<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, 1998

          ( ) 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. [ ]

         The approximate aggregate market value of the voting stock held by
nonaffiliates of the registrant as of March 9, 1999 was: $2,938,459,987.

         Common stock outstanding at March 9, 1999: 40,418,354 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 29, 1999, are incorporated by reference
     in Part III.

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>

                                                                                             PAGE
                                                                                             ----
<S>                                                                                        <C>
PART I
ITEM 1.  BUSINESS...............................................................................1
         General................................................................................1
         Marketed Products......................................................................1
                  RHEUMATOID ARTHRITIS..........................................................1
                  ONCOLOGY......................................................................2
         Research and Product Development ......................................................3
                  INVESTIGATIONAL PRODUCTS IN HUMAN CLINICAL TRIALS.............................3
                  MARKETED PRODUCTS IN HUMAN CLINICAL TRIALS FOR ADDITIONAL
                           CLINICAL INDICATIONS.................................................3
                  PRECLINICAL RESEARCH AND DEVELOPMENT PIPELINE.................................4
                  CYTOKINE PRODUCTS.............................................................4
                  ADDITIONAL CYTOKINES AND OTHER NEW MOLECULES..................................6
                  OTHER BIOLOGICAL PRODUCTS.....................................................7
                  RECEPTOR PRODUCTS ............................................................7
                  RESEARCH COLLABORATIONS......................................................10
                  NON-BIOLOGICAL ONCOLOGY PRODUCTS.............................................11
         Relationship with AHP and Cyanamid....................................................12
                  1993 MERGER..................................................................12
                  GOVERNANCE AGREEMENT.........................................................12
                  1993 MERGER RELATED AGREEMENTS...............................................13
                  TACE AGREEMENTS..............................................................13
                  TNFR LICENSE AND DEVELOPMENT AGREEMENT.......................................13
                  ENBREL PROMOTION AGREEMENT...................................................14
                  PRODUCT RIGHTS AGREEMENT.....................................................15
         Relationship with Hoechst AG..........................................................16
         Marketing and Distribution............................................................17
                  GENERALLY....................................................................17
                  ENBREL.......................................................................17
                  ONCOLOGY PRODUCTS............................................................17
                  DISTRIBUTION.................................................................17
         Competition...........................................................................17
                  GENERALLY....................................................................17
                  LEUKINE......................................................................18
                  NOVANTRONE...................................................................19
                  ENBREL.......................................................................19
                  GENERIC ONCOLOGY PRODUCTS....................................................20
         Raw Materials and Supply..............................................................20
         Government Regulation.................................................................21
         Patents, Licenses and Trademarks......................................................22
                  GENERALLY....................................................................22
                  PATENTS ON BIOLOGICAL PRODUCTS...............................................22
                  PATENTS ON NON-BIOLOGICAL ONCOLOGY PRODUCTS..................................24
                  PATENT AND TECHNOLOGY LICENSES...............................................24
                  TRADEMARKS...................................................................24
         Properties............................................................................24
         Personnel.............................................................................25
         Risk Factors..........................................................................25
ITEM 2.  PROPERTIES............................................................................30
ITEM 3.  LEGAL PROCEEDINGS.....................................................................30
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY
                  HOLDERS......................................................................30

</TABLE>

                                       ii

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<TABLE>
<CAPTION>

                                                                                             PAGE
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<S>                                                                                        <C>
PART II
ITEM 5.  MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND
                  RELATED STOCKHOLDER MATTERS..................................................31
ITEM 6.  SELECTED FINANCIAL DATA...............................................................31
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS..........................................32
         Introduction..........................................................................32
         Results of Operations.................................................................32
                  OVERVIEW.....................................................................32
                  REVENUES.....................................................................32
                  OPERATING EXPENSES...........................................................33
                  OTHER INCOME (EXPENSE).......................................................34
                  PROVISION FOR INCOME TAXES...................................................35
         Liquidity and Capital Resources.......................................................35
         Outlook  .............................................................................36
         Year 2000.............................................................................36
         Market Risk...........................................................................37
ITEM 7A.  QUALITATIVE AND QUANTITATIVE DISCLOSURES
                  ABOUT MARKET RISK............................................................38
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA...........................................38
         Consolidated Balance Sheets...........................................................39
         Consolidated Statements of Operations.................................................40
         Consolidated Statements of Shareholders' Equity.......................................41
         Consolidated Statements of Cash Flows.................................................42
         Notes to Consolidated Financial Statements............................................43
                  Note 1.  Organization and Basis of Presentation..............................43
                  Note 2.  Summary of Significant Accounting Policies..........................43
                  Note 3.  Investments.........................................................45
                  Note 4.  Property, Plant and Equipment.......................................46
                  Note 5.  Long-term Obligations...............................................46
                  Note 6.  Shareholders' Equity................................................47
                  Note 7.  Income Taxes........................................................49
                  Note 8.  Employee Benefits...................................................51
                  Note 9.  Transactions with AHP...............................................51
                  Note 10.  Commitments and Contingencies......................................53
                  Note 11.  Subsequent Events..................................................54
                  Note 12.  Quarterly Financial Results (unaudited)............................54
                  Report of Ernst & Young LLP, Independent Auditors............................55
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
                  ON ACCOUNTING AND FINANCIAL DISCLOSURE.......................................56

PART III
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT...................................56
ITEM 11.  EXECUTIVE COMPENSATION...............................................................56
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
                  OWNERS AND MANAGEMENT........................................................56
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.......................................56

PART IV
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
                  ON FORM 8-K..................................................................57

</TABLE>

                                      iii

<PAGE>

                                     PART I

ITEM 1. BUSINESS

         Our disclosure and analysis in this report and in our 1998 Annual
Report to shareholders contain forward-looking statements. See RISK FACTORS,
below.

GENERAL

         Immunex Corporation (which may be referred to as IMMUNEX, WE, US, or
OUR) 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 such as
rheumatoid arthritis. Immunex was founded in 1981. Our products improve the
quality of life of people and help them enjoy longer, healthier and more
productive lives. Our products are currently marketed in the United States
(U.S.), and are available by prescription only. American Home Products
Corporation (AHP), through one of its wholly owned subsidiaries, American
Cyanamid Company (CYANAMID), owns approximately 54.1% of the outstanding common
stock of Immunex. AHP is one of the world's largest research-based
pharmaceutical and health care products companies.

         Our home page on the Internet is at www.immunex.com. You can learn
about Immunex by visiting that site. Information contained on our Web site does
not constitute part of this report.

         Our business is regulated primarily by the United States Food and Drug
Administration (FDA). The FDA regulates the products we sell, our manufacturing
processes and our promotion and advertising. See GOVERNMENT REGULATION, below.

MARKETED PRODUCTS

         Almost all of our product revenues come from products in two major
therapeutic classes: rheumatoid arthritis (also referred to as RA) and oncology.
Our marketed products in the U.S. can be grouped as follows:

<TABLE>
<CAPTION>
       <S>                                              <C>
        RHEUMATOID ARTHRITIS                               ONCOLOGY

        ENBREL-Registered Trademark- (etanercept)          LEUKINE-Registered Trademark- (sargramostim, GM-CSF)

                                                           NOVANTRONE-Registered Trademark- (mitoxantrone for 
                                                           injection concentrate)

                                                           THIOPLEX-Registered Trademark- (thiotepa for injection)

                                                           Methotrexate sodium injectable

                                                           Leucovorin calcium

                                                           AMICAR-Registered Trademark- (aminocaproic acid)

</TABLE>

         We own rights to ENBREL in the U.S. and Canada (NORTH AMERICA), and AHP
owns ex-North American rights to ENBREL. We own worldwide rights to LEUKINE and
U.S. rights to the other marketed products listed above. A summary of our
marketed products is provided below.

RHEUMATOID ARTHRITIS

         ENBREL. ENBREL, our newest product, was approved by the FDA on November
2, 1998, and launched in the U.S. on November 4, 1998. ENBREL is our brand name,
or trademark, for etanercept. Etanercept is the assigned generic name for this
product, which is described more fully below. ENBREL is the first in a new class
of RA drugs known as biologic response modifiers, a new approach to RA
management and the first breakthrough treatment in many years for people with
RA. RA is a serious autoimmune disorder that causes the body's immune system to
attack the lining of the joints and can lead to joint deformity or destruction,
organ damage, disability and premature death. The FDA has approved ENBREL for
the following indications or uses:

      -     reduction of signs and symptoms of moderately to severely active RA
            in patients who have had an inadequate response to one or more
            disease modifying antirheumatic drugs (DMARDS), and

                                       1

<PAGE>

      -     in combination with methotrexate in patients who do not respond
            adequately to methotrexate alone.

         The dosage of ENBREL for adult patients with RA is 25 mg given twice
weekly as a subcutaneous (under the skin) injection. ENBREL is sold in a powder
formulation. AHP and Immunex are marketing ENBREL in the U.S. under the ENBREL
Promotion Agreement discussed later. See RELATIONSHIP WITH AHP AND CYANAMID,
below.

         ENBREL acts by supplementing the body's natural process of regulating
levels of tumor necrosis factor (TNF), a protein known to be pivotal to the RA
disease process. In clinical trials, ENBREL has been shown to reduce pain and
duration of morning stiffness and improve swollen and tender joints, enabling
patients to better participate in daily activities. ENBREL acts by binding to
and neutralizing TNF. TNF is one of the dominant cytokines or proteins that play
an important role in the cascade of reactions that cause the inflammatory
process of RA. ENBREL inhibits the binding of TNF molecules to cell surface TNF
receptors (TNFR). The binding of ENBREL to TNF renders the bound TNF
biologically inactive, resulting in significant reduction in inflammatory
activity.

ONCOLOGY

         LEUKINE. LEUKINE, which was our first marketed product, was launched in
the U.S. in 1991. LEUKINE is our trademark for sargramostim. LEUKINE is
sometimes referred to as granulocyte-macrophage colony stimulating factor or
GM-CSF. LEUKINE is a recombinant (man-made) form of a protein, called a
cytokine, that is almost identical to a protein normally produced in your body.
This cytokine helps to increase the number and improve the function of white
blood cells. White blood cells, which are made in the bone marrow, help prevent
infections. LEUKINE is marketed in the U.S. by our oncology specialty sales
force. LEUKINE is only available in the U.S. While LEUKINE is available in both
multi-dose liquid and powder formulations, most of our sales are of the
multi-dose liquid formulation. The FDA has approved LEUKINE for the following
indications:

      -     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 acute myelogenous leukemia (AML), and

      -     for use in peripheral blood progenitor cell (PBPC) mobilization and
            post-transplantation support.

         NOVANTRONE. NOVANTRONE is our trademark for mitoxantrone for injection
concentrate. NOVANTRONE is a compound similar to doxorubicin and idarubicin, but
with a molecular change that provides less damage to the heart. NOVANTRONE is
sold in a concentrated liquid form for injection. The FDA has approved
NOVANTRONE for the following indications:

      -     initial therapy of acute nonlymphocytic leukemia (ANLL), and

      -     in combination with steroids, for treatment of patients with pain
            related to hormone refractory prostate cancer (HRPC).

         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. In 1997, the FDA authorized us to supplement the approved
labeling for NOVANTRONE to cite clinical results showing its potential, in
combination with corticosteroids, to reduce levels of prostate-specific antigen
(PSA), an important indicator used by many physicians and patients to monitor
prostate cancer.


         THIOPLEX. THIOPLEX is our trademark for a powder formulation of
thiotepa for injection. Thiotepa is a cytotoxic agent (kills cells) approved for
the palliative (alleviation of symptoms without curing the underlying disease)
treatment of a wide variety of tumor types. The FDA has approved THIOPLEX for a
number of oncology indications. We have been selling and distributing THIOPLEX
in the U.S. since FDA approval of a supplemental new drug application (SNDA) in
December 1994.


         METHOTREXATE INJECTABLE. Methotrexate injectable is an antimetabolite
(a substance that replaces a particular metabolite) used in the treatment of
certain neoplastic (tumor) diseases. Patients with breast cancer, non-Hodgkin's
lymphoma (NHL) and lung cancer benefit from methotrexate. Methotrexate
injectable has significant generic competition. We distribute methotrexate
injectable in the U.S. under a distribution agreement with Cyanamid.


         LEUCOVORIN CALCIUM. Leucovorin is used in methotrexate rescue therapy
and in modulation of 5-fluorouracil drug therapy in advanced colorectal cancer.
We sell both tablet and powder formulations of leucovorin. Leucovorin has
significant generic competition.

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<PAGE>

         AMICAR. AMICAR is our trademark for aminocaproic acid. AMICAR is a
fibrinolysis-inhibitory agent useful in enhancing hemostasis (prevention of
bleeding) when fibrinolysis contributes to bleeding. AMICAR is used to decrease
bleeding in certain surgical procedures and other medical situations. We sell
syrup, tablet and powder injectable formulations of AMICAR.

RESEARCH AND PRODUCT DEVELOPMENT

         Since Immunex was founded in 1981, we have focused our scientific
efforts on understanding the biology of the immune system. Our goal is to
understand the complex interactions between cells that can trigger the
underproduction or overabundance of key immune system components, leading to
serious human diseases. From this singular research focus we have created a
portfolio of proprietary molecules and other technology that has produced a
number of promising biological therapeutic candidates. We spent $120.0 million
in 1998, $109.3 million in 1997 and $96.6 million in 1996 on Immunex-sponsored
research and development. These amounts include expenses related to third-party
research collaborations and the acquisition of product rights from certain third
parties.

INVESTIGATIONAL PRODUCTS IN HUMAN CLINICAL TRIALS

         We are currently testing the following proprietary investigational
biotechnology products in human clinical trials. We own worldwide rights to
these products.

<TABLE>
<CAPTION>

    PRODUCT                                           CLINICAL INDICATION                        DEVELOPMENT STATUS
    -------                                           -------------------                        ------------------
  <S>                                               <C>                                         <C>
    -    MOBIST(TM) (Flt3 ligand, or                  Peripheral blood stem cell                 Phase II
         Flt3-L), a cytokine that induces             mobilization and transplantation,
         the proliferation of blood                   dendritic cell growth and 
         progenitor cells and specialized             mobilization, immunotherapy of
         immune cells (dendritic cells)               cancer

     -   NUVANCE(TM) (Interleukin-4
         receptor, or IL-4R), a soluble               Asthma                                     Phase I/II
         receptor that binds to and
         neutralizes Interleukin-4 (IL-4)

     -   CD40 Ligand (CD40-L), an immune              B-cell lymphomas, solid tumors             Phase I
         system molecule that plays a         
         primary role in various immune
         processes and directly arrests the
         growth of certain tumors

</TABLE>

MARKETED PRODUCTS IN HUMAN CLINICAL TRIALS FOR ADDITIONAL CLINICAL INDICATIONS

         Immunex recognizes that an efficient way to generate increased revenue
is by adding new indications to a product that is already on the market. We have
increased our focus on development activities to find potential new indications
for our existing drugs. Our goal is to build pharmaceutical franchises and
expand the commercial usefulness and revenue-producing ability of our key
products. Our marketed products listed below have been or are being tested in
clinical trials for the following potential additional clinical indications:

<TABLE>
<CAPTION>

     MARKETED PRODUCT            ADDITIONAL CLINICAL INDICATION                 DEVELOPMENT STATUS
     ----------------            ------------------------------                 ------------------
  <S>                          <C>                                            <C>
     -   ENBREL                  Juvenile rheumatoid arthritis (JRA)            Supplemental biologics license
                                                                                application (SBLA) filed with
                                                                                FDA (November 1998)

                                 Disease modification of early RA               Phase III

                                 Chronic heart failure (CHF)                    Phase II/III

</TABLE>

                                       3

<PAGE>

<TABLE>
<CAPTION>

     MARKETED PRODUCT            ADDITIONAL CLINICAL INDICATION                 DEVELOPMENT STATUS
     ----------------            ------------------------------                 ------------------
   <S>                         <C>                                            <C>
     -   LEUKINE                 Treatment of neutropenia resulting from        Biologics license application
                                 chemotherapy in solid tumors                   (BLA) filed with FDA (March
                                                                                1993)

                                 Treatment of patients infected with the
                                 human immunodeficiency virus (HIV),
                                 malignant melanoma, treatment of
                                 mucositis                                      Phase III

                                 Anti-tumor adjuvancy, vaccine adjuvancy        Phase II

     -   NOVANTRONE              Progressive multiple sclerosis (MS)            Phase III

                                 NHL                                            Phase II

</TABLE>

PRECLINICAL RESEARCH AND DEVELOPMENT PIPELINE

         Innovation by our research and development operations is very important
to the success of our business. Our goal is to discover, develop and bring to
market innovative products that address major unmet health care needs. This goal
has been supported by our substantial research and development investments. To
get the most value from our molecular portfolio, we are focusing first on those
product candidates with the largest market potential. Our most promising
preclinical candidates are listed below.

<TABLE>
<CAPTION>

     MOLECULE                                  POTENTIAL CLINICAL UTILITY       STATUS
     --------                                  --------------------------       ------
  <S>                                        <C>                              <C>
     -   Interleukin-1 receptor Type II        Anti-inflammatory,               Pre-investigational new
         (IL-1R TYPE II)                       osteoporosis, stroke, myeloma    drug application (IND)
                                                                                development
     -   TNF related apoptosis inducing        Anti-tumor                       Pre-IND development
         ligand (TRAIL)                        

     -   Interleukin-15 (IL-15)                Mucositis (side effect of        Late preclinical
                                               chemotherapy from cancer)

     -   TNF-alpha converting enzyme           Anti-inflammatory                Late preclinical;
         (TACE) antagonist                                                      collaboration with AHP

     -   4-1BB ligand (4-1BBL)                 Anti-tumor                       Late preclinical

     -   ORK                                   Anti-angiogenesis (cancer)       Late preclinical

     -   RANK                                  Osteoporosis                     Early preclinical

     -   p35 program                           Asthma, inflammation             Early preclinical

</TABLE>

CYTOKINE PRODUCTS

         Our 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 the following:

      -     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,

                                       4

<PAGE>

      -     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.

         We have developed recombinant cytokine products capable of expanding
and activating these immune cell populations, all of which must interact to
provide a normal immune response. We have also cloned and expressed genes
encoding cytokine receptors. Using genetic engineering techniques, we have
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. We have 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). As mentioned earlier, 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. Apart from our efforts to secure approval of LEUKINE in
chemotherapy-induced neutropenia (CIN), a number of clinical trials were
conducted in 1998 or are underway to investigate whether LEUKINE could be
approved for other uses. These investigational uses include HIV infections,
malignant melanoma, mucositis, anti-tumor adjuvancy and vaccine adjuvancy.

      -     HIV INFECTIONS. We are conducting a clinical development program to
            study LEUKINE as a potential adjunctive AIDS therapy. In 1998,
            results of a Phase III randomized, placebo-controlled, blinded
            clinical trial indicated that patients who received LEUKINE in
            addition to either RETROVIR-Registered Trademark- (zidovudine) or
            in combination with another nucleoside analog, experienced 
            reductions in viral load and increases in CD4+ cell counts. Viral
            load is an important marker used by physicians and patients to 
            monitor HIV disease progression, and CD4+ cells help fight 
            infections. CD4+ cells are progressively depleted by HIV disease.
            In this clinical trial, the most frequently reported adverse event
            was anemia, occurring at a similar rate in both the LEUKINE and 
            placebo groups. RETROVIR is a trademark of GlaxoWellcome Inc. 
            Results of an earlier small Phase I clinical trial reported in 
            1998 showed that LEUKINE was well tolerated and may have 
            contributed to reductions in viral load and increases in CD4+ cell 
            counts in a number of patients that received LEUKINE in combination 
            with stable protease inhibitor regimens. In addition to the clinical
            trials for Leukine discussed above, we have completed a pivotal 
            Phase III clinical trial studying the impact of LEUKINE on the 
            incidence of opportunistic infections, survival, viral load, and
            CD4+ cell counts. Results of this Phase III clinical trial, which
            involved late-stage AIDS patients with CD4+ cell counts of less than
            100, are expected in early 1999.

      -     MALIGNANT MELANOMA. In 1997 we announced positive results of an
            open-label Phase II clinical trial of LEUKINE as an adjuvant therapy
            following surgery to remove tumors in patients with advanced
            melanoma who were at high risk for relapse or death. This trial
            demonstrated that using LEUKINE 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. We are supporting a controlled Phase III trial of
            LEUKINE in this patient population with a cooperative oncology
            group.

      -     CIN. In March 1993, we filed an amendment to our BLA for LEUKINE to
            obtain FDA approval for an additional label indication for
            prophylaxis of CIN. Since the 1993 filing, we have supplemented our
            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. However, we
            maintain our BLA amendment at the FDA, and we are continuing to seek
            approval of the CIN indication. Although we believe 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.

      -     MUCOSITIS. Data from pilot clinical trials have indicated that
            LEUKINE may ameliorate chemotherapy/radiotherapy induced oral
            mucositis. We are initiating a controlled Phase III clinical trial
            of this potential indication with a cooperative oncology group.

      -     ANTI-TUMOR ADJUVANCY. Besides the clinical trial of LEUKINE in
            malignant melanoma mentioned above, we are also supporting clinical
            trials conducted by a cooperative oncology group to study the
            potential of LEUKINE as an immune adjuvant therapy in breast cancer.

                                       5

<PAGE>

      -     VACCINE ADJUVANT. Clinical trials are also being conducted with
            various third parties to investigate the potential of LEUKINE as a
            vaccine adjuvant.

         MOBIST (FLT3-L). In 1993, we cloned cDNAs encoding Flt3-L, which is a
ligand for the Flt3 receptor. Flt3-L binds to a receptor located on primitive
hematopoietic cells, and has been shown to be capable of mobilizing PBPCs alone,
and in combination with other cytokines such as LEUKINE or granulocyte-colony
stimulating factor (G-CSF). In 1997, we 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
either LEUKINE or G-CSF, were begun in 1998 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 dendritic cells. In 1998, we also commenced
Phase II trials of MOBIST as an anti-tumor agent in patients with prostate
cancer or NHL, and in patients with malignant melanoma. Results of these
clinical trials are expected in 1999. Clinical trials of MOBIST conducted to
date have demonstrated that MOBIST was well tolerated and provided sustained
increases in dendritic cell populations. We are evaluating the best approach to
using this characteristic of MOBIST to facilitate immunotherapy of cancer or
infectious diseases.

