~~- ------------------------------------------------------------------------------------------------------------------------------------~~

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q - ------------------------------------------------------------------------------------------------------------------------------------ {X}

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

For the quarterly period ended ~~September~~June 30, ~~2002 Commission File No. 0-19131~~ 2003

MedImmune, Inc. (Exact
(Exact name of registrant as specified in its charter) Delaware 52-1555759 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.)


Delaware	0-19131	52-1555759
(State or other jurisdiction of	(Commission File No.)	(I.R.S. Employer Identification No.)
incorporation or organization)

35 West Watkins Mill Road, Gaithersburg, MD 20878 ~~(Address~~
(Address of principal executive offices) (Zip Code) ~~Registrant's~~

Registrant’s telephone number, including area code (301) 417-0770

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act). Yes [X] No [ ]

As of ~~November 6, 2002, 251,011,129~~August 5, 2003, 249,836,270 shares of Common Stock, par value $0.01 per share, were outstanding.

MEDIMMUNE, INC.
Index to Form 10-Q

			Page
	Part I-- FINANCIAL INFORMATION
	Item 1. Consolidated Financial Statements
	Consolidated Balance Sheets		1
	Consolidated Statements of Operations		2
	Condensed Consolidated Statements of Cash Flows		3
	Notes to Consolidated Financial Statements		4-9
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		10-21
	Item 3. Quantitative and Qualitative Disclosures About Market Risk		21
	Item 4. Controls and Procedures		22
	Part II-- OTHER INFORMATION
	Item 1. Legal Proceedings		23
	Item 2. Changes in Securities and Use of Preceeds		23
	Item 3. Defaults Upon Senior Securities		23
	Item 4. Submission of Matters to a Vote of Security Holders		23
	Item 5. Other Information		24
	Item 6. Exhibits and Reports on Form 8-K		24

Trademark information: Synagis® (palivizumab), CytoGam® (cytomegalovirus immune globulin intravenous (human)), RespiGam® (respiratory syncytial virus immune globulin intravenous (human)), and Vitaxin® are registered trademarks of MedImmune, Inc. NumaxTM is a trademark of MedImmune, Inc. Ethyol® (amifostine) and NeuTrexin® (trimetrexate glucuronate for injection) are registered trademarks of MedImmune Oncology, Inc. FluMistTM (Influenza Virus Vaccine Live, Intranasal) is a trademark of MedImmune Vaccines, Inc.

_________________

Unless otherwise indicated, this quarterly report is as of June 30, 2003. This quarterly report will not be updated as a result of new information or future events.

PART I Financial Information Page ---- Item 1. Consolidated Financial Statements Consolidated Balance Sheets 1 Consolidated Statements of Operations 2 Condensed Consolidated Statements of Cash Flows 3 Notes to Consolidated Financial Statements 4-14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 15-26 Item 3. Quantitative and Qualitative Disclosures About Market Risk 26 Item 4. Controls and Procedures 27 Part II Other Information Item 1. Legal Proceedings 28 Item 2. Changes in Securities 31 Item 3. Defaults upon Senior Securities 31 Item 4. Submission of Matters to a Vote of Security Holders 31 Item 5. Other Information 31 Item 6. Exhibits and Reports on Form 8-K 31 Synagis, CytoGam, Ethyol, RespiGam, Vitaxin and NeuTrexin are registered trademarks of the Company. FluMist and Numax are trademarks of the Company. – FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

MEDIMMUNE, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share data) September 30, December 31, 2002 2001 ---------------- ---------------- ASSETS: (Unaudited) Cash and cash equivalents $118,600 $171,255 Marketable securities 335,685 217,067 Trade receivables, net 33,039 126,371 Inventory, net 53,145 50,836 Deferred tax assets 21,946 27,280 Other current assets 15,327 9,063 ------------- ------------- Total Current Assets 577,742 601,872 Marketable securities 779,473 389,368 Property and equipment, net 167,161 95,402 Deferred tax assets, net 281,845 136,361 Intangible assets, net 117,436 -- Goodwill 14,996 -- Other assets 8,744 13,852 ------------- ------------- Total Assets $1,947,397 $1,236,855 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY: Accounts payable $7,675 $5,873 Accrued expenses 82,232 112,434 Product royalties payable 17,242 47,720 Deferred revenue 9,334 13,839 Other current liabilities 9,651 2,149 ------------- ------------- Total Current Liabilities 126,134 182,015 Long-term debt 218,220 8,791 Other liabilities 27,034 1,776 ------------- ------------- Total Liabilities 371,388 192,582 ------------- ------------- Commitments and Contingencies SHAREHOLDERS' EQUITY: Preferred stock, $.01 par value; authorized 5,524,525 shares; none issued or outstanding -- -- Common stock, $.01 par value; authorized 320,000,000 shares; issued and outstanding 250,923,936 at September 30, 2002 and 214,484,084 at December 31, 2001 2,509 2,145 Paid-in capital 2,607,009 891,627 Deferred compensation (12,383) -- Accumulated (deficit) earnings (1,040,731) 141,875 Accumulated other comprehensive income 19,605 8,626 ------------- ------------ Total Shareholders' Equity 1,576,009 1,044,273 ------------- ------------- Total Liabilities and Shareholders' Equity $1,947,397 $1,236,855 ============= =============
(in thousands)

	June 30,			December 31,
	2003			2002
	(Unaudited)
ASSETS:
Cash and cash equivalents	$	105,523		$	130,056
Marketable securities		286,761			396,882
Trade receivables, net		6,039			113,774
Inventory, net		81,379			59,963
Deferred tax assets		18,555			25,735
Other current assets		37,543			17,023

Total Current Assets		535,800			743,433
Marketable securities		1,195,689			896,118
Property and equipment, net		215,520			183,992
Deferred tax assets, net		167,213			222,038
Intangible assets, net		104,955			113,275
Goodwill		15,970			15,970
Other assets		24,878			13,463

Total Assets	$	2,260,025		$	2,188,289

LIABILITIES AND SHAREHOLDERS' EQUITY:
Accounts payable	$	12,300		$	19,773
Accrued expenses		101,619			157,359
Product royalties payable		47,633			74,048
Deferred revenue		2,209			6,789
Other current liabilities		9,622			8,684

Total Current Liabilities		173,383			266,653
Long-term debt		216,203			217,554
Obligations to Evans		25,135			24,755
Other liabilities		1,985			2,093

Total Liabilities		416,706			511,055

Commitments and Contingencies
SHAREHOLDERS' EQUITY:
Preferred stock, $.01 par value; authorized
5,525 shares; none issued or outstanding		--			--
Common stock, $.01 par value; authorized
420,000 shares; issued and outstanding
252,391 at June 30, 2003 and
251,262 at December 31, 2002		2,524			2,513
Paid-in capital		2,638,189			2,613,075
Deferred compensation		(2,971	)		(6,823	)
Accumulated deficit		(833,165	)		(956,140	)
Accumulated other comprehensive income		38,742			24,609

Total Shareholders' Equity		1,843,319			1,677,234

Total Liabilities and Shareholders' Equity	$	2,260,025		$	2,188,289

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

MEDIMMUNE, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) ~~(in~~
(in thousands, except share data) For the For the three months ended nine months ended September 30, September 30, 2002 2001 2002 2001 ------------------------------------------------------------------- Revenues: Product sales $59,233 $39,991 $437,231 $303,508 Other revenue 13,401 7,419 28,758 22,468 ----------- ---------- ----------- ----------- Total revenues 72,634 47,410 465,989 325,976 ----------- ---------- ----------- ---------- Costs and expenses: Cost of sales 22,296 16,340 117,815 76,270 Research and development 31,822 21,224 110,436 61,616 Selling, general and administrative 51,197 44,228 194,191 128,170 Other operating expenses 24,118 2,074 68,111 7,669 Acquired in-process research and development -- -- 1,179,321 -- ----------- ---------- ----------- ---------- Total expenses 129,433 83,866 1,669,874 273,725 ----------- ---------- ----------- ---------- Operating (loss) income (56,799) (36,456) (1,203,885) 52,251 Interest income 13,275 9,186 37,181 28,418 Interest expense (2,326) (148) (6,964) (447) Loss on investment activities (10,557) -- (10,666) -- ----------- ---------- ----------- ---------- (Loss) earnings before income taxes (56,407) (27,418) (1,184,334) 80,222 (Benefit) provision for income taxes (20,115) (8,444) (1,728) 29,768 ----------- ---------- ----------- ---------- Net (loss) earnings $(36,292) $(18,974) $(1,182,606) $50,454 =========== ========== =========== ========== Basic (loss) earnings per share $(0.14) $(0.09) $(4.75) $0.24 =========== ========== =========== ========== Shares used in calculation of basic (loss) earnings per share 250,830 213,876 249,080 213,075 =========== ========== =========== ========== Diluted (loss) earnings per share $(0.14) $(0.09) $(4.75) $0.23 =========== ========== =========== ========== Shares used in calculation of diluted (loss) earnings per share 250,830 213,876 249,080 219,864 =========== ========== =========== ==========data)

			For the					For the
			three months ended					six months ended
			June 30,					June 30,
	2003			2002			2003			2002
Revenues:
Product sales	$	85,864		$	57,330		$	518,299		$	377,998
Other revenue		31,935			6,392			35,446			15,357

Total revenues		117,799			63,722			553,745			393,355

Costs and expenses:
Cost of sales		23,197			15,642			126,028			95,519
Research and development		28,904			34,545			59,568			78,614
Selling, general and administrative		55,495			47,354			173,581			142,994
Other operating expenses		1,415			22,152			22,871			43,993
Acquired in-process research and development		--			--			--			1,179,321

Total expenses		109,011			119,693			382,048			1,540,441

Operating income (loss)		8,788			(55,971	)		171,697			(1,147,086	)
Interest income		14,310			11,863			27,300			23,797
Interest expense		(1,604	)		(1,767	)		(3,403	)		(4,529	)
Loss on investment activities		(139	)		(109	)		(396	)		(109	)

Earnings (loss) before income taxes		21,355			(45,984	)		195,198			(1,127,927	)
Provision (benefit) for income taxes		7,901			(16,528	)		72,223			18,387

Net earnings (loss)	$	13,454		$	(29,456	)	$	122,975		$	(1,146,314	)

Basic earnings (loss) per share	$	0.05		$	(0.12	)	$	0.49		$	(4.62	)

Shares used in calculation of basic earnings (loss) per
share		252,106			250,161			251,836			248,110

Diluted earnings (loss) per share	$	0.05		$	(0.12	)	$	0.48		$	(4.62	)

Shares used in calculation of diluted earnings (loss) per
share		258,200			250,161			257,390			248,110

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

MEDIMMUNE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) (in thousands) For the nine months ended September 30, 2002 2001 ------------ ----------- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) earnings $(1,182,606) $50,454 Noncash items: Acquired in-process research and development 1,179,321 -- Deferred taxes 2,226 25,494 Deferred revenue (6,322) (14,361) Depreciation and amortization 25,723 6,838 Amortization of premium (discount) on marketable securities 6,964 (2,789) Amortization of deferred compensation 14,414 -- Amortization of bond premium (1,353) -- Loss on investment activities 10,666 -- Change
(in reserve for inventory (1,299) 5,958 Change in allowances for trade accounts receivable 4,872 (3,118) Change in reserve for government rebates (7,972) (7,145) Change in restructuring liability for non-cash employee termination costs 9,989 -- Other 1,305 31 Other changes in assets and liabilities, net of effects of Aviron acquisition (12,758) 52,897 ----------- ---------- Net cash provided by operating activities 43,170 114,259 ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Increase in marketable securities (227,214) (169,555) Net cash acquired in acquisition of Aviron 146,853 -- Capital expenditures, net of capitalized interest (48,431) (9,947) Minority interest investments (3,735) (11,500) ----------- ---------- Net cash used in investing activities (132,527) (191,002) ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from issuance of common stock and exercise of stock options 40,936 18,730 Decrease in long-term debt and other long-term obligations (4,434) (576) ----------- ---------- Net cash provided by financing activities 36,502 18,154 ----------- ---------- Effect of exchange rate changes on cash 200 (46) Net decrease in cash and cash equivalents (52,655) (58,635) Cash and cash equivalents at beginning of period 171,255 84,974 ----------- ---------- Cash and cash equivalents at end of period $118,600 $26,339 =========== ========== thousands)

	For the
	six months ended
	June 30,
	2003			2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss)	$	122,975		$	(1,146,314	)
Noncash items:
Acquired in-process research and development		--			1,179,321
Deferred taxes		67,041			22,383
Deferred revenue		(4,580	)		(3,049	)
Depreciation and amortization		18,497			16,415
Amortization of premium on marketable securities		7,381			4,480
Amortization of deferred compensation		2,666			11,823
Amortization of premium on convertible subordinated notes		(933	)		(886	)
Losses on writedowns of inventory		20,519			6,453
Decrease in sales allowances		(27,461	)		(937	)
Decrease in restructuring liability for cash employee termination costs		(251	)		(4,802	)
Other		1,438			1,396
Other changes in assets and liabilities, net of effects of acquisition of Aviron		(12,709	)		69,014

Net cash provided by operating activities		194,583			155,297

CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in marketable securities		(183,567	)		(379,863	)
Net cash acquired in acquisition of Aviron		--			146,853
Capital expenditures		(43,573	)		(37,987	)
Investments in strategic alliances		(11,780	)		(3,734	)

Net cash used in investing activities		(238,920	)		(274,731	)

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		20,272			38,146
Repayments on long-term obligations		(415	)		(389	)

Net cash provided by financing activities		19,857			37,757

Effect of exchange rate changes on cash		(53	)		99
Net decrease in cash and cash equivalents		(24,533	)		(81,578	)
Cash and cash equivalents at beginning of period		130,056			171,255

Cash and cash equivalents at end of period	$	105,523		$	89,677

Supplemental schedule of noncash investing and financing activities:

During January 2002, the Company acquired 100% of the outstanding capital stock of Aviron through an exchange offer and merger transaction. The Company exchanged approximately 34.0 million of its common shares for all of the outstanding shares of Aviron common stock and assumed ~~Aviron's~~Aviron’s outstanding options and warrants, for which approximately 7.0 million additional shares of the ~~Company's~~Company’s common stock are issuable. The estimated fair value of the net assets acquired was $1,635.1 million, and included $1,179.3 million of acquired research and development assets that were charged to ~~current period~~our 2002 results at the date of acquisition and $211.4 million of 5 ~~1/4%~~¼ % convertible subordinated notes (the “Notes”) due in 2008.

The accompanying notes are an integral part of these ~~consolidated~~ financial statements.

MEDIMMUNE, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

1. Organization

MedImmune, Inc., a Delaware corporation (together with its subsidiaries, the “Company”), is a biotechnology company headquartered in Gaithersburg, Maryland. During January 2002, the Company completed its acquisition of Aviron, subsequently renamed MedImmune Vaccines, Inc., a vaccines company headquartered in Mountain View, California, through an exchange offer and merger transaction (the “Acquisition”). The Acquisition was accounted for as a purchase, and the results of operations of MedImmune Vaccines are included in the results of the Company effective January 10, 2002.

On June 17, 2003, the U.S. Food and Drug Administration (FDA) approved the biologics license application for the commercial sale of FluMist, the first influenza vaccine delivered as a nasal mist available in the United States. FluMist is indicated for active immunization for the prevention of disease caused by influenza A and B viruses in healthy people, 5-49 years of age. MedImmune manufactures FluMist and co-promotes FluMist with a division of Wyeth.

In addition to FluMist, the Company currently actively markets three other products, Synagis, Ethyol and CytoGam, and is developing a diverse pipeline of potential future products. The Company is focused on developing new products, particularly vaccines and antibodies that address significant medical needs in the areas of infectious diseases, immunology and oncology.

2. Summary of Significant Accounting Policies

General

The financial information presented ~~in the consolidated financial statements at September 30, 2002~~as of and for the three months and ~~nine~~six months ended ~~September~~June 30, 2003 (“Q2 2003” and “YTD 2003,” respectively) and as of and for the three months and six months ended June 30, 2002 (“Q2 2002” and ~~2001~~“YTD 2002,” respectively) is unaudited. In the opinion of the ~~Company's~~Company’s management, the financial information presented herein contains all adjustments, ~~(which~~which consist only of normal recurring ~~adjustments)~~adjustments, necessary for a fair presentation of results for the interim periods presented. Interim results are not necessarily indicative of results for an entire year or for any subsequent interim period. These consolidated financial statements should be read in conjunction with the ~~Company's~~Company’s annual report on Form 10-K for the year ended December 31, ~~2001. Organization MedImmune, Inc., a Delaware corporation (together~~2002.

Stock-based Compensation

Compensation costs attributable to stock option and similar plans are recognized based on any excess of the quoted market price of the stock on the date of grant over the amount the employee is required to pay to acquire the stock, in accordance with ~~its subsidiaries,~~ the ~~"Company"~~intrinsic-value method under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”),. Such amount, if any, is a biotechnology company headquartered in Gaithersburg, Maryland. The Company currently actively markets three products, Synagis, Ethyol, and CytoGam, and maintains a diverse research and development pipeline. The Company is focused on developing important new products that address significant medical needs inaccrued over the ~~areas of infectious diseases, immunology and oncology. During January~~related vesting period.

In December 2002, the ~~Company completed its acquisition~~FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation-Transition and Disclosure” (“SFAS 148”). SFAS 148 amends SFAS No. 123, “Accounting for Stock-Based Compensation (“SFAS 123”),” to provide alternative methods of ~~Aviron, subsequently renamed MedImmune Vaccines, Inc.,~~transition for a ~~biopharmaceutical company headquartered~~voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in ~~Mountain View, California, through an exchange offer~~both annual and ~~merger transaction (the "Acquisition"). The Acquisition was accounted~~interim financial statements about the method of accounting for ~~as a purchase,~~stock-based employee compensation and the ~~results of operations of MedImmune Vaccines are included in the results~~effect of the ~~Company~~method used on reported results. The alternative methods of transition and additional disclosure requirements of SFAS 148 are effective January ~~10, 2002. Seasonality~~ 1, 2003.

