<PAGE>
--------------------------------------------------------------------------------
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
 
                             WASHINGTON, D.C. 20549
 
                            ------------------------
 
                                   FORM 10-K
 

<TABLE>
<C>        <S>
   /X/     ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

 
                    FOR THE FISCAL YEAR ENDED JULY 31, 2000
                                       OR
 

<TABLE>
<C>        <S>
   / /     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
           SECURITIES EXCHANGE ACT OF 1934
</TABLE>

 
        FOR THE TRANSITION PERIOD FROM ______________ TO ______________
 
                        COMMISSION FILE NUMBER: 0-27756
 
                            ------------------------
 
                         ALEXION PHARMACEUTICALS, INC.
 
             (Exact Name of Registrant as Specified in Its Charter)
 

<TABLE>
<S>                                   <C>
           DELAWARE                                 13-3648318
 (State or Other Jurisdiction          (I.R.S. Employer Identification No.)
     of Incorporation or
        Organization)
</TABLE>

 
                 25 SCIENCE PARK, NEW HAVEN, CONNECTICUT 06511
              (Address of Principal Executive Offices) (Zip Code)
 
                                  203-776-1790
              (Registrant's telephone number, including area code)
 
                            ------------------------
 
Securities registered pursuant to Section 12(b) of the Act: None
 
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $0.0001
 
    Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes /X/  No / /
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. / /
 
    The aggregate market value of the Common Stock held by non-affiliates of the
registrant, based upon the last sale price of the Common Stock reported on the
National Association of Securities Dealers Automated Quotation (NASDAQ) National
Market System on October 5, 2000, was approximately $1,620,000,000.
 
    The number of shares of Common Stock outstanding as of October 5, 2000 was
15,494,671.
 
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>

                                     PART I
 
    THIS ANNUAL REPORT ON FORM 10-K CONTAINS FORWARD-LOOKING STATEMENTS THAT
HAVE BEEN MADE PURSUANT TO THE PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. SUCH FORWARD LOOKING STATEMENTS ARE BASED ON CURRENT
EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT THE COMPANY'S INDUSTRY,
MANAGEMENT'S BELIEFS AND CERTAIN ASSUMPTIONS MADE BY THE COMPANY'S MANAGEMENT.
WORDS SUCH AS "ANTICIPATES," "EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS,"
"ESTIMATES," VARIATIONS OF SUCH WORDS AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY SUCH FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE NOT GUARANTEES OF
FUTURE PERFORMANCE AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND
ASSUMPTIONS THAT ARE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER
MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN ANY SUCH FORWARD-LOOKING
STATEMENTS. SUCH RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, THOSE
SET FORTH HEREIN UNDER "IMPORTANT FACTORS REGARDING FORWARD-LOOKING STATEMENTS,"
ATTACHED HERETO AS EXHIBIT 99, AS WELL AS THOSE NOTED IN THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE. UNLESS REQUIRED BY LAW, THE COMPANY UNDERTAKES
NO OBLIGATION TO UPDATE PUBLICLY ANY FORWARD-LOOKING STATEMENTS, WHETHER AS A
RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. HOWEVER, READERS SHOULD
CAREFULLY REVIEW THE RISK FACTORS SET FORTH IN OTHER REPORTS OR DOCUMENTS THE
COMPANY FILES FROM TIME TO TIME WITH THE SECURITIES AND EXCHANGE COMMISSION.
 

ITEM 1. BUSINESS.
 
OVERVIEW
 
    We develop pharmaceutical products for the treatment of heart disease, and
inflammation, diseases of the immune system and cancer in humans. During the
fiscal years ended July 31, 2000, 1999, and 1998, we spent $40.2 million,
$23.7 million, and $12.3 million, respectively, on research and development
activities. Our lead product candidates are genetically altered antibodies that
target specific diseases which arise when the human immune system induces
undesired inflammation in the human body. Our lead product candidates are
designed to block components of the human immune system which cause undesired
inflammation while allowing beneficial components of the immune system to remain
functional. Our two lead genetically altered antibody product candidates are
designed to block the inflammatory effects of the components of the immune
system known as "complement," and are:
 
    - 5G1.1-SC. We completed enrollment in Phase IIb trials for the treatment of
      acute inflammation caused by the trauma of heart and lung bypass
      procedures during open heart surgery, and we are enrolling patients in two
      Phase II heart attack trials. We are developing 5G1.1-SC in collaboration
      with Procter & Gamble; and
 
    - 5G1.1. We completed enrollment in Phase II trials for the chronic
      treatment of rheumatoid arthritis and we are enrolling patients in Phase
      II trials for the treatment of membranous nephritis, and Phase Ib pilot
      trials for psoriasis, dermatomyositis, and bullous pemphigoid. We are
      developing 5G1.1 ourselves.
 
    In September 2000, we acquired Prolifaron, Inc., through a merger with
Alexion Antibody Technologies (AAT), Inc., a newly created, wholly owned
subsidiary of Alexion. Prolifaron was a biopharmaceutical company that possessed
extensive research expertise and technologies in the area of creating fully
human antibodies from libraries containing billions of human antibody genes.
 
                                       2

<PAGE>
    In addition, to our antibody product candidates which inhibit the
inflammatory effects of complement and our technology programs focusing on human
antibody discovery and development, we are developing products to block the
harmful effects of a component of the immune system known as "T-cells" in
pre-clinical studies. We call these products "Apogens." We are targeting our
first Apogen product candidate, known as MP4, for the treatment of patients with
multiple sclerosis. We are also developing methods of blocking the human immune
system to permit the use of cells and organs from non-human species in the
treatment of diseases in humans. This product development program is initially
targeting the treatment of patients with Parkinson's disease and patients with
spinal cord injury with genetically altered pig cells.
 
    THE IMMUNE SYSTEM
 
    The human immune system defends the body from attack or invasion by
infectious agents or pathogens. This is accomplished through a complex system of
proteins and cells, primarily complement proteins, antibodies and white blood
cells, each with a specialized function. Under normal circumstances, complement
proteins, together with antibodies and white blood cells, act to protect the
body by removing:
 
    - harmful microorganisms;
 
    - cells containing foreign proteins known as antigens; and
 
    - disease-causing combinations of antigens and antibodies known as immune
      complexes.
 
    When activated by stimuli, the immune system triggers a series of enzymatic
and biochemical reactions called the complement cascade that results in an
inflammatory response. This inflammatory response is one of the immune system's
weapons against foreign pathogens or otherwise diseased tissue. However, under
certain circumstances, the complement cascade may be activated inappropriately
to direct an inflammatory response at healthy tissue, which may result in acute
and chronic inflammatory conditions.
 
    Common heart diseases and procedures in which the complement cascade is
activated include:
 
    - cardiopulmonary bypass surgery;
 
    - myocardial infarction;
 
    - unstable angina;
 
    - angioplasty; and
 
    - stroke and other peripheral vascular diseases.
 
    Common autoimmune diseases in which the complement cascade is activated
include:
 
    - rheumatoid arthritis;
 
    - kidney diseases;
 
    - lupus;
 
    - inflammatory bowel diseases;
 
    - inflammatory skin disorders; and
 
    - multiple sclerosis.
 
                                       3

<PAGE>
    T-cells, a type of white blood cell, play a critical role in the normal
immune response by recognizing cells containing antigens and initiating the
immune response. This response results in T-cells:
 
    - attacking the antigen-containing tissue; and
 
    - directing the production of antibodies by white blood cells to eliminate
      the antigen-bearing foreign organism.
 
    In autoimmune diseases, T-cells may mistakenly attack healthy host tissue
and may cause an inflammatory response resulting in tissue destruction. In the
case of multiple sclerosis, this may cause paralysis due to destruction of nerve
fibers in the brain.
 
PRODUCT DEVELOPMENT PROGRAMS
 
    We have focused our product development programs on anti-inflammatory
therapeutics for diseases for which we believe current treatments are either
non-existent or inadequate. Currently available drugs for certain autoimmune,
cardiovascular and neurologic diseases, in which the immune system attacks the
patient's own tissue, broadly suppress the entire immune system, and may also
cause potentially severe side effects. Our lead product candidates, which are
genetically altered antibodies known as C5 Complement Inhibitors, are designed
to selectively block the production of inflammation-causing proteins in the
complement cascade. We believe that selective suppression of this immune
response will provide a significant therapeutic advantage relative to existing
therapies.
 
    Additionally, we are developing selective T-cell inhibitors known as Apogens
and UniGraft xenotransplants for neurologic disorders.
 
    Our product candidates are as follows:
 

<TABLE>
<CAPTION>
PRODUCT CANDIDATE           TECHNOLOGY             INDICATION               STATUS
-----------------      ---------------------  ---------------------  ---------------------
<S>                    <C>                    <C>                    <C>
5G1.1-SC               C5 Complement          Cardiopulmonary        Phase IIb enrollment
                       Inhibitor (single      bypass                 completed
                       chain antibody)
                                              Myocardial infarction
                                              (1) Thrombolysis       Phase II ongoing
                                              (2) PTCA               Phase II ongoing
5G1.1                  C5 Complement          Rheumatoid arthritis   Phase II enrollment
                       Inhibitor (antibody)                          completed
                                              Membranous nephritis   Phase II ongoing
                                              Lupus                  Phase I completed
                                              Psoriasis              Phase Ib ongoing
                                              Dermatomyositis        Phase Ib ongoing
                                              Bullous Pemphigoid     Phase Ib ongoing
MP4                    Apogen                 Multiple sclerosis     Pre-clinical
UniGraft-SCI           Cell replacement       Spinal cord injury     Pre-clinical
UniGraft-PD            Cell replacement       Parkinson's disease    Pre-clinical
</TABLE>

 
    C5 COMPLEMENT INHIBITORS
 
    Complement proteins are a series of inactive proteins circulating in the
blood. When activated by stimuli, including those associated with both acute and
chronic inflammatory disorders, these inactive complement proteins are split by
enzymes known as convertases into activated byproducts through the complement
cascade.
 
