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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, 2001
                                       OR

<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)
           830 WINTER STREET                                 02451-1420
        WALTHAM, MASSACHUSETTS                               (Zip code)
    (Address of principal executive
               offices)
</Table>

                                 (781) 795-4100
              (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. / /

    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
February 28, 2002, was $207,959,729.

    The number of shares of common stock, par value $.01 per share, outstanding
as of February 28, 2002 was 51,528,024.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Specified portions of the definitive Proxy Statement with respect to the
registrant's 2002 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....................................................      2
Item 2.       Properties..................................................     16
Item 3.       Legal Proceedings...........................................     16
Item 4.       Submission of Matters to a Vote of Security Holders.........     16

                                      PART II
Item 5.       Market for Registrant's Common Equity and Related
                Stockholder Matters.......................................     17
Item 6.       Selected Financial Data.....................................     18
Item 7.       Management's Discussion and Analysis of Financial Condition
                and Results of Operations.................................     19
Item 7A.      Quantitative and Qualitative Disclosures About Market
                Risk......................................................     37
Item 8.       Financial Statements and Supplementary Data.................     37
Item 9.       Changes in and Disagreements with Accountants on Accounting
                and Financial Disclosure..................................     37

                                      PART III
Item 10.      Directors and Executive Officers of the Registrant..........     38
Item 11.      Executive Compensation......................................     38
Item 12.      Security Ownership of Certain Beneficial Owners and
                Management................................................     38
Item 13.      Certain Relationships and Related Transactions..............     38

                                      PART IV
Item 14.      Exhibits, Financial Statement Schedules and Reports on Form
                8-K.......................................................     39

              Signatures..................................................     41

              Index to Financial Statements...............................    F-1
</Table>
<Page>
                                     PART I

ITEM 1. BUSINESS.

OVERVIEW

    We are a drug discovery and development company with a lead product
candidate, Plenaxis-TM- (abarelix for injectable suspension), for the treatment
of hormonally responsive advanced prostate cancer. In December 2000, we
submitted to the FDA a new drug application, or NDA, for Plenaxis for the
treatment of hormonally responsive advanced prostate cancer. In response to
concerns raised by the FDA in June 2001, we recently initiated an additional
clinical trial to study the effects of using currently available hormonal
therapies in prostate cancer patients following treatment with Plenaxis. We are
also evaluating the rare allergic reactions that occurred in our clinical
trials. Assuming positive results, we expect to submit to the FDA additional
data by the end of the first quarter of 2003.

    We are also developing Plenaxis for the treatment of endometriosis, a
disease that responds to a reduction of the female hormone estrogen. We believe
that patients suffering from endometriosis are not well served by current
methods or remain untreated, and that Plenaxis could fulfill a significant unmet
need. Endometriosis is a long-lasting, often painful condition affecting an
estimated 5.5 million females in the United States and Canada. Patients recently
concluded the final stages of follow-up in a phase II/III clinical study of
Plenaxis for the treatment of endometriosis. We anticipate meeting with the FDA
during mid-year 2002 to discuss the results of this study and the initiation of
additional clinical trials.

    We are also developing Apan-TM-, our drug candidate for the treatment of
Alzheimer's disease, a condition that affects more than four million Americans.
Apan is designed to treat what we and others believe to be the underlying cause
of Alzheimer's disease, rather than the symptoms. 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. We have
demonstrated in preclinical studies that Apan is able to mobilize beta-amyloid
in the brains of guinea pigs and transgenic mice, and, based on these studies,
we believe that Apan may be facilitating the clearance of beta-amyloid. We are
conducting a phase I dose escalation study of Apan in which we are evaluating
the safety and pharmacokinetics of the compound in normal human subjects. We
anticipate that this study will be completed during the second half of 2002. We
expect to initiate a second phase I study in the first half of 2003 in which we
intend to further evaluate the safety and pharmacokinetics of Apan in
individuals suffering from Alzheimer's disease.

    Our proprietary drug discovery technology called Ligand Evolution to Active
Pharmaceuticals, or LEAP-TM-, 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 efficiently new drugs
against a variety of other disease targets. LEAP was instrumental in the
development of Plenaxis and Apan, and we are using it against targets in other
disease areas, as well.

    Our technology platform also includes a proprietary drug delivery system
known as Rel-Ease-TM-. Plenaxis is formulated in Rel-Ease, which allows it to be
administered to prostate cancer patients once every four weeks. We have
demonstrated that Rel-Ease is useful for formulating Plenaxis and various other
molecules in sustained release formulations. We hold a patent that covers the
general application of this technology for a broad range of peptide-based drugs.

    We were incorporated in Delaware in July 1993 under the name Pharmaceutical
Peptides, Inc. In June 1997, we changed our name to PRAECIS PHARMACEUTICALS
INCORPORATED.

PRODUCT PIPELINE

    We focus our drug development efforts on conditions or diseases where there
are unmet needs creating a potential for significant product revenues. We have
three 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>
PRODUCT CANDIDATES             CLINICAL INDICATION            STATUS
------------------             -------------------            ------
<S>                            <C>                            <C>
Plenaxis                       Hormonally Responsive          NDA Submitted Q4 2000;
                                 Advanced Prostate Cancer       additional Study and
                                                                Analyses ongoing
Plenaxis                       Endometriosis                  Phase II/III
Apan                           Alzheimer's Disease            Phase I
PPI-2458                       Rheumatoid Arthritis/Cancer    Research/Preclinical
Apan-CH                        Alzheimer's Disease            Research/Preclinical
CCR5 Antagonist*               AIDS                           Research/Preclinical
Androgen Receptor Antagonist   Hormone-Independent            Research/Preclinical
                                 Prostate Cancer
Endometriosis Diagnostic       Endometriosis                  Research/Preclinical
</Table>

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

*   In collaboration with Human Genome Sciences, Inc. Subject to GlaxoSmithKline
    option, if exercised, to assume development and commercialization with Human
    Genome Sciences, Inc.

  PLENAXIS-TM- PROGRAM

    Plenaxis (abarelix for injectable suspension) 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, benign prostatic hypertrophy, uterine fibroids, breast cancer,
polycystic ovarian disease, infertility and precocious puberty. Treatments that
reduce testosterone or estrogen through the use of drugs, known as hormonal
therapy, can result in a therapeutic benefit to patients suffering from these
diseases.

    Currently available hormonal therapies, known as LHRH agonists, 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 become non-responsive after approximately three
weeks. However, this overstimulation first leads to increased production of two
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
become non-responsive and the desired reduction of hormonal levels occur. Due to
this surge, current LHRH agonists, such as Lupron Depot-Registered Trademark-,
marketed by TAP Pharmaceuticals Inc., and Zoladex-Registered Trademark-,
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
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, Plenaxis has a blocking, or antagonist, effect on the GnRH
receptor. Plenaxis rapidly shuts off the production of LH and FSH and,
consequently, rapidly reduces the patient's levels of testosterone or estrogen.
With Plenaxis, unlike commercially available LHRH agonists, there is no increase
in hormone levels before achieving the desired hormone level reduction.

    Our most advanced programs involve the development of Plenaxis for the
treatment of hormonally responsive advanced prostate cancer and for
endometriosis. In addition, a small, investigator-sponsored study is underway in
which the effects of using Plenaxis to treat hormonally refractory prostate
cancer are being evaluated. We have not begun studies for any of the other
potential indications identified above.

                                       3
<Page>
    PLENAXIS--PROSTATE CANCER

    BACKGROUND.  Prostate cancer is one of the most commonly diagnosed cancers
in men. The American Cancer Society estimates that approximately 189,000 new
diagnoses of, and 30,200 deaths from, prostate cancer will occur in the United
States in 2002. In nearly all newly diagnosed prostate cancer patients, the
cancerous cells require the androgen 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. The goal of
hormonal therapies is to reduce testosterone to low, or castrate, levels,
leading to inhibition of prostate cancer cell growth.

    To date, we have focused on the development of Plenaxis as a treatment for
hormonally responsive prostate cancer. Plenaxis is a sustained release depot
formulation that enables the drug to be administered once every four weeks.
During the first four weeks of administration, an additional injection is given
on day 15, resulting in two injections during that time period. Our pivotal
phase III studies demonstrate that Plenaxis reduces the time required to achieve
therapeutically low testosterone levels compared to currently available LHRH
agonists and completely avoids the testosterone surge associated with these
therapies.

    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-Registered Trademark-, 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 LHRH agonists. 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 gastrointestinal distress. Finally, Medicare generally does not
reimburse the costs of anti-androgens. This means that patients who pay
out-of-pocket for medications not covered by Medicare may not fill their
prescriptions and, thus, 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 Plenaxis experienced a testosterone surge. In
contrast, more than 80% of patients treated with Lupron Depot alone or in
combination with Casodex experienced a testosterone surge. A major reason for
using anti-androgens in clinical practice is to mitigate the effects of the
surge and thereby avoid the resultant flare. We believe that the results of our
clinical studies may lessen the perceived need to use anti-androgens because the
use of Plenaxis 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. 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 LHRH agonists in patients with the potential for developing
worsening neurologic 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, known as castration, both to rapidly reduce
testosterone levels and avoid the testosterone surge. Based upon our analysis of
our clinical studies, we believe that Plenaxis may have the potential to provide
a non-surgical alternative to castration for these patients. A significant
portion of patients who do not have radiographically confirmed epidural or
spinal metastases or kidney obstruction are still at risk for developing
life-threatening conditions as a result of the disease flare induced by the
testosterone surge. We believe that both physicians and patients will prefer a
treatment option that eliminates the potential risks of a clinical flare
response.

                                       4
<Page>
    PROSTATE CANCER--NDA STATUS.  We submitted to the FDA an NDA comprised of
comprehensive safety and efficacy data in December 2000 to support marketing
approval of Plenaxis for the treatment of hormonally responsive prostate cancer.
Our submission included data from two pivotal phase III safety and efficacy
studies, one pivotal phase III safety study, a phase II/III study in advanced
metastatic prostate cancer patients, as well as previously completed phase I and
phase I/II pharmacokinetics studies.

    In January 2001, the FDA informed us that it had accepted and filed the NDA
and had granted the filing priority review. In June 2001, we received a letter
from the FDA in which the FDA indicated that the information presented in the
NDA was inadequate for approval. In September 2001, we met with the FDA in an
effort to clarify the various deficiencies cited in the FDA's letter, and to
discuss what further steps needed to be taken before the application could be
approved. The FDA recommended that we analyze the allergic reactions that
occurred in a small subset of clinical trial patients. In addition, the FDA
expressed concern that, in a subset of patients treated beyond the three-month
pivotal study time frame, testosterone suppression was not maintained at a
comparable level to that of patients treated with either Lupron Depot or Lupron
Depot plus Casodex. The FDA also indicated that the nature of the testosterone
surge, if any, associated with treating patients with Plenaxis and then
switching them to a currently available therapy should be understood.

    We considered various alternatives to address these issues, and in
December 2001 the FDA indicated that we could proceed with our clinical plans to
study the effects of using currently available hormonal therapies in prostate
cancer patients following treatment with Plenaxis. The FDA also indicated that
our plan to further evaluate the rare allergic reactions that occurred in our
clinical trials was acceptable. We recently initiated an additional clinical
trial in accordance with our clinical plan. This trial is summarized below.

    Following further review of the proposed protocol for our additional
clinical study, the FDA requested that we extend the treatment period for an
additional month, which will delay our previously announced timeline. Assuming
positive results, we now expect to submit additional data to the FDA by the end
of the first quarter of 2003. However, we can give no assurance that our
additional clinical studies will yield positive results or that the results,
even if positive, will satisfy FDA concerns that have been or may be raised. We
cannot assure investors that we will be successful in obtaining approval for the
commercialization of Plenaxis for the treatment of hormonally responsive
advanced prostate cancer or any other indication.

    As discussed above, we have initiated an open-label clinical trial to study
the effects of using currently available hormonal therapies in prostate cancer
patients following treatment with Plenaxis. We intend to enroll up to 140
patients suffering from prostate cancer in this trial. In this study, in which
we have begun patient accrual, patients will receive a three-month treatment of
Plenaxis followed by a two-month treatment of either Lupron Depot or Zoladex.
The goal is to study the nature and magnitude, if any, of the testosterone surge
typically caused by currently available LHRH agonists if patients are initially
treated with Plenaxis and then switched to Lupron Depot or Zoladex.

    PROSTATE CANCER CLINICAL STUDIES.  In support of our NDA, we previously
submitted data from two pivotal phase III clinical trials of Plenaxis for the
treatment of hormonally responsive prostate cancer. The first phase III clinical
trial was a 269 patient study comparing Plenaxis to Lupron Depot. This study
compared the safety of both drugs and the ability of both drugs to avoid the
testosterone surge, reduce testosterone levels and achieve and maintain
therapeutically low levels of testosterone. The second phase III clinical trial
was a 251 patient study comparing the safety and efficacy of Plenaxis to the
combination therapy of Lupron Depot plus Casodex.

    In these clinical trials, zero percent of the patients treated with Plenaxis
experienced a testosterone surge compared to more than 80% of patients treated
with Lupron Depot, or a combination of Lupron Depot and Casodex. Further,
Plenaxis suppressed testosterone levels more rapidly, achieving suppression by
day 8 in 70% of patients compared to zero percent of patients treated with
either Lupron Depot, or Lupron Depot plus Casodex. Each treatment therapy
studied achieved and

                                       5
<Page>
maintained therapeutically low testosterone levels from day 29 through day 85 in
more than 90% of patients.