The ~~Company's largest product, Synagis, is used to prevent respiratory syncytial virus ("RSV") in high-risk infants. RSV is most prevalent in~~following table illustrates the winter months in the northern hemisphere. Because of the seasonal nature of RSV, limited sales, if any, of Synagis, are expected during the second and third quarters of any calendar year, causing results to vary significantly from quarter to quarter. Reclassification Certain prior year amounts have been reclassified to conform to the current presentation. New Accounting Standard Effective January 1, 2002, the Company adopted SFAS No. 142 ("SFAS 142"), "Goodwill and Other Intangible Assets." Inasmuch as the Company had no recorded goodwill or intangible assets prior to the January 2002 acquisition of Aviron, the adoption of SFAS 142 did not have an impact on the Company's financial position, results of operations, or cash flows. Change in Accounting Method For new contracts executed or acquired after January 1, 2002, the Company has changed its accounting method for contract revenues such that the Company may recognize contract revenues associated with substantive at-risk performance milestones when the milestone is achieved, when no future service obligation is attendant to that milestone and when the related revenue is due and payable under the milestone payment method. The change in accounting principle was made to more closely reflect the essence of the Company's contractual obligations with collaborative partners. Also, the new method is prevalent in the industry in which the Company operates. The effect on net earnings and earnings per share for the three months and nine months ended September 30, 2002 is not material. Significant Accounting Policies Contract Revenues - For contracts executed prior to January 1, 2002, contract revenues are recognized during each period based on a percentage-of-completion model based on actual costs incurred relative to the total projected costs. Upfront fees and milestone payments under collaborative agreements are recognized when they are earned in accordance with the applicable performance requirements and contractual terms, using the contingency-adjusted performance (percentage-of-completion) model. Under this method, payments received that are related to future performance are deferred and recorded as revenues as they are earned over specified future performance periods. Recognized revenues are subject to revisions as the collaboration efforts progress and estimated costs to complete are revised. For new contracts executed or acquired after January 1, 2002,if the Company ~~uses~~had applied the ~~milestone payment method when all milestones~~fair value recognition provisions of SFAS 123 to ~~be received under contractual arrangements~~stock-based employee compensation (in millions, except per share data):


Net earnings (loss), as reported	$ 13.5		($ 29.5)	$123.0	($1,146.3)
Add: stock-based employee compensation expense included in
historical results for the vesting of stock options assumed in
conjunction with the Acquisition, calculated in accordance with
FIN 44, "Accounting for Certain Transactions Involving Stock
Compensation-an Interpretation of APB 25, net of related tax
effect	0.6		2.1	1.7	7.6
Deduct: stock-based employee compensation expense determined under
the fair value based method for all awards, net of related tax
effect	(24.8	)	(24.7)	(49.1)	(47.8)

Pro forma net earnings (loss)	($ 10.7	)	($ 52.1)	$ 75.6	($1,186.5)


Basic earnings (loss) per share, as reported	$ 0.05		($ 0.12)	$ 0.49	($4.62)
Basic earnings (loss) per share, pro forma	($ 0.04	)	($ 0.21)	$ 0.30	($4.78)
Diluted earnings (loss) per share, as reported	$ 0.05		($ 0.12)	$ 0.48	($4.62)
Diluted earnings (loss) per share, pro forma	($ 0.04	)	($ 0.21)	$ 0.30	($4.78)

3. Intangible Assets

Intangible assets are ~~determined to be substantive, at-risk and~~stated at amortized cost. The Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the ~~culmination~~carrying amount of an ~~earnings process. Substantive milestones~~asset may not be recoverable. Intangible assets at June 30, 2003 are ~~payments that are conditioned upon an event requiring substantive effort, when the amount~~comprised of the milestone is reasonable relative to the time, effort and risk involved in achieving the milestone and when the milestones are reasonable relative to each other and the amount of any up-front payment. If all of these criteria are not met, then the Company will use the contingency-adjusted performance model. Acquisition On January 10, 2002, the Company completed the Acquisition through an exchange offer and merger transaction. MedImmune Vaccines focuses on preventing disease through innovative vaccine technologies. Its lead product candidate is FluMist, a live, attenuated virus vaccine delivered as a nasal mist for the prevention of influenza. FluMist has not been approved by the FDA. Under the terms of the agreement, the Company exchanged approximately 34.0 million of its common shares for 100% of the outstanding common stock of Aviron. Additionally, approximately 7.0 million shares are issuable upon the exercise of Aviron's outstanding options and warrants. Holders of Aviron's $200 million of 5 1/4% convertible subordinated notes due in 2008 (the "Notes") may convert the Notes into a total of approximately 3.4 million shares of the Company's common stock, based on a conversion price of $58.14 per share. The Acquisition was accounted for as a purchase and, accordingly, the results of MedImmune Vaccines' operations have been included with the Company's operations since January 10, 2002. In the nine-month period ended September 30, 2002, the Company recorded adjustments to the purchase price resulting from a final reconciliation of Aviron registered shares of common stock as of the acquisition date, a refinement to the calculation of unearned compensation for terminated employees, and a reconciliation of transaction costs. The purchase price adjustments resulted in a net decrease of $1.3 million to the purchase price and a corresponding decrease to goodwill. The revised aggregate purchase consideration was approximately $1.6 billion, as followsfollowing (in millions): ~~Common stock $1,497.3 Assumption~~


Worldwide collaborative agreement with Wyeth	$	90.0
Contract manufacturing agreement with Evans		39.0
Other intangible assets		0.4

		129.4
Less accumulated amortization		(24.4	)

	$	105.0

Amortization of Aviron's options and warrants, less intrinsic value of unvested portion 128.0 Transaction costs 9.8 -------- $1,635.1 ======== The value of common shares issued was $44.10 per share,intangible assets is computed on the straight-line method based on the ~~closing market price~~estimated useful lives of the ~~Company's common stock on November~~assets. Amortization expense for Q2 2003 and YTD 2003 was $1.9 million and $6.1 million, respectively. As of June 30, ~~2001, the last business day prior~~2003, capitalized inventory related to the signing of the merger agreement. The fair value of Aviron's options and warrants assumed in the transaction was estimated using the Black-Scholes option pricing model. The following table summarizes the estimated fair values (in millions) of the assets acquired and liabilities assumed at the date of acquisition, as revised. The Company is in the process of determining the fair value of certain tangible assets and liabilities; thus, the allocation of the purchase price is subject to refinement: Assets: Cash and marketable securities $417.5 Other current assets 24.9 Other long-term assets 41.8 Deferred tax assets 134.0 Intangible assets 129.0 In-process research and development 1,179.3 Goodwill 15.0 ----------- Total assets: $1,941.5 ----------- Liabilities: Current liabilities $ 49.8 Restructuring liability 16.0 Long-term debt 211.4 Long-term obligations 28.7 Other liabilities 0.5 ----------- Total liabilities 306.4 ----------- Net assets acquired: $1,635.1 =========== Intangible Assets - Of the $129.0FluMist includes approximately $2.2 million of ~~acquired intangible assets, $90.0 million was assigned to Aviron's worldwide collaborative agreement~~amortization costs associated with ~~Wyeth for~~ the development, manufacture, distribution, marketing, promotion, and sale of FluMist, which is subject to amortization over its estimated useful life of approximately 11 years. The Company estimated the fair value of the Wyeth agreement using the sum of the probability-adjusted scenarios under the income approach. In applying this method, the Company relied on revenue assumptions, profitability assumptions and anticipated approval dates. The remaining $39.0 million was assigned to Aviron's contract manufacturing agreement with ~~Evans Vaccines Limited, which is subject to~~Evans. The estimated aggregate amortization ~~over its estimated useful life of approximately four years. The Company estimated the fair value~~for each of the ~~Evans agreement using~~next five years is as follows: 2003, $16.6 million; 2004, $16.4 million; 2005, $16.4 million; 2006, $12.0 million; and 2007, $7.7 million.

4. Restructuring Liability

As of June 30, 2003, the cost approach, which is based on the theory that a prudent investor would pay no more for an asset than the amount for which the asset could be replaced. In its analysis, the Company reduced replacement cost for such factors as physical deterioration and functional or economic obsolescence. In-Process Research and Development - Approximately $1,179.3 millionremaining balance of the purchase price was allocated to acquired research and development assets that were written off at the date of acquisition as a separate component of the Company's results of operations in accordance with FASB Interpretation No. 4, "Applicability of FASB Statement No. 2 to Business Combinations Accounted for by the Purchase Method." The amount represents the fair value of purchased in-process technology for projects, principally FluMist, that, as of the date of the acquisition, had not yet reached technological feasibility and had no alternative future use. Goodwill - Approximately $15.0 million in goodwill was recognized in the revised allocation of the purchase price, none of which is expected to be deductible for tax purposes. Through September 30, 2002, the Company recorded net purchase price adjustments of $1.3 million, net reversals to the restructuring liability of less than $0.1 million (discussed below), and a $0.7 million reduction to the fair value assigned to certain depreciable assets based on a final assessment of their net realizable value, which in the aggregate resulted in a reduction to goodwill of $0.7 million. In accordance with SFAS 142, the goodwill recognized in the transaction is not amortized, but will be reviewed for impairment on an annual basis. Restructuring Liability - Included in the revised allocation of acquisition cost is a restructuring liability of $16.0 million for estimated costs associated with the ~~Company's~~Company’s restructuring ~~plan.~~plan was $0.7 million. The restructuring plan was originally formulated and announced to employees in December 2001, to consolidate and restructure certain functions, including the involuntary termination of ~~eight Aviron~~certain executives and 52 other ~~Aviron~~ employees of MedImmune Vaccines from various functions and levels. Through September 30, 2002, the Company recorded purchase accounting adjustments resulting from a refinement to the calculation of involuntary termination benefits, the removal from the original accrual of three positions that were retained, and to reflect revised costs estimated for vacant lease space. As a result of these adjustments, the Company recorded net restructuring charge reversals of less than $0.1 million through September 30, 2002, which resulted in a corresponding reduction to goodwill. Subsequent adjustments to the allocation of the acquisition cost related to the true-up of severance and other restructuring costs, if any, are not expected to be significant. During the three months ended September 30, 2002, there were no significant amounts charged against the restructuring liability for actual severance payments or compensation expense for the accelerated vesting of stock options for terminated executives and employees, and rent expense of $0.2 million for vacant lease space was charged against the restructuring liability.

The restructuring liability activity through ~~September~~June 30, ~~2002~~2003 is summarized as follows (in millions): Original Accrual Adjusted Restructuring Balance at at 1/10/02 Adjustments Accrual Charges Incurred 9/30/02 ---------- ----------- ------- ---------------- ------- Employee severance costs $ 5.4 $ (0.3) $ 5.1 $(5.0) 0.1 Acceleration of employee stock options 9.5 (0.2) 9.3 $(9.1) 0.2 Other facility-related costs 1.1 0.5 1.6 $(0.5) 1.1 ----- ------ ----- ------- ---- Total $16.0 $ -- $16.0 $(14.6) $1.4 ===== ====== ===== ======= ==== Transaction Costs - Included in the allocation of acquisition costs were accrued transaction costs of $9.8 million, which primarily consist of investment banking, accounting and legal fees incurred by the Company. For the period ended September 30, 2002, there were no significant adjustments to accrued transaction costs and all costs have been paid. Pro Forma Data - The following unaudited pro forma condensed combined supplemental data present the revenues, net earnings and earnings per share of the combined entity as though the business combination had been completed as of January 1, 2002 and 2001, respectively. The unaudited pro forma condensed combined supplemental data gives effect to actual operating results prior to the acquisition, adjusted to include the pro forma effect of amortization of intangibles, deferred stock compensation costs, the elimination of the non-recurring charge for acquired in-process research and development, the tax effects to the pro forma adjustments and the recognition of the tax benefits arising from Aviron's net loss for the 2001 period. The unaudited pro forma condensed combined supplemental data are not necessarily an indication of the results that would have been achieved had the transaction been consummated as of the dates indicated or that may be achieved in the future (in millions, except per share data). 3 mos. 3 mos. 9 mos. 9 mos. ended ended ended ended 9/30/02 9/30/01 9/30/02 9/30/01 ------- ------- ------- ------- Revenues $72.6 $51.8 $466.0 $339.5 Net earnings (36.3) (43.6) (3.3)(1) (16.1) Loss per share (0.14) (0.18) (0.01)(1) (0.07) (1) Excludes a non-recurring charge of $1,179.3 million for acquired in-process research and development. Long-term Debt Following the Acquisition, the Company's wholly owned subsidiary, MedImmune Vaccines Inc., remains obligated for its outstanding indebtedness, which includes $200.0 million aggregate principal amount of the Notes. Approximately $211.4 million of the acquisition cost was allocated to the Notes, which represents the fair value as of the acquisition date, based on quoted market prices. The Notes are convertible into an aggregate of 3.4 million shares of the Company's common stock, based on a conversion price of $58.14, at any time on or before January 15, 2008. MedImmune Vaccines may redeem the Notes beginning in February 2004, at redemption prices declining from 103% of their principal amount in 2004 to 100% in 2008, plus accrued interest. Interest is payable semi-annually in arrears in cash on February 1 and August 1 each year. Derivative Instruments and Hedging Activities The Company adopted SFAS 133, "Accounting for Derivative Instruments and Hedging Activities," on January 1, 2001. The Company accounts for its Euro-denominated foreign currency forward-exchange contracts as foreign currency cash-flow hedges and is required to recognize any ineffectiveness on hedging transactions as interest income or expense in the statement of operations. For the three months and nine months ended September 30, 2002, gains or losses for ineffective hedges were insignificant. As of September 30, 2002, net deferred gains on derivative instruments of $0.3 million, net of tax, in accumulated other comprehensive income are expected to be reclassified to earnings in the next 12 months in conjunction with the sale of the related inventory. The maximum term over which the Company is hedging its exposures to the variability of cash flows is 12 months. During the third quarter of 2002, the Company entered into foreign currency forward-exchange contracts to purchase 12.5 million British Pounds (GBPs) to fund construction payments denominated in GBPs. The contracts were designated as cash flow hedges. During the third quarter of 2002, the hedges were determined to be ineffective, and realized gains on the contracts were recorded to the income statement in the amount of $0.3 million. During October 2002, the contracts were subsequently cancelled, at an immaterial loss to the Company.

			Restructuring
	Balance as of		Charges		Balance at
	12/31/02		Incurred		6/30/03
Employee severance costs	$	--	$	--	$	--
Acceleration of employee stock options		--		--		--
Other facility-related costs		1.0		(0.3)		0.7

Total	$	1.0	$	(0.3)	$	0.7

5. Inventory

Inventory, net of reserves, is comprised of the following (in millions): 9/30/02 12/31/01 ---------- ---------- Raw Materials $21.4 $16.8 Work in Process 18.1 13.7 Finished Goods 13.8 22.2 ------ ----- 53.3 52.7 Less noncurrent (0.2) (1.9) ------ ----- $53.1 $50.8 ====== ===== Noncurrent inventory at September 30, 2002 and December 31, 2001 is comprised of some of the Company's raw plasma and certain CytoGam production lots that are being tested for long-term stability which are not expected to be available for sale within the next 12 months. Inventory balances are net of reserves for RespiGam inventory, for which minimal product sales are expected to result for the foreseeable future. In April 2002, the Company reduced the inventory and reserve balances by $3.4 million upon the disposal of expired product. RespiGam inventory and reserve balances were $1.7 million and $0.6 million, respectively, at September 30, 2002, versus $4.9 million and $4.2 million, respectively, at December 31, 2001.

	June 30,		December 31,
	2003		2002
Raw Materials	$	19.4	$	30.4
Work in Process		40.8		19.4
Finished Goods		21.2		10.2

	$	81.4	$	60.0

The Company has ~~commenced production~~capitalized inventory costs associated with FluMist manufacturing prior to product launch, based on management’s judgment of inventory in connection with its proposed launch of FluMist, which has not yet been approved by the FDA. The Company recorded a full reserve for such inventory produced through September 30, 2002, which resulted in a year-to-date charge to other operating expense of approximately $39.4 million, inprobable future commercial use. In recognition of ~~management's~~management’s assessment that ~~it currently appears probable that such~~certain inventory materials will reach their expiration dates ~~as FDA approval, if it occurs,~~prior to commercial use, the Company recorded reserves for such unmarketable inventory. During the first quarter of 2003, the Company recorded reserves in other operating expenses totaling approximately $19.6 million for inventoriable costs related to FluMist production that would likely not be recovered. During Q2 2003, the Company disposed of $10.8 million of fully-reserved finished goods inventory related to the 2002/2003 flu season. As of June 30, 2003, the Company has a FluMist related inventory balance of $81.2 million against which there is ~~not expected until 2003.~~a reserve of $45.2 million, resulting in a net inventory balance of $36.0 million.

6. Earnings per Share ~~The Company computes earnings per share in accordance with Statement of Financial Accounting Standards No. 128, "Earnings Per Share."~~

Basic earnings per share is computed based on the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed based on the weighted average shares outstanding adjusted for all dilutive potential common shares. The dilutive impact, if any, of common stock equivalents outstanding during the period, including outstanding stock options and warrants, is measured by the treasury stock method. The dilutive impact, if any, of the ~~Notes~~Company’s convertible subordinated notes is measured using the if-converted method. ~~Common stock equivalents~~Potential common shares are not included in ~~periods where there is a loss as~~the computation of diluted earnings per share if they are ~~anti-dilutive.~~antidilutive. The following is a reconciliation of the denominator of the diluted EPS computation for the periods ~~reported (in millions).~~reported. There are no reconciling items to the numerator for the EPS computation for the periods reported. 3 mos. 3 mos. 9 mos. 9 mos. ended ended ended ended 9/30/02 9/30/01 9/30/02 9/30/01 ------- ------- ------- ------- Denominator: Weighted averagereported (in millions).