                                       4

<PAGE>
    Some of these byproducts, notably C3b, are helpful in fighting infections
and inhibiting autoimmune disorders. However, the byproducts generated by the
cleavage of C5, known as C5a and C5b-9, generally cause harmful inflammation.
The inflammatory byproducts of C5 cause:
 
    - activation of white blood cells;
 
    - attraction of white blood cells;
 
    - production of injurious cytokines including tumor necrosis factor-alpha;
 
    - activation of blood vessel-lining cells called endothelial cells, allowing
      leakage of white blood cells into tissue; and
 
    - activation of blood-clotting cells called platelets.
 
    The following diagram describes the complement cascade:
 
    [diagram]
 
    Because of the generally beneficial effects of the components of the
complement cascade prior to C5 and the greater inflammatory disease-promoting
effects of the cleavage products of C5, we have identified C5 as a potentially
effective anti-inflammatory drug target. Our first two C5 Inhibitors
specifically and tightly bind to C5 blocking its cleavage into harmful
byproducts and are designed to inhibit subsequent damage from the inflammatory
response.
 
    In laboratory and animal models of human disease, we have shown that the
administration of C5 Inhibitor, as compared to placebo, is effective in:
 
    - preventing inflammation during cardiopulmonary bypass;
 
    - reducing heart tissue damage during myocardial infarction;
 
    - reducing brain damage in cerebral ischemia;
 
    - enhancing survival in a model of lupus; and
 
    - preserving kidney function in nephritis.
 
    In addition, in initial human clinical trials, we have shown that C5
Inhibitors can reduce:
 
    - inflammation during cardiopulmonary bypass surgery;
 
    - heart tissue damage during cardiopulmonary bypass surgery;
 
    - new cognitive deficits after cardiopulmonary bypass surgery;
 
    - an objective measure of disease activity in rheumatoid arthritis patients;
      and
 
    - the incidence of proteinuria in lupus patients.
 
    C5 INHIBITOR IMMUNOTHERAPEUTIC PRODUCT CANDIDATES
 
    We are developing one of our two lead C5 Inhibitor product candidates,
5G1.1-SC, for the treatment of inflammation related to acute cardiovascular
diseases and procedures. Our initial indications for 5G1.1-SC are
cardiopulmonary bypass surgery and myocardial infarction. We are developing our
other C5 Inhibitor product candidate, 5G1.1, for the treatment of inflammation
related to chronic autoimmune disorders. Our initial indications for 5G1.1 are
rheumatoid arthritis, membranous nephritis, psoriosis, dermatomyositis, and
bullious pemphagoid. We have selected these seven initial indications because we
believe each represents a clinical condition which is:
 
    - closely tied to the production of activated complement byproducts;
 
                                       5

<PAGE>
    - characterized by clear development pathways;
 
    - inadequately treated by current therapies;
 
    - associated with substantial health care costs; and
 
    - a significant market opportunity.
 
    To date, 5G1.1-SC and 5G1.1 have been observed to be safe and well tolerated
in completed and ongoing controlled clinical trials in over 1,300 individuals
treated with either C5 Inhibitor or placebo.
 
    5G1.1-SC
 
    5G1.1-SC is a humanized, single chain antibody that has been shown to block
complement activity for up to 20 hours at doses tested and is designed for the
treatment of acute inflammatory conditions. In January 1999, we entered into a
collaboration with Procter & Gamble to develop and commercialize 5G1.1-SC. Under
this collaboration, we will initially pursue the development of 5G1.1-SC for the
treatment of inflammation caused by various acute cardiovascular indications and
procedures such as cardiopulmonary bypass surgery, myocardial infarction and
angioplasty. Procter & Gamble has agreed to fund all clinical development and
manufacturing costs relating to 5G1.1-SC for these indications.
 
    CARDIOPULMONARY BYPASS SURGERY
 
    In cardiopulmonary bypass surgery, blood is diverted from a patient's heart
and lungs to a cardiopulmonary, heart-lung, bypass machine in the operating
room. The machine adds oxygen to the blood and circulates the oxygenated blood
to the organs in the patient's body. Significant side effects of cardiopulmonary
bypass surgery include tissue damage and excessive bleeding during and after the
procedure. We believe these side effects may result from activation of the
complement cascade when the patient's blood comes into contact with the plastic
lining of the machine, when insufficient blood flows through the heart as a
result of the procedure and after blood flow through the heart is reintroduced
following completion of the procedure. Activated complement byproducts may be
increased by over 1,000% in patients undergoing cardiopulmonary bypass surgery.
The inflammation is also characterized by activation of leukocytes, a type of
white blood cell, and platelets, cells responsible for clotting. We believe that
this leukocyte activation is associated with impaired lung, heart, brain and
kidney function. We further believe that platelet activation and subsequent
platelet dysfunction during the procedure impair a patient's ability to stop the
bleeding that occurs after extensive surgery.
 
    5G1.1-SC is designed to rapidly penetrate the patient's tissues and to
inhibit complement activation in patients immediately before, during and after
cardiopulmonary bypass in order to reduce the cardiovascular and brain tissue
damage and bleeding complications. We believe inhibition of the inflammatory
response might reduce:
 
    - incidence of death;
 
    - incidence of heart tissue damage;
 
    - incidence of stroke;
 
    - post-operative complications;
 
    - the time spent by patients in the intensive care unit;
 
    - the scope of required treatments associated with cardiopulmonary bypass;
      and
 
    - the need for blood transfusions.
 
                                       6

<PAGE>
    The American Heart Association estimates that in 1997, approximately 600,000
cardiopulmonary bypass operations were performed in the United States.
Currently, products utilized in patients undergoing cardiopulmonary bypass are
designed to enhance the coagulation of blood so as to reduce the need for blood
transfusions. However, we believe these products have little beneficial effect
on the heart and brain inflammatory complications associated with the surgery.
 
    Our pre-clinical studies indicated that C5 Inhibitors can prevent activation
of platelets and leukocytes and the subsequent inflammatory response that occurs
during circulation of human blood in a closed-loop cardiopulmonary bypass
machine. These pre-clinical studies additionally indicated that administration
of a C5 Inhibitor reduces cardiac damage associated with reduced heart blood
flow.
 
    CLINICAL TRIALS
 
    In March 1996, we filed an investigational new drug application, or IND,
with the FDA for 5G1.1-SC, targeting the treatment of patients undergoing
cardiopulmonary bypass surgery. To date, we have initiated and completed four
human clinical trials of 5G1.1-SC administered intravenously. Although we
designed these early clinical studies primarily to assess dosing and safety, we
also collected biological and clinical results. These trials are described
below.
 
    - In June 1996, we commenced a Phase I clinical trial in 33 healthy
      volunteers receiving a single bolus administration of 0.5 to 2.0 mg/kg of
      5G1.1-SC or placebo. In this trial, 5G1.1-SC:
 
       -- was safe and well tolerated in this study population as compared to
placebo; and
 
       -- showed dose-dependent reduction in complement activity in study
subjects.
 
    - In October 1998, we commenced a Phase I clinical trial in 49 healthy
      volunteers receiving a single bolus dose, double bolus dose, and single
      bolus dose followed by continuous infusion administration of up to 6.8
      mg/kg of 5G1.1-SC or placebo. In this trial, 5G1.1-SC:
 
       -- was safe and well tolerated in this study population as compared to
placebo; and
 
       -- showed dose-dependent reduction in complement activity in study
subjects.
 
    - In October 1996, we commenced a Phase I/II clinical trial in 17 patients
      undergoing cardiopulmonary bypass surgery receiving a single bolus
      administration of 0.5 to 2.0 mg/kg of 5G1.1-SC or placebo. In this trial,
      5G1.1-SC:
 
       -- was safe and well tolerated in this study population as compared to
placebo; and
 
       -- showed a dose-dependent reduction in the more than ten-fold increase
in activated complement byproducts experienced by placebo-treated patients.
 
    - In August 1997, we commenced a Phase IIa clinical trial in 18 patients
      undergoing cardiopulmonary bypass surgery receiving a single bolus
      administration of 1.0 or 2.0 mg/kg of 5G1.1-SC or placebo. In this trial,
      5G1.1-SC:
 
       -- was safe and well tolerated in this study population as compared to
placebo; and
 
       -- showed dose-dependent reductions in activated complement byproducts.
 
    In April 1998, we announced the combined results of our Phase I/II and Phase
IIa trials in cardiopulmonary bypass surgery patients. The results for patients
treated with either a 2.0 mg/kg bolus of 5G1.1-SC or placebo are shown in the
table below.
 
