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


                                    FORM 10-Q


(Mark One)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934 FOR QUARTER ENDED JUNE 30, 2002

                                       OR

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

                         Commission File Number: 0-20017

                         TEXAS BIOTECHNOLOGY CORPORATION
--------------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


         Delaware                                      13-3532643
--------------------------------------------------------------------------------
(State or other jurisdiction of            (I.R.S. Employer Identification No.)
 incorporation or organization)


      7000 Fannin, 20th Floor, Houston, Texas              77030
--------------------------------------------------------------------------------
      (Address of principal executive office)           (Zip code)


                                 (713) 796-8822
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

                                 Not Applicable
--------------------------------------------------------------------------------
              (Former name, former address and former fiscal year,
                         if changed since last report)

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 the number of shares outstanding of each of the issuer's classes of
Common Stock, exclusive of treasury shares, as of the latest practicable date.

          Class                             Outstanding at August 8, 2002
          -----                             -----------------------------
common stock, $0.005 par value                         43,800,373
<PAGE>
                         TEXAS BIOTECHNOLOGY CORPORATION

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                       PAGE NO.
                                                                                       --------
<S>                                                                                    <C>
PART I.    FINANCIAL INFORMATION

           ITEM 1:   FINANCIAL STATEMENTS

           Consolidated Balance Sheets as of June 30, 2002 and December 31, 2001           1

           Consolidated Statements of Operations and Comprehensive Loss for the
           three and six months ended June 30, 2002 and 2001                               2

           Consolidated Statements of Cash Flows for the six months ended
           June 30, 2002 and 2001                                                          3

           Notes to Consolidated Financial Statements                                      4

           ITEM 2:   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                     FINANCIAL CONDITION AND RESULTS OF OPERATIONS                        16

           ITEM 3:   QUANTITATIVE AND QUALITATIVE DISCLOSURES
                     ABOUT MARKET RISK                                                    24

PART II.   OTHER INFORMATION

           ITEM 1:  Legal Proceedings                                                     25

           ITEM 2:  Changes in Securities                                                 25

           ITEM 3:  Defaults Upon Senior Securities                                       25

           ITEM 4:  Submission of Matters to a Vote of Security Holders                   25

           ITEM 5:  Other Information                                                     25

           ITEM 6:  Exhibits and Reports on Form 8-K                                      26

SIGNATURES                                                                                27
</TABLE>
<PAGE>
                TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                     ($ IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                             JUNE 30,        DECEMBER 31,
ASSETS                                                                        2002              2001
                                                                            ---------         ---------
                                                                           (unaudited)
<S>                                                                         <C>               <C>
Current assets:
      Cash and cash equivalents                                             $  29,912         $  10,086
      Short-term investments                                                   22,212            46,465
      Accounts receivable                                                         880               655
      Other current receivables                                                   395               618
      Receivable from related party under collaborative arrangement               329             1,144
      Prepaids                                                                  1,757             1,350
                                                                            ---------         ---------
         Total current assets                                                  55,485            60,318

Long-term investments                                                          27,406            38,876
Equipment and leasehold improvements, net                                       5,915             4,300
Other assets                                                                      815               868
                                                                            ---------         ---------
         Total assets                                                       $  89,621         $ 104,362
                                                                            =========         =========
LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
      Accounts payable                                                      $   1,180         $   2,187
      Accrued expenses                                                          3,202             3,902
      Obligation under capital leases                                              10                --
      Deferred revenue from related party                                       1,150             1,159
      Deferred revenue from unrelated parties                                     927               748
                                                                            ---------         ---------
         Total current liabilities                                              6,469             7,996

Liability to related party                                                      2,975             3,533
Deferred revenue from related party                                             1,146             1,722
Deferred revenue from unrelated parties                                         3,482             3,041
Obligation under capital leases                                                    23                --
Deferred credit                                                                 2,620             2,620
Minority interest in Revotar                                                      733             1,213

Commitments and contingencies

Stockholders' equity:
      Preferred stock, par value $.005 per share.  At June 30, 2002,
         and December 31, 2001, 5,000,000 shares authorized;
         none outstanding                                                          --                --
      Common stock, par value $.005 per share.  At June 30, 2002
         75,000,000 shares authorized; 43,958,872 shares issued
         At December 31, 2001, 75,000,000 shares authorized;
         43,783,638 shares issued                                                 220               218
      Additional paid-in capital                                              211,651           210,616
      Deferred compensation expense                                              (274)               --
      Treasury stock, 213,000 shares at June 30, 2002, and
         December 31, 2001                                                     (1,602)           (1,602)
      Accumulated other comprehensive loss                                       (155)             (299)
      Accumulated deficit                                                    (137,667)         (124,696)
                                                                            ---------         ---------
         Total stockholders' equity                                            72,173            84,237
                                                                            ---------         ---------
         Total liabilities and stockholders' equity                         $  89,621         $ 104,362
                                                                            =========         =========
</TABLE>

           See accompanying notes to consolidated financial statements

                                       1
<PAGE>
                TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                             AND COMPREHENSIVE LOSS
                     ($ IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED                         SIX MONTHS ENDED
                                                 ---------------------------------         ---------------------------------
                                                     JUNE 30,           JUNE 30,             JUNE 30,             JUNE 30,
                                                      2002                2001                 2002                 2001
                                                 ------------         ------------         ------------         ------------
<S>                                              <C>                  <C>                  <C>                  <C>
Revenues:
   Research agreements                           $        914         $      1,364         $      1,827         $      2,797
   Collaborative research and development
     from ICOS-TBC, L.P.                                  246                  379                  486                  780
   Royalty income, net                                    840                  392                1,805                  569
   License fee, milestones and grants                     626                  328                1,101                  586
                                                 ------------         ------------         ------------         ------------
     Total revenues                                     2,626                2,463                5,219                4,732
                                                 ------------         ------------         ------------         ------------
Expenses:
   Research and development                             5,472                4,550               10,821                8,059
   Equity in loss of ICOS-TBC, L.P.                     1,957                2,242                4,467                3,771
   General and administrative                           2,254                1,778                4,762                3,233
                                                 ------------         ------------         ------------         ------------
     Total expenses                                     9,683                8,570               20,050               15,063
                                                 ------------         ------------         ------------         ------------
     Operating loss                                    (7,057)              (6,107)             (14,831)             (10,331)

Investment income, net                                    613                1,445                1,380                3,098
                                                 ------------         ------------         ------------         ------------
     Loss before minority interest                     (6,444)              (4,662)             (13,451)              (7,233)

Minority interest in loss of Revotar                      223                  123                  480                  185
                                                 ------------         ------------         ------------         ------------
   Net loss                                            (6,221)              (4,539)             (12,971)              (7,048)

Other comprehensive loss:
   Unrealized gain (loss) on
     foreign currency translation                         205                 (148)                 144                 (444)
                                                 ------------         ------------         ------------         ------------
     Comprehensive loss                          $     (6,016)        $     (4,687)        $    (12,827)        $     (7,492)
                                                 ============         ============         ============         ============
Net loss per common share-
   basic and diluted                             $      (0.14)        $      (0.10)        $      (0.30)        $      (0.16)
                                                 ============         ============         ============         ============
Weighted average common shares
   used to compute basic and diluted
   net loss per share                              43,745,625           43,703,465           43,679,752           43,684,593
                                                 ============         ============         ============         ============
</TABLE>

           See accompanying notes to consolidated financial statements

                                       2
<PAGE>
                TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                ($ IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                           SIX MONTHS ENDED JUNE 30,
                                                                           -------------------------
                                                                             2002             2001
                                                                           --------         --------
<S>                                                                        <C>              <C>
Cash flows from operating activities:
   Net loss                                                                $(12,971)        $ (7,048)
   Adjustments to reconcile net loss to net cash
    used in operating activities:
          Depreciation and amortization                                         568              391
          Equity in loss of ICOS-TBC, L.P.                                    4,467            3,771
          Minority interest in loss of Revotar                                 (480)            (185)
          Expenses paid with stock                                              242               --
          Compensation expense related to stock options                         213               98
          Loss on disposition of fixed assets                                    --                6
         Amortization of premium/discount on investments                         79               --
    Change in operating assets and liabilities:
         Decrease in interest receivable included in short-term
            and long-term investments                                           331              491
         Increase in accounts receivable                                       (225)            (237)
         Increase in prepaids                                                  (407)            (155)
         Decrease (increase) in other current receivables                       223             (542)
         Decrease (increase) in receivable from related party under
            collaborative arrangement                                           815           (3,031)
         Decrease in accounts payable and accrued expenses                   (1,707)            (179)
         Decrease in liability to related party                              (5,025)          (1,175)
         Increase in deferred revenue from unrelated parties                    620            1,656
         Decrease in deferred revenue from related party                       (585)            (246)
                                                                           --------         --------
    Net cash used in operating activities                                   (13,842)          (6,385)
                                                                           --------         --------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Purchases of equipment and leasehold improvements                         (2,097)            (772)
   Purchase of investments                                                  (55,142)         (93,020)
   Maturity of investments                                                   90,455           63,270
                                                                           --------         --------
    Net cash provided by (used in)  investing activities                     33,216          (30,522)
                                                                           --------         --------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Acquisition of treasury stock                                                 --           (1,268)
   Proceeds from sale of common stock and option and
    warrant exercises, net                                                      308           21,107
                                                                           --------         --------
    Net cash provided by financing activities                                   308           19,839
                                                                           --------         --------
Effect of exchange rate changes on cash                                         144             (444)
                                                                           --------         --------
    Net increase (decrease)  in cash and cash equivalents                    19,826          (17,512)

