the event the Company is able to utilize its net operating tax
loss carryforwards, the carryforwards would be used on a first-in, first-out
basis to reduce the unamortized balance of goodwill and intangible product
rights recorded pursuant to the Merger with Cyanamid (see Note 1) and to
increase additional paid-in capital for the unrecorded tax benefits related to
stock option exercises. Any remaining unused carryforward would then be used to
reduce federal income tax expense.

     The significant components of the Company's deferred tax assets and
liabilities at December 31, 1997 and 1996 are as follows (in thousands):

<TABLE>
<CAPTION>

                                                            1997                 1996
                                                    -------------         -------------
<S>                                                 <C>                   <C>
Deferred tax assets:
  Net operating loss carryforwards                  $      87,289         $      83,688
   Research and experimental credits                       13,152                12,012
   In-process research and development                      1,063                 1,248
   Accounts receivable allowances                           3,029                 2,513
   Accrued liabilities                                      2,832                 4,007
   Other                                                    1,762                 1,713
                                                    -------------         -------------

     Total deferred tax assets                            109,127               105,181

Valuation allowance for deferred tax assets              (101,736)              (96,628)
                                                    --------------        --------------

     Net deferred tax assets                                7,391                 8,553

Deferred tax liabilities:
   Tax over book depreciation                               2,334                 3,394
   Purchase accounting adjustments                          2,694                 3,230
   Other                                                    2,363                 1,929
                                                    -------------         -------------

     Total deferred tax liabilities                         7,391                 8,553
                                                    -------------         -------------

                                                    $           -         $           -
                                                    -------------         -------------
                                                    -------------         -------------

</TABLE>

         The provision for income taxes consists of the tax obligation  incurred
in the states in which the Company sells its products.  The entire provision for
the period is current.  Income  taxes paid during the years ended  December  31,
1997, 1996 and 1995, totaled $132,000, $148,000 and $1,289,000, respectively.



                                       42
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 8.  Income Taxes, continued

     Reconciliation of the U.S. federal statutory tax rate to the Company's
effective tax rate is as follows:

<TABLE>
<CAPTION>
                                                                Year Ended December 31,
                                                        ---------------------------------------
                                                        1997             1996              1995
                                                       -------          ------            ------
<S>                                                    <C>               <C>               <C>    
   U.S. federal statutory tax rate                      (35.0)%          (35.0)%           (35.0)%
   Non-deductible amortization of goodwill                4.6              1.4               6.5
   Increase in valuation reserve                         32.7             32.5              36.6
   State taxes                                            1.4              0.3               2.4
   Foreign income subject to different rates              -                -                (6.8)
   Tax benefit from research and development
     expenses and credits                                (7.3)            (0.9)             (5.3)
   Other                                                  5.0              2.0               3.8
                                               --------------   ---------------   --------------

     Effective tax rate                                   1.4%             0.3%              2.2%
                                               --------------   ---------------   --------------
                                               --------------   ---------------   --------------
</TABLE>

Note 9.  Employee Benefits

     As a retirement vehicle, the Company has a defined contribution plan
covering all full-time salaried employees. The plan is a salary deferral
arrangement pursuant to Internal Revenue Code section 401(k) and is subject to
the provisions of the Employee Retirement Income Security Act of 1974. The
Company matches 100% of the first 2% of an employee's deferred salary and 50% of
the next 4% of an employee's deferred salary. Employees with five or more years
of service receive a match of 100% of the first 2% of deferred salary and 75% of
the next 4% of deferred salary. The matching contributions to the plan were
$1,900,000, $1,707,000 and $1,370,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

Note 10.  Related Party Transactions

     On June 1, 1993, the Predecessor merged with a subsidiary of Cyanamid,
forming the Company. In November 1994, all of the outstanding shares of common
stock of Cyanamid were acquired by AHP. AHP, its subsidiaries and affiliates
have assumed the rights and obligations of Cyanamid under various agreements
entered into at the time of the Merger or thereafter. Underlying the Merger are
numerous agreements under which, among other things, Immunex and AHP collaborate
in research and development, manufacture clinical materials, manufacture and
distribute marketed products and provide certain services. Significant
transactions under these agreements are summarized below.