	Q2		Q2		YTD		YTD
	2003		2002		2003		2002
Denominator:
Weighted average shares
outstanding		252.1		250.2		251.8		248.1
Effect of dilutive securities:
Stock options, warrants, and Notes		6.1		--		5.6		--

Denominator for diluted EPS		258.2		250.2		257.4		248.1

The following table shows the number of shares ~~outstanding 250.8 213.9 249.1 213.1 Effect~~and related price ranges of dilutive securities: Stock options, warrants, and Notes -- -- -- 6.8 ----- ----- ----- ----- Denominator for dilutedthose shares that were excluded from the EPS 250.8 213.9 249.1 219.9 ===== ===== ===== ===== The Company incurred net lossescomputation for the ~~three months ended September 30, 2002 and 2001 and for the nine months ended September 30, 2002 and, accordingly, did not assume exercise or conversion~~first two quarters of ~~potential common shares for those periods, as follows (in millions), because~~2003. These options to do so would be anti-dilutive. 3 mos. 3 mos. 9 mos. ended ended ended 9/30/02 9/30/01 9/30/02 ------- ------- ------- Stock options, at prices ranging from $0.24 to $83.25 28.5 21.3 28.5 Warrants, at $9.30 per share 0.4 -- 0.4 Convertible Subordinated Notes, at a conversion price of $58.14 3.5 -- 3.5 ---- ---- ----- Total potential common shares 32.4 21.3 32.4 ==== ==== ===== Options to purchase ~~6.7 million~~ shares of common stock ~~with prices ranging from $39.87 to $83.25 per share that~~ were outstanding during the ~~nine months ended September 30, 2001~~period, but were not included in the computation of diluted earnings per share as the exercise prices for these options were greater than the average market price of the common stock during the period, and therefore would be antidilutive (in millions).

	Q1		Q2
	2003		2003
Price range of stock options:
$30.16-$83.25		15.0
$35.41 - $83.25				14.3

The Company incurred a net loss for Q2 2002 and YTD 2002 and, accordingly, did not assume exercise or conversion of any of the Company’s outstanding stock options, warrants, or Notes because ~~they were~~to do so would be anti-dilutive.

7. Income Taxes

The reported effective tax rate for the first six months of 2003 is 37% of pretax income, based on the current estimate of the annual effective tax rate. The effective tax rate may be affected in future periods by changes in estimates with respect to the deferred tax assets and other items affecting the overall tax rate. Income tax ~~benefit~~expense for the ~~three~~first six months ~~and nine months ended September 30,~~of 2002 was ~~$20.1 million and $1.7 million, respectively. Excluding~~based on an estimated annual effective tax rate on pretax income of 36%.

8. Comprehensive Income

	Q2		Q2			YTD			YTD
	2003		2002			2003			2002
Net earnings (loss)		$13.5		($29.5	)		$123.0			($1,146.3	)
Changes in:
Foreign currency translation adjustment		0.2		0.5			1.0			0.4
Unrealized gain (loss) on investments, net of tax		9.6		8.3			13.3			(0.9	)
Unrealized gain (loss) on hedged inventory purchases, net
of tax		--		0.4			(0.2	)		0.4

Comprehensive income (loss)		$23.3		($20.3	)		$137.1			($1,146.4	)

9. Recent Accounting Pronouncements

In January 2003, the ~~Company's write-off~~FASB issued FIN No. 46, “Consolidation of ~~purchased in-process research and development and other insignificant items, which are~~Variable Interest Entities, an interpretation of Accounting Research Bulletin No. 51.” FIN No. 46 requires certain variable interest entities to be consolidated by the primary beneficiary of the entity if the equity investors in the entity do not ~~tax deductible, income tax expense as~~have the characteristics of a ~~percentage of pre-tax income~~controlling financial interest or do not have sufficient equity at risk for the ~~nine months ended September 30, 2002 was 35%. During~~entity to finance its activities without additional subordinated financial support from other parties. In accordance with the ~~nine months ended September 30, 2002,~~adoption provisions of FIN No. 46, during Q2 2003 the Company ~~recognized credits for research and development expenditures and credits earned for "Orphan Drug" status of certain research and development expenses, resulting in a reduction from~~adopted the statutory rate of 37.0%. Comprehensive Income Comprehensive income is comprised of net earnings or loss and other comprehensive income. Other comprehensive income includes certain changes in equity that are excluded from net earnings or loss, suchprovisions as translation adjustments, unrealized holding gains and losses on available-for-sale marketable securities, and gains and losses on hedging instruments. Comprehensive loss for the three months ended September 30, 2002 was $25.2 million versus $10.1 million for the comparable period in 2001. Comprehensive (loss) income for the nine months ended September 30, 2002 was $(1,171.6) million versus $55.5 million for the comparable period in 2001. Net unrealized holding gains on available-for-sale marketable securities of $11.1 million and $8.6 million for the three months ended September 30, 2002 and 2001, respectively, and $10.3 million and $5.3 million, respectively, for the nine months ended September 30, 2002 and 2001 were a significant component of comprehensive income during those periods. Minority Interest Investments In connection with its research and development collaborations, the Company holds minority interests in companies having operations or technology in areas within its strategic focus. The investments are maintained on the cost or equity method of accounting, accordingthey relate to the ~~facts and circumstances of the individual investment. Under either method, the investments are subject~~Company’s contractual relationships with variable interest entities established subsequent to adjustment for other-than-temporary impairments. Additionally, for investments carried on the equity method, the Company's proportionate share of the investee's gains or losses is recorded on a quarterly basis. For minority interests maintained in publicly traded companies, the Company's investment is maintained as available-for-sale securities. DueJanuary 31, 2003, with an immaterial impact to the ~~highly volatile share prices~~Company’s consolidated financial position, results of these investments, the investments are subject to unrealized holding gains or losses. As of September 30, 2002, the Company determined that the declines in fair value below the cost basis of certain of its minority interest investments were other than temporary, based primarily on the durationoperations and magnitude of the declines in fair value, largely due to the downward movement in the capital markets, as well as the financial condition and near-term prospects of the investee companies. For the three months and nine months ended September 30, 2002, the Company recorded realized losses of $10.3 million and $10.6 million, respectively, to write-down the cost basis of certain of its minority interest investments to fair value. Property and Equipment During March 2002, the Company paid approximately $13.4 million to acquire 11 acres of land in Gaithersburg, Maryland, which will serve as the site of the Company's new corporate headquarters. Additionally, the Company has options to purchase an additional 14 acres of land. The Company has begun construction of the first phase of the new facility, at a total estimated cost of $85 million. As of September 30, 2002, approximately $8.8 million of engineering and construction costs related to Phase I of the new headquarters are included in construction in progress. The Company expects to take occupancy of the first phase of construction, which will feature a complex totaling approximately 220,000 square feet, in the fall of 2003. Collaborative Arrangements Wyeth In January 1999, Aviron signed a worldwide collaborative agreement with Wyeth Lederle Vaccines, a subsidiary of Wyeth, for the development, manufacture, distribution, marketing, promotion, and sale of FluMist. Under this agreement, Wyeth has exclusive worldwide rights to market FluMist, excluding Korea, Australia, New Zealand and some South Pacific countries. The two companies have agreed to co-promote FluMist in the United States, with the Company focusing on non-traditional channels. Wyeth holds the marketing rights in the United States for an initial term of seven years from the first commercial sale of FluMist in the United States. Outside the United States (with the exclusions noted above), Wyeth holds the marketing rights for an initial term of eight years from the first commercial sale of FluMist outside the United States. Wyeth has the option to extend its rights both in the United States and internationally for an additional four years, the aggregate of which could result in payments to the Company ranging from $145 million to $400 million. Under the terms of the agreement with Wyeth, the two companies are to collaborate on the regulatory, clinical and marketing programs for FluMist within the United States. As a part of the collaboration, the Company is to receive certain payments related to the achievement of key milestones and events for FluMist. In January 2001, Aviron received from Wyeth: $15.5 million related to the acceptance by the FDA of the filing of the Biological License Application ("BLA") for FluMist on December 28, 2000; and $10.0 million as compensation for manufacturing costs incurred in preparing for the then-expected 2001 FluMist launch. Under the agreements, as recently amended, potential milestones and related payments to the Company from Wyeth include: $25 million as compensation for manufacturing costs incurred in preparing for the potential, but now not expected, 2002 FluMist launch; $20 million for FDA approval in the United States; $20 million for advisory body recommendations and expanded label claims; up to $25 million in supply goal payments; up to $17.5 million for FDA approval of use in multiple target populations; $10 million for the submission of a license application in Europe; $27.5 million for FDA approval of a liquid formulation of FluMist; and up to $50 million upon licensure in international regions. Additionally, Wyeth is committed to provide the Company with up to $20 million in financing, contingent upon regulatory approval of FluMist. The total potential value for the license fees, milestones, financing support and term extension options that the Company could receive from Wyeth could range from approximately $320 million to $620 million. Under the terms of the agreement, Wyeth will distribute FluMist and record all product sales.cash flows. The Company will ~~receive approximately 50%~~apply the consolidation provisions of ~~FluMist revenues, paid~~FIN No. 46 relative to its investments in variable interest entities established prior to February 1, 2003 during the third quarter of 2003, and is currently evaluating the effect on its consolidated financial position, results of operations and cash flows.

10. Subsequent Events

During July 2003, the Company’s Board of Directors authorized a repurchase, over a two-year period, of up to $500 million of the Company’s common stock in the ~~form of product transfer payments and royalties. These payments are higher~~open market or in ~~the United States than internationally.~~privately negotiated transactions, pursuant to terms management deems appropriate. The Company ~~incurs expenses~~will hold repurchased shares as treasury shares and intends to ~~manufacture, supply~~use them for general corporate purposes, including but not limited to acquisition-related transactions and ~~co-promote FluMist. There is potential~~ for ~~the manufacturing cost incurred by~~issuance upon exercise of outstanding stock options. Through August 5, 2003, the Company ~~to exceed transfer payments received from Wyeth. Wyeth reimburses~~had repurchased approximately 2.9 million shares at a cost of $112.3 million.

During July 2003, the Company ~~for~~issued $500 million aggregate principal amount of convertible senior notes due 2023. The notes bear interest at one percent per annum payable semi-annually in arrears on January 15 and July 15 of each year. Beginning July 2006, the Company will pay contingent interest on the notes during a six-month interest period if the average trading price of the notes is above a specified level. Under certain circumstances, the notes will be convertible into the Company’s common stock at an initial conversion price of approximately $68.18 per share. On or after July 15, 2006, the Company may at its option redeem all or a portion of the ~~product's clinical development and sales and marketing expenses, and has agreed~~notes for cash at a redemption price equal to spend up to $100 million over the first three years for commercialization of FluMist in the United States. Evans Vaccines Limited In July 1999, Aviron entered into an agreement with a division of Celltech Group Plc, which was later acquired by PowderJect Pharmaceuticals Plc and is now called Evans Vaccines Limited ("Evans"), for the manufacture of key components of FluMist, specifically the bulk manufacture of monovalents and diluent, as well as use100% of the manufacturing facilities. During October 2000, Aviron restructured its agreement with Evans in order to gain direct control over FluMist manufacturing operations. Aviron obtained responsibility for bulk manufacture of FluMist in Evans' Speke, U.K. facility, hired approximately 100 Evans employees who had been working on FluMist, and entered into subleases through June 2006 for the FluMist manufacturing areas on the existing site. In connection with the restructuringprincipal amount of the ~~manufacturing agreement, Aviron made an initial payment~~notes to be redeemed, plus any accrued and unpaid interest; contingent interest, if any; and liquidated damages, if any. In addition, on each of ~~$15.0 million~~July 15, 2006, July 15, 2009, July 15, 2013, and ~~payments~~July 15, 2019, holders may require the Company to purchase all or a portion of ~~$3.9 million in September 2001~~their notes for cash at 100% of the principal amount of the notes to be purchased, plus any accrued and ~~2002.~~ unpaid interest; contingent interest, if any; and liquidated damages, if any.

The Company ~~is obligated~~intends to ~~make three additional annual payments of $3.9 million in September 2003 through September 2005, which is included in other liabilities in~~use the accompanying consolidated balance sheet as of September 30, 2002. The Company is also obligated to make other additional payments totaling $19.0 million (included in other liabilities in the accompanying consolidated balance sheet as of September 30, 2002), which will be paid over the termproceeds of the ~~agreement based on net sales~~offering to repurchase shares of ~~FluMist, if~~its common stock under the stock repurchase program, and ~~when approved~~ for ~~marketing, with the unpaid balance, if any, due January 2006. In addition, the Company is obligated to make payments during the term~~general corporate purposes, which may include pre-funding of the ~~agreement~~retirement of ~~$225,000 per year for~~existing debt obligations, and possible acquisitions or other external growth opportunities. The notes were issued in a private placement and were expected to be resold by the ~~use~~initial purchasers to qualified institutional buyers under Rule 144A of the ~~Aviron unit in the Evans manufacturing plant, payments up to an aggregate~~Securities Act of $3.0 million for attaining specific milestones, and payments for other support services based on the costs of these services incurred. The Company expenses rent and other support services as the costs are incurred, and expenses milestones as they become due.1933.

11. Legal Proceedings In 1998, MediGene AG ("MediGene") initiated a legal action against Loyola University of Chicago ("Loyola") and the Company in the United States District Court for the Northern District of Illinois alleging, among other things, breach of contract and tortious interference by the Company with an alleged prospective business relationship between MediGene and Loyola. The claims relate to human papillomavirus vaccine technology allegedly covered by contracts between MediGene and the Company and by a license agreement from Loyola to the Company, under which the Company granted a sublicense to GlaxoSmithKline. MediGene seeks damages from the Company ranging from $31.3 million to $86.9 million based on the tortious interference claim, and/or damages ranging from $10.2 million to $31.3 million based on the breach of contract claim. MediGene also seeks ownership of the patents in question, as well as rescission of the Company's license agreement from Loyola or rights as a third-party beneficiary thereof. The District Court has granted summary judgment in favor of the Company on all claims and MediGene has appealed.

In October 2000, Celltech Chiroscience Limited, ~~("Celltech"~~now known as Celltech R&D Limited (“Celltech”), commenced a legal proceeding against the Company in the U.K. High Court of Justice, Chancery Division, Patents Court. Celltech alleges that the Company failed to pay royalties with respect to its sales of Synagis as required by a license agreement dated January 19, 1998. Under the agreement, the Company obtained from Celltech a worldwide license to make, use and/or sell product under a patent (and related applications) pertaining to humanized antibodies. In the proceeding, Celltech ~~seeks~~sought payment of a 2% royalty based on net sales of Synagis sold or manufactured in the United States, with interest, and certain costs, including ~~attorney's~~attorney’s fees. The Company filed answering papers denying that any royalties are due on the basis that Celltech's United States patent does not cover Synagis and has sought dismissal of the case on the grounds that the legal doctrine of prosecution history estoppel prevents Celltech from claiming that its patent covers Synagis. On October 28, 2002, the High Court of Justice ruled in favor of the Company and dismissed ~~Celltech's case~~Celltech’s case. This dismissal was upheld on this basis after a hearing was held before the Court in early October 2002. Celltech is expected to appeal. On November 29, 2001, the Company received a letter from counsel for Celltech enclosing a copy of a patent granted by the European Patent Officeappeal on November 14, 2001. That letter requested various information concerning the manufacture and sale of Synagis in Europe and sought confirmation that the Company would pay royalties on such sales pursuant to the license agreement dated January 19, 1998. July 17, 2003.

On September 16, 2002, Celltech ~~(now known as Celltech R&D Limited)~~ commenced a second legal proceeding against the Company in the U.K. High Court of Justice, Chancery Division, Patents Court, based on the license agreement dated January 19, 1998. Celltech seeks payment of a 2% royalty based on net sales of Synagis sold or manufactured in Germany, ~~after the effective date of the patent (November, 2001),~~ with interest and certain costs, including attorney fees. ~~The~~To date, the Company has ~~a contract manufacturing relationship with Boehringer Ingleheim (BI) for the manufacture of Synagis in Germany. As of November 7, 2002, the Company had~~ not made the royalty payments that ~~were~~are the subject of ~~Celltech's November 29, 2001 letter or its September 16, 2002~~this second lawsuit. The Company's answering papers are due on December 4, 2002. On December 18, 2001, Genentech, Inc. ("Genentech") announced that it had been granted a patent relating to certain methods and compositions used to produce antibodies by recombinant DNA technology. In June 1997, in anticipation of any potential impactThis matter is scheduled for trial before the issuance of Genentech's patent could have on the production of Synagis, the Company obtained a license to this patent. The Company has received from Genentech a letter, dated January 7, 2002, stating that Genentech expects to receive from the Company royalty payments pursuant to such license. The Company is in the process of evaluating whether any valid claim of Genentech's patent, as recently issued, covers production of Synagis. Pending resolution of this issue, the Company has made certain royalty payments to Genentech under protest and with reservation of all of its rights. The Company is also evaluating whether any of its other antibody-based product candidates, if and when approved for marketing by the United States Food and Drug Administration, could require a license under any valid claim of the Genentech patent. On February 28, 1996, Ichthyol Gesellschaft Cordes, Hermanni & Co. ("Ichthyol Gesellschaft") filed a complaint for refrain, information and damages with the Regional Court of Hamburg against MedImmune Oncology on the grounds of trademark infringement in respect of the use of the trademark "Ethyol" in Germany. No monetary amount is currently being sought in the litigation by Ichthyol. Ichthyol is seeking injunctive relief against the use of the trademark Ethyol in Germany. The suit was dismissed on January 29, 1997 by the Regional Court of Hamburg. Ichthyol Gesellschaft filed an appeal and a judgment was rendered in favor of MedImmune Oncology in the appellate proceedings. In January 1999, Ichthyol Gesellschaft filed an appeal on points of law with the FederalHigh Court of Justice ~~and~~ in June 1999, Ichthyol Gesellschaft filed the grounds for the appeal on points of law. By judgment of May 3, 2001, the Federal Court of Justice reversed the judgment of the Higher Regional Court and remitted the case to that court for another hearing. By order of December l9, 2001, the Higher Regional Court ordered Ichthyol to make further submissions concerning the relevant facts and legal questions. Ichthyol recently filed its submissions. A hearing was held during the fall of 2002. No decision has been reached, but the parties are engaged in settlement discussions. The Company has been involved in a contract dispute with the University of Massachusetts Biologic Laboratories ("MBL") regarding the Company's agreement to transfer to MBL certain technology relating to the Company's monoclonal antibody manufacturing operations. During the third quarter of 2002, the parties agreed to a settlement of the dispute for a $5 million payment by the Company, which was charged to the income statement. The Company will also secure the return of the rights to "make, have made, use and sell" the Company's monoclonal antibody for RSV in the Commonwealth of Massachusetts and State of Maine in exchange for a royalty. March 2004.