Cash and cash equivalents at beginning of period                             10,086           48,470
                                                                           --------         --------
Cash and cash equivalents at end of period                                 $ 29,912         $ 30,958
                                                                           ========         ========
Supplemental schedule of noncash financing activities:
   Deferred compensation expense                                           $    274         $     --
   Issuance of common stock for expenses                                        242               --
   Acquisition of equipment under capital leases                                 34               --
                                                                           ========         ========
</TABLE>

           See accompanying notes to consolidated financial statements

                                       3
<PAGE>
                TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 JUNE 30, 2002 (UNAUDITED) AND DECEMBER 31, 2001

(1)   BASIS OF PRESENTATION

      The accompanying unaudited consolidated financial statements of Texas
Biotechnology Corporation, a Delaware Corporation, and its subsidiaries
(collectively referred to as the "Company" or "TBC") have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("USA") for interim financial information and with the instructions to
Form 10-Q and Rule 10-01 of Regulation S-X. They do not include all information
and notes required by accounting principles generally accepted in the USA for
complete financial statements. It is recommended that these interim condensed
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2001. Except as disclosed herein,
there has been no material change in the information disclosed in the notes to
the consolidated financial statements included in the Company's Annual Report on
Form 10-K. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods ended June
30, 2002 are not necessarily indicative of the results that may be expected for
any other interim period, or for the year ending December 31, 2002.

(2)   ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

      (a) Organization

          The Company is a biopharmaceutical company focused on the discovery,
      development and commercialization of novel synthetic small molecule
      compounds for the treatment of a variety of cardiovascular, vascular and
      related inflammatory diseases. Since its formation in 1989, the Company
      has been engaged principally in research and drug discovery programs and
      clinical development of certain drug compounds. On July 25, 1994, the
      Company acquired all of the outstanding common stock of
      ImmunoPharmaceutics, Inc. ("IPI") in exchange for common stock, par value
      $.005 per share (the "Common Stock"), of the Company. On June 6, 2000,
      TBC, through its wholly owned subsidiary, TBC-ET, Inc., a Delaware
      Corporation, and ICOS Corporation, a Delaware Corporation, ("ICOS")
      entered into an agreement and formed ICOS-Texas Biotechnology L.P., a
      Delaware limited partnership ("ICOS-TBC"), to develop and globally
      commercialize endothelin-A receptor antagonists. TBC and ICOS are both 50%
      owners in ICOS-TBC. During the third quarter of 2000, TBC formed Revotar
      Biopharmaceuticals AG ("Revotar"), a German corporation, to conduct
      research and development for novel small molecule compounds and to develop
      and commercialize TBC's selectin antagonists. The Company retained an
      approximately 55% interest in Revotar. The Company is presently working on
      a number of long-term development projects that involve experimental and
      unproven technology, which may require many years and substantial
      expenditures to complete, and which may be unsuccessful. Sales of the
      Company's first product for which it receives royalty income, Argatroban,
      began during November 2000.

      (b) Basis of Consolidation

          The Company's consolidated financial statements include the accounts
      of the Company, its wholly owned subsidiaries, IPI and TBC-ET, Inc., and
      its majority controlled subsidiary, Revotar. All material intercompany
      balances and transactions have been eliminated.

      (c) Cash, Cash Equivalents, Short-Term Investments and Long-Term
          Investments

          Cash equivalents are considered to be those securities or instruments
      with original maturities, when purchased, of three months or less. At June
      30, 2002, approximately $1,382,000 was invested in demand and money market
      accounts, and approximately $28,530,000 was invested in corporate

                                       4
<PAGE>
      commercial paper and loan participations with a maturity of less than
      three months. Short-term investments are those investments which have an
      original maturity of less than one year and greater than three months at
      the purchase date. At June 30, 2002, the Company's short-term investments
      consisted of approximately $20,096,000 in corporate commercial paper and
      loan participations, $2,000,000 in government securities, and accrued
      interest of $116,000. Long-term investments consist of approximately
      $16,992,000 in government agency bonds, $10,140,000 in corporate bonds and
      loan participations and $274,000 in accrued interest thereon, all with a
      remaining maturity of one year or more. Cash equivalents, short-term and
      long-term investments are stated at cost plus accrued interest, which
      approximates market value. Interest income is accrued as earned. The
      Company classifies all short-term and long-term investments as held to
      maturity.

      (d) Equipment and Leasehold Improvements

          Equipment and leasehold improvements are stated at cost less
      accumulated depreciation and amortization. Depreciation of furniture and
      equipment is provided on the straight-line method over the estimated
      useful lives of the respective assets (3 to 10 years). Amortization of
      leasehold improvements is provided on the straight-line method over the
      remaining minimum lease term.

      (e) Investment in ICOS - TBC

          The Company accounts for the investment in ICOS-TBC using the equity
      method. Because the Company had no basis in the technology transferred to
      ICOS-TBC as the Company's original investment, the Company did not record
      an amount for its original investment. The Company records its share of
      the ICOS-TBC loss as a liability to related party until the Company funds
      its portion of the loss.

         ICOS-TBC paid a license fee and a milestone payment to the Company in
      2000 and 2001, respectively. Because the Company has continuing
      obligations to ICOS-TBC, the Company deferred these amounts and is
      amortizing them into revenue over the estimated developmental period of
      the underlying technology.

      (f) Research and Development Costs

          All research and development costs are expensed as incurred and
      include salaries of research and development employees, certain rent and
      related building services, research supplies and services, clinical trial
      expenses and other associated costs. Salaries and benefits charged to
      research and development in the three-month periods ended June 30, 2002
      and 2001 were approximately $2,307,000 and $1,664,000, respectively, and
      in the six-month periods ended June 30, 2002 and 2001 were approximately
      $4,558,000 and $3,362,000, respectively. Payments related to the
      acquisition of in-process research and development, if any, are expensed
      as incurred.

      (g) Net Loss Per Common Share

          Basic net loss per common share is calculated by dividing the net loss
      applicable to common shares by the weighted average number of common and
      common equivalent shares outstanding during the period. For the
      three-month periods ended June 30, 2002 and 2001, the weighted average
      common shares used to compute basic and diluted net loss per common share
      totaled 43,745,625 and 43,703,465 shares, respectively. Securities
      convertible into common stock, comprised of stock options and warrants
      totaling 5,499,880 and 4,351,562 shares at June 30, 2002 and 2001,
      respectively, were not used in the calculation of diluted net loss per
      common share because the effect would have been antidilutive.

                                       5
<PAGE>
      (h) Revenue Recognition

          Revenue from service contracts is recognized as services are
      performed. Royalty revenue is recognized as products are sold by a
      licensee and we have received sufficient information to record a
      receivable. The Company defers the recognition of milestone payments
      related to contractual agreements which are still in the developmental
      stage. Such deferred revenues are amortized into income over the estimated
      remaining development period. Milestone payments received under
      contractual agreements which have completed the development stage are
      evaluated, and either recognized into income when earned, or amortized
      over a future period, depending upon whether or not the Company continues
      to have obligations under the terms of the arrangement. License fees
      received under the terms of licensing agreements for the Company's
      intellectual property are similarly deferred, and amortized into income
      over the estimated development period of the licensed item or items. The
      Company periodically evaluates its estimates of remaining development
      periods, and adjusts the recognition of remaining deferred revenues over
      the adjusted development period remaining. Revenue from grants is
      recognized as earned under the terms of the related grant agreements,
      typically as expenses are incurred. Amounts received in advance of
      services being performed under contracts are recorded as deferred revenue,
      and recognized as services are performed.

      (i) Patent Application Costs

          Costs incurred in filing for, defending and maintaining patents are
      expensed as incurred.

      (j) Use of Estimates

          Management of the Company has made a number of estimates and
      assumptions relating to the reporting of assets, liabilities, revenues and
      expenses and the disclosure of contingent assets and liabilities to
      prepare these consolidated financial statements in conformity with
      accounting principles generally accepted in the United States of America.
      Actual results could differ from these estimates.

      (k) Intangible Assets

          Intangible assets, consisting of amounts paid for products approved by
      the United States Food and Drug Administration ("FDA"), are amortized on a
      straight-line basis over their estimated useful lives. The Company
      periodically reviews the useful lives of its intangible and long-lived
      assets, which may result in future adjustments to the amortization
      periods. Related amortization expense for each of the three-month periods
      ended June 30, 2002 and 2001 was $27,000, and in the six-month periods
      ended June 30, 2002 and 2001 was $53,000. Amortization of intangible
      assets is included in general and administrative expense in the
      consolidated statements of operations and comprehensive loss.

      (l) Treasury Stock

          Treasury stock is recorded at cost. On May 3, 2001, the Company
      announced a stock repurchase program to buy up to 3 million shares, or
      approximately 7 percent, of the Company's outstanding common stock over an
      18 month period. Pursuant to the stock repurchase program, the Company had
      repurchased 213,000 shares for $1,602,000 during the year ended December
      31, 2001. No shares were repurchased in the three or six-month periods
      ended June 30, 2002. During the three and six month periods ended June 30,
      2001, the Company repurchased 160,000 shares at a cost of approximately
      $1,268,000.