         CD40-L. We have 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 and is required for the
generation of cytotoxic T-cells. 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. In 1998 we commenced a Phase I trial of CD40-L in
patients with B-cell NHL and solid tumors. The results of this clinical trial
are expected in early 1999. If the results of this clinical trial are positive,
in 1999 we intend to begin Phase II clinical trials of CD40-L.

         Our soluble CD40-L stops the growth of tumor cells in mice, as
demonstrated by preclinical research conducted by investigators at Immunex, at
the National Cancer Institute and elsewhere. In addition, in 1998 we reported
preclinical data that showed that mice treated with a combination of MOBIST and
CD40-L demonstrated a higher rate of tumor rejection than either molecule alone.
Thus, it may be possible to develop combination cytokine therapies involving the
use of MOBIST and CD40-L.

         It has also been shown that CD40-L induces chemokines and down
modulates chemokine receptors on cells infected with HIV. Since HIV uses
chemokine receptors to gain entry to these cells, CD40-L may have the potential
to prevent HIV infection of new cells.

         INTERLEUKIN-2 (IL-2). IL-2 is a cytokine that controls the 
proliferation and activation of T-cells. It can both augment normal immune 
functions and help restore deficient immune responses. In 1983, we entered 
into license agreements with Hoffmann-La Roche, Inc. and its parent, F. 
Hoffmann La Roche & Company, Limited Company of Basel, Switzerland (ROCHE), 
under which we receive royalties on worldwide sales of IL-2 products by Roche 
and its sublicensees, including Chiron Corporation. Chiron's 
PROLEUKIN-Registered Trademarks- IL-2 is available in over 45 countries, and 
is approved in the U.S as a treatment for metastatic kidney cancer and 
metastatic melanoma, a form of skin cancer. Chiron is also studying the use 
of IL-2 to treat patients with HIV infection. PROLEUKIN is a trademark of 
Chiron.

ADDITIONAL CYTOKINES AND OTHER NEW MOLECULES

         Our scientists have cloned genes encoding several additional cytokines
and other new molecules that are now being characterized in preclinical studies.

      -     TRAIL. We have cloned TRAIL, which induces apoptosis (cell death) of
            a number of tumor cell types. Recombinant TRAIL, either alone or in
            combination with chemotherapy, has been shown to be effective at
            reducing tumor growth and tumor incidence in animals.

      -     IL-15. We have cloned and expressed cDNAs encoding a cytokine known
            as IL-15, a growth factor that shares certain biological activities
            with IL-2. In preclinical 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. We
            are currently evaluating our development strategy for IL-15, which
            may include licensing IL-15 rights to a collaborator or strategic
            alliance partner for continued development.

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      -     4-1BBL. Recombinant 4-1BBL is a stimulator of anti-tumor immune
            responses via its effects on T-cells. We produced this molecule and
            tested it in IN VIVO tumor models in 1998. Combination studies of
            4-1BBL with MOBIST in tumor models suggest that these two cytokines
            have synergistic effects when used together.

      -     ORK. We cloned the human receptor tyrosine kinase called ORK and
            have received a patent on the DNA encoding ORK in 1995. ORK is the
            receptor for the angiopoietins which stimulate the process of blood
            vessel development. We have constructed a soluble ORK molecule,
            which has been shown to prevent tumor angiogenesis (new blood vessel
            development) and retard tumor growth in experimental models of
            cancer.

      -     RANK. Stimulation of the receptor named RANK results in development
            of osteoclasts which resorb bone. We are developing a soluble RANK
            receptor as an inhibitor of osteoclast development for osteoporosis.

      -     P35 PROGRAM. p35 is a protein of viral origin that binds to
            chemokines (proteins involved in the inflammatory pathway). We are
            collaborating with ArQule, Inc. to develop a small molecule
            chemokine antagonist for use in various inflammatory conditions. See
            RESEARCH COLLABORATIONS, below.

OTHER BIOLOGICAL PRODUCTS

         Several other novel cytokines are currently at earlier stages of IN
VITRO assessment with third-party collaborators. We have cloned and expressed
cDNAs for a family of molecules known as "ligands for eph-related protein
kinases" (LERKS), and in 1995, we granted an exclusive, royalty-bearing
worldwide license for neurobiology uses under our LERKS patent rights and
technology to Genentech, Inc. In 1996, we entered into an agreement with Biogen,
Inc. for development outside the U.S. of anti-CD40-L antibodies in the treatment
of humans for all indications other than oncology.

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 cells located throughout the body.

         Using genetic engineering techniques, our 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 cytokines, preventing interaction of the cytokines with immune cells
and thereby neutralizing the development of an autoimmune or inflammatory
response. With our success in obtaining FDA approval of ENBREL, we believe that
soluble cytokine receptors can be effective as therapeutics to counteract
autoimmune or inflammatory diseases.

         We have developed a comprehensive array of cytokine receptor
technologies, which has led to us obtaining proprietary rights relating to
ENBREL (TNFR p80), NUVANCE (IL-4R), Interleukin-1 receptor Type I (IL-1R TYPE
I), IL-1R Type II, Interleukin-7 receptor (IL-7R), G-CSF receptor (G-CSFR),
IL-15 receptor, Interleukin-17 receptor and TRAIL receptors. ENBREL, a TNF
receptor fusion protein, was approved by the FDA in November 1998, and we are
conducting additional clinical trials of ENBREL as a treatment for early RA and
CHF. We are also conducting clinical trials of NUVANCE as a therapy for asthma.
We have decided to proceed with the development of a natural soluble form of
IL-1R Type II as a potential treatment for inflammation, osteoporosis or other
Interleukin-1 (IL-1) related diseases. We have also commenced a licensing
program under our cytokine receptor patents to enable other companies to use our
patented cytokine receptors in drug screening. Under this program, we granted a
license to use G-CSFR for drug screening to one company in 1997 and to a second
company in 1998. We are continuing license discussions with other companies also
interested in using G-CSFR or our IL-1R receptors in drug screening.

         ENBREL. 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. We have 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. Our trademark for TNFR:Fc, generically
known as etanercept, is ENBREL. ENBREL exhibits a long serum half-life and has
been shown to be capable of rapidly lowering serum TNF levels.

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         We have successfully developed ENBREL as a new, therapeutic
breakthrough for RA based on TNF inhibition. In September 1997, we announced the
results of our pivotal Phase III randomized, placebo-controlled, blinded
clinical trial of ENBREL in advanced RA, a progressively crippling disorder.
Positive and statistically significant results in favor of treatment with ENBREL
were achieved for all primary and secondary clinical endpoints, the key
measurements used to judge the drug's effectiveness. The drug was found to be
generally safe and well tolerated. These data confirmed results previously
reported from the similarly designed Phase II trial of ENBREL in advanced RA.

         In March 1998, we announced the results of a Phase III randomized,
placebo-controlled, blinded clinical trial of ENBREL in combination with
methotrexate versus methotrexate alone in patients with RA. The results
demonstrated that RA patients treated with ENBREL 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 ENBREL 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 March 1998, we 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 meant that the FDA
would take appropriate actions to expedite the development and review of ENBREL.
The designation of ENBREL as a Fast Track Product by the FDA initiated the
application and review process for ENBREL. We submitted portions of our BLA for
ENBREL to the FDA in March 1998, and completed the BLA submission with the FDA
on May 7, 1998 to request a license to market ENBREL for treatment of patients
with active RA. The FDA assigned "priority review" status to our BLA, and
accepted the BLA for filing on June 22, 1998.

         On September 16, 1998, ENBREL was unanimously recommended for approval
for the treatment of active RA by the FDA Arthritis Advisory Committee. The
Advisory Committee recommended that ENBREL be approved for use alone in patients
who have failed other DMARDs. In addition, the Advisory Committee recommended
that ENBREL be approved for use in combination with methotrexate.

         On November 2, 1998, ENBREL was approved by the FDA. ENBREL is
indicated for the reduction of signs and symptoms of moderately to severely
active RA in patients who have had an inadequate response to one or more DMARDs.
ENBREL can be used in combination with methotrexate in patients who do not
respond adequately to methotrexate alone. The most frequently reported adverse
events in studies with ENBREL were mild to moderate injection site reactions.
However, the long-term effects of treatment with ENBREL on the development or
course of serious infection, malignancy and autoimmune disease are unknown.

         In 1998, we announced that ENBREL was generally well tolerated by RA
patients receiving long-term therapy in an open-label safety study of
administration of ENBREL to patients that received the drug in the earlier Phase
II clinical trial, with some patients having received the drug for up to two
years.

         In early 1998, we completed a pharmacokinetic study with ENBREL
demonstrating comparability of product manufactured at our Bothell, Washington
mammalian cell-based protein manufacturing facility and product manufactured by
our contract manufacturer, Boehringer Ingelheim Pharma KG (BI PHARMA).

         In November 1998, Immunex filed a new drug submission (NDS) for ENBREL
for the treatment of active RA with the Canadian Health Protection Bureau
(CHPB). We cannot be certain that the CHPB will approve this NDS.

         ENBREL is the subject of regulatory filings and clinical trials
intended to result in additional FDA-approved indications. These filings and
trials are described below. These investigational uses currently include JRA,
disease modification of early RA, and CHF. In addition, a number of clinical
trials are underway or will be conducted with third party investigators in 1999
to investigate the use of ENBREL in multiple other disease settings.

      -     JRA. In 1998 we completed a clinical trial of ENBREL in patients
            with JRA, which began in 1997. The results were consistent with
            results already reported from clinical trials of ENBREL in patients
            with adult RA. The results indicated that children and teenagers
            suffering from JRA experienced less pain and swelling in their
            joints and decreased incidence of disease activity on ENBREL,
            compared with patients on placebo. JRA is an immune system disease
            that strikes before age 16. On November 25, 1998, we filed an SBLA
            with the FDA for ENBREL to treat children and teenagers (age 4-17)
            with moderately to severely active polyarticular course JRA. We
            cannot be certain that the FDA will approve this SBLA.

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      -     DISEASE MODIFICATION OF EARLY RA. In early 1999 we intend to
            announce the results of a large Phase III randomized,
            placebo-controlled, blinded clinical trial of ENBREL in
            earlier-stage methotrexate-naive RA patients. This Phase III
            clinical trial is aimed at documenting the ability of ENBREL to slow
            the progression of joint damage in RA disease over a year of
            treatment. If the results of this clinical trial are positive, in
            1999 we intend to file an SBLA with the FDA for ENBREL for this
            additional indication.

      -     CHF. In November 1997, results were announced of a small Phase I
            clinical trial of ENBREL in patients with CHF. The results indicated
            that a single dose of ENBREL reduced circulating levels of TNF and
            improved certain clinical parameters. A Phase I randomized,
            placebo-controlled, blinded, multiple-dose clinical trial of ENBREL
            in patients with CHF has been completed, and based upon the results
            announced in March 1998, two large Phase II/III randomized,
            placebo-controlled, blinded clinical trials of ENBREL will be
            commenced in early 1999 in patients with CHF. One of these Phase
            II/III clinical trials will be conducted in the U.S., and the other
            Phase II/III clinical trial will be conducted in Europe and
            Australia by AHP, our collaborator in the development of ENBREL.

          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. NUVANCE, which is a soluble IL-4R, has been shown to
inhibit IL-4-dependent immune responses in animal models. NUVANCE is our
trademark for IL-4R. Based on these preclinical studies, and on the results of
certain clinical trials with NUVANCE, we believe that soluble IL-4R may be
effective in the treatment of asthma and we intend to devote significant
resources to developing NUVANCE for this disease.

         In February 1997, we announced the results of a Phase I clinical trial
of NUVANCE in mild asthmatic patients. This dose-escalating trial, which
involved a single dose of NUVANCE by inhalation of a nebulized, water-based
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, we repeated this Phase I trial of NUVANCE
in moderate asthmatic patients, adding a placebo-control group, and similar
results were obtained in 1998.

         We are continuing our clinical development of NUVANCE in Phase I/II
clinical trials in moderate asthmatics. In early 1999 we completed a Phase I/II
repeat dose clinical trial to evaluate primarily the safety of nebulized NUVANCE
in adult patients with moderate asthma. Efficacy parameters were also evaluated
in this clinical trial. Based on the results of this first multi-dose clinical
trial of NUVANCE, Immunex has decided to expedite the clinical development of
NUVANCE. In this Phase I/II clinical trial, NUVANCE was well-tolerated for up to
12 weeks of once weekly treatment, and there were no serious adverse events
related to the drug. The first Phase II clinical trial of NUVANCE is anticipated
to start in the second quarter of 1999 and will evaluate the safety and efficacy
of NUVANCE for the long-term control of asthma. In this Phase II clinical trial,
we plan to deliver NUVANCE as an aerosol by a proprietary pulmonary (inhalation
into the lungs) drug delivery system owned by a third-party collaborator. In
early 1999 we also intend to complete a Phase I safety and pharmacokinetic study
of intravenous, subcutaneous and nebulized NUVANCE.

         IL-1R TYPE II. 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, RA,
septic shock, stroke and periodontal disease. We have produced genetically
engineered soluble IL-1 receptors of two types, designated Type I and Type II,
and have conducted clinical trials 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 we are
currently focused on preclinical testing of IL-1R Type II. Based upon this data,
we believe that IL-1R Type II may be of therapeutic value in the treatment of a
number of inflammatory diseases such as those mentioned above, either alone or
in combination with ENBREL. In late 1998 we designated IL-1R Type II as a
pre-development molecule, and in 1999 we intend to begin process scale-up to
produce IL-1R Type II for future toxicology studies.

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RESEARCH COLLABORATIONS

         There is a race in the biotechnology industry to discover and develop
novel therapeutics, in part by utilizing the rapidly accumulating knowledge
concerning the human genome. Several biotechnology companies have accumulated
significant genetic information from large-scale genomic DNA sequencing. Much of
this data is expected to be incorporated into patent applications by these
companies. The impact of such patent application activity upon our future gene
discovery efforts is currently unknown. We have entered into a number of
important research collaborations, using varied technology platforms, in an
effort to provide us with a competitive edge in our continuing efforts to
identify new drug candidates. A summary of these research collaborations is set
forth below.

         DIGITAL GENE TECHNOLOGIES. In December 1997 we announced a genomics
research collaboration with Digital Gene Technologies, Inc. (DGT) using DGT's
patented total gene expression analysis (TOGA(TM)) platform to discover novel
approaches to the diagnosis and treatment of inflammatory diseases of the
gastrointestinal (GI) system, including inflammatory bowel disease. TOGA is a
method of identifying and determining the concentration of nearly all of the
genes active in a sample cell or tissue. This program significantly enhances our
discovery research programs in the field of GI biology. TOGA allows us to link
our biological models to an important new technology that may provide us with
new molecules to develop as therapeutics or as targets for small molecule
discovery. For exclusivity in the field of GI inflammation, we have paid an
up-front fee to DGT, with additional fees due over the course of the five-year
agreement. In addition, we will pay DGT for assay processing and identification
of new molecules. For each molecule successfully developed in the U.S. and
Europe, we have agreed to pay DGT certain clinical milestone payments, plus a
royalty on worldwide sales of such molecule. In July 1998 we announced that we
had obtained an experimentation license for the first molecule resulting from
this collaboration.

         GENETICS INSTITUTE. In April 1998, we became a participant in 
Genetics Institute's DiscoverEase-Registered Trademark- program with a goal 
of faster identification of immune system proteins that may have therapeutic 
value. Genetics Institute (also referred to as GI) is a wholly owned 
subsidiary of AHP. As a participant in this program, we have access to the 
DiscoverEase protein library, which is a collection of proprietary novel, 
human, secreted proteins, the corresponding genes, and a relational database 
of associated information. As mediators of key biological processes, secreted 
proteins represent a valuable source of therapeutic candidates, targets for 
small molecule drug development, and disease markers useful for the 
development of diagnostic tests. We intend to analyze the proteins using our 
repertoire of biological assays and bioinformatics expertise to identify 
proteins having immune system function and potential therapeutic value. The 
DiscoverEase business structure provides for low up-front fees to allow us to 
conduct broad laboratory and preclinical research on the library genes and 
proteins, and downstream fees that are based on the successful development 
and commercialization of therapeutic candidates. GI retains the rights, at 
the time of filing an IND, to co-develop and co-commercialize a protein 
therapeutic. Immunex has not yet licensed any candidates identified in the 
DiscoverEase program.

         ARQULE. In March 1998, we entered into a collaboration with ArQule,
Inc. to discover and develop new products for the treatment of inflammatory
diseases. The collaboration provides us with access to ArQule's Mapping
Array(TM) program to identify small molecule therapeutics, based on a new
chemokine gene discovered by us known as p35. ArQule's Mapping Array program is
comprised of libraries of novel, diverse, small organic, pure compounds used for
screening against biological targets in new product discovery. ArQule is using
proprietary assays from us that utilize a novel inhibitor of multiple chemokines
to identify compounds with biological activity from ArQule's Mapping Array
program. The data provided by this program is expected to speed the
identification of specific active drug leads. Once active leads are identified,
we will elect whether to continue preclinical development with ArQule, or to
license the active leads on an exclusive basis, in exchange for milestone and
royalty payments to ArQule for successful clinical and commercial development.
Chemokines control the attraction of white blood cells to tissues, a process
essential for inflammation and host responses to infection. An efficient
inhibitor of chemokines could have potential as a therapeutic in a wide variety
of diseases, such as asthma, acute respiratory distress syndrome, arthritis,
atherosclerosis, inflammatory bowel disease and psoriasis.

         MEDAREX. In January 1999 we entered into a licensing agreement with
Medarex, Inc. involving Medarex's HuMAb-Mouse(TM) technology. Under this
agreement, we obtained the rights to use the HuMAb-Mouse technology for an
unlimited number of targets for up to 10 years. We will pay Medarex technology
access fees, and Medarex could receive research payments, license fees and
milestone payments, as well as royalties on commercial sales. The HuMAb-Mouse
technology is a transgenic mouse system that creates high affinity, fully human
antibodies instead of mouse antibodies. Using standard, well proven laboratory
techniques, scientists can produce these antibodies in a matter of months.
Incorporating the HuMAb-Mouse technology into our broad drug discovery program
is expected to significantly enhance our continuing efforts to identify new drug
candidates. The ability to generate human antibodies against our proprietary
antigens will permit us to develop potential therapeutics without the risks
associated with non-human antibodies.

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         GENESIS. Since 1994 we have collaborated with Genesis Research and
Development Corporation Limited, a New Zealand company. Genesis has sequenced
cDNA libraries for specialized cell types to create a proprietary DNA database
for Immunex. We are testing several genes identified by Genesis.

NON-BIOLOGICAL ONCOLOGY PRODUCTS

         BACKGROUND. As a result of the merger in 1993 (the 1993 MERGER) of the
predecessor to the current Immunex Corporation and Lederle Oncology Corporation,
a subsidiary of Cyanamid created for the purpose of merging Cyanamid's Lederle
Laboratories oncology business in North America with our biopharmaceutical
business, we acquired certain intellectual property rights, including marketing
rights, in North America relating to certain non-biological oncology products,
including the following products that we currently market in the U.S.:
NOVANTRONE (mitoxantrone for injection concentrate), leucovorin calcium,
THIOPLEX (thiotepa for injection), Amicar (aminocaproic acid) and methotrexate
sodium injectable. See MARKETED PRODUCTS, above. As part of the 1993 Merger, we
also acquired rights to certain other non-biological oncology products that have
been either discontinued, sold or returned to AHP. The rights that we acquired
as a result of the 1993 Merger include patents, know-how, trademarks, clinical
and other supporting data, registrations and approvals from the FDA. Cyanamid
also transferred to us its U.S. oncology marketing and sales force, but did not
transfer to us any manufacturing facilities, research assets, other tangible
assets or other personnel. We entered into a number of agreements with Cyanamid
and its subsidiaries at the time of the 1993 Merger relating to these products.
See RELATIONSHIP WITH AHP AND CYANAMID, below.

         NOVANTRONE. In addition to its current FDA-approved indications
discussed above, NOVANTRONE is the subject of clinical trials intended to
provide data to support an additional FDA-approved indication for progressive
multiple sclerosis (MS), as discussed below. Other clinical trials are being
conducted by third parties with NOVANTRONE to investigate its potential in NHL.

      -     PROGRESSIVE MS. NOVANTRONE has been tested in two European clinical
            trials in patients with MS. In 1997, it was reported that data from
            the smaller European Phase II clinical trial was positive. In 1998,
            we reported that in preliminary results of the second European
            trial, which was a larger Phase III clinical trial, NOVANTRONE had a
            statistically significant impact on relapse rate and disability
            progression in patients with progressive MS. Magnetic resonance
            imaging (MRI) data were also reported that supported these clinical
            findings. In this Phase III clinical trial, NOVANTRONE was
            administered by short, intravenous infusion once every three months.
            Other treatments currently approved for MS require a subcutaneous or
            intramuscular self-injection on a daily or weekly basis. In 1999 we
            intend to file an SNDA with the FDA to expand the use of NOVANTRONE
            for the treatment of patients with progressive MS. We cannot be
            certain that the data from these clinical trials will be deemed
            sufficient by the FDA to demonstrate the efficacy of NOVANTRONE in
            this patient population. Further, we cannot be certain that the FDA
            will approve this SNDA for NOVANTRONE.

         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.

         We submitted an abbreviated new drug application (ANDA) to the FDA for
generic Paclitaxel Injection on August 8, 1997, which was accepted for review by
the FDA on October 7, 1997. Our ANDA contains a certification by Immunex, 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 our 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. We had anticipated the legal action by BMS, and because of BMS's legal
action, the FDA will withhold approval of our 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.

         In June 1998, we announced a collaboration with Baker Norton
Pharmaceuticals, a wholly owned subsidiary of IVAX Corporation, to market
paclitaxel products in the U.S., subject to FDA approval. Baker Norton agreed to
buy our paclitaxel ANDA that was filed with the FDA, as well as our paclitaxel
inventory, in exchange for $6.9 million. The FDA has confirmed that Immunex's
ANDA is the first filed with the FDA for a generic paclitaxel product. If
Immunex and Baker Norton prevail in the pending patent litigation with BMS, and
the FDA approves this ANDA, the paclitaxel injection product that is covered by
this ANDA would be entitled to 180 days of shared market exclusivity with TAXOL
prior to the entry of any other generic paclitaxel products. The FDA is expected
to continue its review of this ANDA during the litigation. However, there can be
no assurance that our new collaboration with Baker Norton will be successful or
that this generic paclitaxel

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product will be granted co-exclusivity, that the FDA will approve our ANDA, or
that BMS will not obtain or enforce additional patents relating to TAXOL.