                                       7

<PAGE>
            CLINICAL RESULTS OF A SINGLE 2.0 MG/KG DOSE OF 5G1.1-SC
                 IN PATIENTS UNDERGOING CARDIOPULMONARY BYPASS
 

<TABLE>
<CAPTION>
BIOLOGICAL AND CLINICAL MEASUREMENTS                         5G1.1-SC VS. PLACEBO
---------------------------------------------------------    --------------------
<S>                                                        <C>
C5 complement activation.................................  100% less*
C3 complement activation.................................  No difference
Leukocyte activation.....................................  60% to 70% less*+
Heart tissue damage......................................  40% less*
New cognitive deficits...................................  80% less*
Blood loss...............................................  400 ml less*
</TABLE>

 
------------------------
 
  * P < .05 vs. placebo
 
  + Includes both patients treated with 1.0 mg/kg 5G1.1-SC and patients treated
    with 2.0 mg/kg 5G1.1-SC
 
    In January 1999, we commenced dosing patients undergoing coronary artery
bypass graft surgery with or without accompanying valve surgery during
cardiopulmonary bypass in a Phase IIb clinical trial with 5G1.1-SC. In
September 2000, we announced that we had completed enrollment in this multi-
center, double-blinded, randomized, placebo-controlled study was completed. The
study enrolled approximately 1,000 patients and is designed to gather clinical
data to augment and extend previous findings regarding the safety profile and
pharmacokinetics of 5G1.1-SC and its efficacy in reducing the life-threatening
inflammatory complications, such as mortality, myocardial infarction, heart
failure and stroke, that can be triggered by cardiopulmonary bypass procedures.
 
    ACUTE MYOCARDIAL INFARCTION
 
    Myocardial infarction is an acute cardiovascular disorder in which the
coronary arteries, the blood vessels that supply nutrients to the heart muscle,
are blocked to such an extent that the flow of blood is insufficient to supply
enough oxygen and nutrients to keep the heart muscle alive. With insufficient
supply of blood, oxygen, and nutrients, the heart muscle may subsequently
infarct or die. Upon the reduction in flow in the coronary artery, a complex
cascade of inflammatory events involving complement proteins, platelets and
leukocytes and their secreted factors, and endothelial cells commences within
the blood vessel. In patients suffering a myocardial infarction, activated
complement byproducts are significantly elevated. This severe inflammatory
response targeting the area of insufficient blood flow to cardiac muscle is
associated with subsequent death of heart muscle. Restoration of blood flow is
also associated with an additional inflammatory reaction with concomitant
production of activated complement byproducts. In addition to the high incidence
of sudden cardiac death at the onset, severe complications associated with the
initial survival of an acute myocardial infarction include congestive heart
failure, stroke, and death. The American Heart Association estimates that
approximately 1.1 million people in the United States will have a heart attack
in 2000.
 
    We are developing 5G1.1-SC to inhibit inflammation associated with
complement activation in order to reduce the extent of death of heart muscle in
patients suffering an acute myocardial infarction. In contrast, most drugs
currently being developed or on the market to treat myocardial infarction are
designed to improve blood flow through the heart, rather than treating the
damaging effects of inflammation caused by myocardial infarction. We and our
scientific collaborators have performed pre-clinical studies in rodents which
have demonstrated that administration of a C5 Inhibitor during periods of
insufficient supply of blood to the heart muscle and prior to restoration of
normal flow to the heart muscle significantly reduced the extent of subsequent
death of heart muscle compared to control animal studies. Additionally,
administration of a C5 Inhibitor significantly reduced the extent of
 
                                       8

<PAGE>
cardiac damage associated with reduced heart blood flow without subsequent
restoration of blood flow. The results of these pre-clinical studies are shown
in the table below.
 
             PRE-CLINICAL RESULTS WITH C5 INHIBITOR ADMINISTRATION
                   IN ANIMAL MODELS OF MYOCARDIAL INFARCTION
 

<TABLE>
<CAPTION>
BIOLOGICAL AND CLINICAL MEASUREMENTS                      C5 INHIBITOR VS. PLACEBO
------------------------------------                      ------------------------
<S>                                                       <C>
Complement activity.....................................  100% less*
Leukocyte activation....................................  > 90% less*
Heart tissue damage.....................................  50% less*
</TABLE>

 
------------------------
 
  * P < .05 vs. placebo
 
    CLINICAL TRIALS
 
    In October 1998, we commenced dosing subjects in a Phase I clinical trial in
healthy individuals that was designed to evaluate dosing regimens for subsequent
cardiopulmonary bypass and myocardial infarction clinical trials. We have used
the results of this trial to select dosing regimens for subsequent clinical
trials in acute myocardial infarction patients. The results of this trial
indicated that 5G1.1-SC was well tolerated at doses more than three times as
high as had been previously administered. In December 1999, together with our
collaborator Procter & Gamble, we announced that we were commencing enrollment
in two Phase II trials each one designed to enroll approximately 1,000 patients
for the treatment of acute myocardial infarction.
 
5G1.1
 
    5G1.1 is a humanized, monoclonal antibody that blocks complement activity
for one to two weeks at doses tested and is designed for the chronic treatment
of autoimmune diseases such as rheumatoid arthritis and nephritis. 5G1.1 is not
included in the collaboration with Procter & Gamble, and we have retained full
rights to 5G1.1.
 
    RHEUMATOID ARTHRITIS
 
    Rheumatoid arthritis is an autoimmune disease directed at various organ and
tissue linings, including the lining of the joints, causing inflammation and
joint destruction. Clinical signs and symptoms of the disease include weight
loss, joint pain, morning stiffness and fatigue. Further, the joint destruction
can progress to redness, swelling and pain with frequent and severe joint
deformity. Diagnostic procedures, which may include obtaining a sample of joint
fluid, routinely demonstrate substantial elevations in the levels of activated
complement byproducts in the joint fluid of affected rheumatoid arthritis
patients. Rheumatoid arthritis is generally believed to be caused by different
types of white blood cells, including T-cells, which both directly attack the
patient's joints and also activate B-cells to produce antibodies which activate
complement proteins in the joint leading to inflammation with subsequent tissue
and joint destruction. It is estimated that more than 2.0 million people are
currently affected by rheumatoid arthritis in the United States.
 
    We are developing 5G1.1 for the treatment of patients with chronic
inflammatory diseases, including rheumatoid arthritis. We have performed
pre-clinical studies in rodent models of rheumatoid arthritis which have shown
that C5 Inhibitor administration, as compared to placebo-treated subjects:
 
    - reduced the swelling in joints;
 
    - prevented the onset of erosion of joints;
 
                                       9

<PAGE>
    - reduced the inflammatory white blood cell infiltration into the joints;
 
    - prevented the spread of disease to additional joints;
 
    - blocked the onset of clinical signs of rheumatoid arthritis; and
 
    - ameliorated established disease.
 
    Currently, there are a large number of anti-inflammatory drugs under
development or on the market for the treatment of patients with rheumatoid
arthritis. These drugs include non-steroidal anti-inflammatory drugs, and their
more recent analog the COX-2 inhibitors, which generally treat the symptoms of
the disease, but do not alter disease progression. There are also several
currently available drugs that are disease-modifying agents, but these are
associated with undesirable side effects. More recently, tumor necrosis factor,
or TNF, inhibitors have been approved or are under development to reduce the
inflammatory response. TNF is one of the many injurious substances that may be
generated downstream of the complement cascade. In contrast to these single
agent inhibitors like TNF inhibitors, by acting at C5 of the complement cascade,
we expect 5G1.1 both to block complement activation and reduce the production of
many of these downstream harmful substances. Because of this dual action, we
believe that 5G1.1 may provide a more potent anti-inflammatory effect.
 
    CLINICAL TRIALS
 
    In December 1997, we filed an IND with the FDA for 5G1.1 in the treatment of
rheumatoid arthritis patients.
 
    - In July 1998, we commenced a Phase I/II multi-center, clinical trial in 42
      rheumatoid arthritis patients receiving a single bolus administration of
      0.1 to 8.0 mg/kg of 5G1.1. In this trial, 5G1.1:
 
       -- was safe and well tolerated in this study population as compared to
placebo;
 
       -- showed dose-dependent reduction in complement activity in study
subjects; and
 
       -- at 8.0 mg/kg, showed a reduction in C-reactive protein blood levels in
study subjects.
 
    C-reactive protein is considered by many physicians to be the most objective
component of the American College of Rheumatology's definition of efficacy
criteria for rheumatoid arthritis drug trials. Although this initial clinical
trial was designed to primarily assess dosing and safety, biological and
clinical results were collected. These results in the patients treated with a
8.0 mg/kg bolus of 5G1.1, announced in April 1999, are shown in the table below.
 
              CLINICAL RESULTS OF A SINGLE 8.0 MG/KG DOSE OF 5G1.1
                     IN PATIENTS WITH RHEUMATOID ARTHRITIS
 

<TABLE>
<CAPTION>
                                                          AFTER 5G1.1 TREATMENT VS.
BIOLOGICAL AND CLINICAL MEASUREMENTS                       BEFORE 5G1.1 TREATMENT
------------------------------------                      -------------------------
<S>                                                       <C>
Complement activity.....................................  100% reduction*
C-reactive protein blood level..........................  30% decrease*
</TABLE>

 
------------------------
 
  * P < .05 vs. before treatment
 
    In November 1999, we announced additional results from this Phase I/II trial
that demonstrated 50% of rheumatoid arthritis patients receiving 8.0 mg/kg of
5G1.1 achieved an ACR20 score, a measure of clinical benefit, as compared to 10%
of placebo-treated patients. In August 1999, we initiated a Phase II
multi-center, double-blinded, randomized, placebo-controlled clinical safety and
efficacy trial with multiple doses of 5G1.1 at one to four week dosing
intervals. We announced that we completed the trial enrollment of the 200
patients in August 2000. Also in August 2000, we announced that we
 
                                       10

<PAGE>
have commenced a one year extended trial designed to test safety and enroll
approximately 100 rheumatoid arthritis patients.
 