      (m) Income Taxes

          The Company uses the asset and liability method of accounting for
      income taxes. Under the asset and liability method, deferred tax assets
      and liabilities are recognized for the future tax consequences
      attributable to differences between the financial statement carrying
      amounts of

                                       6
<PAGE>
      existing assets and liabilities and their respective tax bases and
      operating loss and tax credit carryforwards.

          Deferred tax assets and liabilities are measured using enacted tax
      rates expected to apply to taxable income in the years in which those
      temporary differences are expected to be recovered or settled. The effect
      on deferred tax assets and liabilities of a change in tax rates is
      recognized in income in the period that includes the enactment date.

      (n) Impairment of Long-lived Assets

          As circumstances dictate, the Company evaluates the recoverability of
      its intangible and long-lived assets by comparing the projected
      undiscounted net cash flows associated with such assets against their
      respective carrying values. Impairment, if any, is based on the excess of
      the carrying value over the fair value.

      (o) New Accounting Pronouncements

          In August 2001, the FASB issued Statement of Financial Accounting
      Standards No. 143, "Accounting for Asset Retirement Obligations,"
      (SFAS143) which addresses financial accounting and reporting for
      obligations associated with the retirement of tangible long-lived assets
      and the associated asset retirement costs. This statement applies to all
      entities that have legal obligations associated with the retirement of
      long-lived assets that result from the acquisition, construction,
      development or normal use of the assets. SFAS143 is effective for all
      fiscal years beginning after June 15, 2002. The Company does not expect
      the adoption of SFAS143 to have a significant impact on its financial
      condition or results of operations.

           In April 2002, the FASB issued Statement of Financial Accounting
      Standards No. 145, "Rescission of FASB Statements No. 4, 44 and 64,
      Amendment of FASB Statements No. 13 and Technical Corrections," (SFAS145).
      SFAS145 provides guidance for income statement classification of gains and
      losses on extinguishments of debt and accounting for certain lease
      modifications that have economic effects that are similar to
      sale-leaseback transactions. SFAS145 is effective for the Company in
      January 2003. The Company does not expect the adoption of SFAS145 to have
      a significant impact on its financial condition or results of operations.


           In July 2002, the FASB issued Statement of Financial Accounting
      Standards No. 146, "Accounting for Costs Associated With Exit or Disposal
      Activities," (SFAS146) which addresses significant issues regarding the
      recognition, measurement and reporting of costs that are associated with
      exit and disposal activities, including restructuring activities that are
      currently accounted for pursuant to the guidance set forth in EITF Issue
      No. 94-3, "Liability Recognition of Certain Employee Termination Benefits
      and Other Costs to Exit an Activity." SFAS146 is effective for the Company
      in January 2003. The Company does not expect the adoption of SFAS146 to
      have a significant impact on its financial condition or results of
      operations.

      (p) Reclassifications

          Certain reclassifications have been made to prior period financial
      statements to conform to the June 30, 2002 presentation with no effect on
      net loss previously reported.

(3)   CAPITAL STOCK

      In December 1993, the Company completed an initial public offering
comprised of 4,082,500 units, each unit consisting of one share of Common Stock
(par value $.005 per share) and one warrant to purchase one share of Common
Stock. Proceeds to the Company were approximately $24.2 million, net of selling
expenses of approximately $3.3 million. The securities included in the unit
subsequently separated into its

                                       7
<PAGE>
Common Stock and warrant components. The warrants were exercisable at $8.44 per
share. On December 13, 1998, the expiration date of the warrants was extended
from December 14, 1998 to September 30, 1999 for those warrant holders electing
such extension. On September 13, 1999, the expiration date of the warrants was
further extended to December 31, 2000. There were 2,386,645 warrants outstanding
as of December 31, 2000 which were exercised on January 3, 2001 for proceeds of
approximately $20.1 million.

      The Company has reserved Common Stock for issuance as of June 30, 2002 as
follows:

<TABLE>
<S>                                                            <C>
          Stock option plans..........................         5,931,763
          Warrants outstanding........................           247,858
                                                               ---------
               Total shares reserved..................         6,179,621
                                                               =========
</TABLE>

      Shareholders' Rights Plan

         In January 2002, the Company adopted a shareholder rights plan under
      which the Board of Directors declared a dividend of one preferred stock
      purchase right ("Right") for each outstanding share of the Company's
      common stock held of record as of the close of business on January 22,
      2002. Each Right initially entitles a stockholder to purchase a one
      one-thousandth fraction of a share of Preferred Stock - Junior
      Participating Series A (the "Preferred Stock") for $55.00. Each such
      fraction of a share of Preferred Stock has terms designed to make it
      essentially equivalent to one share of Common Stock. The Rights will
      become exercisable only in the event a person or group acquires 15% or
      more of the Company's Common Stock or commences a tender or exchange offer
      which, if consummated, would result in that person or group owning 15% of
      the Common Stock. Prior to such an event, the Rights will be evidenced by
      and traded in tandem with the Common Stock.

         If a person or group acquires a 15% or larger position in the Company,
      each Right (except those held by the acquiring party) will then entitle
      its holder to purchase fractional shares of Preferred Stock having twice
      the value of the $55 exercise price, with each fractional Preferred Share
      valued at the market price of the Common Stock. Also, if following an
      acquisition of 15% or more of the Company's Common Stock, the Company is
      acquired by that person or group in a merger or other business combination
      transaction, each Right would then entitle its holder to purchase Common
      Stock of the acquiring company having a value of twice the $55.00 exercise
      price. The effect will be to entitle the Company's shareholders to buy
      stock in the acquiring company at 50% of its market price.

         The Company may redeem the Rights at $.001 per Right at any time on or
      prior to the tenth business day following the acquisition of 15% or more
      of its Common Stock by a person or group or commencement of a tender offer
      for such 15% ownership. The Rights expire on January 2, 2012.

(4)   STOCK OPTIONS

      The Company applies Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees", and related interpretations in
accounting for its plans and applies FASB Statement No. 123, "Accounting for
Stock-Based Compensation", and related interpretations in reporting for its
plans.

                                       8
<PAGE>
      A summary of stock options as of June 30, 2002, follows:

<TABLE>
<CAPTION>
                         EXERCISE PRICE                              EXERCISED/                    AVAILABLE
  STOCK OPTION PLANS       PER SHARE     AUTHORIZED    OUTSTANDING     OTHER       EXERCISABLE     FOR GRANT
  ------------------       ---------     ----------    -----------     -----       -----------    ----------
<S>                       <C>               <C>            <C>         <C>             <C>        <C>
1990 Plan............     $ 1.38-$21.59     285,715        112,636     173,079         96,806            ---
1992 Plan............     $ 1.41-$21.59   1,700,000        871,998     828,002        814,926            ---
Director Plan........     $3.50-$  4.54      71,429         28,527      42,902         28,527            ---
1995 Plan............     $ 1.31-$21.59   2,000,000      1,584,339     395,133      1,457,411         20,528
1995 Director Plan...     $ 1.38-$11.31     500,000        386,596      46,577        284,096         66,827
1999 Plan ...........     $ 5.51-$20.13   3,000,000      2,267,926     139,688        484,915        592,386
                                         ----------    -----------    --------      ---------    -----------
       TOTALS........                     7,557,144     5,252,022    1,625,381      3,166,681        679,741
                                         ==========  ============    =========      =========    ===========
</TABLE>

        Pursuant to provisions contained within his employment agreement, in
March 2002 the Company's new chief executive officer purchased 5,000 shares at
market price and was awarded 50,000 shares of the Company's common stock out of
the 1999 Plan. The awarded shares will vest after completion of three years'
service to the Company. The Company recorded deferred compensation expense of
$309,000, which will be recognized over the vesting period. General and
administrative expenses during the three and six months ended June 30, 2002
included compensation expense related to such grant of approximately $26,000 and
$34,000, respectively.

        In conjunction with the retirement of the Company's former chief
executive officer, the Company modified vesting and time to exercise of certain
stock options of the officer and recorded compensation expense of approximately
$173,000, which was included in general and administrative expenses, during the
six months ended June 30, 2002.

(5)   INCOME TAXES

      The Company did not incur tax expense during the three and six-month
periods ended June 30, 2002 and 2001, due to operating losses and the related
increase in the valuation allowance.

