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

                                 FORM 10-Q/A
                                AMENDMENT NO. 1
                                   ---------


     [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
                OF THE SECURITIES AND EXCHANGE ACT OF 1934

             FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998

                                     OR

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

             FOR THE TRANSITION PERIOD FROM ________ TO _________


                       COMMISSION FILE NUMBER:  0-016607


                        ADVANCED TISSUE SCIENCES, INC.
              (Exact name of registrant as specified in charter)

                               ----------



               Delaware                                     14-1701513
      -------------------------------                   -------------------
      (State or other jurisdiction of                    (I.R.S. Employer
       incorporation or organization)                   Identification No.)

10933 North Torrey Pines Road, La Jolla, California               92037
---------------------------------------------------             ----------
     (Address of principal executive offices)                   (Zip Code)

    Registrant's telephone number, including area code:  (619) 450-5730

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
                           ---           ---

The number of shares of the Registrant's Common Stock, par value $.01 per
share, outstanding at April 30, 1998 was 39,323,373.

<PAGE>


                           EXPLANATORY STATEMENT

The undersigned registrant hereby amends Part I, Item 1 and Part II, Item 2
of its Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
In Part I, Item 1, the Consolidated Balance Sheet as of March 31, 1998 and
Consolidated Statement of Cash Flows for the three months ended March 31,
1998 have been restated to correct the classification of investment
securities between short-term investments and cash equivalents.  Part II,
Item 2 has been added to the Form 10-Q with respect to the sale of
unregistered shares of the Company's Common Stock.


                        PART I - FINANCIAL INFORMATION
                        ------------------------------



ITEM 1 - FINANCIAL STATEMENTS


                   INTRODUCTION TO THE FINANCIAL STATEMENTS

     The financial statements have been prepared by Advanced Tissue Sciences,
Inc. (the "Company"), without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission.  Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations.  The Company believes that the
disclosures are adequate to make the information presented not misleading when
read in conjunction with the financial statements and the notes thereto
included in the Company's Annual Report on Form 10-K for the year ended
December 31, 1997.

     The financial information presented in this Quarterly Report on Form 10-Q
reflects all adjustments, consisting only of normal recurring adjustments,
which are, in the opinion of management, necessary for a fair statement of the
results for the interim periods presented.  The results for the interim
periods are not necessarily indicative of results to be expected for the full
year.



                                      -1-

<PAGE>


                        ADVANCED TISSUE SCIENCES, INC.

                          CONSOLIDATED BALANCE SHEETS
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                    March 31,     December 31,
                                                      1998           1997
                                                  ------------    ------------
                                                  (Unaudited)
<S>                                                <C>             <C>
  ASSETS

Current assets:
   Cash and cash equivalents                       $    20,159     $   15,086
   Short-term investments                                5,972          2,000
   Receivables from related parties                      2,120            332
   Inventory                                             3,806          4,643
   Other current assets                                  1,514          1,063
                                                   -----------     ----------
       Total current assets                             33,571         23,124
Property - net                                          23,648         23,190
Patent costs - net                                       1,631          1,608
Other assets                                             2,010          2,538
                                                   -----------     ----------
       Total assets                                $    60,860     $   50,460
                                                   ===========     ==========

  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Current portion of long-term debt and 
     capital lease obligations                     $     2,838     $    1,939 
   Accounts payable                                      1,069            958 
   Accrued expenses                                      5,608          7,011 
                                                   -----------     ----------
       Total current liabilities                         9,515          9,908 
Long-term debt and capital lease obligations            26,913         26,157 
Other long-term liabilities                                323            245 
Minority interest in consolidated subsidiary               254            184 
                                                   -----------     ----------
       Total liabilities                                37,005         36,494 
                                                   -----------     ----------
Stockholders' equity:
   Preferred Stock, $.01 par value; 1,000,000 
     shares authorized; none issued                         --             -- 
   Common Stock, $.01 par value; 100,000,000 
     shares authorized; issued and outstanding, 
     39,323,373 shares at March 31, 1998 and 
     37,673,983 shares at December 31, 1997                393            377 
   Additional paid-in capital                          210,507        189,679 
   Accumulated deficit                                (186,126)      (175,171)
                                                   -----------     ----------
                                                        24,774         14,885 

   Less note received in connection with 
     sale of Common Stock                                 (919)          (919)
                                                   -----------     ----------
       Total stockholders' equity                       23,855         13,966 
                                                   -----------     ----------
       Total liabilities and stockholders' 
         equity                                    $    60,860     $   50,460 
                                                   ===========     ==========

</TABLE>
             See accompanying notes to the consolidated financial statements.