    All of the patients enrolled in these studies were to continue treatment
beyond the three-month pivotal study timeframe for a total of six months. In
addition, physicians could continue to administer treatment to patients for up
to one year. We observed that in a subset of patients treated with Plenaxis for
over six months, testosterone suppression was not maintained at a comparable
level to that of patients treated with either Lupron Depot or Lupron Depot plus
Casodex. As stated above, the FDA raised concerns with these results and,
therefore, we are exploring possible additional studies that could be undertaken
to address this issue and eventually expand the potential treatment time for
Plenaxis.

    In further support of the safety of Plenaxis, we included results in our NDA
from a separate pivotal phase III safety study comparing Plenaxis to Lupron
Depot in 582 patients. The primary objective of this study was to gain more
patient exposure to confirm the safety of Plenaxis over a six-month course of
therapy. The results of this safety study were consistent with previous studies
and supplement existing patient drug exposure data.

    In addition, we conducted a phase II/III clinical trial to evaluate the use
of Plenaxis in patients with advanced prostate cancer where the use of current
LHRH agonists could result in a life-threatening disease flare. The results of
this study indicated that Plenaxis could provide a medical alternative to
immediate surgical removal of the testes for this high risk population.

    Our former European collaborator also conducted a 176 patient study in
Europe comparing the safety and efficacy of Plenaxis to Zoladex plus Casodex.
Based upon 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 intend to use the results of this study to
support a regulatory filing for Plenaxis in Europe.

    From a safety perspective, patients have generally tolerated treatment with
Plenaxis well to date. However, a small number of patients in our Plenaxis
studies had adverse reactions, including relatively mild allergic reactions and
temporary and reversible elevation of some liver enzymes. We expected these
types of relatively non-severe reactions and observed them with similar
frequency in patients taking Lupron Depot and Lupron Depot plus Casodex in our
clinical studies.

    During the clinical studies described above, in which approximately 1,200
patients were treated, 15 patients treated with Plenaxis experienced allergic
reactions that resulted in the discontinuation of trial participation. We
observed a similar frequency of allergic reactions resulting in the
discontinuation of trial participation in patients treated with Lupron Depot,
Lupron Depot plus Casodex or Zoladex plus Casodex. However, of these 15
patients, five patients, or approximately 0.4% of the total patient population,
experienced severe allergic reactions, consisting of either a drop in blood
pressure or temporary syncope (fainting), following the administration of
Plenaxis. None of the patients in these studies treated with Lupron Depot,
Lupron Depot plus Casodex or Zoladex plus Casodex, experienced an allergic
reaction of similar severity. At the recommendation of the FDA, we are
conducting additional analyses of the existing data and samples from these
patients to further characterize these reactions.

    PLENAXIS--ENDOMETRIOSIS

    BACKGROUND.  We also are developing Plenaxis for the treatment of
endometriosis. 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. Each year in the United
States, approximately 300,000 females are diagnosed with endometriosis. In
addition, an estimated 5.5 million females in the

                                       6
<Page>
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 available 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 Plenaxis causes a more rapid
reduction of estrogen levels and associated relief of menstrual-related pain
compared to Lupron Depot. In addition, in these initial studies, there has been
no initial estrogen increase associated with the use of Plenaxis.

    ENDOMETRIOSIS CLINICAL STUDIES.  To date, we have completed a phase I/II
study of 40 women with confirmed endometriosis using Plenaxis, and we recently
completed the follow-up phase of a 363 patient, phase II/III study. In both of
these studies, we administered an injection of Plenaxis once every four weeks
for 24 weeks.

    In the phase I/II study, we compared various doses of Plenaxis to the
standard dose of Lupron Depot. Patients receiving Lupron Depot therapy
experienced initial estrogen increases, and therapeutically low estrogen levels
were not achieved for several weeks. Patients treated with Plenaxis experienced
a rapid reduction of estrogen levels without the initial increase seen with LHRH
agonist therapy.

    Our phase II/III study compares the safety and efficacy of various doses of
Plenaxis to the standard dose of Lupron Depot with respect to pain relief. The
study also seeks to confirm the ability of Plenaxis 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 48-week follow-up period.
Patients recently completed the final stages of follow-up and, following data
analyses and conclusion of this study, we anticipate meeting with the FDA to
discuss the results of the phase II/III study and the initiation of additional
clinical trials in endometriosis.

    Patients appear to have generally tolerated treatment with Plenaxis in these
studies. As expected, we observed some adverse reactions in patients during our
studies of Plenaxis 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 Plenaxis, results in bone mineral density loss. Preliminary
review of the data from our clinical studies indicates that patients treated
with Plenaxis experienced dose-related levels of bone mineral density loss. We
are further evaluating this data in an effort to clarify the extent and
magnitude of this loss. We did not observe any severe allergic reactions in our
endometriosis trials similar to those observed in our prostate cancer trials
described above.

  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
the symptoms of Alzheimer's disease in some patients, 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

                                       7
<Page>
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 in IN VITRO experiments that Apan specifically inhibits the
aggregation of beta-amyloid and prevents the associated nerve cell toxicity. In
addition, we have shown in rats and mice that Apan reaches the brain in
quantities that we believe may be sufficient to block the aggregation of
beta-amyloid molecules and alter the course of the disease. Recent studies in
guinea pigs and 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 excess beta-amyloid from the
brain to the cerebro-spinal fluid, or CSF. Both humans and transgenic mice with
Alzheimer's disease-like 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, suggesting that Apan is able to mobilize beta-amyloid in the
brain and may be facilitating its clearance.

    In March 2001, we began a phase I dose escalation study of Apan in normal
subjects. In this study, we are evaluating the safety and pharmacokinetics of
the compound. To date, we have treated approximately 52 subjects in 12 dosing
groups. We anticipate that this study will be completed during the second half
of 2002. We expect to initiate a second phase I study in the first half of 2003
in which we intend to further evaluate the safety and pharmacokinetics of Apan
in individuals suffering from Alzheimer's disease.

  PPI-2458

    PPI-2458 is a novel, proprietary molecule that is based on the fumagillin
class of compounds that have been shown to have potent activity in preventing
excessive growth and the formation of new blood vessels. The dose limiting
toxicity associated with fumagillin derivatives have largely prevented the
clinical development of these compounds. PPI-2458 was designed to maintain the
potent anti-growth activity while at the same time improving the toxicity
profile relative to other members of the fumagillin class of compounds.
Therapeutic targets for PPI-2458 include diseases whose underlying pathology is
dependent on inappropriate cell growth and/or new blood vessel formation, such
as rheumatoid arthritis, or RA, and certain types of cancers.

    Preclinical studies have demonstrated the efficacy of PPI-2458 in a rodent
model of RA, when administered either by injection or orally. Despite the
availability of several new effective disease-modifying anti-rheumatic drugs,
also known as DMARDs, for the treatment of RA, there remains significant unmet
medical need. We believe that new drugs which could be used alone or in
combination with established DMARDs could be successful.

    We are also evaluating through preclinical studies the potential utility of
PPI-2458 for treating certain types of cancer.

    We anticipate that, if we continue to meet the goals of our preclinical
pharmacology and toxicology studies of PPI-2458, we would be in the position to
file an investigational new drug application, or IND, for a phase I study of
PPI-2458 during the third quarter of 2002.

                                       8
<Page>
  APAN-CH

    While our preclinical studies suggest that Apan can mobilize beta-amyloid
and potentially prevent its initial accumulation in the brain, we are also
pursuing a complementary therapeutic strategy aimed at removing existing plaque
and aggregated beta-amyloid molecules from the Alzheimer's disease-affected
brain. Recent published studies using a transgenic mouse model of Alzheimer's
disease show that stimulating an autoimmune response to beta-amyloid through
vaccination 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, and
mediate the uptake of aggregated forms of beta-amyloid in EX VIVO systems.
Studies are ongoing to determine if Apan-CH plays a role in the removal of
amyloid plaque-like deposits in rodent models of Alzheimer's disease.

  CCR5 ANTAGONIST

    Various studies by others have 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
macrophages and T cells, which are cells in the human immune system that are
commonly infected by HIV. Taken together, these studies identify CCR5 as an
ideal drug target for anti-HIV 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. We are using our LEAP technology to discover ligands against CCR5 that
may act as inhibitors of HIV entry into T cells.

  ANDROGEN RECEPTOR ANTAGONIST

    Because testosterone and other hormones are growth factors for prostate
cancer cells, hormone-lowering therapy can be a safe and effective treatment for
patients with hormone-dependent prostate cancer. However, most 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. These studies indicate 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 as a
growth stimulatory protein in prostate tumor cells, which could provide the
basis for a new class of 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 in
the United States and an unknown number in Canada are actually diagnosed with
the disease, 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 seeking to identify proteins
that underlie the

                                       9
<Page>
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 Plenaxis, 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 to identify
compounds with potentially favorable drug-like properties with an ability to
enhance and optimize these compounds 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 synthesize and test manually. 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
permits the examination of fewer than one million molecules with equivalent
resources and requires more time.

    In the case of Plenaxis, 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 Plenaxis, 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
proteomics technology and 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 potential 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
Plenaxis in such a way that a physician only needs to administer it to prostate
cancer patients once every four weeks because Rel-Ease continuously releases the
drug in the body over that period of time. In many 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 also intend to explore the use of our
Rel-Ease technology to create improved formulations and sustained release
formulations of approved drugs.

  MASTRSCREEN

    MASTRscreen is our proprietary screening procedure that rapidly 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 Plenaxis program, and
it was instrumental in the selection of Plenaxis 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.

                                       10
<Page>
RESEARCH AND DEVELOPMENT

    As of December 31, 2001, we had a total of 104 employees dedicated to
research and development for Plenaxis and our other product candidates. We have
spent substantial funds over the past three years to develop Plenaxis and our
other potential drug candidates and expect to continue to do so in the future.
We spent approximately $48.8 million in 1999, $85.9 million in 2000 and $59.4 in
2001 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 Plenaxis products in the United
States, Canada, Japan and certain other countries. In September 2001, Amgen
notified us that it was terminating its agreement with us pursuant to the terms
of the agreement. The termination was effective in December 2001. As a result of
the termination, all licenses for Plenaxis granted to Amgen under the agreement,
and all of Amgen's rights in the Plenaxis program, have terminated.

  SANOFI-SYNTHELABO S.A.

    In May 1997, we entered into a license agreement with Sanofi-Synthelabo for
the development and commercialization of Plenaxis products in specific
territories including Europe, Latin America, the Middle East and various
countries in Africa. In October 2001, Sanofi-Synthelabo notified us that it was
terminating its license agreement with us pursuant to the terms of the
agreement. The termination was effective in December 2001. As a result of the
termination, all licenses for Plenaxis granted to Sanofi-Synthelabo under the
agreement, and all of Sanofi-Synthelabo's rights in the Plenaxis program, have
terminated.

  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.

TECHNOLOGY LICENSE

  INDIANA UNIVERSITY FOUNDATION

    In October 1996, we entered into a license agreement with Indiana University
Foundation. The license agreement was amended in June 1998, and Indiana
University Foundation assigned it to Indiana University's Advanced Research and
Technology Institute, Inc. Under the agreement, we have an

                                       11
<Page>
exclusive worldwide license under patent applications, future patents and
technology of Indiana University Foundation relating to GnRH antagonist
compounds, including Plenaxis and methods of use for Plenaxis. Through
December 31, 2001, we have paid non-refundable 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. 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, provided we obtain the
consent of Advanced Research and Technology Institute to extend the license term
past the expiration date. Advanced Research and Technology Institute may not
unreasonably withhold its consent to our request for such an extension. We can
terminate the agreement at any time upon 90 days notice. Advanced Research and
Technology Institute may terminate upon 90 days notice if we materially breach
the agreement or fail to make required payments.

MANUFACTURING

    We generally manufacture in-house the drug supply required to support our
early preclinical studies. External contractors provide all of our later-stage
preclinical and clinical supplies and manufacture them in accordance with FDA
and European regulations. Under our collaboration agreement with Amgen, Amgen
had control over certain phases of the manufacturing process for Plenaxis.
Accordingly, Amgen had either entered into or assumed from us agreements with
third parties to perform, or was itself performing, these manufacturing
processes. Due to the termination of our collaboration agreement with Amgen, to
assure an adequate supply of drug product for continued clinical studies and, if
Plenaxis is approved for marketing, for commercial sale, we would necessarily
need to assume these manufacturing contracts from Amgen, enter into new
agreements with third party manufacturers or act as manufacturer ourselves.

    In January 2002, we assumed all of Amgen's rights and obligations under its
development and supply agreement with UCB S.A. Under this agreement, UCB will
supply us with commercial volumes of the Plenaxis drug compound. We are
committed to purchase from UCB approximately $16.1 million of pharmaceutical
grade peptide during 2002.

    We also have a supply agreement with Salsbury Chemicals, Inc. Under this
supply agreement, Salsbury has agreed to manufacture for us the commercial depot
formulations of Plenaxis. 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 pay
Salsbury approximately $634,000 during 2002 towards minimum purchase commitments
and facility maintenance.

