<SUBMISSION>
<ACCESSION-NUMBER>0001169232-02-000490
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>4
<PERIOD>20020630
<FILING-DATE>20020807
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>BIOCRYST PHARMACEUTICALS INC
<CIK>0000882796
<ASSIGNED-SIC>2836
<IRS-NUMBER>621413174
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>000-23186
<FILM-NUMBER>02721137
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>2190 PKWY LAKE DR
<CITY>BIRMINGHAM
<STATE>AL
<ZIP>35244
<PHONE>2054444600
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>2190 PARKWAY LAKE DR
<CITY>BIRMINGHAM
<STATE>AL
<ZIP>35244
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>d51245_10q.htm
<DESCRIPTION>QUARTERLY REPORT
<TEXT>
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UNITED STATES<BR>
SECURITIES AND EXCHANGE COMMISSION<BR>
Washington, D.C. 20549</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 10-Q</FONT></H1>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE<BR>
SECURITIES EXCHANGE ACT OF 1934</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the quarterly period ended June 30, 2002</FONT></H1>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>OR</FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>[_] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d)<BR>
OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the transition period from __________ to __________.</FONT></H1>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Commission File Number 000-23186</FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><B>BIOCRYST PHARMACEUTICALS, INC.</B><BR>
(Exact name of registrant as specified in its charter)</FONT></P>

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DELAWARE<BR>
(State or other jurisdiction of<BR>
incorporation or organization)
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62-1413174<BR>
(I.R.S. employer identification no.)
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>2190 Parkway Lake Drive; Birmingham, Alabama 35244<BR>
(Address and zip code of principal executive offices)</FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(205) 444-4600<BR>
(Registrant&#146;s telephone number, including area code)</FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>NONE<BR>
(Former name, former address and former fiscal year, if changed since last report)</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>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: </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Yes [X]&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No [_]</FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate the number of
shares outstanding of each of the issuer&#146;s classes of common stock, as of
the latest practicable date: 17,636,465 shares of the Company&#146;s Common
Stock, $.01 par value, were outstanding as of July 31, 2002. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.</FONT></H1>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEX</FONT></H1>

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     <TD COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD align="center" COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Part I. Financial Information</FONT></TD>
     <TD COLSPAN="2" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="1"><B>Page No.&nbsp;&nbsp;</B></FONT></FONT></TD></TR>
<TR>
     <TD COLSPAN="2">&nbsp;</TD>
     <TD COLSPAN="2">&nbsp;</TD>
     <TD ALIGN="CENTER"><HR NOSHADE SIZE="1" WIDTH="53%"></TD>
     <TD ALIGN="CENTER">&nbsp;</TD></TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="9%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 1.</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="71%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Financial Statements:</FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="12%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="2%" ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Condensed Balance Sheets &#150; June 30, 2002 and December 31, 2001</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Condensed Statements of Operations &#150; Three and Six Months Ended</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;June 30, 2002 and 2001</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Condensed Statements of Cash Flows &#150; Six Months Ended June 30, ,</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;2002 and 2001</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Notes to Condensed Financial Statements</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 2.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Management&#146;s Discussion and Analysis of Financial Condition and</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Results of Operations</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 3.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Quantitative and Qualitative Disclosures About Market Risk</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR>
     <TD><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp; </FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Part II. Other Information</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 1.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Legal Proceedings</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 2.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Changes in Securities and Use of Proceeds</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 3.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Defaults Upon Senior Securities</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 4.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Submission of Matters to a Vote of Security Holders</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 5.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other Information</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 6.</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Exhibits and Reports on Form 8-K</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Signatures</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>1</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.
FINANCIAL INFORMATION</FONT></H1>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 1.  Financial Statements</FONT></H2>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>CONDENSED BALANCE SHEETS<BR>
June 30, 2002 and December 31, 2001<BR>
(In thousands, except per share data)</FONT></H1>

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     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2002<BR>(Unaudited) </FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2001<BR>(Note 1) </FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="73%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Assets</B></FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and cash equivalents</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">14,831</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,865</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities held-to-maturity</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,049</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">13,122</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Prepaid expenses and other current assets</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">851</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">416</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total current assets</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">27,731</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">32,403</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities held-to-maturity</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">14,886</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">20,954</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Furniture and equipment, net</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,177</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,396</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Patents</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">83</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">343</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total assets</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,877</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">59,096</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Liabilities and Stockholders&#146; Equity</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accounts payable</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">775</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">617</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accrued expenses</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">590</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,365</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total current liabilities</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,365</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,982</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred revenue</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">300</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">300</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stockholders&#146; equity:</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Preferred stock: shares authorized &#150; 5,000</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Series A Convertible Preferred stock, $.01 par value, shares</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized &#150; 1,800; shares issued and outstanding &#150; none</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;Series B Junior Participating Preferred Stock, $.001 par value, shares</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;authorized &#150; 21.5; shares issued and outstanding - none</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Common stock, $.01 par value, shares authorized -</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;45,000; shares issued and outstanding -</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;&nbsp;17,636 in 2002 and 17,607 in 2001</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">176</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">176</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Additional paid-in capital</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">131,845</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">131,669</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;Accumulated deficit</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(85,809</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(75,031</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total stockholders&#146; equity</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">46,212</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">56,814</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total liabilities and stockholders&#146; equity</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">47,877</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">59,096</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes to
condensed financial statements. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>2</FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>
CONDENSED STATEMENTS OF OPERATIONS<BR>
Periods Ended June 30, 2002 and 2001<BR>
(In thousands, except per share)<BR>
(Unaudited)</FONT></H1>

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<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="5"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Three Months</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="5"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Six Months</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH></TR>
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2002 </FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2001 </FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2002 </FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2001 </FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="52%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Revenues:</B></FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="7%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collaborative and other research and development</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,634</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,338</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Interest and other</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">461</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">903</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,000</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,086</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total revenues</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">461</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,537</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,000</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,424</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="15"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Expenses:</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Research and development</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4,377</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,714</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,764</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,244</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">General and administrative</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">871</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">657</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,640</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,356</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Impairment of patents and licenses</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">374</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">374</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Royalty expense</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">208</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">249</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;Total expenses</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,622</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,579</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">11,778</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,849</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="15"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net income (loss)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(5,161</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">958</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,778</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(425</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="15"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Amounts per common share:</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net income (loss) (Note 2)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;-Basic</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(.29</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0.05</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(.61</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(.02</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;-Diluted</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(.29</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0.05</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(.61</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(.02</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="15"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted average shares outstanding (Note 2)</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;-Basic</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,636</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,540</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,632</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,540</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;&nbsp;-Diluted</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,636</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,602</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,632</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,540</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
</TABLE>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes to
condensed financial statements. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>3</FONT></P>

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<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>CONDENSED
STATEMENTS OF CASH FLOWS<BR>Six Months
Ended June 30, 2002 and 2001<BR>(In
thousands)<BR>(Unaudited)</FONT></H1>

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<BR>

<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
     <TH COLSPAN="3"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2002</FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2001</FONT><HR SIZE=1 NOSHADE></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
</TR>
<TR VALIGN="BOTTOM">
     <TD WIDTH="70%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Operating activities:</B></FONT></TD>
     <TD WIDTH="1%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="1%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD WIDTH="9%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
     <TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net loss</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10,778</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(425</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Depreciation and amortization</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">628</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">485</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Amortization of patents and licenses</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Impairment of patents and licenses</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">374</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred expense</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">249</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred revenue</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4,338</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Non-monetary compensation</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">75</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">72</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Changes in operating assets and liabilities, net</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,052</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(738</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;<B>Net cash used in operating activities</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(<B>10,751</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(<B>4,695</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Investing activities:</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of furniture and equipment</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(409</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(717</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of patents and licenses</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(116</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(21</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of marketable securities</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(2,585</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(21,943</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Maturities of marketable securities</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,726</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">36,875</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;<B>Net cash provided by investing activities</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>6,616</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>14,194</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Financing activities:</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Principal payments of debt and capital lease obligations</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from sale of common stock</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">101</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">19</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;&nbsp;<B>Net cash provided by financing activities</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>101</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>9</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="9"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Increase (decrease) in cash and cash equivalents</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4,034</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,508</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and cash equivalents at beginning of period</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18,865</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,456</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=1 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>Cash and cash equivalents at end of period</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>14,831</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$</FONT></TD>
     <TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"><B>17,964</B></FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">&nbsp;</FONT></TD></TR>
<TR VALIGN="BOTTOM">
     <TD COLSPAN="3"><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD>
     <TD COLSPAN="2" ALIGN="RIGHT"><HR SIZE=2 NOSHADE></TD>
     <TD><FONT SIZE=1>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes to
condensed financial statements. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>4</FONT></P>

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</TD>
</TR>
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<BR>

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<BR>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>NOTES TO CONDENSED FINANCIAL STATEMENTS</FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 1.  Basis of Preparation</FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
condensed balance sheet as of June 30, 2002 and the condensed statements of
operations and cash flows for the six months ended June 30, 2002 and 2001 have
been prepared by the Company in accordance with accounting principles generally
accepted in the United States and have not been audited. Such financial
statements reflect all adjustments that are, in management&#146;s opinion,
necessary to present fairly, in all material respects, the financial position at
June 30, 2002 and the results of operations and cash flows for the six months
ended June 30, 2002 and 2001. These condensed financial statements should be
read in conjunction with the financial statements for the year ended December
31, 2001 and the notes thereto included in the Company&#146;s 2001 Annual Report
on Form 10-K. Interim operating results are not necessarily indicative of
operating results for the full year. The condensed balance sheet as of December
31, 2001 has been prepared from the audited financial statements included in the
previously mentioned Annual Report. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 2.  Net Loss Per Share</FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company computes net income (loss) per share in accordance with Statement of
Financial Accounting Standards No. 128, <I>Earnings per Share</I>. Basic net
income (loss) per share is based upon the weighted average number of common
shares outstanding during the period. Diluted net income (loss) per share is
based upon the weighted average number of common shares outstanding and dilutive
common stock equivalents during the period. Common stock equivalents are options
under the Company&#146;s stock option plan and common shares expected to be
issued under the Company&#146;s employee stock purchase plan and are calculated
under the treasury stock method. Common equivalent shares from unexercised stock
options are excluded from the computation when there is a loss, as their effect
is anti-dilutive. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For
the three months ended June 30, 2002, common stock equivalents of approximately
354 shares were not used to calculate net loss per share because of their
anti-dilutive effect. For the three months ended June 30, 2001, common stock
equivalents of approximately 61,917 shares were included in the weighted average
shares outstanding used to calculate diluted income per share. For the six
months ended June 30, 2002 and 2001, common stock equivalents of approximately
38,112 and 98,362 shares respectively, were not used to calculate net loss per
share because of their anti-dilutive effect. There were no reconciling items in
calculating the numerator for net loss per share for any of the periods
presented. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 3. Stockholder&#146;s Equity</FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2002, our board of directors adopted a stockholder rights plan and,
pursuant thereto, issued preferred stock purchase rights (&#147;Rights&#148;) to
the holders of our common stock. The Rights have certain anti-takeover effects.
If triggered, the Rights would cause substantial dilution to a person or group
of persons who acquires more than 15% (19.9% for William W. Featheringill, a
Director who already owns more than 15%) of our common stock on terms not
approved by the board of directors. The rights are not exercisable until the
distribution date, as defined in the Rights Agreement by and between the Company
and American Stock Transfer &amp; Trust Company, as Rights Agent. The Rights
will expire at the close of business on June 24, 2012, unless that final
expiration date is extended or unless the rights are earlier redeemed or
exchanged by the Company. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each
Right entitles the registered holder to purchase from the Company one
one-thousandth of a share of Series B Junior Participating Preferred Stock
(&#147;Series B&#148;), par value $0.001 per share at a purchase price of
$26.00, subject to adjustment. Shares of Series B purchasable upon exercise of
the Rights will not be redeemable. Each share of Series B will be entitled to a
dividend of 1,000 times the dividend declared per share of common stock. In the
event of liquidation, each share of Series B will be entitled to a payment of
1,000 times the payment made per share of common stock. Each share of Series B
will have 1,000 votes, voting together with the common stock. Finally, in the
event of any merger, consolidation, or other transaction in which shares of
common stock are exchanged, each share of Series B will be entitled to receive
1,000 times the amount received per share of common stock. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>5</FONT></P>