                                      -2-

<PAGE>

                        ADVANCED TISSUE SCIENCES, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>

                                              Three Months Ended March 31,
                                           ----------------------------------
                                               1998                 1997
                                           ------------         -------------
                                                      (Unaudited)

<S>                                         <C>                 <C>
Revenues:
   Product sales -
     Related parties                        $     2,415         $         -- 
     Others                                         227                   -- 
   Contracts and fees -
     Related parties                              2,539                2,639 
     Others                                         125                   10 
                                            -----------         ------------
     Total revenues                               5,306                2,649 
                                            -----------         ------------

Costs and expenses:
   Research and development                       3,854                4,968 
   Selling, general and administrative            3,612                3,120 
   Professional and consulting                      328                  674 
   Cost of goods sold                             3,928                   -- 
                                            -----------         ------------
     Total costs and expenses                    11,722                8,762 
                                            -----------         ------------

Loss from operations before equity in 
  losses of joint ventures                       (6,416)              (6,113)

Equity in losses of joint ventures               (4,252)              (1,707)
                                            -----------         ------------
Loss from operations                            (10,668)              (7,820)

Other income (expense):
   Interest income and other                        269                  293 
   Interest expense                                (556)                  (5)
                                            -----------         ------------
Net loss                                    $   (10,955)        $     (7,532)
                                            ===========         ============

Basic and diluted loss per share            $      (.28)        $       (.20)
                                            ===========         ============

Weighted average number of common 
 shares used in computation of basic 
 and diluted loss per share                      38,930               37,488 
                                            ===========         ============

</TABLE>

         See accompanying notes to the consolidated financial statements.

            
                                      -3-

<PAGE>


                        ADVANCED TISSUE SCIENCES, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                 Three Months Ended March 31,
                                               --------------------------------
                                                   1998               1997
                                               ------------       -------------
                                                         (Unaudited)
<S>                                            <C>                <C>
Operating activities:
   Net loss                                    $   (10,955)       $    (7,532)
   Adjustments to reconcile net loss 
    to cash used in operating activities:
      Depreciation and amortization                  1,147                510 
      Equity in losses of joint ventures             4,252              1,707 
      Other adjustments to net loss                    115                 56 
      Change in assets and liabilities:
        Receivables from related parties            (1,788)            (1,606)
        Inventory                                      837               (789)
        Other current assets                          (451)               645
        Accounts payable                               111                363 
        Accrued expenses                            (1,403)              (676)
                                               -----------         ----------
           Net cash used in operating 
            activities                              (8,135)            (7,322)
                                               -----------         ----------
Investing activities:
   Purchases of short-term investments              (3,972)                -- 
   Maturities and sales of short-term 
    investments                                         --                998 
   Acquisition of property                          (1,639)            (3,012)
   Investment in joint ventures                     (4,350)            (1,905)
   Patent application costs                            (34)               (90)
   Other long-term assets                              626               (561)
                                               -----------         ----------
           Net cash used in investing 
            activities                              (9,369)            (4,570)
                                               -----------         ----------
Financing activities:
   Proceeds from borrowings                          1,705             10,000 
   Payments of borrowings                              (50)                (5)
   Net proceeds from sale of equity                 20,000                 --
   Options exercised                                   844                301 
   Other long-term obligations                          78                 -- 
                                               -----------         ----------
           Net cash provided by financing 
            activities                              22,577             10,296 
                                               -----------         ----------
Net increase (decrease) in cash and cash 
 equivalents                                         5,073             (1,596)
Cash and cash equivalents at beginning 
 of period                                          15,086             27,907 
                                               -----------         ----------
Cash and cash equivalents at end of period     $    20,159         $   26,311 
                                               ===========         ==========

</TABLE>

       See accompanying notes to the consolidated financial statements.