Revenue guaranty

     AHP was required to make payments or contribute products to Immunex if
revenues from certain marketed products did not achieve established levels
through December 31, 1997 (see Note 7). At December 31, 1997 and 1996, Immunex
had recorded a receivable from AHP of $60,032,000 and $56,000,000 related to the
revenue shortfall for the years ended December 31, 1997 and 1996, respectively.
AHP's payment obligation to Immunex under these provisions ceases with respect
to calendar years after 1997.


                                       43
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 10.  Related Party Transactions, continued

Research and development

     Immunex and AHP are parties to research and development agreements under
which the parties cooperate to research, develop and commercialize new products.
Under the terms of these agreements, certain of which were revised in 1996,
Immunex is obligated to support AHP's oncology discovery research programs. Each
party, upon notification, may elect which products it will continue to support
during clinical testing and receive an exclusive license to sell and market in
its territory the products resulting from the research and development programs
encompassed by these agreements. If the election to continue support is made by
the applicable party, Immunex and AHP share equally the development costs for
the North American and European markets. For the years ended December 31, 1997,
1996 and 1995, Immunex paid $16,240,000, $21,156,000 and $15,800,000,
respectively, to support AHP's oncology research programs. Immunex's annual
funding obligation for discovery research is 50% of AHP's oncology discovery
research expenditures, up to a maximum of $16,000,000 per year, adjusted
annually for inflation beginning in 1997. AHP's obligation for shared
development costs related to Immunex's programs totaled $18,768,000, and
$3,923,000, for the years ended December 31, 1997, and 1996, respectively. There
was no obligation in 1995.

     In order to retain the ex-North American rights to Enbrel(TM) (TNFR:Fc),
AHP paid Immunex $2,000,000 and $4,000,000 during the years ended December 31,
1996 and 1995, respectively. This agreement was superseded during 1996 by the
revised research agreements, discussed above.

Oncology product license agreements

     Immunex and AHP are parties to certain oncology product license agreements
under which AHP and its sub-licensees have a license to sell certain existing
oncology products outside North America. AHP is entitled to a royalty-bearing
license outside North America to any products resulting from Immunex's oncology
research and development activities ("New Oncology Products"). Royalties earned
by Immunex for the years ended December 31, 1997, 1996 and 1995 totaled
$2,972,000, $2,379,000 and $2,546,000, respectively.

     In the event that a New Oncology Product is to be manufactured by Immunex
for AHP or by AHP for Immunex, the manufacturing party will supply such product
at a price that will reimburse the manufacturing party for its manufacturing,
process development and reasonable overhead costs allocable to such product
plus, in the case of commercial quantities, a reasonable profit. Immunex
recognized revenue under this agreement of $1,246,000, $1,645,000 and $651,000
for the years ended December 31, 1997, 1996 and 1995, respectively. Under the
terms of a subsequent related agreement, the Company incurred costs of
$3,243,000, $3,081,000 and $2,434,000 for the years ended December 31, 1997,
1996 and 1995, respectively.

Enbrel Promotion Agreement

     In September 1997, Immunex and AHP entered into a promotion agreement for
AHP to promote Enbrel in North America, if and when the product receives
regulatory approval. Under the terms of the agreement, AHP will promote Enbrel
in North America and will share a percentage of the gross profits and expenses
from selling and commercializing Enbrel. Immunex received milestone payments of
$15,000,000 in 1997 under the agreement.

TACE agreements

     In December 1995, Immunex licensed exclusive worldwide rights to tumor
necrosis factor alpha converting enzyme ("TACE") technology to AHP. Immunex
received milestone payments of $6,000,000 and $4,000,000 in 1997 and 1996,
respectively, and received a license fee of $2,000,000 upon signing of the
agreement in 1995. The TACE agreements also include additional milestone
payments and royalties on future product sales. Under the agreements, AHP will
be responsible for developing inhibitors of TACE.