On April 5, 2002, the Company filed a suit against Centocor, Inc. ~~("Centocor"~~(“Centocor”) in the United States District Court for the District of Maryland. The Company currently pays Centocor a royalty for sales of Synagis made or sold in the United States pursuant to a patent Sublicense ~~Agreement between the parties dated as of September 15, 2000 (the "Sublicense Agreement").~~Agreement. In the litigation, the Company seeks a declaratory judgment that it has no obligation to continue paying royalties to Centocor on the basis that the patent is invalid, unenforceable and does not cover Synagis. Additionally, the Company seeks an injunction preventing Centocor from enforcing this patent. ~~On July 1, 2002, Centocor moved~~In January 2003, the Company amended its complaint to ~~dismiss this action on the basis that it did not include~~add the Trustees of Columbia University in the City of New York ~~("Columbia")~~ and the Board of Trustees of ~~the~~ Leland Stanford Jr. University ~~("Stanford"),~~ as defendants. After various motions were filed and decided, a Second Amended Complaint was filed by MedImmune in July 2003. Discovery is ongoing.

On January 14, 2003, a lawsuit was filed by the ~~owners~~County of Suffolk New York (“Suffolk”) in the United States District Court, Eastern District of New York, naming the Company along with approximately 25 other pharmaceutical and biotechnology companies as defendants. The complaint asserts claims under the federal RICO statute, as well as various state, statutory and common laws to recover monetary damages, civil penalties, declaratory and injunctive relief, disgorgement of profits, treble and punitive damages suffered as a result of defendants’ alleged unlawful practices related to prescription medications paid for by Medicaid. Suffolk alleges that the defendants (including the Company) manipulated the “average wholesale price” (“AWP”) causing Suffolk to pay artificially inflated prices for covered drugs including, in the case of the ~~patent. The court has~~Company, Synagis. In addition, Suffolk argues that the defendants (including the Company) did not ~~yet issued its decision~~accurately report the “best price” under the Medicaid Program. In March 2003, the Suffolk Case was, for pretrial purposes, consolidated with and transferred to the United States District Court for the District of Massachusetts, In re Pharmaceutical Industry Average Wholesale Price Litigation (AWP MultiDistrict Litigation). An Amended Complaint was filed in the Suffolk Case on ~~Centocor's motion.~~ August 1, 2003.

On ~~July 9, 2002, Centocor, Columbia and Stanford initiated an action against~~April 11, 2003, the Company filed a suit against Genentech, Inc., Celltech R&D Ltd. and City of Hope National Medical Center in the United States District Court for the ~~Northern~~Central District of California. The Company currently pays Genentech a royalty for sales of Synagis made or sold in the United States pursuant to a patent License Agreement between the parties dated as of June 1997 and covering United States Patent No. 6,331, 415B1 (the “Cabilly Patent”). In the ~~California litigation, Centocor, Columbia and Stanford sought a declaratory judgment~~complaint, the Company alleges that the ~~patent at issue in the Sublicense Agreement is valid~~Cabilly Patent was obtained as a result of a collusive agreement between Genentech and ~~enforceable~~Celltech that violates federal and ~~that the Company would be liable for patent infringement but for the Sublicense Agreement,~~California antitrust laws as well as ~~a declaratory judgment~~California’s unfair business practices act. Additionally, the Company alleges that the ~~Sublicense Agreement~~Cabilly Patent is ~~enforceable.~~invalid and unenforceable under federal patent law. The Company ~~moved to dismiss the California action, among~~thus seeks a declaration that it owes no royalty payments under existing licensing agreements with Genentech.

_________________

The Company is also involved in other ~~arguments, on the basis that a prior action was filed~~legal proceedings arising in the ~~U.S. District Court for the State~~ordinary course of Maryland and the California action should not go forward. On October 21, 2002, the court ruled in favor of the Company and dismissed the California litigation. There can be no assurance that the Company will be successful in this dispute. ----------------------------its business. After consultation with its legal counsel, the Company believes that it has meritorious defenses to the claims against itthe Company referred to above and is determined to defend its position vigorously. While it is impossible to predict with certainty the eventual outcome of these proceedings, the Company believes they are unlikely to have a material adverse effect on its financial position but might have a material adverse effect on its results of operations for a particular period. There can be no assurance that the Company will be successful in any of the litigation it has initiated.

ITEM 2. ~~MEDIMMUNE, INC. MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ~~GENERAL During~~

This Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements regarding future events and our future results that are based on current expectations, estimates, forecasts, and the beliefs and assumptions of our management. Readers are cautioned that these forward-looking statements are only predictions or estimates and are subject to risks, uncertainties, and assumptions that are difficult to predict. Readers are referred to the “Forward Looking Statements” and “Risk Factors” sections in Part I, Item 1 of our Form 10-K for the year ended December 31, 2002.

OVERVIEW

Since 1988, MedImmune has been focused on using biotechnology to produce innovative products to prevent or treat infectious disease, autoimmune disease and cancer. In January 2002, we acquired Aviron ~~a biopharmaceutical company focused on preventing disease through innovative vaccine technologies. Aviron was subsequently~~(subsequently renamed MedImmune Vaccines, Inc. ~~We accounted for the acquisition under the purchase method~~), a California-based vaccines company. The operating results of ~~accounting and~~MedImmune Vaccines, Inc. have been included ~~MedImmune Vaccines' operating results~~ in our consolidated operating results beginning January 10, 2002.

Having made significant advances in the last several years, we are now a fully integrated company with the ability and infrastructure to take products from discovery through development, manufacturing, and into the market. On June 17, 2003, the biologics license application for the commercial sale of FluMist was approved by the FDA. FluMist is the first influenza vaccine delivered as a nasal mist available in the United States. FluMist is indicated for active immunization for the prevention of disease caused by influenza A and B viruses in healthy people, 5-49 years of age. MedImmune manufactures FluMist and co-promotes FluMist with a division of Wyeth.

In addition to FluMist, we currently actively market three other products, Synagis, Ethyol and CytoGam, and are developing a broad and diverse pipeline of potential future products. We are focused on developing important new products, particularly vaccines and antibodies that address significant unmet medical needs in the areas of infectious diseases, immunology and oncology.

CRITICAL ACCOUNTING ~~POLICIES AND~~ ESTIMATES ~~For a more detailed discussion~~

The preparation of consolidated financial statements requires us to make estimates and judgments with respect to the selection and application of accounting policies that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosures of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting estimates have the greatest impact on the preparation of our ~~critical accounting policies~~consolidated financial statements.

Inventory Capitalization – We capitalize inventory costs associated with products prior to regulatory approval and ~~estimates, please refer~~product launch, based on management’s judgment of probable future commercial use. We could be required to ~~Part II, Item 7 "Management's Discussion~~expense previously capitalized costs related to pre-approval or pre-launch inventory upon a change in such judgment, due to a denial or delay of approval by necessary regulatory bodies, a delay in commercialization, or other potential factors.

Most of the inventory components for FluMist have expiration dates that range from nine to 24 months. During the last quarter of 2002 and ~~Analysis~~first half of ~~Financial Condition Results~~2003, we incurred inventoriable costs associated with FluMist manufacturing in anticipation of ~~Operations"~~commercial launch for the 2003/2004 flu season. With respect to all FluMist inventory on hand as of June 30, 2003, we reviewed the following assumptions to determine the amount of reserves, if any, required to write down the inventory to net realizable value: the expected sales volume; the concentration of viral material in our ~~2001 Annual Report on Form 10-K. Contract Revenues - For contracts executed or acquired prior to January 1, 2002, we recognize revenue from upfront~~vaccine; anticipated changes in the manufacturing process; anticipated delays in obtaining FDA lot release for finished vaccine; and ~~milestone payments under collaborative agreements using~~other variables associated with product launch efforts. During the ~~contingency-adjusted performance (percentage-of-completion) model. Under this method, payments received that are~~first quarter of 2003, the Company recorded reserves in other operating expenses totaling approximately $19.6 million for inventoriable costs related to ~~future performance~~FluMist production that would likely not be recovered. During Q2 2003, the Company disposed of $10.8 million of fully-reserved finished goods inventory related to the 2002/2003 flu season. As of June 30, 2003, we have $81.2 million of inventory against which we have a reserve of $45.2 million, resulting in a net inventory balance of $36.0 million. If FluMist sales levels are ~~deferred~~higher than expected, we may be able to utilize more inventory than anticipated and, with licensure now in place, our gross margins would be favorably impacted in the last half of 2003 when most of the inventory is sold. If FluMist sales levels are lower than expected, we may have further reserves or writedowns for obsolete inventory.

For our other products, we periodically assess our inventory balances to determine whether net realizable value is below recorded cost. Factors we consider include expected sales volume, production capacity and expiration dates.

Sales Allowances and Other Sales Related Estimates – We estimate the amount of sales discounts and sales returns, recorded as ~~revenues~~a reduction of gross product sales, by applying rates determined by our past experience to actual sales for the period. We estimate our co-promotion expense and sales commissions, recorded as ~~they are earned over specified future performance periods. The~~selling, general and administrative expense, by applying an estimated rate that is based upon an estimate of projected sales for the season, to our actual sales for the period. We estimate the level of bad debts as a percentage of gross trade accounts receivable balances, based upon our assessment of the concentration of credit risk, the financial condition and environment of our customers and the level of credit insurance we obtain on our customers’ balances. We record provisions for bad debts as a reduction of gross product sales. For the first six months of 2003, we decreased our reserves for bad debts by approximately $6.6 million, based on our current application of this methodology, in large part as a consequence of the overall reduction in accounts receivable balances. We estimate the aggregate amount of ~~revenue recognized during each period is~~rebates due to government purchasers, recorded as a reduction to gross product sales, based onupon historical experience and our best estimate of the proportion of the sales that will be subject to this reimbursement, largely comprised of Medicaid payments to state governments. If our historical trends are not indicative of the future, or our actual ~~costs incurred relative to the total~~sales are materially different from projected ~~costs~~amounts, or if our assessments prove to be ~~incurred. When~~materially different than actual occurrence, our results could be affected. During the ~~performance criteria for~~first three months of 2003, we adjusted our estimate of rebates due to government purchasers to reflect favorable historical experience. Absent our favorable historical experience and a ~~non-refundable milestone payment are met, revenue is recognized for~~change in our estimate of the proportion of the sales that ~~milestone based on the proration of actual costs incurred relative to the total costs to be incurred. Recognized revenues~~ are subject to ~~revisions as the collaboration efforts progress and estimated costs~~reimbursement, our reserves for rebates due to complete are revised. Revisions in revenue estimates are recorded to income in the period in which the facts that give rise to the revision become known. For new contracts executed or acquired after January 1, 2002, the Company uses the milestone payment method when all milestones to be received under contractual arrangements are determined to be substantive, at-risk and the culmination of an earnings process. Substantive milestones are payments that are conditioned upon an event requiring substantive effort, when the amount of the milestone is reasonable relative to the time, effort and risk involved in achieving the milestone and when the milestones are reasonable relative to each other and to the amount of any up-front payment. If all of these criteria are not met, then the Company will use the contingency-adjusted performance model. This constitutes a change in accounting principle and was made to more closely reflect the essence of the contractual obligations the Company enters into with collaborative partners. Since milestone payments are often times directly related to the completed portion (an achieved milestone) of the arrangement, revenue is earned and recognized as the milestones are achieved. Additionally, the new method is prevalent in our industry and is used by most other companies in our peer group. The effect on earnings and earnings per sharegovernment purchasers would have been approximately $15.2 million higher for the ~~three~~first six months and nine months ended September 30, 2002 is not material. The milestone payment method may not be applicable to all new contracts, in which case the Company would revert to the contingency-adjusted performance model for revenue recognition. Research and Development- We expense research and development expenses as they are incurred. These expenses include related salaries, contractor fees, building costs, utilities, and administrative expenses. Licensing Fees- In the normal course of business, we enter into collaborative research and development and in-licensing agreements to acquire access to technology. These collaborative agreements usually require us to pay up-front fees and milestone payments, some of which are significant. When we pay an up-front or milestone payment, management evaluates the stage of the acquired technology to determine the appropriate accounting treatment. If the technology is considered to be in the early development stage (generally defined as pre-clinical through Phase 1 (safety)), the up-front or milestone payment is expensed. If the technology has entered Phase 2 (efficacy) clinical trials but has not yet been approved by regulatory authorities, we will evaluate the facts and circumstances of each case to determine if a portion or all of the payment have future benefit and should be capitalized at fair value. Payments made to third parties subsequent to regulatory approval will be capitalized with that cost generally amortized over the patented life of the product. The agreements may also require that we provide funding for research programs of our partners. These costs are expensed as incurred. Clinical Trials- We accrue estimated costs for clinical and preclinical studies performed by contract research organizations or by our own staff based on the total estimated cost of the trial and the estimated percentage of completion of the clinical trial related activities. These costs are a significant component of research and development expenses. We monitor the progress of the trials and their related activities to the extent possible, and adjust our accruals accordingly. Sales Reserves - We continually monitor the need for reserves associated with potential bad debts, sales discounts, sales returns and government rebates. We establish these reserves based on analysis of the marketplace, credit risk and historical trends for each product. If the actual bad debts, discounts, returns or requests for rebates deviate from the historical data on which the reserve has been established, our revenue could be affected. Acquired In-Process Research and Development - We recorded a charge of $1,179.3 million during the nine-month period ended September 30, 2002 for the write-off of purchased in-process research and development in conjunction with our acquisition of Aviron. The write-off represents the fair value of purchased in-process technologies at the acquisition date, calculated utilizing the sum of the probability-adjusted scenarios under the income approach. This method is based upon management's estimates of the probability of FDA approval and commercial success for FluMist. As with all biotechnology products, the probability of FDA approval and commercial success for any particular research and development project is highly uncertain. Management's projections were based on assumptions, which may or may not remain valid for the relevant period, including the estimated impact of four "key" factors: price per dose; dose volume; launch date; and the potential failure of the frozen or liquid formulations of FluMist. Based on current information, management believes that the estimates and assumptions underlying the fair value analysis are reasonable. 2003.

Investments -— We regularly enter into collaborative research and development agreements with strategic partners. As part of the agreements, we may obtain common stock, preferred stock, convertible debt or other debt or equity securities in these strategic partners. These companies may be public or privately held companies. At the time the securities are obtained, we determine if the investment should be accounted for under the cost method, equity method, or consolidation method based upon multiple factors including: percentage ownership of the company; representation on board of directors; participation in policy-making processes; technological dependency; veto rights of partners; our role on key technical or product development committees; revenue dependence; ~~and~~ other extraordinary voting ~~rights.~~rights; and a determination regarding the investee company’s primary beneficiary. Investments accounted for under the equity method are adjusted quarterly for the ~~Company's~~Company’s proportionate share of the ~~investee's~~investee’s gains or losses, which may fluctuate significantly from quarter to quarter. Each quarter, we evaluate all of our investments, and recognize an impairment charge in the consolidated statements of operations when a decline in the fair value of an investment falls below its cost value and is judged to be other than temporary. We consider various factors in determining whether we should recognize an impairment charge, ~~including~~including: the length of time and extent to which the fair value has been less than our cost ~~basis,~~basis; the financial condition and near-term prospects of the ~~issuer,~~issuer; fundamental changes to the business prospects of the ~~investee,~~investee; share prices of subsequent ~~offerings,~~offerings; and our intent and ability to hold the investment for a period of time sufficient to allow for any anticipated recovery in market value. ~~Inventory Reserves - The Company has commenced production~~Especially with regards to investments in earlier stage, privately held companies, considerable judgment is required in making assessments of inventory in connection with its proposed launch of FluMist, which has not yet been approved by the FDA. The Company recorded a full reserve for such inventory produced from January 10, 2002 through September 30, 2002, which resulted in a charge to other operating expense of approximately $39.4 million, in recognition of management's assessment that it currently appears probable that such inventory materials will reach their expiration dates as FDA approval, if it occurs, is not expected until 2003. Should FluMist be approved for some portion of the 2002/2003 flu season, any inventory sold would have no carrying value and, as such, margins would be favorably impacted in those periods when the related inventory was sold. fair value.

RESULTS OF OPERATIONS THREE MONTHS ENDED September 30, 2002 AND 2001 Product Sales - Product Sales (In Millions) 2002 2001 ----- ----- Synagis $30.2 $30.0 Ethyol $20.2 $(0.4) Other Products $8.8 $10.4 ----- ----- TOTAL $59.2 $40.0 Product sales grew 48% to $59.2 million in the third quarter of 2002 compared to $40.0 million

To present our results in the same ~~period last year. This increase~~manner as we view the performance of the business and the resulting underlying trends, we have presented certain expense categories with and without certain Acquisition-related adjustments, including: the acquired in-process research and development charge; amortization of intangible assets, compensation expense associated with the assumption and vesting of unvested stock options, retention and severance payments; and the amortization of the premium on convertible subordinated notes. Inclusion of such Acquisition-related adjustments is ~~attributable~~consistent with generally accepted accounting principles (“GAAP”). Where we exclude such adjustments, we use the term “adjusted” to describe the ~~impact~~results.

Q2 2003 compared to Q2 2002

Revenues – Product Sales
(in millions)

	Q2		Q2
	2003		2002		Growth
Synagis	$	54.9	$	32.5		69%
Ethyol		24.8		16.6		49%
Other Products		6.2		8.2		(24%	)

	$	85.9	$	57.3		50%

For Q2 2003, product sales grew 50% to $85.9 million as compared to $57.3 million in Q2 2002, primarily due to increased sales of ~~reacquiring the domestic marketing rights to Ethyol as~~Synagis.