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<BR>

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<BR>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 4. Impairment of long-lived assets</FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company periodically reviews its patents and licenses for impairment in
accordance with Statement of Financial Accounting Standards No. 144,
<I>Accounting for the Impairment or Disposal of Long-Lived Assets
</I>(&#147;Statement No. 144&#148;) to determine any impairment that needs to be
recognized. During the quarter ended June 30, 2002, the Company abandoned the
development of peramivir, its influenza neuraminidase inhibitor. As a result,
the Company recognized an expense of $374,000 during the quarter related to the
patents for our neuraminidase inhibitors, as they no longer have any readily
determinable value to the Company. </FONT></P>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 5.  Subsequent Events</FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
July 10, 2002, the Company streamlined its operations, reducing its workforce
from 75 employees to 45 employees in order to conserve its resources and provide
a longer timeframe in which to advance its other programs. The expenses related
to this reduction in staff will be recognized during the third quarter of 2002. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 2.  Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</FONT></H2>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>This Quarterly Report on
Form 10-Q contains certain statements of a forward-looking nature relating to
future events or the future financial performance of the Company. Such
statements are only predictions and the actual events or results may differ
materially from the results discussed in the forward-looking stat</I>e<I>ments.
Factors that could cause or contribute to such differences include those
discussed below as well as those discussed in other filings made by the Company
with the Securities and Exchange Commission, including the Company&#146;s Annual
Report on Form 10-K.</I> </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Overview</FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
our inception in 1986, we have been engaged in research and development
activities and organizational efforts, including: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>identification
and licensing of enzyme targets; </FONT></TD>
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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>drug
discovery; </FONT></TD>
</TR>
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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>structure-based
design of drug candidates; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>small-scale
synthesis of compounds; </FONT></TD>
</TR>
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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>conducting
preclinical studies and clinical trials; </FONT></TD>
</TR>
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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>recruiting
our scientific and management personnel; </FONT></TD>
</TR>
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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>establishing
laboratory facilities; and </FONT></TD>
</TR>
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<BR>

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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>raising
capital. </FONT></TD>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
revenues have generally been limited to license fees, milestone payments,
interest income, collaboration research and development fees. Prior to January
1, 2000, the Company recognized research and development fees, license fees and
milestone payments as revenue when received. Effective January 1, 2000, the
Company changed its method of accounting for revenue recognition in accordance
with SEC Staff Accounting Bulletin No. 101, <I>Revenue Recognition in Financial
Statements </I>(&#147;SAB 101&#148;). Research and development revenue on
cost-reimbursement agreements is recognized as expenses are incurred, up to
contractual limits. Research and development fees, license fees and milestone
payments are recognized as revenue when the earnings process is complete, the
Company has no further continuing performance obligations and has completed its
performance under the terms of the agreement, in accordance with SAB 101.
License fees and milestone payments received under licensing agreements that are
related to future performance are deferred and taken into income as earned over
the estimated drug development period. The Company has not received any
royalties from the sale of licensed pharmaceutical products. It could be several
years, if ever, before we will recognize significant revenue from royalties
received pursuant to our license agreements, and we do not expect to ever
generate revenue directly from product sales. Future revenues, if any, are
likely to fluctuate substantially from quarter to quarter. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>6</FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have incurred operating losses since our inception. Our accumulated deficit at
June 30, 2002 was $85.8 million. We will require substantial expenditures
relating to the development of our current and future drug candidates. During
the three years ended December 31, 2001, we spent 26.9% of our research and
development expenses on contract research and development, including: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>payments
to consultants; </FONT></TD>
</TR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>funding
of research at academic institutions; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>large
scale synthesis of compounds; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>preclinical
studies; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>engaging
investigators to conduct clinical trials; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>hiring
contract research organizations to monitor and gather data on clinical trials; and </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>using
statisticians to evaluate the results of clinical trials. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
above expenditures for contract research and development for our current and
future drug candidates will vary from quarter to quarter depending on the status
of our research and development projects. For example, on June 25, 2002, we
announced preliminary Phase III clinical trial data for peramivir, our
investigational oral influenza neuraminidase inhibitor. The trial indicated no
statistically significant difference in the primary efficacy endpoint between
groups treated with peramivir and groups treated with placebo. Based on these
data, we discontinued the development of peramivir. During the first six months
of 2002, our cash expenses related to this trial were approximately $4 million.
After terminating the development of peramivir, the Company streamlined its
operations, reducing its workforce from 75 employees to 45 employees in order to
conserve its resources and provide a longer timeframe in which to advance its
other programs. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes
in our existing and future research and development and collaborative
relationships will also impact the status of our research and development
projects. Although we may, in some cases, be able to control the timing of
development expenses, in part by accelerating or decelerating certain of these
costs, many of these costs will be incurred irrespective of whether or not we
are able to discover drug candidates or obtain collaborative partners for
commercialization. As a result, we believe that quarter-to-quarter comparisons
of our financial results are not necessarily meaningful and should not be relied
upon as an indication of future performance. If we fail to meet the research,
clinical and financial expectations of securities analysts and investors, it
could have a material adverse effect on the price of our common stock. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Results of Operations
(three months ended June 30, 2002 compared to the three months ended June 30, 2001)</FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
decreased 89.8% to $461,000 in the three months ended June 30, 2002 from
$4,537,000 in the three months ended June 30, 2001. The decrease was primarily
due to a change in accounting estimate in the quarter ended June 30, 2001
following termination by Ortho-McNeil and RWJPRI of the worldwide license
agreement with BioCryst for peramivir, the Company&#146;s neuraminidase
inhibitor. As a result of this change, we had no collaborative revenue during
the second quarter of 2002 as compared to $3,634,000 in the second quarter of
2001. In addition, interest and other income decreased 48.9% to $461,000 in the
second quarter of 2002 from $903,000 in the second quarter of 2001, due to a
reduction in cash from funding operations and expansion of our facilities, plus
the effect of lower interest rates on some of our investments. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>7</FONT></P>

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</TD>
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<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and development expenses increased 61.3% to $4,377,000 in the three months ended
June 30, 2002 from $2,714,000 in the three months ended June 30, 2001. The
increase is primarily attributable to an increase in clinical trial expenses
related to the Phase III development of peramivir. General and administrative
expenses for the three months ended June 30, 2002 increased 32.6% to $871,000 as
compared to the same period in 2001, primarily due to an increase in expenses
related to the adoption of a stockholder rights plan and other professional
fees. Royalty expense decreased 100.00% to $0 in the three months ended June 30,
2002 from $208,000 for the three months ended June 30, 2001, as a result of the
termination agreement with Ortho-McNeil and RWJPRI. During the quarter ended
June 30, 2002, the Company recorded a non-cash impairment loss of $374,000
related to the influenza patents, as this program was terminated effective June
25, 2002. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Results of Operations
(six months ended June 30, 2002 compared to the six months ended June 30, 2001)</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues
decreased 84.4% to $1,000,000 in the six months ended June 30, 2002 from
$6,424,000 in the six months ended June 30, 2001. The decrease was primarily due
to a change in accounting estimate in the quarter ended June 30, 2001 following
termination by Ortho-McNeil and RWJPRI of the worldwide license agreement with
BioCryst for peramivir, the Company&#146;s neuraminidase inhibitor. As a result
of this change, we had no collaborative revenue during the first six months of
2002 as compared to $4,338,000 in the first six months of 2001. In addition,
interest and other income decreased 52.1% to $1,000,000 in the six months ended
June 30, 2002 from $2,086,000 in the first six months of 2001, due to a
reduction in cash from funding operations and expansion of our facilities, plus
the effect of lower interest rates on some of our investments. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research
and development expenses increased 86.2% to $9,764,000 in the six months ended
June 30, 2002 from $5,244,000 in the six months ended June 30, 2001. The
increase is primarily attributable to an increase in clinical trial expenses
related to the Phase III development of peramivir. General and administrative
expenses for the six months ended June 30, 2002 increased 20.9% to $1,640,000 as
compared to the same period in 2001, primarily due to an increase in expenses
related to the adoption of a stockholder rights plan and other professional
fees. Royalty expense decreased 100.00% to $0 in the six months ended June 30,
2002 from $249,000 for the six months ended June 30, 2001, as a result of the
termination agreement with Ortho-McNeil and RWJPRI. During the second quarter of
2002, the Company recorded a non-cash impairment loss of $374,000 related to the
influenza patents, as this program was terminated effective June 25, 2002. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Liquidity and Capital
Resources</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash
expenditures have exceeded revenues since the Company&#146;s inception. Our
operations have principally been funded through various sources, including the
following: </FONT></P>