                                      -4-

<PAGE>


                        ADVANCED TISSUE SCIENCES, INC.

                CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                (IN THOUSANDS)




<TABLE>
<CAPTION>

                                                                                       Total
                                               Additional                              Stock-
                               Common Stock     Paid-In    Accumulated      Note      holders'
                            ------------------                                               
                             Shares    Amount   Capital      Deficit     Receivable    Equity
                            --------  -------- ----------  -----------   ----------   --------
                                                         (Unaudited)

<S>                         <C>       <C>       <C>        <C>           <C>          <C>
Balance, December 31, 1997  37,674    $   377   $ 189,679  $ (175,171)   $    (919)   $  13,966 

Sale of Common Stock         1,533         15      19,985                                20,000

Options exercised              116          1         843                                   844

Net loss                                                      (10,955)                  (10,955)
                            ------    -------   ---------  ----------    ---------    ---------

Balance, March 31, 1998     39,323    $   393   $ 210,507  $ (186,126)   $    (919)   $  23,855
                            ======    =======   =========  ==========    =========    =========
</TABLE>

          See accompanying notes to the consolidated financial statements.


                                      -5-
<PAGE>



                        ADVANCED TISSUE SCIENCES, INC.

                NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
                                  (Unaudited)

NOTE 1 - BASIS OF PRESENTATION

Organization - Advanced Tissue Sciences, Inc. (the "Company") is a tissue
engineering company utilizing its proprietary technology to develop and
manufacture human-based tissue products for tissue repair and transplantation.
The Company is focusing on the worldwide commercialization of skin, cartilage
and cardiovascular products.  The Company's leading therapeutic products are
tissue engineered skin products for the temporary covering of severe and
partial-thickness burns, approved for marketing in the United States by the
U.S. Food and Drug Administration (the "FDA"), and for the treatment of
diabetic foot ulcers, for which the Company has filed an application with the
FDA for marketing approval in the United States.

Principles of Consolidation - The consolidated financial statements include
the accounts of the Company, its wholly owned subsidiaries and DermEquip,
L.L.C. ("DermEquip"), a limited liability company owned jointly with Smith &
Nephew plc ("Smith & Nephew").  All intercompany accounts and transactions
have been eliminated.  The Company's other interests in joint ventures with
Smith & Nephew are accounted for under the equity method (see Note 2).

Reclassification - Certain reclassifications have been made to prior year
amounts to conform to the presentation for the three months ended
March 31, 1998.

NOTE 2 - STRATEGIC ALLIANCES

In April 1996, the Company entered into an agreement with Smith & Nephew to
form a fifty-fifty joint venture for the worldwide commercialization of
Dermagraft(R), the Company's tissue engineered dermal skin replacement, for
the treatment of diabetic foot ulcers (the "Dermagraft Joint Venture").  Smith
& Nephew is a worldwide healthcare company with extensive sales and
distribution capabilities.  It manufactures a wide range of tissue repair
products, principally addressing the areas of bone, joints, skin and other
soft tissue.  In January 1998, the Company and Smith & Nephew expanded the
Dermagraft Joint Venture to include venous ulcers, pressure ulcers, burns and
other skin tissue wounds.  The Company retained the exclusive right to market
Dermagraft-TC(R), a temporary covering for full and partial-thickness burns,
in the United States, while the Dermagraft Joint Venture has the right to
market Dermagraft-TC for other skin wounds in the United States.

As consideration for entering into the Dermagraft Joint Venture, Advanced
Tissue Sciences received a $10 million up front fee in 1996.  In addition, as
a part of the agreement to expand the joint venture, Smith & Nephew purchased
$20 million, or 1,533,115 newly-issued shares, of the Company's Common Stock
at approximately $13.05 per share in January 1998.  The Company will also
receive an additional $15 million, directly or through the Dermagraft Joint
Venture, upon the earlier of (i) FDA approval for the marketing of Dermagraft
in the treatment of diabetic foot ulcers or (ii) January 4, 1999, and could
receive, subject to the achievement of certain milestones related to
regulatory approvals, reimbursement and sales levels, further payments of up
to $136 million.