    We are currently negotiating an agreement with a third-party manufacturer to
provide for the supply of Plenaxis products in finished vials. We cannot assure
you that we will be able to finalize this agreement on reasonable terms or in a
timely manner. In addition, the manufacturer will need to undergo regulatory
review and compliance procedures which could be costly and could further delay
regulatory review and approval, and thus potential commercialization, of
Plenaxis for the treatment of hormonally responsive advanced prostate cancer.

    In order to meet potential increases in demand in connection with the
possible commercial launch of Plenaxis for the treatment of hormonally
responsive advanced prostate cancer, we intend to evaluate the need for a second
source for each stage of Plenaxis production.

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 generally seek patent protection on the
compound itself, its commercial formulation, its range of applications and its

                                       12
<Page>
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 16 United States patents and exclusive licenses to two
United States patents. These patents have expiration dates from 2012 through
2016. In addition, as of December 31, 2001, we had filed or held exclusive
licenses to 32 United States utility and provisional patent applications, as
well as 152 related foreign patent applications, including both Patent
Cooperation Treaty filings and national filings. We also have non-exclusive
licenses to four United States patents directed to technologies embodied in
LEAP.

    In particular, we have United States patents that cover both the Plenaxis
compound and the sustained release formulation enabling its once-per-month
administration. We also have patents covering the use of Plenaxis 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 and consultants 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 agree not to 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 Plenaxis products will compete with numerous established or newly
introduced products on the market, including:

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

    - Cetrotide-Registered Trademark-, manufactured by ASTA Medica, and
      Antagon-Registered Trademark-, 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-TM-,
marketed by Bayer as a 12-month hormone therapy implant, and Eligard-TM-, which
is being developed in one, three and four month subcutaneous injections by Atrix
Laboratories, Inc. In January 2002, Atrix received FDA approval for its
one-month depot of Eligard for the treatment of advanced prostate cancer.

    We believe that our product candidates will compete favorably in the market
with these and other products, although no assurance can be given in this
regard.

                                       13
<Page>
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
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 any
submission of an IND to the FDA relating to our product candidates 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. In addition, after approval for an
initial indication, further clinical trials would be necessary to gain approval
to promote the use of the product for any additional indication.

    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 includes 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.

    The FDA has considerable discretion in determining whether to grant
marketing approval for a drug, and may delay or deny approval even in
circumstances where the applicant's clinical trials have proceeded in compliance
with FDA procedures and regulations and have met the established end-points of
the trials. Challenges to FDA determinations are generally time-consuming and
costly. We can give no assurance that we will obtain marketing approval for
Plenaxis or any of our other product candidates.

    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

                                       14
<Page>
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 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 primarily on corporate partners or
licensees to obtain governmental approval in foreign countries for our products.
Due to the termination of our collaboration agreement with Sanofi-Synthelabo, we
must either contract with another third party to pursue foreign regulatory
approvals for Plenaxis for the treatment of hormonally responsive advanced
prostate cancer or perform this function ourselves. We cannot assure you that we
will be able to establish new arrangements for this function on reasonable terms
or in a timely manner, if at all. Moreover, even after seeking qualified
experience and assistance in dealing with the foreign regulatory processes and
interacting with foreign regulatory authorities, we can not assure you that we
will be successful in filing and obtaining the necessary governmental approvals
for Plenaxis or any of our other product candidates in Europe or any other
foreign country.

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 February 28, 2002, we had 127 full-time employees. We also utilize
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 consider our employee relations to be good. We believe
that our future success is dependent in part on our ability to attract and
retain skilled scientific, sales and marketing, and senior management personnel.
Competition in our industry is intense and we cannot assure you that we will be
able to attract and retain these personnel.

                                       15
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ITEM 2. PROPERTIES.

    Our corporate headquarters and principal research facilities are located in
Waltham, Massachusetts, where we own, through our wholly owned real estate
subsidiary, land and a building of approximately 175,000 square feet. We have
entered into a 15-year lease for this facility with our subsidiary. We currently
occupy approximately 100,000 square feet of this facility and are attempting to
sublease a portion of the remaining space for up to the next five years,
although we have not yet found a tenant.

    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.

    No matters were submitted to a vote of security holders of the company
during the last quarter of the fiscal year ended December 31, 2001.

                                       16
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                                    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, 2001:
  First Quarter.............................................   $33.13     $13.50
  Second Quarter............................................    31.11      12.75
  Third Quarter.............................................    15.41       3.00
  Fourth Quarter............................................     6.10       3.37

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
</Table>

    As of February 28, 2002, there were approximately 156 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 and other factors that the board deems
relevant. Therefore, you will not receive any funds without selling your shares.

    (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, 2001, we used approximately
$38.0 million of the net proceeds from our initial public offering for the
purchase and build-out of our new facility. Due to increased construction costs,
the total amount of net proceeds from our initial public offering that was used
for the purchase and build-out of our new facility exceeded our original
estimates by approximately $8.0 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.

                                       17
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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, 2001, and our
balance sheet data at December 31, 2000 and 2001, 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, 1997 and 1998 and the balance sheet data
at December 31, 1997, 1998 and 1999 from our audited financial statements, which
we do not include in this report.

<Table>
<Caption>
                                                                     YEAR ENDED DECEMBER 31,
                                                       ----------------------------------------------------
                                                         1997       1998       1999       2000       2001
                                                       --------   --------   --------   --------   --------
                                                              (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   $  9,907
  Contract services..................................    2,615      1,943         --          --         --
                                                       -------    -------    -------    --------   --------
    Total revenues...................................   17,733     39,567     61,514      61,189      9,907
Costs and expenses:
  Research and development...........................   15,013     33,704     48,764      85,915     59,416
  Sales and marketing................................       --         --      2,601       6,444      8,737
  General and administrative.........................    3,780      3,605      3,572       5,285      6,961
                                                       -------    -------    -------    --------   --------
    Total costs and expenses.........................   18,793     37,309     54,937      97,644     75,114
  Operating income (loss)............................   (1,060)     2,258      6,577     (36,455)   (65,207)
  Gain on assignment of leasehold improvements.......       --         --         --          --      1,499
  Interest income (net)..............................    1,364      3,516      4,473       7,819      9,105
                                                       -------    -------    -------    --------   --------
  Income (loss) before income taxes..................      304      5,774     11,050     (28,636)   (54,603)
  Provision for income taxes.........................      100        100      1,800         100         --
                                                       -------    -------    -------    --------   --------
  Net income (loss)..................................  $   204    $ 5,674    $ 9,250    $(28,736)  $(54,603)
                                                       =======    =======    =======    ========   ========

  Net income (loss) per share:
    Basic............................................  $  0.05    $  0.99    $  1.51    $  (0.95)  $  (1.10)
                                                       =======    =======    =======    ========   ========
    Diluted..........................................  $  0.01    $  0.16    $  0.24    $  (0.95)  $  (1.10)
                                                       =======    =======    =======    ========   ========
  Weighted average number of common shares:
    Basic............................................    4,446      5,738      6,106      30,259     49,777
    Diluted..........................................   28,270     35,139     37,849      30,259     49,777
  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,
                                                      ----------------------------------------------------
                                                        1997       1998       1999       2000       2001
                                                      --------   --------   --------   --------   --------
                                                                         (IN THOUSANDS)
<S>                                                   <C>        <C>        <C>        <C>        <C>
BALANCE SHEET DATA:
Cash, cash equivalents and marketable securities....  $40,190    $85,298    $94,525    $132,207   $266,216
Working capital.....................................   31,802     76,626     86,220     115,733    229,028
Total assets........................................   47,361     90,625    140,331     195,571    342,125
Long-term debt......................................       --         --         --      24,000     33,000
Capital lease obligations, net of current portion...      249         59         --          --         --
Total stockholders' equity..........................   34,907     78,373     87,716     146,531    270,696
</Table>

                                       18
<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
Plenaxis-TM- (abarelix for injectable suspension), a drug for the treatment of
diseases that respond to the lowering of hormone levels. We are developing
Plenaxis for the treatment of hormonally responsive advanced prostate cancer and
endometriosis.

    We had entered into collaborations with Amgen and Sanofi-Synthelabo to
develop and commercialize our Plenaxis products. In September 2001, Amgen
notified us that it was terminating its agreement with us. In October 2001,
Sanofi-Synthelabo gave us notice that it was terminating its agreement with us.
Both terminations were effective in December 2001. As a result, all of the
licenses for Plenaxis granted to Amgen and Sanofi-Synthelabo under these
agreements, and all rights of Amgen and Sanofi-Synthelabo in the Plenaxis
program, have terminated. In this connection we are finalizing agreements with
Amgen and Sanofi-Synthelabo in an effort to assure a successful transition of
the rights and responsibilities for the continued development and
commercialization of Plenaxis and to provide for, among other things, final cash
payments and mutual releases.

    We are also conducting clinical trials of Apan, our proprietary drug
candidate for the treatment of Alzheimer's disease. In addition, we have a
number of other product candidates in the research or preclinical development
stage.

    In September 2001, we decided not to proceed with additional clinical trials
of Latranal, our in-licensed drug candidate being developed for the relief of
musculoskeletal pain, due to the lack of efficacy observed in a phase II
clinical trial.

    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. We will receive no
additional revenues under the Amgen and Sanofi-Synthelabo agreements, other than
a potential final reimbursement payment from Sanofi-Synthelabo. Accordingly, for
the foreseeable future, we do not expect to have any revenues other than
interest income and the potential payment from Sanofi-Synthelabo.

    Our accumulated deficit as of December 31, 2001 was approximately
$84.4 million.

    At December 31, 2001, we had 127 full-time employees, 99 of whom were
engaged in research and development activities, compared to 120 full-time
employees at December 31, 2000, 93 of whom were engaged in research and
development activities. 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 continued development, and preparing
for the possible commercial launch, of Plenaxis for the treatment of hormonally
responsive advanced prostate cancer, as well as other research and development
and general and administrative expenses, we had a net operating loss for 2001.
We expect to have net operating losses for the next several years, due, in part,
to our assumption of all Plenaxis program costs as of the effective dates of the
Amgen and Sanofi-Synthelabo terminations. We do not expect to generate operating
income unless, and not until several years after, we receive FDA approval to
market Plenaxis for the treatment of hormonally responsive

                                       19
<Page>
advanced prostate cancer. We will need to receive regulatory approval to market
all of our future products.

    Through December 31, 2001, we have recognized an aggregate of approximately
$24.7 million in non-refundable fees and performance-based payments, and
approximately $10.7 million in reimbursement for ongoing development costs,
under the Sanofi-Synthelabo agreement. Of this amount, we recognized the
$4.7 million initial non-refundable signing fee payment through December 31,
2001, the effective date of termination of the Sanofi-Synthelabo agreement,
which was the period during which we were obligated under the agreement to
participate on a continuing and substantial basis in the research, development
and manufacturing process development of Plenaxis products. As noted above, we
are finalizing an agreement with Sanofi-Synthelabo regarding the termination of
its license agreement, which we expect will be executed during the second
quarter of 2002.

    In addition, through December 31, 2001, we have recognized an aggregate of
approximately $121.7 million of revenues under the Amgen agreement. We received
a $10.0 million signing fee under the Amgen agreement which we recognized as
revenue through December 17, 2001, the effective date of termination of the
Amgen agreement, which was the period during which we were obligated under the
agreement to participate on a continuing and substantial basis in the research,
development and manufacturing process development of Plenaxis products.

    Under the Amgen agreement, Amgen paid the first $175.0 million of all
authorized costs and expenses associated with the research, development and
commercialization of Plenaxis 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
Plenaxis products. Additionally, the agreement provided that following Amgen's
completion of its $175.0 million funding commitment, we must reimburse Amgen for
one-half of the costs associated with establishing a sales and marketing
infrastructure for Plenaxis products in the United States. As noted above, we
are finalizing an agreement with Amgen regarding the termination of its
agreement with us, which we expect will be executed during the second quarter of
2002.

CRITICAL ACCOUNTING POLICIES

    In December 2001, the Securities and Exchange Commission requested that all
registrants discuss their most "critical accounting policies" in Management's
Discussion and Analysis of Financial Condition and Results of Operations. The
Commission indicated that a "critical accounting policy" is one which is both
important to the portrayal of the company's financial condition and results and
requires management's most difficult, subjective or complex judgments, often as
a result of the need to make estimates about the effect of matters that are
inherently uncertain. While our significant accounting policies are more fully
described in Note 2 to our consolidated financial statements appearing elsewhere
in this report, we believe the following accounting policies to be critical:

    REVENUE RECOGNITION.  We have previously entered into corporate
collaborations with other pharmaceutical companies. These agreements provided
for the partitioning of the development, manufacturing and commercialization
responsibilities related to potential drug candidates. Under these arrangements,
we were obligated to participate in several aspects of the remaining development
and manufacturing of our drug candidate, Plenaxis. Our collaborations generally
have provided for our partners to make up-front payments and additional payments
upon the achievement of specific research and product development milestones,
share in the costs of development and/or pay royalties, and in some cases,
profit-sharing payments to us based upon any product sales resulting from the
collaboration.

    We recognize revenue in accordance with Staff Accounting Bulletin No. 101,
REVENUE RECOGNITION IN FINANCIAL STATEMENTS. Under this accounting method, we
recognize revenue when it is earned, that is when all of the following have
occurred: all of our obligations relating to the revenue have been met

                                       20
<Page>
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 us with respect to such revenue.
In general, collaboration 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 we are obligated
to participate on a continuing and substantial basis in the research and
development activities outlined in each contract. We continually review these
estimates, which could result in a change in the deferral period. Amounts
received in advance of reimbursable expenses are deferred and only recognized
when the related expenses have been 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.