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</TR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>public
offerings and private placements of equity and debt securities, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>equipment
lease financing, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>facility
leases, </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>collaborative
and other research and development agreements (including licenses and options for
licenses), </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>research
grants and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>interest
income. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, we have attempted to contain costs and reduce cash flow requirements
by renting scientific equipment and facilities, contracting with other parties
to conduct certain research and development and using consultants. We expect to
incur additional expenses, potentially resulting in significant losses, as we
continue to pursue our research and development activities and undertake
additional preclinical studies and clinical trials of compounds, which have been
or may be discovered. We also expect to incur substantial expenses related to
the filing, prosecution, maintenance, defense and enforcement of patent and
other intellectual property claims. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>8</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On
June 25, 2002, the Company announced we were discontinuing the development of
peramivir, our investigational oral influenza neuraminidase inhibitor designed
to treat and prevent influenza. After terminating the development of peramivir,
the Company streamlined its operations, reducing its workforce from 75 employees
to 45 employees in order to conserve its resources and provide a longer
timeframe in which to advance its other programs. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Company invests its excess cash principally in U.S. marketable securities from a
diversified portfolio of institutions with strong credit ratings and in U.S.
government and agency bills and notes, and by policy, limits the amount of
credit exposure at any one institution. These investments are generally not
collateralized and mature within four years. The Company has not realized any
losses from such investments. In addition, at June 30, 2002, approximately $10.6
million was invested in the Merrill Lynch Premier Institutional Fund, which
invests primarily in commercial paper, U.S. government and agency bills and
notes, corporate notes, certificates of deposit and time deposits. The Merrill
Lynch Premier Institutional Fund is not insured. At June 30, 2002, our cash,
cash equivalents and securities held-to-maturity were $41.8 million, a decrease
of $11.2 million from December 31, 2001, principally due to the funding of
current operations, which included the Phase III development of peramivir prior
to the termination of this program in June 2002. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have financed some of our equipment purchases with lease lines of credit. We
currently have a $500,000 general line of credit with our bank, secured by a
pledge of $600,000 in marketable securities. There was nothing drawn against
this line as of June 30, 2002. In July 2000, we renegotiated our lease for our
current facilities, which will expire on June 30, 2010. We have an option to
renew the lease for an additional five years at current market rates. The lease,
as amended effective July 1, 2001 for an additional 7,200 square feet, requires
us to pay monthly rent starting at $33,145 per month in July 2001 and escalating
annually to a minimum of $47,437 per month in the final year, plus our pro rata
share of operating expenses and real estate taxes in excess of base year
amounts. As part of the lease, we have pledged a U.S. Treasury security
deposited in escrow for the payment of rent and performance of other obligations
specified in the lease. This pledged amount is currently $455,000, which will be
decreased by $65,000 annually throughout the term of the lease. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During
2000, we renovated our facilities to gain additional laboratory space, update
our existing laboratories, and add a small good manufacturing practices (GMP)
clean room. In addition, we updated our general office facility to provide for
growth and efficiencies. The total cost of these changes, including furniture
and laboratory equipment, was approximately $2.7 million. This phase of
renovation was completed in December 2000. Another phase of renovation was
completed in February 2002 for approximately $2.6 million to add two chemistry
laboratories and purchase additional equipment. Currently, there are no plans
for additional remodeling. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
a result of the reduction in our staff during July 2002, we now have
approximately 14,000 square feet of excess space we are currently attempting to
sublease. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At
December 31, 2001, we had long-term operating lease obligations, which provide
for aggregate minimum payments of $567,123 in 2002, $580,803 in 2003 and
$594,897 in 2004. These obligations include the future rental of our operating
facility. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
plan to finance our needs principally from the following: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
existing capital resources and interest earned on that capital; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>payments
under collaborative and licensing agreements with corporate partners; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>through
lease or loan financing and future public or private financing. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe
that our available funds will be sufficient to fund our operations at least
through 2004. However, this is a forward-looking statement, and there may be
changes that would consume available resources significantly before such time.
Our long-term capital requirements and the adequacy of our available funds will
depend upon many factors, including: </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>9</FONT></P>

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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
progress of our research, drug discovery and development programs; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in existing collaborative relationships; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
ability to establish additional collaborative relationships; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
magnitude of our research and development programs; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
scope and results of preclinical studies and clinical trials to identify drug candidates; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>competitive
and technological advances; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
time and costs involved in obtaining regulatory approvals; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
costs involved in preparing, filing, prosecuting, maintaining and enforcing patent claims; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
dependence on others for development and commercialization of our product candidates, and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>successful
commercialization of our products consistent with our licensing strategy. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Additional
funding, whether through additional sales of securities or collaborative or
other arrangements with corporate partners or from other sources, may not be
available when needed or on terms acceptable to us. The issuance of preferred or
common stock or convertible securities, with terms and prices significantly more
favorable than those of the currently outstanding common stock, could have the
effect of diluting or adversely affecting the holdings or rights of our existing
stockholders. In addition, collaborative arrangements may require us to transfer
certain material rights to such corporate partners. Insufficient funds may
require us to delay, scale-back or eliminate certain of our research and
development programs. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Critical Accounting Policies</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have established various accounting policies that govern the application of
accounting principles generally accepted in the United States in the preparation
of our financial statements. Our significant accounting policies are described
in the footnotes to the financial statements of the Company&#146;s most recent
Annual Report on Form 10-K. Certain accounting policies involve significant
judgments and assumptions by management that have a material impact on the
carrying value of certain assets and liabilities; management considers such
accounting policies to be critical accounting policies. The judgments and
assumptions used by management are based on historical experience and other
factors, which are believed to be reasonable under the circumstances. Because of
the nature of the judgments and assumptions made by management, actual results
could differ from these judgments and estimates, which could have a material
impact on the carrying values of assets and liabilities and the results of
operations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
believe the following critical accounting policies affect our more significant
judgments and estimates used in the preparation of our financial statements. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Revenue Recognition</I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective
January 1, 2000, we changed our method of accounting for revenue recognition in
accordance with SEC Staff Accounting Bulletin No. 101, <I>Revenue Recognition in
Financial Statements</I> (&#147;SAB 101&#148;). Research and development revenue
on cost-reimbursement agreements is recognized as expenses are incurred, up to
contractual limits. Research and development fees, license fees and milestone
payments are recognized as revenue when the earnings process is complete, the
Company has no further continuing performance obligations and has completed its
performance under the terms of the agreement, in accordance with SAB 101.
License fees and milestone payments received under licensing agreements that are
related to future performance are deferred and taken into income as earned over
the estimated drug development period. Recognized revenues and profit are
subject to revisions as these contracts or agreements progress to completion.
Revisions to revenue or profit estimates are charged to income in the period in
which the facts that give rise to the revision became known. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>10</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<BR>

<!-- MARKER FORMAT-SHEET="Head Sub 2" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Valuation of Financial
Instruments</I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
carry our held-to-maturity securities at amortized cost, as adjusted for
other-than-temporary declines in market value. In determining if and when a
decline in market value below amortized cost is other-than-temporary, we
evaluate the market conditions and other key measures for our held-to-maturity
investments. Future adverse changes in market conditions could result in losses
or an inability to recover the carrying value of the held-to-maturity
investments that may not be reflected in an investment&#146;s current carrying
value, thereby possibly requiring an impairment charge in the future. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Deferred
Taxes</FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
have not had taxable income since incorporation and, therefore, we have not paid
any income tax. We have deferred tax assets related to net operating loss
carryforwards and research and development carryforwards. We record a valuation
allowance to reduce our deferred tax assets to the amount that is more likely
than not to be realized. While we have considered future taxable income and
ongoing prudent and feasible tax planning strategies in assessing the need for
the valuation allowance, in the event we were to determine that we would be able
to realize the deferred tax assets in the future in excess of the net recorded
amount, an adjustment to the deferred tax asset would increase income in the
period such determination was made. Likewise, should we determine that we would
not be able to realize all or part of the net deferred tax asset in the future,
an adjustment to the deferred tax asset would be charged to income in the period
such determination was made. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 2" -->
<P ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Patents and Licenses</I></FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Patents
and licenses are recorded at cost and amortized on a straight-line basis over
their estimated useful lives or 20 years, whichever is lesser. These costs are
reviewed periodically in accordance with Statement of Financial Accounting
Standards No. 144, <I>Accounting for the Impairment or Disposal of Long-Lived
Assets</I> (&#147;Statement No. 144&#148;) to determine any impairment that
needs to be recognized. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Certain Risk Factors
That May Affect Future Results, Financial Condition and the Market Price of Securities</FONT></H2>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>We have incurred
substantial losses since our inception in 1986, expect to continue to incur such losses,
may never be profitable and may need additional financing</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since
our inception in 1986, we have not been profitable. We expect to incur
additional losses for the foreseeable future, and our losses could increase as
our research and development efforts progress. As of June 30, 2002, our
accumulated deficit was approximately $85.8 million. To become profitable, we
must successfully develop drug candidates, enter into profitable agreements with
other parties and our drug candidates must receive regulatory approval. These
other parties must then successfully manufacture and market our drug candidates.
It could be several years, if ever, before we receive royalties from any future
license agreements. In addition, we never expect to generate revenue directly
from product sales. If we do not generate revenue, or if our drug development
expenses increase, we may need to raise additional funds through new or existing
collaborations or through private or public equity or debt financing. If
financing is not available on acceptable terms or not available at all, we may
not have enough capital to continue our current business strategy. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Our future revenue
generation is uncertain</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Our revenue from
collaborative agreements is dependent upon the status of our preclinical and
clinical programs. If we fail to advance these programs to the point of being
able to enter into successful collaborations, we will not receive any future
milestone or other collaborative payments. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>11</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If our development
collaborations with other parties fail, the development of our drug candidates will be
delayed or stopped</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
rely completely upon other parties for many important stages of our drug
development programs, including: </FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>discovery
of proteins that cause or enable biological reactions necessary for the progression of
the disease or disorder, called enzyme targets; </FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Hang Bullet 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>execution
of some preclinical studies and late-stage development for our compounds and drug
candidates; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>manufacturing,
sales, marketing and distribution of our drug candidates. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
failure to engage in successful collaborations at any one of these stages would
greatly impact our business. If we do not license enzyme targets from academic
institutions or from other biotechnology companies on acceptable terms, our
product development efforts would suffer. Similarly, if the contract research
organizations that conduct our initial or late-stage clinical trials breached
their obligations to us, this would delay or prevent the development of our drug
candidates. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Even
more critical to our success is our ability to enter into successful
collaborations for the late-stage clinical development, regulatory approval,
manufacturing, marketing, sales and distribution of our drug candidates. Our
strategy is to rely upon other parties for all of these steps so that we can
focus exclusively on the key areas of our expertise. This heavy reliance upon
third parties for these critical functions presents several risks, including: </FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>these
contracts may expire or the other parties to the contract may terminate them; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
partners may choose to pursue alternative technologies, including those of our
competitors; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>we
may have disputes with a partner that could lead to litigation or arbitration; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
partners may not devote sufficient capital or resources towards our drug candidates; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>our
partners may not comply with applicable government regulatory requirements. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
problems encountered with our current or future partners could delay or prevent
the development of our compounds, which would severely affect our business,
because if our compounds do not reach the market in a timely manner, or at all,
we may never receive any milestone or royalty payments. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If the clinical
trials of our drug candidates fail, our drug candidates will not be marketed, which would
result in a decrease in, or complete absence of, revenue</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To
receive the regulatory approvals necessary for the sale of our drug candidates,
we or our licensees must demonstrate through preclinical studies and clinical
trials that each drug candidate is safe and effective. If we or our licensees
are unable to demonstrate that our drug candidates are safe and effective, our
drug candidates will not receive regulatory approval and will not be marketed,
which would result in a decrease in, or complete absence of, revenue. The
clinical trial process is complex and uncertain. Positive results from
preclinical studies and early clinical trials do not ensure positive results in
clinical trials designed to permit application for regulatory approval, called
pivotal clinical trials. We may suffer significant setbacks in pivotal clinical
trials, even after earlier clinical trials show promising results. Any of our
drug candidates may produce undesirable side effects in humans. These side
effects could cause us or regulatory authorities to interrupt, delay or halt
clinical trials of a drug candidate. These side effects could also result in the
FDA or foreign regulatory authorities refusing to approve the drug candidate for
any targeted indications. We, our licensees, the FDA or foreign regulatory
authorities may suspend or terminate clinical trials at any time if we or they
believe the trial participants face unacceptable health risks. Clinical trials
may fail to demonstrate that our drug candidates are safe or effective. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>12</FONT></P>

