<PAGE>
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

(MARK ONE)

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                  FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

        FOR THE TRANSITION PERIOD FROM ______________ TO ______________

                        COMMISSION FILE NUMBER 000-30289
                            ------------------------

                      PRAECIS PHARMACEUTICALS INCORPORATED

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                   <C>
                   DELAWARE                                        04-3200305
       (State or other jurisdiction of                (I.R.S. Employer Identification No.)
        incorporation or organization)

ONE HAMPSHIRE STREET, CAMBRIDGE, MASSACHUSETTS                     02139-1572
   (Address of principal executive offices)                        (Zip code)
</TABLE>

                                 (617) 494-8400
              (Registrant's telephone number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

                                      None
                                  -----------
                                (Title of Class)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:

                     Common Stock, par value $.01 per share
                      -----------------------------------
                                (Title of Class)

                        Preferred Stock Purchase Rights
                          ----------------------------
                                (Title of Class)

    Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (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 (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. /X/

    The aggregate market value of voting and non-voting stock held by
non-affiliates of the registrant, based upon the last sale price of the common
stock, par value $.01 per share, reported on the Nasdaq National Market on
March 26, 2001, was $1,001,569,635.

    The number of shares of common stock, par value $.01 per share, outstanding
as of March 26, 2001 was 50,771,815.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Specified portions of the definitive Proxy Statement with respect to the
registrant's 2001 Annual Meeting of Stockholders to be filed by the registrant
with the Securities and Exchange Commission are incorporated by reference into
Part III of this Report on Form 10-K.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                     FACTORS THAT MAY AFFECT FUTURE RESULTS

    The Company's prospects are subject to certain uncertainties and risks. This
Annual Report on Form 10-K also contains certain forward-looking statements
within the meaning of the federal securities laws. The Company's future results
may differ materially from its current results and actual results could differ
materially from those projected in the forward-looking statements as a result of
certain risk factors. READERS SHOULD PAY PARTICULAR ATTENTION TO THE
CONSIDERATIONS DESCRIBED IN THE SECTION OF THIS REPORT ENTITLED "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS--RISK
FACTORS THAT MAY AFFECT FUTURE RESULTS." Readers should also carefully review
the risk factors described in the other documents the Company files from time to
time with the Securities and Exchange Commission.
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED
                           ANNUAL REPORT ON FORM 10-K

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                          PAGE
                                                                        --------
<S>       <C>                                                           <C>
                                     PART I
Item 1.   Business....................................................      1
Item 2.   Properties..................................................     19
Item 3.   Legal Proceedings...........................................     20
Item 4.   Submission of Matters to a Vote of Security Holders.........     20

                                    PART II
Item 5.   Market for Registrant's Common Equity and Related
            Stockholder Matters.......................................     21
Item 6.   Selected Financial Data.....................................     22
Item 7.   Management's Discussion and Analysis of Financial Condition
            and
            Results of Operations.....................................     23
Item 7A.  Quantitative and Qualitative Disclosures About Market
            Risk......................................................     39
Item 8.   Financial Statements and Supplementary Data.................     40
Item 9.   Changes in and Disagreements with Accountants on Accounting
            and Financial Disclosure..................................     40

                                    PART III
Item 10.  Directors and Executive Officers of the Registrant..........     41
Item 11.  Executive Compensation......................................     41
Item 12.  Security Ownership of Certain Beneficial Owners and
            Management................................................     41
Item 13.  Certain Relationships and Related Transactions..............     41

                                    PART IV
Item 14.  Exhibits, Financial Statement Schedules and Reports on Form
            8-K.......................................................     42

          Signatures..................................................     45

          Index to Financial Statements...............................    F-1
</TABLE>
<PAGE>
                                     PART I

ITEM 1. BUSINESS.

OVERVIEW

    PRAECIS PHARMACEUTICALS INCORPORATED, a Delaware corporation incorporated in
1993, is a drug discovery and development company with a lead product, abarelix
depot, for the treatment of prostate cancer. In December 2000, we submitted to
the FDA a new drug application, or NDA, for abarelix depot for the treatment of
prostate cancer. The FDA has informed us that it has accepted and filed our NDA
and that it has granted the filing priority review. We intend to commercialize
abarelix depot globally with our collaborators, Amgen Inc. and Sanofi-Synthelabo
S.A. We believe that abarelix depot, formulated in our proprietary drug delivery
system known as Rel-Ease, which allows abarelix to be administered once every
four weeks, works in a unique way that will allow this drug to compete
successfully in the worldwide market for hormonal prostate cancer drugs.
According to IMS Health's Global Services' Midas database, this market was
approximately $2.6 billion in 1999.

    We are also developing abarelix depot for the treatment of women with
diseases that respond to a reduction of the female hormone estrogen, such as
endometriosis. We believe that patients suffering from endometriosis are largely
untreated and that abarelix depot will fulfill a significant unmet need.
Endometriosis is a painful, long-lasting condition affecting an estimated
5.5 million females in the United States and Canada. A phase II/III clinical
study of abarelix depot for the treatment of endometriosis is ongoing. Patient
enrollment is complete in this study, with 365 patients enrolled. We have
completed an interim analysis of the study results and have submitted this
analysis to the FDA for review. The timing of the next pivotal trial of abarelix
for the treatment of endometriosis will be determined following meetings with
the FDA.

    We are also developing Apan, our drug candidate for the treatment of
Alzheimer's disease, which affects more than four million Americans. Apan treats
what we and others believe to be the underlying cause of Alzheimer's disease,
rather than the symptoms. We have demonstrated in preclinical studies that Apan
is able to mobilize beta-amyloid in the brains of transgenic mice, and, based on
these studies, we believe that Apan may be facilitating the clearance of
beta-amyloid. In December 2000, we submitted to the FDA an investigational new
drug application, or IND, for Apan and we began clinical trials during
March 2001.

    Given the significant clinical and market opportunity in treating back pain,
we licensed Latranal, a proprietary topical composition that we are developing
for the relief of localized muscle, tendon or neuropathic related pain, and in
particular, chronic back pain. In January 2001, we initiated a phase II clinical
study of Latranal. We intend to enroll 300 patients suffering from chronic back
pain in this randomized, placebo controlled study and expect to have interim
results of the study during the third quarter of 2001.

    Our proprietary drug discovery technology called Ligand Evolution to Active
Pharmaceuticals, or LEAP, has been valuable in the development of our pipeline
of product candidates. Because LEAP technology uses biological molecules as
ligands, we believe it can be used to develop new drugs against virtually any
disease target. LEAP was instrumental in the development of abarelix and Apan,
and we are using it against targets in other disease areas, including oncology
and inflammation. We also believe LEAP provides us with an opportunity to
exploit the potential for drug discovery presented by new drug targets coming
out of the Human Genome Project, a government sponsored, multi-institutional
effort to determine the entire sequence of the DNA of human genes. We are
collaborating with Human Genome Sciences, Inc. to use LEAP to discover, develop
and commercialize compounds targeted to proprietary proteins that they have
identified that are encoded in the genome. The first of these targets is CCR5, a
human protein the HIV virus uses to enter human cells.

                                       1
<PAGE>
    As noted above, our technology platform also includes Rel-Ease. We have
demonstrated that Rel-Ease is useful for producing abarelix and other compounds
in sustained release formulations. We hold a patent that covers the general
application of this technology for a broad range of drugs. We intend to use our
Rel-Ease technology to create improved formulations and produce sustained
release formulations of approved drugs, as well as to formulate drugs we
discover and develop using our LEAP technology.

RECENT DEVELOPMENTS

    On February 21, 2001, we completed a follow-on public offering in which we
sold 6,500,000 shares of common stock at a price of $24.5625 per share, raising
a total of approximately $150.5 million in net proceeds after payment of
underwriting discounts and commissions and estimated offering expenses. On
February 23, 2001, the underwriters of our follow-on offering exercised their
right to purchase additional shares of common stock to cover over-allotments.
Accordingly, on February 27, 2001, we sold an additional 1,087,500 shares of
common stock at a price of $24.5625 per share, resulting in approximately an
additional $25.3 million in net proceeds after payment of underwriting discounts
and commissions. Thus, we sold a total of 7,587,500 shares of common stock in
our follow-on public offering for a total of approximately $175.8 million, net
of underwriting discounts and commissions and estimated offering expenses.

    We expect to use the net proceeds of the offering for clinical trials of
abarelix and other product candidates, preclinical testing and expansion of
research and development initiatives, sales and marketing expenses, production
of abarelix drug products, completion of our new facility and for general
corporate purposes. In addition, we may use a portion of the net proceeds for
potential acquisitions of complementary businesses, products or technologies. As
part of the public offering, one of our stockholders sold 750,000 shares of
common stock. We did not receive any of the proceeds from the sale of shares by
the selling stockholder.

PRODUCT PIPELINE

    We focus our drug development efforts on conditions or diseases where there
are significant unmet needs creating a potential for large product revenues. We
have four programs that have moved beyond the research phase into clinical
testing, as well as various research and preclinical programs. We have

                                       2
<PAGE>
outlined our clinical programs and five of our programs in the research or
preclinical development stage, along with the clinical indications they address,
in the following table:

<TABLE>
<CAPTION>

<S>                    <C>                    <C>                    <C>
                                                                     CORPORATE
PRODUCT CANDIDATES     DISEASE                STATUS                 COLLABORATORS
---------------------  ---------------------  ---------------------  ---------------------
Abarelix Depot         Hormonally Responsive  NDA Submitted          Amgen; Sanofi-
                       Prostate Cancer                               Synthelabo

Abarelix Depot         Endometriosis          Phase II/III           Amgen; Sanofi-
                                                                     Synthelabo

Latranal               Chronic Back Pain      Phase II               --

Apan                   Alzheimer's Disease    Phase I                --

Apan-CH                Alzheimer's Disease    Research/Preclinical   --

CCR5 Antagonist        AIDS                   Research/Preclinical   Human Genome
                                                                     Sciences*

PPI 3088               Inflammation           Research/Preclinical   --

Androgen Receptor      Hormone-Independent    Research/Preclinical   --
Antagonist             Prostate Cancer

Endometriosis          Endometriosis          Research/Preclinical   --
Diagnostic
------------------------------------------------------------------------------------------
* Subject to GlaxoSmithKline option, if exercised, to assume development and
  commercialization with Human Genome Sciences, Inc.
</TABLE>

  ABARELIX PROGRAM

    Abarelix has potential use in treating diseases that respond to the
reduction of testosterone, a male hormone, and estrogen, a female hormone.
Examples of these diseases include prostate cancer, endometriosis, uterine
fibroids, breast cancer, benign prostatic hypertrophy, polycystic ovarian
disease, infertility and precocious puberty. Treatments that reduce testosterone
or estrogen through the use of drugs, known as hormonal therapy, result in a
therapeutic benefit to the patient suffering from these diseases.

    Currently available hormonal therapies act by overstimulating the GnRH
receptor, located on the pituitary gland, a small gland in the center of the
brain. Overstimulation of the pituitary GnRH receptor causes the GnRH receptor
to completely shut down after approximately three weeks. However, this
overstimulation leads to increased production of the hormones luteinizing
hormone, or LH, and follicle stimulating hormone, or FSH. The increased levels
of LH cause an initial surge of testosterone from the testes in males and a
surge of estrogen from the ovaries in females. The temporary surge in hormone
levels may result in a worsening, or flare, of the disease for which the patient
takes the therapy. Only after several weeks following administration of these
hormonal therapies does the GnRH receptor shut down and the desired reduction of
hormonal levels occur. With continued treatment with currently available
hormonal therapies, testosterone levels and LH levels remain lowered while FSH
levels return to pretreatment levels. The role of FSH in prostate cancer is not
fully understood. Recent scientific studies suggest that FSH may play a role in
stimulating prostate cancer cell growth. Due to the testosterone surge, current
hormonal therapies, such as Lupron Depot, marketed by TAP Pharmaceuticals Inc.,
and Zoladex, marketed by AstraZeneca Pharmaceuticals, have precautionary
labeling about the hormone-induced flare. The FDA mandates this precautionary
labeling, and the drug labels and packaging for these currently available drugs
must prominently

                                       3
<PAGE>
include the precautionary labeling to protect patients and avoid the use of the
drugs in patients who are at risk for developing life-threatening conditions as
a result of the disease flare.

    In contrast, abarelix has a blocking, or antagonist, effect on the GnRH
receptor. Abarelix rapidly shuts off the production of LH and FSH and,
consequently, rapidly reduces the patient's levels of testosterone or estrogen.
With abarelix, unlike commercially available hormonal therapies, there is no
increase in hormonal levels before achieving the desired hormone level
reduction. Furthermore, FSH levels remain lowered over time with continued
treatment with abarelix further distinguishing it from currently available
hormonal therapies. Results of our prostate cancer and endometriosis clinical
trials demonstrate that abarelix rapidly inhibits hormone production without the
initial surge in hormone levels.

    Our most advanced programs involve the development of abarelix depot for the
treatment of diseases exacerbated by testosterone in men or estrogen in women.
We believe abarelix depot represents the first commercially viable sustained
release formulation of an important class of compounds known as GnRH
antagonists.

    ABARELIX DEPOT--PROSTATE CANCER

    BACKGROUND.  Prostate cancer is one of the most commonly diagnosed cancers
in men. The American Cancer Society estimates that approximately 198,000 new
diagnoses of, and 32,000 deaths from, prostate cancer will occur in the United
States in 2001. In nearly all newly diagnosed prostate cancer patients, the
cancerous cells require androgens, including testosterone and its derivatives,
for growth. Androgens stimulate the growth of the cancerous cells. Since
androgens stimulate the growth of the cancerous cells, this stage of prostate
cancer is commonly referred to as hormonally responsive prostate cancer.
Approximately 40% of newly diagnosed patients have prostate cancer that has
spread beyond the prostate gland, referred to as non-localized prostate cancer.
Patients at this stage generally receive long-term hormonal therapy. The goal of
this therapy is to reduce testosterone to low levels, leading to inhibition of
prostate cancer cell growth. The remaining 60% of patients, whose prostate
cancer is localized and generally hormone-responsive, are increasingly receiving
hormonal therapy in addition to other therapies, such as radiation therapy,
including radioactive seed implantation to the prostate gland. The worldwide
market for hormonal prostate cancer drugs was approximately $2.6 billion in
1999, according to the IMS Health's Global Services' Midas database.

    To date, we have focused primarily on the development of abarelix depot as a
treatment for hormonally responsive prostate cancer. Abarelix depot is a
sustained release formulation of abarelix that enables abarelix to be
administered once every four weeks following the first four weeks of
administration, during which time an additional injection is given on day 15.
Our pivotal phase III studies demonstrate that abarelix depot reduces the time
required to achieve therapeutically low testosterone levels without the
testosterone surge and the resulting symptoms. Abarelix depot, if approved for
marketing, will be the first commercially available GnRH antagonist in a
sustained delivery formulation for the acute and chronic management of patients
with prostate cancer.

    The surge of testosterone associated with available hormonal therapies may
last as long as three weeks before the intended medical effect of reduced
testosterone levels takes place. In an attempt to mitigate the flare, many
practicing physicians prescribe additional drugs, known as anti-androgens.
Anti-androgens, such as Casodex, marketed by AstraZeneca Pharmaceuticals, are
oral drugs given one-to-three times a day. Anti-androgens function by
interfering with the effect of testosterone at the cellular level but do not
reduce circulating testosterone levels or the initial surge in hormone levels
associated with currently available hormonal therapies. This additional therapy
may be only partially effective in reducing some of the undesirable effects of
the flare. In addition, anti-androgen therapy may cause various side effects,
including liver damage, breast enlargement, lung dysfunction and

                                       4
<PAGE>
gastrointestinal distress. Finally, Medicare generally does not reimburse the
costs of anti-androgens. This means that many patients may not receive the
potential benefit of anti-androgens.

    In our pivotal phase III safety and efficacy studies of over 500 patients,
none of the patients treated with abarelix depot experienced a testosterone
surge. In contrast, more than 80% of patients treated with Lupron Depot alone or
in combination with Casodex experienced a sustained testosterone surge. A major
reason for using anti-androgens in clinical practice is to mitigate the surge
and avoid the subsequent flare. We believe that the results of our clinical
studies may lessen the perceived need to use anti-androgens because the use of
abarelix depot alone avoids the surge.

    Some patients with advanced-stage hormonally responsive prostate cancer are
at higher risk of serious harm resulting from the testosterone surge. Based upon
our studies, these patients constitute approximately 15% of all non-localized
prostate cancer patients. In these patients, the testosterone surge may lead to
urinary blockage, worsening pain, kidney failure, paralysis and nerve damage due
to spinal cord compression, and even death. FDA mandated drug product labels
specifically warn against the use of available hormonal therapy in patients with
the potential for developing worsening neuropathic function, including
paralysis, due to spinal metastases, worsening of kidney and urinary function,
and worsening of bone pain due to secondary bone metastases. In these cases,
patients may require immediate surgical removal of the testes to both rapidly
reduce testosterone levels and avoid the testosterone surge. Based upon our
analysis of our clinical studies, we believe that abarelix depot may have the
potential to provide a non-surgical alternative for these patients. A
significant portion of patients who do not have confirmed spinal tumors are
still at risk for developing life-threatening conditions as a result of the
disease flare. We believe that both physicians and patients will prefer a
treatment option that eliminates the potential risks of a clinical flare
response.

    ABARELIX DEPOT--PROSTATE CANCER CLINICAL STUDIES.  We submitted to the FDA
an NDA comprised of comprehensive safety and efficacy data in December 2000 to
support marketing approval of abarelix depot for the treatment of prostate
cancer. Our submission included data from two pivotal phase III safety and
efficacy studies for the treatment of hormonally responsive prostate cancer, one
pivotal phase III safety study, an ongoing phase II/III study in advanced
metastatic prostate cancer patients, as well as previously completed phase I and
phase I/II studies. In January 2001, the FDA informed us that it had accepted
and filed the NDA and had granted the filing priority review. This is a
classification applied to a product that, if approved, would in the FDA's
judgment represent a significant improvement compared to currently marketed
products, and means that the FDA is committed to complete its review of the NDA
within six months of the submission, which would be June 12, 2001. During the
review period, the FDA may ask for additional information that could extend its
review beyond June 12, 2001. Following completion of its review, the FDA will
inform us whether or not the drug is approved for marketing, and if not, what
additional steps are necessary for its approval.

    In November 1999, we completed two pivotal phase III clinical trials of
abarelix depot for the treatment of hormonally responsive prostate cancer. The
first phase III clinical trial was a 269 patient study comparing abarelix depot
to Lupron Depot. This study compared the safety of both drugs and the ability of
both drugs to reduce testosterone levels. The second phase III clinical trial
was a 251 patient study comparing the safety and efficacy of abarelix depot to
the combination therapy of Lupron Depot plus Casodex.

    In addition to well-defined safety parameters, these studies had three
prospectively defined primary endpoints:

    - the demonstration of the benefit of abarelix depot compared to Lupron
      Depot and Lupron Depot plus Casodex in avoiding or eliminating the
      testosterone surge;

                                       5
<PAGE>
    - the demonstration of the benefit of abarelix depot compared to Lupron
      Depot and Lupron Depot plus Casodex in rapidly achieving therapeutically
      low testosterone levels, based on a measurement of testosterone levels on
      the eighth day following treatment; and

    - the demonstration of the similarities of abarelix depot to Lupron Depot
      and Lupron Depot plus Casodex in achieving and maintaining therapeutically
      low testosterone levels through 85 days of treatment.

    To demonstrate the benefit of abarelix depot compared to Lupron Depot and
Lupron Depot plus Casodex in avoiding or eliminating the testosterone surge, we
measured testosterone levels prior to and throughout the first week of
treatment. In our clinical studies, we define testosterone surge as a 10% or
greater increase in testosterone levels above pre-treatment levels. None of the
abarelix depot treated patients demonstrated a testosterone surge based on two
measurements during the first week of treatment. In contrast, more than 80% of
patients treated with Lupron Depot and Lupron Depot plus Casodex experienced
elevations in testosterone levels greater than 10% above baseline.

    To demonstrate the benefit of abarelix depot compared to Lupron Depot and
Lupron Depot plus Casodex in rapidly achieving therapeutically low testosterone
levels, we measured testosterone levels on the eighth day of treatment. We
observed that approximately 70% of the abarelix depot treated patients achieved
therapeutically low testosterone levels by the eighth day of treatment. In
contrast, none of the patients treated with either Lupron Depot or Lupron Depot
plus Casodex had achieved therapeutically low testosterone levels on the eighth
day. To demonstrate the similarity of abarelix depot to Lupron Depot and Lupron
Depot plus Casodex in achieving and maintaining therapeutically low testosterone
levels through 85 days of treatment, we measured serum testosterone levels
frequently throughout the 85 days of treatment. We observed that greater than
90% of the patients, regardless of the treatment that we administered, were able
to achieve and maintain therapeutically low testosterone levels from day 29
through day 85.

    From a safety perspective, patients have tolerated treatment with abarelix
depot well to date. We observed some adverse reactions in patients during our
abarelix depot studies, including allergic reactions and temporary and
reversible elevation of some liver enzymes. We expected these reactions and
observed them with similar frequency in patients taking Lupron Depot and Lupron
Depot plus Casodex in our clinical studies.

    We believe that the collective data from all of our clinical studies
supports the primary endpoints we summarized above. In addition, we believe that
these findings will result in product labeling that is consistent with the
absence of an initial testosterone surge.

    In further support of the safety of abarelix depot, we and our corporate
collaborator, Amgen, conducted a separate pivotal phase III safety study
comparing abarelix depot to Lupron Depot in 582 patients. The primary objective
of this study was to gain more patient exposure to confirm the safety of
abarelix over a six-month course of therapy. The results of this safety study
are consistent with previous studies and will supplement existing patient drug
exposure data. We included these results in our NDA.

    In addition, we are testing abarelix depot in an ongoing phase II/III
clinical trial to evaluate its use in patients with advanced prostate cancer
where the use of current hormonal therapies could result in a life-threatening
disease flare. The goal of this study is to demonstrate that abarelix depot
provides a medical alternative to immediate surgical removal of the testes for
this high risk population. We have been monitoring these patients' prostate
specific antigen, or PSA, levels as part of our evaluation. PSA is a widely used
screen for identification of patients with prostate cancer. Although the FDA
does not accept PSA levels for its approval purposes, physicians monitor a
patient's progress based on PSA levels over time. We observed an immediate
decrease in median PSA levels in patients with advanced prostate cancer that we
treated with abarelix depot. In addition, many of these patients required fewer

                                       6
<PAGE>
narcotic analgesics, their kidney function improved and their bone scans
revealed a reduction in cancerous lesions.

    Our corporate collaborator Sanofi-Synthelabo is conducting a 176 person
study in Europe comparing the safety and efficacy of abarelix depot to Zoladex
plus Casodex. Based on our initial analysis, we believe the results of this
study are consistent with the safety and efficacy results we observed in our two
pivotal phase III studies described above.

    We also included supporting data from earlier abarelix depot clinical trials
in our NDA, including a three-month, 263 patient phase I/II clinical study of
abarelix depot for the treatment of hormonally responsive prostate cancer,
completed in June 1999, and a 36 patient phase I/II clinical trial of abarelix
in patients with locally confined prostate cancer prior to radiation therapy or
surgical removal of the prostate, completed in December 1998.