In the expanded joint venture, the Company and Smith & Nephew will continue to
share equally in the expenses and revenues of the Dermagraft Joint Venture,
except the Company will fund the first $6 million of expenses for conducting
clinical trials and for regulatory support of Dermagraft and Dermagraft-TC in
the treatment of venous and pressure ulcers.  The Company will continue to
manufacture and Smith & Nephew will continue to market and sell the joint
venture's products.  During the three months ended March 31, 1998 and 1997,
the Company recognized $1,710,000 and $1,695,000, respectively, in contract
revenues for research and development activities performed for the Dermagraft
Joint Venture.  In addition, during the quarter ended March 31, 1998, the
Company sold the Dermagraft Joint Venture $2,415,000 of Dermagraft and
Dermagraft-TC product, which was equal to the Company's cost of goods sold for
such products.

                                      -6-

<PAGE>


In 1994, Smith & Nephew and the Company entered into a separate joint venture
for the development of tissue engineered cartilage for orthopedic applications
(the "Cartilage Joint Venture").  Under the Cartilage Joint Venture, Smith &
Nephew contributed the first $10 million in funding and the Company
contributed certain technology licenses. The Cartilage Joint Venture's total
funding since inception reached $10 million in January 1997 and, as provided
in the joint venture agreement, the Company and Smith & Nephew are sharing
equally in Cartilage Joint Venture revenues and expenditures.  During the
three months ended March 31, 1998, the Company recognized $829,000 in contract
revenues for research and development activities performed for the Cartilage
Joint Venture compared with $944,000 for the corresponding period of 1997.

The results of operations of the joint ventures for the three months ended
March 31, 1998 and 1997 are as follows (in thousands):

<TABLE>
<CAPTION>

                          Dermagraft Joint Venture   Cartilage Joint Venture
                          ------------------------   -----------------------
                             1998          1997         1998         1997
                          ----------    ----------   ----------   ----------

<S>                       <C>           <C>          <C>          <C>
Sales                     $      75     $      --    $      --    $      --
Cost of goods sold            2,582            --           --           --
Other costs and expenses      4,529         2,109        1,475        1,863
Net loss                      7,036         2,109        1,475        1,863

</TABLE>

NOTE 3 - INVENTORIES

Inventories are stated at the lower of cost, principally standard costs which
approximate actual costs on a first-in, first-out basis, or market and consist
of the following components as of March 31, 1998 and December 31, 1997 (in
thousands):

                                           MARCH 31,          DECEMBER 31,
                                             1998                 1997
                                           ---------          ------------
                                          (Unaudited)

     Raw materials and supplies            $   3,135           $   3,295
     Work-in-process                             532                 347
     Finished goods                              139               1,001
                                           ---------           ---------
                                           $   3,806           $   4,643
                                           =========           =========

NOTE 4 - LONG-TERM DEBT

In March 1998, DermEquip borrowed an additional $1.4 million under the term
loan agreement with The Chase Manhattan Bank (the "Chase Loan") bringing
borrowings under the Chase Loan to $16 million, the total amount available
under the facility.  During 1997, the Company borrowed $3.4 million from Smith
& Nephew pursuant to a commitment as a part of the agreement to form the
Cartilage Joint Venture (see Note 2).  Under the terms of that joint venture
agreement, the Company may borrow up to a total of $10 million of which $3.4
million had been drawn as of March 31, 1998.  Debt and other long-term
obligations as of March 31, 1998 and December 31, 1997 were as follows (in
thousands):

                                              MARCH 31,        DECEMBER 31,
                                                1998              1997
                                            -------------      ------------

     Chase Loan                              $   16,000         $   14,600
     Smith & Nephew notes:
      Dermagraft Joint Venture                   10,000             10,000
      Cartilage Joint Venture                     3,400              3,400
     Capital leases and other                       351                 96
     Less current portion                        (2,838)            (1,939)
                                             ----------         ----------
                                             $   26,913         $   26,157
                                             ==========         ==========