Synagis — Synagis accounted for approximately 64% and 57% of ~~October 1, 2001. Synagis-~~our product sales in Q2 2003 and Q2 2002, respectively. We achieved ~~a 19%~~an 83% increase in domestic Synagis sales to ~~$25.8~~$49.7 million for 2003, up from $27.1 million in ~~2002 from $21.7 million in 2001.~~2002. This strong growth was ~~largely~~driven primarily by an increase in unit sales that contributed 52 of the 83 percentage points, an increase in price that contributed three points and a decrease in sales allowances that contributed 28 points, reflecting a reduction in our estimate of rebates due to ~~increased demand~~government purchasers and reserves for bad debts. We record Synagis international product sales based on Abbott International’s (“AI’s”) sales price to customers, as defined in the United States, and resulted in an 18% increase in domestic units sold. Also aiding growth was a 3% price increase that took effect in June 2002. Our reported international sales of Synagis decreased 47% to $4.4 million in the 2002 quarter compared to $8.3 million in the 2001 quarter, due to a 51% decrease in units sold to Abbott International ("Abbott"),our agreement. AI is our exclusive distributor of Synagis outside of the United States. ~~We believe that the decrease is due to reductions~~Our reported international sales of Synagis were $5.2 million and $5.4 million in the ~~inventory stocking levels~~2003 and 2002 periods, respectively.

Ethyol — Ethyol accounted for approximately 29% of ~~Abbott, rather than reduced~~our product ~~demand~~sales in both Q2 2003 and Q2 2002. Worldwide Ethyol sales grew 49% to $24.8 million in Q2 2003, as compared to $16.6 million in Q2 2002. This growth was driven by ~~end users. The~~a number of contributing factors, including: a strong increase in domestic unit sales that contributed 29 of the 49 percentage points; a domestic price increase that contributed 12 points; a decrease in ~~unit volume was offset by~~reserves for bad debts that contributed four points; and an increase in ~~the per unit~~ sales ~~price recognized upon delivery of product~~ to ~~Abbott under the terms of~~ our international distribution agreement. Based on information received from Abbott, we believe that end-user sales have increased over last year's comparable quarter. We record Synagis international product sales based on Abbott's sales price to customers, as defined in the agreement. We have been working with Abbott to expand the number of countries where we are licensed to sell Synagis. As of September 30, 2002, international registrations have been filed in 58 countries for the approval of Synagis, for which approval in 50 countries, including the United States, had been obtained, the most recent of which was Canada in May 2002. There can be no assurance that approvals by the appropriate regulatory authorities will continue to be granted or that we will receive pricing and reimbursement approvals in countries where we have received regulatory approval. Ethyol- On October 1, 2001 we reacquired domestic marketing rights to Ethyol from ALZA Corporation ("ALZA") and have since recorded all revenues from domestic sales of Ethyol to wholesalers and distributors. As part of this agreement, no third quarter 2001 supply sales were made to ALZA, and we purchased ALZA's remaining Ethyol inventory at their original purchase price, which was recorded as a reduction to product sales. Beginning April 1, 2002, we pay ALZA a declining royalty through 2011 based on net sales of Ethyol in the United States. Domestic Ethyol sales were $18.5 million in the 2002 quarter, as compared to net returns of $2.3 million in the 2001 quarter. Prior to October 1, 2001, we had recorded Ethyol domestic product sales based on ALZA's net unit selling price as defined in the agreement. Our international sales of Ethyol to our distribution partner, Schering-Plough Corporation ~~("Schering"~~(“Schering”), ~~of $1.7 million for the third quarter of 2002 were down slightly from the prior year quarter sales of $1.9 million.~~that contributed four points. We record Ethyol international product sales based on ~~Schering's end user~~a percentage of Schering’s end-user sales, as defined in ~~the~~our agreement.

Other ~~Products-~~Products — Sales of other products in ~~third quarter 2002,~~Q2 2003, which include sales of CytoGam, NeuTrexin, RespiGam, and by-products that result from the CytoGam manufacturing process, decreased ~~12% to $8.8~~$2.0 million, or 24% from ~~$10.0 million in last year's quarter.~~Q2 2002. The decrease ~~was largely~~is driven by a 40% decrease in CytoGam sales. We believe this decrease is the result of a reduction in wholesaler inventory levels during the second quarter of 2003, rather than due to changes in demand for the product.

Forward-looking commentary — We believe that the growth rate of our product sales, while remaining at double-digit levels, will decelerate during the second half of 2003 relative to the second half of 2002. Additionally due to the ~~5% decline~~significant contribution of Synagis, we believe our revenues and operating results will reflect the seasonality of that product’s use to prevent RSV disease, which occurs primarily during the winter months, for the foreseeable future. In addition, this seasonality will be compounded by FluMist, which was recently approved by the FDA, and is expected to be sold primarily during the third and fourth quarters of the year, the most common time for yearly influenza vaccination. The high concentration of product sales in ~~CytoGam~~a portion of the year exaggerates the adverse consequences on our sales of any manufacturing or supply delays, any sudden loss of inventory, any inability to satisfy product demand, or of any unsuccessful sales or marketing strategies during the Synagis and ~~a mix shift to more CytoGam international sales, which sell at a lower unit price than domestic units. Forward-looking commentary-~~FluMist selling seasons. The level of future product sales will depend on several factors, including, but not limited ~~to, the timing~~to: potential limitations on pricing and ~~extent of future regulatory approvals of our products and product candidates, receiving reimbursement pricing,~~profitability by government or third-party payors; availability of finished product ~~inventory, approval and~~inventory; commercialization of competitive ~~products~~products; and the degree of acceptance of our products in the marketplace. We continue to make progress in the FDA review process for FluMist. On August 26, 2002, we completed a rolling submission of our response to the FDA's Complete Response Letter ("CRL"). We expect to have the opportunity to appear before the Vaccine and Related Biological Products Advisory Committee ("VRBPAC") in the near future, and have been given a tentative date of December 17, 2002 for that meeting. The agenda and topics for discussion at that meeting have not yet been finalized, but could include: the relative risks for asthma and wheezing episodes in children less than five years of age; the potential for vaccine transmission; and the adequacy of the data set at the ends of the age spectrum (for example, infants under age 2 and adults over age 50). We do not expect children less than five years of age to be included in the initial indication, if and when approved. We are hopeful that a successful meeting will result in approval for FluMist during the second quarter of 2003, if not sooner.

Revenues – Other Revenues -

Other revenues increased ~~80%~~$25.5 million to ~~$13.4~~$31.9 million for Q2 2003 compared to $6.4 million in ~~the third quarter of~~Q2 2002, ~~compared~~primarily due to $7.4 million in the 2001 period, largely the result of $9.0 million from the sale of excess production capacity to a third party and $2.1 million in funding for FluMist clinical development and sales and marketing activities from Wyeth. Partially offsetting these increases is a decrease of $3.8 million in revenue recordedincreased revenues under collaborative agreements. During Q2 2003, we recorded $20.0 million of milestone revenue under our worldwide collaborative agreement with Wyeth, associated with the approval of FluMist. Also during Q2 2003, we recognized $7.5 million of revenue under our international distribution agreement with Abbott International for achieving in excess of $100 million in end-user sales of Synagis outside the U.S. during a single RSV season.

Forward-looking ~~commentary- The expected timing~~commentary — We anticipate the level of ~~annual~~other revenues for the remainder of 2003 will increase over the prior year period, but at a lower rate as compared to ~~be recognized through 2005 under major collaborative agreements entered into before January 1, 2002~~our growth for ~~which we have accounted for using~~ the ~~contingency adjusted performance model and deferred a portion~~first half of the ~~up-front~~year. Year-over-year, we expect significant growth in other revenues, largely due to milestone and ~~milestone~~royalty payments received, based on current estimates of costs to complete, is as follows (in millions): 2002 2003 2004 2005 ---- ---- ---- ---- Abbott Laboratories $7.5 $2.7 $-- $-- GlaxoSmithKline 0.7 -- -- -- Schering-Plough Corporation 0.4 0.4 0.4 0.4 ---- ---- ---- ---- Total $8.6 $3.1 $0.4 $0.4 ==== ==== ==== ==== Future changes in estimated total costs or differences between actual costs and projected costs in any one period could cause the actual recorded amounts to differ from the projected amounts. As discussed in "Critical Accounting Policies and Estimates - Contract Revenues" above, we have adopted the milestone payment method for new contracts entered into or acquired after January 1, 2002. Because we have adopted this method prospectively, the table above assumes the revenues deferred for these contracts entered into prior to January 1, 2002 will be recognized in accordanceassociated with the contingency-adjusted performance model. Under the recently amended collaborative agreements with Wyeth, acquired with the Acquisition and associated with FluMist, the Company expects to receive a $25 million payment in the fourth quartercommercialization of ~~2002 as compensation for manufacturing costs incurred in preparing for the potential, but now not expected, 2002 FluMist launch.~~FluMist. The level of contract revenues in future periods will depend primarily upon the extent to which we enter into other collaborative contractual arrangements, if any, and the extent to which we achieve certain milestones provided for in existing agreements. Future revenues from the sale of excess production capacity will vary depending ~~upon~~on the extent to which we enter into these types of arrangements, and are not expected to be significant for 2003 or thereafter.

Based on current estimates of costs to complete, the expected timing of revenues to be recognized in the future as we fulfill certain obligations under our collaborative agreement with Schering-Plough Corporation, for which we have deferred a portion of the up-front and milestone payments received under the contingency adjusted performance model, is as follows: $0.2 million in the second half of 2003; $0.4 million in 2004; and $0.4 million in 2005.

Cost of Sales -

Cost of sales for ~~the third quarter of 2002~~Q2 2003 increased ~~37%~~48% to ~~$22.3~~$23.2 million from ~~$16.3~~$15.6 million in ~~2001, principally~~Q2 2002, due largely to ~~increases~~an increase in product sales volumes. ~~Overall gross~~Gross margins ~~for the September 2002 quarter increased to 62% from 59%~~on products sales were 73% in the last year's quarter. This increase is largely due to the write-off of certain inventories produced at our manufacturing facility in Nijmegen in the 2001 quarter, partially offset by additional royalty payments in 2002 related to domestic Synagisboth Q2 2003 and ~~Ethyol sales.~~ Q2 2002.

Forward-looking ~~commentary-~~commentary — We expect that gross margins ~~will~~may vary significantly from quarter to quarter, based on changes in the ~~seasonal~~ product ~~mix.~~mix due to seasonality. For the remainder of 2003, we anticipate that gross margins on product sales will decline significantly over the prior year period, primarily due to the commencement of FluMist sales, which are expected to have lower margins, during the second half of 2003. We expect that, on an annual basis, our gross margin percentage for ~~2002 will~~2003 should be slightly lower than ~~2001, largely~~2002, due to the ~~result~~launch of ~~the additional royalties owed for Synagis and Ethyol.~~ FluMist.

Research and Development Expenses -
(in millions)

Q2 2003				Q2 2002
Acquisition-Related				Acquisition-Related
Historical	Adjustments		Adjusted	Historical	Adjustments		Adjusted
$28.9	($	1.1)	$27.8	$34.5	($	1.2)	$33.3

Research and development ~~and clinical~~ expenses ~~increased 50% to $31.8~~of $28.9 million in ~~the 2002 third quarter, compared to $21.2~~Q2 2003 decreased 16% from $34.5 million in the 2001 quarter, driven by a $10.0 million up-front payment for the license to an early development-stage technology for the human metapneumovirus (hMPV). The clinical symptoms of hMPV are largely similar to RSV,Q2 2002. Excluding Acquisition-related adjustments in both ~~of which cause serious respiratory infections in young children. Additionally, the impact of the Acquisition was offset by reduced spending in other areas of~~periods, research and ~~development. In~~development expenses for Q2 2003 were $27.8 million, down 17% over Q2 2002. The decline is largely due to the ~~third quarter~~completion of several late-stage clinical trials by the end of 2002, ~~we completed several important clinical trials,~~ including a successful Phase 3 trial for Synagis in children with congenital heart disease. We completed the preliminary analysis of three Phase 2 trials for Siplizumab involving almost 700 psoriasis patients. While the drug appeared to be generally well tolerated and patients exhibited an improvement in their psoriatic disease, an anti-antibody response (also known as immunogenicity) was observed in the laboratory tests of approximately 50 percent of the patients in the first of these Phase 2 trials (analysis of the other two trials is not yet completed). This anti-antibody response did not appear to cause any clinical complications. However, in 2003 we plan to conduct retreatmentcertain Phase 2 studies with siplizumab in psoriasis, and the Phase 3 Synagis clinical trial in congenital heart disease patients, the results of which were submitted to ~~further assess~~ the potential clinical impact of the immunogenicity. We have also recently completed two Phase 2 trials of our E. coli urinary tract infection vaccine, and have determined that there is not a sufficient level of efficacyFDA in ~~prevention of urinary tract infections to proceed with additional trials.~~November 2002. Our ongoing clinical ~~program~~programs also ~~includes~~include several products and product candidates in various ~~phases~~stages of ~~evaluation,~~development, including trials for Vitaxin, and a ~~Phase 1~~pediatric trial ~~in adults using~~of a liquid formulation of ~~Synagis; several Phase 1 and Phase 2 trials with our human papillomavirus (HPV) cervical cancer vaccine; Phase 1 trials with Vitaxin in cancer and rheumatoid arthritis; and certain trials for FluMist.~~Synagis. Additionally, we have multiple programs in the preclinical development stage.

Forward-looking commentary ~~- Overall,~~— For the remainder of 2003, we ~~expect 2002 clinical spending~~anticipate that the growth in our research and development expenditures will accelerate significantly, in part due to ~~increase over 2001 levels as more~~the recently announced collaboration with Critical Therapeutics, a private biotechnology company. In connection with the alliance, we incurred a licensing fee of ~~our product candidates move into the clinic~~$12.5 million during July 2003 to acquire an exclusive, worldwide license for technology associated with High Mobility Group Box Chromosomal Protein 1 (“HMGB-1”), and we ~~expand trials on products already in the clinic. In conjunction with the in-licensing agreement~~may be obligated for ~~hMPV technology, the Company is obligated to pay up to $74.4 million in~~ research funding and various milestone payments subject to the achievement of specified clinical, regulatory and sales milestones. Additionally, during the first half of 2002, we entered into two research collaborations. The Company entered into a research collaboration with Panacea Pharmaceuticals, Inc. ("Panacea") to develop Human Aspartyl (Asparaginyl) Beta-Hydroxlase ("HAAH") technology. In conjunction with the agreement, the Company is obligated to pay $3.3 million in research funding over a three-year period and is also obligated to make milestone payments in the amount of $68.1 million subject to the achievement of specified clinical, regulatory and sales milestones. We also entered into a research collaboration with A&G Pharmaceuticals, Inc. ("A&G") to license technology relating to PC-Cell Derived Growth Factor (PCDGF), a monoclonal antibody, the initial indications of which would apply to breast cancer. In conjunction with the agreement, the Company is obligated to pay up to $5.9 million in various milestone payments subject to the achievement of specified clinical, regulatory and sales milestones. Our development-stage efforts and otherfuture. On an annualized basis, we expect research and development ~~projects may never reach clinical trials, achieve success~~expenses to be up slightly in ~~the clinic, be submitted~~2003 compared to 2002. This is largely due to the ~~appropriate regulatory authorities for approval, or be approved for marketing or manufacturing~~anticipation of post-marketing commitments related to FluMist, additional trials associated with Vitaxin, and the continued progress of other pipeline candidates, partially offset by the ~~appropriate regulatory authorities. Further, we rely on numerous third parties to assist us in various stages~~impact of the ~~development process. Should they be unable to meet our needs, we may incur substantial additional costs. Any~~conclusion of ~~such uncertainties, if they should occur, could have a material adverse effect on our financial condition~~trials and ~~results of operations.~~ studies during 2002.

Selling, General, and Administrative ~~Expense -~~ Expenses
(in millions)

Q2 2003			Q2 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical	Adjustments		Adjusted
$55.5	($2.1)	$53.4	$47.4	($	2.7)	$44.7

Selling, general and administrative ("(“SG~~&A"~~&A”) ~~expense~~expenses increased ~~16%~~17% to ~~$51.2~~$55.5 million in ~~the third quarter of 2002~~Q2 2003 compared to ~~$44.2~~$47.4 million in ~~the third quarter of 2001. The increase is~~Q2 2002. Excluding Acquisition- related adjustments, adjusted SG&A expenses for Q2 2003 were $53.4 million, up 19% over $44.7 million in Q2 2002, due primarily attributable to the Acquisition, including $2.7 million for amortization of intangibles and stock compensation expense for unvested stock options assumed. Additionally, we experienced increased costs for sales commissions due to increased ~~product sales and increased~~ co-promotion ~~expense directly related to the sales growth of~~expenses for Synagis in the United States. We also experienced increases in legal costs, as we are currently involved in several disputes and legal matters. During the 2002 third quarter, we incurred a $5.0 million charge associated with settling a contractual dispute, regarding an agreement with MBL to transfer certain technology relating to the Company's monoclonal antibody manufacturing operations. The comparison to last year is also affected by a charge of $13.4 million in 2001 for termination payments associated with the ~~return~~product’s domestic sales growth and a modest increase in the size of the sales force associated with the marketing ~~rights for Ethyol.~~ launch of FluMist.

Other Operating Expenses -
(in millions)

Q2 2003			Q2 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical	Adjustments		Adjusted
$1.4	($--)	$1.4	$22.2	($	3.5)	$18.7

Other operating expenses, which reflect manufacturing start-up costs and other manufacturing related costs, were ~~$24.1~~$1.4 million in ~~the 2002 quarter~~Q2 2003 compared to ~~$2.1~~$22.2 million in the 2001 quarter. The increase is primarily related to pre-production costs and inventory reserves for FluMist, which has not yet been approved by the FDA. In addition, we incurred $3.4 million in expense in the 2002 quarter relating to stock compensation for unvested stock options assumed and amortization of intangibles relating to the Acquisition. Also included in other operating expense for both periods are excess capacity costs associated with the plasma production section of our Frederick, Maryland manufacturing facility. Forward-looking commentary- While we continue to make progress in the FDA review process for FluMist, we believe that it is unlikely that FluMist would be approved in time for significant sales for the 2002/2003 flu season. As such, it currently appears probable that a substantial portion, if not all, of the inventory materials produced in the fourth quarter of 2002 will reach their expiration dates prior to being utilized. We expect thatQ2 2002. Adjusted other operating expenses ~~associated with FluMist will be slightly lower~~were $1.4 million for Q2 2003, compared to $18.7 million in Q2 2002. The decrease is due to the shift in the ~~fourth quarter~~costs of ~~2002. From time~~FluMist manufacturing that are capitalized in inventory this year, but were expensed as other operating costs in last year’s quarter.