                                       44
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 10.  Related Party Transactions, continued

Supply and manufacturing

     Immunex and AHP are parties to a supply agreement and a toll manufacturing
agreement under which AHP manufactures and supplies the reasonable commercial
requirements of certain oncology products at a price equal to 125% of AHP's or
its subsidiaries' manufacturing costs. Immunex and AHP also have a methotrexate
distributorship agreement whereby AHP agreed to supply methotrexate at certain
established prices which are adjusted annually. Immunex and its subsidiaries
purchased $7,905,000 and $9,657,000 of inventory from AHP and its subsidiaries
under these agreements during the years ended December 31, 1997 and 1996,
respectively. In addition, AHP billed Immunex $988,000, $686,000 and $659,000
for other expenses under such agreement for the years ended December 31, 1997,
1996 and 1995, respectively.

Distribution

     Immunex and Wyeth-Ayerst Canada, Inc. ("Wyeth-Ayerst Canada"), a wholly
owned subsidiary of AHP, are parties to a distributorship agreement under which
Wyeth-Ayerst Canada distributes certain oncology products in Canada. Immunex
supplies the oncology products to Wyeth-Ayerst Canada at certain established
prices which are subject to annual adjustment. Immunex sold $2,010,000,
$1,511,000 and $1,631,000 of inventory to Wyeth-Ayerst Canada during the years
ended December 31, 1997, 1996 and 1995, respectively. In December 1997, Immunex
sold its rights to these products in Canada to AHP for $4,000,000.

     Immunex has agreed to supply the commercial requirements of Immunex
products to Wyeth-Ayerst Laboratories Puerto Rico, Inc., a wholly owned
subsidiary of AHP. Net revenue recognized under this agreement for the years
ended December 31, 1997 and 1996, totaled $580,000 and $446,000, respectively.
No revenue was recognized under this agreement in 1995.

Trademark license agreement

     Immunex and AHP are parties to a trademark license agreement under which
Immunex received the right to use certain trademarks relating to oncology
products. Immunex pays a royalty of 2% of net sales of the products sold under
these trademarks. Immunex ceased using such trademarks on sales of its products
during 1996 and accordingly, no costs were incurred under this agreement in
1997. Royalty expense for the years ended December 31, 1996 and 1995, was
$18,000 and $267,000, respectively.

Services agreement

     Immunex and AHP are parties to a transitionary services agreement under
which AHP agreed to provide, among other things, marketing, customer service,
distribution, and credit and collections services related to certain contributed
products. In 1995, nearly all the services provided under this agreement were
terminated. Immunex incurred costs under this agreement totaling $87,000,
$80,000 and $968,000 for the years ended December 31, 1997, 1996 and 1995,
respectively.

Note 11.  Commitments and Contingencies

     The Company leases office and laboratory facilities under certain
noncancelable operating leases that expire through December 2002. These leases
provide the Company with options to renew the leases at fair market rentals
through August 2015. A summary of minimum future rental commitments under
noncancelable operating leases at December 31, 1997 follows (in thousands):
<TABLE>
<CAPTION>

    Year Ended December 31,                         Operating Leases
    -----------------------                         ----------------


<S>          <C>                                    <C>             
             1998                                   $          4,359
             1999                                              4,359
             2000                                              2,959
             2001                                                755
             2002                                                755
                                                    ----------------
             Total minimum lease payments           $         13,187
                                                    ----------------
                                                    ----------------
</TABLE>

     Rental expense on operating leases was $3,339,000, $2,781,000 and
$2,704,000 for the years ended December 31, 1997, 1996 and 1995, respectively.



                                       45
<PAGE>

                               IMMUNEX CORPORATION
                   Notes to Consolidated Financial Statements


Note 11.  Commitments and Contingencies, continued

     The Company is utilizing a contract manufacturer for the production of
inventory of Enbrel. The Company has made initial orders of launch inventory of
Enbrel from the contract manufacturer, totaling approximately $35,000,000 at
December 31, 1997 and expects to make additional orders in 1998. The launch
inventory requirements of Enbrel are expected to be invoiced to the Company
beginning in mid-1998 and will be capitalized as inventory. Although the Phase
III data for Enbrel released by the Company in September 1997 were positive,
there can be no assurance that Enbrel will be approved by the FDA or, if
approved, that Enbrel will actually be launched in the United States, or if
launched, whether the Company's estimates of launch inventory requirements will
reflect actual demand for the product. Accordingly, any amounts capitalized
related to launch inventory of Enbrel are subject to risk until such
uncertainties are resolved.