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</TR>
</TABLE>
<BR>

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<BR>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Clinical
trials are lengthy and expensive. We or our licensees incur substantial expense
for, and devote significant time to, preclinical testing and clinical trials,
yet cannot be certain that the tests and trials will ever result in the
commercial sale of a product. For example, clinical trials require adequate
supplies of drug and sufficient patient enrollment. Delays in patient enrollment
can result in increased costs and longer development times. Even if we or our
licensees successfully complete clinical trials for our product candidates, our
licensees might not file the required regulatory submissions in a timely manner
and may not receive regulatory approval for the drug candidate. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If we or our
licensees do not obtain and maintain governmental approvals for our products under
development, we or our partners will not be able to sell these potential products, which
would significantly harm our business because we will receive no revenue</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
or our licensees must obtain regulatory approval before marketing or selling our
future drug products. If we or our licensees are unable to receive regulatory
approval and do not market or sell our future drug products, we will never
receive any revenue from such product sales. In the United States, we or our
partners must obtain FDA approval for each drug that we intend to commercialize.
The FDA approval process is typically lengthy and expensive, and approval is
never certain. Products distributed abroad are also subject to foreign
government regulation. The FDA or foreign regulatory agencies have not approved
any of our drug candidates. If we or our licensees fail to obtain regulatory
approval we will be unable to market and sell our future drug products. We have
several drug products in various stages of preclinical and clinical development;
however, we are unable to determine when, if ever, any of these products will be
commercially available. Because of the risks and uncertainties in
biopharmaceutical development, our drug candidates could take a significantly
longer time to gain regulatory approval than we expect or may never gain
approval. If the FDA delays regulatory approval of our drug candidates, our
management&#146;s credibility, our company&#146;s value and our operating
results may suffer. Even if the FDA or foreign regulatory agencies approve a
drug candidate, the approval may limit the indicated uses for a drug candidate
and/or may require post-marketing studies. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
FDA regulates, among other things, the record keeping and storage of data
pertaining to potential pharmaceutical products. We currently store most of our
preclinical research data at our facility. While we do store duplicate copies of
most of our clinical data offsite, we could lose important preclinical data if
our facility incurs damage. If we get approval to market our potential products,
whether in the United States or internationally, we will continue to be subject
to extensive regulatory requirements. These requirements are wide ranging and
govern, among other things: </FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>adverse
drug experience reporting regulations; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>product
promotion; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>product
manufacturing, including good manufacturing practice requirements; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>product
changes or modifications. </FONT></TD>
</TR>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Our
failure to comply with existing or future regulatory requirements, or our loss
of, or changes to, previously obtained approvals, could have a material adverse
effect on our business because we will not receive royalty revenues if our
licensees do not receive approval of our products for marketing.</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 1995, we notified the FDA that we submitted incorrect data for our Phase II
studies of BCX-34 applied to the skin for cutaneous T-cell lymphoma and
psoriasis. The FDA inspected us in November 1995 and issued us a List of
Inspectional Observations, Form FDA 483, which cited our failure to follow good
clinical practices. The FDA also inspected us in June 1996. The focus was on the
two 1995 Phase II dose-ranging studies of topical BCX-34 for the treatment of
cutaneous T-cell lymphoma and psoriasis. As a result of the investigation, the
FDA issued us a Form FDA 483, which cited our failure to follow good clinical
practices. BioCryst is no longer developing BCX-34; however, as a consequence of
these two investigations, our ongoing and future clinical studies may receive
increased scrutiny, which may delay the regulatory review process. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>13</FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If our drug
candidates do not achieve broad market acceptance, our business may never become
profitable</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
drug candidates may not gain the market acceptance required for us to be
profitable even if they receive approval for sale by the FDA or foreign
regulatory agencies. The degree of market acceptance of any drug candidates that
we or our partners develop will depend on a number of factors, including: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>cost-effectiveness
of our drug candidates; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>their
safety and effectiveness relative to alternative treatments; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>reimbursement
policies of government and third-party payers; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>marketing
and distribution support for our drug candidates. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Physicians,
patients, payers or the medical community in general may not accept or use our
drug candidates even after the FDA or foreign regulatory agencies approve the
drug candidates. If our drug candidates do not achieve significant market
acceptance, we will not have enough revenues to become profitable. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If competitive
products from other companies are better than our product candidates, our future revenues
might fail to meet expectations</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
biotechnology and pharmaceutical industries are highly competitive and are
subject to rapid and substantial technological change. Other products and
therapies that either currently exist on the market or are under development
could compete directly with some of the compounds that we are seeking to develop
and market. These other products may render some or all of our compounds under
development noncompetitive or obsolete. Products marketed by our competitors may
prove to be more effective than our own, and our products, if any, may not offer
an economically feasible or preferable alternative to existing therapies. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If we fail to
adequately protect or enforce our intellectual property rights or secure rights to
patents of others, the value of those rights would diminish</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
success will depend in part on our ability and the abilities of our licensors to
obtain patent protection for our products, methods, processes and other
technologies to preserve our trade secrets, and to operate without infringing
the proprietary rights of third parties. If we or our partners are unable to
adequately protect or enforce our intellectual property rights for our products,
methods, processes and other technologies, the value of the drug candidates that
we license to derive revenue would diminish. Additionally, if our products,
methods, processes and other technologies infringe the proprietary rights of
other parties, we could incur substantial costs. The U.S. Patent and Trademark
Office has issued to us a number of U.S. patents for our various inventions and
we have in-licensed several patents from various institutions. We have filed
additional patent applications and provisional patent applications with the U.S.
Patent and Trademark Office. We have filed a number of corresponding foreign
patent applications and intend to file additional foreign and U.S. patent
applications, as appropriate. We cannot assure you as to: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>the
degree and range of protection any patents will afford against competitors with similar
products; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>if
and when patents will issue; or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>whether
or not others will obtain patents claiming aspects similar to those covered by our patent
applications. </FONT></TD>
</TR>
</TABLE>
<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If
the U.S. Patent and Trademark Office upholds patents issued to others or if the
U.S. Patent and Trademark Office grants patent applications filed by others, we
may have to: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>obtain
licenses or redesign our products or processes to avoid infringement; </FONT></TD>
</TR>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>14</FONT></P>

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<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>stop
using the subject matter claimed in those patents; or </FONT></TD>
</TR>
</TABLE>
<BR>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>pay
damages. </FONT></TD>
</TR>
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<BR>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
may initiate, or others may bring against us, litigation or administrative
proceedings related to intellectual property rights, including proceedings
before the U.S. Patent and Trademark Office. Any judgment adverse to us in any
litigation or other proceeding arising in connection with a patent or patent
application could materially and adversely affect our business, financial
condition and results of operations. In addition, the costs of any such
proceeding may be substantial whether or not we are successful. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
success is also dependent upon the skills, knowledge and experience, none of
which is patentable, of our scientific and technical personnel. To help protect
our rights, we require all employees, consultants, advisors and collaborators to
enter into confidentiality agreements that prohibit the disclosure of
confidential information to anyone outside of our company and require disclosure
and assignment to us of their ideas, developments, discoveries and inventions.
These agreements may not provide adequate protection for our trade secrets,
know-how or other proprietary information in the event of any unauthorized use
or disclosure or the lawful development by others of such information, and if
any of our proprietary information is disclosed, our business will suffer
because our revenues depend upon our ability to license our technology and any
such events would significantly impair the value of such a license. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If we fail to retain
our existing key personnel or fail to attract and retain additional key personnel, the
development of our drug candidates and the expansion of our business will be delayed or
stopped</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
are highly dependent upon our senior management and scientific team, the loss of
whose services might impede the achievement of our development and commercial
objectives. Competition for key personnel with the experience that we require is
intense and is expected to continue to increase. Our inability to attract and
retain the required number of skilled and experienced management, operational
and scientific personnel, will harm our business because we rely upon these
personnel for many critical functions of our business. In addition, we rely on
members of our scientific advisory board and consultants to assist us in
formulating our research and development strategy. All of the members of the
scientific advisory board and all of our consultants are otherwise employed and
each such member or consultant may have commitments to other entities that may
limit their availability to us. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If users of our drug
products are not reimbursed for use, future sales of our drug products will decline</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
lack of reimbursement for the use of our product candidates by hospitals,
clinics, patients or doctors will harm our business. Medicare, Medicaid, health
maintenance organizations and other third-party payers may not authorize or
otherwise budget for the reimbursement of our products. Governmental and
third-party payers are increasingly challenging the prices charged for medical
products and services. We cannot be sure that third-party payers would view our
product candidates as cost-effective, that reimbursement will be available to
consumers or that reimbursement will be sufficient to allow our product
candidates to be marketed on a competitive basis. Changes in reimbursement
policies, or attempts to contain costs in the health care industry, limit or
restrict reimbursement for our product candidates, would materially and
adversely affect our business, because future product sales would decline and we
would receive less royalty revenue. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If we face clinical
trial liability claims related to the use or misuse of our compounds in clinical trials,
our management&#146;s time will be diverted and we will incur litigation costs</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We
face an inherent business risk of liability claims in the event that the use or
misuse of our compounds results in personal injury or death. We have not
experienced any clinical trial liability claims to date, but we may experience
these claims in the future. After commercial introduction of our products we may
experience losses due to product liability claims. We currently maintain
clinical trial liability insurance coverage in the amount of $5.0 million per
occurrence and $5.0 million in the aggregate, with an additional $2.0 million
potentially available under our umbrella policy. The insurance policy may not be
sufficient to cover claims that may be made against us. Clinical trial liability
insurance may not be available in the future on acceptable terms, if at all. Any
claims against us, regardless of their merit, could materially and adversely
affect our financial condition, because litigation related to these claims would
strain our financial resources in addition to consuming the time and attention
of our management. </FONT></P>

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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>15</FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If our computer
systems fail, our business will suffer</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
drug development activities depend on the security, integrity and performance of
the computer systems supporting them, and the failure of our computer systems
could delay our drug development efforts. We currently store most of our
preclinical and clinical data at our facility. Duplicate copies of all critical
data are stored off-site in a bank vault. Any significant degradation or failure
of our computer systems could cause us to inaccurately calculate or lose our
data. Loss of data could result in significant delays in our drug development
process and any system failure could harm our business and operations. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>If, because of our
use of hazardous materials, we violate any environmental controls or regulations that
apply to such materials, we may incur substantial costs and expenses in our remediation
efforts</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
research and development involves the controlled use of hazardous materials,
chemicals and various radioactive compounds. We are subject to federal, state
and local laws and regulations governing the use, storage, handling and disposal
of these materials and some waste products. Accidental contamination or injury
from these materials could occur. In the event of an accident, we could be
liable for any damages that result and any liabilities could exceed our
resources. Compliance with environmental laws and regulations could require us
to incur substantial unexpected costs, which would materially and adversely
affect our results of operations. </FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Because stock
ownership is concentrated, you and other investors will have minimal influence on
stockholder decisions</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
directors, executive officers and some principal stockholders and their
affiliates, including Johnson &amp; Johnson Development Corporation,
beneficially own approximately 44% (directors and officers own 28%) of our
outstanding common stock and common stock equivalents. As a result, these
holders, if acting together, are able to significantly influence matters
requiring stockholder approval, including the election of directors. This
concentration of ownership may delay, defer or prevent a change in our control. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Sub 1" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>We have anti-takeover
provisions in our corporate charter documents that may result in outcomes with which you
do not agree</I></FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our
board of directors has the authority to issue up to 3,178,500 shares of
undesignated preferred stock and to determine the rights, preferences,
privileges and restrictions of those shares without further vote or action by
our stockholders. The rights of the holders of any preferred stock that may be
issued in the future may adversely affect the rights of the holders of common
stock. The issuance of preferred stock could make it more difficult for third
parties to acquire a majority of our outstanding voting stock. </FONT></P>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
addition, our certificate of incorporation provides for staggered terms for the
members of the board of directors and supermajority approval of the removal of
any member of the board of directors and prevents our stockholders from acting
by written consent. Our certificate also requires supermajority approval of any
amendment of these provisions. These provisions and other provisions of our
by-laws and of Delaware law applicable to us could delay or make more difficult
a merger, tender offer or proxy contest involving us. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In
June 2002, our board of directors adopted a stockholder rights plan and,
pursuant thereto, issued preferred stock purchase rights (&#147;Rights&#148;) to
the holders of our common stock. The Rights have certain anti-takeover effects.
If triggered, the Rights would cause substantial dilution to a person or group
of persons who acquires more than 15% (19.9% for William W. Featheringill, a
Director who already owns more than 15%) of our common stock on terms not
approved by the board of directors. </FONT></P>