    ABARELIX DEPOT--ENDOMETRIOSIS

    BACKGROUND.  We also are developing abarelix depot for the treatment of
endometriosis. We believe that abarelix depot, if it receives FDA approval for
marketing, will be the first commercially available GnRH antagonist in a
sustained delivery formulation for the rapid and sustained reduction of pain
associated with endometriosis through estrogen suppression. We have fully
enrolled 365 patients in a phase II/III study that compares the safety and
efficacy of abarelix depot to Lupron Depot with respect to the ability to
provide pain relief. We are also confirming the ability of abarelix depot to
rapidly suppress estrogen, which we initially demonstrated in our phase I/II
study. The phase II/III study includes a 24-week treatment period and a 12-month
follow-up period. We have completed an interim analysis of the study results and
have submitted this analysis to the FDA for review. The timing of the next
pivotal trial of abarelix for the treatment of endometriosis will be determined
following meetings with the FDA.

    Endometriosis is a condition where endometrial tissue grows beyond the
uterine lining, most often on the surfaces of organs in the pelvic cavity.
Endometrial tissues, regardless of location in the body, respond to the normal
menstrual cycling of women. When the location of the endometrial tissue prevents
the appropriate sloughing of tissue that normally occurs during menstruation,
inflammation, gastrointestinal symptoms and internal scarring occurs. This
causes, among other things, pain, fatigue, heavy menstrual bleeding, painful
sexual intercourse and infertility. On rare occasions, these displaced
endometrial tissues may even cause bleeding in distant organs, such as the
lungs. Each year, approximately 300,000 females are diagnosed with endometriosis
in the United States, while an estimated 5.5 million females in the United
States and Canada suffer from endometriosis. As a result of increased awareness
of female health, we believe that the number of patients diagnosed with and
treated for endometriosis will increase.

    Existing treatments for endometriosis include the use of pain management
medications, birth control pills and hormonal therapies, of which Lupron Depot
and Zoladex are the most commonly used. The use of current hormonal therapies to
suppress estrogen production causes an initial estrogen surge in women. Lupron
Depot, Zoladex and other drugs that act in a similar way include FDA mandated
drug product labels warning against the adverse effects associated with an
estrogen surge. These labels can include warnings for the worsening in the signs
and symptoms of endometriosis, which include pain, cramping and excessive
bleeding, the risk of tumor flare in breast cancer and the development of
ovarian cysts. Our initial studies show that abarelix depot causes a more rapid
reduction of estrogen levels and associated relief of menstrual-related pain
compared to Lupron Depot. In addition, there is no estrogen surge associated
with the use of abarelix.

                                       7
<PAGE>
    ABARELIX DEPOT--ENDOMETRIOSIS CLINICAL STUDIES.  To date, we have completed
a phase I/II study of 40 women with confirmed endometriosis using abarelix
depot, and patient enrollment is complete in a 365 patient, phase II/III study.
In these studies, we administered an injection of abarelix depot once every four
weeks. In the phase I/II study, we compared various doses of abarelix depot to
the standard dose of Lupron Depot. Patients receiving Lupron Depot therapy
experienced estrogen surges that required several weeks to reach therapeutically
low levels, while patients treated with abarelix depot experienced a rapid
reduction of estrogen levels without the initial surge. Furthermore, patients
receiving Lupron Depot therapy had more frequent episodes of
endometriosis-associated menstrual pain during the first month of treatment
compared to patients receiving abarelix depot. Patients have tolerated treatment
with abarelix depot well in these studies.

    To date, the safety profile for abarelix depot for the treatment of
endometriosis is consistent with the safety profile that we have observed in the
clinical studies of abarelix depot for the treatment of prostate cancer
described above. As expected, we observed some adverse reactions in patients
during our studies of abarelix depot and Lupron Depot, including temporary and
reversible irritation at the injection site and temporary and reversible
elevation of some liver enzymes. In addition, the use of hormonal therapies that
lower estrogen levels, including abarelix depot, can result in bone mineral
density loss.

    ADDITIONAL INDICATIONS FOR ABARELIX

    We believe that abarelix can treat other diseases where hormone reduction is
a goal of therapy, including benign prostatic hypertrophy, breast cancer and
uterine fibroids. We have not yet begun clinical trials of abarelix for these
diseases.

    An estimated ten million men over the age of 50 in the United States have
benign prostatic hypertrophy, symptoms of which include impaired urinary flow
and, in the most severe cases, urinary retention. These symptoms are in part
related to the fact that the prostate gland continues to enlarge with age. We
believe that approximately 25% of patients with this disease could benefit from
a reduction in the size of the prostate gland. Based on data from our phase II
clinical trial of abarelix, in which urinary problems in prostate cancer
patients were assessed, we believe that abarelix may be useful in treating
urinary symptoms associated with diseases of the prostate gland.

    The American Cancer Society estimates that there will be approximately
192,200 newly diagnosed cases of, and 40,200 deaths from, invasive female breast
cancer in the United States in 2001. Approximately one-third of all newly
diagnosed patients are pre-menopausal, and in many of these cases, estrogen
stimulates the growth of the breast cancer. Studies of patients taking current
hormonal therapies, such as Zoladex, suggest that these therapies are beneficial
due to their ability to suppress estrogen. The FDA has approved the marketing of
Zoladex for this use. We believe abarelix has the potential to treat female
breast cancer and reduce estrogen levels rapidly and without an estrogen surge.

    Other conditions in which hormone reduction is an accepted goal of therapy
include uterine fibroids, polycystic ovarian disease, infertility and precocious
puberty. Approximately ten million women in the United States suffer from
uterine fibroids, which are benign enlargements of the uterus. In addition, an
estimated three million women in the United States suffer from polycystic
ovarian disease, a disease characterized by excessive hormonal production caused
by ovarian cysts.

  LATRANAL

    We are developing Latranal, a drug formulation applied to the skin over an
area of localized muscle, tendon or neuropathic-related pain for pain relief. We
are evaluating the use of Latranal to treat chronic back pain in our ongoing
phase II clinical studies. Pain, whether associated with injury, illnesses or
the general aging process, remains one of the most serious and poorly treated
afflictions.

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Worldwide, consumers spend approximately $9.5 billion annually on all
medications for pain management. The cost of pain-related issues to society is
significant. For example, in the United States, back pain is a leading cause of
lost work days. The needs of pain sufferers, especially those suffering from
chronic pain conditions, are generally poorly met. We estimate that there are
several million individuals suffering from chronic pain in the United States,
Europe and Japan who are experiencing minimal to no relief from currently
available treatment options, including prescription pain medications.

    Latranal is a proprietary topical formulation made from two generically
available compounds. Both of these compounds have been in use as oral
formulations for extended periods of time and have demonstrated acceptable
safety profiles for their intended uses. One of these compounds affects nerve
action and the other has muscle relaxant properties. Through a license from
Pharmaceutical Applications Associates, we obtained rights to the patents filed
on this drug formulation and its use as a treatment for pain. Pharmaceutical
Applications Associates discovered that the combination of these two compounds,
when applied to the skin, may result in localized pain relief. To date, the
clinical observations by Pharmaceutical Applications Associates of over 100
patients suggest that relief of localized muscle, tendon or neuropathic-related
pain can occur with the use of this drug combination.

    We completed a phase Ia and phase Ib safety study of Latranal with 42
healthy volunteers in August 2000. We observed no serious side effects due to
the drug in these studies. We initiated a phase II safety and efficacy study and
began dosing patients with Latranal in this randomized, placebo controlled study
in January 2001. We intend to enroll 300 patients in this study who are
suffering from chronic back pain not related to disc disease and expect to have
interim results during the third quarter of 2001.

  APAN

    We are developing Apan for the treatment of Alzheimer's disease. Alzheimer's
disease affects an estimated four million people in the United States, according
to a 1998 report issued by the National Institute of Aging. According to the
Alzheimer's Association, Alzheimer's disease is expected to become increasingly
prevalent as the population ages. Current therapies provide temporary relief for
some of the symptoms of Alzheimer's disease but do not affect the progression of
the disease itself.

    A hallmark of Alzheimer's disease is the accumulation of plaque-like
deposits in brain tissue. A major component of this plaque is a small peptide
called beta-amyloid. Over the past several years, a large body of clinical,
biochemical and genetic evidence has emerged suggesting that the aggregation of
beta-amyloid peptide is the underlying cause of Alzheimer's disease. This body
of evidence has led to the widely held theory that when single beta-amyloid
molecules aggregate they become toxic to nerve cells, and that this toxicity
leads to the development and progression of Alzheimer's disease. We used our
LEAP technology to select Apan to interfere with this aggregation process.

    We have shown that Apan specifically inhibits the aggregation of
beta-amyloid and prevents the associated nerve cell toxicity in preclinical
experiments. In addition, we have shown in rats and mice that Apan reaches the
brain in quantities that we believe are sufficient to block the aggregation of
beta-amyloid molecules and alter the course of the disease. Recent studies in
transgenic mice that develop human Alzheimer's disease plaques in their brains
suggest that Apan can mobilize beta-amyloid. Alzheimer's disease, and the
associated accumulation of beta-amyloid in the brain, is often thought of as a
defect in the ability to clear beta-amyloid from the brain to the cerebro-spinal
fluid, or CSF. Both humans and transgenic mice with Alzheimer's disease plaques
show increased levels of beta-amyloid in the brain and decreased levels in the
CSF as the disease progresses. In contrast, transgenic mice treated with Apan
show significant increases in beta-amyloid levels in the CSF, indicating that
Apan is able to mobilize beta-amyloid in the brain and may be facilitating its
clearance.

    We have completed preliminary good laboratory practice toxicology studies of
Apan and submitted our IND in December 2000. In March 2001, we began dosing
patients in a normal volunteer, phase I

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clinical trial of Apan. In this trial, we will evaluate the safety and
pharmacokinetics of Apan in up to 40 healthy volunteers.

  APAN-CH

    While our preclinical studies show that Apan can mobilize beta-amyloid and
potentially prevent its initial accumulation in the brain, we are also pursuing
a complementary therapeutic strategy that attempts to remove existing plaque
from the Alzheimer's disease-affected brain. Recent published studies show that
stimulating an autoimmune response to beta-amyloid through vaccination of
transgenic mice can effect the removal of Alzheimer's disease plaques from the
brains of these mice. These studies indicate that cells of the immune system can
function to take up and remove plaques in the brain. Using natural peptide
ligands that bind to Alzheimer's disease plaques, we have created proprietary
fusion proteins between these ligands and sequences from proteins of the immune
system. We have shown that these fusion proteins, that we refer to as Apan-CH,
bind to Alzheimer's disease plaques with high specificity and affinity. Studies
are ongoing to determine if Apan-CH plays a role in the removal of Alzheimer's
disease plaques.

  CCR5 ANTAGONIST

    Recent studies identified groups of individuals who are resistant to HIV
infection despite multiple exposures to the AIDS virus. Genetic characterization
of these individuals revealed that they have mutations in the CCR5 gene which
prevents the expression of the functional CCR5 protein, yet they remain healthy.
The HIV virus uses the CCR5 protein as a point of entry into T cells, which are
a part of the human immune system. Taken together, these studies identify CCR5
as an ideal drug target for AIDS therapy, as CCR5 is necessary for HIV
infection, but appears not to be required for human health. Through our
collaboration with Human Genome Sciences, we have licensed certain rights to
CCR5 as a disease target. Using our LEAP technology, we have discovered potent
ligands against CCR5 that may act as inhibitors of HIV entry into T cells.

  PPI 3088

    Nuclear Factor-kB, or NF-kB, is an inducible transcription factor identified
as a central mediator of inflammation in a number of diseases, including
rheumatoid arthritis, inflammatory bowel disease and lupus. NF-kB receives
signals from sources outside the cell such as viral and bacterial infection,
tumor necrosis factor, or TNF, interleukin-L, or IL-1, oxidative stress and
other forms of tissue damage. When it receives these signals, NF-kB activates an
inflammatory cascade that leads to tissue damage and disease progression. We
have identified peptides that have been shown in laboratory experiments to
penetrate cells and inhibit NF-kB, thereby arresting inflammation in several
animal disease models. We believe that one or more of these peptides may be
superior to other anti-inflammatory molecules because in laboratory experiments
they suppress the entire inflammatory cascade rather than just targeting single
inflammatory molecules, such as TNF or IL-1, as some existing drugs do.

  ANDROGEN RECEPTOR ANTAGONIST

    Because testosterone and other hormones are growth factors for prostate
cancer cells, hormone-lowering therapy is a safe and effective treatment for
patients with hormone-dependent prostate cancer. However, a significant number
of patients eventually progress to a condition known as hormone-independent
prostate cancer, where the prostate cancer cells no longer need testosterone and
other hormones to grow and, as a consequence, hormone-lowering therapies are
ineffective. Genetic studies in these patients reveal that most of them have
accumulated mutations in the gene encoding the Androgen Receptor, or AR,
allowing it to function in the absence of testosterone and indicating that the
AR is central to the growth of prostate cancer cells. Using our LEAP technology,
we have discovered ligands that bind to the AR and prevent it from functioning,
providing the basis for new

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<PAGE>
drugs to treat hormone-independent prostate cancer. If successful, the use of
these drugs could be expanded to treat prostate cancer at all stages.

  ENDOMETRIOSIS DIAGNOSTIC

    Considering that an estimated 5.5 million females in the United States and
Canada suffer from endometriosis, and that only approximately 300,000 females
are actually diagnosed with the disease in the United States, we believe a
diagnostic test is critical to better identify, assess and treat those who
suffer from the disease. Currently, endometriosis is diagnosed by a relatively
painful and expensive invasive procedure called laparoscopy. We are developing a
simple, non-invasive endometriosis diagnostic test based on the immune response
of disease sufferers. Significant differences in immune responses have been
observed in women with endometriosis, and these differences are thought to be
the underlying cause of the disease. Using the proteomics component of our LEAP
technology, we are identifying proteins that underlie the differences in immune
responses between diseased and non-diseased individuals. These proteins could
prove useful to diagnose individuals with the disease and identify candidates
for treatment with abarelix depot, as well as assisting in the further
understanding of the disease process.

TECHNOLOGY

  LEAP

    Our proprietary method for discovering drugs is based on a unique system
that combines the power and diversity of biological selection with the favorable
drug-like properties added using medicinal chemistry. We call this process
Ligand Evolution to Active Pharmaceuticals, or LEAP. We believe LEAP is superior
to traditional methods of drug discovery that are limited by the number of
compounds that the traditional methods can make and test mechanically. In a
typical LEAP selection process, we can examine more than a trillion molecules in
a few months. By contrast, conventional screening and medicinal chemistry permit
the examination of fewer than one million molecules with equivalent resources
and require more time.

    In the case of abarelix, LEAP allowed us to take a peptide ligand encoded in
the human genome and convert that peptide into a drug. GnRH is a natural peptide
ligand that binds to the GnRH receptor on the pituitary gland triggering the
production of LH, which, in turn, triggers the production of testosterone. We
used LEAP to evolve GnRH into abarelix, a drug that binds to the same receptor
target, but blocks the production of LH.

    If a ligand from the human genome is not available, we can select one
encoded in a synthetic gene library using a process we call biological
evolution. This process involves the natural selection of the best ligand from a
pool containing billions of natural peptides in a biological system. We can
carry out this process in repeated cycles, selecting ligands based on their
functions. We then modify the selected ligand using a unique process that we
call chemical evolution. Chemical evolution is powerful because we can make
pools of thousands of diverse molecules based on the structure of the selected
ligand and composed of synthetic building blocks. We then select the best
molecules from these pools and identify them through our unique application of
the technology called mass spectrometry. These molecules can behave like drugs,
because they bind to their target like natural peptides and have the
characteristics of an effective drug.

  REL-EASE

    We can further enhance the clinical utility of our drug candidates by
formulating the drugs with our proprietary sustained release technology,
Rel-Ease. For example, using Rel-Ease technology, we are able to formulate
abarelix in such a way that a physician only needs to administer it once every
four weeks because Rel-Ease continuously releases the drug in the body over that
period of time. In many

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<PAGE>
cases, infrequent injections of a drug in a sustained release formulation are
more desirable than oral administration due to patient compliance, convenience
or reimbursement issues. We have formulated a variety of molecules with Rel-Ease
technology and believe that Rel-Ease may be useful for formulating drug
candidates we discover and develop using our LEAP technology.

    We believe we can also use Rel-Ease to produce improved formulations and
create sustained release formulations of approved drugs. Many drugs that have
been approved are not used widely because they require frequent injections to be
effective. We believe Rel-Ease could transform drugs requiring multiple
injections per day into drugs requiring dosing between once-a-week and once
every four weeks, increasing the use and adding value to these drugs. In
addition, because these drugs have already been approved for use in humans, the
development hurdles for gaining market approval of improved and sustained
release formulations may be lower.

  MASTRSCREEN

    MASTRscreen is our proprietary, rapid and efficient screening procedure that
identifies and evaluates ligands for the most successful class of drug targets,
known as G-protein coupled receptors. The GnRH receptor is a member of this
class of receptors. We developed MASTRscreen in connection with our abarelix
program, and it was instrumental in the selection of abarelix from pools of
modified peptides. MASTRscreen is useful because of its sensitivity to low
concentrations of screened material, easily measurable endpoints and
adaptability to various screening systems.

  ALZHEIMER'S DISEASE DRUG TESTS

    Our proprietary procedures for testing beta-amyloid aggregation measure the
aggregation of beta-amyloid and the ability of candidate molecules to prevent
the aggregation process. We used these testing procedures in the identification
of Apan. In addition, these testing procedures formed the basis of our
collaboration with Boehringer Ingelheim International GmbH, which was aimed at
developing orally administered drugs to treat Alzheimer's disease.

RESEARCH AND DEVELOPMENT

    As of December 31, 2000, we had a total of 93 employees dedicated to
research and development for abarelix and our other product candidates. In 1998,
we established the Provid Research division to further extend our drug
development technologies. Our Provid Research division had 16 employees as of
December 31, 2000. We are consolidating the Provid Research division with our
Massachusetts operations when we move to our new corporate headquarters and
research facility in the spring of 2001.

    We have spent substantial funds over the past three years to develop
abarelix and our other potential drug candidates and expect to continue to do so
in the future. We spent approximately $33.7 million in 1998, $48.8 million in
1999 and $85.9 million in 2000 on research and development activities.

CORPORATE COLLABORATIONS

  AMGEN INC.

    Effective March 1999, we entered into an agreement with Amgen for the
research, development and commercialization of abarelix products in the United
States, Canada, Japan and other countries that the Sanofi-Synthelabo
collaboration does not cover. Under the terms of the Amgen agreement:

    - We could receive from Amgen up to $25.0 million in signing and
      performance-based payments. We have received $10.0 million to date,
      representing the minimum amount payable under the

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<PAGE>
      Amgen agreement. The remaining $15.0 million is payable upon FDA approval
      of an NDA relating to abarelix.

    - Amgen agreed to pay the first $175.0 million of all authorized costs and
      expenses associated with the research, development and commercialization
      of abarelix products in the United States. Amgen fulfilled this initial
      $175.0 million funding commitment during the third quarter of 2000.
      Following Amgen's completion of this funding, we became responsible for
      one-half of all subsequent United States research and development costs
      for abarelix products through the launch period. Additionally, we must
      reimburse Amgen for one-half of the costs associated with establishing a
      sales and marketing infrastructure for abarelix products in the United
      States. In general, we will receive a transfer price and royalty based
      upon an equal sharing of the resulting profits on sales of abarelix
      products in the United States.

    - All program expenses in Amgen's licensed territory outside the United
      States will be borne by Amgen, and we will receive a royalty on net sales
      of abarelix products in those territories.

    - Amgen will provide us with a line of credit not to exceed $150.0 million
      through 2002. Under the line of credit, subject to various conditions each
      year, we will be permitted to draw down a maximum of $75.0 million in
      2001, and in 2002, the remaining balance of the line of credit available
      after all previous drawdowns. For each drawdown in 2002, we must
      demonstrate a cash flow need reasonably acceptable to Amgen and meet
      various other specified conditions, including conditions relating to the
      commercial sale of abarelix. The loan will be interest-bearing, secured by
      receivables relating to the abarelix products and must be repaid by 2008.

    Through December 31, 2000, we have recognized approximately $113.9 million
of revenues under the Amgen agreement.

    We have granted Amgen exclusive manufacturing and commercialization rights
for abarelix products for all indications in the licensed territories. During
the second quarter of 2000, Amgen assumed manufacturing responsibility for
abarelix products, with the exception of the depot formulation, pursuant to the
terms of the Amgen agreement. Subject to the terms of the agreement, we have
retained manufacturing responsibility for the depot formulation of abarelix. In
addition, under the terms of the Amgen agreement, we transferred the final
decision-making authority for the abarelix endometriosis indication to Amgen
during the third quarter of 2000.

    Also, under our agreement with Amgen, Amgen has a right of first offer and
last refusal as to any disposition by us to a third party of an interest in any
product which is intended to be sold to urologists or gynecologists.

    The agreement terminates when the last patent right included in the abarelix
technology expires. Following the expiration of the agreement, Amgen will have a
fully paid, compensation free, perpetual, exclusive license under the abarelix
technology to manufacture and commercialize the abarelix products resulting from
the collaboration in the licensed territory. We or Amgen may terminate the
agreement for material breach by the other. Amgen may also terminate the
agreement on 90 days notice or if the results of any clinical trial of abarelix
materially harms its commercial prospects. If Amgen terminates the agreement for
material breach by us, then Amgen retains all licenses granted under the
agreement, subject to continued payment to us of all costs and royalty payments
due under the agreement.

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<PAGE>
  SANOFI-SYNTHELABO S.A.

    In May 1997, we entered into a license agreement with Sanofi-Synthelabo for
the development and commercialization of abarelix products in specific
territories including Europe, Latin America, the Middle East and various
countries in Africa.

    Sanofi-Synthelabo agreed to pay us up to $64.6 million in signing and
performance-based payments, approximately $5.0 million of the costs and expenses
for the development in the United States of abarelix products for prostate
cancer, and approximately 25% of all United States costs and expenses for the
development of abarelix products for endometriosis and uterine fibroids and any
other products approved by a joint development committee. If we choose to
develop abarelix products for additional applications that the joint development
committee does not approve, we must carry out development activities for those
additional applications at our own expense. If the joint development committee
subsequently approves the additional application that we are developing
independently, we and Sanofi-Synthelabo will share equally the overall costs and
expenses for the program. Sanofi-Synthelabo will pay all costs and expenses
associated with obtaining regulatory approvals in their territory for any
products approved by the joint development committee. Through December 31, 2000,
we have recognized a total of approximately $33.3 million of revenues under the
agreement. In addition, in connection with the agreement, Sanofi-Synthelabo
purchased $10.0 million of common stock and warrants to purchase common stock.

    Under the agreement, Sanofi-Synthelabo has co-development rights with us,
and exclusive marketing and distribution rights, for abarelix products for all
indications in the licensed territories. We retain manufacturing rights and must
supply Sanofi-Synthelabo with abarelix products in the licensed territories.
Sanofi-Synthelabo pays us a transfer price for abarelix products that varies
based on sales price and sales volumes.

    The agreement expires, and the licenses we granted to Sanofi-Synthelabo
become fully paid, perpetual and royalty free, on a country-by-country basis,
when the last patent licensed in that country expires. If no licensed patents
cover an abarelix product in the country, the license becomes fully paid up,
perpetual and royalty free, ten years after the date of regulatory approval for
the marketing and sale of the abarelix product in that country.