    USE OF ESTIMATES.  We prepare our financial statements in accordance with
accounting principles generally accepted in the United States. These principles
require that we make estimates and use assumptions that affect the reporting of
our assets and our liabilities as well as the disclosures that we make regarding
assets and liabilities and income and expense that are contingent upon uncertain
factors as of the reporting date. As discussed in Note 8 to our consolidated
financial statements, we have accrued an estimate of our potential liability as
of December 31, 2001 under our agreement with Amgen which has been terminated.
The actual payments, and thus our actual results, could differ from our
estimates.

RESULTS OF OPERATIONS

  YEARS ENDED DECEMBER 31, 2001 AND 2000

    Revenues for the year ended December 31, 2001 decreased 84% to approximately
$9.9 million, from approximately $61.2 million in 2000. The decrease in revenues
was the result of decreases in both the amount and rate of reimbursement of
Plenaxis expenses from our former collaborators, as well as the one-time sale of
materials inventory to Amgen during the fourth quarter of 2000. We will receive
no additional revenues under the Amgen or Sanofi-Synthelabo agreements, other
than a possible final reimbursement payment from Sanofi-Synthelabo.

    Research and development expenses for the year ended December 31, 2001
decreased 31% to approximately $59.4 million, from approximately $85.9 million
in 2000. This decrease in expenses was due primarily to the one-time sale of
materials inventory to Amgen during the fourth quarter of 2000 combined with
reduced clinical spending during the second half of 2001 as we repositioned the
Plenaxis program in response to issues raised by the FDA in June 2001. As we
initiate new clinical trials for Plenaxis for the treatment of hormonally
responsive advanced prostate cancer and endometriosis, continue our Apan
clinical program and add new clinical programs, we expect our research and
development expenses will increase during 2002 and thereafter.

    Members of our research and development team typically work on a number of
projects concurrently. In addition, a substantial amount of our fixed costs such
as facility depreciation, utilities and maintenance are shared by our various
programs. Accordingly, we have not and do not plan to separately track the costs
for each of our research and development programs. During 2001 and 2000, we
estimate that the majority of our research and development expense was related
to clinical trial costs, manufacturing and materials inventory costs, salaries
and lab supplies related to our prostate cancer and endometriosis clinical
programs. The remaining research and development costs were incurred in our Apan
clinical program, as well as our preclinical research programs.

    We began our clinical program to develop Plenaxis for the treatment of
prostate cancer during 1996. In December 2000, we submitted an NDA to the FDA
for Plenaxis for the treatment of hormonally responsive advanced prostate
cancer. However, the FDA raised certain concerns over the results of the data
submitted to them and, therefore, we recently initiated an additional clinical
trial in an effort to respond to those concerns. In 1998, we began our clinical
program to develop Plenaxis for the treatment of endometriosis. We recently
completed the follow-up phase of a phase II/III study in this program.

                                       21
<Page>
    We expect to submit additional data to the FDA for Plenaxis for the
treatment of hormonally responsive advanced prostate cancer by the end of the
first quarter of 2003. With respect to our endometriosis program, we expect to
meet with the FDA mid-year 2002 to discuss the results of our phase II/III study
and the timing and scope of additional clinical trials.

    We began our clinical program for Apan in 2000. We are currently conducting
a phase I study of Apan which we anticipate will be completed during the second
half of 2002. We expect to initiate a second phase I study in the first half of
2003 in which we intend to evaluate the safety and pharmacokinetics of Apan in
individuals suffering from Alzheimer's disease.

    We anticipate that the substantial majority of our research and development
costs over the next few years will be focused on the development of Plenaxis for
the treatment of hormonally responsive advanced prostate cancer and
endometriosis. In addition, as discussed above, we currently have several other
ongoing research and development programs. Using industry estimates, typical
drug development programs may last for ten or more years and may cost hundreds
of millions of dollars to complete. As our programs progress, we will assess the
possibility of entering into corporate collaborations to offset a portion of
development costs. The ultimate success of our research and development programs
and the impact of these programs on our operations and financial results cannot
be accurately predicted and will depend, in large part, upon the outcome and
timing of many variables outside of our control.

    Sales and marketing expenses for the year ended December 31, 2001 increased
36% to approximately $8.7 million, from approximately $6.4 million in 2000. The
increase in expenses was primarily the result of our obligation under our
agreement with Amgen, beginning in the third quarter of 2000, to pay one-half of
all subsequent costs associated with establishing a sales and marketing
infrastructure in the United States for Plenaxis through the launch period.
These increases were partially offset by decreased spending on marketing and
sales for the Plenaxis program during the second half of 2001. In response to
issues raised by the FDA. Due to the termination of the Amgen and
Sanofi-Synthelabo agreements, which provided for the sharing of the costs
associated with commercialization, our sales and marketing expenses may increase
as we incur costs related to preparing for the possible launch of Plenaxis for
the treatment of hormonally responsive advanced prostate cancer.

    General and administrative expenses for the year ended December 31, 2001
increased 32% to approximately $7.0 million, from approximately $5.3 million in
2000. The increase was due to an increase in personnel-related operating costs
and increased use of professional services. We expect that general and
administrative expenses will continue to increase as we hire additional
administrative personnel to support continued growth of our research,
development and pre-commercialization initiatives and incur increased operating
costs related to our new facility.

    Net interest income for the year ended December 31, 2001 increased 16% to
approximately $9.1 million, from approximately $7.8 million in 2000. The
increase in interest income was due to increased cash and investment balances
from our follow-on public offering in February 2001, offset by lower interest
rates. The increase in interest expense was due to a higher average principal
balance outstanding for a full year under our loan agreement during 2001.

    The provision for income taxes for the years ended December 31, 2001 and
2000 was zero and $0.1 million, respectively. The provision for income taxes
during 2000 was primarily for state income taxes. We anticipate that we will
continue to be in a net operating loss carryforward position during 2001 and for
several years thereafter. Therefore, as in 2000, no benefit from our operating
losses has been recognized. We account for income taxes under Statement of
Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES. Realization
of deferred tax assets is dependent on future earnings, if any, the timing and
amount of which are uncertain. Accordingly, valuation allowances, in amounts
equal to the net deferred tax assets as of December 31, 2001 and 2000, have been
established in each period to reflect these uncertainties.

                                       22
<Page>
    At December 31, 2001, we had federal net operating loss carryforwards of
$51.6 million that will expire in varying amounts through 2021, if not utilized.
Utilization of net operating loss and tax credit carryforwards will be subject
to substantial annual limitations under the Internal Revenue Code of 1986, as
amended. The annual limitations may result in the expiration of the net
operating loss and tax credit carryforwards before full utilization.

  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 Plenaxis expenses, offset
by the one-time sale of materials inventory to Amgen during the fourth quarter
of 2000.

    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 Plenaxis clinical development program for hormonally responsive advanced
prostate cancer. This increase also was partially due to increased spending
related to our Plenaxis 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 we became responsible for one-half of all
subsequent United States research and development costs for Plenaxis products
through the launch period.

    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 Plenaxis through the
launch period.

    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.

    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 interest rates
from the same period in the prior 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 were in a net operating loss carryforward
position in 2000 and, therefore, no benefit from our operating losses was
recognized.

SELECTED QUARTERLY OPERATING RESULTS

    The following table sets forth our unaudited statement of operations data
for the eight quarters ended December 31, 2001. 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 appearing 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

                                       23
<Page>
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,
                                   2000       2000       2000        2000       2001       2001       2001        2001
                                 --------   --------   ---------   --------   --------   --------   ---------   --------
                                                          (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                              <C>        <C>        <C>         <C>        <C>        <C>        <C>         <C>
Total revenues.................   $9,001     $9,972     $7,334     $34,882    $ 2,582    $ 3,167     $ 2,479    $ 1,679
Operating loss.................   (3,669)    (4,200)    (9,387)    (19,199)   (14,321)   (16,000)    (24,052)   (10,834)
Net loss.......................   (2,475)    (2,052)    (7,132)    (17,077)   (11,847)   (12,997)    (22,217)    (7,542)
Basic and diluted net loss
  per share....................   $(0.36)    $(0.07)    $(0.17)    $ (0.41)   $ (0.26)   $ (0.26)    $ (0.44)   $ (0.15)
</Table>

    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 the proceeds from our public offerings.
Prior to our initial public offering, we had received aggregate net proceeds of
approximately $88.5 million from various private placements of our securities.
In May 2000, we completed our initial public offering in which we sold a total
of 9,200,000 shares of common stock at a price of $10 per share, raising a total
of approximately $84.3 million, net of underwriting discounts and commissions
and offering expenses. In February 2001, we completed a follow-on public
offering in which we sold a total of 7,587,500 shares of common stock at a price
of $24.5625 per share, raising a total of approximately $175.9 million, net of
underwriting discounts and commissions and offering expenses.

    Additionally, we have received a total of approximately $185.0 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 $29.8 million from interest on invested cash balances,
and paid approximately $2.6 million in interest associated with building and
equipment financing.

    At December 31, 2001, we had cash, cash equivalents and marketable
securities of approximately $266.2 million and working capital of approximately
$229.0 million, compared to approximately $132.2 million and $115.7 million,
respectively, at December 31, 2000. During 2002, we expect to spend in the range
of approximately $40,000,000 to $45,000,000 on operations and approximately
$45,000,000 to $55,000,000 on development programs. We believe that our existing
cash and investments will be sufficient to meet our working capital and capital
expenditure needs for approximately the next three years.

    For the year ended December 31, 2001, net cash of approximately
$31.6 million was used in operating activities, compared to approximately
$20.0 million used in operating activities during 2000. During the year ended
December 31, 2001, our use of cash in operations was due principally to our net
loss, partially offset by an increase in accounts payable consisting principally
of our share of accrued Plenaxis program expenses pursuant to the Amgen
agreement. Our investing activities during the year ended December 31, 2001
consisted of the purchase, sale and maturity of marketable securities, as well
as $23.9 million of additional spending toward the build-out of our new
corporate headquarters and other fixed asset additions. Our financing activities
for the year ended December 31, 2001 consisted principally of the
$175.9 million of proceeds from our follow-on public offering and $2.4 million
of

                                       24
<Page>
proceeds received from the exercise of common stock options, as well as advances
of $9.0 million under an acquisition and construction loan agreement.

    In July 2000, in connection with the purchase, through our wholly owned real
estate subsidiary, of our new corporate headquarters and research facility in
Waltham, Massachusetts, the subsidiary entered into 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. As of December 31,
2001, $33.0 million was outstanding under the loan agreement. Advances bear
interest at a rate equal to the 30-day LIBOR plus 2.0% (3.87% at December 31,
2001). 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, and is unconditionally guaranteed by us. In addition to
this financing, as of December 31, 2001, we had spent approximately
$38.0 million of our own funds in connection with the build-out and occupancy of
our new facility. We occupied the new facility during May 2001 and as planned,
are actively seeking to sublease a portion of this facility. We do not believe
that there is any impairment issue at this time. We terminated the lease for our
Cambridge, Massachusetts facility effective as of September 1, 2001. In
addition, in connection with our move to the new facility, we consolidated our
Provid Research division with our Massachusetts operations and, effective
October 31, 2001, have assigned to a third party all of our right, title and
interest in and to the lease for the New Jersey facility and the third party has
assumed all of our obligations thereunder.

    In addition to our long-term debt, we have fixed contractual obligations
under various supply agreements. These fixed contractual obligations were
comprised of the following as of December 31, 2001:

<Table>
<Caption>
                                                                          PAYMENTS DUE BY PERIOD
                                                                      -------------------------------
                                                                      LESS THAN     1-3       AFTER
CONTRACTUAL OBLIGATIONS                                     TOTAL      1 YEAR      YEARS     3 YEARS
-----------------------                                    --------   ---------   --------   --------
                                                                         (IN THOUSANDS)
<S>                                                        <C>        <C>         <C>        <C>
Long-term debt...........................................  $33,000     $    --    $33,000      $ --
Unconditional purchase obligations.......................      634         634         --        --
                                                           -------     -------    -------      ----
Total contractual cash obligations.......................  $33,634     $   634    $33,000      $ --
                                                           =======     =======    =======      ====
</Table>

    In January 2002, we assumed all of Amgen's rights and obligations under a
development and supply agreement with UCB. Under the terms of this agreement, we
are committed to pay UCB approximately $16.1 million for the supply of clinical
and commercial volumes of pharmaceutical peptide to be delivered by the end of
2002.

    We expect our funding requirements to increase over the next several years
as we prepare for the possible commercial launch of Plenaxis for the treatment
of hormonally responsive advanced prostate cancer, continue with current
prostate cancer and endometriosis clinical trials for Plenaxis and clinical
trials for Apan, initiate preclinical trials for additional product candidates,
continue to improve our facility and expand our research and development
initiatives. The amount of these expenditures will depend on numerous factors,
including:

    - the cost, timing and outcomes of FDA and other regulatory reviews;

    - decisions relating to the Plenaxis program made by us;

    - the effect of the termination of our Plenaxis corporate collaborations and
      our ability to assume the responsibilities under these agreements or
      contract with other third parties to do so;

    - the development of sales and marketing resources by us;

    - the establishment, continuation or termination of third-party
      manufacturing or sales and marketing arrangements for Plenaxis or our
      other potential products;

                                       25
<Page>
    - the establishment of additional strategic or licensing arrangements with,
      or acquisitions of, other companies;

    - 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 product candidates
      under development;

    - the status of competitive products;

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

    - our ability to sublease a portion of our new facility; and

    - the availability of additional financing.