      The reconciliation of income taxes at the statutory rate of 35% applied to
income before taxes for the three months ended June 30, 2002 and 2001 is as
follows:

<TABLE>
<CAPTION>
                                                 2002            2001
                                             ------------    ------------
<S>                                          <C>             <C>
    Computed "expected" tax expense          $ (2,177,000)   $ (1,589,000)
    Effect of:
        Permanent differences                     101,000        (473,000)
        Increase in valuation allowance         2,076,000       2,062,000
                                             ------------    ------------
    Tax expense                              $        ---    $        ---
                                             ============    ============
</TABLE>

      The reconciliation of income taxes at the statutory rate of 35% applied to
income before taxes for the six months ended June 30, 2002 and 2001 is as
follows:

<TABLE>
<CAPTION>
                                                  2002           2001
                                              ------------   ------------
<S>                                           <C>            <C>
    Computed "expected" tax expense           $ (4,539,000)  $ (2,468,000)
    Effect of:
        Permanent differences                      279,000       (351,000)
        Increase in valuation allowance          4,260,000      2,819,000
                                              ------------   ------------
    Tax expense                               $        ---   $        ---
                                              ============   ============
</TABLE>

                                       9
<PAGE>
      The tax effects of the temporary differences that give rise to significant
portions of the deferred tax assets as of June 30, 2002 and December 31, 2001
are as follows:

<TABLE>
<CAPTION>
                                          JUNE 30, 2002     DECEMBER 31, 2001
                                        ---------------     -----------------
<S>                                        <C>                <C>
    Loss carryforwards                     $ 36,217,000       $   30,472,000
    Start-up costs                            9,402,000           10,775,000
    Property, plant and equipment               773,000              993,000
    Deferred revenue                          2,345,000            2,333,000
    Other                                       987,000              891,000
                                        ---------------      ---------------
        Gross deferred tax assets            49,724,000           45,464,000
        Valuation allowance                 (49,724,000)         (45,464,000)
                                        ---------------      ---------------
        Net deferred tax assets            $        ---       $          ---
                                        ===============      ===============
</TABLE>

      The Company has established a valuation allowance for the full amount of
these deferred tax assets, as management believes that it is more likely than
not that the Company will not recover these assets. Utilization of the Company's
net operating loss carryforwards is subject to certain limitations due to
specific stock ownership changes which have occurred or may occur. To the extent
not utilized, the carryforwards will expire during the years beginning 2005
through 2022.

(6)   EQUIPMENT AND LEASEHOLD IMPROVEMENTS

      Equipment and leasehold improvements consist of the following:

<TABLE>
<CAPTION>
                                                    JUNE 30,          DECEMBER 31,
                                                      2002                2001
                                                 ----------------      -----------
<S>                                              <C>                   <C>
     Laboratory and office equipment             $     10,530,000      $ 8,407,000
     Leasehold improvements                             4,310,000        4,302,000
                                                 ----------------      -----------
                                                       14,840,000       12,709,000
     Less accumulated depreciation and                  8,925,000        8,409,000
                                                 ----------------      -----------
     amortization............................
                                                 $    _ 5,915,000      $ 4,300,000
                                                 ================      ===========
</TABLE>

(7)   ENTITY-WIDE GEOGRAPHIC DATA

      The Company operates in a single business segment that includes research
and development of pharmaceutical products. The following table summarizes the
Company's long-lived assets in different geographic locations:

<TABLE>
<CAPTION>
                                             JUNE 30, 2002   DECEMBER 31, 2001
                                            ---------------  -----------------
<S>                                         <C>               <C>
            Long-lived assets:
               United States                $     5,125,000   $     4,446,000
               Germany                            1,605,000          722,000
                                            ---------------   --------------
            Total                           $     6,730,000   $     5,168,000
                                            ===============   ===============
</TABLE>

(8)   RESEARCH AGREEMENTS

      Under the terms of the Company's agreement with ICOS-TBC, the Company will
provide, and be reimbursed for, research and development activities conducted on
behalf of ICOS-TBC. See Note 9, License Agreements, below.

      The Company also receives reimbursement for certain research costs
pursuant to its agreements with Schering-Plough (Note 9), Revotar (Note 10) and
GlaxoSmithKline ("GSK") (Note 11).

                                       10
<PAGE>
(9)   LICENSE AGREEMENTS

      Mitsubishi Pharma Agreement

         TBC has entered into an agreement with Mitsubishi Pharma Corporation,
      formerly Mitsubishi-Tokyo Pharmaceuticals, Inc. ("Mitsubishi") to license
      Mitsubishi's rights and technology relating to Argatroban and to license
      Mitsubishi's own proprietary technology developed with respect to
      Argatroban (the "Mitsubishi Agreement"). Under the Mitsubishi Agreement,
      the Company has an exclusive license to use and sell Argatroban in the
      U.S. and Canada for all specified indications. The Company is required to
      pay Mitsubishi specified royalties on net sales of Argatroban by the
      Company and its sublicensees after its commercial introduction in the U.S.
      and Canada. Either party may terminate the Mitsubishi Agreement on 60 days
      notice if the other party defaults in its material obligations under the
      agreement, declares bankruptcy or is insolvent, or if a substantial
      portion of its property is subject to levy. Unless terminated sooner
      pursuant to the above described termination provisions, the Mitsubishi
      Agreement expires on the later of termination of patent rights in a
      particular country or 20 years after first commercial sale of products.
      Under the Mitsubishi Agreement, TBC has access to an improved formulation
      patent granted in 1993 which expires in 2010, a patent on the
      manufacturing process to produce Argatroban that expires in 2019, and a
      patent for the use of Argatroban as a fibrinolysis-enhancing agent which
      expires in 2009. The Mitsubishi composition of matter patent on Argatroban
      has expired. During 2000, we signed an additional agreement with
      Mitsubishi that provides TBC with royalties on sales of Argatroban in
      certain European countries, and up to a total of $5.0 million in
      milestones for the development of ischemic stroke and certain other
      provisions. In conjunction with the Mitsubishi Agreement, a consulting
      firm involved in negotiations related to the agreement will receive a
      percentage of net sales received as a result of the agreement. The Company
      enrolled its first patient in a clinical trial for ischemic stroke in
      April 2001, and received a $2.0 million milestone payment in May 2001,
      which is being recognized in revenues over the expected development
      period, and accordingly, revenues in the three and six month periods ended
      June 30, 2002 include approximately $95,000 and $191,000, respectively,
      related to such milestone payment. Revenues in the three and six month
      periods ended June 30, 2001 include approximately $71,000 related to such
      milestone payment.

         In exchange for the license from Genentech, Inc, (the "Former
      Licensor") of its Argatroban technology, TBC issued the Former Licensor
      285,714 shares of Common Stock during 1993 and issued an additional
      214,286 shares of Common Stock on October 9, 1997, after acceptance of the
      filing of the first New Drug Application ("NDA") with the United States
      Food and Drug Administration (the "FDA") for Argatroban. On June 30, 2000,
      the Company issued an additional 71,429 shares of Common Stock to
      Genentech in conjunction with the approval of the NDA for Argatroban in
      patients with heparin-induced thrombocytopenia ("HIT"). The value of
      $965,970 has been recorded as an intangible asset and is being amortized
      over the estimated useful life of the asset. Amortization expense recorded
      in the three and a six-month period ended June 30, 2002 was approximately
      $26,000 and $53,000, respectively. Additionally, on October 9, 1997, upon
      acceptance of the filing of the first NDA for Argatroban with the FDA, the
      Company granted the Former Licensor a warrant to purchase an additional
      142,858 shares of Common Stock at an exercise price of $14.00 per share,
      subject to adjustment, which expires on October 9, 2004. TBC has also
      granted the Former Licensor demand and piggyback registration rights with
      regard to shares of Common Stock issued to the Former Licensor.

      ICOS Corporation Partnership

         On June 6, 2000, ICOS and the Company entered into the ICOS-TBC limited
      partnership agreement. The partnership seeks to develop and globally
      commercialize ET(A) receptor antagonists. As a result of the Company's
      contribution of technology, ICOS-TBC paid a license fee to the Company in
      June 2000, and has made a milestone payment that together with additional
      milestone payments could be as much as $53.5 million for the development
      and commercialization

                                       11
<PAGE>
      of products resulting from the collaboration. The license fee is being
      amortized over the estimated development period of the licensed
      technology, and the Company recognized approximately $121,000 and $242,000
      of it as revenue during the three and six month periods ended June 30,
      2002, and the three and six month periods ended June 30, 2001,
      respectively. See Note 2(h), Revenue Recognition, above.

         Pursuant to the terms of the limited partnership agreement, ICOS-TBC
      has been initially capitalized by a cash contribution from ICOS and the
      Company's contribution of intellectual property associated with
      sitaxsentan sodium. The intellectual property contributed by the Company
      to ICOS-TBC had no basis for financial reporting purposes and,
      accordingly, the Company assigned no value to the transfer of technology.

         In July 2001, the Company earned a milestone, as a result of the
      achievement of an objective defined in the partnership agreement. The
      Company is recognizing the revenue associated with the milestone over the
      expected development period, and revenues included approximately $167,000
      and $333,000 in the three and six-month periods ended June 30, 2002,
      respectively.

         During the three month periods ended June 30, 2002 and 2001, the
      Company recognized a loss of approximately $1,957,000 and $2,242,000,
      respectively, representing the Company's proportionate share of the losses
      of ICOS-TBC, including amounts billed by the Company to ICOS-TBC as
      discussed in Note 8, Research Agreements, above. During the six-month
      periods ended June 30, 2002 and June 30, 2001, such losses recognized by
      the Company totaled $4,467,000 and $3,771,000, respectively.

      Schering-Plough Research Collaboration and License Agreement

         On June 30, 2000, TBC and Schering-Plough ("Schering") entered into a
      worldwide research collaboration and license agreement to discover,
      develop and commercialize VLA-4 antagonists. VLA-4 antagonists represent a
      new class of compounds that has shown promise in multiple preclinical
      animal models of asthma. The primary focus of the collaboration will be to
      discover orally available VLA-4 antagonists as treatments for asthma.