Forward-looking commentary- For the remainder of 2003, we expect the level of other operating expenses to ~~time, we consider cost-saving alternatives, including outsourcing or contract manufacturing. Certain~~decline dramatically versus the prior year period, as the costs of ~~these alternatives might result in the write-off~~FluMist manufacturing are inventoried and subsequently expensed to cost of ~~specialized equipment and facilities infrastructure that would not be transferable~~sales as product is sold to other activities. While we cannot predict with certainty the outcome of these considerations, we believe that such a write-off might be material to the results of operations for a particular period but would not have a material adverse effect on our financial position or future operations. Wyeth.

Interest Income and Expense -

We earned interest income of ~~$13.3~~$14.3 million ~~during the~~for Q2 2003, compared to $11.9 million in Q2 2002, ~~quarter, up 45% over the 2001 quarter,~~ reflecting higher cash balances available for investment, ~~largely due to the Acquisition,~~ partially offset by a ~~decline~~decrease in short-term interest rates ~~which~~that lowered ~~our~~the overall portfolio yield. Interest expense for ~~the third quarter of 2002,~~Q2 2003, net of amounts capitalized, ~~increased $2.2~~was $1.6 million, ~~over third quarter 2001,~~down from $1.8 million in Q2 2002. This decrease is largely due to interest expense capitalized in connection with several large construction projects currently undertaken by the Company, including construction of the new corporate headquarters in Maryland, and manufacturing facilities in Pennsylvania and the U.K. that began during 2002.

Forward-looking commentary- We expect interest expense to increase during the second half of 2003 and beyond, as a result of the issuance during July 2003 of $500 million of Convertible Notes due 2023. The notes bear interest at one percent per annum payable semi-annually in arrears, and beginning in 2006, we will pay contingent interest on the notes during a six-month interest period if the average trading price of the notes is above a specified level. The notes are convertible ~~debt assumed in the Acquisition.~~ into our common stock at $68.18 per share.

Loss on Investment Activities -

We incurred ~~$10.6~~$0.1 million in losses on investment activities ~~for the~~during both Q2 2003 and Q2 2002 ~~third quarter. The losses consist primarily of impairment write-downs due~~related to ~~the decline in the fair value of certain~~recording our portion of our ~~publicly traded~~minority investees’ operating results as required by the equity ~~investments and other investments~~method of accounting.

Taxes

We recorded a provision for income taxes of $7.9 million for Q2 2003, resulting in ~~private companies below their cost basis that were judged to be other than temporary. Taxes - We~~an effective tax rate of 37%. Comparatively, we recorded an income tax benefit of ~~$20.1~~$16.5 million for ~~the quarter ended September 30,~~Q2 2002, resulting in an effective tax rate of ~~35.7%~~36%. ~~This compares to a tax benefit of $8.4 million recorded for~~

The increase in the ~~quarter ended September 30, 2001, based on an~~estimated effective tax rate ~~of 30.8%. The variation~~between 2002 and 2003 is primarily due to a decrease in ~~the effective tax rate for 2002 versus 2001 results primarily from differences in the amount of~~estimated credits ~~taken~~available for research and development ~~programs~~activities, including credits earned for Orphan Drug status of certain research and development activities, relative to the ~~impact of lower state income tax rates.~~growth in earnings. These credits will vary from year to year depending on the activities of the Company. ~~We believe that our effective tax rate~~

Net Earnings / (Loss)
(in millions)

Q2 2003			Q2 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical	Adjustments	Adjusted
$13.5	$1.7	$15.2	($29.5)	4.2	($25.3)

Net earnings for ~~the full year of 2002 will be approximately 35.2%. Net Loss - Net loss for the third quarter of 2002 was $36.3~~Q2 2003 were $13.5 million, or ~~$0.14~~$0.05 per basic and diluted share, compared to a net loss for ~~the 2001 quarter~~Q2 2002 of ~~$19.0~~$29.5 million or ~~$0.09~~$0.12 per share. Excluding the after-tax impact of the Acquisition-related adjustments totaling $1.7 million for Q2 2003, and $4.2 million for Q2 2002, adjusted net earnings for Q2 2003 were $15.2 million, or $0.06 per basic and diluted share, compared to an adjusted net loss for Q2 2002 of $25.3 million or $0.10 per share.

Shares used in computing basic earnings per share and basic adjusted earnings per share for Q2 2003 were 252.1 million, while shares used for computing diluted earnings per share and adjusted diluted earnings per share were 258.2 million. Shares used in computing net loss per share and adjusted net loss per share for ~~the quarter ended September 30,~~Q2 2002 ~~and September 30, 2001~~ were ~~250.8 million and 213.9 million, respectively. The increase in share count primarily reflects the additional shares issued in conjunction with the Acquisition.~~ 250.2 million.

We do not believe inflation had a material effect on our financial statements.

Forward-looking commentary ~~- Our quarterly financial results vary significantly due~~— For the remainder of the year and on an annualized basis, we expect to ~~seasonality~~generate net earnings per diluted share in 2003. The level of ~~Synagis product sales,~~net earnings will depend on many factors, including, but not limited to, the degree of acceptance of our products in the marketplace and adequate product supply to meet ~~demand, fluctuations~~demand. As a result of our recently announced share repurchase program, we expect that shares used for computing basic and diluted shares for the remainder of the year will decrease slightly, reflecting repurchases of approximately 2.9 million shares already completed through August 5, 2003, and additional repurchases during the second half of 2003.

YTD 2003 compared to YTD 2002

Revenues – Product Sales
(in millions)

	YTD		YTD
	2003		2002		Growth
Synagis	$	447.2	$	325.5		37%
Ethyol		51.8		34.8		49%
Other Products		19.3		17.7		9%

	$	518.3	$	378.0		37%

For YTD 2003, product sales grew 37% to $518.3 million as compared to $378.0 million in YTD 2002, primarily due to a 37% increase in sales of ~~other products, milestone payments, research funding~~Synagis to $447.2 million and expenditures for research, development, clinical and marketing programs. NINE MONTHS ENDED SEPTEMBER 30, 2002 AND 2001 Product Sales - Product Sales (In Millions) 2002 2001 ----- ----- Synagis $355.7 $266.5 Ethyol $55.0 $6.0 Other Products $26.5 $31.0 ----- ----- TOTAL $437.2 $303.5 Product sales grew 44% to $437.2 millionby a 49% increase in ~~the nine months ended September 30, 2002 from $303.5 million in the comparable 2001 period, primarily driven by higher~~ sales of Ethyol to $51.8 million.

Synagis ~~which~~— Synagis accounted for ~~81%~~approximately 86% of our product sales for ~~the nine-month period. Synagis-~~both YTD 2003 and YTD 2002. We achieved a 34% increase in domestic Synagis sales ~~increased 34%~~to $420.6 million for YTD 2003, up from ~~$266.5~~$314.1 million in ~~the nine months ended September 30, 2001 to $355.7 million~~YTD 2002. This strong growth was driven primarily by an increase in ~~the nine months ended September 30, 2002, reflecting 38% growth in domestic~~ unit sales that contributed 24 of the 34 percentage points, an increase in price that contributed 6 points and a decrease in sales allowances that contributed 4 points, reflecting a reduction in our estimate of reserves for bad debts and rebates due to ~~increased demand for the product.~~government purchasers. Our reported international sales of Synagis ~~decreased 37% primarily~~more than doubled to $26.6 million in YTD 2003 compared to $11.4 million in YTD 2002, largely due to ~~a decrease~~an almost five-fold increase in units sold to ~~Abbott International ("Abbott"), our exclusive distributor of Synagis outside of the United States, and totaled $15.8 million in the 2002 nine months compared to $25.1 million in the 2001 nine months.~~AI. We believe ~~that~~ the ~~decrease~~growth is due to ~~reductions in the inventory stocking levels of Abbott, rather than reduced~~increased product demand by end ~~users. Based upon information received~~users, particularly in Japan, where the product was approved for use in 2002. Also contributing to international Synagis sales growth is the additional amount due from ~~Abbott, we believe that end user~~AI in YTD 2003 compared to YTD 2002, calculated as the difference between the contractually stipulated transfer price and our share of AI’s sales ~~have increased 27% over~~price to end-users. Sales growth was also aided by the ~~comparable prior year period. The decrease~~impact of a weaker U.S. dollar.

Ethyol — Ethyol accounted for approximately 10% and 9% of our product sales in ~~unit volume~~YTD 2003 and YTD 2002, respectively. Worldwide Ethyol sales grew 49% to $51.8 million in YTD 2003, as compared to $34.8 million in YTD 2002. This growth was ~~offset~~driven by a number of contributing factors, including: an increase in ~~the per~~domestic unit sales that contributed 24 of the 49 percentage points; an increase in price ~~recognized upon delivery of product~~that contributed 15 points; a decrease in sales allowances that contributed seven points; and an increase in sales to ~~Abbott under the terms of~~ our international ~~distribution agreement. Ethyol- Ethyol sales accounted for approximately 13% and 2% of year-to-date product sales in 2002 and 2001, respectively. Sales of Ethyol~~partner, Schering, that contributed three points.

Revenues – Other Revenues

Other revenues increased ~~from $6.0~~$20.0 million to $35.4 million for ~~the nine months ended September 30, 2001~~YTD 2003 compared to ~~$55.0~~$15.4 million ~~for the nine months ended September 30,~~in YTD 2002, ~~principally~~largely due to ~~our assumption of domestic marketing rights of the product on October 1, 2001 when we began recording all revenues from domestic sales to wholesalers and distributors. Once reacquired~~an increase in October 2001, domestic sales volume increased and we increased the sales price. Domestic Ethyol sales were $51.1 million in the nine-month period in 2002, as compared to $1.6 million in the 2001 period. The amounts for 2001 are net of reductions in Ethyol sales for the buy back of Ethyol inventory from ALZA in accordance with the reacquisition of marketing rights. As of April 1, 2002, we began paying ALZArevenue recorded under collaborative agreements, partially offset by a ~~declining royalty based on net sales of Ethyol in the United States which will continue through 2011. Year-to-date international sales of $3.9 million were down slightly from the prior year sales~~decrease of $4.4 million for the comparable period. Other Products- Sales of other products, which include sales of CytoGam, NeuTrexin, RespiGam, and by-products that result from the CytoGam manufacturing process, decreased $4.5 million or 15% for the nine months ended September 30, 2002 from the 2001 comparable period. CytoGam sales for the nine months ended September 30, 2002 decreased $1.6 million or 7% from the 2001 period. Unit sales decreased approximately 13%, which was offset by a 10% domestic price increase, which took effect in ~~the first quarter of 2002. The Company also experienced decreases in sales of NeuTrexin and by-products. Other~~ revenues ~~- Other revenues in the nine months ended September 30, 2002 of $28.8 million increased $6.3 million or 28% from the comparable 2001 period, principally due to $9.0 million~~ from the sale of excess production capacity to a third ~~party and $6.3~~party. Other revenues for YTD 2003 include approximately $27.5 million in ~~funding~~milestone payments for the approval of FluMist ~~clinical development~~ and for achieving in excess of $100 million in end-user sales ~~and marketing activities from Wyeth. Offsetting these increases are decreases in revenues recognized in accordance with SAB 101 and~~of Synagis outside the U.S. during a ~~$3.6 million decrease in revenues related to sale proceeds received in 2001 for our Hexalen business.~~ single respiratory syncytial virus (RSV) season.

Cost of ~~sales -~~ Sales

Cost of sales for ~~the 2002 nine months~~YTD 2003 increased ~~54%~~32% to ~~$117.8~~$126.0 million from ~~$76.3~~$95.5 million ~~in the 2001 nine months, principally due to higher sales volume.~~for YTD 2002. Gross margins on product sales were 76% for ~~the nine month period ended September 30, 2002 were 73%~~YTD 2003, compared to 75% for ~~the nine month period ended September 30, 2001. This decrease is principally~~YTD 2002, due to ~~additional~~higher margins, particularly for Synagis, which are largely a result of lower sales allowances that increased net product sales. This favorable impact was partially offset by higher royalties payable ~~relating~~ to ~~Synagis, starting in December 2001.~~ ALZA Corporation on Ethyol.

Research and Development Expenses -
(in millions)

YTD 2003			YTD 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical	Adjustments		Adjusted
$59.6	($2.1)	$57.5	$78.6	($	4.5)	$74.1

Research and development expenses of ~~$110.4~~$59.6 million in ~~the 2002 nine months increased 79%~~YTD 2003 decreased 24% from ~~$61.6~~$78.6 million in ~~the 2001 nine months, primarily~~YTD 2002. Excluding Acquisition-related adjustments in both periods, research and development expenses for YTD 2003 were $57.5 million, down 22% from YTD 2002. The decline is largely due to ~~higher expenditures on~~ the ~~Company's~~completion of several late-stage clinical trials by the end of 2002, including certain Phase 2 studies with siplizumab in psoriasis, and the ~~impact~~Phase 3 Synagis clinical trial in congenital heart disease patients, the results of which were submitted to the ~~Acquisition including $5.7 million~~FDA in expense relating to retention payments, stock option acceleration and stock compensation for unvested stock options assumed. As discussed in the analysis of results for the three months ended September 30, 2002 above, we are conducting trials for several product candidates in various phases of clinical development and have multiple programs in the preclinical stage. November 2002.

Selling, General, and Administrative ~~Expense-~~ Expenses
(in millions)

YTD 2003			YTD 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical	Adjustments		Adjusted
$173.6	($4.2)	$169.4	$143.0	($	5.9)	$137.1

Selling, general and administrative (“SG&A”) expenses increased ~~52%~~21% to ~~$194.2~~$173.6 million in ~~2002~~YTD 2003 compared to $128.2 million for the 2001 period. As a percentage of product sales, SG&A expense increased to 44% of product sales in the 2002 period from 42% in the 2001 period. The increase in this ratio is largely reflective of the impact of the Acquisition, including $8.6$143.0 million in expense in the 2002 nine-month period relating to retention payments, stock option acceleration and stock compensation for unvested stock options assumed, and amortization of intangibles. Additionally, we incurred increased costs for salary andYTD 2002. Excluding Acquisition- related adjustments, adjusted SG&A expenses for ~~the expansion of our Ethyol sales force by adding approximately 40 additional sales representatives during the second half of 2001 and increased marketing~~YTD 2003 were $169.4 million, up 24% over $137.1 million in YTD 2002, due primarily to increases in co-promotion expenses for ~~the relaunch of Ethyol. Higher sales commissions in conjunction with the~~Synagis. This increase ~~in product sales~~was partially offset by lower administrative spending and the expansion of Synagis marketing programs contributed to the increase, as well as increased co-promotion expense directly related to the growth in domestic sales of Synagis. Higher legal expenses for the period included a $5.0 million chargesynergies associated with the settlement of a contractual dispute in August 2002 regarding an agreement with MBL to transfer certain technology relating to the Company's monoclonal antibody manufacturing operations (see further discussion in the Legal Proceedings section of this report). Acquisition.

Other Operating ~~Expense-~~ Expenses
(in millions)

YTD 2003			YTD 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical	Adjustments		Adjusted
$22.9	($3.2)	$19.7	$44.0	($	11.0)	$33.0

Other operating expenses, ~~increased~~which reflect manufacturing start-up costs and other manufacturing related costs, decreased to ~~$68.1~~$22.9 million in ~~the nine months ended September 30, 2002~~YTD 2003 from ~~$7.7~~$44.0 million in ~~the 2001 period. The increase is principally attributable~~YTD 2002. Adjusted other operating expenses were $19.7 million for YTD 2003, compared to ~~pre-production costs and inventory reserves for FluMist, which has not yet been approved by the FDA. In addition, we incurred $14.4~~$33.0 million in ~~expense~~YTD 2002. The decrease is due to the shift in the ~~2002 nine-month period relating to retention payments, stock option acceleration and stock compensation for unvested stock options assumed and amortization~~costs of ~~intangibles relating to the Acquisition. Also included~~FluMist manufacturing that are in inventory this year, but were expensed as other operating ~~expense for both periods are excess capacity~~ costs ~~associated with~~in the ~~plasma production section of our Frederick manufacturing facility.~~ prior year.

In-Process Research and Development -

We incurred charges of $1,179.3 million ~~during~~in the ~~nine month period ended September 30,~~first quarter of 2002 for the write-off of purchased in-process research and development in conjunction with the Acquisition. The write-off ~~represents~~represented the fair value of purchased in-process technologies at the acquisition date, calculated ~~utilizing~~as the sum of ~~the~~ probability-adjusted scenarios under the income approach using a discount rate of 18.7%, and certain in-process research and development projects, primarily FluMist. The Company does not anticipate that there will be any alternative future use for the in-process technologies that were written off. FluMist is a live, attenuated vaccine delivered via a nasal mist for the prevention of influenza. We are currently seeking regulatory approval for the frozen formulation, which requires freezer storage. The liquid formulation of FluMist, which is better suited to international markets than the frozen formulation, is currently in Phase 3 clinical trials with our partner, Wyeth. While there are other flu vaccines currently marketed by other companies, FluMist would be the only live virus vaccine administered as a nasal mist. In October 2000, Aviron had submitted a BLA for FluMist (frozen) to the FDA seeking approval for licensure. Aviron received a Complete Response Letter from the FDA on August 31, 2001, and filed its response to this letter on January 8, 2002. A second Complete Response Lettercommercial scenarios. This method was received from the FDA on July 10, 2002 requesting clarification and additional information relating to clinical data and chemistry, manufacturing and controls data previously submitted. We completed our submission of information requested on August 26, 2002. We are hopeful that a successful meeting with the FDA's VRBPAC committee in December will result in approval for FluMist during the second quarter of 2003, if not sooner. The valuation of the acquired in-process research and development is based upon ~~certain estimates and assumptions by management. The valuation is based upon management's~~management’s estimates of the probability of FDA approval and commercial success for FluMist. As with all biotechnology products, the probability of FDA approval and commercial success for any particular research and development project is highly uncertain. Management's projections were based on assumptions, which may or may not remain valid for the relevant period, including the estimated impact of four "key" factors: price per dose; dose volume; launch date; and the potential failure of the frozen or liquid formulations of FluMist. Based on current information, management believes that the estimates and assumptions underlying the fair value analysis are substantially accurate. In addition, as of September 30, 2002, none of the existing manufacturing facilities involved in the production of FluMist had been licensed by any regulatory agency and FluMist had not yet been manufactured at a sustained commercial scale. There can be no assurance that these facilities can achieve licensure by the FDA or any other regulatory agency. Nor can there be any assurances that if licensed, commercial scale production could be achieved or sustained. If we fail to obtain FDA approval for the marketing and manufacture of FluMist, we will absorb all of the related ongoing expenses while recording no corresponding revenue.