    At December 31, 2001, we had provided a valuation allowance of
$42.5 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.

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 became 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. The adoption of SFAS
No. 133 did not have a material impact on our consolidated financial position or
consolidated results of operations.

    In June 2001, the Financial Accounting Standards Board issued SFAS No. 141,
BUSINESS COMBINATIONS, and SFAS No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS,
effective for fiscal years beginning after December 15, 2001. Under the new
rules, goodwill will no longer be amortized but will be subject to annual
impairment tests in accordance with the statements. Other intangible assets will
continue to be amortized over their useful lives. We will apply the new rules on
accounting for goodwill and other intangible assets beginning in the first
quarter of 2002. Application of the provisions of these statements is not
expected to have a material effect on our consolidated financial position or
consolidated results of operations since we do not have any goodwill or
intangibles at this time.

    On October 20, 2001, the Financial Accounting Standards Board issued SFAS
No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS, or SFAS
No.144. SFAS No. 144 supersedes SFAS No. 121, ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED ASSETS TO BE DISPOSED OF, however it
retains the fundamental provision of that statement related to the recognition
and measurement of the impairment of long-lived assets to be held and used. In
addition, SFAS No. 144 provides additional guidance on estimating cash flows
when performing a recoverability test, requiring that a long-lived asset to be
disposed of other than by sale be classified as an asset held for sale until it
is disposed of, and establishes more restrictive criteria to classify an asset
as held for sale. SFAS No. 144 will be effective in 2002. Application of SFAS
No. 144 is not expected to have any effect on our consolidated financial
position or consolidated results of operations since we do not believe that we
have any impairments at this time.

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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 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 corporate collaboration and license agreements. Due to the termination of
the Amgen and Sanofi-Synthelabo agreements, for the foreseeable future, we do
not expect to have any revenues, other than interest income and any final
reimbursement payment from Sanofi-Synthelabo. In addition, we expect to continue
to spend significant amounts to continue clinical studies, seek regulatory
approval for our existing product candidates, develop commercial capabilities
and expand our facilities. We also intend to spend substantial amounts to fund
additional research and development for other potential products, enhance our
core technologies, and for general and administrative purposes. As of
December 31, 2001, we had an accumulated deficit of approximately
$84.4 million. We expect that our operating expenses will increase significantly
in the near term, primarily due to the termination of the Amgen and Sanofi-
Synthelabo agreements, resulting in significant operating losses for 2002 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 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 marketing authorization from the
appropriate regulatory authorities. This foreign regulatory approval process
includes all of risks associated with the FDA approval process, and may include
additional risks.

    To gain regulatory approval from the FDA and foreign regulatory authorities
for the commercial sale of any product, we must demonstrate in clinical trials,
and satisfy the FDA as to, 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
that may not be related to our products. These events may affect the statistical
analysis of the safety and efficacy of our products. 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.

    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, or of safety issues associated with, the
drug we are testing. Future governmental action or existing or changes in FDA
policies or precedents, 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 Plenaxis, our drug candidate for the
treatment of hormonally

                                       27
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responsive advanced prostate cancer and endometriosis, or for any of our other
product candidates, or regulatory approval may be conditioned upon significant
labeling requirements which could adversely affect the marketability or value of
the product.

    To date, none of our product candidates has received regulatory approval for
commercial sale. In June 2001, we received a letter from the FDA with respect to
our NDA for Plenaxis for the treatment of hormonally responsive prostate cancer,
which was submitted in December 2000. The FDA indicated that the information
presented in the NDA was inadequate for approval. In September 2001, we met with
the FDA in an effort to clarify the various deficiencies cited in the FDA's
letter, and to discuss what further steps needed to be taken before the
application could be approved. The FDA recommended that we analyze the allergic
reactions that occurred in a small subset of clinical trial patients. We are
conducting this analysis utilizing existing data and samples. In addition, the
FDA expressed concern that, in a subset of patients treated beyond the
three-month pivotal study time frame, testosterone suppression was not
maintained at a comparable level to that of patients treated with either Lupron
Depot or Lupron Depot plus Casodex. The FDA also indicated that the nature of
the testosterone surge, if any, associated with treating patients with Plenaxis
and then switching them to a currently available therapy should be understood.
We considered various alternatives to address these issues, and in
December 2001 the FDA indicated that we could proceed with our clinical plans to
study the effects of using currently available hormonal therapies in prostate
cancer patients following treatment with Plenaxis. The FDA also indicated that
our plan to further evaluate the rare allergic reactions that occurred in our
clinical trials was acceptable. We can give no assurance that our additional
clinical studies will yield positive results or that the results, even if
positive, will satisfy FDA concerns that have been or may be raised. We cannot
assure investors that we will be successful in obtaining approval for the
commercialization of Plenaxis for the treatment of hormonally responsive
advanced prostate cancer or any other indication.

    These FDA actions have delayed, and otherwise adversely affected, our
obtaining regulatory approval to market Plenaxis for the treatment of hormonally
responsive advanced prostate cancer. Moreover, there could be further delays due
to FDA review or action, and the FDA could deny approval altogether. If we are
further delayed in obtaining or are unable to obtain this regulatory approval,
or regulatory approval to market our other potential products, we may exhaust
our available resources significantly sooner than we had planned, particularly
given the termination of the Amgen and Sanofi-Synthelabo agreements. If this
were to happen, we would need to either raise additional funds or seek
alternative partners to complete development and commercialization of Plenaxis
and continue our currently planned research and development programs. 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.

DUE TO THE TERMINATION BY OUR CORPORATE COLLABORATORS OF THEIR AGREEMENTS WITH
US, WE MAY BE UNABLE TO SUCCESSFULLY DEVELOP, MARKET, DISTRIBUTE OR SELL OUR
PRODUCT CANDIDATES.

    We depended upon our corporate collaborators, Amgen and Sanofi-Synthelabo,
to provide substantial financial support for the development and
commercialization of Plenaxis. We relied on them to some extent in seeking
regulatory approval for Plenaxis for the treatment of hormonally responsive
advanced prostate cancer. In addition, under our agreement with Amgen, they had
assumed principal responsibility for the manufacture of Plenaxis, and under our
agreements with Amgen and Sanofi-Synthelabo, those parties were responsible for
the marketing, distribution and sale of Plenaxis in their respective licensed
territories.

    The termination of our agreements with Amgen and Sanofi-Synthelabo may delay
or otherwise adversely affect or prevent the development or commercialization of
Plenaxis for the treatment of hormonally responsive advanced prostate cancer and
endometriosis. We will likely need to devote funds and other resources to
Plenaxis development and commercialization that we had planned would be
available from our collaborators. This could require us to curtail or terminate
one or more of our other drug development programs. Also, due to increased
operating costs, lost revenue and a likely final

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payment to Amgen associated with the termination of our agreements with them, we
could have to seek additional funding to meet our capital requirements. In
addition, we may have to seek alternative partners to support the continued
development and commercialization of Plenaxis. 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 in that event we might have
to curtail or cease operations.

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 scope of the patient population and the indications for which Plenaxis
      or our other product candidates are approved;

    - the effectiveness of Plenaxis or any of our other product candidates,
      including any potential side effects, as compared to alternative treatment
      methods;

    - the extent and success of our marketing and sales efforts relating to the
      marketing and sales of Plenaxis or other potential products;

    - the product labeling or product insert required by the FDA for Plenaxis
      and each of our other product candidates;

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

    - the rate of adoption of Plenaxis or our other product candidates by
      doctors and nurses and acceptance by the target patient population;

    - the competitive features of our products as compared to other products,
      including the frequency of administration of Plenaxis as compared to other
      products, and doctor and patient acceptance of these features;

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

    - unfavorable publicity concerning Plenaxis or any of our other product
      candidates or any similar products.

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

WE MAY BE UNABLE TO ESTABLISH MARKETING AND SALES CAPABILITIES NECESSARY TO
SUCCESSFULLY COMMERCIALIZE OUR POTENTIAL PRODUCTS.

    We have no experience in marketing or selling pharmaceutical products and
have very limited marketing and sales resources. To achieve commercial success
for any approved product, we must either develop a marketing and sales force, as
well as the infrastructure to support it, or enter into arrangements with others
to market and sell our products. We may be unable to establish marketing, sales
and distribution capabilities necessary to commercialize and gain market
acceptance for our potential products. If we decide to market and sell our
potential products, including Plenaxis, independently, we would need to hire a
sales force with expertise in pharmaceutical sales. In that event, recruiting
and retaining qualified sales personnel would be critical to our success.
Competition for skilled personnel is intense, and we cannot assure you that we
would be able to attract and retain a sufficient number of qualified individuals
to successfully launch any potential product. In addition, establishing the
expertise necessary to successfully market and sell any product would require a
substantial capital investment. We cannot assure you that we would have the
funds necessary to successfully commercialize Plenaxis for the treatment of
hormonally responsive advanced prostate cancer or any other potential product.

                                       29
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    In the event that we decide to contract with third parties to provide sales
force capabilities to meet our needs for Plenaxis or any other product
candidates, we cannot assure you that we will be able to enter into such
agreements on acceptable terms, if at all. In addition, co-promotion or other
marketing arrangements with third parties to commercialize potential products
could significantly limit the revenues we derive from these potential products,
and these third parties may fail to commercialize our potential products
successfully. To the extent we enter into any such agreements, the parties to
those agreements may also market products that compete with our products,
further limiting our potential revenue from product sales.

IF WE 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, or continue to conduct, clinical trials and
commercialize our product candidates, including Plenaxis, 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 must establish and maintain a commercial scale
formulation and manufacturing process for each of our potential products for
which we seek marketing approval. We 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 to produce Plenaxis and other
compounds for later-stage preclinical, clinical and commercial purposes for a
significant period of time. Third-party manufacturers may not be able to meet
our needs as to timing, quantity or quality of materials. If we are unable to
contract for a sufficient supply of needed materials on acceptable terms, or if
we should encounter delays or difficulties in our relationships with
manufacturers, our clinical trials may be delayed, thereby preventing or
delaying the submission of product candidates for, or the granting of,
regulatory approval and the market introduction and subsequent commercialization
of our potential products. Any such delays may lower our revenues and potential
profitability.

    We may increase our manufacturing capacity in part by building our own
manufacturing facilities. This activity would require substantial expenditures,
and we would need to hire and train significant numbers of employees to staff a
new facility. If we decide to build our own facility, we may not be able to
develop sufficient manufacturing capacity to produce drug materials for clinical
trials or commercial use.

    In addition, we and the third-party manufacturers that we use must
continually adhere to current Good Manufacturing Practice regulations enforced
by the FDA through its facilities inspection program. If our facilities or the
facilities of third-party manufacturers cannot pass a pre-approval plant
inspection, the FDA pre-market approval of our product candidates will not be
granted. In complying with these regulations and foreign regulatory
requirements, we and any of our third-party manufacturers will be obligated to
expend time, money and effort in production, record-keeping and quality control
to assure that our potential products meet applicable specifications and other
requirements. If we or any of our third-party manufacturers fail to comply with
these requirements, we may be subject to regulatory sanctions.

    If we make changes in our manufacturing processes, the FDA and corresponding
foreign authorities may require us to demonstrate that the changes have not
caused the resulting drug material to differ significantly from the drug
material previously produced. Also, we may want to rely on results of prior
preclinical studies and clinical trials performed using the previously produced
drug material. Depending on the type and degree of differences between the newer
and older drug material, we may be required to conduct additional animal studies
or human clinical trials to demonstrate that the newly produced drug material is
sufficiently similar to the previously produced drug material.

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    Any of these factors could prevent, or cause delays in, obtaining regulatory
approvals for, and the manufacturing, marketing or selling of, our potential
products, including Plenaxis, and could also result in significantly higher
operating expenses.

    Under our collaboration agreement with Amgen, Amgen had control over certain
phases of the manufacturing process for Plenaxis. Accordingly, Amgen had either
entered into or assumed from us agreements with third parties to perform, or was
itself performing, these manufacturing processes. Due to the termination of our
collaboration agreement with Amgen, to assure an adequate supply of drug product
for continued clinical studies and, if Plenaxis is approved for marketing, for
commercial sale, we will need to assume these manufacturing contracts from
Amgen, enter into new agreements with third party manufacturers or act as
manufacturer ourselves. We may elect not to, or may not be able to, assume the
existing contracts from Amgen, and we may be unable to make necessary
alternative arrangements in a timely manner or on favorable terms, if at all.
Moreover, to the extent we must make alternative supply arrangements, even if we
are able to establish these arrangements in a timely manner, the use of a
different manufacturer or the establishment of our own facility will require us
to undergo additional regulatory review and compliance procedures which could
result in additional expenses and further delay the regulatory review and
potential commercialization of Plenaxis for the treatment of hormonally
responsive advanced prostate cancer. Also, the establishment of our own facility
could itself be costly thereby increasing our operating costs.