         If a paclitaxel injection product based on our ANDA is marketed in the
U.S., Baker Norton will pay us royalties based on net sales of this generic
paclitaxel injection product. Also, at Baker Norton's request, we will help them
promote this generic paclitaxel injection product using our oncology sales
force. Baker Norton has agreed to pay us additional fees for these promotional
efforts.

         Both Immunex and Baker Norton have filed ANDAs requesting FDA approval
of generic paclitaxel products and have certified in these ANDA applications
that certain use patents held by BMS relating to TAXOL are invalid or not
infringed by the products covered by these ANDAs. BMS has challenged this
certification, filing lawsuits for infringement of its patents. Baker Norton has
also filed a counterclaim against BMS to invalidate its patents, and has also
asserted claims against BMS for violation of federal anti-trust laws and unfair
competition. Baker Norton, as part of our collaboration, will direct the defense
of both lawsuits, and we will reimburse Baker Norton for a percentage of its
paclitaxel patent litigation expenses relating to these ANDA applications.

         Baker Norton also filed an NDA with the FDA for PAXENE-Registered 
Trademark-, its branded form of paclitaxel, for use in the treatment of 
Kaposi's sarcoma. Baker Norton appointed us to promote PAXENE in the U.S. if 
the FDA approves that product. We will earn fees based on all sales of PAXENE 
in the U.S. during the time that we promote PAXENE.

RELATIONSHIP WITH AHP AND CYANAMID

1993 MERGER

         As a result of the 1993 Merger discussed earlier, Cyanamid currently
owns approximately 54.1% of our outstanding common stock. In late 1994, AHP
purchased all of the common stock of Cyanamid. Thus, AHP owns Cyanamid's
interest in our common stock. Before AHP's purchase of Cyanamid, we entered into
an agreement with AHP under which AHP agreed to protect our rights under our
agreements with Cyanamid and be bound by Cyanamid's obligations under these
agreements. 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 some of the rights and obligations of Cyanamid
under the various agreements that we entered into with Cyanamid at or after the
time of the 1993 Merger. In the following discussion, AHP refers to AHP, or its
various divisions or affiliates, including Cyanamid.

GOVERNANCE AGREEMENT

         At the same time that we entered into the 1993 Merger, we entered into
an Amended and Restated Governance Agreement (GOVERNANCE AGREEMENT) with
Cyanamid. AHP assumed the rights and obligations of Cyanamid under the
Governance Agreement, which includes, among other matters, certain agreements
relating to the following:

      -     the corporate governance of Immunex, including the composition of
            our Board of Directors (BOARD),

      -     rights of AHP to purchase additional shares of our stock from
            Immunex if certain events occur,

      -     future purchases and sales of our stock by AHP,

      -     the right of members of our Board designated by AHP to approve
            certain of our corporate actions,

      -     the requirement that a supermajority of the members of our Board
            approve certain of our corporate actions, and

      -     payments to be made by AHP to us in the event that the products
            acquired under the 1993 Merger and certain of our other products did
            not achieve net sales targets. We received a total of $204.5 million
            under this provision of the Governance Agreement, which expired on
            December 31, 1997. AHP made its final payment to us under this
            provision, in the amount of $60.0 million, in February 1998.

         AHP had been subject to certain standstill restrictions included in the
Governance Agreement that prevented AHP from purchasing additional shares of our
stock except under certain circumstances. These restrictions on AHP expired on
June 1, 1998. The practical effect of the lapse of these restrictions is to make
us more susceptible to an unsolicited tender offer by AHP for the shares of our
stock that AHP does not currently own.

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         AHP is still prohibited from transferring shares of our stock except
under an underwritten public offering, or as permitted by the volume and manner
of sale limitations of Rule 144 under the Securities Act of 1933, as amended, or
to a wholly owned AHP subsidiary. Also, except under an underwritten public
offering, AHP may not transfer an amount in excess of 1% of the outstanding
shares of our stock on any given day, nor may any AHP transfer result in the
creation of a 5% shareholder of our stock. AHP may, however, transfer all, but
not less than all, of its shares of our stock provided that the purchaser has
offered to purchase all outstanding shares of our stock on the same terms, and
also provided that we have first been notified and allowed three months to find
an alternative purchaser. These restrictions on transfer of our stock continue
beyond June 1, 1998.

1993 MERGER RELATED AGREEMENTS

         At the time of the 1993 Merger, Cyanamid, Immunex and certain of their
respective subsidiaries entered into certain related agreements, some of which
have been amended and which are now superseded. Immunex and AHP are parties to
numerous agreements that AHP assumed from Cyanamid or that Immunex entered into
directly with AHP.

         One of these agreements was a Research and Development Agreement, which
was replaced in July 1996 by a new Research Agreement (the 1996 RESEARCH
AGREEMENT) among Immunex, Cyanamid and AHP. The 1996 Research Agreement and
another related agreement together provided for the commercialization of new
oncology products by Immunex in North America, and by AHP elsewhere. Under the
1996 Research Agreement, we were obligated to contribute up to 50% of AHP's
oncology discovery research expenditures, up to a maximum amount of $16.0
million per year (adjusted annually for inflation beginning in 1997) and we had
the option to elect which oncology products we would continue to support beyond
the discovery stage. To the extent we developed products or technology other
than new oncology products and determined not to market such products or
technology by ourselves, we agreed to offer AHP exclusive marketing rights to
any such products or technology before offering any marketing rights to third
parties. The 1996 Research Agreement was replaced in July 1998 with a new
Product Rights Agreement that we entered into with AHP and Cyanamid, as
discussed below.


         Other agreements entered into as part of the 1993 Merger provide for,
among other matters, the supply and toll manufacture by Cyanamid or its
subsidiaries for Immunex of the non-biological oncology products referred to
earlier, and various other implementing licenses and distribution agreements.
These agreements, in particular the Governance Agreement, together with the new
Product Rights Agreement, establish the framework for the ongoing relationship
between Immunex and AHP.

TACE AGREEMENTS

         In December 1995, we entered into certain research and license
agreements with AHP under which we 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. We will receive license fees, research
payments, commercial development milestone payments and royalties on any
compounds that are commercialized by AHP. In September 1997, in conjunction with
the ENBREL Promotion Agreement with AHP discussed below, the parties amended one
of the TACE agreements in order to substantially increase the royalty payable by
AHP to us on the first TACE molecule approved by the FDA, if any.

TNFR LICENSE AND DEVELOPMENT AGREEMENT

         In July 1996, we entered into a TNFR License and Development Agreement
with AHP (TNFR AGREEMENT), under which we retained North American marketing
rights to ENBREL, and AHP retained marketing rights to ENBREL outside of North
America. The TNFR Agreement also addresses joint project management, cost
sharing for development activities related to ENBREL, manufacturing
responsibilities, intellectual property protection and other pertinent terms.
Previously, AHP's rights in ENBREL had been stated in the 1993 Research and
Development Agreement between Immunex and Cyanamid, which has been superseded.
Under the TNFR Agreement, we have agreed with AHP to negotiate the terms of a
supply agreement for the commercial supply of ENBREL to AHP outside North
America. In November 1998, Immunex and AHP entered into an ENBREL Supply
Agreement with BI Pharma for the commercial supply of ENBREL to Immunex in North
America and to AHP outside of North America. See RAW MATERIALS AND SUPPLY,
below. We are negotiating a related supply agreement with AHP for certain
services that we will perform for AHP relating to the supply of ENBREL by BI
Pharma outside North America.

                                       13

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ENBREL PROMOTION AGREEMENT

         In September 1997, we entered into an ENBREL Promotion Agreement with
AHP, under which AHP, acting through its Wyeth-Ayerst Laboratories division, has
the rights to promote ENBREL to all appropriate customer segments in North
America for all approved indications other than oncology. We have reserved the
right to promote ENBREL in North America for any approved oncology indications.
Under the terms of this long-term Promotion Agreement, AHP may pay Immunex up to
$100.0 million in nonrefundable scheduled payments for the North American
promotion rights to ENBREL. We have already received $65.0 million of these
scheduled payments, as follows:

      -     $15.0 million upon signing of the ENBREL Promotion Agreement, which
            was earned in September 1997,

      -     $20.0 million when our BLA for ENBREL for advanced RA was accepted
            for review by the FDA, which was earned in June 1998, and

      -     $30.0 million upon FDA approval of ENBREL, which was earned in
            November 1998.

         AHP may pay us an additional $35.0 million in scheduled payments under
the ENBREL Promotion Agreement as follows:

      -     $15.0 million if and when a disease modification claim for ENBREL is
            obtained from the FDA,

      -     $10.0 million on first achieving $200.0 million in net sales for
            ENBREL in North America in any rolling 12-month period, and

      -     $10.0 million on first achieving $400.0 million in net sales for
            ENBREL in North America in any rolling 12-month period.

         We cannot be certain of the likelihood or timing of receiving any of
these final three scheduled payments.

         Under the ENBREL Promotion Agreement, AHP has agreed to reimburse us
for more than a majority of the clinical and regulatory expenses made by or on
behalf of us 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 ENBREL
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 ENBREL 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 for that part of the North American clinical and regulatory expenses for
ENBREL for which we are otherwise financially responsible under the cost sharing
provisions in the TNFR Agreement. AHP has also agreed to reimburse us under the
ENBREL Promotion Agreement for less than a majority of certain patent expenses
related to ENBREL, including any up-front license fees and milestones, as well
as patent litigation and interference 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, we will
share such commercial expenses in North America with AHP on an equal basis.

         Under the ENBREL Promotion Agreement, we may elect at any time to
supplement AHP's detailing (meaning visiting and communicating with physicians
by AHP's sales representatives to increase physician prescribing preferences for
ENBREL) and promotion of ENBREL in the U.S. with our own sales force to detail
ENBREL for any approved indications promoted by AHP. We have the same right in
Canada if ENBREL is approved there. We will pay the majority of our sales force
costs for two years beginning on the date, if any, our sales force begins
detailing ENBREL, and we will share our sales force costs with AHP on an equal
basis thereafter.

                                       14

<PAGE>

         We record any and all product sales of ENBREL in North America under
the ENBREL Promotion Agreement. We will pay AHP a percentage of any and all
annual gross profits of ENBREL in North America attributable to all indications
for ENBREL other than oncology indications on a scale that increases as gross
profits increase. We will retain a majority percentage of these gross profits in
North America on an annual basis. Also, we 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. We do not receive either royalties or a share
of gross profits from sales of ENBREL outside of North America, since AHP owns
rights to ENBREL outside of North America.

         If AHP sells or distributes a biologic product in North America that is
directly competitive with Enbrel, as defined in the ENBREL Promotion Agreement,
and subject to certain exclusions, AHP will give us prior written notice and,
upon our request, we will attempt in good faith to either establish mutually
acceptable terms with AHP under which we will co-promote this competitive
biologic product (or other terms for a commercial relationship) with AHP, or
negotiate an adjustment to the gross profits allocated to AHP under the ENBREL
Promotion Agreement. If we are unable to establish such terms with AHP within 90
days of our request, we may at our option reacquire from AHP all marketing
rights to ENBREL in North America and terminate the ENBREL Promotion Agreement,
subject to our payment of certain amounts to AHP. If AHP obtains a biologic
product that is directly competitive with ENBREL through the acquisition of
another company and we reacquire 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 biologic product for a specified
period in North America.

         The ENBREL Promotion Agreement required the parties to form the ENBREL
Management Committee, which is composed of an equal number of representatives
from Immunex and from AHP. The ENBREL Management Committee has responsibility
for such areas as strategic planning, approval of an annual marketing plan and
product pricing.

PRODUCT RIGHTS AGREEMENT

         Immunex, AHP and Cyanamid entered into a Product Rights Agreement dated
July 1, 1998 under which several prior agreements among the parties were
terminated and under which we granted AHP an option to obtain exclusive,
royalty-bearing worldwide licenses to certain of our products for all clinical
indications (PRODUCT CALLS). The Product Rights Agreement terminated all
provisions of our 1996 Research Agreement with AHP and Cyanamid, except for
certain rights of first refusal held by AHP. As a result, our $16.0 million
(adjusted annually for inflation) annual oncology research payment obligation to
AHP under the 1996 Research Agreement is canceled. We completed our payment
obligations to AHP under the 1996 Research Agreement by the payment of $8.2
million in 1998. In addition, our exclusive North American rights to certain
oncology products resulting from AHP research and development, and AHP's
exclusive rights outside North America to certain oncology products resulting
from our research and development, are both terminated.

         Under the Product Rights Agreement, AHP keeps certain rights of first
refusal which had been included in the 1996 Research Agreement. AHP may exercise
these rights of first refusal if our Board decides that Immunex will not market
a product or technology by itself in any part of the world where Immunex has or
acquires marketing rights. AHP's right of first refusal applies to our products
and technologies in all fields, including NUVANCE, but the right of first
refusal does not apply to LEUKINE, MOBIST, CD40-L, IL-15, and certain other
Immunex products.

         The Product Rights Agreement provides AHP with a Product Call for up to
four Immunex products over a period discussed below. The Product Rights
Agreement also provides that AHP must exercise a Product Call for an Immunex
product within certain time periods, or else it will lose the right to use a
Product Call on that Immunex product. Certain Immunex products are excluded from
AHP's Product Calls, including ENBREL, NUVANCE, LEUKINE, MOBIST, CD40-L, IL-15,
any product marketed by Immunex as of July 1, 1998, and certain other products.

         If AHP exercises a Product Call for an Immunex product, AHP and Immunex
will enter into an ELECTED PRODUCT AGREEMENT granting AHP exclusive worldwide
rights (or if less than exclusive worldwide rights are held by us, all of our
rights) to this Immunex product for all indications. Under the Elected Product
Agreement, AHP will pay us an initial fee, milestone payments and royalties on
any future worldwide net sales of this Immunex product after regulatory
approvals. The initial fee, milestone payments and royalties are determined by
the development stage of the product when AHP exercises the Product Call. In
total, the initial fees and milestone payments range from $25.0 million if we
have given the product IND status, up to $70.0 million if we have given notice
to AHP that data from the first positive Phase II clinical trial results are
available for the product. The royalties AHP pays to us increase based on the
development stage of the product and based upon the product attaining certain
annual net sales thresholds.

                                       15

<PAGE>

         Under the Product Rights Agreement, we have the right to keep ownership
to up to two of our products for which AHP has exercised Product Calls
(CONVERSION RIGHT) in exchange for our commitment to pay certain milestone
payments and royalties to AHP and, in the case of the second Conversion Right
only, an initial fee. Our milestone payments to AHP are fixed at one-half the
amount AHP would otherwise pay us for a Product Call, and our royalties payable
to AHP are always fixed at the lowest of the four levels of royalties that AHP
would otherwise pay us after exercising a Product Call. If we exercise one of
our Conversion Rights for an Immunex product, which must be exercised within 30
days after AHP exercises one of its Product Calls, we will enter into a
CONVERTED PRODUCT AGREEMENT with AHP for the product that will provide for
Immunex payments to AHP as discussed above, unless AHP has exercised its option
to obtain a replacement Product Call (as discussed below). We may not exercise
our Conversion Rights on both of the first two Product Calls exercised by AHP.
If we exercise a Conversion Right, AHP may within 30 days elect to obtain one
replacement Product Call from Immunex. If AHP makes this election, AHP waives
its right to receive an initial fee (if applicable), milestone payments and
royalties from us on this converted product. If either party exercises its
rights under the Product Rights Agreement and acquires or retains rights to an
Immunex product, the company that exercised these rights assumes independent
development responsibility for that product, including the payment of all costs
for future product development.

         The Product Rights Agreement also terminates certain prior agreements
between Immunex and Cyanamid. Under one of those terminated agreements, we had
granted to Cyanamid exclusive ownership rights outside North America to certain
oncology products resulting from our research and development efforts. As a
result of the termination, the applicable oncology product rights outside North
America previously granted to Cyanamid have been returned to Immunex in exchange
for royalty payments from Immunex to AHP on future sales of LEUKINE, MOBIST, and
IL-15 outside North America. These products are not currently approved or sold
outside North America. The Product Rights Agreement also terminated the
agreement between Immunex and AHP for the development of MOBIST, under which we
granted AHP exclusive rights to MOBIST outside North America and AHP committed
to paying us a royalty equal to five percent of the net sales of MOBIST outside
North America.

         AHP's rights to exercise Product Calls under the Product Rights
Agreement terminate upon the first to occur of the following events:

      -     AHP has exercised Product Calls and entered into Elected Product
            Agreements for four of our products, subject to our two Conversion
            Rights and AHP's replacement Product Call,

      -     June 30, 2008, with an additional year if we exercise both of our
            Conversion Rights, or

      -     upon the later of June 30, 2003 or the date by which AHP has been
            given a total of eight opportunities to exercise a Product Call,
            except that this number increases to nine opportunities in certain
            circumstances.


      AHP's rights of first refusal to our products and technologies terminate
      upon the later of

      -     June 30, 2003 or

      -     the date that AHP or its affiliates no longer own a majority of our
            stock.

RELATIONSHIP WITH HOECHST AG

         Under a 1984 research and license agreement that has been amended
periodically, Immunex and Hoechst AG, through its former subsidiary Behringwerke
AG, conducted collaborative research in the field of colony stimulating factors
(CSFs). Behringwerke has been assimilated into Hoechst and its separate
corporate existence ceased in 1997. Under the agreement, we 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, we
reacquired worldwide rights to LEUKINE GM-CSF and all related technologies in
consideration of cash payments, licenses and technology transfers relating to
our soluble cytokine receptors, and royalties on sales of LEUKINE. In 1992 we
reacquired Behringwerke's worldwide rights to TNFR, and we subsequently licensed
rights to TNFR outside North America to AHP as part of the 1993 Merger. In April
1998 we reacquired Hoechst Marion Roussel's rights outside North America to our
soluble receptors IL-4R, IL-1R Type I, IL-1R Type II and IL-7R, and as a result
of these transactions, we have agreed to pay Hoechst Marion Roussel royalties on
worldwide sales of products based on TNFR (including ENBREL), IL-4R (including
Nuvance), IL-1R Type I, IL-1R Type II or IL-7R.

                                       16

<PAGE>

MARKETING AND DISTRIBUTION

GENERALLY

         Through our marketing and professional services organization, we
explain the approved uses and advantages of our products to medical
professionals in the U.S. We work to gain access to managed care organization
formularies (lists of recommended or approved medicines and other products
compiled by pharmacists and physicians) by demonstrating the qualities and
treatment benefits of our products. AHP's marketing organization, working
together with us, performs similar activities for ENBREL.

         Marketing of prescription pharmaceuticals depends to a degree on
complex decisions about the scope of clinical trials made years before product
approval. All drugs must complete clinical trials required by regulatory
authorities to show they are safe and effective for treating one or more
particular medical problems. A manufacturer may choose, however, to undertake
additional studies to demonstrate additional advantages of a product, such as a
better safety profile or greater cost effectiveness than existing therapies.

         Those studies can be costly, the results are uncertain, and they can
take years to complete. Balancing these considerations makes it difficult to
decide whether and when to undertake such additional studies. When these studies
are successful, they can have a major impact on approved claims and marketing
strategies.

ENBREL

         Under the ENBREL Promotion Agreement, the Wyeth-Ayerst Laboratories
division of AHP currently markets ENBREL to appropriate customer segments in the
U.S. for the FDA approved indications for ENBREL. These customer segments
include health care providers such as doctors and hospitals, pharmacy benefit
managers and managed care organizations. We also have the right to supplement
AHP's detailing of ENBREL in the U.S. with our own sales force for certain
customer segments. See RELATIONSHIP WITH AHP AND CYANAMID, above. Several
hundred AHP sales representatives currently detail ENBREL in the U.S. In
addition to AHP's and Immunex's coordinated marketing efforts for ENBREL in the
U.S., we have added a group of approximately 30 allied health professionals to
support educational needs of health care providers in the U.S. relating to
ENBREL.

ONCOLOGY PRODUCTS

         We market our other products to health care providers in the U.S.
through an oncology specialty sales force that consists of approximately 108
sales representatives and sales managers. Currently our sales representatives
conduct details in the U.S. for the following products: LEUKINE, NOVANTRONE and
THIOPLEX.

DISTRIBUTION

         We distribute our products through pharmaceutical wholesalers and
specialty distributors, as well as to end users such as oncology clinics,
physicians' offices, hospitals and pharmacies. However, for at least the U.S.
launch period for ENBREL, rather than stocking inventory of product at
wholesalers, we are drop-shipping wholesaler orders for ENBREL directly to
pharmacies for end users. We receive and process product orders 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.

COMPETITION

GENERALLY

         Competition in researching, developing, manufacturing and marketing
biopharmaceuticals and other oncology products is intense. We are marketing a
group of cancer products and simultaneously developing an extensive portfolio of
cytokines, cytokine receptors and other immunological therapeutic products. In
addition, we are collaborating with AHP to market ENBREL for RA in the U.S.
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 us.

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<PAGE>

         The principal means of competition vary among various product
categories. The following technological innovations are all important to success
in our business:

      -     efficacy,

      -     safety,

      -     patients' ease of use, and

      -     cost effectiveness.

Our business focuses on unmet medical needs and improving therapies. Our
emphasis on innovation has led to significant research and development
investments at Immunex. See RESEARCH AND PRODUCT DEVELOPMENT, above.

         We compete with other pharmaceutical firms in performing research and
clinical testing, acquiring patents, developing efficient manufacturing
processes, securing regulatory approvals and marketing the resulting products to
physicians. We believe that our 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. We possess 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 Immunex's scientific resources. We
possess an oncology specialty sales force and offer 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.

         Most of the cancer products that we market 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 we do.

LEUKINE

         Several companies are marketing or developing products that compete or
are expected to compete with LEUKINE, as listed below.

      -     AMGEN. 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.

      -     GENETICS INSTITUTE, INC. In late 1997, Genetics Institute, a
            division of AHP, received FDA approval of NEUMEGA-Registered 
            Trademark-(Interleukin-11) for treatment of thrombocytopenia 
            caused by cancer chemotherapy. Since NEUMEGA is being marketed 
            by Genetics Institute for use in combination with G-CSF in 
            patient populations in which LEUKINE is now being used, sales 
            of LEUKINE may be adversely affected. We are cooperating with 
            AHP to study the use of LEUKINE and NEUMEGA together in clinical
            trials in patients with breast cancer and AML. If such clinical 
            trials are positive, Immunex and AHP intend to pursue an expanded
            label in the U.S. for their respective products, LEUKINE and 
            NEUMEGA, to include the use of such products in combination in 
            certain patient populations.