    We or Sanofi-Synthelabo may terminate the agreement for material breach by
the other. If Sanofi-Synthelabo terminates the agreement for material breach or
default by us, other than a breach of our supply obligations, the license
granted to Sanofi-Synthelabo would become fully paid, perpetual and royalty free
and Sanofi-Synthelabo would have a fully paid, perpetual and royalty free
license of all manufacturing protocols, know-how and related information and
data necessary to enable it to develop and make licensed products in the
licensed territory from and after the effective date of the termination.
Sanofi-Synthelabo also may terminate the agreement as to an abarelix product for
the treatment of a particular disease in any country within the licensed
territories if the results of clinical trials of the product for that disease in
that country materially impair the product's commercial prospects for that
disease application. In addition, Sanofi-Synthelabo may terminate if annual
sales in that country of a competitor's product containing the same GnRH
antagonist as the abarelix product in a delivery system exceeds more than a
specified percentage of annual sales of the abarelix product in that country.
Sanofi-Synthelabo also may terminate the agreement within nine months after
first becoming aware of any of various specified adverse circumstances or events
relating to the patentability of abarelix products or the Rel-Ease formulation.
The right to terminate in this situation includes a reasonable determination by
Sanofi-Synthelabo that it is not reasonably likely that a European patent will
issue covering abarelix or Rel-Ease.

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<PAGE>
  HUMAN GENOME SCIENCES, INC.

    In January 2000, we entered into an agreement with Human Genome Sciences for
the discovery, development and commercialization of compounds targeted to two
proprietary genomic targets that Human Genome Sciences has identified. The first
of these targets is CCR5, a human protein the HIV virus uses to enter human
cells. Under the agreement, we will use LEAP to make drugs targeted to these
molecules. We will jointly develop clinical drug candidates with Human Genome
Sciences on an equal cost and profit sharing basis, unless a pre-existing option
that Human Genome Sciences granted to GlaxoSmithKline applies to the drug
candidate and GlaxoSmithKline exercises the option. In that case, or if we so
elect as to a drug candidate as to which the GlaxoSmithKline option does not
apply or has not been exercised, we will have no obligation to participate in
any development costs, and we will be entitled to royalties and
performance-based payments instead of a profit share. If, instead of an equal
share of profits, we are entitled to royalties and performance-based payments,
the performance-based payments would be payable upon occurrence of specified
regulatory approval-related events; the obligation to pay us royalties would
terminate on a country-by-country and product-by-product basis on the later of
the expiration of the last applicable licensed patent in that country or ten
years after the first country-wide launch of the product in that country. We
cannot assure you as to whether or when any drug candidate will be identified
and successfully developed and commercialized under the agreement and,
accordingly, we cannot predict the potential value, if any, of the agreement to
us.

  BOEHRINGER INGELHEIM INTERNATIONAL GMBH

    In August 1996, we entered into a collaboration and license agreement with
Boehringer. Under the agreement, we used various proprietary procedures to
screen compounds that Boehringer supplied to us for beta-amyloid aggregation
inhibition activity, and received screening services payments totaling
$5.4 million. The screening portion of the collaboration ended in August 1998.
Boehringer would be responsible for all development, marketing and other costs
for, and we would be entitled to receive royalties on net sales of, any product
containing any Boehringer compound which we screened, if Boehringer develops and
commercializes the product. We are not aware of any ongoing program of
Boehringer to develop or commercialize a compound that would entitle us to
royalties, and we cannot predict the potential value, if any, of our royalty
entitlement under the agreement.

TECHNOLOGY LICENSES

  PHARMACEUTICAL APPLICATIONS ASSOCIATES LLC

    In April 1999, we entered into a license agreement with Pharmaceutical
Applications Associates. Under the agreement, we have exclusive worldwide rights
to develop and commercialize Latranal for the treatment of localized muscle,
tendon or neuropathic related pain. Under the agreement, we will pay for all
costs associated with the development and commercialization of Latranal, and
will pay a $50,000 performance fee if we proceed with a phase III clinical
study. We will pay a royalty on net revenue from sales of Latranal products to
Pharmaceutical Applications Associates. The license agreement remains in effect
until the later of ten years or the date the last licensed patent expires. We
have the right to terminate the agreement at any time.

  INDIANA UNIVERSITY FOUNDATION

    In October 1996, we entered into a license agreement with Indiana University
Foundation. We and Indiana University Foundation amended the license in
June 1998 and Indiana University Foundation assigned it to Indiana University's
Advanced Research and Technology Institutes, Inc. Under the agreement, we have
an exclusive worldwide license under patent applications, future patents and
technology of Indiana University Foundation relating to GnRH antagonist
compounds, including abarelix and methods of use for abarelix. Through
December 31, 2000, we have paid non-refundable

                                       15
<PAGE>
fees of $305,000 and performance-based payments of $750,000 under this
agreement. We have agreed to make performance-based payments of up to an
additional $3.5 million, and to pay royalties on our net sales of products
covered by the license grant. The license agreement remains in effect until the
last licensed patent expires. Expiration of the license will not preclude us
from continuing to develop and market the licensed products and use the licensed
technology. We must request a continuation of the license and Advanced Research
and Technology may not unreasonably withhold its consent to our request. We can
terminate the agreement at any time upon 90 days notice. Advanced Research and
Technology may terminate upon 90 days notice if we materially breach the
agreement or fail to make required payments.

MANUFACTURING

    We generally manufacture the drug supply required to support our initial
preclinical studies in-house. External contractors provide all of our clinical
supplies and manufacture them in accordance with FDA and European regulations.
Under our agreement with Amgen, we have granted Amgen exclusive manufacturing
and commercialization rights for abarelix products for all indications in the
licensed territories. During the second quarter of 2000, Amgen assumed
manufacturing responsibility for abarelix products, with the exception of the
depot formulation, pursuant to the terms of the Amgen agreement. Subject to the
terms of the agreement, we have retained manufacturing responsibility for the
depot formulation of abarelix. Accordingly, we have assigned all of our
third-party manufacturing contracts relating to the commercial production of
abarelix products to Amgen, with the exception of our contract with Salsbury
Chemicals, Inc.

    Under the Salsbury agreement, Salsbury has agreed to supply us with the
commercial depot formulations of abarelix. We contributed approximately
$6.0 million toward Salsbury's construction and outfitting of a dedicated
manufacturing facility, to which we will retain manufacturing process rights. We
are obligated to purchase a minimum of approximately $1.1 million of abarelix
depot from Salsbury during 2001. In order to meet potential increases in demand
in connection with the commercialization of abarelix depot, we intend to secure
a second source for abarelix depot production.

    If we fail to meet our manufacturing and supply obligations under our
collaboration agreements, Amgen or Sanofi-Synthelabo may assume manufacturing
responsibility under each company's agreement with us to the extent they do not
already have this responsibility. If this occurs, we must pay Sanofi-Synthelabo
its incremental costs of assuming manufacturing responsibility.

PATENTS AND PROPRIETARY RIGHTS

    Proprietary protection for our products, technology and processes is
essential to our business. We seek proprietary protection predominantly in the
form of patents on our products and the processes which we use to discover them.
With respect to a particular product, we seek patent protection on the compound
itself, its commercial formulation, its range of applications and its
production. Where possible, we also seek patent coverage that could prevent the
marketing of, or restrict the commercial threat of, competitive products.

    We currently have ten United States patents and an exclusive license to one
United States patent. These patents have expiration dates from 2012 through
2016. In addition, as of December 31, 2000, we had filed or held exclusive
licenses to 45 United States utility and provisional patent applications, as
well as 123 related foreign patent applications, including both Patent
Cooperation Treaty filings and national filings. We also have non-exclusive
licenses to four United States patents and four issued foreign patents, and
related United States and foreign applications, directed to technologies
embodied in LEAP.

    In particular, we have United States patents that cover both the abarelix
compound and the sustained release formulation enabling its once-per-month
administration. We also have a patent

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covering the use of abarelix and any other GnRH antagonist in a variety of
therapeutic settings, including in combination with surgery or radiation
therapy. We intend to file additional United States and foreign patent
applications, where appropriate, relating to new product discoveries or
improvements.

    We also rely on trade secrets, know-how and continuing technological
advances to protect various aspects of our core technology. We require our
employees, consultants and scientific collaborators to execute confidentiality
and invention assignment agreements with us to maintain the confidentiality of
our trade secrets and proprietary information. Our confidentiality agreements
generally provide that the employee, consultant or scientific collaborator will
not disclose our confidential information to third parties, compete with us or
solicit our employees during the course of their employment with us. When
appropriate, these agreements also provide that inventions conceived by the
employee, consultant or scientific collaborator in the course of working for us
will be our exclusive property. Additionally, our employees also agree not to
compete with us or solicit our employees for one year following termination of
their employment with us.

COMPETITION

    A biotechnology company such as ours faces intense competition. Many
companies, both public and private, including large pharmaceutical companies,
chemical companies and biotechnology companies, develop products or technologies
competitive with our products or technologies. In addition, academic, government
and industry-based research is intense, resulting in considerable competition in
obtaining qualified research personnel, submitting patent filings for protection
of intellectual property rights and establishing strategic corporate alliances.

    Each of our potential products in research or development will face
competition from other products. For example, if approved for marketing and
sale, our abarelix products will compete with numerous established or newly
introduced products on the market, including:

    - Lupron Depot, Zoladex and other pharmaceuticals approved and marketed for
      the treatment of hormonally responsive prostate cancer or endometriosis in
      the United States and Europe; and

    - Cetrotide, manufactured by ASTA Medica, and Antagon, manufactured by
      Organon, approved GnRH antagonists for use in infertility that are only
      available as daily injectable formulations.

    For each of our product candidates, we will face increasing competition from
generic formulations of existing drugs whose active components are no longer
covered by patents. Specifically, we are aware of various formulations of
leuprorelin, the active ingredient of Lupron Depot, including Viadur,
manufactured by Crescendo, for which the FDA has granted marketing approval, and
Leuprogel, which is being developed in one, three and four month subcutaneous
injections by Atrix Laboratories, Inc. The U.S. subsidiary of Sanofi-Synthelabo
has recently entered into a collaboration agreement with Atrix, under which it
will exclusively market Leuprogel for the treatment of prostate cancer in North
America.

    We believe that our product candidates will compete favorably in the market
with these and other products on the basis of a combination of superior
efficacy, decreased side effects and overall cost-benefit considerations.

GOVERNMENT REGULATION

    The manufacture and marketing of pharmaceutical products and our ongoing
research and development activities in the United States require the approval of
numerous governmental authorities, including the FDA. We also must obtain
similar approvals from comparable agencies in most foreign countries. The FDA
has established mandatory procedures and safety standards which apply to the

                                       17
<PAGE>
preclinical testing and clinical trials, as well as to the manufacture and
marketing, of pharmaceutical products. State, local and other authorities also
regulate pharmaceutical manufacturing facilities.

    As an initial step in the FDA regulatory approval process, an applicant
typically conducts preclinical studies in animals to assess a drug's efficacy
and to identify potential safety problems. An applicant must conduct specified
preclinical laboratory and animal studies in compliance with the FDA's good
laboratory practice regulations. An applicant must submit the results of these
studies to the FDA as part of an IND. Proposed clinical testing can only begin
if the FDA raises no objections to the IND. We can give no assurance that our
submission of an IND to the FDA will result in the commencement of a clinical
trial.

    Clinical testing must meet requirements for Institutional Review Board
oversight and informed consent, as well as FDA prior review, oversight and good
clinical practice requirements. Typically, clinical testing involves a
three-phase process. Phase I clinical trials involve a small number of subjects
and are designed to provide information about both product safety and the
expected dose of the drug. Phase II clinical trials generally provide additional
information on dosing and safety in a limited patient population. Occasionally,
phase II trials may provide preliminary evidence of product efficacy. Phase III
clinical trials are large-scale, well-controlled studies. The goal of phase III
clinical trials generally is to provide statistically valid proof of efficacy,
as well as safety, in the target patient population. The company performing the
preclinical testing and clinical trials of a pharmaceutical product then submits
the results to the FDA in the form of an NDA, for approval to commence
commercial sales. Preparing NDA applications involves considerable data
collection, verification, analysis and expense. In responding to an NDA, the FDA
may grant marketing approval for a specific indication, request additional
information or deny the application if it determines that the application does
not satisfy its regulatory approval criteria. After approval for the initial
indications, further clinical trials would be necessary to gain approval to
promote the use of the product for any additional indications.

    Among the conditions for NDA approval is the requirement that the
prospective manufacturer's quality control and manufacturing procedures conform
on an ongoing basis with good manufacturing practices. In complying with good
manufacturing practices, manufacturers must continue to spend time, money and
effort in the areas of production and quality control to ensure full technical
compliance. Manufacturing facilities are subject to periodic inspections by the
FDA.

    The FDA must grant approval of our products, which involves a review of the
manufacturing processes and facilities used to produce these products before we
can market these products in the United States. The process of obtaining
approvals from the FDA can be costly, time consuming and subject to
unanticipated delays. The FDA may refuse to approve an application if it
believes the product does not meet applicable regulatory criteria. The FDA also
may require additional testing for safety and efficacy of the drug. If the FDA
grants approval of a drug product, the approval will be limited to specific
indications.

    If we receive marketing approval, we must comply with FDA requirements for
manufacturing, labeling, advertising, record keeping and reporting of adverse
experiences and other information. In addition, we must comply with federal and
state anti-kickback and other health care fraud and abuse laws that pertain to
the marketing of drugs. For all drugs, failure to comply with applicable
regulatory requirements after obtaining regulatory approval could, among other
things, result in suspension of regulatory approval, as well as possible
recalls, product seizures, injunctions and civil and criminal sanctions.

    In addition to regulations enforced by the FDA, we also are subject to
various laws and regulations 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 chemicals,
micro-organisms and various radioactive compounds used in connection with our
research and development activities. Although we believe that our safety
procedures for handling and disposing of

                                       18
<PAGE>
these materials comply with the standards prescribed by state and federal
regulations, we cannot assure you that accidental contamination or injury from
these materials will not occur. Compliance with laws and regulations relating to
the protection of the environment has not had a material effect on our capital
expenditures or our competitive position. However, we cannot accurately predict
the extent of government regulation, and the cost, and effect thereof on our
competitive position, which might result from any legislative or administrative
action.

    Additionally, we may have to obtain approval of a product from comparable
regulatory authorities in foreign countries prior to the commencement of
marketing of the product in those countries. The approval procedure varies among
countries, may involve additional testing and the time required may differ from
that required for FDA approval. Although there is now a centralized European
Union approval mechanism in place, each European country may nonetheless impose
its own procedures and requirements, many of which could be time-consuming and
expensive. Thus, substantial delays could occur in obtaining required approvals
from both the FDA and foreign regulatory authorities after the relevant
applications are filed. We expect to rely on corporate partners and licensees,
along with our expertise, to obtain governmental approval in foreign countries
of drug formulations utilizing our drug candidates. Under the Sanofi-Synthelabo
agreement, Sanofi-Synthelabo is responsible for filing and obtaining necessary
governmental marketing reimbursement and pricing approvals for any abarelix
product in each country in the Sanofi-Synthelabo territory where the abarelix
product will be commercialized under the agreement.

PRODUCT LIABILITY INSURANCE

    We maintain product liability insurance for clinical trials in the amount of
$15.0 million per occurrence and $15.0 million in the aggregate. We intend to
expand our product liability insurance coverage to include the manufacture,
marketing and sale of commercial products if marketing approval for any of our
products for which marketing approval is obtained. However, insurance coverage
is becoming increasingly expensive, and we may be unable to maintain insurance
coverage at a reasonable cost or in sufficient amounts to protect us against
losses due to liability. In addition, we may be unable to obtain commercially
reasonable product liability insurance for any products approved for marketing.
A successful product liability claim or series of claims brought against us
could result in substantial setbacks for our business.

EMPLOYEES

    As of March 15, 2001, we had 125 full-time employees, 109 of whom were
employed at our headquarters in Cambridge, Massachusetts and 16 of whom were
employed with our Provid Research division at our facility in Piscataway, New
Jersey. We also employ consultants and independent contractors on a regular
basis to assist in the development of our products. None of our employees are
party to a collective bargaining agreement. We believe our relationship with our
employees is good.

ITEM 2. PROPERTIES.

    Our headquarters and primary research facilities are currently located in
Cambridge, Massachusetts, where we lease and occupy a total of approximately
25,000 square feet. The lease for these facilities expires in September 2004. We
also have executed a lease for a total of approximately 15,000 square feet of
space in Piscataway, New Jersey for the operations of our Provid Research
division. The lease for this facility expires in 2008.

    On July 11, 2000, we purchased, through our wholly owned real estate
subsidiary, land and a building of approximately 175,000 square feet located in
Waltham, Massachusetts. We have entered into a 15-year lease for this facility.
We will use this building as our corporate headquarters and principal research
facility. We expect to occupy the new facility during the spring of 2001,
following the

                                       19
<PAGE>
completion of laboratory and office improvements. We intend to occupy
approximately 100,000 square feet at this facility and expect to sublease a
portion of the remaining space for up to the next five years, although we have
not yet found a tenant. We expect to vacate and sublease our current Cambridge,
Massachusetts premises upon our move to the new facility. In addition, in
connection with the occupation of the new facility, we are consolidating our
Provid Research division with our Massachusetts operations and intend to
sublease the New Jersey facility.

    Upon completion of our new facility, we believe that our facilities will be
adequate for at least the next seven years and that we will be able to obtain
additional space as needed on commercially reasonable terms.

ITEM 3. LEGAL PROCEEDINGS.

    We are not currently a party to any material legal proceedings.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

    None.

                                       20
<PAGE>
                                    PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

    (a)  Our common stock is traded on the Nasdaq National Market under the
symbol "PRCS." Public trading of our common stock commenced on April 27, 2000.
The following table shows the range of high and low per share sale prices of our
common stock as reported on the Nasdaq National Market for the periods
indicated.

<TABLE>
<CAPTION>
                                                                 COMMON STOCK PRICE
                                                              -------------------------
                                                                HIGH             LOW
                                                                ----           --------
<S>                                                           <C>              <C>
Year Ended December 31, 2000:
  Second Quarter (from April 27, 2000)......................   $32.50           $10.06
  Third Quarter.............................................    47.94            24.63
  Fourth Quarter............................................    44.13            18.50
Year Ended December 31, 2001:
  First Quarter (through March 26, 2001)....................    33.13            13.50
</TABLE>

    On March 26, 2001, the last reported sale price of our common stock on the
Nasdaq National Market was $20.63 per share. As of March 26, 2001, there were
approximately 155 holders of record of our common stock registered with our
transfer agent, American Stock Transfer & Trust Company.

    We have never declared or paid any cash dividends on our capital stock, and
we do not currently intend to pay any cash dividends on the common stock in the
foreseeable future. We expect to retain future earnings, if any, to fund the
development and growth of our business. Our board of directors will determine
future dividends, if any, based upon our financial condition, results of
operations, capital requirements, general business condition and other factors
that the board deems relevant. Therefore, you will not receive any funds without
selling your shares.

    In October 2000, we issued 9,538 shares of common stock to one warrant
holder upon the net issuance exercise of warrants to purchase 9,860 shares of
common stock at an exercise price of $1.35 per share and a fair market value at
the time of exercise of $41.35 per share.

    In November 2000, we issued 94,346 shares of common stock to one warrant
holder upon the net issuance exercise of warrants to purchase 98,773 shares of
common stock at an exercise price of $1.35 per share and a fair market value at
the time of exercise of $30.12 per share.

    No underwriters were involved in the foregoing sale of securities. We made
these sales of capital stock in reliance upon an exemption from registration
under the Securities Act of 1933, as amended, provided by Section 4(2) of the
Securities Act, and its related rules and regulations, regarding sales by an
issuer not involving a public offering. All of the foregoing securities are
deemed restricted securities for purposes of the Securities Act.

    (b)  On February 8, 2000, we filed a Registration Statement on Form S-1
(Registration No. 333-96351) with the Securities and Exchange Commission to
register under the Securities Act 8,000,000 shares of our common stock (plus an
additional 1,200,000 shares subject to an over-allotment option granted to the
underwriters). The Registration Statement was declared effective by the
Securities and Exchange Commission on April 26, 2000.

    From April 26, 2000 through December 31, 2000, we used approximately $26.5
million of the net proceeds from our initial public offering for the purchase
and build-out of our new facility. Due to unanticipated construction costs, we
expect that the total amount of net proceeds from our initial public offering
which will be used for the purchase and build-out of our new facility will
exceed our original estimates by approximately $10.0 million. Pending use of the
remaining net proceeds of our initial public offering, we have invested these
funds in short-term, interest-bearing, investment-grade securities. Our
management will continue to have broad discretion over the actual use of these
proceeds.

                                       21
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.

    You should read the following selected financial data in conjunction with
our consolidated financial statements and the related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
appearing elsewhere in this report. We have derived our statement of operations
data for each of the three years in the period ended December 31, 2000, and our
balance sheet data at December 31, 1999 and 2000, from our financial statements
that have been audited by Ernst & Young LLP, independent auditors, and which we
include elsewhere in this report. We have derived the statement of operations
data for the years ended December 31, 1996 and 1997 and the balance sheet data
at December 31, 1996, 1997 and 1998 from our audited financial statements which
we do not include in this report.

<TABLE>
<CAPTION>
                                                                      YEAR ENDED DECEMBER 31,
                                                        ----------------------------------------------------
                                                          1996       1997       1998       1999       2000
                                                        --------   --------   --------   --------   --------
                                                               (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                     <C>        <C>        <C>        <C>        <C>
STATEMENT OF OPERATIONS DATA:
Revenues:
  Corporate collaborations............................  $    --    $15,118    $37,624    $ 61,514   $ 61,189
  Contract services...................................      876      2,615      1,943          --         --
                                                        -------    -------    -------    --------   --------
    Total revenues....................................      876     17,733     39,567      61,514     61,189
Costs and expenses:
  Research and development............................    7,947     15,013     33,704      48,764     85,915
  Sales and marketing.................................       --         --         --       2,601      6,444
  General and administrative..........................    2,120      3,780      3,605       3,572      5,285
                                                        -------    -------    -------    --------   --------
    Total costs and expenses..........................   10,067     18,793     37,309      54,937     97,644
                                                        -------    -------    -------    --------   --------
Operating income (loss)...............................   (9,191)    (1,060)     2,258       6,577    (36,455)
Interest income (net).................................      627      1,364      3,516       4,473      7,819
                                                        -------    -------    -------    --------   --------
Income (loss) before income taxes.....................   (8,564)       304      5,774      11,050    (28,636)
Provision for incomes taxes...........................       --        100        100       1,800        100
                                                        -------    -------    -------    --------   --------
Net income (loss).....................................  $(8,564)   $   204    $ 5,674    $  9,250   $(28,736)
                                                        =======    =======    =======    ========   ========
Net income (loss) per share:
  Basic...............................................  $ (2.62)   $  0.05    $  0.99    $   1.51   $  (0.95)
                                                        =======    =======    =======    ========   ========
  Diluted.............................................  $ (2.62)   $  0.01    $  0.16    $   0.24   $  (0.95)
                                                        =======    =======    =======    ========   ========
Weighted average number of common shares:
  Basic...............................................    3,263      4,446      5,738       6,106     30,259
  Diluted.............................................    3,263     28,270     35,139      37,849     30,259
Pro forma net income (loss) per share:
  Basic...............................................................................   $   0.29   $  (0.74)
                                                                                         ========   ========
  Diluted.............................................................................   $   0.24   $  (0.74)
                                                                                         ========   ========
Pro forma weighted average number of common shares:
  Basic...............................................................................     31,714     38,794
  Diluted.............................................................................     37,849     38,794
</TABLE>

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                        ----------------------------------------------------
                                                          1996       1997       1998       1999       2000
                                                        --------   --------   --------   --------   --------
                                                                           (IN THOUSANDS)
<S>                                                     <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash and cash equivalents.............................  $15,220    $40,190    $85,298    $ 94,525   $132,207
Working capital.......................................   13,092     31,802     76,626      86,220    115,733
Total assets..........................................   18,213     47,361     90,625     140,331    195,571
Long-term debt........................................       --         --         --          --     24,000
Capital lease obligations, net of current portion.....      717        249         59          --         --
Total stockholders' equity............................   14,761     34,907     78,373      87,716    146,531
</TABLE>

                                       22
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

GENERAL

    The following discussion and analysis of our financial condition and results
of operations should be read in conjunction with "Selected Financial Data" and
our consolidated financial statements and notes thereto appearing elsewhere in
this report. This discussion and analysis contains forward-looking statements
that involve risks, uncertainties and assumptions. Our actual results may differ
substantially from those anticipated in these forward-looking statements.