                                  -7-
<PAGE>


NOTE 5 - BASIC AND DILUTED LOSS PER SHARE

As required, the Company adopted Financial Accounting Standards Board
Statement No. 128, "Earnings Per Share," ("FAS No. 128") for the year ended
December 31, 1997.  FAS No. 128 changes the method used to calculate earnings
per share and requires the restatement of all prior periods reported.  Under
FAS No. 128, the Company is required to present basic and diluted earnings per
share if applicable.  Basic earnings per share are determined based on the
weighted average number of shares outstanding during the period.  Diluted
earnings per share include the weighted average number of shares outstanding
and give effect to potentially dilutive common shares such as options and
warrants outstanding.

Both the basic and diluted loss per share for the three months ended March 31,
1998 and 1997 are based on the weighted average number of shares of Common
Stock outstanding during the periods.  Potentially dilutive securities include
options and warrants outstanding and debt convertible into Common Stock;
however, such securities have not been included in the calculation of the
diluted loss per share as their effect is antidilutive.  Since such securities
are antidilutive, there is no difference between basic and diluted loss per
share for the two periods presented and there was no change in the loss per
share for the quarter ended March 31, 1997.

NOTE 6 - EQUITY LINE EXTENSION

In February 1998, the Company extended an Investment Agreement (the
"Investment Agreement") under which the Company may access up to $50 million
through an equity line until February 1999.  In connection with the extension,
the Company granted the investment group a warrant to purchase 50,000 shares
of Common Stock at an exercise price of $14.00 per share.  The Company
originally entered into the Investment Agreement for a two-year period in
February 1996.  The decision to draw any funds under the Investment Agreement
and the timing of any such draw are solely at the Company's discretion.

The Investment Agreement provides that the Company can obtain up to $15
million at any one time through the sale of its Common Stock to the investment
group.  Any sales against the equity line will be at a five percent discount
to the average low sales prices of the Company's Common Stock over a specified
period of time as determined by market volume at the time of the draw.  The
Company's ability to draw under the Investment Agreement is subject to certain
conditions including, but not limited to, registration of the shares, a
minimum trading price of $2.00 per share, and certain limitations on the
number of shares of Common Stock held by the investment group at any point in
time.

NOTE 7 - STOCK OPTIONS

The following table summarizes activity under the Company's 1997 Stock
Incentive Plan (the "1997 Plan") and for other options and warrants for Common
Stock for the three months ended March 31, 1998:

<TABLE>
<CAPTION>

                                       1997 Plan              Other Options and Warrants
                                -------------------------     --------------------------
                                              Weighted                       Weighted
                                 Number     Average Price       Number     Average Price
                                of Shares     Per Share        of Shares     Per Share
                                ---------   -------------      ---------   -------------
<S>                             <C>            <C>             <C>           <C>
Outstanding, December 31, 1997  4,115,150      $10.26          1,459,640      $7.21
  Granted                         187,285      $13.08             50,000     $14.00
  Exercised                      (116,275)      $7.27                 --         --
  Canceled                        (57,808)     $14.64                 --         --
                                ---------                      ---------

Outstanding, March 31, 1998     4,128,352      $10.41          1,509,640      $7.44
                                =========                      =========

</TABLE>


                                      -8-

<PAGE>



                          PART II - OTHER INFORMATION
                          ---------------------------


ITEM 2 - CHANGES IN SECURITIES

     In January 1998, the Company issued and sold 1,533,115 shares of the
Company's Common Stock, resulting in $20 million in proceeds to the
Company.  These shares were sold pursuant to the exemption from registration
provided under Section 4(2) of the Securities Act of 1933.




                                  SIGNATURES

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

                                            ADVANCED TISSUE SCIENCES, INC.



Date: August 27, 1998                           /s/ Arthur J. Benvenuto
      ---------------                       -------------------------------
                                            Arthur J. Benvenuto
                                            Chairman of the Board and 
                                            Chief Executive Officer



Date: August 27, 1998                           /s/ Michael V. Swanson
      ---------------                       -------------------------------
                                            Michael V. Swanson
                                            Vice President, Finance and 
                                            Administration




                                   -9-