      -     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. If the FDA approves the Cangene GM-CSF product, sales of
            LEUKINE could be adversely affected.

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NOVANTRONE

         A number of companies, including those listed below, are marketing
products that compete with NOVANTRONE for its current indications or are
expected to compete with NOVANTRONE for a potential new indication in
progressive MS.

      -     PHARMACIA & UPJOHN, INC. (P&U). P&U has been marketing 
            IDAMYCIN-Registered Trademark- (idarubicin) for AML and 
            EMCyt(R) (estramustine) for prostate cancer.

      -     BEDFORD LABORATORIES. Bedford Laboratories, a division of Ben Venue
            Laboratories, Inc., is marketing Cerubidine-Registered Trademark-
            (daunorubicin) for AML.

      -     BIOGEN. Biogen is marketing AVONEX-Registered Trademark- 
            (interferon beta-1a) for relapsing-remitting MS.

      -     BERLEX LABORATORIES, INC. Berlex is marketing 
            BETASERON-Registered Trademark- (interferon beta-1b) for 
            relapsing-remitting MS. Berlex filed for FDA approval of an
            expanded indication for BETASERON for secondary progressive
            MS in June, 1998.

      -     TEVA PHARMACEUTICALS INDUSTRIES LIMITED. Teva is marketing
            COPAXONE-Registered Trademark- (glatiramer acetate for injection) 
            for relapsing-remitting MS.

ENBREL

         A number of companies, including those listed below, are developing
biological products that are expected to compete with ENBREL. If any of these
products are approved by the FDA for RA, sales of ENBREL could be adversely
affected.

      -     CENTOCOR INC. Centocor is developing a monoclonal antibody known as
            REMICADE-Registered Trademark-(infliximab), an anti-inflammatory 
            agent that has completed Phase III trials in RA. The FDA approved 
            REMICADE for treatment of Crohn's disease in August 1998. Centocor 
            filed for FDA approval of an expanded indication for REMICADE for 
            RA in January 1999. Unlike ENBREL, which is administered by 
            subcutaneous injection, REMICADE must be given intravenously. 
            Since REMICADE is given intravenously, it is likely that REMICADE 
            will be covered by Medicare. Since Medicare presently will not 
            reimburse for drugs that are self-administered, we have not 
            assumed that Medicare would cover prescriptions for ENBREL. As a
            result, REMICADE may have a reimbursement advantage for patients 
            whose drug therapies are covered by Medicare.

      -     AMGEN. Amgen is developing ANTRIL(TM) (anakinra), a IL-1RA (receptor
            antagonist) that is in Phase I/II clinical trials, as well as a
            TNFbp (binding protein) that is in Phase I clinical trials.

      -     BAYER AG AND BASF AG. Both Bayer and BASF are developing monoclonal
            antibodies or antibody fragments that bind to TNF.

      -     ROCHE. 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 has continued clinical development of
            lenercept in sepsis.

      -     SMITHKLINE BEECHAM PLC (SKB). SKB is developing a second generation
            anti-CD4 monoclonal antibody (IDEC-151) in collaboration with IDEC
            Pharmaceuticals Corporation, which is in Phase II clinical trials
            for RA. However, SKB announced the suspension of these clinical
            trials in January 1999.

Other companies, as listed below, have developed non-biological products for
patients with RA. We do not currently expect such products to compete with
ENBREL in patients with advanced RA, but such products may compete directly with
ENBREL in patients with earlier stage RA. ENBREL is not currently approved by
the FDA in patients with earlier stage RA. Due to its mechanism of action, we
believe that ENBREL may be effective in combination with some of these products
in development, as well as with some existing 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.

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<PAGE>

      -     HOECHST MARION ROUSSEL. Hoechst Marion Roussel received FDA approval
            of ARAVA-Registered Trademark- (leflunomide) in September 1998 for 
            the treatment of active RA in adults to reduce signs and symptoms 
            and to retard structural damage as evidenced by x-ray erosions 
            and joint space narrowing. ARAVA is an oral treatment for RA, and
            it is priced significantly less than ENBREL.

      -     MONSANTO COMPANY. Monsanto received FDA approval of 
            CELEBREX-Registered Trademark- (celecoxib) in December 1998 for  
            relief of the signs and symptoms of osteoarthritis and adult RA. 
            CELEBREX is a COX-2 inhibitor, and is priced significantly less 
            than ENBREL. CELEBREX is an oral treatment and is co-promoted by 
            G.D. Searle & Co., the pharmaceutical business unit of Monsanto, 
            and Pfizer Inc. COX-2 inhibitors are a new class of drugs for 
            arthritis and pain that are generally as effective as current 
            initial RA therapy with non-steroidal anti-inflammatory drugs 
            (NSAIDS).

      -     MERCK. Merck is developing a COX-2 inhibitor known as VIOXX(TM)
            (MK-966). Vioxx has completed Phase III clinical trials and Merck
            has filed for FDA approval of this compound.

GENERIC ONCOLOGY PRODUCTS

         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. We
currently face aggressive generic competition from numerous suppliers on
methotrexate injectable and leucovorin calcium, resulting in lower prices and
lower sales. THIOPLEX (thiotepa for injection) may be subject to generic
competition in the future.

RAW MATERIALS AND SUPPLY

         Along with our third-party manufacturers, we purchase raw materials
essential to our business in the ordinary course of business from numerous
suppliers. Substantially all the raw materials used to manufacture our
recombinant protein products and other products are available from multiple
sources. No serious shortages or delays in obtaining raw materials were
encountered in 1998.

         All finished dosage forms of ENBREL are manufactured by BI Pharma and
packaged by a third-party contract packager. We manufacture all LEUKINE bulk
drug substance, which is then filled and finished by third parties. All finished
dosage forms for our non-biological oncology products are manufactured by AHP
subsidiaries or sourced by AHP from third-party manufacturers. Bulk active raw
materials for our 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.

         We presently do not have our own fill and finish capabilities for
producing and labeling final drug products from bulk drug substances or bulk
proteins. We rely upon unaffiliated third parties and AHP for the fill and
finish of all drug products we market.

         In November 1998, Immunex and AHP entered into a long-term ENBREL
Supply Agreement with BI Pharma to manufacture commercial quantities of ENBREL.
Our sales of ENBREL are entirely dependent on BI Pharma's manufacture of the
product. Before the completion of the ENBREL Supply Agreement, we had operated
under short-term arrangements with BI Pharma to manufacture quantities of
commercial inventory of ENBREL sufficient to launch the product in the U.S., and
we had made significant purchase commitments to BI Pharma for inventory of
ENBREL. Immunex and AHP have made additional significant purchase commitments to
BI Pharma under the ENBREL Supply Agreement to manufacture commercial inventory
of ENBREL.

         Under the ENBREL Supply Agreement, BI Pharma has reserved certain
production capacity for ENBREL, and our purchase commitments for ENBREL are
manufactured from that reserved production capacity. The ENBREL Supply Agreement
contains provisions for increasing or decreasing BI Pharma's reserved production
capacity for ENBREL, subject to certain lead-times and other related terms.
Because of the long lead-time required for ordering raw materials for ENBREL and
for the scheduling of BI Pharma's facilities, we are required to submit a
rolling three-year forecast for the manufacture of the bulk drug for ENBREL, and
a rolling forecast for a shorter period for the number of finished vials of
ENBREL to be manufactured from the bulk drug. A significant portion of each of
the above forecasts becomes a purchase commitment when issued to BI Pharma.
Also, we have relocated one of our senior executives in product quality to
Germany to facilitate technical interactions with BI Pharma related to ENBREL.

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<PAGE>

         BI Pharma's pricing of ENBREL is dependent on certain production
assumptions that the parties have made relating to the production efficiency of
manufacturing ENBREL. The pricing for ENBREL is also subject to certain volume
discounts depending on the amount of ENBREL ordered during each calendar year.
BI Pharma's volume discount pricing of ENBREL to us will be firm throughout
1999, but will be subject to annual increases for inflation and also subject to
annual adjustments depending on certain production efficiencies and the actual
cost of producing ENBREL. Immunex and AHP will be responsible for substantial
payments to BI Pharma if Immunex and AHP fail to utilize a certain percentage of
the production capacity that BI Pharma has reserved for ENBREL each calendar
year, or if the ENBREL Supply Agreement is terminated prematurely under certain
conditions.

         Since ENBREL was recently launched in the U.S. in November 1998, the
market demand for ENBREL in the U.S. has not yet matured and cannot be predicted
with certainty. We are not certain that BI Pharma will be able to successfully
manufacture sufficient inventory of ENBREL to satisfy both the commercial demand
for ENBREL in the U.S. as estimated in our current U.S. marketing forecasts and
the demand for ENBREL outside the U.S. Our sales of ENBREL could be adversely
affected if we experienced production shortages of ENBREL within BI Pharma's
existing reserved production capacity for ENBREL. We are actively working with
BI Pharma to ensure that it will have sufficient manufacturing capacity to meet
worldwide commercial demand for ENBREL. However, we are not certain that BI
Pharma has or can acquire sufficient production capacity for ENBREL in a timely
manner should additional indications for ENBREL be approved by the FDA and other
regulatory authorities around the world, or should commercial demand for ENBREL
exceed BI Pharma's ability to manufacture sufficient commercial inventory of
ENBREL.

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.

         Data from human clinical trials are submitted to the FDA in a new drug
application (NDA) for drugs or a biologics license application (BLA) for
biologics. For products to be marketed in Canada, these submissions are made to
the Canadian Health Protection Bureau (CHPB) in a new drug submission (NDS).
Data from human clinical trials for new indications or uses for approved
products are submitted to the FDA in a supplemental new drug application (SNDA)
for drugs and in a supplemental biologics license application (SBLA) for
biologics. Data regarding manufacturing and bioequivalence of generic drug
products are submitted to the FDA in an abbreviated new drug application (ANDA)
and to the CHPB in an abbreviated NDS (A/NDS). Preparing any of these regulatory
submissions involves considerable data collection, verification and analysis.

         The federal government regulates certain recombinant DNA research
activity through National Institutes of Health guidelines for research involving
recombinant DNA molecules (NIH GUIDELINES). We comply 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.

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

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PATENTS, LICENSES AND TRADEMARKS

GENERALLY

         Patents, trade secrets and other proprietary rights are very important
to Immunex. We have obtained U.S. and foreign patents and have filed
applications for additional U.S. and foreign patents covering numerous aspects
of our technology. We cannot be certain that any of our pending or future
applications will result in issued patents or that the rights granted thereunder
will provide competitive advantage to Immunex or our licensees. We also rely on
trade secrets, unpatented proprietary know-how and continuing technological
innovation to develop and maintain our competitive position. We cannot be
certain that others will not acquire or independently develop the same or
similar technology, or that Immunex'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 our patents, as well as the possibility of patents being granted to
others, we cannot be certain that the patents owned by or licensed to us and our
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 sufficient
legal precedents concerning the validity and enforceability of certain types of
biotechnology patent claims make it difficult to predict accurately the breadth
or degree of protection that patents will afford Immunex's or our 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, we cannot be certain that our
patents will afford protection against competitors with similar inventions, nor
can we be certain that our patents will not be infringed or designed around by
others or that others will not obtain patents that we would need to license or
design around.

         It is our policy to respect the valid patent rights of others. We have
obtained patent licenses from various parties covering technologies relating to
our products. However, we 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 our products.

         We intend to pursue 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 significant inventions,
discoveries and developments in our various areas of research.

PATENTS ON BIOLOGICAL PRODUCTS

         GM-CSF. We have been issued three U.S. patents covering an altered, or
analog, form of GM-CSF (sargramostim), that we market under the LEUKINE
trademark. From July 1990 to January 1998, a GM-CSF interference proceeding had
been pending in the U.S. Patent and Trademark Office (USPTO) directed to human
GM-CSF DNAs. The interference had been declared between competing U.S. patent
applications filed by or licensed to Immunex, Novartis AG, Research Corporation
Technologies, Inc. (RCT), Schering-Plough, Inc. 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 had 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, we agreed to concede
priority to Novartis in the interference, and Novartis agreed not to assert its
GM-CSF patent rights to prevent us 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, we agreed to grant
Novartis immunity from suit under certain patent rights we own relating to
methods of using GM-CSF, and to pay Novartis royalties in respect of our future
sales of Leukine. In addition, as part of the resolution of the GM-CSF
interference among the various parties, in early 1998 we paid Genetics
Institute, Inc. $5.0 million.

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<PAGE>

         ENBREL. ENBREL (etanercept, 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." We believe that we were the first to isolate a
recombinant DNA encoding p80 TNFR and also the first to express the protein
using recombinant DNA technology. We have 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. We were granted a European patent in
December 1995 covering p80 TNFR DNAs, proteins and related technology. Two other
companies, however, BASF and Yeda Research & Development Company, Ltd. (YEDA),
filed patent applications disclosing partial amino acid sequence information of
certain TNF-binding proteins (TBPS) shortly prior to the time we filed our
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. In January 1999, Immunex entered into a settlement agreement with
Ares-Serono International S.A., a Swiss company, and its affiliate Inter-Lab
Ltd., an Israeli company (collectively, SERONO) under which Immunex and Serono
agreed to settle certain potential disputes concerning patents and patent
applications filed by Yeda and controlled by Serono that relate to TBPs.
Pursuant to the settlement, Serono has agreed not to assert any of the foregoing
patent rights against the manufacture, use or sale of ENBREL in any territory in
consideration of the payment by Immunex to Serono of certain fees, and royalties
for a specified term in respect of the net sales of ENBREL sold or manufactured
in designated countries where Yeda's patent rights have been filed.

         Roche and Amgen, through Synergen Inc., also filed patent applications
directed to p80 TNFR DNAs after the date we filed our patent application. No
patents covering full-length TNFR or the intact extracellular domain of TNFR
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 our granted
patents covering p80 TNFR. We have filed an opposition to this Amgen patent.
Since an application giving rise to our patents covering TNFR and disclosing the
relevant DNA sequence was filed earlier than Synergen's first application
disclosing the relevant DNA sequence, we believe that the Amgen patent cannot be
legally asserted to cover TNFR:Fc, which includes the sequences patented by us.
If BASF, Roche or Amgen were able to validly assert TNFR patents to cover
TNFR:Fc, Immunex's or AHP's commercialization of ENBREL could 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
us. We have also been granted a royalty-bearing worldwide exclusive license
under patent rights jointly owned by Hoechst and Massachusetts General Hospital
(HOECHST/MASS GENERAL) 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 certain processes for making
such proteins, and has also filed corresponding European applications that have
not yet been granted. Roche has filed patent applications with claims covering
TNFR:Fc fusions, which were filed after the Hoechst/Mass General patent
applications licensed to Immunex. A patent containing such claims has been
granted to Roche in Japan. We believe that an interference may be declared in
the U.S. involving the Hoechst/Mass General, U.T. and Roche patents and patent
applications. We have 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 ENBREL, or if additional TNFR:Fc patents were
granted to Roche, Immunex's or AHP's commercialization of ENBREL could 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
our intention to mount a vigorous defense should any patent be asserted against
activities relating to ENBREL, 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 ENBREL, and, if
so, the outcome of any litigation or licensing negotiations.

         MOBIST FLT3-L. In 1996 we were granted a U.S. patent covering Flt3-L
DNA. In 1998, we were granted a U.S. patent covering methods of using Flt3-L. We
are currently seeking other U.S. and foreign patents for Flt3-L proteins, DNAs
and various methods of using Flt3-L.

         NUVANCE IL-4R. We have been granted a total of five U.S. patents
relating to IL-4R proteins and DNAs, methods for inhibiting IL- 4R mediated
immune or inflammatory responses, and antibodies immunoreactive with IL-4R.
IL-4R patents have also been granted to us in Europe and certain other foreign
countries. We have additional U.S. and foreign patent applications pending
relating to IL-4R.

         CD40-L. In 1998 we were granted a U.S. patent for soluble fusion
proteins that include soluble portions of CD40-L and methods of making them. We
have also received a U.S. patent relating to the use of soluble CD40-L to treat
neoplastic diseases. We have additional U.S. and foreign patent applications
pending relating to CD40-L.

                                       23

<PAGE>

         TRAIL. In 1998 we were granted a U.S. patent covering the DNA encoding
TRAIL. This is believed to be the first U.S. patent granted for this molecule.
We have additional U.S. and foreign patent applications pending relating to
TRAIL.

         IL-1R TYPE II. In 1998 we were granted a U.S. patent covering methods
of using soluble IL-1R Type II to regulate an IL-1 mediated immune or
inflammatory response in a mammal. Previously we have received two U.S. patents
covering the DNA and the protein for IL-1R Type II. We have additional U.S. and
foreign patent applications pending relating to IL-1R Type II.

         TACE. In 1998 we were granted a U.S. DNA and protein patent on TACE,
which includes claims to methods of using TACE to discover TACE inhibitors. This
is believed to be the first patent issued for this molecule. We have additional
U.S. and foreign patent applications pending relating to TACE. We have licensed
our TACE technology to AHP and are working together to develop and test small
molecule TACE inhibitors. See RELATIONSHIP WITH AHP AND CYANAMID, above.

PATENTS ON NON-BIOLOGICAL ONCOLOGY PRODUCTS

         NOVANTRONE. 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.

         THIOPLEX. AHP holds a manufacturing process patent on thiotepa in the
U.S. and Canada.

         METHOTREXATE, LEUCOVORIN CALCIUM, AMICAR. Although methotrexate is the
subject of certain patents held by AHP, the protection afforded by such patents
is not material. We have no patent protection on leucovorin calcium or AMICAR.

PATENT AND TECHNOLOGY LICENSES

          Under our royalty-bearing patent and technology license agreements, we
are obligated to pay royalties on sales of products produced using the licensed
technologies. Following the expiration of the Cohen-Boyer patents in 1997, we
are no longer obligated to pay royalties under such patents for our recombinant
DNA based products. However, we continue to pay royalties to university
licensors of certain yeast and mammalian-cell expression technologies employed
in making LEUKINE and certain other products. We are also obligated to pay
royalties to Hoechst, Novartis and RCT on sales of LEUKINE, and have agreed to
pay royalties to Hoechst, Mass General and Serono on sales of ENBREL. We 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 Immunex's ability to
successfully commercialize ENBREL. We cannot be sure, however, that patent
license negotiations with any licensors can be successfully completed, or that
the total royalties payable under any agreements resulting from such
negotiations will not have a material adverse effect on our business.

TRADEMARKS

         We own all of our trademarks used in our business.

PROPERTIES

         Our 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 our 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 five-year renewal options at market value. In addition
to our primary facility, we lease a total of approximately 113,000 square feet
of additional office and research space in several other buildings located in
downtown Seattle. The total current rent payments for the foregoing facilities
was approximately $4.0 million in 1998 and is forecast to be approximately $4.7
million in 1999.

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         We own 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 ENBREL for our clinical trials in 1997; however, such facilities lack
sufficient capacity to produce commercial quantities of ENBREL. See RAW
MATERIALS AND SUPPLY, above. In 1999, we intend to begin construction of a new
process development facility at our site in Bothell, Washington. This new
process development facility is expected to speed process improvements and
development of our recombinant products.

         We are currently exploring several alternatives in order to meet our
long-term facility needs. We own approximately 20 acres of undeveloped land
adjacent to our manufacturing and development center in Bothell, Washington. In
addition, in 1998 we completed the purchase of a 29-acre parcel of land located
in Seattle, Washington, known as Terminal 88, for the possible long-term
development of a new campus for our corporate offices and research facilities.

PERSONNEL

         In our innovation-intensive business, our employees are vital to our
success. We believe we have good relationships with our employees, and none of
our employees are covered by a collective bargaining agreement. As of December
31, 1998, we employed a total of 1,007 people in our operations, of whom 141
have doctoral degrees. The employee count for three of our key functions is as
follows:

      -     Research and development--441,

      -     Manufacturing--179, and

      -     Sales and marketing--186.

         Each of our employees has entered into a confidentiality agreement that
contains terms requiring disclosure of ideas, developments, discoveries or
inventions conceived during employment, and assignment to us of all proprietary
rights to these matters.

         Our ability to maintain our competitive position will depend, in part,
upon our continued ability to attract and keep qualified scientific and
managerial people, and certain key employees. Competition for these people is
intense, and there can be no assurance that we will be able to attract and keep
these people.

RISK FACTORS

         Our disclosure and analysis in this report and in our 1998 Annual
Report to shareholders contain some forward-looking statements. Forward-looking
statements provide our current expectations or forecasts of future events. In
particular, these include statements relating to future actions, prospective
products or product approvals, future performance or results of current and
anticipated products, sales efforts, expenses, the outcome of contingencies such
as legal proceedings, and financial results. From time to time, we also may
provide oral or written forward-looking statements in other materials we release
to the public. Any or all of our forward-looking statements in this report, in
the 1998 Annual Report and in any other public statements we make may turn out
to be wrong. Inaccurate assumptions we might make and known or unknown risks and
uncertainties can affect our forward-looking statements. Consequently, no
forward-looking statement can be guaranteed and our actual results may differ
materially.

         We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make on related
subjects in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
Annual Reports on Form 10-K. Also note that we provide the following cautionary
discussion of risks, uncertainties and possibly inaccurate assumptions relevant
to our business. These are factors that we think could cause our actual results
to differ materially from expected and historical results. Other factors besides
those listed here could also adversely affect us.

OUR FUTURE OPERATING RESULTS ARE UNCERTAIN AND LIKELY TO FLUCTUATE

         We have had a history of operating losses and future operating
performance is never certain. Our accumulated deficit at December 31, 1998 is
$479.0 million. We anticipate that our operating and capital expenditures will
increase significantly in 1999 and in future years due primarily to:

      -     Spending to support the launch and sale of ENBREL,

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<PAGE>

      -     Working capital requirements for inventory of ENBREL,

      -     Growth in research and development expenses as we progress with the
            development of our clinical and preclinical product candidates,

      -     Increased purchases of capital equipment including construction of a
            new process development facility in 1999, and

      -     Possible development of Terminal 88 in Seattle, Washington into our
            new corporate offices and research facilities.