    MEMBRANOUS NEPHRITIS
 
    The kidneys are responsible for filtering blood to remove toxic metabolites
and maintaining the minerals and proteins in the blood that are required for
normal metabolism. Each kidney consists of millions of individual filtering
units, or glomeruli. When glomeruli are damaged, the kidney can no longer
adequately maintain its normal filtering function. This may result in the
build-up of toxins in the blood and the loss of valuable minerals and proteins
in the urine. Clinically severe nephritis, or kidney inflammation, is found in
many patients suffering from lupus and other autoimmune diseases. This condition
occurs when more than 90% of the kidney is destroyed by disease. Kidney failure
is frequently associated with:
 
    - hypertension;
 
    - strokes;
 
    - infections;
 
    - anemia;
 
    - heart, lung and joint inflammation;
 
    - coma; and
 
    - death.
 
    Many forms of damage to the glomeruli are mediated by the immune system,
particularly by antibodies and activated complement proteins. Membranous
nephritis is a form of kidney inflammation that is believed to be caused by a
chronic autoimmune disorder that targets the kidney. We estimate that there are
approximately 100,000 to 300,000 people currently afflicted with membranous
nephritis in the United States.
 
    Membranous nephritis is characterized by kidney inflammation and dysfunction
that may eventually progress to kidney failure. Diagnostic criteria for
membranous nephritis include kidney biopsies that may demonstrate the presence
of antibodies and activated complement byproducts in the kidneys of affected
patients. The subsequent kidney inflammation leads to the abnormal loss of
substantial amounts of protein in the patient's urine; this condition is known
as proteinuria and is recognized as an objective measurement of kidney disease.
Loss of protein in the urine disturbs the normal control of water in the blood
vessels and also is believed to directly further injure the kidney. Moreover,
clinical studies by others have shown that the degree of proteinuria is
associated with the incidence of subsequent kidney failure. Additional clinical
signs associated with proteinuria may include:
 
    - abnormally low levels of protein in the blood;
 
    - a propensity for abnormal clotting;
 
    - abnormal lipid elevations; and
 
    - substantial swelling in the abdomen and under the skin.
 
    Current therapies for membranous nephritis include potentially toxic drugs
more frequently used in other indications such as cancer. These drugs generally
act to suppress broadly the proliferation of many types of cells, including
white blood cells. We believe that the use of such therapies is generally
limited due to their unfavorable side effects. Even with current therapies, in
such a severe disease population more than 30% of the patients are expected to
progress to renal failure, which may require dialysis or transplantation. In
contrast, 5G1.1 directly targets the inhibition of deleterious complement
 
                                       11

<PAGE>
activation. We believe 5G1.1 may exert more selective and effective
anti-inflammatory activity without the adverse effects associated with current
therapies.
 
    We have performed pre-clinical studies in rodent models of nephritis and
observed that C5 Inhibitor administration, as compared to placebo-treated
subjects, substantially reduced:
 
    - scarring of the kidney;
 
    - breakdown of kidney tissue into the urine;
 
    - clogging of the kidney filtering units; and
 
    - proteinuria.
 
    CLINICAL TRIALS
 
    We are developing 5G1.1 for a family of kidney and kidney-related chronic
autoimmune disorders, which include membranous nephritis, lupus nephritis, and
lupus. Our strategy is to develop 5G1.1 in kidney disease by initially obtaining
safety data in the more readily available lupus patient population and then to
commence efficacy trials in patients with a kidney disorder known as membranous
nephritis. We are initially starting efficacy trials with 5G1.1 for the
treatment of membranous nephritis patients because of the more uniform clinical
presentations of membranous nephritis patients as compared to lupus patients. We
then intend to expand our efforts to conduct advanced clinical trials in other
kidney diseases and lupus.
 
    The results of our initial clinical trial in lupus patients are described
below.
 
    - In July 1998, we commenced a Phase I single-center, clinical study in 24
      lupus patients receiving a single bolus administration of 0.1 to 8.0 mg/kg
      of 5G1.1 or placebo. In this trial, 5G1.1:
 
       - was safe and well tolerated in this study population as compared to
         placebo;
 
       - showed dose-dependent reduction in complement activity in study
         subjects; and
 
       - at 8.0 mg/kg, resulted in significantly lower incidence of proteinuria
         in study subjects as compared to placebo.
 
    Although we designed this initial clinical trial to assess primarily dosing
and safety, we also collected biological and clinical results. These results in
the patients treated with a 8.0 mg/kg bolus of 5G1.1, announced in June 1999,
are shown in the table below.
 
                  CLINICAL RESULTS OF A SINGLE 8.0 MG/KG DOSE
                        OF 5G1.1 IN PATIENTS WITH LUPUS
 

<TABLE>
<CAPTION>
BIOLOGICAL AND CLINICAL MEASUREMENTS                          5G1.1 VS. PLACEBO
------------------------------------                          -----------------
<S>                                                           <C>
Complement activity.........................................  100% less*
Incidence of proteinuria....................................  100% less*
</TABLE>

 
------------------------
 
  * P < .05 vs. placebo
 
    In August 1999, we commenced a Phase II multi-center, double-blinded,
randomized, placebo-controlled clinical safety and efficacy trial with multiple
doses of 5G1.1 at two to four week dosing intervals that is intended to enroll
approximately 100 membranous nephritis patients.
 
    In February 2000, we announced that the FDA has designated Fast Track status
for development of 5G1.1 for the treatment of patients with membranous
nephritis.
 
                                       12

<PAGE>
LUPUS
 
    Lupus is an autoimmune disorder that damages the brain, lungs, heart, joints
and especially the kidneys. In lupus, antibodies deposit within particular
organs causing complement activation, inflammation and tissue destruction. For
decades, clinical studies by others have demonstrated the presence of complement
activation in lupus patients undergoing flares. Studies have further shown an
abundant deposition of activated complement proteins with localized inflammation
in tissue biopsies from kidney or other tissues in lupus patients. The Lupus
Foundation estimates that approximately 1.4 million people in the United States
have lupus. Further, an estimated 70% of individuals afflicted with lupus have
nephritis. Although lupus may affect people of either sex, women are 10 to 15
times more likely to suffer from the disease than men.
 
    Patients with active lupus may have a broad range of symptoms related to the
antibody and activated complement deposition and inflammation. Inflammation of
the brain may cause seizures and other neurologic abnormalities. Inflammation of
the heart may cause heart failure or sudden death. Lung inflammation causes
shortness of breath. Lupus may also cause swollen joints and arthritis. One of
the most common complications associated with lupus, however, is kidney disease,
which often leads to kidney failure requiring dialysis or transplantation.
 
    Current therapies generally act to suppress broadly the proliferation of
many types of cells, including white blood cells. In contrast, 5G1.1 directly
targets the inhibition of deleterious complement activation. We believe 5G1.1
may exert more selective and effective anti-inflammatory activity without the
adverse effects associated with current therapies.
 
    We are developing 5G1.1 for the prevention and treatment of inflammation in
lupus patients. We have performed pre-clinical studies in a rodent model of
lupus. In this chronic rodent model that spontaneously develops a disease
similar to lupus, substantially more animals treated with a C5 Inhibitor
survived as compared to untreated control animals.
 
CLINICAL TRIALS
 
    We filed an IND with the FDA in late December 1997 for 5G1.1 in the
treatment of patients suffering from lupus and began a Phase I clinical trial in
lupus patients in July 1998. As discussed above, in the Clinical Trials section
of Membranous Nephritis, we announced results of a 24 patient,
placebo-controlled clinical study in June 1999. This trial showed that a single
dose of 5G1.1 was safe and well tolerated, reduced complement activity in a
dose-dependent manner, and a single 8.0 mg/kg dose significantly lowered
incidence of proteinuria.
 
PRE-CLINICAL TECHNOLOGIES
 
    COMBINATORIAL HUMAN ANTIBODY LIBRARY TECHNOLOGIES
 
    In order to expand our pipeline of potential antibody therapeutics, in
September 2000, we acquired Prolifaron, Inc., a privately held biopharmaceutical
company, through a merger with our newly organized, wholly owned subsidiary,
Alexion Antibody Technologies (AAT), Inc. AAT possesses extensive research
expertise and technologies in the area of creating fully human antibodies from
libraries containing billions of human antibody genes.
 
    AAT's goal is to develop new fully human therapeutic antibodies addressing
multiple disease areas, including autoimmune and inflammatory disorders and
cancer. AAT's technologies involve the generation of diverse libraries of human
antibodies and the screening of these libraries against a wide array of
potential drug targets. We believe that these technologies may be optimally
suited to the rapid generation of novel fully human therapeutic antibodies
directed at validated clinical targets. To date, we have focused on identifying
validated clinical targets, antibodies to which might be therapeutically
effective in different autoimmune or inflammatory disorders and cancer. In
addition, we believe that
 
                                       13

<PAGE>
these technologies could permit the pre-clinical validation of new gene targets
that are coming out of the international effort to sequence the human genome. We
also believe that these technologies might also provide new therapeutic
antibodies when the libraries are screened against certain of these new gene
targets.
 