OVERVIEW

    Since our inception, we have been engaged in developing drugs for the
treatment of a variety of human diseases. Our lead program is the development of
abarelix depot, a drug to treat diseases that respond to the lowering of hormone
levels. We have entered into collaborations with Amgen and Sanofi-Synthelabo to
further develop and commercialize our abarelix products. We are also developing
Latranal, a proprietary topical composition for the relief of localized muscle,
tendon or neuropathic pain, and Apan, our proprietary drug candidate for the
treatment of Alzheimer's disease. In addition, we have numerous product
candidates in the research and development phase.

    Since our inception, we have had no revenues from product sales. We have
received revenues in the form of signing, performance-based, cost sharing and
contract services payments from corporate collaborations. These revenues enabled
us to achieve profitability and positive cash flow before any financing activity
for 1997, 1998 and 1999. From inception through December 31, 2000, we recognized
approximately $180.9 million in revenues under these collaboration agreements.
Under these agreements, we could receive additional non-refundable
performance-based payments and reimbursement for ongoing development costs, as
well as a percentage of future product profits. For the next several years, we
expect that our sources of revenue, if any, will consist primarily of interest
income and payments from our corporate collaborators. We expect reimbursement
for ongoing development costs under our corporate collaborations to diminish
over the next several years.

    Our accumulated deficit as of December 31, 2000 was approximately
$29.8 million. Substantially all of our expenditures to date have been for drug
development and commercialization activities and for general and administrative
expenses.

    Due to the high costs associated with preparing to launch our first product,
as well as other research and development and general and administrative
expenses, we had net operating losses for 2000 and expect to have net operating
losses for the following several years. We do not expect to generate operating
income until several years after our receipt of FDA approval to market abarelix
depot for the treatment of prostate cancer. We will require regulatory approval
to market all of our future products.

    In 1997 and 1998, we entered into agreements with Roche Products Inc. for
the research, development and commercialization of abarelix products in all
countries outside of the Sanofi-Synthelabo territory. In December 1998, we and
Roche mutually terminated the agreements. During the term of the agreements,
Roche paid to us approximately $28.2 million in performance-based and
cost-sharing payments. Roche retains no rights to the abarelix program and has
no equity interest in us.

    Under our agreement with Sanofi-Synthelabo, we could receive up to
approximately $69.6 million in non-refundable fees and performance-based
payments. Of this amount, we are recognizing the $4.7 million initial payment
over the period through December 2001, which is the period during which we are
obligated to participate on a continuing and substantial basis in the research,
development and manufacturing process development of abarelix products. For
supply of product to Sanofi-Synthelabo, we are entitled to receive a transfer
price that varies based on sales price and volume. Additionally, we

                                       23
<PAGE>
are entitled to receive reimbursement for certain ongoing development costs.
Through December 31, 2000, we have recognized a total of approximately
$33.3 million in non-refundable fees, performance-based payments and
reimbursement for ongoing development costs under the Sanofi-Synthelabo
agreement.

    Under our agreement with Amgen for the development and commercialization of
abarelix products in the countries not covered by the Sanofi-Synthelabo
agreement, we could receive up to $25.0 million in signing and performance-based
fees. Of this $25.0 million, we have received $10.0 million to date, which is
the minimum amount payable under the agreement. We are recognizing this amount
as revenue over the period through December 2001, during which time we are
obligated to participate on a continuing and substantial basis in the research,
development and manufacturing process development of abarelix products. The
remaining $15.0 million is payable upon FDA approval of an NDA relating to
abarelix.

    Under the agreement, Amgen paid the first $175.0 million of all authorized
costs and expenses associated with the research, development and
commercialization of abarelix products in the United States. Amgen's initial
$175.0 million funding commitment was fulfilled during the third quarter of
2000. Following Amgen's completion of this funding, we became responsible for
one-half of all subsequent United States research and development costs for
abarelix products. Additionally, we must reimburse Amgen for one-half of the
costs associated with establishing a sales and marketing infrastructure for
abarelix products in the United States. In general, we will receive a transfer
price and royalty based on an equal sharing of the resulting profits on sales of
abarelix products in the United States. All program expenses in Amgen's licensed
territory outside the United States will be borne by Amgen, and we will receive
a royalty on net sales of abarelix products in those territories. Through
December 31, 2000, we have recognized approximately $113.9 million of revenues
under the Amgen agreement.

    We have granted Amgen exclusive manufacturing and commercialization rights
for abarelix products for all indications in the licensed territories. During
the second quarter of 2000, Amgen assumed manufacturing responsibility for
abarelix products, with the exception of the depot formulation, pursuant to the
terms of the Amgen agreement. Subject to the terms of the agreement, we have
retained manufacturing responsibility for the depot formulation of abarelix. In
addition, under the terms of the Amgen agreement, we transferred the final
decision-making authority for the abarelix endometriosis indication to Amgen
during the third quarter of 2000.

RESULTS OF OPERATIONS

  YEARS ENDED DECEMBER 31, 2000 AND 1999

    Revenues for the year ended December 31, 2000 decreased 1% to approximately
$61.2 million, from approximately $61.5 million in 1999. The decrease in
revenues was the result of a decrease in reimbursable abarelix expenses, offset
by the one-time sale of materials inventory to Amgen during the fourth quarter
of 2000. We anticipate that revenues will continue to decrease due to the
decline in our reimbursable abarelix expenses, which are subject to a reduced
rate of reimbursement under our collaboration agreements.

    Research and development expenses for the year ended December 31, 2000
increased 76% to approximately $85.9 million, from approximately $48.8 million
in 1999. The increase in expenses was primarily attributable to the cost of the
inventory associated with the one-time sale of materials inventory to Amgen
during the fourth quarter of 2000, combined with increased expenses related to
our abarelix clinical development program for prostate cancer. This increase
also was partially due to increased spending related to our abarelix clinical
development program for endometriosis, our Latranal and Apan clinical
development programs, and discovery research initiatives. Amgen's initial
funding commitment was completed during the third quarter of 2000, after which
time we became

                                       24
<PAGE>
responsible for one-half of all subsequent United States research and
development costs for abarelix products through the launch period. As we
continue to increase spending on the ongoing development of abarelix depot for
the treatment of prostate cancer, as well as on the expansion of our other
clinical programs, we expect our research and development expenses to increase
during 2001 and thereafter.

    Sales and marketing expenses for the year ended December 31, 2000 increased
148% to approximately $6.4 million, from approximately $2.6 million in 1999.
Following the completion of Amgen's initial funding commitment, we became
responsible for one-half of all subsequent costs associated with establishing a
sales and marketing infrastructure in the United States for abarelix through the
launch period. Accordingly, we expect our sales and marketing expenses to
increase significantly during 2001 and thereafter.

    General and administrative expenses for the year ended December 31, 2000
increased 48% to approximately $5.3 million, from approximately $3.6 million in
1999. The increase was due to an increase in personnel and compensation costs,
an increased use of professional services and other costs associated with being
a public company. We expect that general and administrative expenses will
increase as we hire additional administrative personnel to support continued
growth of our research and development initiatives and incur increased operating
costs related to our new facility.

    Net interest income for the year ended December 31, 2000 increased 75% to
approximately $7.8 million, from approximately $4.5 million in 1999. The
increase in interest income was due to increased cash and investment balances
from our initial public offering in May 2000 and an increase in average interest
rates from the same period last year.

    The provision for income taxes for the years ended December 31, 2000 and
1999 was $0.1 million and $1.8 million, respectively. Our effective tax rate was
approximately 16.3% during 1999. The provision for income taxes during 2000 was
primarily for state income taxes. We are currently in a net operating loss
carryforward position and do not expect to generate taxable income in the near
future; therefore, no benefit from our operating losses has been recognized.

  YEARS ENDED DECEMBER 31, 1999 AND 1998

    Revenues for the year ended December 31, 1999 increased 55% to approximately
$61.5 million, from approximately $39.6 million in 1998. The increase in
revenues was due to significantly increased cost-sharing payments under our
collaboration agreements, principally our agreement with Amgen.

    Research and development expenses for the year ended December 31, 1999
increased 45% to approximately $48.8 million, from approximately $33.7 million
in 1998. The increase in research and development expenses was attributable
primarily to increased expenses related to two pivotal phase III prostate cancer
clinical trials and phase I/II and II/III endometriosis clinical trials.
Additional spending increases were related to our Apan program, our Latranal
program and core research and development activities.

    Sales and marketing expenses for the year ended December 31, 1999 increased
$2.6 million, from zero in 1998. The increase was due to the establishment of a
sales and marketing department and the incurrence of marketing costs related to
preparing for the anticipated commercial launch of abarelix.

    General and administrative expenses for the years ended December 31, 1999
and 1998 were approximately $3.6 million. These expenses reflect consistent
levels of both general and administrative personnel and other expenses related
to general corporate purposes.

    Net interest income for the year ended December 31, 1999 increased 27% to
approximately $4.5 million, from approximately $3.5 million in 1998. This
increase was attributable to an increase in the amount of cash available for
investment following our sale of $37.7 million of equity securities in
April 1998.

                                       25
<PAGE>
    The provision for income taxes for the year ended December 31, 1999
increased to approximately $1.8 million, from approximately $0.1 million in
1998. The provision increased because prior to 1999 we utilized net operating
loss carryforwards to offset substantially all of our taxable income.

SELECTED QUARTERLY OPERATING RESULTS

    The following table sets forth our unaudited statement of operations data
for the eight quarters ended December 31, 2000. This information has been
derived from our unaudited financial statements. The unaudited financial
statements have been prepared on the same basis as the audited financial
statements contained in this report and include all adjustments, consisting only
of normal recurring accruals, that we consider necessary for a fair presentation
of such information when read in conjunction with our annual audited financial
statements and notes thereto appearing elsewhere in this report. You should not
draw any conclusions from the operating results for any quarter.

<TABLE>
<CAPTION>
                                                                         QUARTER ENDED
                                        --------------------------------------------------------------------------------
                                        MAR. 31,  JUNE 30,  SEPT. 30,  DEC. 31,  MAR. 31,  JUNE 30,  SEPT. 30,  DEC. 31,
                                          1999      1999      1999       1999      2000      2000      2000       2000
                                        --------  --------  ---------  --------  --------  --------  ---------  --------
<S>                                     <C>       <C>       <C>        <C>       <C>       <C>       <C>        <C>
Total revenues........................  $ 1,143   $39,202    $16,783   $ 4,386   $ 9,001   $ 9,972    $ 7,334   $ 34,882
Operating income (loss)...............  (10,905)   19,364      1,711    (3,593)   (3,669)   (4,200)    (9,387)   (19,199)(1)
Net income (loss).....................  (10,029)   18,821      2,416    (1,958)   (2,475)   (2,052)    (7,132)   (17,077)
Net income (loss) per share:
  Basic...............................  $ (1.68)  $  3.08    $  0.39   $ (0.32)  $ (0.36)  $ (0.07)   $ (0.17)  $  (0.41)
  Diluted.............................  $ (1.68)  $  0.50    $  0.06   $ (0.32)  $ (0.36)  $ (0.07)   $ (0.17)  $  (0.41)
</TABLE>

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

(1) We incurred approximately $2.8 million in one-time cash and non-cash
    facility relocation expenses during the fourth quarter of 2000.

    We expect to experience significant fluctuations in our quarterly operating
results in the future, and, therefore, we will continue to have difficulty
providing an accurate forecast of our quarterly revenues and operating results.
We believe that period-to-period comparisons of our operating results may not be
meaningful, and you should not rely upon them as any indication of future
performance. It is likely that our operating results in one or more future
quarters may be below the expectations of securities analysts and investors. In
that event, the trading price of our common stock would almost certainly
decline.

LIQUIDITY AND CAPITAL RESOURCES

    We have financed our operations since inception principally through private
placements of equity securities and our initial public offering. Prior to our
initial public offering, we had received net proceeds of approximately
$9.5 million from the private placement of our common stock, $0.5 million from
the private placement of warrants to purchase common stock and $78.5 million
from the private placement of convertible preferred stock. Additionally, we have
received a total of approximately $183.3 million from one-time signing payments
and performance-based payments, cost reimbursements and contract service
payments under our collaboration agreements. We have also received approximately
$19.1 million from interest on invested cash balances, and paid approximately
$0.7 million in interest expense associated with building and equipment
financing.

    On May 2, 2000, we completed our initial public offering in which we sold
8,000,000 shares of common stock at a price of $10 per share, raising a total of
approximately $73.1 million in net proceeds after payment of underwriting
discounts and commissions and offering expenses. On May 3, 2000, the
underwriters of our initial public offering exercised their right to purchase
additional shares of common stock to cover over-allotments. Accordingly, on
May 8, 2000, we sold an additional 1,200,000 shares of common stock at a price
of $10 per share, resulting in an additional $11.2 million in net proceeds after
payment of underwriting discounts and commissions. Thus, we sold a total of
9,200,000 shares of

                                       26
<PAGE>
common stock in our initial public offering for a total of approximately
$84.3 million, net of underwriting discounts and commissions and estimated
offering expenses.

    At December 31, 2000, we had cash and cash equivalents of approximately
$132.2 million and working capital of approximately $115.7 million, compared to
approximately $94.5 million and $86.2 million, respectively, at December 31,
1999. Based upon our existing capital resources, together with the net proceeds
of our initial public offering and our recent follow-on public offering, which
we discuss below, interest income, payments under our collaboration agreements
and the line of credit contemplated by the Amgen agreement, which we also
discuss below, we anticipate that we will be able to maintain currently planned
operations for at least the next several years.

    For the year ended December 31, 2000, net cash of approximately
$19.9 million was used in operating activities, compared to approximately
$12.9 million provided by operating activities in 1999. During the year ended
December 31, 2000, our use of cash in operations was due principally to our net
loss coupled with our payment of 1999 income taxes, as well as a decrease in
deferred revenue. This increase in cash used in operations was partially offset
by a decrease in accounts receivable and a slight increase in accounts payable.
Our investing activities during the year ended December 31, 2000 consisted of
the purchase of land and a building to use as our corporate headquarters and
principal research facility and the purchase of property and equipment in the
aggregate amount of approximately $52.5 million. Our financing activities for
the year ended December 31, 2000 consisted principally of the proceeds of our
initial public offering, proceeds received from the exercise of common stock
options and advances during the year of $24.0 million under an acquisition and
construction loan agreement.

    On July 11, 2000, we purchased, for approximately $41.3 million, through our
wholly owned real estate subsidiary, land and a building of approximately
175,000 square feet located in Waltham, Massachusetts. We will use this building
as our corporate headquarters and principal research facility. In connection
with obtaining first mortgage financing to purchase this facility, we assigned
all of our rights and obligations under the related purchase and sale agreement
to our wholly owned real estate subsidiary. The subsidiary executed an
acquisition and construction loan agreement providing for up to $33.0 million in
financing for the acquisition of, and improvements to, the new facility.

    Under the terms of the loan agreement, advances are available primarily to
pay for the acquisition of, and improvements to, the new facility. In connection
with the purchase of the new facility, an initial advance of $24.0 million was
made. The remaining $9.0 million of the loan became available following the
expenditure by us of approximately $8.0 million for renovation costs, and is
subject to various other terms and conditions under the loan documents. Advances
bear interest at a rate equal to the 30-day LIBOR plus 2.0% (8.56% at
December 31, 2000). Interest is payable monthly in arrears. Principal is due and
payable in full on July 30, 2003, subject to two, one-year extension options.
The loan is secured by the new facility, together with all fixtures, equipment,
improvements and other related items, and by all rents, income or profits
received by our real estate subsidiary.

    In addition, as a condition of the financing, we executed certain
unconditional guaranties of all of the subsidiary's obligations under the loan
agreement and related loan documents. In addition to this financing, as of
December 31, 2000, we had spent approximately $26.5 million of our own funds,
and anticipate spending an additional $13.6 million to complete the build-out
and prepare for occupancy of our new facility. We expect to occupy the new
facility during the spring of 2001 and intend to sublet a portion of the
facility at that time. In addition, in connection with our move to the new
facility, we are consolidating our Provid Research division with our
Massachusetts operations and intend to sublease our Provid facility located in
New Jersey.

    On February 21, 2001, we completed a follow-on public offering in which we
sold 6,500,000 shares of common stock at a price of $24.5625 per share, raising
a total of approximately $150.5 million in net proceeds after payment of
underwriting discounts and commissions and estimated offering expenses.

                                       27
<PAGE>
On February 23, 2001, the underwriters of our follow-on offering exercised their
right to purchase additional shares of common stock to cover over-allotments.
Accordingly, on February 27, 2001, we sold an additional 1,087,500 shares of
common stock at a price of $24.5625 per share, resulting in approximately an
additional $25.3 million in net proceeds after payment of underwriting discounts
and commissions. Thus, we sold a total of 7,587,500 shares of common stock in
our follow-on public offering for a total of approximately $175.8 million, net
of underwriting discounts and commissions and estimated offering expenses.

    Our agreement with Amgen provides that, subject to definitive agreements to
be mutually agreed, Amgen will provide us with a line of credit not to exceed
$150.0 million through 2002 whereby, subject to various conditions each year, we
will be permitted to draw down a maximum of $75.0 million in 2001 and, in 2002,
the remaining balance of the line of credit available after all previous
drawdowns. For each drawdown in 2002, we must demonstrate a cash flow need
reasonably acceptable to Amgen and meet various other specified conditions,
including conditions relating to the commercial sale of abarelix. Borrowings
will bear interest at market rates and will be secured by various receivables
relating to abarelix products. All borrowings under the line of credit must be
repaid by 2008.

    We expect our funding requirements to increase over the next several years
as we continue with current clinical trials for abarelix depot, Latranal and
Apan, initiate preclinical trials for additional product candidates, prepare for
a potential commercial launch of abarelix products, improve and move into our
new facility and expand our research and development initiatives. The amount of
these expenditures will depend on numerous factors, including:

    - decisions relating to the abarelix program made by our corporate
      collaborators;

    - the cost, timing and outcomes of regulatory reviews;

    - the progress of our research and development activities;

    - the scope and results of preclinical testing and clinical trials;

    - the rate of technological advances;

    - determinations as to the commercial potential of our products under
      development;

    - the status of competitive products;

    - our ability to defend and enforce our intellectual property rights;

    - the continued viability and duration of, and timely compliance by our
      collaborators with, our corporate collaboration agreements or other
      licensing agreements;

    - the establishment, continuation or termination of third-party
      manufacturing or sales and marketing arrangements;

    - the development of sales and marketing resources;

    - the establishment of additional strategic or licensing arrangements with
      other companies or acquisitions;

    - our ability to sublease our current facilities and part of our new
      facility; and

    - the availability of other financing.

    At December 31, 2000, we had provided a valuation allowance of
$10.2 million for our deferred tax assets. The valuation allowance represents
the excess of the deferred tax asset over the benefit from future losses that
could be carried back if, and when, they occur. Due to anticipated operating
losses in the future, we believe that it is more likely than not that we will
not realize a portion of the net deferred tax assets in the future and we have
provided an appropriate valuation allowance.

                                       28
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES, or SFAS No. 133, which is effective for fiscal year
2001. SFAS No. 133 requires all derivatives to be carried on the balance sheet
as assets or liabilities at fair value. The accounting for changes in fair value
would depend on the hedging relationship and would be reported in the income
statement or as a component of comprehensive income. We believe that the
adoption of this new accounting standard will not have a material impact on our
financial statements.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, or SAB 101, REVENUE RECOGNITION IN FINANCIAL
STATEMENTS. SAB 101 clarifies the Commission staff's views on applying generally
accepted accounting principles to revenue recognition in financial statements.
We adopted SAB 101 in the fourth quarter of 2000 and believe our revenue
recognition policies are in compliance with SAB 101.

    In March 2000, the Financial Accounting Standards Board issued
Interpretation No. 44, ACCOUNTING FOR CERTAIN TRANSACTIONS INVOLVING STOCK
COMPENSATION. This Interpretation clarifies how companies should apply the
Accounting Principles Board's Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO
EMPLOYEES. The Interpretation will be applied prospectively to new awards,
modifications to outstanding awards, and changes in employee status on or after
July 1, 2000, except as follows: the definition of an employee applies to awards
granted after December 15, 1998; the Interpretation applies to modifications
that reduce the exercise price of an award after December 15, 1998; and the
Interpretation applies to modifications that add a reload feature to an award
made after January 12, 2000. There are no awards that resulted in an adjustment
as a result of this Interpretation.

RISK FACTORS THAT MAY AFFECT FUTURE RESULTS

BECAUSE WE HAVE NOT YET MARKETED OR SOLD ANY PRODUCTS AND ANTICIPATE SIGNIFICANT
INCREASES IN OUR OPERATING EXPENSES OVER THE NEXT SEVERAL YEARS, WE MAY NOT BE
PROFITABLE IN THE FUTURE.

    We cannot assure you that we will be profitable in the future or, if we are
profitable, that it will be sustainable. All but one of our potential products
are in the research or development stage. We have not yet marketed or sold any
products, and we may not succeed in developing and marketing any product in the
future. To date, we have derived substantially all of our revenues from payments
under our collaboration and license agreements and will continue to do so for at
least the next several years. In addition, we expect to continue to spend
significant amounts to continue clinical studies, obtain regulatory approval for
our existing product candidates and expand our facilities. We also intend to
spend substantial amounts to fund additional research and development for other
products, enhance our core technologies, and for general and administrative
purposes. As of December 31, 2000, we had an accumulated deficit of
approximately $29.8 million. We expect that our operating expenses will increase
significantly in the near term, primarily due to our obligations under the Amgen
agreement following Amgen's fulfillment of its initial funding commitment during
the third quarter of 2000, resulting in significant operating losses for 2000
and the next several years.

IF OUR CLINICAL TRIALS ARE NOT SUCCESSFUL, OR IF WE ARE OTHERWISE UNABLE TO
OBTAIN AND MAINTAIN THE REGULATORY APPROVAL REQUIRED TO MARKET AND SELL OUR
POTENTIAL PRODUCTS, WE WOULD INCUR ADDITIONAL OPERATING LOSSES.