     In November 1997, Immunex announced that the FDA accepted for review
Immunex's abbreviated new drug application ("ANDA") for generic paclitaxel. In
January 1998, Bristol-Myers Squibb Company ("BMS") filed a complaint alleging
that Immunex's paclitaxel product infringed certain patents pertaining to
Taxol(R), an oncology product marketed by BMS. The legal action by BMS was
anticipated by Immunex, and based on BMS's legal action, the FDA may withhold
clearance of Immunex's ANDA until the earlier of June 2000 or until a court
enters a final judgment finding the BMS patents invalid, unenforceable or not
infringed.

     For several years, the Company has been a party to a GM-CSF patent
interference proceeding. In January 1998, the Company reached a settlement with
the remaining party to the proceeding and will incur additional royalties
payable to such party on future net sales of Leukine. In addition, Immunex made
a one-time payment of $5,000,000 to Genetics Institute, Inc. as part of the
resolution of the GM-CSF interference.

     The Company has entered into a purchase and sale agreement for certain
property in the vicinity of its corporate headquarters. The closing date under
the agreement is March 31, 1998, and the cost of the property is approximately
$15,000,000.

     In addition to its research and development agreements with AHP (see Note
10), the Company has certain additional agreements to fund third-party research.
Commitments under these other agreements are estimated at $3,392,000 and
$500,000 in 1998 and 1999, respectively.

     Various license agreements exist that require the Company to pay royalties
based on a percentage of sales of products manufactured using licensed
technology or sold under license. Royalty costs incurred under these agreements
are included in cost of product sales and totaled $8,139,000, $6,136,000 and
$5,844,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
Certain of these agreements contain minimum annual royalty provisions totaling
$3,890,000 in 1998 and $3,640,000 per year in year thereafter, until expiration
of the related agreements.

     In accordance with a 1992 settlement agreement with Hoechst Roussel
Pharmaceuticals, Inc. ("HRPI"), a payment of $2,000,000 million will be made to
HRPI if the Company receives an expanded label indication for Leukine for
treatment of chemotherapy-induced neutropenia.



                                       46
<PAGE>

                Report of Ernst & Young LLP, Independent Auditors


Shareholders and Board of Directors
Immunex Corporation

We have audited the accompanying consolidated balance sheets of Immunex
Corporation as of December 31, 1997 and 1996, and the related
consolidated statements of operations, shareholders' equity, and cash
flows for each of the three years in the period ended December 31,
1997. Our audits also included the financial statement schedule listed
in the Index at Item 14(a). These financial statements and schedule are
the responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements and schedule based
on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Immunex Corporation as of December 31, 1997 and 1996, and
the consolidated results of its operations and its cash flows for the
each of the three years in the period ended December 31, 1997, in
conformity with generally accepted accounting principles. Also, in our
opinion the related financial statement schedule, when considered in
relation to the basic financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.


                                                    ERNST & YOUNG LLP
Seattle, Washington
January 30, 1998



                                       47
<PAGE>

Item 9.  Changes in and Disagreements with Accountants on Accounting 
         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 from the
section labeled "Election of Directors" and "Executive Officers" in the
Company's definitive Proxy Statement for the annual meeting of shareholders to
be held on April 30, 1998.

Item 11. Executive Compensation

     The information required by this item is incorporated by reference from the
section labeled "Executive Compensation" in the Company's definitive Proxy
Statement for the annual meeting of shareholders to be held on April 30, 1998.

Item 12. Security Ownership of Certain Beneficial Owners and Management

     The information required by this item is incorporated by reference from the
section labeled "Principal Holders of Voting Securities" in the Company's
definitive Proxy Statement for the annual meeting of shareholders to be held on
April 30, 1998.

Item 13. Certain Relationships and Related Transactions

     The information required by this item is incorporated by reference from the
section labeled "Relationship with American Home Products Corporation and
American Cyanamid Company" in the Company's definitive Proxy Statement for the
annual meeting of shareholders to be held on April 30, 1998.