Interest Income and Expense -

We earned interest income of ~~$37.2~~$27.3 million for ~~the first nine months of 2002,~~YTD 2003, compared to ~~$28.4~~$23.8 million in ~~the comparable 2001 period,~~YTD 2002, reflecting higher cash balances available for investment, ~~largely due to the Acquisition,~~ partially offset by a decrease in short-term interest rates ~~which~~that lowered the overall portfolio yield. Interest expense for ~~the first nine months of 2002,~~YTD 2003, net of amounts capitalized, ~~increased $6.5~~was $3.4 million, ~~over the first nine months of 2001~~down from $4.5 million in YTD 2002. This decrease is largely due to interest expense ~~on convertible debt assumed~~capitalized in connection with several large construction projects currently undertaken by the ~~Acquisition.~~ Company, including construction of the new corporate headquarters in Maryland, and manufacturing facilities in Pennsylvania and the U.K. that intensified during the second half of 2002.

Loss on Investment Activities -

We incurred ~~$10.7~~$0.4 million in losses on investment activities for YTD 2003, compared to $0.1 million in YTD 2002, related to recording our portion of our minority investees’ operating results as required by the ~~nine months ended September 30, 2002. The losses consist primarily~~equity method of impairment writedowns due to the decline in the fair value of publicly traded equity investments and other investments in private companies below their cost basis that were judged to be other than temporary. Taxes- accounting.

Taxes

We recorded an income tax benefit of $1.7 million for the nine months ended September 30, 2002. Excluding items not deductible for tax purposes, principally the write-off of purchased in-process research and development, income tax expense ~~resulted~~of $72.2 million for YTD 2003, resulting in an effective tax rate of ~~35.2%~~37%. ~~This compares to~~Comparatively, we recorded income tax expense of $18.4 million for ~~the nine months ended September 30, 2001 of $29.8 million,~~YTD 2002, resulting in an effective tax rate of ~~37.1%.~~ 36% that excluded a write-off of in-process research and development purchased during the first quarter of 2002, which was not deductible for tax purposes.

The ~~variation from~~increase in the ~~statutory~~estimated effective tax rate ~~in both periods~~between 2002 and 2003 is ~~principally~~primarily due to a reduction in the ~~amount of~~estimated credits ~~taken~~available for research and development ~~expenditures.~~ activities, including credits earned for Orphan Drug status of certain research and development activities in 2003, relative to our earnings growth. These credits will vary from year to year depending on the activities of the Company.

Net ~~Loss -~~ Earnings / (Loss)
(in millions)

YTD 2003			YTD 2002
Acquisition-Related			Acquisition-Related
Historical	Adjustments	Adjusted	Historical			Adjustments		Adjusted
$123.0	$5.3	$128.3	($	1,146.3	)	$1,	192.6	$46.3

Net earnings for YTD 2003 were $123.0 million, or $0.49 basic and $0.48 diluted earnings per share compared to a net loss for YTD 2002 of $1.1 billion or $4.62 per share. Excluding the ~~nine months ended September 30, 2002, which includes the~~after-tax impact of the ~~write off~~Acquisition-related adjustments totaling $5.3 million for ~~in-process research~~YTD 2003, and ~~development, was $1,182.6~~$1.2 billion for YTD 2002, adjusted net earnings for YTD 2003 and YTD 2002 were $128.3 million and $46.3 million, respectively, or ~~$4.75~~$0.50 and $0.18 adjusted earnings per ~~share.~~diluted share, respectively.

Shares used in computing basic earnings per share and basic adjusted earnings per share for YTD 2003 were 251.8 million, while shares used for computing diluted earnings per share and adjusted diluted earnings per share were 257.4 million. Shares used in computing net loss per share for YTD 2002 were ~~249.1~~248.1 million. ~~This compared to net earnings for the comparable period of 2001 of $50.5 million or $0.24 basic and $0.23 diluted earnings per share.~~ Shares used in computing ~~basic and diluted~~adjusted earnings per diluted share for YTD 2002 were ~~213.1 million and 219.9 million, respectively. The increase in share count primarily reflects the additional shares issued in conjunction with the Acquisition.~~ 254.8 million.

We do not believe inflation had a material effect on our financial statements.

LIQUIDITY AND CAPITAL RESOURCES

Sources and uses of ~~cash- The Company's capital requirements have generally been funded from operations,~~ cash ~~and investments on hand, and issuance of common stock.~~— Cash and marketable securities ~~(short and long-term) increased 59% to $1.2 billion~~were $1,588.0 million at ~~September~~June 30, ~~2002 from $777.7~~2003 versus $1,423.1 million at December 31, ~~2001. This~~2002, an increase isof 12%. Increases in cash are primarily due to ~~the impact of the Acquisition, as well as~~ cash generated ~~from~~by the Company’s ongoing business operations. Working capital ~~increased 7.5%~~decreased to ~~$451.6~~$362.4 million at ~~September~~June 30, ~~2002~~2003 from ~~$419.9~~$476.8 million at December 31, ~~2001 largely~~2002, primarily due to the ~~Acquisition combined with~~decrease in trade accounts receivable. As the ~~seasonal nature~~Synagis selling season winds down during the second quarter of the ~~business. Also, as a result of the Acquisition, we have added $200 million~~calendar year, accounts are collected and excess cash is invested in ~~convertible debt~~longer term investments, in accordance with ~~the entire balance due in 2008.~~ our investment guidelines.

Operating Activities

Net cash provided by operating activities ~~decreased~~increased to ~~$43.2~~$194.6 million in ~~the nine months ended September 30, 2002~~YTD 2003 as compared to ~~$114.3~~$155.3 million in ~~the comparable 2001 period,~~YTD 2002, primarily as the result of ~~the~~ net ~~loss~~earnings for the period ~~(excluding the write-off of in-process research and development and other non-cash items), the seasonal decrease in accrued co-promotion expenses for Synagis,~~ and the ~~seasonal decrease in royalties payable. These changes were~~use of deferred tax assets to offset current tax liabilities, partially offset by ~~higher allowances~~increases in inventory balances as the Company prepares for ~~doubtful~~the launch of FluMist in the third quarter of 2003, increases in non-trade accounts ~~receivable. The Company has made $5.0 million~~receivable for certain milestone payments due from our collaborative partners, and decreases in ~~cash restructuring payments relating to~~accrued expenses and product royalties payable as amounts paid for co-promotion expense and royalties increased year-over-year, reflecting the ~~Acquisition. The remaining restructuring liability of $1.4 million is expected to be settled by 2004 with cash generated from operations.~~ increase in net sales.

Investing Activities

Cash used for investing activities during ~~the nine months ended September 30, 2002 was $132.5~~YTD 2003 amounted to $238.9 million, as compared to ~~$191.0~~$274.7 million in ~~2001.~~YTD 2002. Cash used for investing activities in ~~2002~~YTD 2003 included net additions to our investment portfolio of $227.2 million, offset by $146.9 in cash acquired as a result of the Acquisition. We also invested $3.7 million in preferred equity securities of two strategic partners: Panacea, which is developing the HAAH technology; and A&G, which is developing the PC-Cell Derived Growth Factor (PCDGF) technology. We expended $48.4$183.6 million; $43.6 million for capital expenditures, primarily for the ~~land purchase for and~~ construction of our new corporate headquarters, ~~in Gaithersburg, Maryland,~~ and ~~for~~ the ~~continued~~ expansion of our FluMist manufacturing and filling and packaging facilities in ~~Frederick, Maryland;~~Speke, England and Philadelphia, Pennsylvania; and ~~Speke, England~~minority interest investments in strategic partners totaling $11.8 million through our venture capital subsidiary, MedImmune Ventures, Inc. During July 2003, we made a minority interest investment in Tercica, a late stage biopharmaceutical company that focuses on endocrinology.

Financing Activities

Financing activities generated $19.9 million in cash for YTD 2003, as compared to $37.8 million in YTD 2002. Approximately $20.3 million was received upon the exercise of employee stock options in YTD 2003, as compared to $38.1 million received in YTD 2002, reflecting increased stock option exercises by employees of MedImmune Vaccines in 2002 subsequent to the Acquisition. In both YTD 2003 and YTD 2002, repayments on long-term debt were $0.4 million.

Forward-looking commentary – The Company currently generates cash from operations primarily from product sales, and expects to continue generating cash from these sources. The Company believes that its existing funds and cash generated from operations are adequate to satisfy its working capital and capital expenditure requirements in the ~~U.K. Forward-looking commentary -~~foreseeable future. During July 2003, the Company completed the issuance of $500 million of 1% Convertible Notes due 2023. The Company ~~expects~~may raise additional capital in the future to take advantage of favorable conditions in the market or in connection with the Company’s development activities.

During July 2003, our Board of Directors authorized the repurchase, over a two-year period, of up to $500 million of the Company’s common stock in the open market or in privately negotiated transactions, pursuant to terms management deems appropriate and at such times it may designate. The Company will hold repurchased shares as treasury shares and intends to use them for general corporate purposes, including but not limited to acquisition-related transactions and for issuance upon exercise of outstanding stock options. Through August 5, 2003, the Company had repurchased approximately 2.9 million shares at a cost of $112.3 million.

We intend to use a portion of the proceeds from the Convertible Notes due 2023 to fund a substantial portion of our stock repurchase program, enabling us to acquire our stock opportunistically in the market at prices lower than the $68.18 at which the Notes are convertible. In addition, the proceeds may be used to fund the retirement of the 5¼ percent debt convertible at $58.14 per share that we assumed through the Aviron acquisition and which becomes callable in February 2004, or for other general corporate purposes.

We expect to have approximately ~~$80~~$190 million in capital expenditures during ~~2002.~~2003. Construction of the first phase of the new corporate headquarters facility and pilot plant, as well as major construction projects at ~~a total estimated cost of $85 million,~~our facilities in Pennsylvania and in England, will be funded from cash generated from operations and investments on hand. ~~Additionally, the Company has options to purchase an additional 14 acres of land adjacent to the new facility. Construction began during March 2002, and the Company expects~~We expect to take occupancy of the first phase of our new corporate headquarters, a complex of approximately 220,000 square feet, in ~~the~~late fall of ~~2003. The majority~~2003 to early 2004. At that time, we expect to sublease a portion of ~~the Company's~~our existing space in Gaithersburg, which is leased through ~~2006, is expected to be subleased.~~2006. There can be no guarantee that we will be successful in subleasing the space.

During June 2003, we entered into a research and development collaboration with Micromet, a private German biotechnology company. Together with Micromet, we plan to develop MT103 for B cell tumors, such as non-Hodgkin’s Lymphoma. We also plan to develop novel drug candidates using Micromet’s proprietary Bi-Specific T cell Engager (BiTE) platform technology. During July 2003, we made an upfront payment of $12.5 million to Critical Therapeutics to acquire an exclusive, worldwide license for technology associated with the HMG-B1 technology. We will develop the commercial production process for any and all potential drug products resulting from the collaboration. In conjunction with ~~the research and development~~these collaborations, ~~with Panacea, A&G and ViroNovative, the Company is~~we are obligated to pay up to ~~$114.4~~an aggregate of $178.5 million infor various milestone payments, subject to the achievement of specified clinical, regulatory, and sales milestones, and ~~is obligated to make quarterly~~fund certain research and development ~~funding payments. The Company is also~~costs. Additionally, we are obligated to pay ~~research~~royalties on any future sales, if any, of products resulting from the collaborations. In connection with the collaborations, our venture capital subsidiary made a minority interest investment in Micromet and ~~development funding and milestones under various research and development agreements it~~ has ~~entered into. Payments due are expected~~committed to ~~be funded from cash generated from operations and investments on hand. Financing Activities Financing activities generated $36.5 million~~participating in ~~cash~~the next round of financing for Critical Therapeutics.

Effective for the ~~nine months ended September 30,~~upcoming RSV season, we reduced the number of ~~2002, as compared~~U.S. specialty distributors in our Synagis network from over 100 in the 2002/2003 season to ~~$18.2 million~~about a dozen specialty distributors going forward. In addition, we reduced the number of Synagis wholesalers and home health care agencies that we will use. The changes were made in ~~2001. Approximately $40.9 million was received upon the issuance~~order to achieve a higher level of ~~common stock relating primarily~~service to ~~the exercise~~patients via contractual requirements for downstream service related to Synagis. The selection criteria used in this process should also mitigate any risks associated with a higher concentration of employee stock options in 2002, as compared to $18.7 million received in 2001, largely reflecting the inclusion of option exercises of employees of MedImmune Vaccines subsequent to the Acquisition. In 2002, repayments on long-term obligations were $4.4 million, compared to $0.6 million in 2001. credit among fewer creditors.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK ~~Following~~

Our primary market risks as of June 30, 2003 are the ~~Acquisition,~~exposures to loss resulting from changes in interest rates, foreign currency exchange rates, and equity prices. Market risk exposure exceeds that of December 31, 2002 due to the ~~Company's wholly-owned subsidiary MedImmune Vaccines, Inc. is obligated~~increase in the size of our investment portfolio.

Expenditures relating to our manufacturing operations in England and the Netherlands are paid in local currency. We have not hedged our expenditures relating to these manufacturing operations and, therefore, foreign currency exchange rate fluctuations may result in increases or decreases in the amount of expenditures recorded. Additionally, certain of our distribution agreements outside the United States provide for ~~$200.0~~us to be paid based upon sales in local currency. As a result, changes in foreign currency exchange rates could adversely affect the amount we expect to collect under these agreements.

During July 2003, we issued $500 million ~~aggregate~~of Convertible Notes due 2023. The notes bear interest at one percent per annum payable semi-annually in arrears. Beginning with the six-month interest period commencing July 15, 2006, if the average trading price of the notes during specified periods equals or exceeds 120% of the principal amount of 5 1/4% Convertible Subordinated Notes (the "Notes") due 2008. The Notes were recorded at their fair value of $211.4 million, based on quoted market prices as of January 10, 2002, the acquisition date. Interest is payable semi-annually in arrears in cash on February 1 and August 1 each year. Changes insuch notes, we will pay contingent interest ~~rates do not affect interest expense incurred on the Notes, because they bear interest at fixed rates. The Notes are convertible into an aggregate of 3.4 million shares~~equal to 0.175% per six-month period of the ~~Company's common stock, based on a conversion~~average trading price of ~~$58.14, at any time on or before February 1, 2008. MedImmune Vaccines may redeem~~ the Notes beginning in February 2004, at redemption prices declining from 103% of their principal amount in 2004 to 100% in 2008, plus accrued interest. We periodically enter into foreign exchange forward contracts that permit us to purchase Euros to fundnotes during such periods. As a portion of our inventory purchase obligations at a fixed exchange rate. As of September 30, 2002, we had outstanding forward contracts to purchase 6.2 million Euros, all expiring within one year. Fairresult, if the market value of the ~~outstanding contracts at September 30, 2002 was $0.6 million. In addition, during~~notes appreciates significantly in the ~~third quarter~~future, we could be obligated to pay significant amounts of ~~2002, we entered into foreign exchange forward contracts to purchase 12.5 million British Pounds (GBPs) to fund payments due under construction contracts denominated~~contingent interest beginning in GBPs. The contracts were designated as cash flow hedges. During the third quarter of 2002, the hedges were determined to be ineffective, and all gains and losses on the contracts were recorded to the income statement, resulting in a net gain of $0.3 million. During October 2002, the contracts were subsequently cancelled, at an immaterial loss to the Company. As of September 30, 2002 we reduced the cost basis of our investments by $10.6 million due to other-than-temporary impairments. The adjusted cost basis of approximately $10.9 million is invested with strategic partners in various forms of investments, principally preferred equity securities and convertible preferred equity securities. We carry the majority of these investments at cost, adjusted for any other-than-temporary declines in value. We evaluate these investments on a quarterly basis, and adjust the carrying value for other-than-temporary impairments if necessary. Should these investments continue to experience other-than-temporary impairments, further write-downs could occur, up to the total amount of our investment. Additionally, the Company maintains several investments in accordance with the equity method. The equity method of accounting requires us to adjust the carrying value of our investments for our proportionate share of the gains or losses generated by the investees on a quarterly basis. As of September 30, 2002 we recorded year-to-date net writedowns of our equity method investments of $0.1 million. Our total equity investments are currently $3.6 million. Further writedowns of our investments could occur, up to our total investment, should the investee continue to incur net losses in future periods. In July 2002, the Company formed MedImmune Ventures, Inc., a wholly-owned venture capital subsidiary that will assume the responsibility of the current portfolio of investments in strategic partners and will invest in early-to-late-stage public or private biotechnology companies focused on discovering and developing human therapeutics. The fund will invest primarily in areas of strategic interest to the Company, including infectious disease, immunology and oncology. The fund initially plans to invest up to $100.0 million over the next three years. These investments will be maintained either on the cost or equity method of accounting, according to the facts and circumstances of the individual investment. Under either method, the investments will be subject to adjustment for other-than-temporary impairments. In addition, investments accounted for under the equity method will be adjusted for the Company's proportionate share of the investee's gains or losses on a quarterly basis. 2006.

For other information regarding the ~~Company's~~Company’s market risk exposure, please refer to Part II, Item 7A., ~~"Quantitative~~“Quantitative and Qualitative Disclosures About Market ~~Risk"~~Risk” of the ~~Company's~~Company’s Annual Report on Form 10-K for the year ended December 31, ~~2001.~~ 2002.