    The development and sale of our product candidates are subject to extensive
regulation by governmental authorities. Obtaining and maintaining regulatory
approval typically is costly and takes many years. Regulatory authorities, most
importantly, the FDA, have substantial discretion to terminate clinical trials,
delay or withhold registration and marketing approval in the United States, and
mandate product recalls. Failure to comply with regulatory requirements may
result in criminal prosecution, civil

                                       29
<PAGE>
penalties, recall or seizure of products, total or partial suspension of
production or injunction, as well as other actions as to our potential products
or against us. Outside the United States, we can market a product only if we
receive a marketing authorization from the appropriate regulatory authorities.
This foreign regulatory approval process includes all of, and in some cases,
additional, risks associated with the FDA approval process we describe above.

    To gain regulatory approval from the FDA and foreign regulatory authorities
for the commercial sale of any product, we must demonstrate the safety and
efficacy of the product in clinical trials. If we develop a product to treat a
long-lasting disease, such as cancer or Alzheimer's disease, we must gather data
over an extended period of time. There are many risks associated with our
clinical trials. For example, we may be unable to achieve the same level of
success in later trials as we did in earlier ones. Additionally, data we obtain
from preclinical and clinical activities are susceptible to varying
interpretations that could impede regulatory approval. Further, some patients in
our prostate cancer and Alzheimer's disease programs have a high risk of death,
age-related disease or other adverse medical events not related to our products.
These events may affect the statistical analysis of the safety and efficacy of
our products.

    In addition, many factors could delay or result in termination of our
ongoing or future clinical trials. For example, a clinical trial may experience
slow patient enrollment or lack of sufficient drug supplies. Patients may
experience adverse medical events or side effects, and there may be a real or
perceived lack of effectiveness of the drug we are testing. Future governmental
action or changes in FDA policy may also result in delays or rejection of an
application for marketing approval. Accordingly, we may not be able to obtain
product registration or marketing approval for abarelix depot, our drug
candidate for the treatment of prostate cancer and endometriosis, or for any of
our other product candidates, based on the results of our clinical trials, or
regulatory approval may be conditioned upon significant labeling requirements
which could adversely affect marketability of the product.

    If we obtain regulatory approval for a product, the approval will be limited
to those diseases for which our clinical trials demonstrate the product is safe
and effective. To date, none of our product candidates have received regulatory
approval for commercial sale. If we are delayed in obtaining or are unable to
obtain regulatory approval to market our products, we may exhaust our available
resources, including the net proceeds from our initial public offering, which we
completed in May 2000, and the net proceeds from our follow-on offering, which
we completed in February 2001, significantly sooner than we had planned. If this
were to happen, we would need to raise additional funds to complete
commercialization of our lead products and continue our research and development
programs. We cannot assure you that we would be able to obtain these additional
funds on favorable terms, if at all.

EVEN IF WE RECEIVE APPROVAL FOR THE MARKETING AND SALE OF OUR PRODUCT
CANDIDATES, THEY MAY FAIL TO ACHIEVE MARKET ACCEPTANCE AND, ACCORDINGLY, MAY
NEVER BE COMMERCIALLY SUCCESSFUL.

    Many factors may affect the market acceptance and commercial success of any
of our potential products, including:

    - the extent and success of our marketing and sales efforts, and, in
      particular, those of our collaborators, relating to the marketing and
      sales of abarelix products;

    - the timing of market entry as compared to competitive products;

    - the effectiveness of our products, including any potential side effects,
      as compared to alternative treatment methods;

    - the rate of adoption of our products by doctors and nurses and acceptance
      by the target population;

    - the product labeling or product insert required by the FDA for each of our
      products;

                                       30
<PAGE>
    - the competitive features of our products as compared to other products,
      including the frequency of administration of abarelix depot as compared to
      other products, and doctor and patient acceptance of these features;

    - the cost-effectiveness of our products and the availability of insurance
      or other third-party reimbursement, in particular Medicare, for patients
      using our products; and

    - unfavorable publicity concerning our products or any similar products.

    If our products are not commercially successful, we may never become
profitable.

IF OUR CORPORATE COLLABORATORS REDUCE, DELAY OR TERMINATE THEIR FINANCIAL
SUPPORT, WE MAY BE UNABLE TO SUCCESSFULLY DEVELOP, MARKET, DISTRIBUTE OR SELL
OUR PRODUCT CANDIDATES.

    We depend upon our corporate collaborators, in particular Amgen and
Sanofi-Synthelabo, to provide substantial financial support for developing our
product candidates. We also will rely on them in some instances to help us
obtain regulatory approval for our products and to manufacture, market,
distribute or sell our products. Despite our collaborative relationships, we
have limited control over the amount and timing of resources that our corporate
collaborators devote to our programs or potential products. For example, Amgen
has final decision-making authority with regard to most of the abarelix program
in the Amgen territory, and accordingly, we have limited control over decisions
related to that program. Also, the availability of the $150.0 million line of
credit that Amgen has agreed to provide us is subject to the execution of
mutually acceptable definitive agreements which, for some borrowings thereunder,
will include specified conditions relating to the sale of abarelix.

    In addition, our corporate collaborators may terminate our collaboration
agreements in various circumstances. For example, in December 1998, we and Roche
Products Inc. mutually terminated our agreement. We and each of Amgen and
Sanofi-Synthelabo may mutually terminate our agreement, and, in addition:

    - Amgen and Sanofi-Synthelabo each may terminate its agreement with us if
      the results of any clinical trial of abarelix materially harms the
      product's commercial prospects;

    - Amgen may terminate its agreement with us at any time upon 90 days' prior
      written notice; and

    - Sanofi-Synthelabo may terminate its agreement with us if specified adverse
      events occur relating to our European patent applications or the related
      patents which may be issued covering abarelix or our Rel-Ease technology.

    We cannot assure you that any of our present or future collaborators will
meet their obligations to us under the collaboration agreements. If a
collaborator terminates its agreement with us or fails to perform, or delays
performance of, its obligations, it could delay or prevent the development or
commercialization of the potential product or research program. As a result, we
could be forced to devote unforeseen additional resources to development and
commercialization or to terminate one or more of our drug development programs.
Due to increased operating costs and lost revenue associated with the
termination of, or non-performance or delay of performance by a corporate
collaborator under, a collaboration agreement, we could have to seek funds in
addition to the net proceeds of both our initial public offering, which we
completed in May 2000, and our follow-on public offering, which we completed in
February 2001, to meet our capital requirements. We cannot assure you that we
would be able to raise the necessary funds or negotiate additional corporate
collaborations on acceptable terms, if at all, and we may have to curtail or
cease operations. For instance, if, following the termination of our agreement
with Roche, we had been unable to enter into an alternative collaboration for
the development and commercialization of our abarelix products in a timely
manner, we likely would have needed to delay or cut back our programs for the
development of abarelix or

                                       31
<PAGE>
other drugs and raise additional funds through one or more equity financings
prior to the time we had planned to do so, and possibly on less than favorable
terms.

IF WE OR OUR CORPORATE COLLABORATORS FAIL TO DEVELOP AND MAINTAIN OUR
RELATIONSHIPS WITH THIRD-PARTY MANUFACTURERS, OR IF THESE MANUFACTURERS FAIL TO
PERFORM ADEQUATELY, WE MAY BE UNABLE TO COMMERCIALIZE OUR PRODUCT CANDIDATES.

    Our ability to conduct clinical trials and commercialize our product
candidates will depend in part on our ability to manufacture, or arrange for
third-party manufacture of, our products on a large scale, at a competitive cost
and in accordance with regulatory requirements. We or our corporate
collaborators must establish and maintain a commercial scale formulation and
manufacturing process for each of our potential products for which we seek
marketing approval. We, our corporate collaborators or third-party manufacturers
may encounter difficulties with these processes at any time that could result in
delays in clinical trials, regulatory submissions or in the commercialization of
potential products.

    We have no experience in large-scale product manufacturing, nor do we have
the resources or facilities to manufacture products on a commercial scale. We
will continue to rely upon contract manufacturers and, in certain instances, our
corporate collaborators, to produce abarelix and other compounds for
preclinical, clinical and commercial purposes for a significant period of time.
Either we or our corporate collaborators have manufacturing and supply
agreements with third parties, and if these agreements are not satisfactory, we
may not be able to develop or commercialize potential products as planned. The
manufacture of our potential products will be subject to current good
manufacturing practices regulations. Third-party manufacturers are subject to
regulatory review and may fail to comply with these good manufacturing practices
regulations. If we or our corporate collaborators need to replace our current
third-party manufacturers, or contract with additional manufacturers, this would
necessitate new product testing and facility compliance inspections. This
testing and inspection is costly and time-consuming. Any of these factors could
prevent, or cause delays in, obtaining regulatory approvals for, and the
manufacturing, marketing or selling of, our products and could also result in
significantly higher operating expenses.

    If we fail to meet our manufacturing and supply obligations under our
agreements with either Amgen or Sanofi-Synthelabo, they may assume manufacturing
responsibility under their agreements to the extent they do not already have
this responsibility. In addition, if this occurs, we must pay Sanofi-Synthelabo
its incremental costs of assuming manufacturing responsibility.

DUE TO OUR INEXPERIENCE AND OUR LIMITED SALES AND MARKETING STAFF, WE WILL
DEPEND ON THIRD PARTIES TO SELL AND MARKET OUR PRODUCTS.

    We have no experience in marketing or selling pharmaceutical products and
have a limited marketing and sales staff. To achieve commercial success for any
approved product, we must either develop a marketing and sales force or enter
into arrangements with others to market and sell our products. We have granted
Amgen and Sanofi-Synthelabo exclusive marketing and distribution rights for
abarelix products in defined geographic locations. We have limited control over
the decisions made by Amgen or Sanofi-Synthelabo or the resources they devote to
the marketing and distribution of abarelix products in their respective
territories. Moreover, our corporate collaborators may, subject to certain
limitations with respect to Sanofi-Synthelabo, market products that compete with
our products. Our marketing and distribution arrangements with Amgen and
Sanofi-Synthelabo may not be successful, and we may not receive any revenues
from these arrangements. Also, we cannot assure you that we will be able to
enter into marketing and sales agreements on acceptable terms, if at all, for
any other products.

                                       32
<PAGE>
BECAUSE WE DEPEND ON THIRD PARTIES TO CONDUCT LABORATORY TESTING AND HUMAN
CLINICAL STUDIES AND ASSIST US WITH REGULATORY COMPLIANCE, WE MAY ENCOUNTER
DELAYS IN PRODUCT DEVELOPMENT AND COMMERCIALIZATION.

    We have contracts with a limited number of research organizations to design
and conduct our laboratory testing and human clinical studies. If we cannot
contract for testing activities on acceptable terms, or at all, we may not
complete our product development efforts in a timely manner. To the extent we
rely on third parties for laboratory testing and human clinical studies, we may
lose some control over these activities. For example, third parties may not
complete testing activities on schedule or when we request. In addition, these
third parties may not conduct our clinical trials in accordance with regulatory
requirements. The failure of these third parties to carry out their contractual
duties could delay or prevent the development and commercialization of our
product candidates.

ALTERNATIVE TREATMENTS ARE AVAILABLE WHICH MAY IMPAIR OUR ABILITY TO CAPTURE
MARKET SHARE FOR OUR POTENTIAL PRODUCTS.

    Alternative products exist or are under development to treat the diseases
for which we are developing drugs. For example, the FDA has approved several
drugs for the treatment of prostate cancer that respond to changes in hormone
levels. Even if the FDA approves abarelix depot for commercialization for the
treatment of prostate cancer, it may not compete favorably with existing
treatments that already have an established market share. If abarelix depot does
not achieve broad market acceptance as a drug for the treatment of prostate
cancer, we may not become profitable.

WE COULD EXPERIENCE DELAYS IN THE RESEARCH, DEVELOPMENT OR COMMERCIALIZATION OF
OUR PRODUCT CANDIDATES AS A RESULT OF CONFLICTS WITH OUR CORPORATE COLLABORATORS
OR COMPETITION FROM THEM.

    An important part of our strategy involves conducting proprietary research
programs. We may pursue opportunities that conflict with our collaborators'
businesses. Disagreements with our collaborators could develop over rights to
intellectual property, including the ownership of technology co-developed with
our collaborators. Our current or future collaborators could develop or market
products in the future that compete with our products. This could diminish our
collaborators' commitment to us, and reduce the resources they devote to
developing and commercializing our product candidates. For example, the U.S.
subsidiary of Sanofi-Synthelabo has recently entered into a collaboration
agreement with Atrix Laboratories, Inc., under which it will exclusively market
Leuprogel, Atrix's product in development for the treatment of prostate cancer,
in North America. If approved, Leuprogel is likely to compete with abarelix
depot as a treatment for advanced stage prostate cancer.

    Conflicts or disputes with our collaborators, and competition from them,
could harm our relationships with our other collaborators, restrict our ability
to enter into future collaboration agreements and delay the research,
development or commercialization of our product candidates.

MANY OF OUR COMPETITORS HAVE SUBSTANTIALLY GREATER RESOURCES THAN WE DO AND MAY
BE ABLE TO DEVELOP AND COMMERCIALIZE PRODUCTS THAT MAKE OUR POTENTIAL PRODUCTS
AND TECHNOLOGIES OBSOLETE OR NON-COMPETITIVE.

    A biotechnology company such as ours must keep pace with rapid technological
change and faces intense competition. We compete with biotechnology and
pharmaceutical companies for funding, access to new technology, research
personnel and in product research and development. Many of these companies have
greater financial resources and more experience than we do in developing drugs,
obtaining regulatory approvals, manufacturing and marketing. We also face
competition from academic and research institutions and government agencies
pursuing alternatives to our products and technologies. We expect that all of
our products under development will face intense competition from existing or
future drugs.

                                       33
<PAGE>
    Our competitors may:

    - successfully identify drug candidates or develop products earlier than we
      do;

    - obtain approvals from the FDA or foreign regulatory bodies more rapidly
      than we do;

    - develop products that are more effective, have fewer side effects or cost
      less than our products; or

    - successfully market products that compete with our products.

    The success of our competitors in any of these efforts would adversely
affect our ability to develop, commercialize and market our product candidates.

IF WE ARE UNABLE TO OBTAIN AND ENFORCE VALID PATENTS, WE COULD LOSE ANY
COMPETITIVE ADVANTAGE WE MAY HAVE.

    Our success will depend in part on our ability to obtain patents and
maintain adequate protection of our technologies and potential products. If we
do not adequately protect our intellectual property, competitors may be able to
use our technologies and erode our competitive advantage. For example, if we
lose our patent protection for abarelix, another party could produce and market
abarelix in direct competition with us. Some foreign countries lack rules and
methods for defending intellectual property rights and do not protect
proprietary rights to the same extent as the United States. Many companies have
had difficulty protecting their proprietary rights in foreign countries.

    Patent positions are sometimes uncertain and usually involve complex legal
and factual questions. We can protect our proprietary rights from unauthorized
use by third parties only to the extent that our proprietary technologies are
covered by valid and enforceable patents or are effectively maintained as trade
secrets. We currently own or have exclusively licensed eleven issued United
States patents. We have applied, and will continue to apply, for patents
covering both our technologies and products as we deem appropriate. Others may
challenge our patent applications or our patent applications may not result in
issued patents. Moreover, any issued patents on our own inventions, or those
licensed from third parties, may not provide us with adequate protection, or
others may challenge the validity of, or seek to narrow or circumvent, these
patents. Third-party patents may impair or block our ability to conduct our
business. Additionally, third parties may independently develop products similar
to our products, duplicate our unpatented products, or design around any
patented products we develop.

IF WE ARE UNABLE TO PROTECT OUR TRADE SECRETS AND PROPRIETARY INFORMATION, WE
COULD LOSE ANY COMPETITIVE ADVANTAGE WE MAY HAVE.

    In addition to patents, we rely on a combination of trade secrets,
confidentiality, nondisclosure and other contractual provisions, and security
measures to protect our confidential and proprietary information. These measures
may not adequately protect our trade secrets or other proprietary information.
If they do not adequately protect our rights, third parties could use our
technology, and we could lose any competitive advantage we may have. In
addition, others may independently develop similar proprietary information or
techniques, which could impair any competitive advantage we may have.

IF OUR TECHNOLOGIES, PROCESSES OR POTENTIAL PRODUCTS CONFLICT WITH THE PATENTS
OF COMPETITORS, UNIVERSITIES OR OTHERS, WE COULD HAVE TO ENGAGE IN COSTLY
LITIGATION AND BE UNABLE TO COMMERCIALIZE THOSE PRODUCTS.

    Our technologies, processes or potential products may give rise to claims
that they infringe other patents. A third party could force us to pay damages,
to stop our use of the technologies or processes, or to stop our manufacturing
or marketing of the affected products by bringing a legal action against us

                                       34
<PAGE>
for infringement. In addition, a third party could require us to obtain a
license to continue to use the technologies or processes or manufacture or
market the affected products, and we may not be able to do so. We believe that
significant litigation will continue in our industry regarding patent and other
intellectual property rights. If we become involved in litigation, it could
consume a substantial portion of our resources. Even if legal actions were
meritless, defending a lawsuit could take significant time, be expensive and
divert management's attention from other business concerns.

IF THIRD PARTIES TERMINATE OUR LICENSES, WE COULD EXPERIENCE DELAYS OR BE UNABLE
TO COMPLETE THE DEVELOPMENT AND COMMERCIALIZATION OF OUR POTENTIAL PRODUCTS.

    We license some of our technology from third parties. Termination of our
licenses could force us to delay or discontinue some of our development and
commercialization programs. For example, if Advanced Research and Technology
Institutes, Inc., the assignee of Indiana University Foundation, terminated our
abarelix license, we could have to discontinue development and commercialization
of our abarelix products. We cannot assure you that we would be able to license
substitute technology in the future. Our inability to do so could impair our
ability to conduct our business because we may lack the technology, or the
necessary rights to technology, required to develop and commercialize our
potential products.

OUR REVENUES WILL DIMINISH IF WE FAIL TO OBTAIN ACCEPTABLE PRICES OR ADEQUATE
REIMBURSEMENT FOR OUR PRODUCTS FROM THIRD-PARTY PAYORS.

    The continuing efforts of government and third-party payors to contain or
reduce the costs of health care may limit our commercial opportunity. If
government and other third-party payors do not provide adequate coverage and
reimbursement for our products, physicians may not prescribe them. If we are
unable to offer physicians comparable or superior financial motivation to use
our products, we may not be able to generate significant revenues. In some
foreign markets, pricing and profitability of prescription pharmaceuticals are
subject to government control. In the United States, we expect that there will
continue to be federal and state proposals for similar controls. In addition,
increasing emphasis on managed care in the United States will continue to put
pressure on the pricing of pharmaceutical products. Cost control initiatives
could decrease the price that any of our collaborators or we receive for any
products in the future. Further, cost control initiatives could impair or
diminish our collaborators' ability or incentive to commercialize our products,
and our ability to earn revenues from this commercialization.

    Our ability to commercialize pharmaceutical products, alone or with
collaborators, may depend in part on the availability of reimbursement for our
products from:

    - government and health administration authorities;

    - private health insurers; and

    - other third-party payors, including Medicare and Medicaid.

    We cannot predict the availability of reimbursement for newly approved
health care products. Third-party payors, including Medicare, are challenging
the prices charged for medical products and services. Government and other
third-party payors increasingly are limiting both coverage and the level of
reimbursement for new drugs and, in some cases, refusing to provide coverage for
a patient's use of an approved drug for purposes not approved by the FDA.
Third-party insurance coverage may not be available to patients for any of our
products.

                                       35
<PAGE>
WE MAY BE UNABLE TO SUBLEASE OUR CURRENT FACILITIES OR FIND SUITABLE TENANTS FOR
A PORTION OF OUR NEW FACILITY.

    We have exceeded the capacity of our current facilities, and recently
purchased, through our wholly owned real estate subsidiary, a new facility in
Waltham, Massachusetts. In July 2000, we executed a 15-year lease with this
subsidiary for our new facility. We intend to sublease a portion of our new
facility to third parties and expect to sublease our current facility. In
addition, in connection with our move to the new facility, we are consolidating
the Provid Research division with our Massachusetts operations and intend to
sublease our Provid facility located in New Jersey. We may not be able to find
suitable sub-tenants to occupy these spaces in a timely manner, if at all. If we
are unable to find suitable sub-tenants in a timely manner, we may experience
greater than anticipated operating expenses in the future.

IF WE LOSE OUR KEY PERSONNEL OR ARE UNABLE TO ATTRACT AND RETAIN ADDITIONAL
SKILLED PERSONNEL, WE MAY BE UNABLE TO PURSUE OUR PRODUCT DEVELOPMENT AND
COMMERCIALIZATION EFFORTS.

    We depend substantially on the principal members of our management and
scientific staff, including Malcolm L. Gefter, Ph.D., our Chief Executive
Officer, President and Chairman of the Board. We do not have employment
agreements with any of our executive officers. Any officer or employee can
terminate his or her relationship with us at any time and work for one of our
competitors. The loss of these key individuals could result in competitive harm
because we could experience delays in our product research, development and
commercialization efforts without their expertise.

    Recruiting and retaining qualified scientific personnel to perform future
research and development work also will be critical to our success. Competition
for skilled personnel is intense and the turnover rate can be high. We compete
with numerous companies and academic and other research institutions for
experienced scientists. This competition may limit our ability to recruit and
retain qualified personnel on acceptable terms. Failure to attract and retain
qualified personnel would prevent us from successfully developing our products
or core technologies and launching our products commercially. Our planned
activities may require the addition of new personnel, including management, and
the development of additional expertise by existing management personnel. The
inability to retain these personnel or to develop this expertise could result in
delays in the research, development and commercialization of our potential
products.

WE MAY HAVE SUBSTANTIAL EXPOSURE TO PRODUCT LIABILITY CLAIMS AND MAY NOT HAVE
ADEQUATE INSURANCE TO COVER THOSE CLAIMS.

    We may be held liable if any product we develop, or any product made by
others using our technologies, causes injury. We have only limited product
liability insurance coverage for our potential products in clinical trials. We
intend to expand our product liability insurance coverage of any of our products
for which we obtain marketing approval. However, this insurance may be
prohibitively expensive or may not fully cover our potential liabilities. Our
inability to obtain adequate insurance coverage at an acceptable cost could
prevent or inhibit the commercialization of our products. If a third party sues
us for any injury caused by products made by us or using our technologies, our
liability could exceed our total assets.

WE USE HAZARDOUS CHEMICALS AND RADIOACTIVE AND BIOLOGICAL MATERIALS IN OUR
BUSINESS AND ANY CLAIMS RELATING TO THE HANDLING, STORAGE OR DISPOSAL OF THESE
MATERIALS COULD BE TIME CONSUMING AND COSTLY.

    Our research and development processes involve the controlled use of
hazardous materials, including chemicals and radioactive and biological
materials. The health risks associated with accidental exposure to abarelix
include temporary impotence or infertility and harmful effects on pregnant
women.

                                       36
<PAGE>
Our operations also produce hazardous waste products. We cannot completely
eliminate the risk of accidental contamination or discharge from hazardous
materials and any resultant injury. Federal, state and local laws and
regulations govern the use, manufacture, storage, handling and disposal of
hazardous materials. Compliance with environmental laws and regulations is
necessary and expensive. Current or future environmental regulations may impair
our research, development or production efforts. We may be required to pay
fines, penalties or damages in the event of noncompliance or the exposure of
individuals to hazardous materials.