                                       48
<PAGE>

                                     PART IV


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

(a) The following documents are filed as part of this Form 10-K:

     1. Financial Statements. The following consolidated financial statements
        are included in Part II, Item 8:

<TABLE>
<CAPTION>

                                                                                                     Page in
                                                                                                   Form 10-K
    <S>                                                                                               <C>
    Consolidated Balance Sheets at December 31, 1997 and 1996.                                        32

    Consolidated Statements of Operations for the years ended December 31, 1997,
    1996 and 1995.                                                                                    33

    Consolidated Statements of Shareholders' Equity for the years ended December
    31, 1997, 1996 and 1995.                                                                          34

    Consolidated Statements of Cash Flows for the years ended December 31, 1997,
    1996 and 1995.                                                                                    35

    Notes to Consolidated Financial Statements for the years ended December 31, 
1997, 1996 and 1995.                                                                               36 - 46

    Report of Ernst & Young LLP, Independent Auditors.                                                47

</TABLE>

2.  Financial Statement  Schedule.  The following schedule supporting the
    foregoing  consolidated  financial  statements  for the  years  ended
    December 31, 1997, 1996 and 1995 is filed as part of this Form 10-K:

<TABLE>
<CAPTION>

                                                                                                    Page in
                                                                                                   Form 10-K
<S>                                                                                                   <C>
II   -   Valuation and Qualifying Accounts                                                            55

</TABLE>

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

                                       49

<PAGE>


  3.  Exhibits

<TABLE>
<CAPTION>

Exhibit
Number    Description
--------  ------------
<C>       <S>                                                                 <C>

    2.1   Amended and Restated Agreement and Plan of Merger, dated as of
          December 15, 1992, among the Company, American Cyanamid Company,
          Lederle Parenterals, Inc. and Lederle Oncology Corporation. 
          (Exhibit 2.1)                                                       (C)

    3.1   Certificate of Incorporation, as filed with the Secretary of State 
          of Washington on April 14, 1994. (Exhibit 3.1)                      (E)

    3.2   Amended and Restated Bylaws.  (Exhibit 3.4)                         (C)

   10.1   Real Estate Purchase and Sale Agreement by and between
          Cornerstone-Columbia Development Company ("CCDC") and the Company
          dated November 12, 1986; Master Lease, dated as of August 20, 1981
          between OTR, an Ohio General Partnership, and CCDC; Assignment of
          Master Lease between CCDC and the Company dated December 17, 1986;
          Consent to Assignment of Master Lease from OTR to CCDC, the Company
          and Weyerhaeuser Real Estate Company, dated December 8, 1986. 
          (Exhibit 10.22)                                                     (A)

   10.2   Amendment to Master Lease dated May 1, 1994, between the Company 
          and Watumull Enterprises, LTD.  (Exhibit 10.2)                      (E)

   10.3   Amended and Restated Lease  Agreement  dated December 21, 1994,  
          between the Company and the Central Life Assurance Company.  
          (Exhibit 10.3)                                                      (E)

   10.4   Amended and Restated Governance Agreement, dated as of December 15,
          1992, among the Company, American Cyanamid Company and Lederle 
          Oncology Corporation.  (Exhibit 2.2)                                (C)

  *10.5   Settlement Agreement, dated as of July 22, 1992, among the Company,
          Hoechst-Roussel Pharmaceuticals Inc. and Behringwerke AG.  
          (Exhibit 10.13)                                                     (B)

   10.6   Lease Agreement  between the Company and Second and Seneca Limited
          Partnership dated as of December 24, 1992.                          (H)

   10.7   Oncology Product License Agreement between the Company and American
          Cyanamid Company dated as of June 1, 1993.  (Exhibit 10.2)          (D)

   10.8   Immunex New Oncology Product License Agreement between the Company
          and American Cyanamid Company dated as of June 1, 1993.
          (Exhibit 10.3)                                                      (D)

   10.9   United States Royalty-Bearing Trademark License Agreement 
          between the Company and American Cyanamid Company dated as of 
          June 1, 1993.  (Exhibit 10.5)                                       (D)

  *10.10  Toll Manufacturing Agreement between Immunex Carolina Corporation, 
          a wholly owned subsidiary of the Company, and Lederle 
          Parenterals, Inc. dated as of June 1, 1993.  (Exhibit 10.6)         (D)