In addition, our current production facilities cannot produce sufficient
quantities of some of our products for all clinical trials or commercial sales,
including ENBREL. If we decide to add manufacturing capability, we will incur
significant capital expenditures.

         Our ability to generate sufficient cash flow to fund such activities is
dependent on our ability to improve operating performance. This in turn depends,
among other things, on increasing sales of our existing products, especially
ENBREL, and successfully completing product development efforts and obtaining
timely regulatory approvals of our lead clinical products. We may also decide to
raise money through various financing transactions or partner with other
companies to license our technology or share the development of our products.

         Our accumulated cash reserves and cash generated from operations is
becoming increasingly dependent on ENBREL and our other products and
technologies. We may not successfully develop and commercialize these products
and technologies in the future. Further, our assumptions regarding the levels of
revenue and expenses for these products and technologies may be inaccurate.

OUR PRECLINICAL AND CLINICAL TESTING RESULTS ARE UNCERTAIN

         Before obtaining regulatory approvals for the sale of any of our new
products, we must subject these products to extensive preclinical and clinical
testing to demonstrate their safety and effectiveness for humans. Results of
initial preclinical and clinical testing are not necessarily indicative of
results to be obtained from later preclinical and clinical testing. Furthermore,
we may not complete our clinical trials of products under development and the
results of the trials may fail to demonstrate the safety and effectiveness of
such products to the extent necessary to obtain regulatory approvals, which
could delay or prevent regulatory approval of such products. Other companies in
the biotechnology industry have suffered significant setbacks in advanced
clinical trials, even after achieving promising results in earlier trials.

         The rate of completion of clinical trials depends on, among other
factors, the enrollment of patients. Enrollment of patients depends on such
factors as 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. Any delay in planned patient enrollment in our
current or future clinical trials may result in increased costs, program delays
or both.

WE MAY NOT DEVELOP NEW PRODUCTS SUCCESSFULLY

         Our long-term profitability depends on the successful commercialization
of our existing products, especially ENBREL, and on the development and
commercialization of products currently under development. We may not develop
these products successfully or receive regulatory approval. Furthermore, even if
these products are developed and approved, we or our contract manufacturers may
fail to manufacture these products or our currently marketed products in
quantities necessary for commercialization, or these products may not receive
market acceptance.

GOVERNMENTAL REGULATORY AGENCIES MAY NOT APPROVE OUR PRODUCTS

         Because our products are pharmaceutical products, the FDA and similar
governmental agencies in foreign countries impose substantial requirements on
our products before they permit us to manufacture, market and sell them to the
public. To meet these requirements, we must spend substantial resources on
costly and time-consuming procedures, such as lengthy and detailed laboratory
tests and clinical trials. It typically takes years to meet these requirements
for a product and the length of time involved depends on the type, complexity
and novelty of the product. We cannot predict when we might submit product
applications or submissions for FDA or other regulatory review for our products
under development.

         The FDA or other governmental agencies may approve only certain uses of
our products or may subject our products to additional testing and surveillance
programs. In addition, the FDA or other governmental agencies may withdraw or
limit their approval for noncompliance with regulatory standards or the
occurrence of unforeseen problems following initial marketing.

                                       26

<PAGE>

         Governmental regulation may cause us to delay marketing new products
for a considerable period of time or spend more resources to meet additional
requirements. Such governmental regulation ultimately may provide a competitive
advantage to our competitors. The FDA or other governmental agencies may not
approve on a timely basis, if at all, some or all of our future products or may
not approve some or all of our applications for additional indications for our
previously approved products. In addition, if another company that is developing
a product similar to one of our products suffers adverse clinical results, this
could have a negative impact on the regulatory process and timing for our
product. If we fail to obtain regulatory approval for one of our products, or
even if such approval is delayed, our marketing of this and our other products,
as well as our liquidity and capital resources, could be adversely affected. In
addition, we may be adversely affected by future legislation or administrative
action that results in new governmental regulations. We are 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 our research. See GOVERNMENT REGULATION, above.

WE MAY NOT GET REIMBURSED FROM THIRD PARTIES

         Our ability to sell our products depends substantially on government
authorities, private health insurers and other organizations, such as health
maintenance organizations (HMOS), reimbursing most of the costs of our products
and related treatments. To date, we have been able to obtain sufficient
reimbursement for most of our oncology products, but we may not be able to
obtain similar levels of reimbursement for ENBREL or for our future products. We
may not receive sufficient government and third-party reimbursement to permit us
to realize an appropriate return on our investment in developing new therapies,
including ENBREL. Since Medicare presently will not reimburse for drugs that are
self-administered, we have assumed that Medicare will not cover prescriptions
for ENBREL. Government authorities or third parties (or both), may decrease the
amount of reimbursement we currently receive for certain products or that we
anticipate we will receive for future products. Finally, low reimbursement
amounts may reduce the demand for, or the price of, our products, adversely
affecting our business.

         As a part of their efforts to control health care costs, government and
other third-party payors are limiting their coverage of, 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 our therapeutic products, including ENBREL, we will have great
difficulty marketing these products.

         Several recent trends may lower the price for therapeutic products,
including:

      -     Third-party payors are challenging the prices charged for medical
            products and services,

      -     Managed healthcare is increasing in the U.S.,

      -     Organizations, such as HMOs, that control or significantly influence
            the purchase of healthcare services and products, are growing,

      -     Legislative proposals are being introduced to reform healthcare or
            reduce government insurance programs, and

      -     Healthcare providers are instituting cost-containment measures,
            including practice protocols and guidelines and clinical pathways.

         All of these trends could affect our ability to sell our existing and
future products. We cannot predict whether additional legislation or regulation
relating to the healthcare industry or third-party coverage and reimbursement
will be enacted in the future or the effect such legislation or regulation could
have on our business.

WE HAVE A LIMITED MANUFACTURING CAPABILITY

         Currently, we do not ourselves possess sufficient manufacturing
capacity to manufacture our forecasted commercial requirements for ENBREL or all
of our mammalian cell-based protein products under development. In 1998, Immunex
and AHP entered into a long-term ENBREL Supply Agreement with BI Pharma to
manufacture commercial inventory of ENBREL. BI Pharma is our sole supplier of
ENBREL. We do not know whether BI Pharma will be able to successfully
manufacture sufficient quantities of ENBREL for commercial supply. Therefore, we
may have to invest substantial sums to construct

                                       27

<PAGE>

facilities sufficient to meet our long-term manufacturing requirements for
ENBREL and other products, or to assist BI Pharma to increase its manufacturing
capacity for ENBREL. See RAW MATERIALS and SUPPLY, above.

WE ARE DEPENDENT ON OTHERS

         AHP either manufactures through its subsidiaries or sources through
third-party manufacturers all finished dosage forms and bulk active raw
materials for our non-biological oncology products, including Novantrone. AHP is
dependent on a single supplier for all of the essential raw material for AMICAR.
Substantially all the raw materials used to manufacture our recombinant protein
products are available from multiple sources. We also rely upon an unaffiliated
third party and AHP for the fill and finish of all drug products we market. 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 us,
we would be unable to obtain these products for an indeterminate period of time.

         We are entirely dependent upon BI Pharma for manufacturing our
commercial inventory of ENBREL. Since ENBREL was recently launched in the U.S.
in November 1998, the market demand for ENBREL in the U.S. has not yet matured
and cannot be predicted. We are not certain that BI Pharma will be able to
successfully manufacture sufficient inventory of ENBREL to satisfy both the
commercial demand for ENBREL in the U.S. as estimated in our current U.S.
marketing forecasts and the demand for ENBREL outside the U.S. As a result, our
sales of ENBREL could be adversely affected if we experienced production
shortages of ENBREL within BI Pharma's existing reserved production capacity for
ENBREL. We are actively working with BI Pharma to ensure that it will have
sufficient manufacturing capacity to meet worldwide commercial demand for
ENBREL. However, we are not certain that BI Pharma has or can acquire sufficient
production capacity for ENBREL in a timely manner should additional indications
for ENBREL be approved by the FDA and other regulatory authorities around the
world, or should existing commercial demand for ENBREL exceed BI Pharma's
ability to manufacture sufficient commercial inventory of ENBREL. If BI Pharma
ceases production or otherwise fails to supply ENBREL, we would be unable to
obtain this product for an indeterminate period of time. See RAW MATERIALS AND
SUPPLY, above.

THE STATUS OF OUR PATENTS AND PROPRIETARY RIGHTS IS UNCERTAIN

         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. We, like other biotechnology and pharmaceutical firms, apply for,
prosecute and maintain patents for our products and technologies. The
enforceability of patents issued to biotechnology and pharmaceutical firms,
however, often is highly uncertain. The legal considerations surrounding the
validity of patents in our field are in a state of transition. In the future,
the historical legal standards surrounding questions of the validity of patents
may not be applied and the current defenses as to issued patents may not protect
our patents. In addition, the degree and range of protection a patent affords is
uncertain. Finally, we may be unsuccessful in obtaining patents and in avoiding
infringements of patents granted to others.

         While we pursue patent protection for products and processes where
appropriate, we also rely on trade secrets, know-how and continuing
technological advancement to develop and maintain our competitive position.

         Our policy is to have each employee enter into a confidentiality
agreement that contains provisions prohibiting the disclosure of confidential
information to anyone outside Immunex. These confidentiality agreements also
contain provisions requiring disclosure of ideas, developments, discoveries or
inventions conceived during employment, and assign to us all proprietary rights
to such matters. Research and development contracts and relationships with our
scientific consultants provide access to aspects of our know-how that are
protected generally under confidentiality agreements with the parties involved.
These confidentiality agreements may not be honored and we may be unable to
protect our rights to our unpatented trade secrets. Moreover, other people or
entities may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets.

         We may be required to obtain licenses to patents or other proprietary
rights from third parties. Licenses required under any patents or proprietary
rights may not be made available on terms acceptable to us, if at all. If we do
not obtain the required licenses, we could encounter delays in product
development while we attempt to redesign products or methods. We also could
discover that the development, manufacture or sale of products requiring such
licenses is simply not possible. In addition, we could incur substantial costs
in defending any patent litigation brought against us or in asserting our patent
rights, including those licensed to us by others, in a suit against another
party. Our competitors have obtained or are seeking patents which, if issued or
granted, may have a material adverse effect on our ability to successfully
commercialize ENBREL. See PATENTS, LICENSES AND TRADEMARKS, above.

                                       28

<PAGE>

TECHNOLOGICAL CHANGE AND COMPETITION

         We are 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. Many companies and institutions, both public and
private, exist that are engaged in developing synthetic pharmaceuticals and
biotechnological products for human therapeutic application, including the
applications we have targeted.

         A number of our competitors have substantially more capital, research
and development, regulatory, manufacturing, marketing, human and other resources
and experience than we have. Furthermore, large pharmaceutical companies have
been consolidating with each other, which has increased the resources available
to them and concentrated the intellectual property assets in a few such
competitors. Such competitors may develop products that are more effective or
less costly than any of our current or future products. Such competitors also
may produce and market their products more successfully then we do. These
competitors may develop technologies and products that are more effective than
any we develop or that render our technology and products obsolete or
noncompetitive. See COMPETITION, above.

WE MAY HAVE PRODUCT LIABILITY

         Product liability is a major risk in the testing and marketing of
biotechnology and pharmaceutical products. This risk exists in human clinical
trials and for products that receive regulatory approval for commercial sale. We
may incur significant product liability exposure. We currently maintain product
liability insurance coverage, which our management believes to be adequate,
based on our product portfolio, sales volumes and claims experience to date and
we intend to continue such coverage. In the future, insurers may not offer us
product liability insurance, may raise the price of such insurance or may limit
the coverage of such insurance. In addition, we may not be able to maintain such
insurance in the future on acceptable terms and such insurance may not provide
us with adequate coverage against potential liabilities either for clinical
trials or commercial sales. Successful product liability claims in excess of our
insurance may adversely affect our business.

WE MAY HAVE ENVIRONMENTAL LIABILITY

         Our research and development activities involve the controlled use of
hazardous materials, chemicals, viruses and radioactive compounds. We are
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 we believe that our safety procedures for the handling and
disposal of such materials comply with the standards prescribed by such laws and
regulations, we cannot eliminate the risk of accidental contamination or injury
from these materials.

         In the event of such an accident, we could be held liable for any
damages that result and any such liability could exceed our resources. We may be
required to incur significant costs to comply with environmental laws and
regulations in the future. Current or future environmental laws or regulations
may materially adversely affect our operations, business or assets. See
GOVERNMENT REGULATION, above.

YEAR 2000 ISSUE

         The "Year 2000" issue is the result of computer programs being unable
to differentiate between the year 1999 and the year 2000 because they were
written using two digits rather than four to define the applicable year. This
could result in a system failure or miscalculations with respect to current
programs.

         We are heavily dependent upon the proper functioning of our own
computer systems and software applications. Any failure or malfunctioning on the
part of these or other systems could adversely affect our business in ways that
we currently do not know and cannot discern, quantify or otherwise anticipate.

         We have established a Year 2000 Committee which has determined that
certain software, hardware and equipment will have to be modified or replaced so
that they will properly utilize dates beyond December 31, 1999. See MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - YEAR
2000, below.

         We anticipate that the required modifications and replacements of our
critical systems and applications will be completed prior to the Year 2000.
However, we may be unable to implement these modifications and replacements and,
even if we do make these modifications and replacements, they may not be
effective in addressing the problems identified. If the required modifications
and replacements are not completed in a timely manner or are not successful, our
business could be materially affected.

                                       29

<PAGE>

         We currently only have limited information on Year 2000 compliance by
our key third-party suppliers, service providers, distributors, wholesalers and
other entities with which we have a business relationship (BUSINESS PARTNERS).
Our Business Partners' operations could be adversely affected if they do not
successfully and timely achieve Year 2000 compliance. If our Business Partners
experience Year 2000 compliance issues, then our business could be materially
affected.

         We cannot guarantee that our plan will adequately address the Year 2000
issue in a timely manner or that we will be able to modify and replace any or
all of our critical systems and applications in accordance with our plan. In
addition, we cannot assure that any modifications or replacements will
effectively address the Year 2000 issue. If we do not complete the required
upgrades on time, or if they are not successful, our business could be
materially affected. Furthermore, we cannot guarantee that other companies will
make necessary, timely and successful conversions to their systems on which our
systems depend. Although we intend in the second half of 1999 to develop a
contingency plan detailing actions that we will take in the event the execution
of our Year 2000 plan is not successfully completed on a timely basis, we have
not yet developed such a plan.

ITEM 2. PROPERTIES

         See PROPERTIES, above, under Item 1.

ITEM 3. LEGAL PROCEEDINGS

         We are involved in an interference involving a patent issued to Yeda
that discloses and claims certain TBP multimers. Because of the license with
Serono discussed above, we do not believe that an adverse result in this
interference would have a material adverse effect on our operations or
prospects. See PATENTS, LICENSES AND TRADEMARKS, above. However, additional
interferences may be declared involving other products or technologies being
developed by Immunex, including ENBREL, MOBIST or CD40-L.

         We are 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 our shareholders during the
fourth quarter of our fiscal year ended December 31, 1998.

                                       30

<PAGE>

                                     PART II


ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS

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

         The following table sets forth for each period indicated the high and
low sales prices for Immunex's common stock as quoted on The Nasdaq Stock
Market. Share prices shown are before our two-for-one stock split effective for
shareholders of record on March 11, 1999.

<TABLE>
<CAPTION>
                                    1998                          1997       
                           ------------------------   --------------------------
                             HIGH          LOW             HIGH          LOW  
                           ---------     ----------   -----------   ------------
<S>                        <C>           <C>          <C>             <C>
       1st Quarter           75 3/8       47 1/8           33           18 7/8

       2nd Quarter           73 5/8       57 1/2           39           23 1/4

       3rd Quarter           73 1/2       48               68 1/4       32 7/8

       4th Quarter           126 3/8      47 7/8           80 3/8       45 1/4
</TABLE>

         There were approximately 1,142 holders of record of Immunex's common
stock as of March 9, 1999, 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.

         We have not paid any cash dividends since our inception. We currently
do not intend to pay any cash dividends in the foreseeable future, but intend to
retain all earnings, if any, for use in our business operations.

         In connection with our stock option plan, we have 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 AHP AND CYANAMID in Item 1,
above. Immunex issued 111,283 shares of common stock to AHP for $6,877,000 in
1998 and issued 28,223 shares of common stock to AHP for $1,280,000 in 1997. We
believe that the sale of these securities was exempt from registration under the
Securities Act of 1933, as amended, under Section 4.2 thereof.


ITEM 6.       SELECTED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

The following table shows selected financial data for the fiscal years 1994 to
1998.

<TABLE>
<CAPTION>
                                             1998            1997            1996           1995            1994
                                         -----------     -----------     -----------    -----------     -----------
<S>                                      <C>             <C>             <C>            <C>             <C>        
     Revenues                            $   243,450     $   185,297     $   151,198    $   156,616     $   144,332
     Net income (loss)                           986         (15,772)        (53,632)       (11,300)        (33,104)
     Net income (loss) per common
        share, basic and diluted                0.02           (0.40)          (1.35)         (0.29)          (0.85)
     Total Assets                            325,325         227,333         177,787        174,037         192,665
     Long-term obligations, including
        current portion                        5,826           9,093          12,071          5,324          50,611
     Shareholders' equity                    247,463         176,156         137,710        136,643         111,927
</TABLE>


                                       31
<PAGE>


ITEM 7.       MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
              RESULTS OF OPERATIONS

INTRODUCTION

         Our disclosure and analysis in this report and in our 1998 Annual
Report to shareholders contain some forward-looking statements. Forward-looking
statements provide our current expectations or forecasts of future events. In
particular, these include statements relating to future actions, prospective
products or product approvals, future performance or results of current and
anticipated products, sales efforts, expenses, the outcome of contingencies such
as legal proceedings, and financial results. From time to time, we also may
provide oral or written forward-looking statements in other materials we release
to the public. Any or all of our forward-looking statements in this report, in
the 1998 Annual Report and in any other public statements we make may turn out
to be wrong. Inaccurate assumptions we might make and known or unknown risks and
uncertainties can affect our forward-looking statements. Consequently, no
forward-looking statement can be guaranteed and our actual results may differ
materially.

         We undertake no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
You are advised, however, to consult any further disclosures we make on related
subjects in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
Annual Reports on Form 10-K. Factors that we think could cause our actual
results to differ materially from expected and historical results include, but
are not limited to, those discussed in the "Risk Factors" section in Item 1
above.

RESULTS OF OPERATIONS

OVERVIEW

         In 1998, we generated net income of $1.0 million, compared to net 
losses of $15.8 million and $53.6 million in 1997 and 1996, respectively. The 
improvement in operating results in each of the years presented reflects 
increased product sales and contract revenues. The improvement in 1998 
revenues was due largely to the approval and launch of ENBREL-Registered 
Trademark- (etanercept) in November 1998 following United States (U.S.) Food 
and Drug Administration (FDA) approval of ENBREL for treatment of advanced 
rheumatoid arthritis and continued growth in sales of LEUKINE-Registered 
Trademark- (sargramostim, GM-CSF). Furthermore, contract revenue totaling 
$50.0 million was earned during 1998 under the terms of an ENBREL Promotion 
Agreement with American Home Products Corporation (AHP). In 1997, growth in 
sales of our products LEUKINE and NOVANTRONE-Registered Trademark- 
(mitoxantrone) contributed to the revenuE increase. In addition, $15.0 
million was earned in 1997 under the ENBREL Promotion Agreement. The revenue 
increases in 1998 and 1997 were partially offset by spending for the 
development of ENBREL, investment in our other research and development 
projects, and increased spending for selling, general and administrative 
activities.

REVENUES (in millions)

<TABLE>
<CAPTION>
                                            1998         1997        1996
                                         ----------   ---------   ----------
<S>                                      <C>          <C>         <C>     
ENBREL                                   $     12.7   $    --     $     --
LEUKINE                                        63.8        52.7         43.1
NOVANTRONE                                     48.8        51.6         36.7
Other product sales                            44.6        45.4         49.7
                                         ----------   ---------   ----------
    Total product sales                       169.9       149.7        129.5
Royalty and contract revenue                   73.5        35.6         21.7
                                         ----------   ---------   ----------
    Total revenue                        $    243.4   $   185.3   $    151.2
                                         ----------   ---------   ----------
                                         ----------   ---------   ----------
</TABLE>

         The improvement in product sales in 1998, as compared to 1997, was due
to the launch of ENBREL in November 1998 and increased demand for LEUKINE, as
noted above. Changes in sales levels of our other marketed products, as a whole,
declined slightly during 1998. Also, at the end of 1997, we sold the marketing
rights to certain products in Canada to a wholly owned subsidiary of AHP.
Accordingly, no revenue was earned from sales of those products in 1998.


                                       32
<PAGE>


         Sales growth in 1997, as compared to 1996, was attributable to sales
increases for both LEUKINE and NOVANTRONE. Increased sales of LEUKINE resulted
from the launch of a liquid formulation in January 1997 and increased selling
and marketing efforts. Sales of NOVANTRONE benefited from an expanded label
indication from the FDA in November 1996, which allows marketing the product to
patients with pain related to hormone refractory prostate cancer (HRPC).

         On November 2, 1998, the FDA approved ENBREL for treatment of advanced
rheumatoid arthritis. Sales of ENBREL commenced on November 4, 1998, and totaled
$12.7 million for 1998. Additional sales history for ENBREL is needed before a
meaningful assessment of the acceptance of ENBREL into the rheumatoid arthritis
market in the U.S. can be completed. Under the terms of the ENBREL Promotion
Agreement, AHP is promoting ENBREL in the U.S. through its Wyeth-Ayerst sales
and marketing organization. AHP shares in the gross profits from U.S. sales of
ENBREL and the companies share the selling, marketing, distribution and other
costs to support sales of ENBREL.

         Demand for LEUKINE increased significantly beginning in 1997 following
the launch of a liquid formulation of LEUKINE. Previously, LEUKINE was only
available in a powdered formulation that required reconstitution prior to
administration. The liquid formulation provided improved convenience that
resulted in increased acceptance of LEUKINE.