         Under the terms of the agreement, Schering obtains the exclusive
      worldwide rights to develop, manufacture and market all compounds from
      TBC's library of VLA-4 antagonists, as well as the rights to a second
      integrin antagonist. TBC will be responsible for optimizing a lead
      compound and additional follow-on compounds. Schering is supporting
      research at TBC and will be responsible for all costs associated with the
      worldwide product development program and commercialization of the
      compound. In addition to reimbursing research costs, Schering paid an
      upfront license fee and will pay development milestones and royalties on
      product sales resulting from the agreement. This upfront license fee is
      being amortized into revenue over the expected development period. License
      fee milestone and grants in the three and six-month periods ended June 30,
      2002 included approximately $92,000 and $183,000, respectively, related to
      this upfront license fee. During the three and six month periods ended
      June 30, 2001, the Company recognized revenues of approximately $136,000
      and $273,000 related to this license fee, respectively.

         In June 2002, the Company achieved a milestone under the agreement with
      Schering as a result of the nomination of an initial candidate for
      Schering's further development. This milestone payment will be recognized
      into revenue over the expected development period. License fees,
      milestones and grants for the three and six-month periods ended June 30,
      2002 included approximately $15,000 related to this milestone payment.
      Total payments to TBC under the terms of the agreement, excluding
      royalties, could reach $87.0 million. Additionally, in June 2002, Schering
      and the Company agreed to extend Schering's support of the research
      collaboration to a third year, through June 30, 2003.

                                       12
<PAGE>
(10)  FOREIGN SUBSIDIARY

      During the third quarter 2000, TBC formed Revotar to conduct research and
development of novel small molecule compounds and to develop and commercialize
selectin antagonists. Upon formation, Revotar received certain development and
commercialization rights to the Company's selectin antagonist compounds as well
as rights to certain other TBC research technology. Revotar also received
approximately $5 million in funding from three German venture capital funds. The
Company retained ownership of approximately 55% of the outstanding common stock
of Revotar and has consolidated the financial results of Revotar into TBC's
consolidated financial statements. Since the development and commercialization
rights contributed by the Company to Revotar had no basis for financial
reporting purposes, the Company assigned no value to its contribution of
intellectual property rights. The Company's equity in the originally contributed
assets by the minority shareholders is reported as a deferred credit of
$2,620,000 on its consolidated balance sheet at June 30, 2002 and December 31,
2001. The minority interest in Revotar at June 30, 2002 and December 31, 2001,
was $733,000 and $1,213,000, respectively. The Company's consolidated net loss
for the three month periods ended June 30, 2002 and 2001 was reduced by $223,000
and $123,000, respectively, for the Revotar minority shareholders' interest in
Revotar's losses. The Company's consolidated net loss for the six-month periods
ended June 30, 2002 and 2001 was reduced by $480,000 and $185,000, respectively.

      The Company and the other stockholders of Revotar have executed an
agreement to provide approximately $4.5 million in unsecured loans, of which the
Company's commitment will be approximately $3.4 million. The terms of the loans
require quarterly interest payments and repayment of all principal on or before
April 1, 2007. The interest rate for the first two years will be seven percent,
after which the interest rate could then be reset to the U.S. prime rate plus
2.5 percent if such rate is higher than seven percent. Pursuant to such
agreement, the Company advanced approximately $700,000 to Revotar in June 2002.

      As part of the agreement to form Revotar, the Company and the other
initial investors agreed to issue rights to purchase common stock of Revotar
held by them to Aqua Partners LLC ("Aqua"), which assisted in the formation of
Revotar. The shareholders have signed an agreement that provides Aqua with the
option to acquire up to 3.26% of the shares owned by each shareholder for a
total amount of approximately $540,000, payable to the shareholders.

(11)  COMMERCIALIZATION AGREEMENT

      In connection with TBC's development and commercialization of Argatroban,
in August 1997, TBC entered into a Product Development, License and CoPromotion
Agreement with GSK (the "GSK Agreement") whereby GSK was granted exclusive
rights to work with TBC in the development and commercialization of Argatroban
in the U.S. and Canada for specified indications. GSK paid $8.5 million in
upfront license fees during August 1997, a $5 million milestone payment in
October 1997, and a $7.5 million milestone payment in June 2000. Additional
milestone payments may be earned upon the clinical development and FDA approval
for the acute myocardial infarction indication. Future milestone payments for
the acute myocardial infarction indication are subject to GSK's agreement to
market Argatroban for such indication. The parties have also formed a joint
development committee to analyze the development of additional Argatroban
indications to be funded 60% by GSK except for certain Phase IV trials which
shall be funded entirely by GSK. At this time, GSK has no plans to conduct
development work for the acute myocardial infarction and stroke indications. TBC
began a Phase II clinical trial in March 2001 to evaluate the use of Argatroban
for ischemic stroke. GSK has the exclusive right to commercialize all products
arising out of the collaboration, subject to the obligation to pay royalties on
net sales to TBC and to the rights of TBC to co-promote these products through
its own sales force in certain circumstances. TBC will retain the rights to any
indications which GSK determines it does not wish to pursue (such as ischemic
stroke), subject to the requirement that TBC must use its own sales force to
commercialize any such indications. Any indications which TBC elects not to
pursue will be returned to Mitsubishi. In conjunction with the GSK Agreement, a
consulting firm involved in negotiations related to the agreement will receive a
percentage of all consideration received by TBC as a result of the agreement.

                                       13
<PAGE>
      We currently market Argatroban and enjoy market exclusivity pursuant to
the Waxman/Hatch Act that provides protection from competition until June 30,
2005. We can obtain an extension under Waxman/Hatch until December 31, 2005
under certain circumstances pertaining to submission of pediatric data.
Argatroban is currently marketed in a formulation that is covered under a
formulation patent that expires in 2010. We will also be submitting a process
patent, that expires in 2019, to the FDA for inclusion in the FDA Orange Book of
Approved Drug Products. Following expiration of Waxman/Hatch protection, it is
possible that generic manufacturers may be able to produce Argatroban without
violating the formulation or process patents. The composition of matter patent
on Argatroban has expired. We have access to other patents held by Mitsubishi,
however, these are not being utilized currently.

      At present, Mitsubishi is the only manufacturer of Argatroban, and has
entered into the Mitsubishi Supply Agreement with GSK to supply Argatroban in
bulk in order to meet GSK and TBC's needs under the GSK Agreement. Should
Mitsubishi fail during any consecutive nine-month period to supply GSK at least
80% of its requirements, and such requirements cannot be satisfied by existing
inventories, the Mitsubishi Supply Agreement provides for the nonexclusive
transfer of the production technology to GSK. If GSK cannot commence
manufacturing of Argatroban or alternate sources of supply are unavailable or
uneconomic, the Company's results of operations would be materially and
adversely affected.

      The GSK Agreement generally terminates on a country by country basis upon
the earlier of the termination of TBC's rights under the Mitsubishi Agreement,
the expiration of applicable patent rights or, in the case of royalty payments,
the commencement of substantial third-party competition. GSK also has the right
to terminate the agreement on a country by country basis by giving TBC at least
three months written notice at any time before GSK first markets products in
that country based on a reasonable determination by GSK that the commercial
profile of the product in question would not justify continued development in
that country. GSK has similar rights to terminate the GSK Agreement on a country
by country basis after marketing has commenced. In addition, either party may
terminate the GSK Agreement on 60 days notice if the other party defaults in its
obligations under the agreement, declares bankruptcy or is insolvent.

(12)  401(k) PLAN

      The Company has a 401(k) plan under which all employees with three months
of service are eligible to participate and may contribute up to 60 percent of
their compensation, with a maximum contribution of $11,000 per employee in 2002.
Under the terms of the Economic Growth and Tax Relief Reconciliation Act,
employees aged 50 or older may contribute an additional $1,000 to the 401(k)
Plan in 2002, such additional contribution would be eligible for employer
matching. Effective on January 1, 2001, the Compensation and Personnel Committee
of the Board of Directors approved an employer matching contribution of $0.50 on
the dollar of employee contributions up to 6% of salaries and the 401(k) plan
was amended. Charges to operating expense for employer match during the
three-month periods ended June 30, 2002 and 2001 were approximately $53,000 and
$44,000, respectively. During the six-month periods ended June 30, 2002 and
2001, charges to operating expense for employer match were $103,000 and $84,000,
respectively.

(13)  COMMITMENTS AND CONTINGENCIES

      (a) Foreign Currency Exchange Risk

          The Company is exposed to market risk primarily from changes in
      foreign currency exchange rates.

          The Company has a majority-owned subsidiary in Germany and
      consolidates the results of operations into its consolidated financial
      results. Although not significant to date, the Company's reported assets,
      liabilities, expenses and cash flows from this subsidiary are exposed to
      changing exchange rates. The Company, accordingly, included an unrealized
      gain of $205,000 and an unrealized loss of $148,000, respectively, in its
      comprehensive loss for the three-month periods ended June 30, 2002 and
      2001. In the six-month periods ended June 30, 2002 and 2001, the

                                       14
<PAGE>
      Company's comprehensive loss included an unrealized gain of $144,000 and
      an unrealized loss of $444,000, respectively. The Company had an
      intercompany receivable from its German subsidiary at June 30, 2002;
      however, this amount is denominated in U.S. dollars and is not exposed to
      exchange risk. The Company contracts with entities in other areas outside
      the U.S. and these transactions are denominated in a foreign currency. To
      date, the currencies of these other countries have not fluctuated
      materially. At this time, management has not deemed it cost effective to
      engage in a program of hedging the effect of foreign currency fluctuations
      on the Company's operating results using derivative financial instruments.