  *10.11  Supply Agreement  between the Company and American Cyanamid Company
          dated as of June 1, 1993.  (Exhibit 10.7)                           (D)

 **10.12  Separation Agreement between the Company and Stephen A. Duzan 
          dated as of May 26, 1993.  (Exhibit 10.8)                           (D)

   10.13   Agreement between the Company and American Home Products dated 
           as of September 23, 1994.  (Exhibit 10.24)                         (E)

 **10.14   Form of Employment Agreement, together with schedule of actual
           agreements.  (Exhibit 10.24)                                       (F)

   10.15   Real Estate Purchase and Sales Agreement between the Company and 
           the Port of Seattle dated as of July 18, 1994.  (Exhibit 10.17)    (H)
</TABLE>

                                      50

<PAGE>

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

   10.16   Research Agreement between the Company, the Wyeth-Ayerst Research 
           division of American Home Products Corporation and the Lederle 
           Pharmaceutical division of American Cyanamid Company dated as of 
           July 1, 1996.  (Exhibit 10.1)                                      (G)

   10.17   TNFR License and  Development Agreement between the Company and 
           the Wyeth-Ayerst Laboratories division of American Home Products 
           Corporation dated as of July 1, 1996.  (Exhibit 10.2)              (G)

   10.18   Amendment No. 1 to Immunex New Oncology Product License Agreement 
           between the Company and American Cyanamid Company dated as of July 
           1, 1996.  (Exhibit 10.3)                                           (G)

   10.19   Sublease Agreement between the Company and PathoGenesis 
           Corporation dated as of December 1, 1996.  (Exhibit 10.21)         (H)

   10.20   Amended and Restated 1993 Stock Option Plan.  (Exhibit 10.23)      (H)

   10.21   Amended and Restated Director Stock Option Plan.  (Exhibit 10.24)  (H)

  *10.22   Enbrel Promotion Agreement between the Company and American Home 
           Products Corporation dated as of September 25, 1997.  (Exhibit 
           10.1)                                                              (I)

   10.23  Fourth Amendment to Real Estate Purchase and Sale Agreement between 
          the Company and the Port of Seattle dated as of December 1, 1997.   56-57

   10.24   Lease Agreement between the Company and Martin Selig Real Estate 
           dated as of December 19, 1997.                                     58-69

   21.1    Subsidiaries of the Registrant.                                    70

   23.1    Consent of Ernst & Young LLP, Independent Auditors.                71

   24.1    Power of Attorney.                                                 72

   27.1    Financial Data Schedule.                                           73
</TABLE>

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

    *      Confidential treatment granted as to certain portions.

    **     Executive compensation plan or arrangement.

    (A)    Incorporated by reference to designated exhibit included with
           the Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1986.

    (B)    Incorporated by reference to designated exhibit included with
           the Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1992.

    (C)    Incorporated by reference to designated exhibit included in the
           Registration Statement on Form S-4 (SEC File No. 33-60254) filed
           by Lederle Oncology Corporation March 18, 1993.

    (D)    Incorporated by reference to designated exhibit included with
           the Company's Current Report on Form 8-K dated June 4, 1993.

    (E)    Incorporated by reference to designated exhibit included with
           the Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1994.

    (F)    Incorporated by reference to designated exhibit included with
           the Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1995.

    (G)    Incorporated by reference to designated exhibit included with
           the Company's Current Report on Form 8-K dated July 1, 1996.

    (H)    Incorporated by reference to designated exhibit included with
           the Company's Annual Report on Form 10-K for the fiscal year
           ended December 31, 1996.

    (I)    Incorporated by reference to designated exhibit included with
           the Company's Current Report on Form 8-K dated September 25,
           1997.

                                      51
<PAGE>

(b)      Reports on Form 8-K.

         On October 2, 1997, the Company filed a current report on Form 8-K
         reporting that Immunex Corporation entered into a promotion agreement
         for Enbrel in North America with AHP acting through its Wyeth-Ayerst
         Laboratories division, dated September 25, 1997.