    APOGEN T-CELL IMMUNOTHERAPEUTIC TECHNOLOGY AND PRODUCT CANDIDATES
 
MP4
 
    MP4 is a recombinant protein consisting of two brain-derived proteins. These
two proteins are believed to be major targets of disease-causing T-cells in
patients with multiple sclerosis. MP4 is designed to bind specifically to, and
induce cell suicide in, the small population of T-cells in multiple sclerosis
patients which are responsible for attacking the patient's brain cells, while
leaving the vast majority of uninvolved T-cells unaffected. In addition, MP4 is
designed to induce other white blood cells to suppress other inflammatory cells.
 
    In February 1998, we filed an IND with the FDA for MP4 for the treatment of
patients suffering from multiple sclerosis. After completion of additional
pre-clinical studies and amendment of the clinical protocol in line with the
preferred route of administration, we may initiate a Phase I/II clinical trial
in multiple sclerosis patients.
 
    THE UNIGRAFT XENOTRANSPLANTATION TECHNOLOGIES PROGRAM
 
    Most transplant procedures today are whole organ transplants. We believe
that there is a far greater number of patients with medical disorders, such as
Parkinson's disease and spinal cord injury, that are caused by the functional
loss of highly specialized cells. The number of these patients is likely to grow
due to both the aging of the population, with subsequent increase in the
incidence of degenerative diseases, as well as the increasing incidence of
trauma. Therefore, cell transplantation could be an important benefit to a large
number of previously untreated, or severely under-treated patients suffering
from severe medical disorders. However, since there are no human donors of such
specialized cells, there is currently no available supply of such cells for
replacement therapy. Further, the immune system prevents the transplantation of
cells from other species, known as xenografts, as they are recognized by the
immune system as foreign and they are rejected. We are developing a portfolio of
UniGraft immunoregulatory technologies designed to permit the therapeutic
transplantation of such cells without rejection.
 
    Although approximately 21,000 people received whole organ transplants in the
United States in 1999, there are many times that number of patients who have
disorders that may be amenable to cell or tissue transplantation. It is
estimated that this broader population includes approximately 200,000 patients
suffering from spinal cord injury and 1.0 million individuals with Parkinson's
disease. In particular, we believe that use of a safe and effective cell
transplantation therapy for patients with spinal cord injury or Parkinson's
disease would represent major therapeutic advances. We are developing a
portfolio of UniGraft immunoregulatory technologies designed to permit the
therapeutic transplantation of such cells without rejection.
 
    NEUROLOGIC CELL TRANSPLANTATION
 
    We have developed methods of blocking the immune system which are designed
to permit the replacement of damaged human brain and other neurologic cells with
potentially highly therapeutic genetically modified porcine cells.
 
    Rejection of non-human tissue by patients is generally believed to occur in
two stages:
 
    - hyperacute phase, which is very rapid, extending from minutes to hours;
      and
 
    - acute phase, which is somewhat less rapid, extending from days to months.
 
                                       14

<PAGE>
    Hyperacute rejection is generally believed to be mediated by naturally-
occurring antibodies in the patient, most of which target a sugar antigen
uniquely present on the surface of non-human tissue but not on the patient's own
tissue. After binding to the foreign tissue, these antibodies stimulate the
activation of the recipient's inactive complement proteins on the surface of the
donor tissue with subsequent destruction of the donor tissue. Subsequently,
acute rejection of xenografts is generally believed to be mediated by white
blood cells.
 
    We are designing UniGraft cell products to resist complement/antibody-
mediated hyperacute rejection. We have commenced preclinical studies employing
the UniGraft technologies during transplantation of genetically modified and
proprietary porcine cells that are resistant to destruction by human complement
proteins. We are currently focusing our immunoregulatory and molecular
engineering technologies primarily on the development of UniGraft cells to treat
Parkinson's disease and injuries to the spinal cord. We are currently performing
pre-clinical studies in the spinal cord injury and Parkinson's disease programs
and optimizing manufacturing methods of the genetically modified pig cells.
 
STRATEGIC ALLIANCE WITH PROCTER & GAMBLE
 
    In January 1999, we entered into an exclusive collaboration with Procter &
Gamble to develop and commercialize 5G1.1-SC. Under this collaboration, we will
initially pursue the development of 5G1.1-SC for the treatment of inflammation
caused by cardiopulmonary bypass surgery, myocardial infarction and angioplasty.
Procter & Gamble has agreed to fund all clinical development and manufacturing
costs relating to 5G1.1-SC for these indications. In addition, under this
agreement, Procter & Gamble has agreed to pay us up to $95 million in payments,
which include a non-refundable up-front license fee, as well as milestone and
research and development support payments. In addition, we will receive
royalties on worldwide sales of 5G1.1-SC for all indications. We also have a
preferred position relative to third-party manufacturers to manufacture 5G1.1-SC
worldwide. We share co-promotion rights with Procter & Gamble to sell, market
and distribute 5G1.1-SC in the United States, and have granted Procter & Gamble
the exclusive rights to sell, market and distribute 5G1.1-SC outside of the
United States. Through July 31, 2000, we earned revenues of $37.5 million from
Procter & Gamble, including a non-refundable up-front license fee of
$10.0 million and $27.5 million in research and development support payments.
Our collaboration with Procter & Gamble does not involve any of our other
product candidates. Staff Accounting Bulletin No. 101 (SAB 101), Revenue
Recognition, was issued in December 1999. SAB 101 will require companies to
recognize certain up-front non-refundable fees over the life of the related
collaboration agreement when such fees are received in conjunction with
collaboration agreements which have multiple elements. We are required to adopt
this new accounting principle through a cumulative charge to retained earnings
through the statement of operations in accordance with the provisions of APB
Opinion No. 20, in fiscal 2001. We believe that the adoption of SAB 101 will
have a material impact on our future operating results as it applies to the
$10.0 million up-front non-refundable payment received by us in connection with
our collaboration with Procter & Gamble. Our historical financial statements
reflect this payment as revenue in the year ended July 31, 1999. Based on
guidance currently available, we will be required to record the $10.0 million
fee as revenue over the future life, as defined, of the collaboration agreement.
As of July 31, 2000 we have not yet adopted this new accounting principle.
 
GRANTS FROM ADVANCED TECHNOLOGY PROGRAM AND NATIONAL INSTITUTE OF STANDARDS AND
  TECHNOLOGY
 
    In August 1995, we were awarded cost-shared funding from the U.S. Commerce
Department's National Institute of Standards and Technology under its Advanced
Technology Program. Through the program, we may receive up to approximately
$2.0 million over three years to support our UniGraft cell, tissue, and organ
transplantation programs. Through July 31, 2000, we have received approximately
$1.9 million under this award. As of September 1999 this award has been
completed.
 
                                       15

<PAGE>
    In November 1997, both ourselves and United States Surgical Corporation ("US
Surgical", a division of Tyco International, Ltd.) were awarded a three-year
$2.0 million cooperative agreement from NIST under its Advanced Technology
Program for funding a joint xenotransplantation project. In February 1999, this
funding was amended to a single company award to us with our reacquisition of
the rights to all aspects of our xenotransplantation program from US Surgical
which had been acquired by Tyco International Ltd. Through July 31, 2000, we had
received approximately $1.2 million under this award.
 
    In October 1998, we were granted our third award under this program, a
three-year grant supporting product development within our neurologic disorder
transplantation program. Through the program, we may receive up to approximately
$2.0 million over three years to support our UniGraft program to develop a
spinal cord injury product within our neurologic disorder xenotransplantation
program. Through July 31, 2000, we had received approximately $498,000 under
this award.
 
    In November 1999, we were granted our fourth award under this program, a
three-year grant supporting product development within our UniGraft program.
Through the program, we may receive up to approximately $2.0 million over three
years to support our production of UniGraft products. Through July 31, 2000, we
had received approximately $45,000 under this award.
 
MANUFACTURING
 
    We obtain drug product to meet our requirements for pre-clinical studies
using both internal and third-party contract manufacturing capabilities. At our
headquarters in New Haven, Connecticut, we have pilot manufacturing facilities
suitable for the fermentation and purification of certain of our recombinant
compounds for clinical studies. Our pilot plant has the capacity to manufacture
under cGMP regulations. We have also secured the production of clinical supplies
of certain other recombinant products through third-party manufacturers. In each
case, we have contracted product finishing, vial filling, and packaging through
third parties.
 
    To date, we have not invested in the development of commercial manufacturing
capabilities. Although we have established a pilot manufacturing facility for
the production of material for clinical trials for certain of our potential
products, we do not have sufficient capacity to manufacture more than one drug
candidate at a time or to manufacture our drug candidates for later stage
clinical development or commercialization. In the longer term, we may contract
the manufacture of our products for commercial sale or may develop large-scale
manufacturing capabilities for the commercialization of some of our products.
The key factors which will be given consideration when making the determination
of which products will be manufactured internally and which through contractual
arrangements will include the availability and expense of contracting this
activity, control issues and the expertise and level of resources required for
us to manufacture products. If we are unable to develop or contract for
additional manufacturing capabilities on acceptable terms, our ability to
conduct human clinical testing will be materially adversely affected, resulting
in delays in the submission of products for regulatory approval and in the
initiation of new development programs, which could have a material adverse
effect on our competitive position and our prospects for achieving
profitability. In addition, as our product development efforts progress, we will
need to hire additional personnel skilled in product testing and regulatory
compliance.
 