      (b) Obligation under capital leases

          During the three month period ended June 30, 2002, the Company
      entered into a lease of certain equipment under an agreement that is
      classified as a capital lease. The cost of equipment under capital leases
      is included in the balance sheets as equipment and leasehold improvements,
      and was $34,000 at June 30, 2002. Accumulated amortization of the leased
      equipment at June 30, 2002 was approximately $1,000. Amortization of
      assets under capital leases is included in depreciation and amortization
      expense.

         The future minimum lease payments required under the capital lease and
      the present value of the net minimum lease payments as of June 30, 2002,
      are as follows:

<TABLE>
<CAPTION>
                                                  Year Ending
                                                  December 31    Amount
                                                  -----------   --------
<S>                                               <C>           <C>
                                                         2002   $  8,000
                                                         2003     14,000
                                                         2004     14,000
                                                         2005      4,000
                                                                --------
      Total minimum lease payments                                40,000

      Less: Amount representing interest                          (7,000)
                                                                --------
      Present value of minimum lease payments                     33,000
      Less: Current maturities of
            capital lease obligations                            (10,000)
                                                                --------
      Long-term capital lease obligations                       $ 23,000
                                                                ========
</TABLE>

      (c) Legal proceedings

          The Company is presently involved in several legal actions, none of
      which are expected to have a material adverse effect upon the results of
      operations or financial condition of the Company when considered either
      individually or in the aggregate.

                                       15
<PAGE>
 ITEM 2

                TEXAS BIOTECHNOLOGY CORPORATION AND SUBSIDIARIES

         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS

           THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND JUNE 30, 2001


                                    OVERVIEW

      The following discussion of our financial condition and results of
operations should be read in conjunction with our consolidated financial
statements and the related notes to the financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2001, and our
condensed consolidated financial statements and the related notes to the
financial statements included in this Quarterly Report on Form 10-Q.

      Since our inception in 1989, we have primarily devoted our resources to
funding drug discovery, research and development. We are a biopharmaceutical
company focused on the discovery, development and commercialization of novel,
synthetic, small molecule compounds for the treatment of a variety of
cardiovascular, vascular and related inflammatory diseases. Our research and
development programs are focused on inhibitors (also referred to as antagonists
or blockers) that can interrupt certain disease processes. Our programs seek to
address unmet medical needs in cardiovascular diseases, thrombocytopenia,
pulmonary arterial hypertension, heart failure and inflammatory diseases such as
asthma.

      Our strategy is to identify and develop novel product candidates for
underserved indications, and to commercialize those candidates through
collaborations with other pharmaceutical and biotechnology companies. On
occasion in the future, we may choose to commercialize products on our own. An
important part of our strategy is the selection of corporate partners to enhance
our drug discovery and development efforts. Our partners and we currently have
four products in clinical development.

              MAJOR COMPOUNDS IN RESEARCH AND DEVELOPMENT PROGRAMS

ARGATROBAN

      Argatroban was approved by the FDA in 2000, is indicated for prophylaxis
or treatment of thrombosis in patients with HIT and began shipping in November
2000. A key element of our continuing development strategy is to seek regulatory
approvals and expand the marketed uses of Argatroban for other indications. GSK
is our development, manufacturing and marketing partner for Argatroban. In April
2002, we received approval from the FDA on our supplemental new drug application
for Argatroban for use in HIT patients undergoing percutaneous coronary
intervention (PCI.) Argatroban is in an on-going Phase II human clinical trial
to evaluate its use in acute ischemic stroke, and we are evaluating, in
conjunction with GSK, the use of Argatroban in hemodialysis patients. We have
recently completed patient enrollment in a Phase II clinical trial, conducted in
conjunction with GSK, for the use of Argatroban in patients undergoing PCI.

SITAXSENTAN

      In June 2000, we established ICOS-TBC, a 50/50-owned limited partnership
with ICOS, to develop and commercialize endothelin receptor antagonists,
including sitaxsentan and TBC3711. During 2001, we initiated a pivotal phase
IIb/III clinical trial for pulmonary arterial hypertension ("PAH"), which
completed enrollment in July 2002. We believe that results of this trial will be
available in the second half of 2002.

                                       16
<PAGE>
      Patients completing the above trial have been eligible to enroll in an
extension trial for the purpose of obtaining long-term safety data. As seen
previously with sitaxsentan and other endothelin receptor antagonists, liver
function abnormalities have been observed in both the phase IIb/III trial, and
the extension trial. Although all liver injury in the current trials has been
reversible, the partnership has decided, as a precaution, to conclude the
extension trial. Since the trial is still ongoing, and the results are blinded,
we do not know the risk/benefit profile of sitaxsentan at this time.


TBC3711

      TBC3711 is our second oral endothelin A receptor selective antagonist to
enter clinical development. Endothelin receptor antagonists are believed to be
potentially effective in the treatment of a variety of diseases where the
regulation of vascular constriction and tone is important. Two Phase I clinical
studies of TBC3711 were completed in year 2001 to determine the safety and
tolerability of TBC3711.

BIMOSIAMOSE (TBC1269)

      We are developing a selectin antagonist, TBC1269, for the treatment of
asthma and psoriasis. The intravenous form of the drug has been tested in Phase
II clinical trials. During 2000, we formed Revotar, a majority owned German
subsidiary located in Berlin, to further the development of this program. During
2001, Revotar completed Phase I clinical trials for asthma utilizing an inhaled
form of TBC1269 and a Phase IIa clinical trial in psoriasis is being conducted
with an injectable form of TBC1269 as a proof-of-concept.

VLA-4 ANTAGONIST PROGRAM

We are developing, in collaboration with Schering, a VLA-4 antagonist for the
treatment of asthma. In June 2002, we achieved a milestone under the Schering
agreement as a result of the nomination of an initial candidate for Schering's
further development.

                              RESULTS OF OPERATIONS

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

      o     We recognize revenue from service contracts as services are
            performed.

      o     Royalty revenue is recognized as products are sold by a licensee and
            we have received sufficient information to record a receivable. Our
            royalty revenue is based on net sales of product, that is, sales net
            of discounts, returns and allowances. We have estimated a percentage
            of gross sales, based on recent experience, as an allowance for
            future returns, however there can be no assurance that our estimate
            will be accurate.

      o     Revenue from collaborative research and development activities is
            recognized as services are performed.

      o     We defer the recognition of milestone payments related to
            contractual agreements which are still in the developmental stage.
            Such deferred revenues are amortized into income over the estimated
            remaining developmental period. Milestone payments received under
            contractual agreements which have completed the developmental stage
            are evaluated, and either recognized into income when earned, or
            amortized over a future period, depending upon whether or not the
            Company continues to have obligations under the terms of the
            arrangement.

      o     License fees received under the terms of licensing agreements for
            our intellectual property are similarly deferred, and amortized into
            income over the estimated developmental period of the licensed item
            or items.

      o     Revenue from grants is recognized as earned under the terms of the
            related grant agreements, typically as expenses are incurred.

                                       17
<PAGE>
      Amounts received in advance of services being performed under contracts
are recorded as deferred revenue, and recognized as services are performed. We
periodically evaluate our estimates of remaining development periods, and adjust
the recognition of remaining deferred revenues over the adjusted development
period remaining.

Partnership Accounting

      We recognize our share of the operating results of ICOS-TBC in proportion
to our ownership interest and record it as equity in loss of ICOS-TBC. Operating
results of ICOS-TBC include expenses related to our internal research staff that
we recognize as revenue and record as collaborative research and development
revenue from ICOS-TBC. Due to the nature of the ICOS-TBC collaborative
agreement, our collaborative research and development revenue from ICOS-TBC
largely depends on the continued progression of clinical trial and development
activities, and can be expected to vary from quarter to quarter and year to
year.

GENERAL

      Our operating results have fluctuated significantly during each quarter,
and we anticipate that such fluctuations, which are largely attributable to
varying research and development commitments and expenditures, will continue for
the next several years.

      We have been unprofitable to date and expect to incur substantial
operating losses for the next several years as we invest in product research and
development, preclinical and clinical testing and regulatory compliance. We may
initiate certain commercial activities in the future, which could contribute to
future operating losses. We have sustained net losses of approximately $137.7
million from the date of our inception to June 30, 2002. We have primarily
financed our operations to date through a series of private placement and public
offerings of our common stock and several collaborative agreements with third
parties to jointly pursue product research and development. See discussion of
"Liquidity and Capital Resources" below. See also "Additional Risk Factors" in
Item 1 "Business" of our Annual Report on Form 10-K for the year ended December
31, 2001.

            THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2002 AND 2001

      Revenues in the quarter ended June 30, 2002 increased approximately
$163,000, compared with the quarter ended June 30, 2001. In the six months ended
June 30, 2002, revenues increased approximately $487,000, compared with the six
months ended June 30, 2001. The increase is attributable to increased royalty
income earned on sales of Argatroban, partially offset by reduced collaborative
research and development revenues, discussed below.