ITEM 4. CONTROLS AND PROCEDURES

Based on an evaluation of the ~~Company's~~Company’s disclosure controls and procedures as of November 4, 2002, our Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Chief Accounting Officer have concluded that the Company's disclosure controls and procedures are effective in connection with the ~~Company's~~Company’s filing of this quarterly report on Form 10-Q for Q2 2003, our management, with the ~~period ended September~~participation of our principal executive officers and principal financial officers, namely our Vice Chairman and Chief Executive Officer; President and Chief Operating Officer; Senior Vice President and Chief Financial Officer; and Vice President and Controller; has concluded that the Company’s disclosure controls and procedures were effective as of June 30, ~~2002. There were no significant~~2003.

Based on an evaluation of changes in the ~~Company's~~Company’s internal ~~controls or in any other factors~~control over financial reporting that ~~could significantly affect those controls, subsequent to~~occurred during Q2 2003, our management, with the ~~date~~participation of the most recent evaluation of the Company's internal controls by the Company, including any corrective actions with regard to any significant deficiencies or material weaknesses. -------------------- The statements in this quarterly reportour principal executive officers and principal financial officers, namely our Vice Chairman and Chief Executive Officer; President and Chief Operating Officer; Senior Vice President and Chief Financial Officer; and Vice President and Controller; has concluded that are not descriptions of historical facts may be forward-looking statements. Those statements involve substantial risks and uncertainties. You can identify those statements by the fact that they contain words such as "anticipate," "believe," "estimate," "expect," "intend," "project" or other terms of similar meaning. Those statements reflect management's current beliefs, but are based on numerous assumptions which MedImmune cannot control and which may not develop as MedImmune expects. Consequently, actual results may differ materially from those projectedthere were no changes in the ~~forward - looking statements. Among~~Company’s internal control over financial reporting during Q2 2003 that have materially affected, or are reasonably likely to materially affect, the factors that could cause actual results to differ materially are: seasonal demand for and continued supply of the Company's principal product, Synagis; whether FluMist receives clearance by the Food and Drug Administration and, if it does, whether it will be successfully launched; availability of competitive products in the market; availability of third-party reimbursement for the cost of our products; effectiveness and safety of our products; exposure to product liability, intellectual property or other types of litigation; foreign currency exchange rate fluctuations; changes in generally accepted accounting principles; growth in costs and expenses; the impact of acquisitions, divestitures and other unusual items; and the risks, uncertainties and other matters discussed in this quarterly report and in our periodic reports filed with the United States Securities and Exchange Commission. MedImmune cautions that RSV disease occurs primarily during the winter months; MedImmune believes its operating results will reflect that seasonality for the foreseeable future. MedImmune is also developing several products (including FluMist) for potential future marketing. There can be no assurance that such development efforts will succeed, that such products will receive required regulatory clearance or that, even if such regulatory clearance were received, such products would ultimately achieve commercial success. Unless otherwise indicated, the information in this quarterly report is as of September 30, 2002. This quarterly report will not be updated as a result of new information or future events. Company’s internal control over financial reporting.

PART II — OTHER INFORMATION ~~Item~~

ITEM 1. Legal Proceedings In 1998, MediGene AG ("MediGene") initiated a legal action against Loyola University of Chicago ("Loyola") and the Company in the United States District Court for the Northern District of Illinois alleging, among other things, breach of contract and tortious interference by the Company with an alleged prospective business relationship between MediGene and Loyola. The claims relate to human papillomavirus vaccine technology allegedly covered by contracts between MediGene and the Company and by a license agreement from Loyola to the Company, under which the Company granted a sublicense to GlaxoSmithKline. MediGene seeks damages from the Company ranging from $31.3 million to $86.9 million based on the tortious interference claim, and/or damages ranging from $10.2 million to $31.3 million based on the breach of contract claim. MediGene also seeks ownership of the patents in question, as well as rescission of the Company's license agreement from Loyola or rights as a third-party beneficiary thereof. The District Court has granted summary judgment in favor of the Company on all claims and MediGene has appealed. In October 2000, Celltech Chiroscience Limited ("Celltech") commenced a legal proceeding against the Company in the U.K. High Court of Justice, Chancery Division, Patents Court. Celltech alleges that the Company failed to pay royaltiesLEGAL PROCEEDINGS

Information with respect to ~~its sales~~legal proceedings is included in Note 11 of ~~Synagis as required~~Part I, Item 1 “Consolidated Financial Statements,” and is incorporated herein by ~~a license agreement dated January 19, 1998. Under~~reference and should be read in conjunction with the ~~agreement, the Company obtained from Celltech a worldwide license to make, use and/or sell product under a patent (and~~ related ~~applications) pertaining to humanized antibodies. In the proceeding, Celltech seeks payment of a 2% royalty based on net sales of Synagis sold or manufactured~~disclosure previously reported in the United States, with interest, and certain costs, including attorney's fees. The Company filed answering papers denying that any royalties are due on the basis that Celltech's United States patent does not cover Synagis and has sought dismissal of the case on the grounds that the legal doctrine of prosecution history estoppel prevents Celltech from claiming that its patent covers Synagis. On October 28, 2002, the High Court of Justice ruled in favor of the Company and dismissed Celltech's case on this basis after a hearing was held before the Court on early October 2002. Celltech is expected to appeal. On November 29, 2001, the Company received a letter from counsel for Celltech enclosing a copy of a patent granted by the European Patent Office on November 14, 2001. That letter requested various information concerning the manufacture and sale of Synagis in Europe and sought confirmation that the Company would pay royalties on such sales pursuant to the license agreement dated January 19, 1998. On September 16, 2002, Celltech (now known as Celltech R&D Limited) commenced a second legal proceeding against the Company in the U.K. High Court of Justice, Chancery Division, Patents Court, based on the license agreement dated January 19, 1998. Celltech seeks payment of a 2% royalty based on net sales of Synagis sold or manufactured in Germany, with interest and certain costs, including attorney fees. As of November 7, 2002, the Company had not made the royalty payments that were the subject of Celltech's November 29, 2001 letter or its September 16, 2002 lawsuit. The Company's answering papers are due on December 4, 2002. On December 18, 2001, Genentech, Inc. ("Genentech") announced that it had been granted a patent relating to certain methods and compositions used to produce antibodies by recombinant DNA technology. In June 1997, in anticipation of any potential impact the issuance of Genentech's patent could have on the production of Synagis, the Company obtained a license to this patent. The Company has received from Genentech a letter, dated January 7, 2002, stating that Genentech expects to receive from the Company royalty payments pursuant to such license. The Company is in the process of evaluating whether any valid claim of Genentech's patent, as recently issued, covers production of Synagis. Pending resolution of this issue, the Company has made certain royalty payments to Genentech under protest and with reservation of all of its rights. The Company is also evaluating whether any of its other antibody-based product candidates, if and when approved for marketing by the United States Food and Drug Administration, could require a license under the Genentech patent. For additional information on risk associated with patent licenses, please refer to Part 1, Item 1, Business - Risk Factors of the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, ~~2001.~~ 2002.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS - NONE

ITEM 3. DEFAULTS UPON SENIOR SECURITIES — NONE

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS - NONE

On ~~February 28, 1996, Ichthyol Gesellschaft Cordes, Hermanni & Co. ("Ichthyol Gesellschaft") filed a complaint for refrain, information and damages with~~May 22, 2003 the ~~Regional Court~~Company held its Annual Meeting of ~~Hamburg against MedImmune Oncology on the grounds of trademark infringement in respect~~Stockholders. Nine director nominees were re-elected to one year terms by vote of the ~~use~~Company’s stockholders at such meeting, and four proposals were also approved by vote of the ~~trademark "Ethyol" in Germany. No monetary amount is currently being sought in~~Company's stockholders, as follows:

							Abstain/
	For		Against		Withheld		Non-vote
Wayne T. Hockmeyer		206,971,546		--		3,815,171	--
David M. Mott		207,149,836		--		3,636,881	--
Melvin D. Booth		207,150,567		--		3,636,150	--
Franklin H. Top, Jr		207,150,582		--		3,636,135	--
M. James Barrett		201,989,182		--		8,797,535	--
James H. Cavanaugh		201,989,164		--		8,797,533	--
Barbara H. Franklin		201,988,641		--		8,798,076	--
Gordon S. Macklin		201,236,197		--		9,550,520	--
Elizabeth H. S. Wyatt		206,971,389		--		3,815,328	--

To amend the Restated Certificate of Incorporation to increase the authorized number of shares of common stock from 320,000,000 to 420,000,000		205,438,945		3,711,188		--	1,614,383

To amend the 1999 Stock Option Plan to increase the maximum number of shares of common stock authorized for issuance under the Plan from 25,250,000 to 31,250,000		178,025,540		30,997,714		--	1,741,262

To approve the 2003 Non-employee Directors Stock Option Plan and reserve 800,000 shares of common stock for issuance thereunder		181,157,859		27,855,112		--	1,751,545

Appointment of PricewaterhouseCoopers LLP as independent auditors		197,418,301		11,958,819		--	1,388,196

ITEM 5. OTHER INFORMATION - NONE

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits:

Exhibit 3.1.4 -- Certificate of Amendment to the ~~litigation by Ichthyol. Ichthyol is seeking injunctive relief against the use~~Restated Certificate of ~~the trademark Ethyol in Germany. The suit was dismissed on January 29, 1997 by the Regional Court of Hamburg. Ichthyol Gesellschaft filed an appeal and a judgment was rendered in favor~~Incorporation of MedImmune, Oncology in the appellate proceedings. In January 1999, Ichthyol Gesellschaft filed an appeal on points of law with the Federal Court of Justice, and in June 1999, Ichthyol Gesellschaft filed the grounds for the appeal on points of law. By judgment ofInc., dated May 3, 2001, the Federal Court of Justice reversed the judgment of the Higher Regional Court and remitted the case to that court for another hearing. By order of December l9, 2001, the Higher Regional Court ordered Ichthyol to make further submissions concerning the relevant facts and legal questions. Ichthyol recently filed its submissions. Another hearing will probably be held this fall. The Company has been involved in a contract dispute with the University of Massachusetts Biologic Laboratories ("MBL") regarding the Company's agreement to transfer to MBL certain technology relating to the Company's monoclonal antibody manufacturing operations. During the third quarter of 2002, the parties agreed to a settlement of the dispute for a $5 million payment by the Company, which was charged to the income statement. The Company also secured the return of the rights to "make, have made, use and sell" the Company's monoclonal antibody for RSV in the Commonwealth of Massachusetts and State of Maine in exchange for a royalty. On April 5, 2002, the Company filed a suit against Centocor, Inc. ("Centocor") in the United States District Court for the District of Maryland. The Company currently pays Centocor a royalty for sales of Synagis made or sold in the United States pursuant to a patent Sublicense Agreement between the parties dated as of September 15, 2000 (the "Sublicense Agreement"). In the litigation, the Company seeks a declaratory judgment that it has no obligation to continue paying royalties to Centocor on the basis that the patent is invalid, unenforceable and does not cover Synagis. Additionally, the Company seeks an injunction preventing Centocor from enforcing this patent. On July 1, 2002, Centocor moved to dismiss this action on the basis that it did not include the Trustees of Columbia University in the City of New York ("Columbia") and the Board of Trustees of the Leland Stanford University ("Stanford"), as the owners of the patent. On July 9, 2002, Centocor, Columbia and Stanford initiated an action against the Company in the United States District Court for the Northern District of California. In the California litigation, Centocor, Columbia and Stanford sought a declaratory judgment that the patent at issue in the Sublicense Agreement is valid and enforceable and that the Company would be liable for patent infringement but for the Sublicense Agreement, as well as a declaratory judgment that the Sublicense Agreement is enforceable. The Company moved to dismiss the California action, among other arguments, on the basis that a prior action was filed in the U.S. District Court for the State of Maryland and the California action should not go forward. On October 21, 2002, the court ruled in favor of the Company and dismissed the California litigation. There can be no assurance that the Company will be successful in this dispute. ---------------------------- After consultation with its counsel, the Company believes that it has meritorious defenses to the claims against it referred to above and is determined to defend its position vigorously. While it is impossible to predict with certainty the eventual outcome of these proceedings, the Company believes they are unlikely to have a material adverse effect on its financial position but might have a material adverse effect on its results of operations for a particular period. Item 2. Changes in Securities - None Item 3. Defaults upon Senior Securities - None Item 4. Submission of Matters to a Vote of Security Holders - None Item 5. Other Information - Update to Risk Factors: Our products may receive further scrutiny after approval by regulatory agenies for adverse events relating to the product. Prior to approval by the FDA, as well as international regulatory agencies, drug products are subject to rigorous preclinical and clinical testing for safety and efficacy. From these trials, a product's "adverse event profile" is identified. This profile is disclosed on each product's Package Insert, which is a printed page accompanying the product, to inform physicians and patients as to what side effects they might encounter with a given product's use. Following approval, MedImmune monitors all of its drug products to maintain a current safety database, tracking identified adverse events from a drug's use in broader populations. Such adverse events are reported to the appropriate regulatory authorities. Periodically, discussions with regulatory agencies may occur regarding adverse event reports. Such discussions may result in changes to the disclosures in the Package Inserts for the Company's products and communications with health care professionals to apprise them of such changes. During 2002, modifications were made to the Package Inserts for Neutrexin, Ethyol, and Synagis reflecting information gained from product use. Item 6. Exhibits and reports on Form 8-K (a) Exhibits: 10.174* Sublicense Agreement between Centocor, Inc. and MedImmune, Inc. 10.175* Stipulated Sum Agreement between MedImmune, Inc. and HITT Contracting Inc. 10.176* Supplementary General Conditions to the General Conditions of the Contract for Construction Agreement between MedImmune, Inc. and HITT Contracting Inc. 10.177* First Amendment to United States License and Co-Promotion Agreement between MedImmune Vaccines, Inc. and Wyeth. 10.178* Second Amendment to FluMist Supply Agreement between MedImmune Vaccines, Inc. and Wyeth. 10.179* Letter Agreement Regarding Supply of Frozen Product for 2002 - 2003 Flu Season between MedImmune Vaccines, Inc. and Wyeth. 99.123, 2003.

Exhibit 31.1 -- Certification pursuant to 18 ~~United States C.~~USC Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 -- Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.3 -- Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.4 -- Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32 -- Certification pursuant to 18 USC Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002. 99.2 Certification pursuant to~~2002, furnished as permitted by Item 601(b)(32)(ii) of Regulation S-K. This Exhibit 32 is not “filed” for purposes of Section 18 ~~United States C. Section 1350, as adopted pursuant to Section 906~~ of the ~~Sarbanes-Oxley~~Securities Exchange Act of ~~2002. * Confidential treatment has been requested. The copy filed as an exhibit omits~~1934, and is not and should not be deemed to be incorporated by reference into any filing under the ~~information subject to~~Securities Act of 1933 or the ~~confidentiality request.~~ Securities Exchange Act of 1934.

(b) Reports on Form 8-K: ~~Report Date Event Reported ----------- -------------- July 10, 2002~~

April 24, 2003 -- MedImmune ~~issues 2001 financial statements~~reports 2003 first quarter results.

June 18, 2003 -- MedImmune, Inc. and Wyeth announce the approval of ~~Aviron~~FluMist™ by the U.S. Food and ~~pro forma financial information in connection with its acquisition~~Drug Administration.

June 30, 2003 -- MedImmune announces a business review meeting to provide an overview of ~~Aviron. August 16, 2002 MedImmune licenses rights to newly discovered Human Metapneumovirus.~~ opportunities for long-term growth.

SIGNATURES

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

MEDIMMUNE, INC. (Registrant) /s/ Gregory S. Patrick Date: November

BY: /s/ Gregory S. Patrick
——————————————
Gregory S. Patrick
Senior Vice President and Chief Financial Officer
Principal Financial Officer

Dated: August 8, 2002 Gregory S. Patrick Senior Vice President and Chief Financial Officer Principal Financial Officer /s/ Lota S. Zoth Date: November2003

BY: /s/ Lota S. Zoth
——————————————
Lota S. Zoth
Vice President and Controller
Principal Accounting Officer

Dated: August 8, ~~2002 Lota S. Zoth Vice President and Controller Principal Accounting Officer~~ CERTIFICATION: I, David M. Mott, certify that: 1. I have reviewed this quarterly report on Form 10-Q of MedImmune, Inc. (the "Company"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the Company's disclosure controls and procedures as of November 4, 2002 (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /s/David M. Mott David M. Mott Vice Chairman and Chief Executive Officer CERTIFICATION: I, Melvin D. Booth, certify that: 1. I have reviewed this quarterly report on Form 10-Q of MedImmune, Inc.(the "Company"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the Company's disclosure controls and procedures as of November 4, 2002 (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /s/Melvin D. Booth Melvin D. Booth President and Chief Operating Officer CERTIFICATION: I, Gregory S. Patrick, certify that: 1. I have reviewed this quarterly report on Form 10-Q of MedImmune, Inc. (the "Company"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the Company's disclosure controls and procedures as of November 4, 2002 (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /s/Gregory S. Patrick Gregory S. Patrick Senior Vice President and Chief Financial Officer CERTIFICATION: I, Lota S. Zoth, certify that: 1. I have reviewed this quarterly report on Form 10-Q of MedImmune, Inc. (the "Company"); 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The Company's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the Company's disclosure controls and procedures as of November 4, 2002 (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The Company's other certifying officers and I have disclosed, based on our most recent evaluation, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent function): a. all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize and report financial data and have identified for the Company's auditors any material weaknesses in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal controls; and 6. The Company's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the Evaluation Date, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 8, 2002 /s/Lota S. Zoth Lota S. Zoth Vice President and Controller

2003

SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D. C. 20549

FORM 10-Q - ------------------------------------------------------------------------------------------------------------------------------------ {X}

MedImmune, Inc. (Exact(Exact name of registrant as specified in its charter) Delaware 52-1555759 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.)

SIGNATURES

MEDIMMUNE, INC. (Registrant) /s/ Gregory S. Patrick Date: November

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

MedImmune, Inc. (Exact
(Exact name of registrant as specified in its charter) Delaware 52-1555759 (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification No.)