THE LOSS OR FAILURE OF ANY OF OUR THIRD-PARTY MANUFACTURERS COULD DELAY OR
IMPAIR OUR DEVELOPMENT, OR OUR SALE OR CONTINUED SALE, OF PLENAXIS PRODUCTS.

    For each stage of Plenaxis production we have relied, and expect in the near
term to continue to rely, on a separate third-party manufacturer, and we
currently have not contracted, and in the near term do not expect to contract,
with second-source suppliers for any of these production stages. Accordingly,
the loss of one or more of these suppliers for any reason, including as a result
of fire, acts of God or insolvency or bankruptcy, could result in delays in, or
impair our ability to complete, clinical trials and regulatory submissions or
reviews, and could delay or impair our sale or continued sale of Plenaxis
products. Such delays or impairment, and the associated costs and expenses, may
lower our potential revenues and profitability. While we intend to evaluate the
possibility of a second source of supply at each stage of Plenaxis production,
the number of qualified alternative suppliers is limited, and we cannot assure
investors that we will be able to locate alternative suppliers or negotiate
second supply agreements on reasonable terms. Furthermore, the process of
engineering a new supplier's facility for the production of Plenaxis and
obtaining the necessary FDA approval of the facility would require a substantial
lead-time and could be extremely costly. We cannot assure investors that we will
not lose one or more of our suppliers, or that in such event we would be readily
able to continue the development and commercialization and sale of Plenaxis
products without substantial and costly delays.

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 them to do so. In
addition, these third parties may conduct our clinical trials in a manner
inconsistent with regulatory requirements or otherwise in a manner that yields
misleading or unreliable data. This, or other failures of these third parties to
carry out their duties, could result in significant additional costs and
expenses and could delay or prevent the development and commercialization of our
product candidates.

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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 responds to changes in hormone
levels. Even if the FDA approves Plenaxis for commercialization for the
treatment of hormonally responsive advanced prostate cancer, the approval could
be limited to a particular group of patients or to administration over a limited
period of time, and Plenaxis may not compete favorably with existing treatments
that already have an established market share. If Plenaxis does not achieve
broad market acceptance as a drug for the treatment of hormonally responsive
advanced prostate cancer, we may not become profitable.

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. In addition, for each of our product candidates, we may face
increasing competition from generic formulations or existing drugs whose active
components are no longer covered by patents.

    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 any competitive advantage we may have. For
example, if we lose our patent protection for Plenaxis, another party could
produce and market the compound 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 18 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

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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 these measures 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,
stop our use of these technologies or processes, or stop our manufacturing or
marketing of the affected products by bringing a legal action against us 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
Institute, the assignee of Indiana University Foundation, terminated our license
with them, we could have to discontinue development and commercialization of our
Plenaxis 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 POTENTIAL 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 we receive for any

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products in the future. Further, cost control initiatives could impair or
diminish our ability or incentive, or the ability or incentive of potential
partners, 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 increasingly
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.

WE MAY BE UNABLE TO FIND SUITABLE TENANTS FOR A PORTION OF OUR FACILITY.

    In May 2001, we moved to a new 175,000 square foot facility in Waltham,
Massachusetts. We are currently seeking to sublease a portion of our new
facility to third parties. We may not be able to find suitable sub-tenants to
occupy this space in a timely manner, if at all. If we are unable to find
suitable sub-tenants in a timely manner, we may not be able to partially offset
with rental income the substantial mortgage payments and other operating
expenses associated with our facility.

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 continuing to develop our potential
products, enhancing our 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 prevent, or result in delays in, the research, development and
commercialization of our potential products.

                                       34
<Page>
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 for 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. Our collaboration
agreements with Amgen and Sanofi-Synthelabo included, and we anticipate that the
agreements we are finalizing with them regarding the termination of those
collaborations will include, an indemnification of them for liabilities
associated with the development and commercialization of Plenaxis. If a third
party, including a former collaborator, sues us for any injury, or for
indemnification for losses, arising out of 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. For example, the health risks associated with accidental exposure to
Plenaxis include temporary impotence or infertility and harmful effects on
pregnant women. 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.

    From time to time, third-parties have also worked with hazardous materials
in connection with our agreements with them. We have agreed to indemnify our
present and former 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, or acquire or in-license 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 as to any
specific transaction. If we do undertake any transaction of this sort, the
process of integrating an acquired business, or an acquired or in-licensed
product or technology, may result in unforeseen operating difficulties and
expenditures and may absorb significant management attention that would
otherwise be available for the ongoing development of our business. Moreover, we
may fail to realize the anticipated benefits of any transaction of this sort. To
the extent we issue stock in a transaction, the ownership interest of our
stockholders will be diluted. Transactions of this kind could also cause us to
incur debt, expose us to future liabilities and result in amortization expenses
related to goodwill and other intangible assets.

                                       35
<Page>
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 Plenaxis for the treatment
      of hormonally responsive advanced prostate cancer or any of our other
      product candidates;

    - failure or delay by former or future corporate collaborators in performing
      their obligations, or disputes or litigation regarding those obligations;

    - failure or delay by third-party manufacturers in performing their supply
      obligations or disputes or litigation regarding those obligations;

    - the success rate of our discovery efforts and clinical trials;

    - our ability or the ability of third parties to commercialize our product
      candidates and the timing of commercialization;

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

    - 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;

    - 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 timing and level of expenses related to the development and
      commercialization of our Plenaxis products leading to revenues from
      product sales;

    - the timing and level of expenses related to our other research and
      development programs; and

                                       36
<Page>
    - 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.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER AND BY-LAWS, OUR RIGHTS AGREEMENT AND
CERTAIN PROVISIONS OF 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 an increase in prevailing interest rates
may cause the principal amount of the investment to decrease. To minimize this
risk in the future, we 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. A hypothetical 100
basis point increase in interest rates would result in an approximate
$0.7 million decrease in the fair value of our investments as of December 31,
2001. Due to the conservative nature of our investments and relatively short
duration, interest rate risk is mitigated. As of December 31, 2001,
approximately 84% of our total portfolio will mature in one year or less, with
the remainder maturing in less than two years.

    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 30-day LIBOR. Concurrent with that transaction, the
subsidiary also entered into an interest rate cap agreement which limits
exposure to interest rate increases above a certain threshold. Due to the
decrease in interest rates since we entered into this interest rate cap, we
currently do not believe that there is material interest rate risk exposure with
respect to the loan agreement. In addition, we believe that we have mitigated
our risk relating to significant adverse fluctuations in interest rates with
respect to borrowings under the loan agreement, 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.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

    The financial statements required by this Item are included on pages F-1
through F-19 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.

                                       37
<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 "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 22, 2002. Such
information is incorporated herein by reference.

ITEM 11.  EXECUTIVE COMPENSATION.

    Information required by this Item may be found in the sections captioned
"Director Compensation," "Summary Compensation Table," "Option Grants in Fiscal
2001," "Aggregated Option Exercises in Last Fiscal Year and Option Values at
December 31, 2001," "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 22, 2002. 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 sections 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 22, 2002. 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 22, 2002. Such information is
incorporated herein by reference.

                                       38
<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
-----------             ------------------------------------------------------------
<S>                     <C>
  3.1                   Amended and Restated Certificate of Incorporation (2)
  3.2                   Second Amended and Restated By-Laws
  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 (7)
 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+                  Collaboration Agreement dated as of January 31, 2000 by and
                        between Human Genome Sciences, Inc. and PRAECIS (1)
 10.9+                  License Agreement effective as of October 17, 1996 by and
                        between PRAECIS and Indiana University Foundation, as
                        amended as of June 3, 1998 (1)
 10.10+                 Supply Agreement dated as of July 23, 1998 by and between
                        PRAECIS and Salsbury Chemicals, Inc. (1)
</Table>

                                       39
<Page>

<Table>
<Caption>
EXHIBIT NO.             EXHIBIT
-----------             ------------------------------------------------------------
<S>                     <C>
 10.11++                Development and Supply Agreement effective as of June 21,
                        2000 by and between UCB S.A. and Amgen Inc., as amended by
                        Amendment No. 1 thereto dated as of March 26, 2002
                        (together with the Assignment of Development and Supply
                        Agreement entered into January 18, 2002 and effective as of
                        December 17, 2001 by and between Amgen Inc. and PRAECIS)
 10.12                  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)
 10.13                  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)
 10.14                  Guaranty of Costs and Completion dated as of July 11, 2000
                        (3)
 10.15                  Guaranty of Non-Recourse Exceptions dated as of July 11,
                        2000 (3)
 10.16                  Environmental Compliance and Indemnity Agreement dated as of
                        July 11, 2000 executed by 830 Winter Street LLC and PRAECIS
                        (3)
 10.17                  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, Independent Auditors
 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.

(7) Incorporated by reference to Annual Report on Form 10-K for the year ended
    December 31, 2000 filed with the Securities and Exchange Commission on
    March 29, 2001.

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

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

    (B) REPORTS ON FORM 8-K.  The Registrant did not file any reports on
Form 8-K during the quarter ended December 31, 2001.

                                       40
<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 Waltham, Commonwealth of Massachusetts, on this 1st day of April, 2002.

<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 April 1, 2002.

<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/ WILLIAM R. RINGO
     -------------------------------------------       Director
                  William R. Ringo
</Table>

                                       41
<Page>

<Table>
<Caption>
                      SIGNATURE                                            TITLE
                      ---------                                            -----
<C>                                                    <S>
                /s/ DAVID B. SHARROCK
     -------------------------------------------       Director
                  David B. Sharrock

                /s/ PATRICK J. ZENNER
     -------------------------------------------       Director
                  Patrick J. Zenner

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

                                       42
<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-7
Notes to Consolidated Financial Statements..................    F-8
</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, 2000 and 2001, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 2001. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

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

    In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of PRAECIS
PHARMACEUTICALS INCORPORATED at December 31, 2000 and 2001, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States.

                                                           /s/ ERNST & YOUNG LLP

Boston, Massachusetts
January 24, 2002

                                      F-2
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
                          CONSOLIDATED BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       2001
                                                              --------   --------
<S>                                                           <C>        <C>
ASSETS
Current assets:
  Cash and cash equivalents.................................  $132,207   $144,685
  Marketable securities.....................................        --    121,531
  Accounts receivable.......................................     1,079        458
  Refundable income taxes...................................     4,853         --
  Unbilled revenue..........................................     1,493         --
  Prepaid expenses and other assets.........................       786        783
                                                              --------   --------
      Total current assets..................................   140,418    267,457
Property and equipment, net.................................    53,821     74,200
Other assets................................................     1,332        468
                                                              --------   --------
      Total assets..........................................  $195,571   $342,125
                                                              ========   ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 12,834   $ 30,721
  Accrued expenses..........................................     7,142      7,708
  Deferred revenue..........................................     4,709         --
                                                              --------   --------
      Total current liabilities.............................    24,685     38,429
Deferred revenue............................................       355         --
Long-term debt..............................................    24,000     33,000

Commitments and contingencies

Stockholders' equity:
  Common Stock, $0.01 par value; 200,000,000 shares
    authorized; 42,284,199 shares in 2000 and 51,116,135
    shares in 2001 issued and outstanding...................       423        511
  Additional paid-in capital................................   175,937    353,887
  Accumulated other comprehensive income....................        --        730
  Accumulated deficit.......................................   (29,829)   (84,432)
                                                              --------   --------
      Total stockholders' equity............................   146,531    270,696
                                                              --------   --------
      Total liabilities and stockholders' equity............  $195,571   $342,125
                                                              ========   ========
</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,
                                                              ------------------------------
                                                                1999       2000       2001
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Corporate collaboration revenue.............................  $61,514    $ 61,189   $  9,907

Costs and expenses:
  Research and development..................................   48,764      85,915     59,416
  Sales and marketing.......................................    2,601       6,444      8,737
  General and administrative................................    3,572       5,285      6,961
                                                              -------    --------   --------
      Total costs and expenses..............................   54,937      97,644     75,114
                                                              -------    --------   --------
Operating income (loss).....................................    6,577     (36,455)   (65,207)
Interest income.............................................    4,484       8,195     10,503
Interest expense............................................      (11)       (376)    (1,398)
Gain on assignment of leasehold improvements................       --          --      1,499
                                                              -------    --------   --------
Income (loss) before income taxes...........................   11,050     (28,636)   (54,603)
Provision for income taxes..................................    1,800         100         --
                                                              -------    --------   --------
Net income (loss)...........................................  $ 9,250    $(28,736)  $(54,603)
                                                              =======    ========   ========
Net income (loss) per share:
  Basic.....................................................  $  1.51    $  (0.95)  $  (1.10)
                                                              =======    ========   ========
  Diluted...................................................  $  0.24    $  (0.95)  $  (1.10)
                                                              =======    ========   ========
Weighted average number of common shares:
  Basic.....................................................    6,106      30,259     49,777
  Diluted...................................................   37,849      30,259     49,777
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,
  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..................
Net loss................
Unrealized gain on
  marketable
  securities............
Total comprehensive
  loss..................
Common Stock issued upon
  follow-on public
  offering (net of
  $10,476 in offering
  costs)................
Stock compensation......
Repurchase of Common
  Stock.................
Issuance of Common
  Stock.................
                          ----------     ---      -------       --      ----------     ---      --------      --
Balance at December 31,
  2001..................
                          ==========     ===      =======       ==      ==========     ===      ========      ==

<Caption>

                               SERIES E
                          -------------------
                           SHARES     AMOUNT
                          --------   --------
<S>                       <C>        <C>
Balance at December 31,
  1998..................   900,478       9
Common Stock issued upon
  exercise of stock
  options...............
Net income..............
                          --------      --
Balance at December 31,
  1999..................   900,478       9
Common Stock issued upon
  initial public
  offering (net of
  $7,735 in offering
  costs)................
Conversion of Preferred
  Stock on initial
  public offering.......  (900,478)     (9)
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..................
Net loss................
Unrealized gain on
  marketable
  securities............
Total comprehensive
  loss..................
Common Stock issued upon
  follow-on public
  offering (net of
  $10,476 in offering
  costs)................
Stock compensation......
Repurchase of Common
  Stock.................
Issuance of Common
  Stock.................
                          --------      --
Balance at December 31,
  2001..................
                          ========      ==
</Table>

SEE ACCOMPANYING NOTES.