SALES AND MARKETING
 
    We currently have no sales, marketing, or distribution capabilities. We will
need to establish or contract these capabilities to commercialize successfully
any of our drug candidates. We may promote our products in collaboration with
marketing partners or rely on relationships with one or more companies with
established distribution systems and direct sales forces. Under our
collaboration agreement, Procter & Gamble is obligated to sell, market and
distribute worldwide 5G1.1-SC for all
 
                                       16

<PAGE>
approved indications. We share with Procter & Gamble co-promotion rights for
5G1.1-SC in the United States. For other future drug products, as well as for
5G1.1-SC in the United States, we may elect to establish our own specialized
sales force and marketing organization to market our products.
 
PATENTS AND PROPRIETARY RIGHTS
 
    We believe that patents and other proprietary rights are important to our
business. Our policy is to file patent applications to protect technology,
inventions and improvements to our technologies that are considered important to
the development of our business. We also rely upon trade secrets, know-how,
continuing technological innovations and licensing opportunities to develop and
maintain our competitive position.
 
    We have filed several U.S. patent applications and international
counterparts of certain of these applications. In addition, we have exclusively
licensed several additional U.S. patents and patent applications. Of our owned
and exclusively licensed patents and patent applications as of July 31, 2000, 14
relate to technologies or products in the C5 Inhibitor program, 8 relate to the
Apogen program, 26 relate to the UniGraft program, 1 relates to the recombinant
human antibody program and 1 relates to the high throughput antibody screening
program.
 
    Our success will depend in part on our ability to obtain United States and
foreign patent protection for our products, to preserve our trade secrets and
proprietary rights, and to operate without infringing on the proprietary rights
of third parties or having third parties circumvent our rights. Because of the
length of time and expense associated with bringing new products through
development and regulatory approval to the marketplace, the health care industry
has traditionally placed considerable importance on obtaining patent and trade
secret protection for significant new technologies, products and processes.
 
    We are aware of broad patents owned by third parties relating to the
manufacture, use, and sale of recombinant humanized antibodies, recombinant
humanized single-chain antibodies, recombinant human antibodies, recombinant
human single chain antibodies, and genetically engineered animals. Many of our
products are genetically engineered antibodies, including recombinant humanized
antibodies, recombinant humanized single chain antibodies, recombinant human
antibodies, and recombinant human single chain antibodies, and other products
are tissues from animals. We have received notices from the owners of some of
these patents in which the owners claim that some of these patents may be
relevant to the development of some of our drug candidates. With respect to
certain of these patents which we believe are relevant for the expeditious
development and commercialization of certain of our products as currently
contemplated, we have acquired licenses. With regard to certain other patents,
we have either determined in our judgment that our products do not infringe the
patents or have identified and are testing various approaches which we believe
should not infringe the patents and which should permit commercialization of our
products.
 
    It is our policy to require our employees, consultants, members of our
scientific advisory board, and parties to collaborative agreements to execute
confidentiality agreements upon the commencement of employment or consulting
relationships or collaborations with us. These agreements provide that all
confidential information developed or made known during the course of
relationship with us is to be kept confidential and not to be disclosed to third
parties except in specific circumstances. In the case of employees, the
agreements provide that all inventions resulting from work performed for us,
utilizing our property or relating to our business and conceived or completed by
the individual during employment shall be our exclusive property to the extent
permitted by applicable law.
 
                                       17

<PAGE>
GOVERNMENT REGULATION
 
    The pre-clinical studies and clinical testing, manufacture, labeling,
storage, record keeping, advertising, promotion, export, and marketing, among
other things, of our proposed products are subject to extensive regulation by
governmental authorities in the United States and other countries. In the United
States, pharmaceutical products are regulated by the FDA under the Federal Food,
Drug, and Cosmetic Act and other laws, including, in the case of biologics, the
Public Health Service Act. At the present time, we believe that our products
will be regulated by the FDA as biologics.
 
    The steps required before a novel biologic may be approved for marketing in
the United States generally include:
 
        (1) pre-clinical laboratory tests and IN VIVO pre-clinical studies;
 
        (2) the submission to the FDA of an IND for human clinical testing,
    which must become effective before human clinical trials may commence;
 
        (3) adequate and well-controlled human clinical trials to establish the
    safety and efficacy of the product;
 
        (4) the submission to the FDA of a biologics license application or BLA;
    and
 
        (5) FDA review and approval of such application.
 
    The testing and approval process requires substantial time, effort and
financial resources. We cannot be certain that any approval will be granted on a
timely basis, if at all. Prior to and following approval, if granted, the
establishment or establishments where the product is manufactured are subject to
inspection by the FDA and must comply with cGMP requirements enforced by the FDA
through its facilities inspection program. Manufacturers of biological materials
also may be subject to state regulation.
 
    Pre-clinical studies include animal studies to evaluate the mechanism of
action of the product, as well as animal studies to assess the potential safety
and efficacy of the product. Compounds must be produced according to applicable
cGMP requirements and pre-clinical safety tests must be conducted in compliance
with FDA regulations regarding good laboratory practices. The results of the
pre-clinical tests, together with manufacturing information and analytical data,
are submitted to the FDA as part of an IND, which must become effective before
human clinical trials may be commenced. The IND will automatically become
effective 30 days after receipt by the FDA, unless the FDA before that time
requests an extension to review or raises concerns about the conduct of the
trials as outlined in the application. In such latter case, the sponsor of the
application and the FDA must resolve any outstanding concerns before clinical
trials can proceed. We cannot assure you that submission of an IND will result
in FDA authorization to commence clinical trials.
 
    Clinical trials involve the administration of the investigational product to
healthy volunteers or to patients, under the supervision of a qualified
principal investigator. Clinical trials are conducted in accordance with
protocols that detail many items, including:
 
    - the objectives of the study;
 
    - the parameters to be used to monitor safety; and
 
    - the efficacy criteria to be evaluated.
 
    Each protocol must be submitted to the FDA as part of the IND. Further, each
clinical study must be reviewed and approved by an independent institutional
review board, prior to the recruitment of subjects.
 
    Clinical trials typically are conducted in three sequential phases, but the
phases may overlap. In Phase I, the initial introduction of the drug into human
subjects, the drug is tested for safety and, as
 
                                       18

<PAGE>
appropriate, for absorption, metabolism, distribution, excretion,
pharmacodynamics and pharmacokinetics. Phase II usually involves studies in a
limited patient population to:
 
    - evaluate preliminarily the efficacy of the drug for specific, targeted
      indications;
 
    - determine dosage tolerance and optimal dosage; and
 
    - identify possible adverse effects and safety risks.
 
    Phase III trials are undertaken to further evaluate clinical efficacy and to
test further for safety within an expanded patient population at geographically
dispersed clinical study sites. Phase I, Phase II or Phase III testing may not
be completed successfully within any specific time period, if at all, with
respect to any products being tested by a sponsor. Furthermore, the FDA may
suspend clinical trials at any time on various grounds, including a finding that
the subjects or patients are being exposed to an unacceptable health risk.
 
    The results of the pre-clinical studies and clinical trials, together with
detailed information on the manufacture and composition of the product, are
submitted to the FDA as part of a BLA requesting approval for the marketing of
the product. The FDA may deny approval of the application if applicable
regulatory criteria are not satisfied, or if additional testing or information
is required. Post-marketing testing and surveillance to monitor the safety or
efficacy of a product may be required. FDA approval of any application may
include many delays or never be granted. Moreover, if regulatory approval of a
product is granted, such approval may entail limitations on the indicated uses
for which it may be marketed. Finally, product approvals may be withdrawn if
compliance with regulatory standards is not maintained or if safety or
manufacturing problems occur following initial marketing. Among the conditions
for approval is the requirement that the prospective manufacturer's quality
control and manufacturing procedures conform to cGMP requirements. These
requirements must be followed at all times in the manufacture of the approved
product. In complying with these requirements, manufacturers must continue to
expend time, monies and effort in the area of production and quality control to
ensure full compliance.
 
    Both before and after the FDA approves a product, the manufacturer and the
holder or holders of the BLA for the product are subject to comprehensive
regulatory oversight. Violations of regulatory requirements at any stage,
including the pre-clinical and clinical testing process, the review process, or
at any time afterward, including after approval, may result in various adverse
consequences, including the FDA's delay in approving or refusal to approve a
product, withdrawal of an approved product from the market, and/or the
imposition of criminal penalties against the manufacturer and/or the license
holder. In addition, later discovery of previously unknown problems may result
in restrictions on a product, its manufacturer, or the license holder, including
withdrawal of the product from the market. Also, new government requirements may
be established that could delay or prevent regulatory approval of our products
under development.
 
    For clinical investigation and marketing outside the United States, we are
also subject to foreign regulatory requirements governing human clinical trials
and marketing approval for drugs. The foreign regulatory approval process
includes all of the risks associated with FDA approval set forth above as well
as country-specific regulations.
 
    No xenotransplantation-based therapeutic product has been approved for sale
by the FDA. The FDA has not yet established definitive regulatory guidelines for
xenotransplantation, but has proposed interim guidelines in an attempt to reduce
the risk of contamination of transplanted organ and cellular products with
infectious agents. Definitive guidelines in the United States may never be
issued, if at all. Current companies involved in this field, including
ourselves, may not be able to comply with any federal final definitive
guidelines that may be issued.
 