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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>16</FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><I>Our stock price is
likely to be highly volatile and the value of your investment could decline significantly</I></FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
market prices for securities of biotechnology companies in general have been
highly volatile and may continue to be highly volatile in the future. Moreover,
our stock price has fluctuated frequently, and these fluctuations are often not
related to our financial results. For the twelve months ended June 30, 2002, the
52-week range of the market price of our stock has been from $0.60 to $6.59 per
share. The following factors, in addition to other risk factors described in
this section, may have a significant impact on the market price of our common
stock: </FONT></P>

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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>announcements
of technological innovations or new products by us or our competitors; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>developments
or disputes concerning patents or proprietary rights; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>status
of new or existing licensing or collaborative agreements; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>we
or our licensees achieving or failing to achieve development milestones; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>publicity
regarding actual or potential medical results relating to products under development by
us or our competitors; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>regulatory
developments in both the United States and foreign countries; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>public
concern as to the safety of pharmaceutical products; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>actual
or anticipated fluctuations in our operating results; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>changes
in financial estimates or recommendations by securities analysts; </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>economic
and other external factors or other disasters or crises; and </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&#149;</FONT></TD>
<TD WIDTH=1%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=95%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>period-to-period
fluctuations in our financial results. </FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 3.  Quantitative and Qualitative Disclosures about Market Risk</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
primary objective of our investment activities is to preserve principal while
maximizing the income we receive from our investments without significantly
increasing our risk. We invest excess cash principally in U.S. marketable
securities from a diversified portfolio of institutions with strong credit
ratings and in U.S. government and agency bills and notes, and by policy, limit
the amount of credit exposure at any one institution. Some of the securities we
invest in may have market risk. This means that a change in prevailing interest
rates may cause the principal amount of the investment to fluctuate. To minimize
this risk, we schedule our investments to have maturities that coincide with our
cash flow needs, thus avoiding the need to redeem an investment prior to its
maturity date. Accordingly, we believe we have no material exposure to interest
rate risk arising from our investments. Therefore, no quantitative tabular
disclosure is provided. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II.
OTHER INFORMATION</FONT></H1>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 1.  Legal Proceedings:</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 2. Changes in Securities and Use of Proceeds:</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 3. Defaults Upon Senior Securities:</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>17</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

<!-- *************************************************************************** -->
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 4. Submission of Matters to a Vote of Security Holders:</FONT></H2>

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</TD>
</TR>
</TABLE>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(a) </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>The
Company&#146;s annual meeting of stockholders was held on May 15, 2002.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(b) </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Messrs.
Featheringill, Sherrill and Spencer were reelected as directors for three-year terms
expiring in 2005. Messrs. Bennett, Horovitz, Steer, Bugg, Gee and Montgomery continue as
directors.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(c) </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Motions
before stockholders:</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1.  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=82%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Election
of three directors as follows - </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=BOTTOM>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Name</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Votes For</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Abstentions/<BR>Withheld</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
</TR>
<TR VALIGN=TOP>
     <TD ALIGN="CENTER" WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT" WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>William W. Featheringill</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,272,639</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>103,126</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=TOP>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Joseph H. Sherrill, Jr.</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,266,151</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>109,614</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
<TR VALIGN=TOP>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>William M. Spencer, III</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,262,308</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>113,457</FONT></TD>
     <TD ALIGN="CENTER"><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>2.  </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=82%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Amendment
to the Employee Stock Purchase Plan </FONT></TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=BOTTOM>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Votes For</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Votes<BR>Against</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Abstentions/<BR>Withheld</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
</TR>
<TR VALIGN=TOP>
     <TD ALIGN="CENTER" WIDTH=15%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="LEFT" WIDTH=25%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>15,031,075</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>278,934</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>65,756</FONT></TD>
     <TD ALIGN="CENTER" WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD></TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>(d) </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Not
applicable.</FONT></TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 5. Other Information:</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None</FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 6. Exhibits and Reports on Form 8-K:</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Exhibits:</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Number</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">&nbsp;</FONT></TH>
     <TH><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Description</FONT></TH></TR>
<TR VALIGN=TOP>
     <TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1 </FONT></TD>
     <TD WIDTH=4%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=84%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Composite
Certificate of Incorporation of Registrant. Incorporated by reference to Exhibit 3.1 to
the Company&#146;s Form 10-Q for the second quarter ending June 30, 1995 dated August 11, 1995.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Bylaws
of Registrant. Incorporated by reference to Exhibit 3.1 to the Company&#146;s Form 10-Q for
the second quarter ending June 30, 1995 dated August 11, 1995.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See
Exhibits 3.1 and 3.2 for provisions of the Composite Certificate of Incorporation and
Bylaws of the Registrant defining rights of holders of Common Stock of the Registrant.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Rights
Agreement, dated as of June 17, 2002, by and between the Company and American Stock
Transfer &amp; Trust Company, as Rights Agent, which includes the Certificate of
Designation for the Series B Junior Participating Preferred Stock as Exhibit A and the
form of Rights Certificate as Exhibit B. Incorporated by reference to Exhibit 4.1 to the
Company&#146;s Form 8-A dated June 17, 2002.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.1 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1991
Stock Option Plan, as amended and restated as of March 6, 2000. Incorporated by reference
to Exhibit 99.1 to the Company&#146;s Form S-8 Registration Statement dated June 16, 2000
(Registration No. 333-39484).</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.2 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Employment
Agreement dated December 27, 1999 between the Registrant and Charles&nbsp;E. Bugg, Ph.D.
Incorporated by reference to Exhibit 10.10 to the Company&#146;s Form 10-K for the year
ending December 31, 1999 dated March 24, 2000.</FONT></TD>
</TR>
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<TR VALIGN=TOP>
     <TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT WIDTH=6%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.3# </FONT></TD>
     <TD WIDTH=4%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD WIDTH=84%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>License
Agreement dated April 15, 1993 between Ciba-Geigy Corporation (now merged into Novartis)
and the Registrant. Incorporated by reference to Exhibit 10.40 to the Company&#146;s Form S-1
Registration Statement (Registration No. 33-73868).</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.4 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Employee
Stock Purchase Plan. Incorporated by reference to Exhibit 99.1 to the Company&#146;s Form S-8
Registration Statement dated June 14, 2002 (Registration No. 333-90582).</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.5# </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>License
Agreement dated as of September 14, 1998 between Registrant and The R.W. Johnson
Pharmaceutical Research Institute and Ortho-McNeil Pharmaceutical, Inc. Incorporated by
reference to Exhibit 10.23 to the Company&#146;s Form 10-Q for the third quarter ending
September 30, 1998 dated November 10, 1998.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.6# </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stock
Purchase Agreement dated as of September 14, 1998 between Registrant and Johnson &amp; Johnson
Development Corporation. Incorporated by reference to Exhibit 10.24 to the Company&#146;s Form
10-Q for the third quarter ending September 30, 1998 dated November 10, 1998.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.7# </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Stockholder&#146;s
Agreement dated as of September 14, 1998 between Registrant and Johnson &amp; Johnson
Development Corporation. Incorporated by reference to Exhibit 10.25 to the Company&#146;s Form
10-Q for the third quarter ending September 30, 1998 dated November 10, 1998.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.8 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Warehouse
Lease dated July 12, 2000 between RBP, LLC an Alabama Limited Liability Company and the
Registrant for office/warehouse space. Incorporated by reference to Exhibit 10.8 to the
Company&#146;s Form 10-Q for the second quarter ending June 30, 2000 dated August 8, 2000.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.9* </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Termination
Agreement dated as of September 21, 2001 between Registrant and The R.W. Johnson
Pharmaceutical Research Institute and Ortho-McNeil Pharmaceutical, Inc.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.10 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Change
of Control Agreement dated May 25, 2001 between the Registrant and W. Randall Pittman.
Incorporated by reference to Exhibit 10.10 to the Company&#146;s Form 10-K for the year
ending December 31, 2001 dated March 22, 2002.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>99.1 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>99.2 </FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.</FONT></TD>
</TR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2># </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Confidential
treatment granted. </FONT></TD>
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<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>*</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Previously
filed as Exhibit 10.9 to the Company&#146;s Form 10-Q/A for the third quarter ending
September 30, 2001, dated January 15, 2002, with confidential treatment granted.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD ALIGN=LEFT WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reports
on Form 8-K: The following report on Form 8-K was filed by BioCryst on June 17, 2002.</FONT></TD>
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<TD WIDTH=88%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Rights
Agreement, dated as of June 17, 2002, by and between the Company and American Stock
Transfer &amp; Trust Company, as Rights Agent, which includes the Certificate of
Designation for the Series B Junior Participating Preferred Stock as Exhibit A and the
form of Rights Certificate as Exhibit B. </FONT></TD>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES</FONT></H1>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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. </FONT></P>

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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><BR><BR><BR>Date: August 7, 2002</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
BIOCRYST PHARMACEUTICALS, INC.
<BR><BR><BR>
/s/ CHARLES E. BUGG<BR>
&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Charles E. Bugg<BR>
Chairman and Chief Executive Officer
</FONT></TD>
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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: August 7, 2002</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ W. RANDALL PITTMAN<BR>
&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
W. Randall Pittman<BR>
Chief Financial Officer and Chief Accounting Officer
</FONT></TD>
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<DOCUMENT>
<TYPE>EX-10.9
<SEQUENCE>3
<FILENAME>d51245_ex10-9.htm
<DESCRIPTION>EXHIBIT 10.9
<TEXT>
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     <TITLE>Exhibit 10.9</TITLE>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>EXHIBIT 10.9</FONT></H2>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>THIS
TERMINATION AGREEMENT</B> (the &#147;Agreement&#148;), dated as of September 21,
2001 (the &#147;Effective Date&#148;), is hereby entered into by and between
BIOCRYST PHARMACEUTICALS, INC., a Delaware corporation having its principal
place of business at 2190 Parkway Lake Drive, Birmingham, Alabama 35244
(hereinafter referred to as &#147;BIOCRYST&#148;) and ORTHO-McNEIL
PHARMACEUTICAL, INC., a Delaware corporation having its principal office at U.S.
Route 202, Raritan, NJ 08869 and THE R. W. JOHNSON PHARMACEUTICAL RESEARCH
INSTITUTE, a division of ORTHO-McNEIL PHARMACEUTICAL, INC., having its principal
place of business at U.S. Route 202, Raritan, NJ 08869 (hereinafter collectively
referred to as &#147;ORTHO&#148;). BIOCRYST and ORTHO are sometimes referred to
herein individually as a &#147;Party&#148; and collectively as the
&#147;Parties&#148; and all references to BIOCRYST and ORTHO shall include their
respective Affiliates (hereinafter defined), where appropriate under the terms
of this Agreement. </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>W I T N E S S E T H</FONT></H1>