         Sales of NOVANTRONE leveled in 1998 following an initial increase in
demand after the product received an expanded label indication for treatment of
HRPC by the FDA in December 1996. In 1998, we recognized that the sales gains
achieved in 1997 were not going to continue throughout the year, due to what we
believe to be increased usage of competitive products for the treatment of
advanced prostate cancer. The increased competition led to a decline in sales of
NOVANTRONE in the fourth quarter of 1998. We cannot predict the extent to which
the decline in sales experienced in the fourth quarter will continue.

         In general, the amount of royalty and contract revenue recognized by
Immunex each year has been largely dependent upon business opportunities that
have been identified and the occurrence of certain events or achievement of
milestones under existing contracts. Therefore, the timing and amounts of these
revenues may fluctuate significantly from year to year.

         Royalty and contract revenue increased significantly in 1998 due to 
revenues earned under the ENBREL Promotion Agreement with AHP. In addition to 
promoting ENBREL in North America, as discussed above, AHP agreed to make 
payments to Immunex upon the occurrence of certain events. In 1998, we earned 
$50.0 million under the ENBREL Promotion Agreement. Of the $50.0 million, 
$20.0 million was earned when the Biologics License Application (BLA) for 
ENBREL was accepted for review by the FDA and the other $30.0 million was 
earned when the FDA approved ENBREL. In June 1998, we sold our U.S. rights to 
paclitaxel injection, a generic form of TAXOL-Registered Trademark-, to Baker 
Norton Pharmaceuticals, a wholly owned subsidiary of IVAX Corporation. The 
sale generated revenues of $6.9 million from license fees and sale of bulk 
paclitaxel inventory. Other license fees and contract revenues totaled $8.9 
million in 1998, of which $4.0 million was earned under existing agreements 
with AHP. Royalty revenue also increased moderately, totaling $7.7 million 
for the year.

         The increase in royalty and contract revenue in 1997, as compared to
1996, was due primarily to the receipt of $15.0 million upon signing of the
ENBREL Promotion Agreement. Other license fees and contract revenues totaled
$13.8 million in 1997, compared to $16.0 million in 1996. Of these totals, $10.0
million was earned in 1997 and $6.0 million was earned in 1996 under agreements
with AHP. Royalty revenue increased to $6.9 million in 1997 from $5.7 million in
1996.

OPERATING EXPENSES

         Cost of product sales was 19.6%, 16.4% and 16.9% of product sales in
1998, 1997 and 1996, respectively. The increase in the cost of product sales
percentage in 1998 was due to the following:

          -    Launch of ENBREL in November 1998 (ENBREL, like LEUKINE, is a
               biologic. Biologics generally have a higher manufacturing cost
               than traditional pharmaceutical products and, in the case of our
               biologic products, are subject to multiple royalty obligations),
          -    Unfavorable change in product mix, and
          -    Increased royalties payable on LEUKINE in 1998.

         The unfavorable change in product mix in 1998 reverses a more favorable
trend in 1997 whereby increased sales of certain products had resulted in an
overall decrease in our cost of product sales percentage. The decrease in 1997
was partially offset by increased period costs incurred during the year and
deteriorating margins on sales of leucovorin calcium.

         Research and development expense increased to $120.0 million in 1998
compared to $109.3 million and $96.6 million in 1997 and 1996, respectively. We
continue to invest significantly in the development of our product candidates
and


                                       33
<PAGE>


have increased spending on discovery research activities. Spending for the
development of ENBREL increased further in 1998, reflecting expenditures for
clinical trials, expenses associated with the regulatory filings for ENBREL, and
spending by AHP for the development of ENBREL in Europe, the costs of which we
share equally with AHP. In addition, expenditures for development of NUVANCE(TM)
(IL-4 receptor) aND MOBist(TM) (Flt3-L) increased duriNG 1998 due to both
expanded clinical trials for these product candidates and increased costs of
manufacturing the product requirements for the clinical trials. Research and
development expense in 1998 also includes the acquisition of the rights outside
North America to IL-4 receptor and other receptor product candidates for $10.0
million from Hoechst Marion Roussel, Inc. The above increases were partially
offset in 1998 by decreased clinical expenses for LEUKINE and decreased
manufacturing costs for CD40 Ligand. In addition, as discussed below, funding of
AHP's oncology discovery research program ceased effective July 1, 1998.

         In July 1998, we ended our oncology collaboration with AHP by
terminating the research agreement and certain other agreements and entering
into a new Product Rights Agreement with AHP. As a result of the termination of
the research agreement, our obligation to fund AHP's oncology discovery research
program ceased effective July 1, 1998. In addition, as a result of the Product
Rights Agreement, certain territorial rights that each party had to the other
party's cancer product candidates was also terminated. Under the terms of the
Product Rights Agreement, AHP may acquire exclusive worldwide rights to up to
four of our future product candidates. If AHP exercises any of these rights, we
would be eligible for certain payments and royalties on future sales of such
products. However, we may elect to retain the worldwide rights to up to two of
such products. In such case, AHP would be eligible for certain payments and
royalties on future sales of such products.

         The increase in research and development expense in 1997, as compared
to 1996, was due largely to increased development costs for ENBREL and, to a
lesser extent, increased investment in discovery research. In 1997, accelerating
development of ENBREL became our primary focus. We significantly expanded our
clinical studies for ENBREL and increased our manufacturing effort to meet the
clinical product requirements for such studies. Spending on our other product
candidates also increased in 1997 as these products progressed through early
phase clinical studies or were being prepared for the start of clinical studies.

         Selling, general and administrative expense totaled $93.8 million,
$71.3 million and $70.0 million in 1998, 1997 and 1996, respectively. The
increase in 1998 expense was due primarily to spending on pre-launch activities
and on launch related selling and marketing activities for ENBREL. Under the
terms of the ENBREL Promotion Agreement, AHP assumed a majority of these
expenses and will share in the gross profits from the U.S. sales of ENBREL. Our
obligation for such expenses, including AHP's share of gross profits from U.S.
sales of ENBREL, totaled $14.8 million in 1998. We have also incurred additional
expenses on corporate infrastructure related to growth of Immunex. This was
primarily due to the following:

          -    Increased staffing levels,
          -    Expenses associated with information systems, including efforts
               to address Year 2000 issues, and
          -    Rent and facilities costs associated with expanded office space.

         The increase in selling, general and administrative expense in 1997, as
compared to 1996, was due primarily to the following:

          -    Selling and marketing programs for LEUKINE and NOVANTRONE,
          -    Expenses associated with information systems, and
          -    Patent procurement and defense activities.

         The above expense increases were offset by decreased litigation
expenses in 1997. We incurred legal defense costs totaling $4.7 million in 1996
related to litigation that was settled in November 1996.

OTHER INCOME (EXPENSE)

         Interest income increased to $6.8 million in 1998, from $3.8 million
and $2.2 million in 1997 and 1996, respectively. The improvement reflects an
increase in funds available for investment purposes and the interest earned on
these funds. Our cash and marketable securities increased significantly
beginning in early 1997 due primarily to payments received from AHP as
settlement of their 1996 and 1997 revenue shortfall obligations assumed under
certain agreements entered into during the merger of Immunex and American
Cyanamid Company (CYANAMID). (See Note 9 in our Notes to Consolidated Financial
Statements for a discussion of our agreements with AHP). In addition, the
improvement in operating results led to positive cash flows from operating
activities in both 1997 and 1998.

         In November 1996, we settled ongoing litigation and recorded a charge
of $18.1 million to other expense as our share of the obligation under the
settlement.


                                       34
<PAGE>


PROVISION FOR INCOME TAXES

         The provision for income taxes totaled $2.2 million, $0.2 million and
$0.2 million in 1998, 1997 and 1996, respectively. To the extent that income
subject to tax was offset by pre-merger net operating tax loss carryforwards,
accounting rules require that we report a tax provision with the offset to the
goodwill account. This tax provision is a non-cash transaction because we will
utilize our net operating tax loss carryforwards to satisfy the federal tax
liability. At December 31, 1998, our net operating tax loss carryforwards
totaled approximately $252.0 million. The provision for income taxes in 1997 and
1996 consisted only of our tax obligation in the states in which we sell our
products.

LIQUIDITY AND CAPITAL RESOURCES

         Cash, cash equivalents and marketable securities totaled $144.8 million
and $86.5 million at December 31, 1998 and 1997, respectively. Our cash reserves
are held in a variety of interest-bearing instruments including government and
corporate obligations and money market accounts.

         Operating activities provided cash of $23.2 million in 1998, compared
to $15.1 million in 1997, and resulted in a net use of cash in operating
activities of $43.0 million in 1996. The increase in 1998 was due primarily to
the improvement in operating results. In addition, changes in working capital
provided cash reflecting an increase in accounts payable and other current
liabilities offset partially by growth in both accounts receivable and
inventory. These changes are primarily due to the U.S. launch of ENBREL in
November 1998 and growth in our operations. The improvement in 1997, as compared
to 1996, was also due largely to the improvement in operating results and a
favorable change in working capital requirements.

         Our working capital requirements will increase significantly in 1999 as
we enter our first full year of selling ENBREL in the U.S. Under an ENBREL
Supply Agreement entered into in November 1998 with AHP and with Boehringer
Ingelheim Pharma KG (BI PHARMA), our contract manufacturer of ENBREL, we have
commitments to purchase inventory totaling $198.0 million over the next two
years. A portion of this inventory will be purchased by AHP from BI Pharma. In
addition to inventory of ENBREL, our accounts receivable will be directly
affected by U.S. sales of ENBREL and accounts payable will be affected by costs
incurred under the ENBREL Promotion Agreement. Accordingly, operating cash flows
are highly uncertain in 1999 and are highly dependent on sales and inventory
levels of ENBREL.

         Excluding net purchases of marketable securities, net cash used in
investing activities increased to $34.7 million in 1998, compared to $9.4
million and $5.9 million in 1997 and 1996, respectively. The increased use of
cash in 1998 was due to:

          -    Increase in property, plant and equipment, which includes the
               acquisition of property for possible development and relocation
               of our corporate offices and research facilities for $15.7
               million, and
          -    Payment of $5.0 million under a GM-CSF patent interference
               settlement.

         The increase in net cash used in investing activities in 1997, as
compared to 1996, was due to increased purchases of property, plant and
equipment.

         Beginning in 1998, capital expenditures increased beyond what had
traditionally been a maintenance level of investment. This trend is expected to
continue in 1999 as we expand our infrastructure, increase purchases of
manufacturing and research equipment, and upgrade or replace systems and
equipment as part of our Year 2000 compliance program. Furthermore, we have
initiated a project to expand our process development capacity. The project to
construct a new process development facility is currently in the design phase
and construction is expected to begin in mid-1999. Costs for the process
development facility are estimated to be approximately $15.0 million in 1999.

         Net cash provided by financing activities totaled $70.5 million, $56.0
million and $52.4 million in 1998, 1997 and 1996, respectively. In February
1998, we received the final revenue shortfall obligation from AHP totaling $60.0
million. In 1998 an additional $6.8 million was received from the exercise of
employee stock options and $6.9 million was received from the issuance of
111,283 shares of common stock to AHP. Under the terms of a Governance Agreement
with AHP, AHP can purchase additional shares of our common stock in order to
maintain its percentage ownership. The purchase price is equal to the fair
market value of the shares, as determined in accordance with the Governance
Agreement, on the date of AHP's purchase. These cash inflows were partially
offset by payments of a deferred litigation settlement.


                                       35
<PAGE>


         The increase in cash provided by financing activities in 1997, as
compared to 1996, was due primarily to an increase in the Revenue Guaranty
payment received in each year. In 1997, we received $56.0 million compared to
$45.3 million in 1996. This was offset by the cash flow impact of the deferred
obligation related to the settlement of litigation.

OUTLOOK

         The U.S. launch of ENBREL in November 1998 has had, and will have, a
significant impact on our operations. If current trends continue, ENBREL will be
our highest selling product in 1999. Not only will this increase product sales,
but also will increase our cost of sales percentage. Cost of product sales for
all products as a percentage of product sales in the fourth quarter of 1998, the
first quarter that ENBREL was sold, increased to 22.1%, as compared to 19.6% for
all of 1998. Our cost of sales percentage is expected to increase further in
1999 as sales of ENBREL become a larger percentage of total product sales.
Spending on selling and marketing activities will also increase significantly in
1999 to support the marketing and sales of ENBREL. While the launch process of a
new pharmaceutical product is expensive, we will only incur a portion of such
expenses. Under the terms of the ENBREL Promotion Agreement, AHP will assume a
majority of the marketing and selling costs for ENBREL in the U.S. for the first
two years after launch, after which time we will share equally those costs with
AHP. In addition, we share with AHP a percentage of the gross profits associated
with U.S. sales of ENBREL. Therefore, spending in 1999 and beyond will include
our portion of the ongoing selling, marketing and distribution expenses and
profit sharing related to ENBREL in the U.S.

         We are seeking opportunities to increase sales of LEUKINE and
NOVANTRONE by obtaining approval of new uses for these products. We are
conducting clinical studies of LEUKINE in infectious disease and new oncology
indications. In 1998, we obtained data from a Phase III study of NOVANTRONE in
patients with progressive multiple sclerosis. In 1999, we intend to file a
supplemental New Drug Application with the FDA to obtain approval to market
NOVANTRONE in this indication.

         A portion of our revenues will continue to be derived from existing
license, royalty and other such agreements. Under the ENBREL Promotion
Agreement, additional revenues may be earned if certain events are achieved. We
will earn $15.0 million under the ENBREL Promotion Agreement if ENBREL is
approved with a claim for disease modification for early rheumatoid arthritis. A
Phase III study of ENBREL for disease modification is expected to be completed
in the second quarter of 1999. If the results are positive, we expect to file a
supplemental BLA for ENBREL with the FDA for disease modification for early
rheumatoid arthritis. The timing and approval of this application is uncertain.
In addition, if net sales of ENBREL in North America exceed $200.0 million in
any 12 consecutive months, we will earn a one-time payment $10.0 million under
the ENBREL Promotion Agreement. We will earn an additional one-time payment of
$10.0 million under the ENBREL Promotion Agreement if net sales of ENBREL in
North America exceed $400.0 million in any 12 consecutive months.

         In the future we may enter into additional agreements to license
marketing or technology rights. The timing of such agreements, if any, and the
revenue recognized from those agreements cannot be predicted.

         Spending for our internal research and development programs is expected
to be consistent with expense levels incurred in 1998. However, the timing and
progression of certain clinical studies can impact these expense levels.
Clinical studies can be very expensive and the costs can fluctuate significantly
depending on the size of the study and how quickly patients are enrolled in a
study. Accordingly, it is uncertain what level of spending will be required to
support the ongoing clinical studies for ENBREL in early rheumatoid arthritis
patients and for treatment of chronic heart failure. We are also progressing
with clinical trials with NUVANCE for treatment of asthma and with certain other
product candidates.

         Growth in selling, general and administrative expense will largely
reflect the launch, selling, marketing and distribution of ENBREL, discussed
above. We also expect spending to increase moderately to support growth in
corporate infrastructure.

YEAR 2000

         The "Year 2000" issue is the result of computer programs being unable
to differentiate between the year 1900 and the year 2000 because they were
written using two digits rather than four to define the applicable year. This
could result in a system failure or miscalculations with respect to current
programs. We have established a Year 2000 Committee with representatives from
all of the functional areas at Immunex. The Year 2000 Committee has initiated a
comprehensive review of our computer systems and software applications
(INFORMATION TECHNOLOGY) and equipment that utilize date


                                       36
<PAGE>


sensitive computer chips (EMBEDDED CHIPS). Embedded Chips are utilized in our
security systems and certain manufacturing, laboratory and office equipment.
Based on this review, we have determined that certain software, hardware and
equipment will have to be modified or replaced so that they will properly
utilize dates beyond December 31, 1999. Furthermore, we have initiated contact
with key third-party suppliers, service providers, distributors, wholesalers and
other entities with which we have a business relationship (BUSINESS PARTNERS) to
determine their compliance with Year 2000 requirements.

         We anticipate that required modifications and replacements of our
critical systems and applications will be completed prior to the year 2000.
However, if such modifications are not completed in a timely manner, or if there
were a similar such failure on the part of our Business Partners, there could be
a material adverse impact on our operations.

         Our plan to resolve the Year 2000 issues is organized into three
functional areas: Information Technology, Embedded Chips and Business Partners.
For each functional area, there are three phases: Phase I: Assessment; Phase II:
Testing and Remediation; and Phase III: Implementation and Contingency Planning.

         The Phase I activities for Information Technology is complete and a
substantial portion of the Phase I activities for Embedded Chips and Business
Partners is complete. Various testing and remediation projects are in process
and many have been completed. As a result of this process, certain software
applications have been identified that are not Year 2000 compliant and
replacement of those software applications is in process. The Company is
interviewing its Business Partners to assess Year 2000 readiness. Progress of
our Business Partners to become Year 2000 compliant will be monitored and
remediation and contingency planning will be made as needed. The estimated
completion dates of each phase of the three functional areas are as follows:

<TABLE>
<CAPTION>
                Information Technology       Embedded Chips         Business Partners
                ----------------------       --------------         -----------------
<S>             <C>                        <C>                     <C>
Phase I                Complete            1999 First Quarter      1999 First Quarter
Phase II          1999 Second Quarter      1999 Second Quarter     1999 Second Quarter
Phase III         1999 Third Quarter       1999 Third Quarter      1999 Third Quarter
</TABLE>


         We are utilizing both internal and external resources to identify,
correct and test our computer systems, equipment and other applications for Year
2000 compliance. Our total cost for the Year 2000 project is estimated at
approximately $6.8 million ($2.3 million of expense and $4.5 million capital).
Through December 31, 1998, we have incurred approximately $1.5 million ($0.5
million of expense and $1.0 million capital). These costs do not include any
internal costs. We will utilize our existing cash reserves to fund our Year 2000
compliance program.

         We have not identified our most reasonably likely worst case scenario
with respect to possible losses in connection with Year 2000 related problems.
We plan on completing this analysis in mid-1999. We have not begun the
contingency planning process. Contingency plan development is scheduled for
completion in the second half of 1999.

MARKET RISK

         We invest our cash reserves in marketable securities consisting
primarily of U.S. government and corporate obligations. Our marketable
securities are subject to interest rate risk. If market interest rates increase
by 10%, the effect on our operating results would not be material. In addition,
we own common stock in two biotechnology companies with a cost of $3.0 million.


                                       37
<PAGE>


ITEM 7A.      QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
         See MARKET RISK, above, under Item 7.

ITEM 8.       FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
                                                                                                 Page in
                                                                                                Form 10-K
                                                                                                ---------
         <S>                                                                                    <C>

         Consolidated Balance Sheets at December 31, 1998 and 1997.                                39

         Consolidated Statements of Operations for the years ended December 31, 1998,
         1997 and 1996.                                                                            40

         Consolidated Statements of Cash Flows for the years ended December 31, 1998,
         1997 and 1996.                                                                            42

         Notes to Consolidated Financial Statements for the years ended December 31, 1998,
         1997 and 1996.                                                                          43 - 54

         Report of Ernst & Young LLP, Independent Auditors.                                        55
</TABLE>


                                       38
<PAGE>


                               IMMUNEX CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)




<TABLE>
<CAPTION>
                                                                          December 31,
                                                                       1998         1997
                                                                    ---------    ---------
<S>                                                                 <C>          <C>      
ASSETS

Current assets:
    Cash and cash equivalents                                       $  43,600    $  66,176
    Marketable securities                                             101,245       19,493
    Accounts receivable - trade, net                                   21,570       10,588
    Accounts receivable - AHP                                             967        3,555
    Accounts receivable - other                                         6,402        4,088
    Inventories                                                        23,475        9,031
    Prepaid expenses and other current assets                           4,726        3,662
                                                                    ---------    ---------
      Total current assets                                            201,985      116,593

Property, plant and equipment, net                                     90,092       73,645

Other assets:
    Property held for future development                                6,129        5,768
    Investments in common stock                                         3,837        6,859
    Intangible product rights and other, net                           15,935       13,286
    Goodwill, net                                                       7,347       11,182
                                                                    ---------    ---------
      Total assets                                                  $ 325,325    $ 227,333
                                                                    ---------    ---------
                                                                    ---------    ---------
LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
    Accounts payable                                                $  39,256    $  29,007
    Accounts payable - AHP                                             13,950        1,917
    Accrued compensation and related items                             13,756        8,572
    Current portion of long-term obligations                            3,477        3,460
    Other current liabilities                                           5,074        2,588
                                                                    ---------    ---------
      Total current liabilities                                        75,513       45,544

Long-term obligations                                                   2,349        5,633

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, 40,161,261 and 39,718,023
      outstanding at December 31, 1998 and 1997, respectively         725,192      711,485
    Guaranty payment receivable from AHP                                 --        (60,032)
    Unrealized gain on investments, net                                 1,228        4,646
    Accumulated deficit                                              (478,957)    (479,943)
                                                                    ---------    ---------
      Total shareholders' equity                                      247,463      176,156
                                                                    ---------    ---------
       Total liabilities and shareholders' equity                   $ 325,325    $ 227,333
                                                                    ---------    ---------
                                                                    ---------    ---------
</TABLE>


                             See accompanying notes.


                                       39
<PAGE>


                               IMMUNEX CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                    (In thousands, except per share amounts)



<TABLE>
<CAPTION>
                                                     Year ended December 31,
                                                 1998         1997         1996
                                              ---------    ---------    ---------
<S>                                           <C>          <C>          <C>      
Revenues:
    Product sales                             $ 169,907    $ 149,672    $ 129,528
    Royalty and contract revenue                 73,543       35,625       21,670
                                              ---------    ---------    ---------
                                                243,450      185,297      151,198
Operating expenses:
    Cost of product sales                        33,285       24,552       21,860
    Research and development                    119,954      109,312       96,612
    Selling, general and administrative          93,777       71,275       69,968
                                              ---------    ---------    ---------
                                                247,016      205,139      188,440
                                              ---------    ---------    ---------
Operating loss                                   (3,566)     (19,842)     (37,242)

Other income (expense):
    Interest income                               6,793        3,790        2,156
    Interest expense                               (425)        (596)        (293)
    Other income (expense), net                     384        1,088      (18,093)
                                              ---------    ---------    ---------
                                                  6,752        4,282      (16,230)
                                              ---------    ---------    ---------
Income (loss) before income taxes                 3,186      (15,560)     (53,472)

Provision for income taxes                        2,200          212          160
                                              ---------    ---------    ---------
Net income (loss)                             $     986    $ (15,772)   $ (53,632)
                                              ---------    ---------    ---------
                                              ---------    ---------    ---------
Net income (loss) per common share
    Basic                                     $    0.02    $   (0.40)   $   (1.35)
                                              ---------    ---------    ---------
                                              ---------    ---------    ---------
    Diluted                                   $    0.02    $   (0.40)   $   (1.35)
                                              ---------    ---------    ---------
                                              ---------    ---------    ---------
Number of shares used for per share amounts
    Basic                                        39,875       39,637       39,602
                                              ---------    ---------    ---------
                                              ---------    ---------    ---------
    Diluted                                      41,890       39,637       39,602
                                              ---------    ---------    ---------
                                              ---------    ---------    ---------
</TABLE>



                             See accompanying notes.