      Royalties earned on sales of Argatroban were $840,000 in the second
quarter of 2002, an increase of $448,000 over the second quarter of 2001. In the
six months ended June 30, 2002, royalties were $1,805,000, an increase of
$1,236,000 over the six months ended June 30, 2001.

      Collaborative research and development revenues received from the ICOS-TBC
partnership declined approximately $133,000 in the second quarter of 2002,
compared with the second quarter of 2001, and approximately $294,000 in the six
months ended June 30, 2002 compared with the six months ended June 30, 2001. The
involvement of the Company's research and development staff will vary from
quarter to quarter, depending upon the activities being performed.

      Research agreement revenues, resulting from the Company's collaborative
efforts with unrelated parties, declined $450,000 in the second quarter of 2002,
compared with the second quarter of 2001, and declined approximately $970,000 in
the comparable six month periods. Research agreement revenues in the first six
months of 2001 included approximately $1,000,000 for preclinical studies which
were in addition to the contractual amount specified in the Company's research
agreement with Schering.

                                       18
<PAGE>
      Revotar has been awarded research grants from the German government, and
earned approximately $137,000 during the three and six months ended June 30,
2002.

      Total research and development expenses (including the Company's share of
expenses incurred by the ICOS-TBC partnership) were $7,429,000 in the second
quarter of 2002, an increase of $637,000 over the comparable amount in the
second quarter of 2001. In the six months ended June 30, 2002, total research
and development expenses were $15,288,000, an increase of $3,458,000 compared
with the six months ended June 30, 2001. The increase is primarily due to costs
of clinical trials ongoing throughout the periods ended June 30, 2002. Trials
ongoing during the first six months of 2002 include a Phase II study of
Argatroban in ischemic stroke, a Phase II study of Argatroban in patients
undergoing PCI, and a Phase IIb/III trial of sitaxsentan for pulmonary
hypertension, conducted by the ICOS-TBC partnership.

      General and administrative expenses in the second quarter of 2002 were
$2,254,000, an increase of $476,000 over the second quarter of 2001. In the
comparable six-month periods, general and administrative expenses increased
$1,529,000. The increase is comprised of additional selling and marketing
support of Argatroban, increased costs at Revotar, which began operation late in
year 2000, and costs associated with the retirement, recruiting and hiring of
key personnel, including a non-cash charge of approximately $182,000 in
compensation expense primarily related to modifications to stock options of our
retired CEO.

      Investment income declined to $613,000 in the second quarter of 2002, and
to $1,380,000 in the six months ended June 30, 2002, compared with $1,445,000 in
the second quarter of 2001 and $3,098,000 in the six months ended June 30, 2001.
The decline is primarily due to a combination of lower prevailing interest rates
during 2002 compared with 2001 and to reduced funds available for investment
during the periods ended June 30, 2002.

      In the quarter ended June 30, 2002, we reported a net loss of $6,221,000,
or $0.14 per share, basic and diluted. The comparable net loss in the quarter
ended June 30, 2001 was $4,539,000, or $0.10 per share. The increased loss in
the current quarter, compared to the quarter ended June 30, 2001, is primarily
due to higher research and development costs, increased general and
administrative expenses, and lower investment income, as discussed above.

      In the six months ended June 30, 2002, we reported a net loss of
$12,971,000, or $0.30 per share, as compared with a net loss of $7,048,000 or
$0.16 per share in the six months ended June 30, 2001. The increased loss during
the current year period is due to higher research and development costs,
increased general and administrative expenses, and lower investment income, as
discussed above.


                         LIQUIDITY AND CAPITAL RESOURCES

      Cash, cash equivalents and investments in marketable securities, including
accrued interest thereon, was $79,530,000 at June 30, 2002, compared with
$95,427,000 at December 31, 2001. We used $13,842,000 in cash in operating
activities during the six months ended June 30, 2002, compared to cash used in
operating activities of $6,385,000 during the six months ended June 30, 2001.
The increased use of cash in the current year period is due to higher operating
expenses and reduced investment income, compared with the first half of 2001, as
discussed above.

      Investing activities generated $33,216,000 during the six months ended
June 30, 2002, compared to a use of cash of $30,522,000 in the six months ended
June 30, 2001. Purchases of equipment and leasehold improvements increased
$1,359,000 in the first half of 2002, compared with the first half of 2001. In
the six months ended June 30, 2002, the effect of increased capital expenditures
was offset by a decline in investments in marketable securities. In the six
months ended June 30, 2001, invested funds increased, primarily because of the
investment of the proceeds received upon the exercise of public warrants in
January 2001, discussed below.

      Financing activities generated $308,000 during the six months ended June
30, 2002, from the

                                       19
<PAGE>
exercise of stock options and the sale of stock at market price to the Company's
new CEO, pursuant to his employment agreement. In the six months ended June 30,
2001, we received proceeds of approximately $21,107,000 upon the exercise of
public and non-public common stock purchase warrants.

Material Commitments

      Our only material contractual commitments are comprised of a loan
commitment to Revotar and office and laboratory facility leases. We and the
minority shareholders of Revotar have committed to lend Revotar, on an unsecured
basis, approximately $4.5 million, of which our commitment will be approximately
$3.4 million. The terms of the loans require quarterly interest payments and
repayment of all principal on or before April 1, 2007. Our portion of the loan
is denominated in U.S. dollars at an interest rate of seven percent fixed for
the first two years and resets to the greater of seven percent or U.S. prime
plus two and one-half percent on April 1, 2004. In June 2002, approximately
$700,000 was advanced to Revotar pursuant to the loan agreement. It is likely
that Revotar may need to seek additional funding through collaborative
arrangements and/or through public or private financings during 2002. A likely
result of additional financings would be to reduce our ownership percentage in
Revotar.

      The Company had long-term obligations under our office and laboratory
leases as follows (in thousands):

<TABLE>
<CAPTION>
                                      Less
                                     than 1      1-3        4-5     After
   Contractual Obligations   Total    year      years      years    5 years
   -----------------------   -----    ----      -----      -----    -------
<S>                         <C>      <C>        <C>        <C>
      Operating Leases      $7,826   $1,617     $3,573     $2,636     ---
       Capital Leases           33       10       23         ---      ---
</TABLE>

Outlook for 2002

      We expect revenues in year 2002 to be in the range of $8.5 to $11.0
million, including royalties on Argatroban sales, reimbursements from
collaborative partners of research and development expenses, research
reimbursements from ICOS-TBC for the development of endothelin antagonist
products, and amortization of earned license fees and milestones. We expect
sales of Argatroban by GSK to be in the range of $22 to $26 million. We believe
investment income will be in the range of $1.8 million to $2.5 million,
depending upon prevailing interest rates and invested balances.

      Expenses in year 2002 are expected to be between $45 and $48 million. The
expected increase over year 2001 expenses is primarily in the area of clinical
development and reflects the Company's intention to expand the use of Argatroban
in ischemic stroke and PCI, demonstrate the safety and efficacy of sitaxsentan
as a treatment of PAH, advance the development of TBC3711 and continue
development work of TBC1269 as a treatment for asthma and other indications.

      For a number of reasons discussed elsewhere in this Form 10-Q, we cannot
estimate, with a reasonable degree of certainty, total completion costs or dates
of completion of our ongoing research and development projects. See "Additional
Risk Factors" in Item 1, "Business" of our annual report on Form 10-K for the
year ended December 31, 2001, and "Longer-Term Outlook", below.

                                       20
<PAGE>
      Below is a summary of our ongoing research and development projects, and
an estimation of the distribution of our year 2002 research and development
expenditures for each of them.

<TABLE>
<CAPTION>
        Research and Development
        Programs                              2002 R&D Expenditures
        ---------------------------------   --------------------------
<S>                                                    <C>
        Argatroban                                     21%
        Endothelin Antagonist                          27%
          (Sitaxsentan and TBC3711)
        Selectin Antagonist (TBC1269)                  13%
        VCAM/VLA-4                                     10%
        Other                                          29%
                                            --------------------------
                                   Total              100%
</TABLE>

Longer-Term Outlook

      We expect to continue to incur substantial expenditures related to the
discovery, development and commercialization of small molecule drugs to treat
significant unmet medical needs. During the second quarter of 2002, we announced
a new strategic plan that is intended to accelerate our transition from a
research and development company to a profitable commercial business. If we are
successful in the implementation of this plan, we anticipate that this
transition could increase our costs related to marketing and sales. We
anticipate that our operating expenses will increase in subsequent years
because:

      o     We expect to incur significant expenses in conjunction with the
            ICOS-TBC partnership for endothelin antagonists associated with
            clinical trial costs for sitaxsentan and TBC3711 and research and
            clinical trial costs for development of TBC1269 compounds and expect
            to begin to incur costs for clinical trials related to additional
            compounds. These costs include:

            -     hiring personnel to direct and carry out all operations
                  related to clinical trials;

            -     hospital and procedural costs;

            -     services of a contract research organization; and

            -     purchasing and formulating large quantities of the compound to
                  be used in such trials.

      o     If, on the basis of the Phase II results from the ongoing ischemic
            stroke trial, we decide to conduct additional trials in ischemic
            stroke, the costs of such trials could be significant. It is
            difficult at this time to estimate the magnitude of costs until
            results are obtained from the ongoing trial.

      o     There will be additional costs in future periods related to
            Argatroban in complying with ongoing FDA requirements and possible
            clinical trial expenditures for additional therapeutic indications.