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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
BIOCRYST and ORTHO previously entered into a license agreement dated September
14, 1998 (the &#147;License Agreement&#148;); </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
On April 27, 2001 pursuant to Section 12.1 of the License Agreement, ORTHO
provided notice to BIOCRYST of its election to terminate the License Agreement,
with such termination effective as of the August 27, 2001, and the parties, by
letter agreement, subsequently extended the effective date of termination until
the Effective Date; and, </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>WHEREAS</B>,
the Parties desire to clarify the rights and responsibilities of each Party in
respect of such termination in order to facilitate and expedite the transfer to
BIOCRYST of all activities under the License Agreement related to the
development, manufacture and marketing of a Neuraminidase Inhibitor Product
(collectively, the &#147;Development Program&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>NOW,
THEREFORE</B>, in consideration of the foregoing premises, and the mutual
promises, covenants and agreement hereinafter set forth, the receipt and
sufficiency of which is hereby acknowledged, both Parties to this Agreement
hereby mutually agree as follows: </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Major 10" -->
<H1 ALIGN=LEFT><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SECTION 1. DEFINITIONS</FONT></H1>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Capitalized
terms used in this Agreement shall have the meanings set forth in the License
Agreement unless otherwise defined in this Agreement or unless the context
clearly indicates to the contrary: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.1
&#147;Agreement&#148; shall mean this Termination Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.2
&#147;Clinical and Clinical Support Studies&#148; shall mean any and all
scientific evaluations of neuraminidase inhibitors, including Neuraminidase
Inhibitor Products, performed in connection with the Development Program, and
all related contracts, data and materials arising in connection therewith,
including but not limited to the clinical trials, clinical support studies and
the other items set forth on Schedule A, attached hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.3
&#147;Contracts&#148; shall mean the contracts set forth on Schedule B, attached hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.4
&#147;Data&#148; shall mean all data, notes, databases and information in any
tangible or intangible form, including but not limited to paper, electronic and
magnetic media, arising out of or related to the Development Program, including
but not limited to that (i) arising out of or related to Clinical and Clinical
Support Studies, (ii) underlying or supporting the Regulatory Filings; (iii)
required in order to maintain the integrity of New Drug Application files as
required by law, rule or regulation, and (iv) which is set forth on Schedule D,
attached hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>21</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.5
&#147;Domain Names&#148; shall mean the Internet domain names set forth in the
Trademark Assignment Agreement, attached hereto as Schedule F. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.6
&#147;Drug Substance&#148; shall mean the approximately one thousand six hundred
(1,600) kilograms of GMP grade neuraminidase inhibitor drug substance
(manufactured and maintained in accordance with GMP requirements), approximately
900 kilograms of which has been manufactured according to the final synthesis
method, all of which has been manufactured by ORTHO during the term of the
License Agreement and which is being stored at ORTHO&#146;s facilities in Spring
House, Pennsylvania as of the Effective Date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.7
&#147;Drug Tablets&#148; shall mean the drug tablets specified in Schedule C,
attached hereto, including both placebos and tablets comprised of the
neuraminidase inhibitor manufactured by ORTHO or its Affiliates. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.8
&#147;License Agreement Effective Date&#148; shall mean the effective date of
the License Agreement, September 14, 1998. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.9
&#147;Materials&#148; shall mean those tangible materials generated by,
purchased by or allocated to the Development Program by ORTHO, its contractors
and agents as set forth on Schedule C. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.10
&#147;Purchase Order&#148; shall have the meaning set forth in Section 9.2. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.11
&#147;Regulatory Filings&#148; shall mean all filings with regulatory agencies,
departments, bureaus or other government entities, made in connection with the
Development Program by ORTHO, its agent and contractors in order to allow ORTHO
to market or sell a Neuraminidase Inhibitor Product anywhere in the world,
including but not limited to those regulatory filings set forth on Schedule E,
attached hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1.12
&#147;Trademarks&#148; shall mean the trademarks set forth in the Trademark
Assignment Agreement, attached hereto as Schedule F. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 2. TERMINATION
OF LICENSE AGREEMENT</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.1
The Parties hereby confirm that the License Agreement is hereby terminated in
its entirety pursuant to Section 12.1 of the License Agreement, with such
termination effective as of the Effective Date. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2.2
The Parties hereby confirm and agree that all provisions, rights and obligations
which survive termination of the License Agreement pursuant to the terms of the
License Agreement shall continue to survive, except for Article 26 of the
License Agreement which the Parties hereby agree shall not survive. All
surviving provisions in the License Agreement are hereby supplemented by the
terms of this Agreement. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>22</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

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<!-- MARKER PAGE="sheet: 24; page: 24" -->

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 3. PATENTS AND
INVENTIONS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.1
ORTHO hereby acknowledges and agrees that (i) all of its rights to the Existing
Know-How, Improvements, Existing Patents, and Improvement Patents which arose by
virtue of the License Agreement are terminated; and (ii) BIOCRYST is and shall
be the exclusive owner of all right, title and interest in and to the Existing
Know-How, Improvements, Existing Patents, and Improvement Patents. To the extent
necessary to effectuate the foregoing, ORTHO hereby assigns to BIOCRYST any and
all right, title and interest throughout the world that ORTHO may have in and to
the Existing Know-How, Improvements, Existing Patents, and Improvement Patents. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.2
ORTHO hereby acknowledges and agrees that (i) all of its rights to the Joint
Inventions and Joint Patents by virtue of the License Agreement are terminated;
and (ii) BIOCRYST is and shall be the exclusive owner of all right, title and
interest in and to the Joint Inventions and Joint Patents. To the extent
necessary to effectuate the foregoing, ORTHO hereby assigns to BIOCRYST all of
ORTHO&#146;s right, title and interest throughout the world in and to the Joint
Inventions and the Joint Patents, including but not limited to the Joint
Inventions and Joint Patents set forth on Schedule G, attached hereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3.3
BIOCRYST hereby grants to ORTHO a royalty-free, perpetual, non-sublicenseable,
non-transferable, fully paid-up limited license to use the manufacturing process
claimed in the patent application PCT/US00/15969, all national filings thereof,
and any continuations or divisionals reissues or re-examinations of the
foregoing, solely for ORTHO&#146;s internal business purposes. For purposes of
clarity, internal business purposes shall not include performance of such
processes for any third party or supply of the product of the process to any
third party; however, internal purposes shall include sale of ORTHO products
which are derived from the use of the processes, but which are materially
changed from the product of the process. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 4. TRADEMARKS,
DOMAIN NAMES AND GENERIC NAME</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4.1
The Parties hereby acknowledge that as of the Effective Date and pursuant to the
assignment agreement attached hereto as Schedule F (the &#147;Trademark
Assignment&#148;), ORTHO has assigned to BIOCRYST, at BIOCRYST&#146;s expense,
all right, title and interest in and to the Trademarks and Domain Names and the
applications or registrations therefor, together with the goodwill of the
business symbolized by the Trademarks and Domain Names. The Trademark Assignment
includes the right to sue and recover damages for past and future infringements
of ORTHO&#146;s rights in the Trademarks and the Domain Names and to bring any
proceeding in the United States Patent and Trademark Office or any equivalent
agency in any other country for cancellation or opposition or other proceeding
in connection with the Trademarks and the Domain Names. The right, title and
interest is to be held and enjoyed by BIOCRYST and BIOCRYST&#146;s successors
and assigns as fully and exclusively as it would have been held and enjoyed by
ORTHO had this assignment not been made. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.2 The Parties acknowledge
that the USAN Council has adopted &#147;peramivir&#148; as the United States
Adopted Name for the neuraminidase inhibitor RWJ-270201 for publication in the
USP Dictionary of USAN and International Nonproprietary Names. ORTHO agrees to
provide BIOCRYST with reasonable assistance in updating such publication, or as
other otherwise reasonably requested by BIOCRYST in relation to the use and
maintenance of peramivir as a nonproprietary name. BIOCRYST agrees to bear
ORTHO&#146;s reasonable and actual out-of-pocket costs related thereto. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 5. CONTRACTS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Excepting
only the Excluded Contract Liabilities (defined below), ORTHO hereby assigns and
transfers to BIOCRYST all of ORTHO&#146;s right, title and interest in and to, and
obligations under, the Contracts. BIOCRYST hereby assumes all of the obligations of ORTHO
under the Contracts arising from and after the Effective Date, and agrees to make any
payments, perform all covenants, stipulations, agreements, and obligations under the
Contracts accruing after the Effective Date. In no event, however, shall BIOCRYST be
deemed to have assumed, with respect to the Contracts, (i) any obligation to perform
which accrued prior to the Effective Date, (ii) any financial obligations, including
obligations to make payments or reimburse expenses, which accrued prior to the Effective
Date; (iii) any liabilities arising out of the actions or inactions of ORTHO, its agents
and contractors; or (iv) any liability or obligation attributable to ORTHO&#146;s (or its
agents&#146; or contractors&#146;) breach of any provision of the Contracts or any other
agreements with any third parties, ((i) through (iv) shall be collectively referred to as
the &#147;Excluded Contract Liabilities&#148;).  </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>23</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 6. CLINICAL AND
CLINICAL SUPPORT STUDIES, DATA AND MATERIALS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Excepting
only the Excluded Development Program Liabilities (defined below), ORTHO hereby
assigns to BIOCRYST any and all right, title and interest throughout the world
that ORTHO may have in and to the Clinical and Clinical Support Studies, Data
and Materials. In no event, however, shall BIOCRYST be deemed to have assumed,
with respect to the Clinical and Clinical Support Studies, Data and Materials,
(i) any obligation to perform which accrued prior to the Effective Date, (ii)
any financial obligations, including obligations to make payments or reimburse
expenses, which accrued prior to the Effective Date; (iii) any liabilities
arising out of the actions or inactions of ORTHO its agents and contractors or
arising out of the infringement of any third party intellectual property rights
by ORTHO, its agents and contractors; or (iv) any liability or obligation
attributable to ORTHO&#146;s (or its agents&#146; or contractors&#146;) breach
of any agreements with any third parties, ((i) through (iv) shall be
collectively referred to as the &#147;Excluded Development Program
Liabilities&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 7. REGULATORY
FILINGS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Excepting
only the Excluded Regulatory Liabilities (defined below), ORTHO hereby assigns
to BIOCRYST any and all right, title and interest throughout the world that
ORTHO may have in and to the Regulatory Filings. In no event, however, shall
BIOCRYST be deemed to have assumed, with respect to the Regulatory Filings, (i)
any obligation to perform which accrued prior to the Effective Date, (ii) any
financial obligations, including obligations to make payments or reimburse
expenses, which accrued prior to the Effective Date; (iii) any liabilities
arising out of the actions or in actions of ORTHO, its agents and contractors or
arising out of the infringement of any third party intellectual property rights
by ORTHO, its agents and contractors; or (iv) any liability or obligation
attributable to ORTHO&#146;s (or its agents&#146; or contractors&#146;) breach
of any agreements with any third parties; or (v) any liabilities attributable to
any failure of ORTHO (or its agents or contractors) to comply with any
applicable laws, regulations or rules, (collectively, the &#147;Excluded
Regulatory Liabilities&#148;). </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 8.
CONFIDENTIALITY</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;8.1
The Confidentiality provisions set forth in Article 6 of the License Agreement
are hereby incorporated into this Agreement by reference as if fully set forth
herein, and are hereby extended to cover all information transmitted by either
Party to the other in furtherance of either Party&#146;s obligations under this
Agreement. The parties hereby agree that for confidential information
transmitted pursuant to this Agreement the Parties&#146; confidentiality
obligations shall remain in effect for five (5) years from the date of each such
transmission. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>8.2 The Parties hereby
understand and agree that ORTHO may keep copies of the Data, Materials and
Regulatory Filings and such items reasonably related thereto, solely for
archival and regulatory or legal compliance purposes. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>24</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 9. DRUG SUBSTANCE</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.1
ORTHO hereby agrees to maintain the Drug Substance, as specified in Schedule C,
and to sell to BIOCRYST or its agents or designee(s) (BIOCRYST, its agents and
designees shall be collectively referred to in this Section 9 as
&#147;BIOCRYST&#148;) Drug Substance as requested by BIOCRYST upon the terms and
conditions set forth herein. The provisions of this Section 9 shall apply until
the earlier of (i) such time that all Drug Substance has been purchased from
ORTHO or (ii) August 31, 2002. ORTHO shall not otherwise use the Drug Substance
for itself or on behalf of a Third Party, nor shall it sell the Drug Substance
to any Third Party. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.2
ORTHO agrees to supply BIOCRYST with such quantities of Drug Substance as
BIOCRYST may order by issuing a &#147;Purchase Order&#148; to ORTHO. ORTHO shall
comply with the terms set forth on each Purchase Order. Each Purchase Order will
be substantially in the form of Schedule H, attached hereto, which further sets
forth the terms and conditions that shall govern the purchases of Drug
Substance. In the event of a conflict between the terms of the Purchase Order
and the terms of this Agreement, this Agreement shall prevail. Purchase Orders
shall be delivered to ORTHO via fax, electronically or by any other mutually
agreeable method. ORTHO hereby agrees to fully cooperate with BIOCRYST in
supplying such Drug Substance to BIOCRYST, and agrees to promptly notify
BIOCRYST of any deficiencies in a Purchase Order and of any and all events that
would prevent ORTHO from timely or completely fulfilling any Purchase Order. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.3
Until the earlier of (a) such time that all Drug Substance has been purchased
from ORTHO or (b) August 31, 2002, ORTHO agrees to store the Drug Substance in
its facilities located in Springhouse, PA in a controlled environment (with
respect to temperature, humidity and otherwise) so as to prevent degradation and
contamination of the Drug Substance to the fullest extent possible and as
otherwise required by the FDA or other law, rule, regulation or standards. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.4
BIOCRYST shall pay to ORTHO Four Thousand Dollars ($4,000) per kilogram of Drug
Substance delivered by ORTHO pursuant to a Purchase Order. ORTHO&#146;s right to
payment for delivery of Drug Substance pursuant to a Purchase Order shall accrue
upon delivery of the Drug Substance, however, BIOCRYST shall not be required to
make payment in respect of such delivered Drug Substance unless and until
BIOCRYST enters into an agreement with a third party for such third party to
develop and market a Neuraminidase Inhibitor Product, at which time all accrued
amounts shall become due and payable within 60 days. Thereafter, accrued
payments shall be due and payable within thirty (30) days of receipt by BIOCRYST
of a correct and undisputed invoice from ORTHO. BIOCRYST agrees to provide ORTHO
with prompt notice of its entering into an agreement with a third party for such
third party to develop and market a Neuraminidase Inhibitor Product. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.5
BIOCRYST shall have the right to credit its out-of-pocket expenses related to
testing of the Drug Substance transferred or to be transferred to BIOCRYST
pursuant to this Agreement against the amounts payable to ORTHO pursuant to
Section 9.4, above. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.6
BIOCRYST agrees to bear the reasonable costs of shipping Drug Substance from
storage to BIOCRYST. BIOCRYST agrees to pay any sales tax or other state, city
or Federal taxes related to the purchase of Drug Substance, other than taxes
based on the income or real property of ORTHO. Such shipping costs and taxes
shall be set forth on each invoice and shall be due and payable as set forth in
Section 9.4, above. </FONT></P>