                                       40
<PAGE>


                               IMMUNEX CORPORATION
                 CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                        (In thousands, except share data)


<TABLE>
<CAPTION>
                                                                       Guaranty
                                                                       Payment         Accumu-
                                               Common Stock           Receivable      lated Other       Accumu-          Total
                                              $.01 Par Value             from         Comprehen-        lated        Shareholders'
                                          Shares         Amount           AHP         sive Income       Deficit         Equity
                                       -----------     -----------    -----------     -----------     -----------     -----------
<S>                                    <C>             <C>            <C>             <C>             <C>             <C>        
Balance, December 31, 1995              39,601,899     $   592,470    $   (45,288)    $      --       $  (410,539)    $   136,643
    Net loss for the year ended
      December 31, 1996                       --              --             --              --           (53,632)        (53,632)
    Unrealized gain on
      Investments                             --              --             --             9,406            --             9,406
                                                                                                                      -----------
Comprehensive loss                                                                                                        (44,226)

    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)           --              --              --
                                       -----------     -----------    -----------     -----------     -----------     -----------

Balance, December 31, 1996              39,602,225         648,475        (56,000)          9,406        (464,171)        137,710
    Net loss for the year ended
      December 31, 1997                       --              --             --              --           (15,772)        (15,772)
    Unrealized loss on
      investments, net                        --              --             --            (4,760)           --            (4,760)
                                                                                                                      -----------
Comprehensive loss                                                                                                        (20,532)

    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)           --              --              --
                                       -----------     -----------    -----------     -----------     -----------     -----------

Balance, December 31, 1997              39,718,023         711,485        (60,032)          4,646        (479,943)        176,156
    Net income for the year ended
      December 31, 1998                       --              --             --              --               986             986
    Unrealized loss on
      investments, net                        --              --             --            (3,418)           --            (3,418)
                                                                                                                      -----------
Comprehensive loss                                                                                                         (2,432)

    Issuance of common stock upon
      the exercise of stock options        331,955           6,830           --              --              --             6,830
    Net proceeds from issuance of
      common stock to AHP                  111,283           6,877           --              --              --             6,877
    Guaranty payment received
      from AHP                                --              --           60,032            --              --            60,032
                                       -----------     -----------    -----------     -----------     -----------     -----------

Balance, December 31, 1998              40,161,261     $   725,192    $    --         $     1,228     $  (478,957)    $   247,463
                                       -----------     -----------    -----------     -----------     -----------     -----------
                                       -----------     -----------    -----------     -----------     -----------     -----------
</TABLE>




                             See accompanying notes.

                                       41
<PAGE>


                               IMMUNEX CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)





<TABLE>
<CAPTION>
                                                                Year ended December 31,
                                                            1998          1997          1996
                                                         ---------     ---------     ---------
<S>                                                      <C>           <C>           <C>       
Cash flows from operating activities:
   Net income (loss)                                     $     986     $ (15,772)    $ (53,632)
   Adjustments to reconcile net loss to net
     cash provided by (used in) operating activities:
       Depreciation and amortization                        18,119        16,930        15,157
       Deferred income tax provision (see Note 7)            1,900          --            --
       Cash flow impact of changes to:
         Accounts receivable                               (10,708)          (90)        2,269
         Inventories                                        (6,493)         (138)         (591)
         Prepaid expenses and other current assets            (947)           55        (1,990)
         Accounts payable, accrued
           compensation and other current liabilities       20,371        14,078        (4,262)
                                                         ---------     ---------     ---------
           Net cash provided by (used in) operating         23,228        15,063       (43,049)
           activities
Cash flows from investing activities:
   Purchases of property, plant and equipment              (29,389)       (7,409)       (4,656)
   Proceeds from sales and maturities of marketable         40,169        13,804          --
   securities
   Purchases of marketable securities                     (121,745)      (33,158)         --
   Acquisition of rights to marketed products               (5,000)         --            --
   Other                                                      (312)       (1,985)       (1,255)
                                                         ---------     ---------     ---------
           Net cash used in investing activities          (116,277)      (28,748)       (5,911)

Cash flows from financing activities:
   Guaranty payment received from AHP                       60,032        56,000        45,288
   Proceeds from issuance of common stock                    6,877         1,280          --
   Proceeds from exercise of stock options                   6,831         1,698          --
   Deferred portion of settlement obligation                  --            --           7,703
   Payment under settlement obligation                      (2,391)       (2,235)         --
   Other                                                      (876)         (743)         (607)
                                                         ---------     ---------     ---------
           Net cash provided by financing activities        70,473        56,000        52,384
                                                         ---------     ---------     ---------
Net increase (decrease) in cash and cash equivalents       (22,576)       42,315         3,424
Cash and cash equivalents, beginning of period              66,176        23,861        20,437
                                                         ---------     ---------     ---------
Cash and cash equivalents, end of period                 $  43,600     $  66,176     $  23,861
                                                         ---------     ---------     ---------
                                                         ---------     ---------     ---------
</TABLE>



                             See accompanying notes.

                                       42
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1.  ORGANIZATION AND BASIS OF PRESENTATION

         Immunex Corporation (which may be referred to as IMMUNEX, WE, US or
OUR) 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 such as
rheumatoid arthritis.

         We operate in a highly regulated and competitive environment. Our
business is regulated primarily by the United States (U.S.) Food and Drug
Administration (FDA). The FDA regulates the products we sell, our manufacturing
processes and our promotional activities. Obtaining approval for a new
therapeutic product is never certain, may take several years and is very costly.
Competition in researching, developing and marketing pharmaceutical products is
intense. Any of the technologies covering our existing products or products
under development could become obsolete or diminished in value by discoveries
and developments of other organizations.

         The U.S. is our current market for pharmaceutical products. Our sales
to clinics and hospitals are primarily through wholesalers and specialty
distributors.

         The consolidated financial statements are prepared in conformity with
generally accepted accounting principles. In preparing the financial statements,
management must make some estimates and assumptions that may affect reported
amounts and disclosures.

         On June 1, 1993, the predecessor to the current Immunex Corporation
merged with a subsidiary of American Cyanamid Company (CYANAMID). Cyanamid
received the number of shares equal to 53.5% of our common stock and dilutive
securities outstanding immediately following the merger. In late 1994, American
Home Products Corporation (AHP) acquired all of Cyanamid's outstanding shares of
common stock. AHP and certain of its subsidiaries and affiliates assumed the
rights and obligations of Cyanamid. As a result, AHP now holds a majority
interest in Immunex. We have also entered into additional agreements with AHP
(see Note 9). 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 our accounts and our
wholly owned subsidiary. All significant intercompany accounts and transactions
have been eliminated in consolidation.

CASH EQUIVALENTS

         Cash equivalents include items almost as liquid as cash, such as demand
deposits or securities with maturity periods of 90 days or less when purchased.
Our cash equivalents are carried at fair market value.

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 balance sheet. Cost of securities is
calculated using the specific-identification method. Securities
available-for-sale at December 31, 1998 and 1997 consisted primarily of U.S.
government and corporate obligations.


                                       43
<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 are as follows
(in thousands):


<TABLE>
<CAPTION>
                                        1998       1997
                                     ---------   --------
         <S>                         <C>         <C>     
         Raw materials               $     807   $  1,069
         Work in process                17,953      5,377
         Finished goods                  4,715      2,585
                                     ---------   --------

         Total inventory             $  23,475   $  9,031
                                     ---------   --------
                                     ---------   --------
</TABLE>

DEPRECIATION AND AMORTIZATION

         The cost of buildings and equipment is depreciated evenly over the
estimated useful lives of the assets, which range from three to 31.5 years.
Leasehold improvements are amortized evenly over either their estimated useful
life, or the term of the lease, whichever is lower.

PROPERTY HELD FOR FUTURE DEVELOPMENT

         We own some property intended for the possible future expansion of our
manufacturing facilities. This property has been recorded at cost.

INVESTMENTS IN COMMON STOCK

         We own common stock in two biotechnology companies. These investments
are accounted for as securities available-for-sale and recorded at fair value on
the balance sheet (see Note 3).

GOODWILL AND OTHER INTANGIBLE ASSETS

         Goodwill is being amortized evenly over a 10-year period. Accumulated
amortization totaled $11,319,000 in 1998 and $9,384,000 in 1997. Due to the tax
effect of certain transactions during 1998, we recorded a tax provision and
reduced our goodwill by $1,900,000 (see Note 7).

         Intangible product rights and other intangible assets are amortized
evenly over their estimated useful lives, ranging from five to 15 years.
Accumulated amortization totaled $7,069,000 in 1998 and $5,595,000 in 1997.

COMPREHENSIVE INCOME (LOSS)

         Immunex adopted Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income," as of January 1, 1998. SFAS No. 130
establishes new rules for the reporting and display of comprehensive income and
its components; however, the adoption of this Statement had no impact on
Immunex's net income (loss) or shareholders' equity. Statement No. 130 requires
unrealized gains and losses on available-for-sale securities to be included in
other comprehensive income. Prior to adoption they were reported separately in
shareholders' equity. Prior year financial statements have been reclassified to
conform to the requirements of SFAS No. 130.

REVENUES

         Product sales are recognized when product is shipped. We perform
ongoing credit evaluations of our wholesalers, specialty distributors and our
end customers, if appropriate, and we do not require collateral. Product sales
are recorded net of reserves for estimated chargebacks, returns, discounts,
Medicaid rebates and administrative fees. We maintain reserves at a level that
we believe is sufficient to cover estimated future requirements. Allowances for
discounts, returns and bad debts, which are netted against accounts receivable,
totaled $11,627,000 in 1998 and $8,653,000 in 1997. Reserves for chargebacks,
Medicaid rebates and administrative fees are included in accounts payable and
totaled $12,610,000 in 1998 and $9,715,000 in 1997.

         Revenues received under royalty, licensing and other contractual
agreements are recognized based on the terms of the underlying agreements.


                                       44
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 2.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

NET INCOME (LOSS) PER COMMON SHARE

         Immunex adopted SFAS No. 128, "Earnings Per Share," in 1997. SFAS No.
128 requires the calculation and presentation of "Basic" and "Diluted" earnings
per share. Basic earnings per share is calculated by dividing net income or net
loss by the weighted average number of common shares outstanding. Diluted
earnings per share is calculated by dividing net income or net loss by the
weighted average common shares outstanding plus the dilutive effect of
outstanding stock options. If we report a net loss, diluted earnings per share
will be the same as basic earnings per share because the effect of outstanding
stock options being added to weighted average shares outstanding would reduce
the loss per share. Therefore, outstanding stock options are not included in the
calculation during net loss periods.

RECLASSIFICATIONS

         For comparison purposes, certain prior year amounts in the consolidated
financial statements have been reclassified to conform to current year
presentations.

NOTE 3.  INVESTMENTS

         Our 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 as comprehensive income. For both 1998 and
1997, there were no material realized gains or losses. Immunex's investment
guidelines state that the maximum average life of any one security shall be five
years with the maximum weighted average life of the investment portfolio being
three years. At December 31, 1998, all of Immunex's investments met these
guidelines. Information about our investments follows (in thousands):


<TABLE>
<CAPTION>
                                                                             Gross         Gross
                                                    Fair       Amortized   Unrealized    Unrealized
Year Ended December 31, 1998                        Value        Cost         Gains        Losses
                                                  ---------    ---------    ---------     ---------
<S>                                               <C>          <C>          <C>           <C>       
   Type of security:
     Commercial paper                             $   4,178    $   4,194    $    --       $     (16)
     Corporate debt securities                       52,547       52,351          252           (56)
     U.S. government and agency
        obligations                                  54,460       54,208          299           (47)
     Common stock (see Note 2)                        3,837        3,041          796          --
                                                  ---------    ---------    ---------     ---------
                                                  $ 115,022    $ 113,794    $   1,347     $    (119)
                                                  ---------    ---------    ---------     ---------
                                                  ---------    ---------    ---------     ---------
YEAR ENDED DECEMBER 31, 1997
  Type of security:
     Commercial paper                             $   4,988    $   4,988    $    --       $    --
     Corporate debt securities                        3,048        3,045            3          --
     U.S. government and agency
        obligations                                  23,940       23,804          136          --
     Common stock (see Note 2)                        6,859        2,352        4,507          --
                                                  ---------    ---------    ---------     ---------
                                                  $  38,835    $  34,189    $   4,646     $    --
                                                  ---------    ---------    ---------     ---------
                                                  ---------    ---------    ---------     ---------

Classification in the balance sheet:                1998          1997
                                                  ---------    ---------
     Cash and cash equivalents                    $   9,940    $  12,483
     Marketable securities                          101,245       19,493
     Investment in common stock                       3,837        6,859
                                                  ---------    ---------
                                                  $ 115,022    $  38,835
                                                  ---------    ---------
                                                  ---------    ---------
</TABLE>

                                       45
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 4.  PROPERTY, PLANT AND EQUIPMENT

         The major categories of property, plant and equipment, at historical
cost, consist of the following (in thousands):


<TABLE>
<CAPTION>
                                                            1998          1997
                                                          ---------     ---------
        <S>                                               <C>           <C>      
        Land                                              $  17,851     $   2,140
        Buildings and improvements                           50,097        50,001
        Equipment                                            64,727        53,230
        Leasehold improvements                               23,469        21,469
                                                          ---------     ---------
                                                            156,144       126,840
        Less accumulated depreciation and amortization      (66,052)      (53,195)
                                                          ---------     ---------
        Property, plant and equipment, net                $  90,092     $  73,645
                                                          ---------     ---------
                                                          ---------     ---------
</TABLE>


NOTE 5.  LONG-TERM OBLIGATIONS

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

<TABLE>
<CAPTION>
                                                                 1998         1997
                                                                -------     -------
<S>                                                             <C>         <C>    
        Deferred state sales tax on manufacturing facility,
            due in annual installments in 1999 and 2000         $ 1,889     $ 2,576
        Deferred portion of litigation settlement obligation      3,077       5,468
        Other                                                       860       1,049
                                                                -------     -------
                                                                  5,826       9,093

        Less current portion                                     (3,477)     (3,460)
                                                                -------     -------
                                                                $ 2,349     $ 5,633
                                                                =======     =======
</TABLE>

         In November 1996, we settled litigation. 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%.

         We had no interest bearing debt in 1998, 1997 or 1996.

         With the exception of deferred state sales tax, the balance sheet
carrying value for our long-term obligations approximates fair value. The fair
value was calculated by discounting future cash flows using our current
estimated incremental borrowing rate. At December 31, 1998 and 1997, the fair
value of deferred state sales tax was calculated as $1,700,000 and $2,203,000,
respectively.


                                       46
<PAGE>


                                                IMMUNEX CORPORATION
                                    NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6.  SHAREHOLDERS' EQUITY

STOCK OPTIONS

         We may grant stock options, both incentive and non-qualified, to any
employee, including officers, under our stock option plan (the Plan). There have
been 6,225,267 shares of common stock reserved for the Plan. Options are granted
by a committee of our Board of Directors. Under the Plan, options are not
granted with exercise prices less than the fair market value of our common stock
at the date of grant. Each outstanding option has a term of 10 years from the
date of grant and becomes exercisable at a rate of 20% per year beginning one
year from the date of grant.

         We also have a stock option plan with 100,000 shares of common stock
reserved for nonemployee directors that 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 with an exercise
price equal to fair market value of our common stock at the date of grant. Each
outstanding option has a term of 10 years from the date of grant and becomes
exercisable at a rate of 20% per year beginning one year from the date of grant.

         Immunex has elected to follow Accounting Principles Board Opinion No.
25, "Accounting for Stock Issued to Employees" and adopted the disclosure-only
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation." Stock
options are granted with an exercise price equal to the fair market value of the
stock on the date of grant and, accordingly, we do not record compensation
expense for stock option grants. The pro-forma disclosures, assuming that the
fair value of option grants were recorded as compensation, 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 amortization of
compensation expense related to grants made prior to 1995. The following table
summarizes results as if we had recorded compensation expense for the 1998, 1997
and 1996 option grants (in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                                1998            1997          1996
                                                             ----------     -----------    ----------
 <S>                                                         <C>            <C>            <C>        
 Net income (loss) - as reported                             $      986     $  (15,772)    $  (53,632)
 Net loss - pro forma                                           (11,413)       (20,643)       (55,336)
 Net income (loss) per common share, basic and diluted -
     as reported                                             $     0.02     $    (0.40)    $    (1.35)
 Net loss per common share, basic and diluted - pro forma         (0.29)         (0.52)         (1.40)
</TABLE>


         The estimated fair value of options granted in 1998, 1997 and 1996 was
calculated using the Black-Scholes option pricing model with the following
weighted average assumptions:

<TABLE>
<CAPTION>
                                                                   1998           1997          1996
                                                              -------------  -------------  -------------
 <S>                                                         <C>            <C>            <C>          
 Estimated fair value                                        $       35.35  $       15.43  $        8.33
 Expected life in years                                                  6              6              6
 Risk-free interest rate                                       4.6% - 5.7%    6.0% - 6.6%    6.3% - 6.7%
 Volatility                                                            52%            45%            45%
 Dividend yield                                                      --             --             --
</TABLE>


                                       47

<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 6.  SHAREHOLDERS' EQUITY, CONTINUED

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

<TABLE>
<CAPTION>
                                                                                                Weighted
                                                                Shares Subject   Exercise       Average
                                                                  to Option    Price Range   Exercise Price
                                                                 ---------- ---------------    --------
     <S>                                                       <C>          <C>              <C>
     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
         Granted                                                 1,393,750    62.25 - 70.63       63.06
         Exercised                                                (331,955)   11.75 - 41.75       20.57
         Canceled                                                 (178,999)   12.25 - 76.75       46.87
                                                                 ---------- ---------------    --------
     Options outstanding balance at December 31, 1998            3,985,324  $ 11.75 - 76.75    $  36.42
                                                                 ---------- ---------------    --------
                                                                 ---------- ---------------    --------
     Shares available for future grants at December 31, 1998     1,920,087
                                                                 ----------
                                                                 ----------
</TABLE>

         The following table summarizes information about options outstanding at
December 31, 1998:


<TABLE>
<CAPTION>
                                           Outstanding                          Exercisable
                           ----------------------------------------------    -----------------------
                                            Weighted
                                             Average          Weighted                   Weighted
      Range of                              Remaining         Average                    Average
  Exercise Prices          Options       Contractual Life  Exercise Price    Options  Exercise Price
  ---------------          -------       ----------------  --------------    -------  --------------
<S>                    <C>               <C>               <C>             <C>        <C>
$    11.75 - 15.00          323,396           6 years      $      14.47      240,116  $     14.64
     15.88 - 15.88          887,480           7 years             15.88      289,400        15.88
     17.50 - 18.88          107,420           5 years             18.78       85,180        18.76
     24.25 - 24.25          851,000           8 years             24.25      140,740        24.25
     27.25 - 41.75          394,543           5 years             31.97      324,543        31.36
     62.25 - 76.75        1,421,485           9 years             64.09       21,400        76.75
------------------     ------------                        ------------  -----------  -----------
$    11.75 - 76.75        3,985,324                        $      36.42    1,101,379  $     22.62
------------------     ------------                        ------------  -----------  -----------
------------------     ------------                        ------------  -----------  -----------
</TABLE>


GUARANTY PAYMENTS RECEIVABLE FROM AHP

         AHP was required to make payments or contribute products to us if
revenues from certain marketed products did not achieve established levels
through December 31, 1997. This was limited to a maximum amount in each year.
Such payments were treated as additional contributions to shareholders' equity.
We recorded a receivable from AHP of $60,032,000 in 1997 and $56,000,000 in 1996
for the revenue shortfall. All receivables have been collected.


                                       48
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  INCOME TAXES

         Significant components of the provision for income taxes are as follows
(in thousands):

<TABLE>
<CAPTION>
                                              1998       1997       1996
                                             ------     ------     ------
<S>                                          <C>        <C>        <C> 
  Current taxes
      Federal                                $ --       $ --       $ --
      State                                     300        132        148
                                             ------     ------     ------
                                             $  300     $  132     $  148
  Deferred taxes
      Federal                                $ --       $ --       $ --
      State                                    --         --         --
                                             ------     ------     ------
                                             $ --       $ --       $ --

Non-cash accounting entry to record tax
expense and to reduce balance sheet
goodwill associated with Cyanamid merger
(see Note 9)                                 $1,900     $ --       $ --
                                             ------     ------     ------
     Total                                   $2,200     $  132     $  148
                                             ------     ------     ------
                                             ------     ------     ------
</TABLE>

         During 1998 we generated taxable income. Our taxable income was offset
by utilizing net operating loss (NOL) carryforwards that originated prior to the
1993 Cyanamid merger. The benefit from utilizing these NOLs has been recorded as
a non-cash charge to tax expense and as a reduction of goodwill by $1,900,000.
Income taxes paid for 1998, 1997 and 1996 totaled $275,000, $132,000 and
$148,000 respectively.