                                       19

<PAGE>
COMPETITION
 
    Currently, many companies, including major pharmaceutical and chemical
companies as well as specialized biotechnology companies, are engaged in
activities similar to our activities. Universities, governmental agencies and
other public and private research organizations also conduct research and may
market commercial products on their own or through joint ventures. Many of these
entities may have:
 
    - substantially greater financial and other resources;
 
    - larger research and development staffs;
 
    - in the case of universities, lower labor costs; and/or
 
    - more extensive marketing and manufacturing organizations.
 
    Many of these companies have significant experience in pre-clinical testing,
human clinical trials, product manufacturing, marketing and distribution and
other regulatory approval procedures. They may also have a greater number of
significant patents and greater legal resources to seek remedies for cases of
alleged infringement of their patents by us to block, delay, or co-opt our own
drug development process.
 
    We compete with large pharmaceutical companies that produce and market
synthetic compounds and with specialized biotechnology firms in the United
States, Europe and elsewhere, as well as a growing number of large
pharmaceutical companies that are applying biotechnology to their operations.
Many biotechnology companies have focused their developmental efforts in the
human therapeutics area, and many major pharmaceutical companies have developed
or acquired internal biotechnology capabilities or have made commercial
arrangements with other biotechnology companies. A number of biotechnology and
pharmaceutical companies are developing new products for the treatment of the
same diseases being targeted by us; in some instances these products have
already entered clinical trials. Other companies are engaged in research and
development based on complement proteins, T-cell therapeutics, gene therapy and
xenotransplantation.
 
    Each of Avant Immunotherapeutics, Inc., Leukosite Inc., Abbott Laboratories,
Gliatech Inc., Biocryst Pharmaceuticals Inc., and Tanox, Inc. has publicly
announced intentions to develop complement inhibitors to treat diseases related
to trauma, inflammation or certain brain or nervous system disorders. Avant has
initiated clinical trials for a proposed complement inhibitor to treat acute
respiratory distress syndrome, myocardial infarction, lung transplantation, and
in infants undergoing heart and lung bypass procedures during open heart
surgery. We are aware that Pfizer, Inc., SmithKline Beecham Plc, and Merck &
Co., Inc. are also attempting to develop complement inhibitor therapies. We
believe that our potential C5 Inhibitors differ substantially from those of our
competitors due to our compounds' demonstrated ability to specifically intervene
in the complement cascade at what we believe to be the optimal point so that the
disease-causing actions of complement proteins generally are inhibited while the
normal disease-preventing functions of complement proteins generally remain
intact as do other aspects of immune function.
 
    We further believe that, under conditions of inflammation, a complement
inhibitor compound which only indirectly addresses the harmful activity of
complement may be bypassed by pathologic mechanisms present in the inflamed
tissue. Each of Bayer AG, Immunex Corp., Pharmacia & Upjohn Inc. and
Rhone-Poulenc SA sells a product which is used clinically to reduce surgical
bleeding during cardiopulmonary bypass surgery, but has little beneficial effect
on other significant inflammatory morbidities associated with cardiopulmonary
bypass surgery. We believe that each of these drugs does not significantly
prevent complement activation and subsequent inflammation that lead to organ
damage and blood loss during cardiopulmonary bypass surgery, but instead each
drug attempts to reduce blood loss by shifting the normal blood thinning/blood
clotting balance in the blood towards enhanced blood clotting.
 
                                       20

<PAGE>
    Nextran Inc., a subsidiary of Baxter International Inc., and Imutran Ltd., a
wholly-owned subsidiary of Novartis Pharma AG, are seeking to develop pig cell
xenograft technology. Novartis Pharma AG is also collaborating with
Biotransplant Inc. to commercially develop xenograft organs. We are aware that
Diacrin Inc. and Genzyme Tissue Repair, Inc. are working in this field.
 
    Each of Cambridge Antibody Technology, PLC, MorphoSys AG, and Dyax
Corporation have publicly announced intentions to develop therapeutic
genetically altered human antibodies from libraries of human antibody genes.
Additionally, each of Abgenix Inc. and Medarex, Inc. have publicly announced
intentions to develop therapeutic genetically altered human antibodies from mice
that have been bred to include some human antibody genes.
 
EMPLOYEES
 
    As of October 1, 2000, we had 113 full-time employees, of which 100 were
engaged in research, development, manufacturing, and clinical development, and
thirteen in administration and finance. Doctorates are held by 38 of our
employees. Each of our employees has signed a confidentiality agreement.
 

I
TEM 2.  PROPERTIES.
 
FACILITIES
 
    We lease our administrative and research and development facilities under an
operating lease at 25 Science Park, New Haven, Connecticut consisting of
approximately 80,000 square feet at a fixed monthly rate of approximately
$70,000. We expect to relocate our administrative and research and development
facilities at the end of calendar year 2000. Our pilot manufacturing plant,
encompassing approximately 21,000 square feet of labs and office space, is
currently being utilized for producing compounds for our current clinical trials
and will remain currently in New Haven, Connecticut at our current facilities.
In addition through a wholly-owned subsidiary, we own a transgenic manufacturing
facility located in the Northeast. We believe the laboratory space will be
adequate for our current research and development activities.
 
    In May 2000 we entered into a new lease for our headquarters and research
and development facility in Cheshire, Connecticut. The lease commenced in
August 2000 and has a term of ten years and six months. Occupancy of this lease
is contingent upon the timely departure of the current tenant and subsequent
additional work to be completed by the landlord. At this site we will lease and
occupy a total of 82,000 square feet of space. We expect to incur initial
leasehold improvements and relocation costs aggregating approximately
$2.5 million, of which $16,000 were incurred as of July 31, 2000. At our option,
the landlord is required to fund up to $2.5 million of these lease improvements
under a financing arrangement payable over the term of the lease at 11% per
annum. In addition, we will be required to pay a pro rata percentage of real
estate taxes and operating expenses. Monthly fixed rent starts at approximately
$80,000, increasing to approximately $95,500 over the term of the lease. We have
issued a $200,000 open letter of credit to secure the lease.
 
    In September 2000, we acquired Prolifaron, Inc. a privately held
biopharmaceutical company located in San Diego, California through a merger
between our wholly owned subsidiary, Alexion Antibody Technologies, Inc. and
Prolifaron. ATT leases approximately 3,400 square feet of labs and office space
at a monthly fixed rent that starts at approximately $3,100 increasing to
approximately $3,400 over the term of the lease and terminates in August 2002.
 

ITEM 3.  LEGAL PROCEEDINGS.
 
    The Company is not a party to any material legal proceeding.
 

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
 
    None.
 
                                       21

<PAGE>
              EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY
 
    The executive officers and key employees of the Company and their respective
ages and positions with the Company as of October 1, 2000 were as follows:
 

<TABLE>
<CAPTION>
NAME                                          AGE                POSITION WITH ALEXION
----                                        --------   ------------------------------------------
<S>                                         <C>        <C>
Leonard Bell, M.D.........................     42      President, Chief Executive Officer,
                                                       Secretary, Treasurer, Director
 
David W. Keiser...........................     49      Executive Vice President, Chief Operating
                                                       Officer
 
Stephen P. Squinto, Ph.D..................     44      Executive Vice President and Head of
                                                       Research
 
Barry P. Luke.............................     42      Vice President of Finance and
                                                       Administration, Assistant Secretary
 
Nancy Motola, Ph.D........................     47      Vice President of Regulatory Affairs and
                                                       Quality Assurance
 
Samuel Chu, Ph.D..........................     50      Vice President of Process Sciences and
                                                       Manufacturing
 
Christopher F. Mojcik, M.D., Ph.D.........     40      Vice President of Clinical Development
 
Scott A. Rollins, Ph.D....................     37      Vice President of Drug Development and
                                                       Project Management
 
Katherine S. Bowdish, Ph.D................     43      Vice President of Antibody Discovery
 
Daniel N. Caron...........................     37      Senior Director of Operations and
                                                       Engineering
 
William Fodor, Ph.D.......................     42      Senior Director of Xenotransplantation
</TABLE>

 
    LEONARD BELL, M.D.  is the principal founder of Alexion, and has been a
director of Alexion since February 1992 and the Company's President and Chief
Executive Officer, Secretary and Treasurer since January 1992. From 1991 to
1992, Dr. Bell was an Assistant Professor of Medicine and Pathology and
co-Director of the program in Vascular Biology at the Yale University School of
Medicine. From 1990 to 1992, Dr. Bell was an attending physician at the Yale-New
Haven Hospital and an Assistant Professor in the Department of Internal Medicine
at the Yale University School of Medicine. Dr. Bell was the recipient of the
Physician Scientist Award from the National Institutes of Health and
Grant-in-Aid from the American Heart Association as well as various honors and
awards from academic and professional organizations. His work has resulted in
more than 20 scientific publications and three patent applications. Dr. Bell is
a director of The Medicines Company, the Connecticut Technology Council, and
Connecticut United for Research Excellence, Inc. He also served as a director of
the Biotechnology Research and Development Corporation from 1993 to 1997.
Dr. Bell received his A.B. from Brown University and M.D. from Yale University
School of Medicine. Dr. Bell is currently an Adjunct Assistant Professor of
Medicine and Pathology at Yale University School of Medicine.
 