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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>25</FONT></P>

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</TR>
</TABLE>
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<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;9.7
Notwithstanding anything to the Contrary in this Agreement, ORTHO agrees to
provide BIOCRYST, free of charge and promptly upon BIOCRYST&#146;s request with: </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a)
such amounts of Drug Substance as BIOCRYST deems reasonably necessary in order
to complete the clinical studies with the designations PHI 026, PHI 030, and
TX003 and such amounts of the Drug Substance for carcinogenicity studies, animal
studies and QA as referred to in item number 19 of Schedule C-5: and, </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b)
reasonable amount of Drug Substance for BIOCRYST'S own use as laboratory reference
material and for BIOCRYST'S internal research purposes. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 10. PAYMENT
PROVISIONS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
parties acknowledge and agree that as of the Effective Date, each Party is in
complete satisfaction of all of its financial obligations to the other in
connection with the termination of the License Agreement and the transfer to
BIOCRYST of the Development Program. Except as explicitly provided for in this
Agreement, neither Party shall be entitled to seek any further fees, expenses or
reimbursements from the other in connection with the termination of the License
Agreement and the transfer to BIOCRYST of the Development Program including, but
not limited to, all inventions, patents, trademarks, clinical trials and support
studies, data, materials, contracts and regulatory filings. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 11.
REPRESENTATIONS AND WARRANTIES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.1
Each Party hereby represents and warrants that it is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware and has full organizational power and authority to enter into and
perform this Agreement, and to carry out the transactions contemplated under
this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.2
ORTHO hereby represents and warrants that (i) the execution, delivery and
performance by ORTHO of this Agreement, and the consummation by ORTHO of the
transactions contemplated herein, have been duly authorized by all requisite
organizational action; (ii) this Agreement and all of the obligations entered
into and undertaken in connection with the transactions contemplated herein to
which ORTHO is a party constitute, or will constitute upon the execution of such
agreements, the valid and binding obligations of ORTHO enforceable in accordance
with their respective terms, and (iii) the execution of and performance of the
transactions contemplated by this Agreement and compliance with its provisions
by ORTHO will not violate any provision of applicable law and will not conflict
with or result in any breach of any of the terms, conditions or provisions of,
or constitute a default under, or require a consent or waiver under,
ORTHO&#146;s organizational documents or any indenture, lease, agreement or
other instrument to which ORTHO is a party or by which it or any of its
properties is bound, or any decree, judgment, order, statute, rule or regulation
applicable to ORTHO. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.3
ORTHO hereby represents and warrants that: (i) it has made diligent efforts to
transfer to BIOCRYST (and will in the future) all Regulatory Filings, Clinical
and Clinical Support Studies, Data and Materials, according to the time
schedules set forth in Schedules E, A, D and C, respectively and should
additional items related to the foregoing be discovered by ORTHO or otherwise,
ORTHO will use diligent efforts to transfer such items to BIOCRYST and otherwise
assist BIOCRYST in connection therewith; (ii) it has filed all letters and other
documents with the FDA (and all foreign equivalents) in order to effect a
transfer of the Regulatory Filings to BIOCRYST; (iii) the Regulatory Filings,
Clinical and Clinical Support Studies, Data and Materials transferred to
BIOCRYST include all Regulatory Filings, Clinical and Clinical Support Studies,
Data and Materials initiated, conducted or generated in the Development Program;
and, (iv) it has or will otherwise fully comply with Article 14 of the License
Agreement together with all related time schedules set forth in this Agreement
and the Schedules hereto. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>26</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 28; page: 28" -->

<!-- MARKER FORMAT-SHEET="Page Width Begin Rule" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.4
ORTHO hereby represents and warrants that it has the full power and authority to
assign to BIOCRYST all right title and interest in and to, and obligations
under, the Regulatory Filings, Clinical and Clinical Support Studies, Data and
Materials. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.5
ORTHO hereby represents and warrants that, to the best of its knowledge, and
except for the interests of BIOCRYST, it has the full power and authority to
assign to BIOCRYST all right title and interest in and to the Joint Inventions,
Joint Patents, Existing Know-How, Existing Patents, Improvements and Improvement
Patents free and clear of all liens, claims and encumbrances of any nature.
ORTHO further represents and warrants that it has not granted and will not grant
any right to any Third Party in or to the Joint Inventions, Joint Patents,
Existing Know-How, Existing Patents, Improvements and Improvement Patents. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.6
ORTHO hereby represents and warrants (i) that it has the full power and
authority to assign to BIOCRYST all right, title and interest in and to, and
obligations under, the Contracts, (ii) that it has satisfied all financial
obligations under, and all liabilities arising out of, the Contracts which
accrued prior to the Effective Date, and (iii) that it is not in breach of any
of the Contracts. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.7
ORTHO hereby represents and warrants that it has complied and in the future will
continue to comply with all applicable laws, rules and regulations in connection
with its, or its agents and contractors, conduct of the Development Program. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.8
ORTHO hereby represents and warrants that there is no threatened or pending
litigation related to the Development Program including but not limited to the
Licensed Products, the Contracts and the Clinical and Clinical Support Studies. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.9
ORTHO hereby represents that all Drug Substance and other drug materials
transferred to BIOCRYST hereunder and in connection with the termination of the
License Agreement and the transfer to BIOCRYST of the Development Program at the
time of transfer to BIOCRYST that are labeled for use in human clinical trials,
pursuant to Schedule C, and not labeled for laboratory use or otherwise shipped
under quarantine pursuant to Schedule C, met (or will meet) all applicable FDA
requirements and were approved to be administered to humans in connection with
clinical trials. However, it is understood that, pursuant to Schedule C some
Drug Substance may be shipped to BIOCRYST in quarantine status. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;11.10
THE EXPRESS REPRESENTATIONS AND WARRANTIES STATED IN THIS ARTICLE 11 ARE IN LIEU
OF ALL OTHER REPRESENTATIONS AND WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
WITHOUT LIMITATION, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A
PARTICULAR PURPOSE. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 12.
INDEMNIFICATION</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.1
BIOCRYST agrees to indemnify, defend and hold ORTHO and its directors, officers,
employees and agents (the &#147;ORTHO Indemnitees&#148;) harmless from and
against any losses, costs, claims, damages, liabilities or expenses (including
without limitation, fees and disbursements of counsel incurred by ORTHO
Indemnitees in any action or proceeding between ORTHO and ORTHO Indemnitees and
ORTHO Indemnitees and any third party or otherwise) (collectively,
&#147;Liabilities&#148;) arising out of, or in connection with Third Party
claims relating to: (i) any breach by BIOCRYST of the confidentiality provisions
of this Agreement, (ii) personal injury or other liability, which occurs after
the Effective Date, to a participant in any clinical trial conducted by BIOCRYST
of a neuraminidase inhibitor which was the subject of the Development Program;
(iii) Liabilities, accruing after the Effective Date based upon BIOCRYST&#146;S
or its agents or contractor&#146;s, use, sale, distribution or marketing of any
neuraminidase inhibitor which was the subject of the Development Program; (iv)
BIOCRYST&#146;s failure to comply with any law, regulation or rule; and, (v) the
gross negligence or intentional misconduct of BIOCRYST. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>27</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