    Some of our collaborators also work with hazardous materials in connection
with our collaborations. We have agreed to indemnify our collaborators in some
circumstances against damages and other liabilities arising out of development
activities or products produced in connection with these collaborations.

IF WE ENGAGE IN AN ACQUISITION, WE WILL INCUR A VARIETY OF COSTS AND MAY NEVER
REALIZE THE ANTICIPATED BENEFITS OF THE ACQUISITION.

    If appropriate opportunities become available, we may attempt to acquire
businesses, products or technologies that we believe are a strategic fit with
our business. We currently have no commitments or agreements for any
acquisitions, nor are there any negotiations with respect to any specific
transaction. If we do undertake any transaction of this sort, the process of
integrating an acquired business, product or technology may result in unforeseen
operating difficulties and expenditures and may absorb significant management
attention that would otherwise be available for ongoing development of our
business. Moreover, we may fail to realize the anticipated benefits of any
acquisition. Future acquisitions could dilute your ownership interest in us and
could cause us to incur debt, expose us to future liabilities and result in
amortization expenses related to goodwill and other intangible assets.

THE MARKET PRICE OF OUR COMMON STOCK MAY EXPERIENCE EXTREME PRICE AND VOLUME
  FLUCTUATIONS.

    The market price of our common stock may fluctuate substantially due to a
variety of factors, including, but not limited to:

    - announcement of FDA approval or disapproval of our product candidates;

    - the willingness of collaborators to commercialize our product candidates
      and the timing of commercialization;

    - announcements of technological innovations or new products by us or our
      competitors;

    - the success rate of our discovery efforts and clinical trials leading to
      performance-based payments and revenues under our collaboration
      agreements;

    - loss of corporate collaborators, failure by our corporate collaborators to
      perform their obligations or disputes with our corporate collaborators;

    - developments or disputes concerning patents or proprietary rights,
      including announcements of claims of infringement, interference or
      litigation against us or our licensors;

    - announcements concerning our competitors, or the biotechnology or
      pharmaceutical industry in general;

    - public concerns as to the safety of our products or our competitors'
      products;

    - changes in government regulation of the pharmaceutical or medical
      industry;

    - changes in the reimbursement policies of third-party insurance companies
      or government agencies;

    - actual or anticipated fluctuations in our operating results;

                                       37
<PAGE>
    - changes in financial estimates or recommendations by securities analysts;

    - sales of large blocks of our common stock;

    - changes in accounting principles; and

    - the loss of any of our key scientific or management personnel.

    In addition, the stock market has experienced extreme price and volume
fluctuations. The market prices of the securities of biotechnology companies,
particularly companies like ours without current product revenues and earnings,
have been highly volatile, and may continue to be highly volatile in the future.
This volatility has often been unrelated to the operating performance of
particular companies. In the past, securities class action litigation has often
been brought against companies that experience volatility in the market price of
their securities. Whether or not meritorious, litigation brought against us
could result in substantial costs and a diversion of management's attention and
resources.

WE EXPECT THAT OUR QUARTERLY RESULTS OF OPERATIONS WILL FLUCTUATE, AND THIS
FLUCTUATION COULD CAUSE OUR STOCK PRICE TO DECLINE.

    Our quarterly operating results have fluctuated in the past and are likely
to do so in the future. These fluctuations could cause our stock price to
decline. Some of the factors that could cause our operating results to fluctuate
include:

    - the delay or failure of any of our corporate collaborators to meet their
      payment or other obligations, or termination of any of our agreements with
      them;

    - the timing of development and commercialization of our abarelix products
      leading to performance-based payments and revenues under our agreements
      with our corporate collaborators;

    - the timing and level of expenses, and of expense reimbursement payments,
      related to the development and commercialization of our abarelix products,
      or to our other research and development programs; and

    - the timing of our commercialization of other products resulting in
      revenues.

    Due to the possibility of fluctuations in our revenues and expenses, we
believe that quarter-to-quarter comparisons of our operating results are not a
good indication of our future performance.

FUTURE SALES OF OUR COMMON STOCK MAY CAUSE OUR STOCK PRICE TO DECLINE.

    If our stockholders sell substantial amounts of our common stock in the
public market, or the perception that such sales may occur exists, the market
price of our common stock could decline. The 9,200,000 shares of common stock
sold in our initial public offering in May 2000 are all freely tradeable in the
public market. Additionally, all of the 8,337,500 shares sold in our follow-on
public offering in February to purchasers other than our affiliates are freely
tradeable in the public market. Any shares of common stock held by our
affiliates may generally only be sold in compliance with Rule 144 under the
Securities Act. As of March 15, 2001, approximately 4.9 million outstanding
shares of common stock were held by our affiliates or former affiliates. In
addition, in connection with our follow-on public offering, holders of
approximately 2.2 million shares of common stock outstanding as of March 15,
2001 have agreed not to offer, sell, contract to sell or otherwise dispose of
their shares of common stock through May 15, 2001 without the prior written
consent of the underwriters for the offering. Substantially all of our remaining
outstanding shares of common stock may be freely sold without volume
restrictions pursuant to Rule 144(k) or Rule 701 under the Securities Act.

                                       38
<PAGE>
    One of our stockholders, which until recently was one of our affiliates,
owned approximately 7.3 million shares of common stock immediately after
completion of our initial public offering. This stockholder sold approximately
3.7 million of these shares in market transactions subject to the volume
limitations and other requirements of Rule 144 from late October 2000 through
the end of 2000. This stockholder sold an additional 750,000 shares as part of
our follow-on public offering. The remaining approximately 2.9 million shares
held by this stockholder will be eligible for resale without volume restrictions
under Rule 144(k) after April 15, 2001, upon the expiration of the 60-day
lock-up agreement executed by this stockholder in connection with our follow-on
public offering.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BY-LAWS, OUR RIGHTS AGREEMENT AND
UNDER DELAWARE LAW MAY MAKE AN ACQUISITION OF US MORE DIFFICULT, EVEN IF AN
ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.

    Provisions in our certificate of incorporation and by-laws may delay or
prevent an acquisition of us or a change in our management. Also, because we are
incorporated in Delaware, we are governed by the provisions of Section 203 of
the Delaware General Corporation Law, which may prohibit or delay large
stockholders, in particular those owning 15% or more of our outstanding voting
stock, from merging or combining with us. In addition, the rights issued under
our rights agreement may be a substantial deterrent to a person acquiring 10% or
more of our common stock without the approval of our board of directors. These
provisions in our charter and by-laws, rights agreement and under Delaware law
could reduce the price that investors might be willing to pay for shares of our
common stock in the future and result in the market price being lower that it
would be without these provisions.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

    The primary objective of our investment activities is to preserve principal
while at the same time maximizing the income we receive from our investments
without significantly increasing risk. Some of the securities that we invest in
may have market risk. This means that a change in prevailing interest rates may
cause the principal amount of the investment to fluctuate. For example, if we
hold a security that was issued with an interest rate fixed at the
then-prevailing rate and the prevailing interest rate later rises, the principal
amount of our investment will probably decline. We believe that a 10% decline in
the average yield of our investments would adversely impact our net interest
income. We do not believe, however, that a 10% decline would have a material
adverse effect on our overall results of operations or cash flows. To minimize
this risk in the future, we intend to maintain our portfolio of cash equivalents
and short-term investments in a variety of securities, including commercial
paper, money market funds and government and non-government debt securities. The
average duration of all of our investments in 1999 and 2000 was less than one
year. Due to the short-term nature of these investments, we believe we have no
material exposure to interest rate risk arising from our investments.

    In connection with the purchase of our new facility in July 2000, our wholly
owned real estate subsidiary executed an acquisition and construction loan
agreement that provides for up to $33.0 million in borrowings at a floating
interest rate indexed to the 30-day LIBOR. Concurrent with that transaction, the
subsidiary also entered into an interest rate cap agreement which limits
exposure to interest rate increases to 30-day LIBOR plus 1.25%. With regard to
borrowings under the loan agreement, we believe that we have mitigated our risk
to significant adverse fluctuations in interest rates and we do not believe that
a 10% change in interest rates would have a material impact on our results of
operations or cash flows.

    Accordingly, we do not believe that there is any material market risk
exposure with respect to derivative or other financial instruments that would
require quantitative tabular disclosure.

                                       39
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    The financial statements required by this Item are included on pages F-1
through F-20 of this report. The supplementary financial information required by
this Item is included in the section of this report captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations," under
the heading "Selected Quarterly Operating Results."

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE.

    Not applicable.

                                       40
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

    Information required by this Item with respect to directors, executive
officers and compliance with Section 16(a) of the Securities Act of 1934, as
amended, may be found in the sections captioned "Board Actions; Committees of
the Board of Directors," "Nominees for Election to the Board of Directors,"
"Executive Officers Who Are Not Directors" and "Section 16(a) Beneficial
Ownership Reporting Compliance" appearing in our definitive Proxy Statement to
be delivered to stockholders in connection with the Annual Meeting of
Stockholders expected to be held on May 23, 2001. Such information is
incorporated herein by reference.

ITEM 11. EXECUTIVE COMPENSATION.

    Information required by this Item may be found in the sections captioned
"Board Actions; Committees of the Board of Directors, "Director Compensation,"
"Summary Compensation Table," "Option Grants in Fiscal 2000," "Aggregated Option
Exercises in Last Fiscal Year and Option Values at December 31, 2000,"
"Employment Agreements/Change of Control Arrangements" and "Compensation
Committee Interlocks and Insider Participation" appearing in our definitive
Proxy Statement to be delivered to stockholders in connection with the Annual
Meeting of Stockholders expected to be held on May 23, 2001. Such information is
incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

    Information required by this Item may be found in the section captioned
"Stock Ownership of Certain Beneficial Owners and Management" appearing in our
definitive Proxy Statement to be delivered to stockholders in connection with
the Annual Meeting of Stockholders expected to be held on May 23, 2001. Such
information is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

    Information required by this Item may be found in the section captioned
"Certain Relationships and Related Transactions" appearing in our definitive
Proxy Statement to be delivered to stockholders in connection with the Annual
Meeting of Stockholders expected to be held on May 23, 2001. Such information is
incorporated herein by reference.

                                       41
<PAGE>
                                    PART IV

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

    (A) 1. FINANCIAL STATEMENTS

    The financials statements filed as part of this report are listed on the
Index to Consolidated Financial Statements located on page F-1, immediately
following the signature page of this report.

    2. FINANCIAL STATEMENT SCHEDULES

    All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.

    3. EXHIBITS

<TABLE>
<CAPTION>
     EXHIBIT NO.        EXHIBIT
     -----------        -------
<C>                     <S>
    3.1                 Amended and Restated Certificate of Incorporation (2)

    3.2                 Amended and Restated By-Laws (2)

    4.1                 Specimen certificate representing shares of common stock (1)

    4.2                 Specimen certificate representing shares of common stock
                        (including Rights Agreement Legend) (5)

    4.3                 Warrant to purchase Common Stock dated as of May 13, 1997
                        (1)

    4.4                 Amendment dated as of January 30, 2001 between PRAECIS and
                        Sanofi- Synthelabo Inc. (formerly Sylamerica, Inc.) to the
                        Warrant for the Purchase of Shares of Common Stock issued by
                        PRAECIS to Sylamerica, Inc. (5)

    4.5                 Rights Agreement between PRAECIS and American Stock Transfer
                        & Trust Company, as Rights Agent (6)

    4.6                 Form of Certificate of Designations of Series A Junior
                        Participating Preferred Stock (attached as Exhibit A to the
                        Rights Agreement filed as Exhibit 4.5 hereto) (6)

    4.7                 Form of Rights Certificate (attached as Exhibit B to the
                        Rights Agreement filed as Exhibit 4.5 hereto) (6)

   10.1*                Second Amended and Restated 1995 Stock Plan (3)

   10.2*                Executive Management Bonus Plan, as amended and restated as
                        of January 30, 2001 (supersedes the version filed as Exhibit
                        10.2 to Registration Statement on Form S-1 (Registration No.
                        333-54342) initially filed with the Securities and Exchange
                        Commission on January 26, 2001 and declared effective on
                        February 14, 2001)

   10.3*                Employee Stock Purchase Plan (4)

   10.4                 Amended and Restated Stockholders Agreement dated as of
                        April 30, 1998 by and among PRAECIS and certain stockholders
                        referred to therein, as amended by Amendment No. 1 dated as
                        of May 14, 1998, Amendment No. 2 dated as of July 21, 1998
                        and Amendment No. 3 dated as of January 31, 2000 (1)

   10.5                 Amendment No. 4 dated as of September 1, 2000 to Amended and
                        Restated Stockholders Agreement dated as of April 30, 1998
                        by and among PRAECIS and certain stockholders referred to
                        therein, as amended (4)
</TABLE>

                                       42
<PAGE>

<TABLE>
<CAPTION>
     EXHIBIT NO.        EXHIBIT
     -----------        -------
<C>                     <S>
   10.6                 Stock and Warrant Purchase Agreement dated as of May 13,
                        1997 by and between Sylamerica, Inc. and PRAECIS (1)

   10.7                 Waiver and Amendment dated as of January 26, 2001 between
                        PRAECIS and Sanofi-Synthelabo Inc. (formerly Sylamerica,
                        Inc.) to the Stock and Warrant Purchase Agreement dated as
                        of May 13, 1997 by and between Sylamerica, Inc. and PRAECIS
                        (5)

   10.8+                License Agreement dated as of May 13, 1997 by and between
                        PRAECIS and Synthelabo, as amended by letters dated July 31,
                        1997, October 1, 1998 and June 17, 1999 (1)

   10.9+                Amended and Restated Binding Agreement in Principle
                        effective as of March 8, 1999 by and between PRAECIS and
                        Amgen Inc. (1)

   10.10                Amendment to Amended and Restated Binding Agreement in
                        Principle effective as of March 8, 1999 by and between
                        PRAECIS and Amgen Inc. (4)

   10.11+               Collaboration Agreement dated as of January 31, 2000 by and
                        between Human Genome Sciences, Inc. and PRAECIS (1)

   10.12+               Collaboration and License Agreement dated as of August 1,
                        1996 by and between PRAECIS and Boehringer Ingelheim
                        International GmbH (1)

   10.13+               License Agreement effective as of October 17, 1996 by and
                        between PRAECIS and Indiana University Foundation, as
                        amended as of June 3, 1998 (1)

   10.14+               License Agreement dated as of April 15, 1999 between
                        Pharmaceutical Applications Associates LLC, C. Donald
                        Williams, M.D.C.G.P., Robert Murdock, R.Ph. and PRAECIS (5)

   10.15                Amendment No. 1 dated as of August 25, 2000 to License
                        Agreement dated as of April 15, 1999 between Pharmaceutical
                        Applications Associates LLC, C. Donald Williams, M.D.,
                        C.G.P., Robert Murdock, R.Ph. and PRAECIS (5)

   10.16+               Supply Agreement dated as of July 23, 1998 by and between
                        PRAECIS and Salsbury Chemicals, Inc. (1)

   10.17                Lease dated as of April 28, 1994 by and between PRAECIS and
                        The Charles Stark Draper Laboratory, Inc. (1)

   10.18                Lease dated as of August 19, 1998 by and between PRAECIS and
                        BDG Piscataway, LLC (1)

   10.19                Letter Amendment, effective as of March 1, 2000, to Lease
                        dated as of August 19, 1998 by and between PRAECIS and BDG
                        Piscataway, LLC (3)

   10.20                Contract of Sale dated as of January 14, 2000 by and between
                        Best Property Fund, L.P. and PRAECIS, as amended as of
                        February 7, 2000 (1)

   10.21                Acquisition and Construction Loan Agreement dated as of July
                        11, 2000 between 830 Winter Street LLC and Anglo Irish Bank
                        Corporation plc and related Loan and Security Agreements (3)

   10.22                Guaranty of Costs and Completion dated as of July 11, 2000
                        (3)

   10.23                Guaranty of Non-Recourse Exceptions dated as of July 11,
                        2000 (3)

   10.24                Environmental Compliance and Indemnity Agreement dated as of
                        July 11, 2000 executed by 830 Winter Street LLC and PRAECIS
                        (3)
</TABLE>

                                       43
<PAGE>

<TABLE>
<CAPTION>
     EXHIBIT NO.        EXHIBIT
     -----------        -------
<C>                     <S>
   10.25                Lease Agreement dated as of July 11, 2000 between 830 Winter
                        Street LLC, as landlord, and PRAECIS, as tenant (3)

   21.1                 List of Subsidiaries of PRAECIS (5)

   23.1                 Consent of Ernst & Young LLP

   24.1                 Power of Attorney (included on the signature page of this
                        Report on Form 10-K)
</TABLE>

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

*   Represents a management contract or compensatory plan or arrangement.

(1) Incorporated by reference to Registration Statement on Form S-1
    (Registration No. 333-96351) initially filed with the Securities and
    Exchange Commission on February 8, 2000 and declared effective on April 26,
    2000.

(2) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2000 filed with the Securities and Exchange Commission on
    June 7, 2000.

(3) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2000 filed with the Securities and Exchange Commission on
    August 14, 2000.

(4) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
    ended September 30, 2000 filed with the Securities and Exchange Commission
    on November 13, 2000.

(5) Incorporated by reference to Registration Statement on Form S-1
    (Registration No. 333-54342) initially filed with the Securities and
    Exchange Commission on January 26, 2001 and declared effective on
    February 14, 2001.

(6) Incorporated by reference to Registration Statement on Form 8-A filed with
    the Securities and Exchange Commission on January 26, 2001.

+   Confidential treatment has been granted for certain portions of this
    exhibit. Omitted portions have been filed separately with the Securities and
    Exchange Commission.

    (B) REPORTS ON FORM 8-K.

    On December 13, 2000, we filed a Current Report on Form 8-K to file under
Item 5 (Other Events) a copy of our Press Release dated December 13, 2000.

    On December 19, 2000, we filed a Current Report on Form 8-K to file under
Item 5 (Other Events) a copy of our Press Release dated December 19, 2000.

    On December 29, 2000, we filed a Current Report on Form 8-K to file under
Item 5 (Other Events) a copy of our Press Release dated December 29, 2000.

                                       44
<PAGE>
                                   SIGNATURE

    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Cambridge, Commonwealth of Massachusetts, on this 29th day of March,
2001.

<TABLE>
<S>                                                    <C>  <C>
                                                       PRAECIS PHARMACEUTICALS INCORPORATED

                                                       By:  /s/ KEVIN F. MCLAUGHLIN
                                                            -----------------------------------------
                                                            Kevin F. McLaughlin
                                                            CHIEF FINANCIAL OFFICER, SENIOR VICE
                                                            PRESIDENT, TREASURER AND SECRETARY
</TABLE>

                               POWER OF ATTORNEY

    KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Malcolm L. Gefter and Kevin F. McLaughlin and
each of them, as such person's true and lawful attorney-in-fact and agent with
full power of substitution and revocation for such person and in such person's
name, place and stead, in any and all capacities, to execute any and all
amendments to this Report on Form 10-K, and to file the same, with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done, as fully to all intents and purposes as such person might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.

    Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed by the following persons in the capacities
indicated on March 29, 2001.

<TABLE>
<CAPTION>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<C>                                                    <S>
            /s/ MALCOLM L. GEFTER, PH.D.
     -------------------------------------------       Chairman of the Board, Chief Executive Officer
              Malcolm L. Gefter, Ph.D.                   and President (PRINCIPAL EXECUTIVE OFFICER)

               /s/ KEVIN F. MCLAUGHLIN                 Chief Financial Officer, Senior Vice
     -------------------------------------------         President, Treasurer and Secretary
                 Kevin F. McLaughlin                     (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)

              /s/ G. LEONARD BAKER, JR.
     -------------------------------------------       Director
                G. Leonard Baker, Jr.

                /s/ HENRY F. MCCANCE
     -------------------------------------------       Director
                  Henry F. McCance

                /s/ DAVID B. SHARROCK
     -------------------------------------------       Director
                  David B. Sharrock
</TABLE>

                                       45
<PAGE>

<TABLE>
<CAPTION>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<C>                                                    <S>
                /s/ WILLIAM R. RINGO
     -------------------------------------------       Director
                  William R. Ringo

                /s/ ALBERT L. ZESIGER
     -------------------------------------------       Director
                  Albert L. Zesiger
</TABLE>

                                       46
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
Report of Independent Auditors..............................    F-2
Consolidated Balance Sheets.................................    F-3
Consolidated Statements of Operations.......................    F-4
Consolidated Statements of Stockholders' Equity.............    F-5
Consolidated Statements of Cash Flows.......................    F-6
Notes to Consolidated Financial Statements..................    F-7
</TABLE>

                                      F-1
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders
PRAECIS PHARMACEUTICALS INCORPORATED

    We have audited the accompanying consolidated balance sheets of PRAECIS
PHARMACEUTICALS INCORPORATED as of December 31, 1999 and 2000, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of PRAECIS
PHARMACEUTICALS INCORPORATED at December 31, 1999 and 2000, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2000, in conformity with accounting principles
generally accepted in the United States.