      We have been unprofitable to date and expect to incur operating losses for
the next several years as we invest in product research and development,
preclinical and clinical testing and regulatory compliance. We will require
substantial additional funding to complete the research and development of our
product candidates, to establish commercial scale manufacturing facilities, if
necessary, and to market our products. Estimates of our future capital
requirements will depend on many factors, including:

      o     market acceptance and commercial success of Argatroban;

      o     expenses and risks associated with clinical trials to expand the
            indications for Argatroban;

                                       21
<PAGE>
      o     possible emergence of generic competition;

      o     continued scientific progress in our drug discovery programs;

      o     the magnitude of these programs;

      o     progress with preclinical testing and clinical trials;

      o     the time and costs involved in obtaining regulatory approvals;

      o     the costs involved in filing, prosecuting and enforcing patent
            claims;

      o     competing technological and market developments and changes in our
            existing research relationships;

      o     our ability to maintain and establish additional collaborative
            arrangements; and

      o     effective commercialization activities and arrangements.

      Subject to these factors, we anticipate that our existing capital
resources and other revenue sources, should be sufficient to fund our cash
requirements through 2004. Notwithstanding revenues which may be produced
through sales of potential future products, if approved, we anticipate that we
may need to secure additional funds to continue the required levels of research
and development to reach our long-term goals. We intend to seek such additional
funding through collaborative arrangements and/or through public or private
financings, if required.

Off-Balance Sheet Arrangements

      We do not engage in off-balance sheet financing arrangements; however we
are obligated to fund our proportionate share (50%) of any contractual
obligations of ICOS-TBC.

                  HAZARDOUS MATERIALS AND ENVIRONMENTAL MATTERS

      Our research and development processes involve the controlled use of
hazardous materials, chemicals and radioactive materials and produce waste
products. We are subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous
materials and waste products. Although we believe that our safety procedures for
handling and disposing of hazardous materials comply with the standards
prescribed by laws and regulations, the risk of accidental contamination or
injury from these materials cannot be eliminated completely. In the event of an
accident, we could be held liable for any damages that result. This liability
could exceed our resources or not be covered by our insurance. Although we
believe that we are in compliance in all material respects with applicable
environmental laws and regulations, there can be no assurance that we will not
be required to incur significant costs to comply with environmental laws and
regulations in the future. There can also be no assurance that our operations,
business or assets will not be materially adversely affected by current or
future environmental laws or regulations.

                     IMPACT OF INFLATION AND CHANGING PRICES

      The pharmaceutical research industry is labor intensive, and wages and
related expenses increase in inflationary periods. The lease of space and
related building services for the Houston facility contains a clause that
escalates rent and related services each year based on the increase in building
operating costs

                                       22
<PAGE>
and the increase in the Houston Consumer Price Index, respectively. To date,
inflation has not had a significant impact on our operations.

              CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

      This Form 10-Q contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. All statements other than statements of historical fact
included in and incorporated by reference into this Form 10-Q are
forward-looking statements. These forward-looking statements include, without
limitation, statements regarding our estimate of the sufficiency of our existing
capital resources and our ability to raise additional capital to fund cash
requirements for future operations, and regarding the uncertainties involved in
the drug development process and the timing of regulatory approvals required to
market these drugs. Although we believe that the expectations reflected in these
forward-looking statements are reasonable, we cannot give any assurance that
such expectations reflected in these forward-looking statements will prove to
have been correct. The ability to achieve our expectations is contingent upon a
number of factors, which include, without limitation:

      o     market acceptance and commercial success of Argatroban;

      o     expenses and risks associated with clinical trials to expand the
            indications for Argatroban;

      o     effect of any current or future competitive products;

      o     the possible emergence of generic competition;

      o     continued scientific progress in our drug discovery programs;

      o     the magnitude of these programs;

      o     progress with preclinical testing and clinical trials;

      o     the time and costs involved in obtaining regulatory approvals;

      o     the costs involved in filing, prosecuting and enforcing patent
            claims;

      o     competing technological and market developments and changes in our
            existing research relationships;

      o     our ability to maintain and establish additional collaborative
            arrangements;

      o     retention of key personnel;

      o     capital market conditions; and

      o     effective commercialization activities and arrangements.

      When used in this Form 10-Q, the words "expect," "anticipate," "intend,"
"plan," "believe," "seek," "estimate" and similar expressions are intended to
identify forward-looking statements, although not all forward-looking statements
contain these identifying words. Because these forward-looking statements
involve risks and uncertainties, actual results could differ materially from
those expressed or implied by these forward-looking statements for a number of
important reasons, including those discussed under "Management's Discussion and
Analysis of Financial Condition and Results of Operations - Liquidity and
Capital Resources."

                                       23
<PAGE>
      You should read these statements carefully because they discuss our
expectations about our future performance, contain projections of our future
operating results or our future financial condition, or state other
"forward-looking" information. Before you invest in our common stock, you should
be aware that the occurrence of any of the contingent factors described herein
under "Management's Discussion and Analysis of Financial Condition and Results
of Operations - Liquidity and Capital Resources" and described under "Additional
Risk Factors" in our Annual Report on Form 10-K for the year ended December 31,
2001 could substantially harm our business, results of operations and financial
condition. Upon the occurrence of any of these events, the trading price of our
common stock could decline, and you could lose all or part of your investment.

      We cannot guarantee any future results, levels of activity, performance or
achievements. Except as required by law, we undertake no obligation to update
any of the forward-looking statements in this Form 10-Q after the date of this
Form 10-Q.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY EXCHANGE RISK

      We are exposed to market risk primarily from changes in foreign currency
exchange rates. The following describes the nature of this risk that is not
believed to be material to us.

      We have a majority-owned subsidiary in Germany and consolidate the results
of operations into our consolidated financial results. Although not significant
to date, our reported assets, liabilities, expenses and cash flows from this
subsidiary are exposed to changing exchange rates. The Company, accordingly,
included an unrealized gain of $205,000 and $144,000 in its comprehensive loss
for the three and six months ended June 30, 2002, respectively, and unrealized
losses of approximately $148,000 and $444,000 in its comprehensive loss for the
three and six months ended June 30, 2001. The Company had an intercompany
receivable from our German subsidiary at June 30, 2002; however, this amount is
denominated in U.S. dollars and is not exposed to exchange risk. We have
contracts with entities in other areas outside the U.S. and these transactions
are denominated in a foreign currency. To date, the currencies of these other
countries have not fluctuated materially. At this time, we have not deemed it
cost effective to engage in a program of hedging the effect of foreign currency
fluctuations on our operating results using derivative financial instruments.

                                       24
<PAGE>
PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS
        None

ITEM 2. CHANGES IN SECURITIES
        None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES
        None

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

      On May 23, 2002, an annual meeting of our stockholders was held. The
      holders of 40,198,233 shares of common stock were present in person or
      represented by proxy at the meeting. At the meeting, the stockholders took
      the following actions:

      (a) Election of Directors

          The stockholders elected the following persons to serve as directors
          of the Company until the next annual meeting of stockholders, or
          until their successors are duly elected and qualified:

<TABLE>
<CAPTION>
                                                       NUMBER OF
                                  NUMBER OF             VOTES
                   NAME           VOTES FOR           ABSTAINING
                   ----           ---------           ----------
<S>                               <C>                   <C>
           Ron J. Anderson        39,794,691            403,542

           Frank C. Carlucci      39,841,736            356,497

           Robert J. Cruikshank   39,852,040            346,193

           Richard A. F. Dixon    39,869,715            328,518

           Bruce D. Given         39,871,885            326,348

           Suzanne Oparil         39,794,791            403,442

           John M. Pietruski      39,858,710            339,523

           William R. Ringo, Jr.  39,862,985            335,248

           James A. Thomson       39,857,915            340,318

           James T. Willerson     39,866,935            331,298
</TABLE>

ITEM 5.  OTHER INFORMATION
None

                                       25
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

Two reports on Form 8-K were filed during the quarter ended June 30, 2002. A
Report on Form 8-K dated May 1, 2002 was filed regarding the Company's first
quarter earnings and guidance on 2002 Argatroban sales. A Report on Form 8-K
dated June 26, 2002 was filed regarding a mid-year update on the Company's
accomplishments.

  EXHIBIT NO.                     DESCRIPTION
  -----------                     -----------
      99.1     Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
               Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002.

      99.2     Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
               Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002

                                       26
<PAGE>
                         TEXAS BIOTECHNOLOGY CORPORATION

                                  JUNE 30, 2002

                                   SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized, on the 14th day of August, 2002.




                                TEXAS BIOTECHNOLOGY CORPORATION


                                By: /s/ BRUCE D. GIVEN, M.D.
                                    --------------------------------------
                                Bruce D. Given, M.D.
                                President and Chief Executive Officer



                                By: /s/ STEPHEN L. MUELLER
                                   ---------------------------------------
                                Stephen L. Mueller
                                Vice President, Finance and Administration
                                Secretary and Treasurer
                                (Principal Financial and Accounting Officer)



                                       27
<PAGE>
                                INDEX TO EXHIBITS


  EXHIBIT NO.                     DESCRIPTION
  -----------                     -----------
      99.1     Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
               Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002.

      99.2     Certification Pursuant to 18 U.S.C. Section 1350, As Adopted
               Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002