                                      52

<PAGE>


                                   SIGNATURES

Pursuant to the  requirements of Section 13 of the Securities Exchange Act of 
1934, the  registrant has duly caused this Annual Report to be signed on its 
behalf by the undersigned, hereunto duly authorized.

IMMUNEX CORPORATION
REGISTRANT

By:  /s/ Douglas G. Southern                                 March 18, 1998
     -----------------------------------------------
     Douglas G. Southern
     Senior Vice President, Chief Financial Officer
     and Treasurer

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

  /s/ Edward V. Fritzky                                      March 18, 1998
  --------------------------------------------------
  Edward V. Fritzky
  Chief Executive Officer, Chairman of the Board and
  Director
  (Principal Executive Officer)

  /s/ Douglas E. Williams                                    March 18, 1998
  ---------------------------------------------------
  Douglas E. Williams
  Sr. Vice President-Discovery Research and Director

  /s/ Peggy V. Phillips                                      March 18, 1998
  ---------------------------------------------------
  Peggy V. Phillips
  Sr. Vice President-Pharmaceutical Development and
  Director

  /s/ Douglas G. Southern                                    March 18, 1998
  ---------------------------------------------------
  Douglas G. Southern
  Senior Vice President, Chief Financial Officer
  and Treasurer
  (Principal Financial and Accounting Officer)

  Joseph J. Carr*                                            March 18, 1998
  ---------------------------------------------------
  Joseph J. Carr
  Director

  Kirby L. Cramer*                                           March 18, 1998
  ---------------------------------------------------
  Kirby L. Cramer
  Director

  Richard L. Jackson*                                        March 18, 1998
  ---------------------------------------------------
  Richard L. Jackson
  Director

  John E. Lyons*                                             March 18, 1998
  ---------------------------------------------------
  John E. Lyons
  Director

  Joseph M. Mahady*                                          March 18, 1998
  ---------------------------------------------------
  Joseph M. Mahady
  Director

  Edith W. Martin*                                           March 18, 1998
  ---------------------------------------------------
  Edith W. Martin
  Director

                                       53

<PAGE>


  *By: /s/ Douglas G. Southern                               March 18, 1998
       ----------------------------------------------
       Douglas G. Southern
       Attorney-in-Fact







                                       54


<PAGE>


                                                                   SCHEDULE II

                               IMMUNEX CORPORATION




                        VALUATION AND QUALIFYING ACCOUNTS
                  Years ended December 31, 1997, 1996 and 1995
                                 (in thousands)

<TABLE>
<CAPTION>

                                                      Balance at        Additions Charged to                        Balance at
                                                  Beginning of Period       Product Sales       Deductions         End of Period
                                                  -------------------   --------------------    -------------      -------------
<S>                                               <C>                   <C>                   <C>                <C>
Year ended December 31, 1995:

     Reserve for discounts, returns
         and bad debts                             $       6,536           $      10,323       $       10,583      $       6,276
                                                   -------------           -------------       --------------      -------------
                                                   -------------           -------------       --------------      -------------

     Reserve for chargebacks, Medicaid rebates
         and administrative fees                   $       5,822           $      38,571       $       35,090      $       9,303
                                                   -------------           -------------       --------------      -------------
                                                   -------------           -------------       --------------      -------------

Year ended December 31, 1996:

     Reserve for discounts, returns
         and bad debts                             $       6,276           $      11,358       $       10,453      $       7,181
                                                   -------------           -------------       --------------      -------------
                                                   -------------           -------------       --------------      -------------

     Reserve for chargebacks, Medicaid rebates
         and administrative fees                   $       9,303           $      38,608       $       40,331      $       7,580
                                                   -------------           -------------       --------------      -------------
                                                   -------------           -------------       --------------      -------------

 Year ended December 31, 1997:

     Reserve for discounts, returns
         and bad debts                             $       7,181           $      11,649       $       10,177      $       8,653
                                                   -------------           -------------       --------------      -------------
                                                   -------------           -------------       --------------      -------------

     Reserve for chargebacks, Medicaid rebates
         and administrative fees                   $       7,580           $      47,769       $       45,634      $       9,715
                                                   -------------           -------------       --------------      -------------
                                                   -------------           -------------       --------------      -------------
</TABLE>

                                       55