                                      F-5
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (CONTINUED)

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<Table>
<Caption>
                                                                         ACCUMULATED
                                       COMMON STOCK        ADDITIONAL       OTHER                         TOTAL
                                   ---------------------    PAID-IN     COMPREHENSIVE   ACCUMULATED   STOCKHOLDERS'
                                     SHARES      AMOUNT     CAPITAL        INCOME         DEFICIT        EQUITY
                                   ----------   --------   ----------   -------------   -----------   -------------
<S>                                <C>          <C>        <C>          <C>             <C>           <C>
Balance at December 31, 1998.....   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.....   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........  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
Net loss.........................                                                          (54,603)      (54,603)
Unrealized gain on marketable
  securities.....................                                             730                            730
                                                                                                        --------
Total comprehensive loss.........                                                                        (53,873)
Common Stock issued upon follow-
  on public offering (net of
  $10,476 in offering costs).....   7,587,500       76       175,816                                     175,892
Stock compensation...............                               (265)                                       (265)
Repurchase of Common Stock.......    (200,000)      (2)          (51)                                        (53)
Issuance of Common Stock.........   1,444,436       14         2,450                                       2,464
                                   ----------     ----      --------        -----         --------      --------
Balance at December 31, 2001.....  51,116,135     $511      $353,887        $ 730         $(84,432)     $270,696
                                   ==========     ====      ========        =====         ========      ========
</Table>

SEE ACCOMPANYING NOTES.

                                      F-6
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       2000       2001
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
OPERATING ACTIVITIES:

Net income (loss)...........................................  $  9,250   $(28,736)  $(54,603)
Adjustments to reconcile net income (loss) to cash provided
  by
  (used in) operating activities:
  Depreciation and amortization.............................     1,354      4,745      3,500
  Gain on assignment of leasehold improvements..............        --         --     (1,499)
  Deferred income taxes.....................................    (5,295)     5,575         --
  Stock compensation........................................        --      1,391       (265)
  Changes in operating assets and liabilities:
    Accounts receivable.....................................    (7,441)     7,042        621
    Refundable income taxes.................................        --     (4,853)     4,853
    Unbilled revenues.......................................    (4,259)     2,766      1,493
    Materials inventory.....................................   (21,100)    21,100         --
    Prepaid expenses and other assets.......................      (182)    (1,410)       867
    Accounts payable........................................     8,672      2,898     17,887
    Accrued expenses........................................      (372)       283        566
    Deferred revenue........................................     6,711     (4,984)    (5,064)
    Advance payments........................................    21,100    (21,100)        --
    Income taxes payable....................................     4,442     (4,672)        --
                                                              --------   --------   --------
Net cash provided by (used in) operating activities.........    12,880    (19,955)   (31,644)

INVESTING ACTIVITIES:

Purchase of available-for-sale securities...................        --         --   (177,110)
Sales and maturities of available-for-sale securities.......        --         --     56,309
Proceeds from disposition of property and equipment.........        --         --      1,499
Purchase of property and equipment..........................    (3,556)   (52,523)   (23,879)
                                                              --------   --------   --------
Net cash used in investing activities.......................    (3,556)   (52,523)  (143,181)

FINANCING ACTIVITIES:

Follow-on public offering proceeds..........................        --         --    175,892
Initial public offering proceeds............................        --     84,265         --
Proceeds from debt issuance.................................        --     24,000      9,000
Proceeds from the issuance of Common Stock, options and
  warrants..................................................        93      1,895      2,464
Repurchase of Common Stock..................................        --         --        (53)
Principal repayments of capital lease obligations...........      (190)        --         --
                                                              --------   --------   --------
Net cash (used in) provided by financing activities.........       (97)   110,160    187,303
                                                              --------   --------   --------
Increase in cash and cash equivalents.......................     9,227     37,682     12,478
Cash and cash equivalents at beginning of year..............    85,298     94,525    132,207
                                                              --------   --------   --------
Cash and cash equivalents at end of year....................  $ 94,525   $132,207   $144,685
                                                              ========   ========   ========
</Table>

SEE ACCOMPANYING NOTES.

                                      F-7
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

THE COMPANY

    PRAECIS PHARMACEUTICALS INCORPORATED (the "Company") was incorporated 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 accounting
principles generally accepted in the United States 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 and other
investments with original maturities of three months or less at the date of
purchase.

MARKETABLE SECURITIES

    The Company invests in marketable securities of highly rated financial
institutions and investment-grade debt instruments and limits the amount of
credit exposure with any one entity. The Company has classified its marketable
securities as "available-for-sale" and, accordingly, carries such securities at
aggregate fair value. Unrealized gains and losses, if any, are reported as other
comprehensive income in stockholders' equity. The amortized cost of debt
securities in this category is adjusted for amortization of premiums and
accretion of discounts to maturity. Such amortization is included in interest
income. Realized gains and losses on available-for-sale securities are included
in interest income and expense. The cost of securities sold is based on the
specific identification method. Interest and dividends are included in interest
income. At December 31, 2001, the Company's marketable securities had a maximum
maturity of less than two years with an average of approximately 11 months.

CONCENTRATIONS OF CREDIT RISK

    Financial instruments that potentially subject the Company to concentration
of credit risk consist principally of cash, cash equivalents and marketable
securities. The Company places its cash, cash equivalents and marketable
securities with high credit quality financial institutions and, by policy,
limits its credit exposure to any one financial instrument, sovereignty or
issuer.

                                      F-8
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 reimbursable cost documentation.

INVENTORY

    Materials inventory is carried at the lower of actual cost or market (net
realizable value) on a first-in, first-out basis.

DERIVATIVES AND HEDGING

    In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, ACCOUNTING FOR
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES ("SFAS No. 133"), and its
amendments SFAS No. 137 and No. 138, in June 1999 and June 2000, respectively.
SFAS No. 133 requires the Company to recognize all derivatives on the balance
sheet at fair value.

    Derivatives that are not hedges must be adjusted to fair value through
income. If the derivative is a hedge, depending on the nature of the hedge,
changes in the fair value of derivatives are either offset against the change in
fair value of assets, liabilities, or firm commitments through earnings or
recognized in other comprehensive income until the hedged item is recognized in
earnings. The ineffective portion of a derivative's change in fair value will be
immediately recognized in earnings. The adoption of SFAS No. 133 did not have a
material impact on the Company's consolidated results of operations in 2001.

PROPERTY AND EQUIPMENT

    Property and equipment are recorded at cost. Depreciation and amortization
are calculated using the straight-line method over the estimated useful life of
the asset as follows:

<Table>
<S>                                            <C>
    Building.................................  30 years
    Building improvements....................  30 years or the life of the building,
                                               whichever is shorter
    Laboratory and office equipment..........  3-7 years or term of lease, whichever is
                                               shorter
    Leasehold improvements...................  Term of the lease or remaining useful life,
                                               whichever is shorter
</Table>

    Interest capitalized in connection with facilities 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 2000 and 2001
was approximately $0.8 million and $0.6 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.

                                      F-9
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    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.

INCOME TAXES

    The Company provides for income taxes under 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.

RESEARCH AND DEVELOPMENT

    Research and development costs, including those associated with technology,
licenses and patents, are expensed as incurred. Research and development costs
include primarily costs related to ongoing clinical programs, manufacturing and
materials inventory costs, salaries, lab supplies and other fixed facility costs
used in the Company's research and development operations.

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.

ACCOUNTING PRONOUNCEMENTS

    In June 2001, the FASB issued SFAS No. 141, BUSINESS COMBINATIONS, and SFAS
No. 142, GOODWILL AND OTHER INTANGIBLE ASSETS, effective for fiscal years
beginning after December 15, 2001. Under the new rules, goodwill will no longer
be amortized but will be subject to annual impairment tests in accordance with
the statements. Other intangible assets will continue to be amortized over their
useful lives. The Company will apply the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of 2002. Application
of the provisions of these statements is not expected to have a material effect
on the Company's consolidated financial position or consolidated results of
operations since the Company does not have any goodwill or intangibles at this
time.

    In October 2001, the FASB issued SFAS No. 144, ACCOUNTING FOR THE IMPAIRMENT
OR DISPOSAL OF LONG-LIVED ASSETS ("SFAS No. 144"). SFAS No. 144 supersedes SFAS
No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF; however, it retains the fundamental provision of that
statement related to the recognition and measurement of the impairment of
long-lived assets to be held and used. In addition, SFAS No. 144 provides
additional guidance on estimating cash flows when performing a recoverability
test, requiring that a long-lived asset to be

                                      F-10
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
disposed of other than by sale be classified as an asset held for sale until it
is disposed of, and establishes more restrictive criteria to classify an asset
as held for sale. SFAS No. 144 is effective for the Company starting in 2002.
Application of SFAS No. 144 is not expected to have any effect on the Company's
consolidated financial position or consolidated results of operations since it
does not believe that there are any impairment indicators at this time.

COMPREHENSIVE LOSS

    Comprehensive loss consists of net loss and unrealized gains or losses on
marketable securities and is reflected in the consolidated statements of
stockholders' equity.

NET INCOME (LOSS) PER SHARE

    Basic net income (loss) per share represents net income (loss) divided by
the weighted average shares of common stock, par value $.01 per share ("Common
Stock"), outstanding during the period. Diluted net income (loss) 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 (loss) per share is as follows:

<Table>
<Caption>
                                                                 YEAR ENDED DECEMBER 31,
                                                              ------------------------------
                                                                1999       2000       2001
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
HISTORICAL:
Weighted average number of common shares outstanding used in
  computing basic net income (loss) per share...............    6,106     30,259     49,777

Effect of dilutive securities:
  Convertible Preferred Stock...............................   25,608         --         --
  Stock options.............................................    5,989         --         --
  Warrants..................................................      146         --         --
                                                               ------     ------     ------
Weighted average number of common shares used in computing
  diluted net income (loss) per share.......................   37,849     30,259     49,777
                                                               ======     ======     ======
</Table>

PRO FORMA NET INCOME (LOSS) PER SHARE (UNAUDITED)

    Pro forma net income (loss) 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 as of their original
dates of issuance.

                                      F-11
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2.  SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

<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.  MARKETABLE SECURITIES

    The Company's marketable securities, which are classified as
available-for-sale, as of December 31, 2001 are as follows (in thousands):

<Table>
<Caption>
                                                    GROSS        GROSS      ESTIMATED
                                      AMORTIZED   UNREALIZED   UNREALIZED     FAIR
                                        COST        GAINS        LOSSES       VALUE
                                      ---------   ----------   ----------   ---------
<S>                                   <C>         <C>          <C>          <C>
U.S. government agencies............  $ 89,869       $361         $(103)    $ 90,127
Commercial paper....................    30,932        484           (12)      31,404
                                      --------       ----         -----     --------
    Total marketable securities.....  $120,801       $845         $(115)    $121,531
                                      ========       ====         =====     ========
</Table>

4.  PROPERTY AND EQUIPMENT

    Property and equipment consist of the following:

<Table>
<Caption>
                                                               DECEMBER 31,
                                                            -------------------
                                                              2000       2001
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Building..................................................  $    --    $56,314
Land......................................................       --     10,500
Laboratory and office equipment...........................    7,711     14,312
Leasehold improvements....................................    1,610         --
Construction in progress..................................   50,540         --
                                                            -------    -------
                                                             59,861     81,126
Less accumulated depreciation and amortization............    6,040      6,926
                                                            -------    -------
                                                            $53,821    $74,200
                                                            =======    =======
</Table>

                                      F-12
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.  ACCRUED EXPENSES

    Accrued expenses consist of the following:

<Table>
<Caption>
                                                                 DECEMBER 31,
                                                              -------------------
                                                                2000       2001
                                                              --------   --------
                                                                (IN THOUSANDS)
<S>                                                           <C>        <C>
Clinical trial costs........................................   $3,497     $4,514
Other.......................................................    3,645      3,194
                                                               ------     ------
                                                               $7,142     $7,708
                                                               ======     ======
</Table>

6.  STOCKHOLDERS' EQUITY

PUBLIC OFFERINGS

    In May 2000, the Company completed an initial public offering of 9,200,000
shares of Common Stock resulting in net proceeds to the Company of approximately
$84.3 million.

    In February 2001, the Company completed a follow-on public offering of its
Common Stock. The Company sold 7,587,500 shares of Common Stock resulting in net
proceeds to the Company of approximately $175.9 million.

CONVERTIBLE PREFERRED STOCK

    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 is 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. No shares of Preferred Stock have been issued.