                                                           /s/ ERNST & YOUNG LLP

Boston, Massachusetts
January 25, 2001,
  except for Note 12,
  as to which the date
  is February 27, 2001

                                      F-2
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

                          CONSOLIDATED BALANCE SHEETS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
<S>                                                           <C>        <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 94,525   $132,207
  Accounts receivable.......................................     8,121      1,079
  Refundable income taxes...................................        --      4,853
  Unbilled revenue..........................................     4,259      1,493
  Materials inventory.......................................    21,100         --
  Prepaid expenses and other assets.........................       708        786
  Deferred income taxes.....................................     5,575         --
                                                              --------   --------
    Total current assets....................................   134,288    140,418
Property and equipment, net.................................     6,043     53,821
Other assets................................................        --      1,332
                                                              --------   --------
    Total assets............................................  $140,331   $195,571
                                                              ========   ========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $  9,936   $ 12,834
  Accrued expenses..........................................     6,859      7,142
  Deferred revenue..........................................     5,501      4,709
  Advance payments..........................................    21,100         --
  Income taxes payable......................................     4,672         --
                                                              --------   --------
    Total current liabilities...............................    48,068     24,685
Deferred revenue............................................     4,547        355
Long term debt..............................................        --     24,000
Commitments and contingencies
Stockholders' equity:
  Preferred Stock-Unallocated, $0.01 par value, 10,000,000
    shares authorized; no shares issued or outstanding......        --         --
  Series A, B, C, D, E Convertible Preferred Stock, $0.01
    par value; 3,750,000 shares authorized; 3,417,300 shares
    in 1999 and no shares in 2000 issued and outstanding....        35         --
  Common Stock, $0.01 par value; 60,000,000 shares in 1999
    and 200,000,000 shares in 2000 authorized; 6,358,684
    shares in 1999 and 42,284,199 shares in 2000 issued and
    outstanding.............................................        64        423
  Additional paid-in capital................................    88,710    175,937
  Accumulated deficit.......................................    (1,093)   (29,829)
                                                              --------   --------
    Total stockholders' equity..............................    87,716    146,531
                                                              --------   --------
    Total liabilities and stockholders' equity..............  $140,331   $195,571
                                                              ========   ========
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-3
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Revenues:
  Corporate collaborations..................................  $37,624    $61,514    $ 61,189
  Contract services.........................................    1,943         --          --
                                                              -------    -------    --------
    Total revenues..........................................   39,567     61,514      61,189
Costs and expenses:
  Research and development..................................   33,704     48,764      85,915
  Sales and marketing.......................................       --      2,601       6,444
  General and administrative................................    3,605      3,572       5,285
                                                              -------    -------    --------
    Total costs and expenses................................   37,309     54,937      97,644
                                                              -------    -------    --------
Operating income (loss).....................................    2,258      6,577     (36,455)
Interest income.............................................    3,562      4,484       8,195
Interest expense............................................      (46)       (11)       (376)
                                                              -------    -------    --------
Income (loss) before income taxes...........................    5,774     11,050     (28,636)
Provision for income taxes..................................      100      1,800         100
                                                              -------    -------    --------
Net income (loss)...........................................  $ 5,674    $ 9,250    $(28,736)
                                                              =======    =======    ========
Net income (loss) per share:
  Basic.....................................................  $  0.99    $  1.51    $  (0.95)
                                                              =======    =======    ========
  Diluted...................................................  $  0.16    $  0.24    $  (0.95)
                                                              =======    =======    ========
Weighted average number of common shares:
  Basic.....................................................    5,738      6,106      30,259
  Diluted...................................................   35,139     37,849      30,259
Unaudited pro forma net income (loss) per share:
  Basic...............................................................   $  0.29    $  (0.74)
                                                                         =======    ========
  Diluted.............................................................   $  0.24    $  (0.74)
                                                                         =======    ========
Unaudited pro forma weighted average number of common
  shares:
  Basic...............................................................    31,714      38,794
  Diluted.............................................................    37,849      38,794
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-4
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
                                                                           PREFERRED STOCK
                                      -----------------------------------------------------------------------------------------
                                            SERIES A               SERIES B               SERIES C               SERIES D
                                      ---------------------   -------------------   ---------------------   -------------------
                                        SHARES      AMOUNT     SHARES     AMOUNT      SHARES      AMOUNT     SHARES     AMOUNT
                                      ----------   --------   --------   --------   ----------   --------   --------   --------
<S>                                   <C>          <C>        <C>        <C>        <C>          <C>        <C>        <C>
Balance at December 31, 1997........   1,041,166     $10       63,700       $1       1,052,632     $11       359,324      $4
Issuance of Series E Convertible
  Preferred Stock...................
Common Stock issued upon exercise of
  stock options.....................
Net income..........................
                                      ----------     ---      -------       --      ----------     ---      --------      --
Balance at December 31, 1998........   1,041,166      10       63,700        1       1,052,632      11       359,324       4
Common Stock issued upon
  exercise of stock options.........
Net income..........................
                                      ----------     ---      -------       --      ----------     ---      --------      --
Balance at December 31, 1999........   1,041,166      10       63,700        1       1,052,632      11       359,324       4
Common Stock issued upon initial
  public offering (net of $7,735 in
  offering costs)...................
Conversion of Preferred Stock on
  initial public offering...........  (1,041,166)    (10)     (63,700)      (1)     (1,052,632)    (11)     (359,324)     (4)
Stock compensation..................
Issuance of Common Stock............
Common Stock issued upon stock
  grants............................
Common Stock issued upon warrant
  exercises.........................
Net loss............................
                                      ----------     ---      -------       --      ----------     ---      --------      --
Balance at December 31, 2000........
                                      ==========     ===      =======       ==      ==========     ===      ========      ==

<CAPTION>
                                        PREFERRED STOCK
                                      -------------------
                                           SERIES E             COMMON STOCK        ADDITIONAL                      TOTAL
                                      -------------------   ---------------------    PAID-IN     ACCUMULATED    STOCKHOLDERS'
                                       SHARES     AMOUNT      SHARES      AMOUNT     CAPITAL       DEFICIT         EQUITY
                                      --------   --------   ----------   --------   ----------   ------------   -------------
<S>                                   <C>        <C>        <C>          <C>        <C>          <C>            <C>
Balance at December 31, 1997........                         5,064,758     $ 51      $ 50,847      $(16,017)      $ 34,907
Issuance of Series E Convertible
  Preferred Stock...................   900,478      $9                                 37,622                       37,631
Common Stock issued upon exercise of
  stock options.....................                           855,416        8           153                          161
Net income..........................                                                                  5,674          5,674
                                      --------      --      ----------     ----      --------      --------       --------
Balance at December 31, 1998........   900,478       9       5,920,174       59        88,622       (10,343)        78,373
Common Stock issued upon
  exercise of stock options.........                           438,510        5            88                           93
Net income..........................                                                                  9,250          9,250
                                      --------      --      ----------     ----      --------      --------       --------
Balance at December 31, 1999........   900,478       9       6,358,684       64        88,710        (1,093)        87,716
Common Stock issued upon initial
  public offering (net of $7,735 in
  offering costs)...................                         9,200,000       92        84,173                       84,265
Conversion of Preferred Stock on
  initial public offering...........  (900,478)     (9)     25,607,850      256          (221)
Stock compensation..................                                                    1,325                        1,325
Issuance of Common Stock............                         1,006,787       10         1,884                        1,894
Common Stock issued upon stock
  grants............................                             4,250                     66                           66
Common Stock issued upon warrant
  exercises.........................                           106,628        1                                          1
Net loss............................                                                                (28,736)       (28,736)
                                      --------      --      ----------     ----      --------      --------       --------
Balance at December 31, 2000........                        42,284,199     $423      $175,937      $(29,829)      $146,531
                                      ========      ==      ==========     ====      ========      ========       ========
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-5
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES:
Net income (loss)...........................................  $ 5,674    $  9,250   $(28,736)
Adjustments to reconcile net income (loss) to cash provided
  by (used in) operating activities:
  Depreciation and amortization.............................    1,005       1,354      4,745
  Deferred income taxes.....................................     (280)     (5,295)     5,575
  Stock compensation........................................       --          --      1,391
  Changes in operating assets and liabilities:
    Accounts receivable.....................................    1,867      (7,441)     7,042
    Refundable income taxes.................................       --          --     (4,853)
    Unbilled revenues.......................................    1,071      (4,259)     2,766
    Materials inventory.....................................       --     (21,100)    21,100
    Prepaid expenses and other assets.......................     (328)       (182)    (1,410)
    Accounts payable........................................     (213)      8,672      2,898
    Accrued expenses........................................    2,468        (372)       283
    Deferred revenue........................................   (2,265)      6,711     (4,984)
    Advance payments........................................       --      21,100    (21,100)
    Income taxes payable....................................      230       4,442     (4,672)
                                                              -------    --------   --------
Net cash provided by (used in) operating activities.........    9,229      12,880    (19,955)

INVESTING ACTIVITIES:
Purchase of property and equipment..........................   (1,492)     (3,556)   (52,523)
                                                              -------    --------   --------
Net cash used in investing activities.......................   (1,492)     (3,556)   (52,523)

FINANCING ACTIVITIES:
Initial public offering proceeds............................       --          --     84,265
Proceeds from debt issuance.................................       --          --     24,000
Proceeds from the issuance of Common Stock, options and
  warrants..................................................      161          93      1,895
Principal repayments of capital lease obligations...........     (421)       (190)        --
Proceeds from sale of Convertible Preferred Stock...........   37,631          --         --
                                                              -------    --------   --------
Net cash provided by (used in) financing activities.........   37,371         (97)   110,160
                                                              -------    --------   --------
Increase in cash and cash equivalents.......................   45,108       9,227     37,682
Cash and cash equivalents at beginning of year..............   40,190      85,298     94,525
                                                              -------    --------   --------
Cash and cash equivalents at end of year....................  $85,298    $ 94,525   $132,207
                                                              =======    ========   ========
</TABLE>

SEE ACCOMPANYING NOTES.

                                      F-6
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

THE COMPANY

    PRAECIS PHARMACEUTICALS INCORPORATED (the "Company") was incorporated under
the name Pharmaceutical Peptides, Inc. in July 1993 under the laws of the State
of Delaware. The Company is a drug discovery and development company engaged in
the development of drugs for the treatment of human diseases.

USE OF ESTIMATES

    The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of income and expenses during the reporting
period. Actual results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

    The accompanying consolidated financial statements include the Company's
accounts and the accounts of its wholly owned real estate subsidiary. All
significant intercompany account balances and transactions between the companies
have been eliminated.

2.  SIGNIFICANT ACCOUNTING POLICIES

CASH EQUIVALENTS

    Cash equivalents consist principally of money market funds with original
maturities of three months or less at the date of purchase.

CONCENTRATIONS OF CREDIT RISK

    Financial instruments which potentially subject the Company to concentration
of credit risk consist principally of cash equivalents and accounts receivable.
The Company places its cash equivalents with high credit quality financial
institutions and, by policy, limits the credit exposure to any one financial
instrument; accounts receivable are limited to amounts due from collaborators.

UNBILLED REVENUE

    Unbilled revenue represents reimbursable costs incurred by the Company but
not yet billed under corporate collaboration agreements. Billings are prepared
monthly upon receipt of all reimbursable cost documentation.

INVENTORY

    Materials inventory is carried at the lower of actual cost or market (net
realizable value).

PROPERTY AND EQUIPMENT

    Equipment is recorded at cost, and includes capitalized leases which are
stated at the present value of future minimum lease obligations at the date of
inception of the lease. Depreciation is recorded over the shorter of the
estimated useful life of the asset or the term of the lease using the
straight-line

                                      F-7
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
method. Leasehold improvements are stated at cost and are amortized over the
remaining life of the building lease. Interest is capitalized in connection with
the construction of facilities. The capitalized interest is recorded as part of
the asset to which it relates and is amortized over the asset's estimated useful
life. Interest capitalized into construction in progress during 1999 and 2000
was zero and approximately $0.8 million, respectively.

REVENUE RECOGNITION

    Revenue is deemed earned when all of the following have occurred: all
obligations of the Company relating to the revenue have been met and the earning
process is complete; the monies received or receivable are not refundable
irrespective of research results; and there are neither future obligations nor
future milestones to be met by the Company with respect to such revenue.

    CORPORATE COLLABORATIONS.  Revenues are earned based upon research expenses
incurred and milestones achieved. Non-refundable payments upon initiation of
contracts are deferred and amortized over the period in which the Company is
obligated to participate on a continuing and substantial basis in the research
and development activities outlined in each contract. Amounts received in
advance of reimbursable expenses are recorded as deferred revenue until the
related expenses are incurred. Milestone payments are recognized as revenue in
the period in which the parties agree that the milestone has been achieved and
it is deemed that no further obligations exist.

    CONTRACT SERVICES.  Revenues are earned as services are performed or the
related expenses are incurred. Amounts received in advance of reimbursable
services to be performed are recorded as deferred revenue until the related
services are performed.

INCOME TAXES

    The Company provides for income taxes under Statement of Financial
Accounting Standards ("SFAS") No. 109, ACCOUNTING FOR INCOME TAXES. Under this
method, deferred taxes are recognized using the liability method, whereby tax
rates are applied to cumulative temporary differences between carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for income tax purposes based on when and how they are expected to affect the
tax return.

TECHNOLOGY, LICENSES AND PATENTS

    Costs associated with acquired technology, licenses and patents are expensed
as incurred.

STOCK-BASED COMPENSATION

    The Company has elected to follow Accounting Principles Board Opinion
No. 25., ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES ("APB 25"), in accounting for
its stock-based employee compensation plans, rather than the alternative fair
value accounting method provided for under SFAS No. 123, ACCOUNTING FOR
STOCK-BASED COMPENSATION ("SFAS No. 123"), as SFAS No. 123 requires the use of
option valuation models that were not developed for use in valuing employee
stock options. Under APB 25, when the exercise price of options granted under
these plans equals the market price of the underlying stock on the date of
grant, no compensation expense is required.

                                      F-8
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ACCOUNTING PRONOUNCEMENTS

    In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES, which is
effective for fiscal year 2001. This Statement requires all derivatives to be
carried on the balance sheet as assets or liabilities at fair value. The
accounting for changes in fair value would depend on the hedging relationship
and would be reported in the income statement or as a component of comprehensive
income. The Company believes that the adoption of this new accounting standard
is not expected to have a material impact on the Company's financial statements.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin 101, which clarified the Staff's views concerning revenue
recognition policies and is effective no later than the quarter ended
December 31, 2000. The Company believes its revenue recognition policies are in
compliance with the Staff Accounting Bulletin.

    In March 2000, the FASB issued Interpretation No. 44, ACCOUNTING FOR CERTAIN
TRANSACTIONS Involving Stock Compensation. This Interpretation clarifies how
companies should apply the Accounting Principles Board's Opinion No. 25,
ACCOUNTING FOR STOCK ISSUED TO EMPLOYEEs. The Interpretation has been applied
prospectively to new awards, modifications to outstanding awards, and changes in
employee status on or after July 1, 2000, except as follows: the definition of
an employee applies to awards granted after December 15, 1998; the
Interpretation applies to modifications that reduce the exercise price of an
award after December 15, 1998; and the Interpretation applies to modifications
that add a reload feature to an award made after January 12, 2000. There are no
awards that resulted in an adjustment as a result of this Interpretation.

NET INCOME (LOSS) PER SHARE

    Basic net income (loss) per share represents net income (loss) divided by
the weighted average shares of common stock outstanding during the period.
Diluted net income per share includes the effect of all dilutive, potentially
issuable common shares using the treasury stock method. The difference between
basic and diluted shares used in the computation of net income per share is as
follows:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
HISTORICAL:
Weighted average number of common shares outstanding used in
  computing basic net income (loss) per share...............    5,738      6,106     30,259
Effect of dilutive securities:
  Convertible Preferred Stock...............................   23,387     25,608         --
  Stock options.............................................    5,868      5,989         --
  Warrants..................................................      146        146         --
                                                               ------     ------     ------
Weighted average number of common shares used in computing
  diluted net income (loss) per share.......................   35,139     37,849     30,259
                                                               ======     ======     ======
</TABLE>

                                      F-9
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

PRO FORMA NET INCOME PER SHARE (UNAUDITED)

    Pro forma net income per share is computed using the historical basic and
diluted weighted average number of outstanding shares of common stock assuming
conversion of the outstanding shares of Series A, B, C, D and E convertible
preferred stock, par value $.01 per share ("Convertible Preferred Stock") into a
total of 25,607,850 shares of common stock, par value $.01 per share ("Common
Stock") as of their original dates of issuance.

<TABLE>
<CAPTION>
                                                                  YEAR ENDED
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
PRO FORMA (UNAUDITED):
Weighted average number of common shares outstanding used in
  computing basic net income (loss) per share...............    6,106     30,259
Adjustment to reflect the effect of the assumed conversion
  of preferred stock from the date of issuance..............   25,608      8,535
                                                               ------     ------
Weighted average number of common shares outstanding used in
  computing pro forma basic net income (loss) per share.....   31,714     38,794
                                                               ======     ======
Weighted average number of common shares outstanding used in
  computing diluted net income (loss) per share.............   37,849     30,259
Adjustment to reflect the effect of the assumed conversion
  of preferred stock from the date of issuance..............       --      8,535
                                                               ------     ------
Weighted average number of common shares outstanding used in
  computing pro forma diluted net income (loss) per share...   37,849     38,794
                                                               ======     ======
</TABLE>

3.  PROPERTY AND EQUIPMENT

    Property and equipment consists of the following:

<TABLE>
<CAPTION>
                                                                DECEMBER 31,
                                                             -------------------
                                                               1999       2000
                                                             --------   --------
                                                               (IN THOUSANDS)
<S>                                                          <C>        <C>
Laboratory and office equipment............................   $6,271    $ 7,711
Leasehold improvements.....................................    3,711      1,610
Construction in progress...................................      274     50,540
                                                              ------    -------
                                                              10,256     59,861
Less accumulated depreciation and amortization.............    4,213      6,040
                                                              ------    -------
                                                              $6,043    $53,821
                                                              ======    =======
</TABLE>

4.  LEASES

    The Company leases its laboratory and office space under operating lease
agreements with fixed terms of ten years plus renewal options. In addition to
the minimum lease commitments, the leases require payment of the Company's pro
rata share of property taxes and building operating expenses. The leases also
contain certain rent inducements, which are being amortized over the term of the
agreements using the straight-line method.

                                      F-10
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4.  LEASES (CONTINUED)
    At December 31, 2000, future minimum commitments under leases with
noncancelable terms of more than one year are as follows (in thousands):

YEAR ENDED DECEMBER 31,

<TABLE>
<S>                                                           <C>
2001........................................................   $  590
2002........................................................      590
2003........................................................      590
2004........................................................      626
2005........................................................      279
Thereafter..................................................      838
                                                               ------
Total.......................................................   $3,513
                                                               ======
</TABLE>

    Total rent expense amounted to approximately $0.5 million in 1998,
$0.6 million in 1999 and $0.6 million in 2000.

5.  ACCRUED EXPENSES

    Accrued expenses consist of the following:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Clinical trial costs........................................   $4,116     $3,497
Other.......................................................    2,743      3,645
                                                               ------     ------
                                                               $6,859     $7,142
                                                               ======     ======
</TABLE>

6.  STOCKHOLDERS' EQUITY

INITIAL PUBLIC OFFERING

    In May 2000, the Company completed an initial public offering of
9.2 million shares of Common Stock resulting in net proceeds to the Company of
approximately $84.3 million.

STOCK SPLIT

    On February 2, 2000, the Company effected a two-for-one stock split of its
Common Stock in the form of a 100% stock dividend. All common share and per
share data in the accompanying consolidated financial statements have been
retroactively adjusted to reflect the stock split.

                                      F-11
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

CONVERTIBLE PREFERRED STOCK

    The issuance date, purchase price per share, number of shares issued and
conversion terms of the Company's Convertible Preferred Stock outstanding as of
December 31, 1999 are summarized in the table below:

<TABLE>
<CAPTION>
                                                                                        NUMBER OF SHARES
                                                                        NUMBER OF       OF COMMON STOCK
                                DATE OF              PER SHARE           SHARES          ISSUABLE UPON     CONVERSION
                               ISSUANCE            PURCHASE PRICE   ORIGINALLY ISSUED      CONVERSION        RATIO
                       -------------------------   --------------   -----------------   ----------------   ----------
<S>                    <C>                         <C>              <C>                 <C>                <C>
Series A.............  December 1993/March 1994       $10.085           1,041,166          7,777,887       7.47-to-1
Series B.............  December 1993                  $10.085              63,700            475,860       7.47-to-1
Series C.............  April 1996                     $ 19.00           1,052,632          7,905,118       7.51-to-1
Series D.............  June 1997                      $ 27.83             359,324          2,695,414       7.50-to-1
Series E.............  April 1998                     $ 42.00             900,478          6,753,582       7.50-to-1
</TABLE>

    Upon the closing of the Company's initial public offering, all of the
outstanding shares of the Company's Convertible Preferred Stock automatically
converted into 25,607,850 shares of Common Stock. Immediately following the
automatic conversion of the Convertible Preferred Stock, the Company filed an
amended and restated certificate of incorporation. Under the amended and
restated certificate of incorporation, the Company is authorized to issue
200,000,000 shares of Common Stock and 10,000,000 shares of preferred stock, par
value $.01 per share ("Preferred Stock"). The Preferred Stock will be issuable
in one or more classes or series, each of such classes or series to have such
rights and preferences, including voting rights, dividend rights, conversion
rights, redemption privileges and liquidation preferences, as may be determined
by the Board of Directors. There currently are no shares of Preferred Stock
issued and outstanding.

RIGHTS PLAN

    In January 2001, the Company adopted a Rights Agreement (the "Rights
Agreement"), commonly known as a "poison pill." The Rights Agreement provides
for the distribution of certain rights to acquire shares of the Company's
Series A junior participating preferred stock (the "Rights") as a dividend for
each share of Common Stock held of record as of February 5, 2001. Under certain
conditions involving an acquisition or proposed acquisition by any person or
group holding 10% or more of the common stock, each Right permits the holder
(other than the 10% holder) to purchase Common Stock having a value equal to
twice the exercise price of the Right, upon payment of the exercise price of the
Right. In addition, in the event of certain business combinations after an
acquisition by a person or group of 10% or more of the Common Stock, each Right
entitles the holder (other than the 10% holder) to receive, upon payment of the
exercise price, Common Stock having a value equal to twice the exercise price of
the Right. The Rights have no voting privileges and are attached to, and
automatically trade with, the Company's Common Stock. The Rights will terminate
upon the earlier of the date of their redemption or ten years from the date of
issuance.

EMPLOYEE STOCK PURCHASE PLAN

    On February 2, 2000, the Board of Directors adopted, effective as of
July 3, 2000, an Employee Stock Purchase Plan and authorized the reservation of
160,000 shares of Common Stock for issuance thereunder. Under the Employee Stock
Purchase Plan, eligible employees may purchase shares of

                                      F-12
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)
Common Stock at a price per share equal to 85% of the lower of the fair market
value per share of the Common Stock at the beginning or the end of each six
month period during the two-year term of the Employee Stock Purchase Plan.
Participation is limited to the lesser of 10% of the employee's compensation or
$25,000 in any calendar year. During 2000, the Company issued 9,497 shares under
the Employee Stock Purchase Plan.

WARRANTS

    In connection with its lease financing arrangement entered into on
March 29, 1995, the Company agreed to issue warrants to purchase 14,925 shares
of Series A Convertible Preferred Stock at $10.085 per share, which, pursuant to
the terms thereof, converted into warrants to purchase 111,495 shares of Common
Stock at $1.35 per share upon the completion of the initial public offering in
May 2000. The fair value of the warrants, when issued periodically over the two
year period from March 1995 through March 1997, was not material. Between August
and November of 2000, all of the warrants were exercised in three separate net
issuance exercises. As a result, the Company issued 106,628 shares of its Common
Stock.

    In May 1997, Sanofi-Synthelabo Inc. (formerly Sylamerica, Inc.), a wholly
owned subsidiary of Sanofi-Synthelabo S.A. (formerly Synthelabo S.A.) purchased
1,617,772 shares of Common Stock and a warrant to purchase 404,445 shares of
Common Stock, for an aggregate purchase price of $10.0 million. The warrant has
a five-year term and is exercisable at a price of $12.88 per share. The Company
allocated $0.5 million to the value of the warrant. This value was estimated
using the Black-Scholes valuation model using assumptions that are substantially
consistent with those used in valuing the Company's Common Stock options under
SFAS No. 123 (See "Stock Option Plan" below). As of December 31, 2000, all
404,445 warrants were outstanding.

STOCK OPTION PLAN

    The Second Amended and Restated 1995 Stock Plan (the "Plan") allows for the
granting of incentive and nonqualified options and awards to purchase shares of
Common Stock. At December 31, 2000, the Plan provided for the issuance of up to
11,375,000 shares of Common Stock. Incentive options granted to employees
generally vest at 20% on the first anniversary of the date of grant, with the
remaining shares vesting equally over four years following such anniversary
date. Nonqualified options issued to consultants generally vest over the period
of service with the Company.