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

<TABLE>
<CAPTION>
                                                    1998       1997        1996
                                                   ------     ------      ------
<S>                                                <C>        <C>        <C>    
U.S. federal statutory tax rate                      35.0%     (35.0)%     (35.0)%
Non-deductible amortization of goodwill              17.4        4.6         1.3
Increase in valuation reserve                        --         29.7        32.0
State taxes (net of federal tax benefit)              6.1        1.4         0.3
Other                                                10.6        0.7         1.7
                                                   ------     ------      ------
  Effective tax rate                                 69.1%       1.4%        0.3%
                                                   ------     ------      ------
                                                   ------     ------      ------
</TABLE>


                                       49
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 7.  INCOME TAXES, CONTINUED

         Significant components of tax assets and liabilities at December 31 (in
thousands):

<TABLE>
<CAPTION>
                                                         1998            1997
                                                      ---------       ---------
<S>                                                   <C>             <C>      
Deferred tax assets:
  Net operating loss carryforwards                    $  88,194       $  88,232
   Research and experimental credits                     16,814          13,152
   In-process research and development                    3,901           1,063
   Accounts receivable allowances                         4,070           3,029
   Accrued liabilities                                    1,885           2,832
   Other                                                    912           1,763
                                                      ---------       ---------
     Total deferred tax assets                          115,776         110,071

Valuation allowance for deferred tax assets            (109,526)       (101,054)
                                                      ---------       ---------
     Net deferred tax assets                              6,250           9,017

Deferred tax liabilities:
   Tax over book depreciation                             1,515           2,334
   Purchase accounting adjustments                        2,157           2,694
   Other                                                  2,578           3,989
                                                      ---------       ---------
     Total deferred tax liabilities                       6,250           9,017
                                                      ---------       ---------
                                                      $   --          $  --
                                                      ---------       ---------
                                                      ---------       ---------
</TABLE>

         Our deferred tax assets consist primarily of the benefit resulting from
unused NOL carryforwards and research and experimentation credit carryforwards.
The amounts of these carryforwards are approximately $252,000,000 and
$16,800,000 respectively at December 31, 1998. The carryforwards expire from
1999 through 2013. In 1998, approximately $3,000,000 of NOL carryforwards and
$360,000 of research and experimentation credits expired.

         Our ability to generate sufficient future taxable income to realize the
benefits of our net deferred tax assets is uncertain. Therefore, a reserve of
$109,526,000 and $101,054,000 has been recorded for financial reporting purposes
at December 31, 1998 and 1997 respectively. This represents an increase in the
reserve of approximately $8,472,000 and $7,441,000 during 1998 and 1997
respectively. The amount of the reserve is the difference between our deferred
tax assets and our deferred tax liabilities. The balance sheet effect of this
reserve is to completely offset the value of our net deferred tax assets for
financial reporting purposes.

         To the extent we are able to generate taxable income in the future, NOL
carryforwards will be utilized in the following order (in thousands):

<TABLE>
          <S>                                                       <C>
          -    Pre-1993 Cyanamid merger NOL to be utilized
               to offset goodwill and intangible product
               rights                                               $     32,460

          -    Pre and post-1993 Cyanamid merger NOL to be
               utilized to offset future tax expense                     178,417

          -    Pre and post-1993 Cyanamid merger NOL to be
               utilized to increase paid-in capital for the
               unrecorded tax benefit of stock
               options                                                    41,123
                                                                    ------------
          Total NOL carryforward                                    $    252,000
                                                                    ------------
                                                                    ------------
</TABLE>


                             50
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 8.  EMPLOYEE BENEFITS

         As a retirement plan, we offer 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. We match 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. We recorded compensation expense resulting from matching contributions
to the plan of $2,164,000 in 1998, $1,900,000 in 1997 and $1,707,000 in 1996.

NOTE 9.  TRANSACTIONS WITH AHP

         On June 1, 1993, the predecessor to the current Immunex Corporation
merged with a subsidiary of Cyanamid. In late 1994, all of the outstanding
shares of common stock of Cyanamid were acquired by AHP. AHP and certain of 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.
In addition, we have entered into additional agreements with AHP. Significant
transactions under these agreements are discussed in the paragraphs below and
the impact on our statement of operations is summarized in the following table
(in thousands):

<TABLE>
<CAPTION>
                                                 1998          1997         1996
                                               --------      --------     --------
<S>                                            <C>           <C>          <C>     
Revenues:
  Product sales                                $    758      $  2,590     $  1,957
  Royalty and contract revenue                   56,687        29,218       10,024
                                               --------      --------     --------
                                                 57,445        31,808       11,981
Operating expenses:
  Cost of product sales                             511         1,281          936
  Research and development, net                  (2,251)          715       20,314
  Selling, general and administrative            14,800          --           --
                                               --------      --------     --------
                                                 13,060         1,996       21,250
                                               --------      --------     --------
     Net contribution to operating results     $ 44,385      $ 29,812     $ (9,269)
                                               --------      --------     --------
                                               --------      --------     --------
</TABLE>


ENBREL PROMOTION AGREEMENT

         In 1997, we entered into an ENBREL Promotion Agreement with AHP. Under
the terms of the ENBREL Promotion Agreement, AHP is promoting ENBREL in the U.S.
through Wyeth-Ayerst's sales and marketing organization. Immunex distributes a
portion of the gross profits from U.S. sales of ENBREL to AHP and furthermore,
reimburses AHP for a portion of the selling, marketing, distribution and other
costs incurred in the U.S. sales of ENBREL. Our obligation for such expenses,
including AHP's share of gross profits from ENBREL, totaled $14,800,000 in 1998.
In addition, under the ENBREL Promotion Agreement, we received contracted
payments of $50,000,000 and $15,000,000 from AHP in 1998 and 1997, respectively.

TACE AGREEMENTS

         In December 1995, we licensed exclusive worldwide rights to tumor
necrosis factor alpha converting enzyme (TACE) technology to AHP. Immunex
received payments of $4,000,000, $6,000,000 and $4,000,000 in 1998, 1997 and
1996, respectively, under these agreements. 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.

RESEARCH AND DEVELOPMENT

         In July 1998, we ended our oncology collaboration with AHP by
terminating the research agreement and certain other agreements and entered into
a new Product Rights Agreement. As a result of the termination of the research
agreement, our funding requirements of AHP's oncology discovery research program
ceased effective July 1, 1998. Under the superseded agreement, we paid
$8,258,000, $16,240,000 and $21,156,000 in 1998, 1997 and 1996, respectively, to
support AHP's oncology research programs.

                                       51

<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 9.  TRANSACTIONS WITH AHP, CONTINUED  

         Under the terms of the Product Rights Agreement, AHP may acquire
exclusive worldwide rights to up to four of our future product candidates. If
AHP exercises any of these rights, we would be eligible for certain payments and
royalties on future sales of such products. However, we may elect to retain the
worldwide rights to up to two of such products. In such case, AHP would be
eligible for certain payments and royalties on future sales of such products.

         Immunex and AHP have an agreement to share equally the development
costs of ENBREL in the U.S. and Canada (NORTH AMERICA) and Europe. We also had a
similar agreement related to MOBIST. However, the agreement related to MOBIST
was terminated as a result of the Product Rights Agreement, discussed above.
AHP's share of the development costs under these two agreements totaled
$10,719,000, $18,768,000 and $3,923,000 in 1998, 1997 and 1996, respectively.

         In order to retain the rights to ENBREL outside North America, AHP paid
Immunex $2,000,000 in 1996. The agreement under which AHP made this payment was
superseded by the agreement to share equally the development costs of ENBREL,
discussed above.

ONCOLOGY PRODUCT LICENSE AGREEMENT

         As a result of the Product Rights Agreement, certain territorial rights
that each party had to the other party's cancer product candidates were
terminated. Under the terms of the superseded agreements, AHP was entitled to a
royalty bearing license outside North America to any products resulting from our
oncology research and development activities. AHP reimbursed us for certain
costs related to manufacturing and process development. We recognized revenue
under the superseded agreement of $1,246,000 and $1,645,000 in 1997 and 1996,
respectively. No related revenue was earned in 1998.

         Under the terms of a subsequent agreement, Immunex and AHP agreed to 
collaborate in the development of paclitaxel injection, a generic form of 
TAXOL-Registered Trademark-, an oncology product marketed by Bristol-Myers 
Squibb Company. We incurred costs under the agreement of $3,243,000 and 
$3,081,000 in 1997 and 1996, respectively. There were no such costs incurred 
in 1998. In June 1998, we sold our U.S. rights to paclitaxel injection to a 
third party, and accordingly are no longer incurring such development 
expenses.

         AHP and its sublicensees have a royalty bearing license to sell certain
of our existing oncology products outside North America. We earned royalties
under the agreement totaling $2,687,000, $2,972,000 and $2,379,000 in 1998, 1997
and 1996, respectively.


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 purchased
inventory totaling $6,172,000 in 1998 and $7,905,000 in 1997 from AHP and its
subsidiaries under these agreements. In addition, AHP billed us $458,000 in
1998, $988,000 in 1997 and $686,000 in 1996 for other expenses under such
agreement.

DISTRIBUTION

         We were party to a distributorship agreement with Wyeth-Ayerst Canada,
Inc, a wholly owned subsidiary of AHP, under which Wyeth-Ayerst Canada
distributed certain oncology products in Canada. We supplied oncology products
to Wyeth-Ayerst Canada at certain established prices, which were subject to
annual adjustment. Inventory totaling $2,010,000 in 1997 and $1,511,000 in 1996
was sold by us to Wyeth-Ayerst Canada. In December 1997, we sold our rights to
these products in Canada to AHP for $4,000,000.

         We have agreed to supply the commercial requirements of our products to
Wyeth-Ayerst Laboratories Puerto Rico, Inc., a wholly owned subsidiary of AHP.
Net revenue recognized under this agreement totaled $758,000 in 1998, $580,000
in 1997 and $446,000 in 1996.


                                       52
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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 6). At December 31, 1997, we recorded a
receivable from AHP of $60,032,000 related to the revenue shortfall in 1997,
which was received by us in February 1998.

OPTION TO PURCHASE ADDITIONAL COMMON STOCK OF IMMUNEX

         Immunex and AHP are parties to a 1993 Governance Agreement under which
AHP has the option to purchase from us on a quarterly basis, additional shares
of Immunex common stock to the extent necessary to maintain AHP's percentage
ownership interest as of the immediately preceding quarter. The per share
purchase price of such shares is equal to the fair market value of such shares,
as determined in accordance with the Governance Agreement, on the date of AHP's
purchase. AHP exercised its option and purchased 111,283 shares in 1998 and
28,223 shares in 1997 for $6,877,000 and $1,280,000 in 1998 and 1997,
respectively.



NOTE 10.  COMMITMENTS AND CONTINGENCIES

         We lease office and laboratory facilities under certain noncancelable
operating leases that expire through December 2002. These leases provide us 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, 1998 follows (in thousands):

<TABLE>
<CAPTION>
         Year Ended December 31,                        Operating Leases
         -----------------------                        ----------------
         <S>                                            <C>
                  1999                                  $          4,620
                  2000                                             3,195
                  2001                                               920
                  2002                                               799
                  Thereafter                                           -
                                                        ----------------
                  Total minimum lease payments          $          9,534
                                                        ----------------
                                                        ----------------
</TABLE>

         Rental expense on operating leases was $4,000,000 in 1998, $3,339,000
in 1997 and $2,781,000 in 1996.

         We are utilizing a contract manufacturer for the production of ENBREL.
At December 31, 1998, we had made commitments to purchase inventory totaling
approximately $198,000,000 over the next two years. A portion of this inventory
will be purchased by AHP from the contract manufacturer.

         Various license agreements exist that require Immunex 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 $12,997,000 in 1998,
$8,139,000 in 1997, and $6,136,000 in 1996. Certain of these agreements contain
minimum annual royalty provisions as follows (in thousands):

<TABLE>
<CAPTION>
                                                        Minimum Annual
         Year Ended December 31,                        Royalty Payment
         -----------------------                        ---------------
         <S>                                            <C>
                  1999                                  $        8,630
                  2000                                           8,380
                  2001                                           8,380
                  2002                                           8,380
                  Per year thereafter                            3,380
</TABLE>


         We have a 1992 settlement agreement with Hoechst Roussel
Pharmaceuticals, Inc. (HRPI). Under this agreement, a payment of $2,000,000 will
be made to HRPI if we receive an expanded label indication for LEUKINE for
treatment of chemotherapy-induced neutropenia.

         Immunex is party to routine litigation incident to our business. We
believe the ultimate resolution of these matters will not have a material
adverse impact on our future financial position and results of operations.


                                       53
<PAGE>


                               IMMUNEX CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 11.  SUBSEQUENT EVENTS

         On January 11, 1999, we entered into an agreement with another party to
settle certain patent issues related to ENBREL. As a result of the agreement, we
paid an initial license fee of $11,000,000, of which $4,500,000 will be
reimbursed by AHP. A subsequent milestone fee of $5,000,000 will be paid if
ENBREL is approved in Europe, of which $2,500,000 will be reimbursed by AHP.
Royalties will also be payable under the agreement on net sales of ENBREL.

         On February 23, 1999, our Board of Directors approved a two-for-one
stock split of Immunex common stock. Shareholders of record on March 11, 1999
will be issued a certificate representing one additional share of our common
stock for each share held on March 11, 1999. Share and per share amounts
reported in our Consolidated Financial Statements and Footnotes have not been
adjusted to reflect the two-for-one stock split.

NOTE 12.  QUARTERLY FINANCIAL RESULTS (UNAUDITED)

         Our consolidated operating results for each quarter of 1998 and 1997
are summarized as follows (in thousands):

<TABLE>
<CAPTION>
                                                                            Three Months Ended
                                                        ------------------------------------------------------------
                                                        March 31        June 30        September 30      December 31
                                                        --------        -------        ------------      -----------
<S>                                                    <C>              <C>              <C>              <C>     
Year ended December 31, 1998:
   Product sales                                       $ 38,816         $ 39,961         $ 40,125         $ 51,005
   Royalty and contract revenue                           3,050           24,194(1)         9,051           37,248(3)
   Cost of sales                                          7,090            7,691            7,242           11,262
   Research and development expenses                     26,906           36,910(2)        26,894           29,244
   Selling, general and administrative expenses          18,437           20,780           21,593           32,967
   Operating income (loss)                              (10,567)          (1,226)          (6,553)          14,780
   Net income (loss)                                   $ (9,024)        $    195         $ (4,925)        $ 14,740
   Net income (loss) per common share:
     Basic                                             $  (0.23)        $   0.00         $  (0.12)        $   0.37
     Diluted                                           $  (0.23)        $   0.00         $  (0.12)        $   0.35

Year ended December 31, 1997:
   Product sales                                       $ 35,899         $ 38,961         $ 37,674         $ 37,138
   Royalty and contract revenue                           3,548            4,045           18,287(4)         9,745
   Cost of sales                                          6,278            6,228            6,207            5,839
   Research and development expenses                     23,962           26,770           28,003           30,577
   Selling, general and administrative expenses          18,358           19,541           16,489           16,887
   Operating income (loss)                               (9,151)          (9,533)           5,262           (6,420)
   Net income (loss)                                   $ (8,701)        $ (8,699)        $  6,199         $ (4,571)
   Net income (loss) per common share:
     Basic                                             $  (0.22)        $  (0.22)        $   0.16         $  (0.12)
     Diluted                                           $  (0.22)        $  (0.22)        $   0.15         $  (0.12)
</TABLE>


(1)  Includes $20.0 million earned under the ENBREL Promotion Agreement with AHP
     when the BLA for ENBREL was accepted for review by the FDA.
(2)  Includes $10.0 million paid to acquire the rights outside North America to
     certain receptor product candidates we are developing.
(3)  Includes $30.0 million earned under the ENBREL Promotion Agreement with AHP
     when the FDA approved ENBREL.
(4)  Includes $15.0 million earned upon signing of the ENBREL Promotion
     Agreement with AHP.


                                       54

<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, 1998 and 1997, and the related
         consolidated statements of operations, shareholders' equity, and cash
         flows for each of the three years in the period ended December 31,
         1998. 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, 1998 and 1997, and
         the consolidated results of its operations and its cash flows for the
         each of the three years in the period ended December 31, 1998, 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 29, 1999



                                       55

<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 sections labeled "Proposed Election of Directors" and "Executive Officers"
in Immunex's definitive Proxy Statement for the annual meeting of shareholders
to be held on April 29, 1999.

ITEM 11.          EXECUTIVE COMPENSATION

         The information required by this item is incorporated by reference from
the section labeled "Executive Compensation" in Immunex's definitive Proxy
Statement for the annual meeting of shareholders to be held on April 29, 1999.

ITEM 12.          SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is incorporated by reference from
the sections labeled "Principal Shareholders" and "Security Ownership of
Management" in Immunex's definitive Proxy Statement for the annual meeting of
shareholders to be held on April 29, 1999.

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 Immunex's definitive Proxy Statement for the
annual meeting of shareholders to be held on April 29, 1999.


                                       56
<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, 1998, and 1997.                                      39

           Consolidated Statements of Operations for the years ended December 31, 1998, 1997
            and 1996.                                                                                        40

           Consolidated Statements of Shareholders' Equity for the years ended December 31, 1998, 1997
            and 1996.                                                                                        41

           Consolidated Statements of Cash Flows for the years December 31, 1998, 1997
            and 1996.                                                                                        42

           Notes to Consolidated Financial Statements for the years ended December 31, 1998, 1997
            and 1996.                                                                                      43 - 54

           Report of Ernst & Young LLP, Independent Auditors.                                                55
</TABLE>

       2.  FINANCIAL STATEMENT SCHEDULE. The following schedule supporting the
           foregoing consolidated financial statements for the years ended
           December 31, 1998, 1997 and 1996 is filed as part of this Form 10-K:

<TABLE>
<CAPTION>
                                                                                                           Page in
                                                                                                          Form 10-K
                                                                                                          ---------
       <S>                                                                                                <C>
       II  -    Valuation and Qualifying Accounts                                                            62
</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.


                                       57
<PAGE>


       3.  EXHIBITS

<TABLE>
<CAPTION>
           Exhibit
           Number       Description
           ------       -----------
           <S>          <C>                                                        <C>
            2.1         Amended and Restated Agreement and Plan of Merger, dated
                        as of December 15, 1992, among Immunex, 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
                        Immunex 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 Immunex dated December 17, 1986;
                        Consent to Assignment of Master Lease from OTR to CCDC,
                        Immunex and Weyerhaeuser Real Estate Company, dated
                        December 8, 1986. (Exhibit 10.22)                            (A)

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

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

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

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

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

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

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

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

            10.10       Agreement between Immunex and American Home Products
                        Corporation dated as of September 23, 1994. (Exhibit
                        10.24)                                                       (E)

            10.11       Real Estate Purchase and Sales Agreement between Immunex
                        and the Port of Seattle dated as of July 18, 1994.
                        (Exhibit 10.17)                                              (G)

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

            10.13       Immunex Corporation 1993 Stock Option Plan as Amended
                        and Restated on February 13, 1997. (Exhibit 10.23)           (G)

            10.14       Immunex Corporation Stock Option Plan for Nonemployee
                        Directors Amended and Restated on February 23, 1999.
                                                                                   63-66

            *10.15      ENBREL Promotion Agreement between Immunex and American
                        Home Products Corporation dated as of September 25,
                        1997. (Exhibit 10.1)                                         (H)
</TABLE>


                                       58
<PAGE>

<TABLE>
           <S>          <C>                                                        <C>
            10.16       Fourth Amendment to Real Estate Purchase and Sale
                        Agreement between Immunex and the Port of Seattle dated
                        as of December 1, 1997. (Exhibit 10.23)                      (I)

            *10.17      Product Rights Agreement among Immunex, American Home
                        Products Corporation and American Cyanamid Company dated
                        as of July 1, 1998. (Exhibit 10.1)                           (J)

          ***10.18      ENBREL Supply Agreement among Immunex, American Home
                        Products Corporation and Boehringer Ingelheim Pharma KG
                        dated as of November 5, 1998.                              67-125

            21.1        Subsidiaries of the Registrant.                             126

            23.1        Consent of Ernst & Young LLP, Independent Auditors.         127

            24.1        Power of Attorney.                                          128

            27.1        Financial Data Schedule.                                    
</TABLE>

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

            *     Confidential treatment granted as to certain portions.

            **    Executive compensation plan or arrangement.

            ***   Confidential treatment requested as to certain portions

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

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

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

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

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

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

            (I)   Incorporated by reference to designated exhibit included with
                  Immunex's Annual Report on Form 10-K for the fiscal year ended
                  December 31, 1997.

            (J)   Incorporated by reference to designated exhibit included with
                  Immunex's Current Report on Form 8-K dated July 1, 1998.


(b)      REPORTS ON FORM 8-K.

         None.

                                       59
<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 15, 1999
         -------------------------------------------------
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 15, 1999
----------------------------------------------------
         Edward V. Fritzky
         Chief Executive Officer, Chairman of the
         Board and Director
         (Principal Executive Officer)

         Douglas E. Williams*                                    March 15, 1999
----------------------------------------------------
         Douglas E. Williams
         Sr. Vice President-Discovery Research and
         Director

         /s/ Peggy V. Phillips                                   March 15, 1999
----------------------------------------------------
         Peggy V. Phillips
         Sr. Vice President-Pharmaceutical
         Development and Director

         /s/ Douglas G. Southern                                 March 15, 1999
----------------------------------------------------
         Douglas G. Southern
         Senior Vice President, Chief Financial
         Officer
         and Treasurer
         (Principal Financial and Accounting
         Officer)

         Joseph J. Carr*                                         March 15, 1999
----------------------------------------------------
         Joseph J. Carr
         Director

         Kirby L. Cramer*                                        March 15, 1999
----------------------------------------------------
         Kirby L. Cramer
         Director

         Robert I. Levy*                                         March 15, 1999
----------------------------------------------------
         Robert I. Levy
         Director

         John E. Lyons*                                          March 15, 1999
----------------------------------------------------
         John E. Lyons
         Director

         Joseph M. Mahady*                                       March 15, 1999
----------------------------------------------------
         Joseph M. Mahady
         Director

         Edith W. Martin*                                        March 15, 1999
----------------------------------------------------
         Edith W. Martin
         Director


                                       60
<PAGE>


         *By: /S/ Douglas G. Southern                            March 15, 1999
---------------------------------------------------
         Douglas G. Southern
         Attorney-in-Fact


                                       61
<PAGE>


                                                                     SCHEDULE II

                               IMMUNEX CORPORATION




                        VALUATION AND QUALIFYING ACCOUNTS
                  Years ended December 31, 1998, 1997 and 1996
                                 (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, 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
                                                          -------            -------            -------            -------
                                                          -------            -------            -------            -------
Year ended December 31, 1998:

     Reserve for discounts, returns
         and bad debts                                    $ 8,653            $12,147            $ 9,173            $11,627
                                                          -------            -------            -------            -------
                                                          -------            -------            -------            -------
     Reserve for chargebacks, Medicaid rebates
         and administrative fees                          $ 9,715            $54,794            $51,899            $12,610
                                                          -------            -------            -------            -------
                                                          -------            -------            -------            -------
</TABLE>


                                       62