RIGHTS PLAN

    In January 2001, the Company adopted a Rights Agreement (the "Rights
Agreement"), commonly known as a "poison pill." Under the Rights Agreement, the
Company distributed 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. Each share of Common
Stock issued after the February 5, 2001 record date has an attached Right. Under
certain conditions involving an acquisition by any person or group of 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, unless and until they become
exercisable, 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.

                                      F-13
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)
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 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 and 2001, the Company issued 9,497 and 35,532 shares of Common
Stock, respectively, 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 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, expires on May 13, 2002 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, 2001, warrants to purchase 404,445 shares of Common
Stock 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, 2001, 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-14
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)

    Information regarding options under the Plan is summarized below (in
thousands, except per share data):

<Table>
<Caption>
                                                         1999                  2000                  2001
                                                  -------------------   -------------------   -------------------
                                                             WEIGHTED              WEIGHTED              WEIGHTED
                                                             AVERAGE               AVERAGE               AVERAGE
                                                             EXERCISE              EXERCISE              EXERCISE
                                                   SHARES     PRICE      SHARES     PRICE      SHARES     PRICE
                                                  --------   --------   --------   --------   --------   --------
<S>                                               <C>        <C>        <C>        <C>        <C>        <C>
Options outstanding at January 1,...............   6,738      $2.03      8,212      $3.35       8,235     $6.74

Granted.........................................   2,230       6.47      1,528      22.99       1,087     11.75
Exercised.......................................    (438)      0.21       (997)      1.74      (1,209)     1.74
Cancelled.......................................    (318)      1.50       (508)     10.70      (1,454)     6.38
                                                   -----                 -----                 ------
Options outstanding at December 31,.............   8,212      $3.35      8,235      $6.74       6,659     $8.54
                                                   =====                 =====                 ======
Options exercisable at December 31,.............   2,777      $1.61      3,328      $2.55       3,274     $4.73
                                                   =====                 =====                 ======
</Table>

    The weighted average per share fair value of options granted was $4.07 in
1999, $16.64 in 2000 and $10.05 in 2001. At December 31, 2001, there were
8,082,182 shares of Common Stock reserved for the exercise of stock options and
warrants and for issuances under the Employee Stock Purchase Plan, including
903,354 options available for grant under the Plan.

    The following table presents weighted average price and weighted average
remaining contractual life information about significant option groups
outstanding at December 31, 2001 (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                  1,746          4.1         $ 0.53        1,270       $ 0.63
$3.71-$6.38                  2,772          6.2         $ 5.39        1,596       $ 4.90
$7.00-$16.25                 1,079          8.7         $11.55          265       $10.99
$23.13-$42.00                1,062          8.9         $26.88          143       $27.66
                             -----                                   ------
                             6,659                                    3,274
                             =====                                   ======
</Table>

    Pursuant to the requirements of SFAS No. 123, the following is 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>
                                                     1999                  2000                  2001
                                              -------------------   -------------------   -------------------
                                                 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)...........................   $9,250     $6,547    $(28,736)  $(34,863)  $(54,603)  $(62,450)
                                               ======     ======    ========   ========   ========   ========
Diluted net income (loss) per common
  share.....................................   $ 0.24     $ 0.17    $  (0.95)  $  (1.15)  $  (1.10)  $  (1.25)
                                               ======     ======    ========   ========   ========   ========
</Table>

                                      F-15
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

6.  STOCKHOLDERS' EQUITY (CONTINUED)
    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>
                                                               1999       2000       2001
                                                             --------   --------   --------
<S>                                                          <C>        <C>        <C>
Risk-free interest rate....................................    6.0%       6.2%       4.0%
Expected life (years)......................................      5          5          5
Volatility.................................................     70%        84%        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 (loss) 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.

    On October 3, 2001, Dr. Malcolm Gefter, the Company's Chairman, Chief
Executive Officer and President, exercised an option to purchase 200,000 shares
of Common Stock at an exercise price of $0.27 per share. On November 30, 2001,
this option exercise was rescinded, and accordingly, Dr. Gefter returned to the
Company the 200,000 shares of Common Stock acquired upon the exercise of the
option, the Company returned to Dr. Gefter the option exercise price and the
option to purchase 200,000 shares of Common Stock was restored. During 2001, the
Company recognized approximately $256,000 in compensation expense related to
this transaction.

7.  INCOME TAXES

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

<Table>
<Caption>
                                                       YEAR ENDED DECEMBER 31,
                                                    ------------------------------
                                                      1999       2000       2001
                                                    --------   --------   --------
                                                            (IN THOUSANDS)
<S>                                                 <C>        <C>        <C>
Current:
Federal...........................................  $ 5,295    $(5,575)   $    --
State.............................................    1,800        100         --
                                                    -------    -------    -------
                                                      7,095     (5,475)        --
Deferred:
Federal...........................................   (5,295)     5,575         --
State.............................................       --         --         --
                                                    -------    -------    -------
                                                     (5,295)     5,575         --
                                                    -------    -------    -------
                                                    $ 1,800    $   100    $    --
                                                    =======    =======    =======
</Table>

    A reconciliation of the Company's income tax provision to the statutory
federal provision is as follows:

<Table>
<Caption>
                                                      YEAR ENDED DECEMBER 31,
                                                   ------------------------------
                                                     1999       2000       2001
                                                   --------   --------   --------
                                                           (IN THOUSANDS)
<S>                                                <C>        <C>        <C>
Statutory federal income tax provision
  (benefit)......................................   $3,868    $(9,736)   $(18,565)
State income taxes...............................      620         --          --
Increase (decrease) in valuation allowance.......   (2,688)     9,631      18,565
Other............................................       --        205          --
                                                    ------    -------    --------
Income tax provision.............................   $1,800    $   100    $     --
                                                    ======    =======    ========
</Table>

                                      F-16
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.  INCOME TAXES (CONTINUED)
    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,
                                                           -------------------
                                                             2000       2001
                                                           --------   --------
                                                             (IN THOUSANDS)
<S>                                                        <C>        <C>
Deferred tax assets:
  Net operating losses...................................  $ 8,761    $ 21,010
  Deferred revenue.......................................    1,812          --
  Property and equipment.................................    1,524       4,095
  Accrued expenses.......................................      810      12,791
  Research and development tax credit carryforwards......    1,821       4,501
  Other..................................................      231         102
                                                           -------    --------
Total deferred tax assets................................   14,959      42,499
Valuation allowance......................................  (14,959)    (42,499)
                                                           -------    --------
                                                           $    --    $     --
                                                           =======    ========
</Table>

    At December 31, 2000 and 2001, 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 increased by $11.3 million in 2000 and $27.5 million in 2001 due
primarily to the increase in net operating losses, accruals and tax credit
carryforwards. The Company has net operating loss carryforwards in the amount of
approximately $51.6 million, which expire through 2021. 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 $4.0 million in 2000 and zero
in 2001.

8.  CORPORATE COLLABORATIONS

SANOFI-SYNTHELABO AGREEMENT

    In May 1997, the Company entered into a license agreement with Synthelabo
S.A., which subsequently merged with Sanofi S.A. forming Sanofi-Synthelabo S.A.
("Sanofi-Synthelabo"), for the development and commercialization of the
Company's Plenaxis products. Upon initiation, the Company received a one-time,
non-refundable payment of $4.7 million. This initiation fee was recognized into
revenue through 2001, which was the period during which the Company was
obligated under the agreement to participate on a continuing and substantial
basis in the research, development and manufacturing process development
activities.

    In October 2001, Sanofi-Synthelabo notified the Company that it was
terminating the Sanofi-Synthelabo agreement effective December 31, 2001. As a
result of the termination of the Sanofi-Synthelabo agreement, all licenses for
Plenaxis granted to Sanofi-Synthelabo under the agreement, and all rights of
Sanofi-Synthelabo in the Plenaxis program, have terminated.

    The Company recognized revenues of approximately $4.7 million in 1999,
$4.1 million in 2000 and $2.1 million in 2001 under the Sanofi-Synthelabo
agreement.

                                      F-17
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

8.  CORPORATE COLLABORATIONS (CONTINUED)
AMGEN AGREEMENT

    In March 1999, the Company entered into a binding agreement in principle
with Amgen Inc. ("Amgen") for the development and commercialization of the
Company's Plenaxis products. In accordance with the agreement, the Company
received from Amgen a $10.0 million, one-time, non-refundable payment upon
initiation. This initiation fee was recognized into revenue through 2001, which
was the period during which the Company was obligated under the Amgen agreement
to participate on a continuing and substantial basis in the research,
development and manufacturing process development activities. In addition to the
signing payment, Amgen paid the first $175.0 million of all authorized costs and
expenses associated with the development and commercialization of Plenaxis
products, including the cost of materials, in the United States.

    Following Amgen's completion of this funding during the third quarter of
2000, the Company became responsible for one-half of all subsequent United
States research and development costs for Plenaxis products through the launch
period. Additionally, the Company was to reimburse Amgen for one-half of the
costs associated with establishing a sales and marketing infrastructure for
Plenaxis products in the United States.

    In September 2001, Amgen notified the Company that it was terminating the
Amgen agreement effective December 17, 2001. As a result of the termination of
the Amgen agreement, all licenses for Plenaxis granted to Amgen under the
agreement, and all rights of Amgen in the Plenaxis program, have terminated. As
of December 31, 2001, the Company has accrued an estimate of its potential
liability of approximately $29.1 million under its agreement with Amgen.

    In January 2002, the Company assumed all of Amgen's rights and obligations
under the Development and Supply Agreement with UCB S.A. ("UCB"). Under the
terms of this agreement, the Company is committed to pay UCB approximately
$16.1 million for the supply of clinical and commercial volumes of
pharmaceutical peptide to be delivered by the end of 2002.

    The Company recognized revenues in 1999, 2000 and 2001 of approximately
$56.8 million, $57.1 million and $7.8 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.

9.  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,

                                      F-18
<Page>
                      PRAECIS PHARMACEUTICALS INCORPORATED
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9.  BUILDING AND RELATED MORTGAGE FINANCING (CONTINUED)
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, 2001, the notional amount and fair market value under the Interest
Rate Cap Agreement are $33.0 million and $5,000, respectively.

    An initial advance of $24.0 million was made in July 2000, a second advance
of $2.9 million in February 2001 and a final advance of $6.1 million was made in
April 2001. Advances bear interest at a rate equal to the 30-day LIBOR plus 2.0%
(3.87% at December 31, 2001). 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 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
occupied the facility during the May 2001 and is currently seeking to sublease a
portion of the facility.

    Interest paid under the Loan Agreement approximated interest expense in 2000
and 2001.

    During September 2001, the Company terminated the lease for, and all future
obligations with respect to, its Cambridge, Massachusetts facility. In
October 2001, the Company assigned to a third party the Company's right, title
and interest in and to the Company's lease for the New Jersey facility and the
third party has assumed all obligations thereunder.

10.  COMMITMENTS

INDIANA UNIVERSITY FOUNDATION ("IUF") LICENSE AGREEMENT

    The Company has a license agreement with IUF, which was assigned by IUF to
IUF's Advanced Research and Technology Institute, Inc., with respect to rights
to Plenaxis 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 milestone
payments of $500,000 in 2000 under the IUF agreement.

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 Plenaxis. 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. The Company has an obligation with
Salsbury to pay approximately $634,000 during 2002 towards minimum purchase
commitments and facility maintenance.

                                      F-19
<Page>
                                 EXHIBIT INDEX

<Table>
<Caption>
EXHIBIT NO.             EXHIBIT
-----------             ------------------------------------------------------------
<S>                     <C>
  3.1                   Amended and Restated Certificate of Incorporation (2)
  3.2                   Second Amended and Restated By-Laws
  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 (7)
 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+                  Collaboration Agreement dated as of January 31, 2000 by and
                        between Human Genome Sciences, Inc. and PRAECIS (1)
 10.9+                  License Agreement effective as of October 17, 1996 by and
                        between PRAECIS and Indiana University Foundation, as
                        amended as of June 3, 1998 (1)
 10.10+                 Supply Agreement dated as of July 23, 1998 by and between
                        PRAECIS and Salsbury Chemicals, Inc. (1)
 10.11++                Development and Supply Agreement effective as of June 21,
                        2000 by and between UCB S.A. and Amgen Inc., as amended by
                        Amendment No. 1 thereto dated as of March 26, 2002
                        (together with the Assignment of Development and Supply
                        Agreement entered into January 18, 2002 and effective as of
                        December 17, 2001 by and between Amgen Inc. and PRAECIS)
 10.12                  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)
 10.13                  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)
 10.14                  Guaranty of Costs and Completion dated as of July 11, 2000
                        (3)
 10.15                  Guaranty of Non-Recourse Exceptions dated as of July 11,
                        2000 (3)
 10.16                  Environmental Compliance and Indemnity Agreement dated as of
                        July 11, 2000 executed by 830 Winter Street LLC and PRAECIS
                        (3)
</Table>

<Page>

<Table>
<Caption>
EXHIBIT NO.             EXHIBIT
-----------             ------------------------------------------------------------
<S>                     <C>
 10.17                  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, Independent Auditors
 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.

(7) Incorporated by reference to Annual Report on Form 10-K for the year ended
    December 31, 2000 filed with the Securities and Exchange Commission on
    March 29, 2001.

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

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