                                      F-13
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)
    Information regarding options under the Plan is summarized below:

<TABLE>
<CAPTION>
                                                                 NUMBER OF        WEIGHTED-AVERAGE
                                                                   SHARES          EXERCISE PRICE
                                                              ----------------   ------------------
                                                              (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                           <C>                <C>
Outstanding at December 31, 1997............................        6,638                $0.92
Granted.....................................................        1,814                 4.68
Canceled....................................................         (858)                0.83
Exercised...................................................         (856)                0.19
                                                                    -----                -----
Outstanding at December 31, 1998............................        6,738                 2.03
Granted.....................................................        2,230                 6.47
Canceled....................................................         (318)                1.50
Exercised...................................................         (438)                0.21
                                                                    -----                -----
Outstanding at December 31, 1999............................        8,212                 3.35
Granted.....................................................        1,528                22.99
Canceled....................................................         (508)               10.70
Exercised...................................................         (997)                1.74
                                                                    -----                -----
Outstanding at December 31, 2000............................        8,235                $6.74
                                                                    =====                =====

Options exercisable at December 31, 2000....................        3,328                $2.55
                                                                    =====                =====
</TABLE>

    The weighted average per share fair value of options granted was $2.90 in
1998, $4.07 in 1999 and $16.64 in 2000. At December 31, 2000, there were 536,840
options available for grant and 9,326,618 shares of Common Stock reserved for
the exercise of stock options, warrants and issuances under the Employee Stock
Purchase Plan.

    The following table presents weighted average price and weighted average
remaining contractual life information about significant option groups
outstanding at December 31, 2000 (option amounts in thousands):

<TABLE>
<CAPTION>
                                      WEIGHTED-
                                       AVERAGE      WEIGHTED-                 WEIGHTED-
                                      REMAINING      AVERAGE                   AVERAGE
                         OPTIONS     CONTRACTUAL    EXERCISE      OPTIONS     EXERCISE
EXERCISE PRICE         OUTSTANDING   LIFE (YEARS)     PRICE     EXERCISABLE     PRICE
--------------         -----------   ------------   ---------   -----------   ---------
<S>                    <C>           <C>            <C>         <C>           <C>
$0.13-$1.60               2,610          5.4         $ 0.46        1,794       $ 0.49
$3.71-$6.38               4,045          7.6         $ 5.25        1,411       $ 4.47
$7.00-$16.25                712          9.0         $12.00          115       $ 9.55
$25.00-$42.00               868          9.8         $28.30            8       $25.38
                          -----                                    -----
                          8,235                                    3,328
</TABLE>

                                      F-14
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

    Pursuant to the requirements of SFAS No. 123, the following are the pro
forma net income (loss) for each year as if the compensation cost for the Plan
had been determined based on the fair value at the grant date for grants for
each year:

<TABLE>
<CAPTION>
                                                     1998                  1999                  2000
                                              -------------------   -------------------   -------------------
                                                 AS        PRO         AS        PRO         AS        PRO
                                              REPORTED    FORMA     REPORTED    FORMA     REPORTED    FORMA
                                              --------   --------   --------   --------   --------   --------
                                                           (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                           <C>        <C>        <C>        <C>        <C>        <C>
Net income (loss)...........................   $5,674     $3,982     $9,250     $6,547    $(28,736)  $(34,863)
                                               ======     ======     ======     ======    ========   ========
Diluted net income (loss) per common
  share.....................................   $ 0.16     $ 0.11     $ 0.24     $ 0.17    $  (0.95)  $  (1.15)
                                               ======     ======     ======     ======    ========   ========
</TABLE>

    The fair value of the stock options at the date of grant was estimated using
the Black-Scholes option pricing model with the following weighted average
assumptions:

<TABLE>
<CAPTION>
                                                               1998       1999       2000
                                                             --------   --------   --------
<S>                                                          <C>        <C>        <C>
Risk-free interest rate....................................    6.0%       6.0%       6.2%
Expected life (years)......................................      5          5          5
Volatility.................................................     70%        70%        84%
</TABLE>

The Company has never declared or paid any cash dividends on any of its capital
stock and does not expect to do so in the foreseeable future.

    The effects on pro forma net income of expensing the fair value of stock
options are not necessarily representative of the effects on reported results of
operations for future years as the periods presented include only two, three and
four years, respectively, of option grants under the Plan.

7.  INCOME TAXES

    The Company's provision for income taxes is as follows:

<TABLE>
<CAPTION>
                                                          YEAR ENDED DECEMBER 31,
                                                       ------------------------------
                                                         1998       1999       2000
                                                       --------   --------   --------
                                                               (IN THOUSANDS)
<S>                                                    <C>        <C>        <C>
Current:
Federal..............................................    $280      $5,295    $(5,575)
State................................................     100       1,800        100
                                                         ----      ------    -------
                                                          380       7,095     (5,475)

Deferred:
Federal..............................................    (280)     (5,295)     5,575
State................................................      --          --         --
                                                         ----      ------    -------
                                                         (280)     (5,295)     5,575
                                                         ----      ------    -------
                                                         $100      $1,800    $   100
                                                         ====      ======    =======
</TABLE>

                                      F-15
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  INCOME TAXES (CONTINUED)
    A reconciliation of the Company's income tax provision to the statutory
federal provision is as follows:

<TABLE>
<CAPTION>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1998       1999       2000
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Statutory federal income tax provision (benefit)............   $2,327     $3,868    $(9,736)
State income taxes..........................................      362        620         --
Increase (decrease) in valuation allowance..................       --     (2,688)     9,631
Utilization of net operating losses.........................   (2,589)        --         --
Other.......................................................       --         --        205
                                                               ------     ------    -------
Income tax provision........................................   $  100     $1,800    $   100
                                                               ======     ======    =======
</TABLE>

    In 1998, the Company utilized approximately $10.3 million of net operating
loss carryforwards to offset taxable income. Significant components of the
Company's deferred tax assets are as follows:

<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                1999       2000
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Deferred tax assets:
  Net operating losses......................................  $    --    $  8,761
  Deferred revenue..........................................    3,743       1,812
  Property and equipment....................................    4,104       1,524
  Accrued expenses..........................................    1,169         810
  Research and development tax credit carryforwards.........       --       1,821
  Other.....................................................      169         231
                                                              -------    --------
Total deferred tax assets...................................    9,185      14,959
Valuation allowance.........................................   (3,610)    (14,959)
                                                              -------    --------
                                                              $ 5,575    $     --
                                                              =======    ========
</TABLE>

    At December 31, 1999 and 2000, the Company has provided a valuation
allowance for the excess of the deferred tax asset over the benefit from future
losses that could be carried back if, and when, they occur. The valuation
allowance decreased by $2.7 million in 1999 due primarily to utilization of
previously unbenefitted tax credit carryforwards and increased by $11.3 million
in 2000 due to uncertainty regarding the ability to use net operating loss and
tax credit carryforwards. The Company has net operating loss carryforwards in
the amount of approximately $21.9 million, which expire through 2020. Due to
anticipated operating losses in the future, the Company believes that it is more
likely than not that it will not realize a portion of the net deferred tax
assets in the future and has provided an appropriate valuation allowance.

    Income tax payments amounted to approximately $2.6 million in 1999 and
$4.0 million in 2000.

                                      F-16
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8.  CORPORATE COLLABORATIONS

SANOFI-SYNTHELABO AGREEMENT

    In May 1997, the Company entered into a license agreement with
Synthelabo S.A., who subsequently merged with Sanofi S.A. forming
Sanofi-Synthelabo S.A. ("Sanofi-Synthelabo"), for the development and
commercialization of the Company's abarelix products. Upon initiation, the
Company received a one-time, non-refundable payment of $4.7 million. This
initiation fee is being recognized into revenue through the end of 2001, which
coincides with the estimated period in which the Company is obligated to
participate on a continuing and substantial basis in the research and
development activities outlined in the Sanofi-Synthelabo agreement. Should the
estimated period through which the Company will be required to perform these
activities change, then the Company will, on a prospective basis, adjust the
remaining amortization period accordingly. Sanofi-Synthelabo received marketing
rights in Europe, Latin America, the Middle East and various countries in Africa
in exchange for the following additional consideration: (a) 30 million French
Francs (approximately US $5 million) funding over three years to be applied
toward future research and development costs; (b) funding of certain additional
research and development expenses; (c) payments of up to $59.9 million upon
achievement of specific milestones; and (d) payment of a transfer price that
varies based on sales price and volume. The Company retained worldwide
manufacturing rights. The Company recognized revenues of approximately
$13.8 million in 1998, $4.7 million in 1999 and $4.1 million in 2000 under the
Sanofi-Synthelabo agreement.

ROCHE AGREEMENT

    In August 1997, the Company entered into an agreement with Roche
Products Inc. ("Roche") in return for a nonrefundable $2.0 million option fee
and reimbursement of certain development costs. The agreement provided Roche
with the option to enter into a definitive collaboration agreement with the
Company.

    In June 1998, Roche exercised their option and entered into a definitive
agreement with the Company for the development and commercialization of the
Company's abarelix products. Roche received marketing rights in the United
States, Canada and the Pacific Rim in exchange for: (a) a one-time,
nonrefundable payment to the Company upon initiation; (b) funding of a portion
of additional research and development expenses; (c) payments upon achievement
of specific milestones; and (d) specified percentages of product sales, if any,
representing product cost payment. The Company retained worldwide manufacturing
rights. In November 1998, Roche and the Company entered into a termination
agreement as allowed for under the definitive agreement. Pursuant to the
termination agreement, Roche surrendered any rights with respect to the
Company's abarelix products, and neither party has any further obligations to
the other on account of, or arising from, the Roche definitive agreement. In
1998, the Company recognized approximately $23.8 million of revenues under the
definitive agreement and termination agreements with Roche.

AMGEN AGREEMENT

    Effective March 1999, the Company entered into a binding agreement in
principle with Amgen Inc. ("Amgen") for the development and commercialization of
the Company's abarelix products. Under terms of the agreement, Amgen has agreed
to assist in the development of abarelix for all indications and has received
the right to commercialize abarelix in the United States, Canada, Japan and all
other countries not covered by the Sanofi-Synthelabo Agreement.

                                      F-17
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8.  CORPORATE COLLABORATIONS (CONTINUED)
    Under terms of the agreement, Amgen will pay the Company up to
$25.0 million in signing and milestone payments. Of this $25.0 million, the
Company received a $10.0 million, one-time, non-refundable payment upon
initiation. This initiation fee is being recognized into revenue through the end
of 2001, which coincides with the estimated period in which the Company is
obligated to participate on a continuing and substantial basis in the research
and development activities outlined in the Amgen agreement. On or before the end
of 2001, the majority of the Company's efforts related to abarelix products will
transfer to Amgen. Should the estimated period through which the Company will be
required to perform these activities change, then the Company will, on a
prospective basis, adjust the remaining amortization period accordingly. The
remaining $15.0 million is payable upon FDA approval of an NDA relating to
abarelix. In addition to the signing and milestone payments, Amgen agreed to pay
the first $175.0 million of all authorized costs and expenses associated with
the development and commercialization of abarelix products, including the cost
of materials, in the United States. Amgen fulfilled this initial $175.0 million
funding commitment during the third quarter of 2000.

    Following Amgen's completion of this funding, the Company became responsible
for one-half of all subsequent United States research and development costs for
abarelix products through the launch period. Additionally, the Company must
reimburse Amgen for one-half of the costs associated with establishing a sales
and marketing infrastructure for abarelix products in the United States. In
general, the Company will receive a transfer price and royalty based on a
sharing of the resulting profits on sales of abarelix products in the United
States. All program expenses in Amgen's licensed territory outside the United
States will be borne by Amgen, and the Company will receive a royalty on net
sales of abarelix products in those territories.

    Amgen will provide the Company with a line of credit not to exceed
$150.0 million through 2002. Under the line of credit, subject to various
conditions each year, the Company will be permitted to draw down a maximum of
$75.0 million in 2001, and in 2002, the remaining balance of the line of credit
available after all previous drawdowns. For each drawdown in 2002, the Company
must demonstrate a cash flow need reasonably acceptable to Amgen and meet
various other specified conditions, including conditions relating to the
commercial sale of abarelix. The loan will be interest-bearing, secured by
receivables relating to the abarelix products and must be repaid by 2008. As of
December 31, 2000, the Company had not drawn any amounts related to this line of
credit.

    The agreement can be terminated by either party for material breach, or by
Amgen by giving 90-days' notice.

    The Company recognized revenues in 1999 and 2000 of approximately
$56.8 million and $57.1 million, respectively, under the Amgen agreement.

HUMAN GENOME SCIENCES AGREEMENT

    In January 2000, the Company entered into an agreement with Human Genome
Sciences Inc. ("HGS") for the discovery, development and commercialization of
compounds targeted to two proprietary molecules identified by HGS. Under the
terms of the agreement, the Company will apply its technology to these molecules
and any clinical drug candidates will be jointly developed by the parties on an
equal cost and profit sharing basis.

                                      F-18
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9.  CONTRACT SERVICES

    In August 1996, the Company entered into a service agreement with Boehringer
Ingelheim International GmbH ("Boehringer") for the screening of certain
Boehringer compounds for $3.0 million of fees as well as reimbursement of
certain research personnel, equipment and materials expenses in connection with
the screening of those compounds. In August 1998, the Company completed its
responsibility for screening Boehringer compounds. Boehringer would be
responsible for all development, marketing and other costs with respect to any
Boehringer compound screened by the Company and developed and commercialized by
Boehringer or its licensee. The Company would be entitled to receive royalties
on net sales of any product containing a Boehringer compound which the Company
screened, if Boehringer or its licensee develops and commercializes the product.

10.  BUILDING AND RELATED MORTGAGE FINANCING

    On July 11, 2000, the Company purchased, for approximately $41.3 million,
through its wholly owned real estate subsidiary, land and a building to be used
as its principal headquarters and research facility. In connection with
obtaining first mortgage financing to purchase this facility, the Company formed
its real estate subsidiary and assigned to it all of the rights and obligations
under the related Purchase and Sale Agreement (the "Purchase and Sale
Agreement").

    At that time, the Company's real estate subsidiary executed an Acquisition
and Construction Loan Agreement (the "Loan Agreement") providing for up to
$33.0 million in first mortgage financing. Under the terms of the Loan
Agreement, advances are available primarily to pay for the acquisition of, and
improvements to, the Company's new facility. The Company has entered into an
interest rate cap agreement (the "Interest Rate Cap Agreement") in order to
reduce the potential impact of interest rate increases on future income. At
December 31, 2000, the notional amount and fair market value under the Interest
Rate Cap Agreement are $33.0 million and $27,000, respectively.

    An initial advance of $24.0 million was made on July 11, 2000. Advances bear
interest at a rate equal to the 30-day LIBOR plus 2.0% (8.56% at December 31,
2000). Interest is payable monthly in arrears. Principal is due and payable in
full on July 30, 2003, subject to two, one-year extension options. The loan is
secured by the new facility, together with all fixtures, equipment, improvements
and other items related thereto, and by all rents, income or profits received by
the Company's real estate subsidiary.

    The Company expects to occupy the new facility during the first half of 2001
and intends to sublet a portion of the facility at that time. In connection with
the decision to relocate its operations to the new facility, the Company expects
to incur approximately $4.0 million of incremental cash and non-cash operating
costs through June 2001.

11.  COMMITMENTS

INDIANA UNIVERSITY FOUNDATION ("IUF") LICENSE AGREEMENT

    The Company has a license agreement with IUF with respect to rights to
abarelix and certain related technology. In exchange for the license, the
Company agreed to pay (a) fees of $0.3 million, (b) up to an additional
$4.3 million upon achievement of specific milestones and (c) a royalty
percentage of net sales of licensed products, if any. The Company made fee
payments of $495,000 in 1998, $0 in 1999 and $500,000 in 2000 under the IUF
agreement.

                                      F-19
<PAGE>
                      PRAECIS PHARMACEUTICALS INCORPORATED

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11.  COMMITMENTS (CONTINUED)
SALSBURY SUPPLY AGREEMENT

    In July 1998, the Company entered into a seven-year agreement with Salsbury
Chemicals, Inc. ("Salsbury") for the development and supply of clinical and
commercial depot formulation of abarelix. Under the agreement, in 1998 and 1999,
the Company contributed approximately $1.7 million and $4.3 million,
respectively, towards construction of the manufacturing facility which it has
expensed as manufacturing start up costs. As of December 31, 2000, the Company
is committed to purchase $1.1 million of clinical depot formulation through
December 2001. The Company has no obligations beyond this commitment, but
anticipates making additional purchases in the future.

12.  SUBSEQUENT EVENTS

    In February 2001, the Company completed a follow-on public offering of its
Common Stock. The Company sold 7,587,500 shares of its Common Stock, resulting
in net proceeds to the Company of approximately $175.8 million.

                                      F-20
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
     EXHIBIT NO.                                  EXHIBIT
     -----------                                  -------
<C>                     <S>
    3.1                 Amended and Restated Certificate of Incorporation (2)

    3.2                 Amended and Restated By-Laws (2)

    4.1                 Specimen certificate representing shares of common
                        stock (1)

    4.2                 Specimen certificate representing shares of common stock
                        (including Rights Agreement Legend) (5)

    4.3                 Warrant to purchase Common Stock dated as of May 13,
                        1997 (1)

    4.4                 Amendment dated as of January 30, 2001 between PRAECIS and
                        Sanofi- Synthelabo Inc. (formerly Sylamerica, Inc.) to the
                        Warrant for the Purchase of Shares of Common Stock issued by
                        PRAECIS to Sylamerica, Inc. (5)

    4.5                 Rights Agreement between PRAECIS and American Stock Transfer
                        & Trust Company, as Rights Agent (6)

    4.6                 Form of Certificate of Designations of Series A Junior
                        Participating Preferred Stock (attached as Exhibit A to the
                        Rights Agreement filed as Exhibit 4.5 hereto) (6)

    4.7                 Form of Rights Certificate (attached as Exhibit B to the
                        Rights Agreement filed as Exhibit 4.5 hereto) (6)

   10.1*                Second Amended and Restated 1995 Stock Plan (3)

   10.2*                Executive Management Bonus Plan, as amended and restated as
                        of January 30, 2001 (supersedes the version of this Exhibit
                        filed as Exhibit 10.2 to Registration Statement on Form S-1
                        (Registration No. 333-54342) initially filed with the
                        Securities and Exchange Commission on January 26, 2001 and
                        declared effective on February 14, 2001)

   10.3*                Employee Stock Purchase Plan (4)

   10.4                 Amended and Restated Stockholders Agreement dated as of
                        April 30, 1998 by and among PRAECIS and certain stockholders
                        referred to therein, as amended by Amendment No. 1 dated as
                        of May 14, 1998, Amendment No. 2 dated as of July 21, 1998
                        and Amendment No. 3 dated as of January 31, 2000 (1)

   10.5                 Amendment No. 4 dated as of September 1, 2000 to Amended and
                        Restated Stockholders Agreement dated as of April 30, 1998
                        by and among PRAECIS and certain stockholders referred to
                        therein, as amended (4)

   10.6                 Stock and Warrant Purchase Agreement dated as of May 13,
                        1997 by and between Sylamerica, Inc. and PRAECIS (1)

   10.7                 Waiver and Amendment dated as of January 26, 2001 between
                        PRAECIS and Sanofi-Synthelabo Inc. (formerly Sylamerica,
                        Inc.) to the Stock and Warrant Purchase Agreement dated as
                        of May 13, 1997 by and between Sylamerica, Inc. and PRAECIS
                        (5)

   10.8+                License Agreement dated as of May 13, 1997 by and between
                        PRAECIS and Synthelabo, as amended by letters dated July 31,
                        1997, October 1, 1998 and June 17, 1999 (1)

   10.9+                Amended and Restated Binding Agreement in Principle
                        effective as of March 8, 1999 by and between PRAECIS and
                        Amgen Inc. (1)

   10.10                Amendment to Amended and Restated Binding Agreement in
                        Principle effective as of March 8, 1999 by and between
                        PRAECIS and Amgen Inc. (4)

   10.11+               Collaboration Agreement dated as of January 31, 2000 by and
                        between Human Genome Sciences, Inc. and PRAECIS (1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
     EXHIBIT NO.                                  EXHIBIT
     -----------                                  -------
<C>                     <S>
   10.12+               Collaboration and License Agreement dated as of August 1,
                        1996 by and between PRAECIS and Boehringer Ingelheim
                        International GmbH (1)

   10.13+               License Agreement effective as of October 17, 1996 by and
                        between PRAECIS and Indiana University Foundation, as
                        amended as of June 3, 1998 (1)

   10.14+               License Agreement dated as of April 15, 1999 between
                        Pharmaceutical Applications Associates LLC, C. Donald
                        Williams, M.D.C.G.P., Robert Murdock, R.Ph. and PRAECIS (5)

   10.15                Amendment No. 1 dated as of August 25, 2000 to License
                        Agreement dated as of April 15, 1999 between Pharmaceutical
                        Applications Associates LLC, C. Donald Williams, M.D.,
                        C.G.P., Robert Murdock, R.Ph. and PRAECIS (5)

   10.16+               Supply Agreement dated as of July 23, 1998 by and between
                        PRAECIS and Salsbury Chemicals, Inc. (1)

   10.17                Lease dated as of April 28, 1994 by and between PRAECIS and
                        The Charles Stark Draper Laboratory, Inc. (1)

   10.18                Lease dated as of August 19, 1998 by and between PRAECIS and
                        BDG Piscataway, LLC (1)

   10.19                Letter Amendment, effective as of March 1, 2000, to Lease
                        dated as of August 19, 1998 by and between PRAECIS and BDG
                        Piscataway, LLC (3)

   10.20                Contract of Sale dated as of January 14, 2000 by and between
                        Best Property Fund, L.P. and PRAECIS, as amended as of
                        February 7, 2000 (1)

   10.21                Acquisition and Construction Loan Agreement dated as of July
                        11, 2000 between 830 Winter Street LLC and Anglo Irish Bank
                        Corporation plc and related Loan and Security Agreements (3)

   10.22                Guaranty of Costs and Completion dated as of July 11, 2000
                        (3)

   10.23                Guaranty of Non-Recourse Exceptions dated as of July 11,
                        2000 (3)

   10.24                Environmental Compliance and Indemnity Agreement dated as of
                        July 11, 2000 executed by 830 Winter Street LLC and PRAECIS
                        (3)

   10.25                Lease Agreement dated as of July 11, 2000 between 830 Winter
                        Street LLC, as landlord, and PRAECIS, as tenant (3)

   21.1                 List of Subsidiaries of PRAECIS (5)

   23.1                 Consent of Ernst & Young LLP

   24.1                 Power of Attorney (included on the signature page of this
                        Report on Form 10-K)
</TABLE>

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

*   Represents a management contract or compensatory plan or arrangement.

(1) Incorporated by reference to Registration Statement on Form S-1
    (Registration No. 333-96351) initially filed with the Securities and
    Exchange Commission on February 8, 2000 and declared effective on April 26,
    2000.

(2) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
    ended March 31, 2000 filed with the Securities and Exchange Commission on
    June 7, 2000.

(3) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2000 filed with the Securities and Exchange Commission on
    August 14, 2000.

(4) Incorporated by reference to Quarterly Report on Form 10-Q for the quarter
    ended September 30, 2000 filed with the Securities and Exchange Commission
    on November 13, 2000.
<PAGE>
(5) Incorporated by reference to Registration Statement on Form S-1
    (Registration No. 333-54342) initially filed with the Securities and
    Exchange Commission on January 26, 2001 and declared effective on
    February 14, 2001.

(6) Incorporated by reference to Registration Statement on Form 8-A filed with
    the Securities and Exchange Commission on January 26, 2001.

+   Confidential treatment has been granted for certain portions of this
    exhibit. Omitted portions have been filed separately with the Securities and
    Exchange Commission.