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<!-- MARKER FORMAT-SHEET="Page Width Begin Rule" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.2
ORTHO agrees to indemnify, defend and hold BIOCRYST and its directors, officers,
employees and agents (the &#147;BIOCRYST Indemnitees&#148;) harmless from and
against any losses, costs, claims, damages, liabilities or expense (including
without limitation, fees and disbursements of counsel incurred by BIOCRYST
Indemnitees in any action or proceeding between ORTHO and BIOCRYST Indemnitees
and BIOCRYST Indemnitees and any third party or otherwise) (collectively,
&#147;Liabilities&#148;) arising out of, or in connection with Third Party
claims relating to: (i) the Development Program prior to the Effective Date;
(ii) any breach by ORTHO of its representations and warranties under this
Agreement; (iii) any breach by ORTHO of the confidentiality provisions of this
Agreement, (iv) any breach by ORTHO in the performance or observation of any
covenant, agreement, obligation or provision in any of the Contracts to be
performed or observed by ORTHO, (v) the Clinical and Clinical Support Studies
prior to the Effective Date, (vi) ORTHO&#146;s failure to comply with any law,
regulation or rule, (vii) the administration of Drug Tablets, Drug Substance or
any other drug tablets manufactured by ORTHO from Drug Substance, to humans, to
the extent that such Liabilities are attributable to any failure of ORTHO in
properly manufacturing or storing the foregoing, or any failure of ORTHO to meet
any and all requirements of the FDA with respect to manufacture or storage of
the foregoing, and (viii) the negligence or intentional misconduct of ORTHO. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;12.3
An indemnitee that intends to claim indemnification under this Agreement shall
promptly notify indemnifying party of any claim, demand, action or other
proceeding for which the Indemnitee intends to claim such indemnification, and
the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, to assume sole control of the defense
thereof with counsel selected by the indemnifying party; provided, however, that
the Indemnitee shall have the absolute right to retain its own counsel, with the
fees and expenses to be paid by the Indemnitee. The indemnity obligations under
this Agreement shall not apply to amounts paid in settlement of any loss, claim,
damage, liability or action if such settlement is effected without the consent
of the indemnifying party, which consent shall not be unreasonably withheld or
delayed. The Indemnitee, its employees and agents, shall cooperate fully with
the indemnifying party and its legal representatives in the investigation of any
action, claim or liability covered by an indemnification from the indemnifying
party. The Indemnifying party shall not, without the prior written consent of
the Indemnitee, effect any settlement of any pending or threatened action, suit
or proceeding in respect of which any Indemnitee is or could have been a party
and indemnity could have been sought hereunder by such Indemnitee, unless such
settlement includes an unconditional release of such Indemnitee from all
liability on claims that are the subject matter of such action, suit or
proceeding. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 13. FURTHER
ASSURANCES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.1
In addition to the actions specifically provided for elsewhere in this
Agreement, from and after the Effective Date, each of the parties hereto shall
take, or cause to be taken, all actions, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable laws,
regulations and agreements to consummate and make effective the transactions
contemplated by this Agreement and to reasonably aid BIOCRYST in its assumption
and continuation of the Development Program, including the execution and
delivery of instruments of conveyance, assignment and transfer, cooperation in
all filings with, and to obtain all consents, approvals or authorizations of,
any governmental authority or any other person under any permit, license,
agreement, indenture or other instrument, at the expense of the requesting
party. </FONT></P>


<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>28</FONT></P>

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</TD>
</TR>
</TABLE>
<BR>

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<!-- MARKER PAGE="sheet: 30; page: 30" -->

<!-- MARKER FORMAT-SHEET="Page Width Begin Rule" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.2
In the event that following the Effective Date ORTHO discovers any document,
data, contract, invention, patent, or any other item related to the Development
Program, which has not been transferred to BIOCRYST but which ORTHO is obligated
to transfer and/or assign to BIOCRYST pursuant to the License Agreement, or
makes any invention that would be characterized as a Joint Invention under the
License Agreement, ORTHO shall promptly notify BIOCRYST and assign and transfer
the foregoing to BIOCRYST. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;13.3
In the event that ORTHO is contacted by any third party (including for example,
the FDA), in any fashion regarding the subject matter of the Development
Program, ORTHO shall promptly notify BIOCRYST of the of the nature and substance
of such contact or inquiry and shall comply with its confidentiality obligations
set forth herein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 14.
INTERPRETATION</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
construction, validity and performance of this Agreement shall be governed in
all respects by the laws of the State of New York, without giving effect to
principles of conflict of laws. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 15. DISPUTE
RESOLUTION</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
Dispute Resolution provisions set forth in Article 19 of the License Agreement
are hereby incorporated into this Agreement by reference, and shall apply to
this Agreement as if fully set forth herein. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 16. NOTICES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;16.1
Any notice required or permitted to be given under this Agreement shall be
mailed by registered or certified mail, postage prepaid, addressed to the Party
to be notified at its address stated below, or at such other address as may
hereafter be furnished in writing to the notifying Party or by telefax (with
confirmation sent by mail) to the numbers set forth below or to such changed
telefax numbers as may thereafter be furnished. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
If
to BIOCRYST:</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
BIOCRYST Pharmaceuticals, Inc.<BR>
2190 Parkway Lake Drive<BR>
Birmingham, Alabama 35244<BR>
Telefax No.: (205) 444-4640<BR>
Attention:  Chief Executive Officer
</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
If
to ORTHO:</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Para Flush 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0 BORDER=0>
<TR VALIGN=TOP>
<TD WIDTH=6%>&nbsp;</TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
President<BR>
ORTHO-McNeil Pharmaceutical, Inc.<BR>
U.S. Route 202 South<BR>
Raritan, NJ 08869-0602<BR>
Telefax No.: (908) 218-1416
</FONT></TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Width Start" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>

<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Any such notice shall be
deemed to have been received when it has been delivered in the ordinary course
of post or received by telefax. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>29</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

<!-- *************************************************************************** -->
<!-- MARKER PAGE="sheet: 31; page: 31" -->

<!-- MARKER FORMAT-SHEET="Page Width Begin Rule" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 17. WAIVER</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The
failure on the part of BIOCRYST or ORTHO to exercise or enforce any rights
conferred upon it hereunder shall not be deemed to be a waiver of any such
rights nor operate to bar the exercise or enforcement thereof at any time or
times thereafter. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 18. ENTIRE
AGREEMENT</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement constitutes the entire agreement between the Parties hereto concerning
the subject matter hereof and any representation, promise or condition in
connection therewith, not incorporated herein, shall not be binding upon either
Party. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 19. ASSIGNMENT</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement, and all rights and obligations hereunder, is personal to ORTHO and
shall not be assigned in whole or in part by ORTHO to any other person or
company (other than Affiliates of ORTHO) without the prior written consent of
BIOCRYST. When assigned as permitted herein this Agreement shall be binding on
each Party&#146;s successors and assigns. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 20. TITLES</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;It
is agreed that the marginal headings appearing at the beginning of the numbered
Articles hereof have been inserted for convenience only and do not constitute
any part of this Agreement. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 21.
UNENFORCEABLE PROVISIONS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any
provision hereof which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective only to the extent of such prohibition
or unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provisions in any other
jurisdiction. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 22. OTHERS</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As
used in this Agreement, singular includes the plural and plural includes the
singular, wherever so required by fact or context. </FONT></P>

<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>SECTION 23. EXECUTION</FONT></H2>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This
Agreement shall be executed in two (2) counterparts each of which shall for all
purposes be deemed an original. </FONT></P>

<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their respective duly authorized officers or representatives as of the day and
year first above written. </FONT></P>

<!-- MARKER FORMAT-SHEET="Page Number Center" -->
<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>30</FONT></P>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD><HR SIZE=5 NOSHADE>
<BR>

<!-- MARKER FORMAT-SHEET="Page Width End" -->
</TD>
</TR>
</TABLE>
<BR>

<!-- MARKER FORMAT-SHEET="Signature (Single)" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST PHARMACEUTICALS, INC.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WITNESS</FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
By:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Title:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;<BR>
Date:<BR>
&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;&#151;
</FONT></TD>
</TR>
</TABLE>
<BR><BR>

<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>ORTHO-McNEIL PHARMACEUTICAL, INC.</FONT></TD>
</TR>
<TR VALIGN=TOP>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
</TR>
<TR VALIGN=TOP>
<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>WITNESS</FONT></TD>
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By:<BR>
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Title:<BR>
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Date:<BR>
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     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>&nbsp;</FONT></TD>
     <TD><FONT FACE="Times New Roman, Times, Serif" SIZE=2>R.W. JOHNSON PHARMACEUTICAL RESEARCH INSTITUTE, DIVISION OF ORTHO-McNEIL PHARMACEUTICAL, INC.</FONT></TD>
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By:<BR>
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Title:<BR>
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Date:<BR>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>31</FONT></P>

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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<FILENAME>d51245_ex99-1.htm
<DESCRIPTION>EXHIBIT 99.1
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<P ALIGN="RIGHT"><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><B>Exhibit 99.1</B> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION
PURSUANT TO<BR>18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
Quarterly Report of BioCryst Pharmaceuticals, Inc. (the &#147;Company&#148;) on
Form 10-Q for the period ending June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the &#147;Report&#148;), I, Charles E.
Bugg, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
&sect; 1350, as adopted pursuant to &sect; 906 of the Sarbanes-Oxley Act of
2002, that: </FONT></P>

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(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and </FONT></TD>
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(2)
The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company. </FONT></TD>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ Charles E. Bugg<BR>
Charles E. Bugg<BR>
Chief Executive Officer<BR>
August 7, 2002</FONT></P>

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<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>5
<FILENAME>d51245_ex99-2.htm
<DESCRIPTION>EXHIBIT 99.2
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<P ALIGN="RIGHT"><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2><B>Exhibit 99.2</B> </FONT></P>

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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>CERTIFICATION
PURSUANT TO<BR>18 U.S.C. SECTION 1350,<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</FONT></H1>

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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>In connection with the
Quarterly Report of BioCryst Pharmaceuticals, Inc. (the &#147;Company&#148;) on
Form 10-Q for the period ending June 30, 2002 as filed with the Securities and
Exchange Commission on the date hereof (the &#147;Report&#148;), I, W. Randall
Pittman, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C.
&sect; 1350, as adopted pursuant to &sect; 906 of the Sarbanes-Oxley Act of
2002, that: </FONT></P>

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(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the
Securities Exchange Act of 1934; and </FONT></TD>
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(2)
The information contained in the Report fairly presents, in all material respects, the
financial condition and result of operations of the Company. </FONT></TD>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>/s/ W. Randall Pittman<BR>
W. Randall Pittman<BR>
Chief Financial Officer<BR>
August 7, 2002</FONT></P>

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