    DAVID W. KEISER  has been Executive Vice President and Chief Operating
Officer of Alexion since July 1992. From 1990 to 1992, Mr. Keiser was Senior
Director of Asia Pacific Operations for G.D. Searle & Company Limited, a
manufacturer of pharmaceutical products. From 1986 to 1990, Mr. Keiser was
successively Licensing Manager, Director of Product Licensing and Senior
Director of Product Licensing for Searle. From 1984 to 1985, Mr. Keiser was New
Business Opportunities Manager for Mundipharma AG, a manufacturer of
pharmaceutical products, in Basel, Switzerland where he
 
                                       22

<PAGE>
headed pharmaceutical licensing and business development activities in Europe
and the Far East. From 1978 to 1983, he was Area Manager for F. Hoffmann La
Roche Ltd., a manufacturer of pharmaceutical products, in Basel, Switzerland.
Mr. Keiser received his B.A. from Gettysburg College.
 
    STEPHEN P. SQUINTO, PH.D.  is a founder of Alexion and has been recently
promoted to Executive Vice President and Head of Research in August 2000. He has
held the positions of Senior Vice President and Chief Technical Officer from
March 1998 to July 2000, Vice President of Research, Molecular Sciences, from
August 1994 to March 1998, Senior Director of Molecular Sciences from July 1993
to July 1994 and Director of Molecular Development from 1992 to July 1993. From
1989 to 1992 Dr. Squinto held various positions at Regeneron
Pharmaceuticals, Inc. most recently serving as Senior Scientist and Assistant
Head of the Discovery Group. From 1986 to 1989, Dr. Squinto was an Assistant
Professor of Biochemistry and Molecular Biology at Louisiana State University
Medical Center. Dr. Squinto's work has led to over 70 scientific papers in the
fields of gene regulation, growth factor biology and gene transfer.
Dr. Squinto's work is primarily in the fields of regulation of eukaryotic gene
expression, mammalian gene expression systems and growth receptor and signal
transduction biology. Dr. Squinto also serves as a Director of the BRDC since
1997. Dr. Squinto received his B.A. in Chemistry and Ph.D. in Biochemistry and
Biophysics from Loyola University of Chicago.
 
    BARRY P. LUKE  has been Vice President of Finance and Administration since
September 1998 and Senior Director of Finance and Administration of Alexion from
August 1995 to September 1998 and prior thereto as Director of Finance and
Accounting of the Company from May 1993. From 1989 to 1993, Mr. Luke was Chief
Financial Officer, Secretary and Vice President-Finance and Administration at
Comtex Scientific Corporation, a publicly held distributor of electronic news
and business information. From 1985 to 1989, he was Controller and Treasurer of
Softstrip, Inc., a manufacturer of computer peripherals and software. From 1980
to 1985, Mr. Luke was employed by General Electric Company where he held
positions at GE's Corporate Audit Staff after completing GE's Financial
Management Program. Mr. Luke received a B.A. in Economics from Yale University
and an M.B.A. in management and marketing from the University of Connecticut.
 
    NANCY MOTOLA, PH.D.  has been the Vice President of Regulatory Affairs and
Quality Assurance since 1998. From 1991 to 1998, Dr. Motola served as Assistant,
Associate and then Deputy Director, Regulatory affairs for the Bayer Corporation
Pharmaceuticals Division where she was responsible for regulatory aspects of
product development programs for cardiovascular, neuroscience, metabolic and
oncology drugs and included drugs targeting arthritis, cardiac discorders,
stroke and cognitive dysfunction. Dr. Motola has been responsible for the filing
of numerous INDs, other regulatory submissions and has filed New Drug
Applications for marketing approval resulting in three currently marketed drugs.
Dr. Motola held regulatory affairs positions of increasing responsibility at
Abbott Laboratories from 1989 to 1991 and at E.R. Squibb and Sons, Inc. from
1983 to 1989. She also served as past Chairperson of the Regulatory Affairs
Section of the American Association of Pharmaceuticals Scientists. Dr. Motola
received her B.A. from Central Connecticut State University and M.S. and Ph.D.
degrees in medical chemistry from the University of Rhode Island.
 
    SAM CHU, PH.D.  has been Vice President of Process Sciences and
Manufacturing since September 2000. Before joining Alexion Dr. Chu was Director
of the Biotech Development and Pilot Plant, Bio-Chemistry Division operations at
Bristol-Meyers Squibb, Co from 1993 to 2000. From 1990 to 1993 Dr. Chu was an
Associate Director of Product Development and Scale-up at Lederle-Praxis
Biologicals, a division of American Cyanamid. From 1985 to 1990 Dr. Chu was the
Associate Director of Product Development and Scale-up at Praxis Biologics.
Dr. Chu received his B.S. from National Chung-Hsing University, M.S. from
Illinois Institute of Technology, and Ph.D. degree from the University of
Toronto.
 
    CHRISTOPHER F. MOJCIK, M.D., PH.D.  has been Vice President of Clinical
Development since August 2000. Since joining the Alexion in July 1998 to
July 2000, Dr. Mojcik was Senior Director of
 
                                       23

<PAGE>
Clinical Development. From 1996 until July 1998, he was an Associate Director in
the Metabolics/ Rheumatics Department at Bayer Corporation's Pharmaceuticals
Division. Dr. Mojcik was responsible for Phase II and III development of certain
arthritis programs and certain Phase IV programs in cardiopulmonary bypass. From
1993 to 1996, he was a Senior Staff Fellow in the Cellular Immunology Section of
the Laboratory of Immunology in the NIAID at the NIH. From 1991 to 1993, he
completed his Fellowship in Rheumatology in the National Institute of Arthritis
and Musculoskeletal and Skin Diseases at the NIH. He received his B.A. from
Washington University in St. Louis, Missouri, and his M.D. and Ph.D. from the
University of Connecticut.
 
    SCOTT A. ROLLINS, PH.D.  is a co-founder of Alexion and has been Vice
President of Drug Development and Project Management since August 2000.
Dr. Rollins was Senior Director of Project Management and Drug Development from
August 1999 to July 2000, Senior Director of Complement Biology from 1997 to
1999, Director of Complement Biology from 1996 to 1997, Principal Scientist from
1994 to 1996, and Staff Scientist from 1992 to 1994. Since 1994, Dr. Rollins has
been responsible for the preclinical development of our anti-inflammatory
compound 5G1.1-SC. Since 1999, Dr. Rollins has been additionally responsible for
the project management functions of 5G1.1-SC, currently under joint development
with Procter & Gamble Pharmaceuticals. Prior to 1992, Dr. Rollins was a
postdoctoral research fellow in the Department of Immunobiology at Yale
University School of Medicine. Dr. Rollins' work has led to over 50 scientific
papers and patents in the fields of complement biology. He received his B.S. in
Cytotechnology and Ph.D. in Microbiology and Immunology from the University of
Oklahoma Health Sciences Center.
 
    KATHERINE S. BOWDISH, PH.D.  has been Vice President of Antibody Discovery
since September 2000. Dr. Bowdish has also been President of Alexion Antibody
Technologies, Inc., a wholly-owned subsidiary of the Company, since
September 2000. Dr. Bowdish was a co-founder and Chief Scientific Officer and
Executive Vice President of Prolifaron, Inc., a San Diego, CA-based antibody
engineering company which was merged into Alexion Antibody Technologies, Inc. in
September 2000, from 1997 to 1998, and the Chief Executive Officer and Chief
Scientific Officer of Prolifaron from 1998 to 2000. Dr. Bowdish previously held
positions at The Scripps Research Institute, Monsanto, and Rockefeller
University. Dr. Bowdish is an internationally recognized expert in the field of
antibody engineering and has 19 years of experience in biotechnology research.
Dr. Bowdish received her B.S. degree in biology from the College of William and
Mary, M.A. degree in cell biology from Columbia University, and Ph.D. degree in
genetics from Columbia University.
 
    WILLIAM FODOR, PH.D.  has been Senior Director of Xenotransplantation since
1997. After joining Alexion in 1992, Dr. Fodor was a Staff Scientist from 1992
to 1994, Principal Scientist from 1994 to 1996, and Director of
Xenotransplantation from 1996 to 1997. Dr. Fodor has been responsible for
managing the pre-clinical development and manufacturing of our
xenotransplantation product candidates. Prior to 1992, Dr. Fodor was a
postdoctoral research fellow in the Section of Immunobiology at Yale University
School of Medicine and at Biogen, Inc., a biopharmaceutical firm. Dr. Fodor's
work has led to over 30 scientific papers and patents in the fields of
immunobiology and molecular biology. Dr, Fodor received his B.S. in Genetics and
Ph.D. in Molecular Genetics from Ohio State University.
 
    DANIEL N. CARON  has been Senior Director of Operations and Engineering
since 1998. After joining the Company in 1992, Mr. Caron was Operations Manager
from 1992 to 1993, Senior Operations Manager from 1993 to 1996, and Director of
Operations from 1996 to 1998. Mr. Caron has been responsible for managing the
engineering, build-out, validation and maintenance of all of the Company's
research, manufacturing, and administrative facilities. Prior to 1992,
Mr. Caron was a research scientist at Imclone Systems, Inc., a biopharmaceutical
firm. Mr. Caron received his B.A. in Biology from Adelphia University and M.S.
in Biomedical Engineering from Polytechnic University of New York.
 
                                       24

<PAGE>

                                    PART II
 

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
    Our common stock is quoted on The Nasdaq National Market under the symbol
"ALXN." The following table sets forth the range of high and low sales prices
for our common stock on The Nasdaq National Market for the periods indicated
since August 1, 1997.
 

<TABLE>
<CAPTION>
FISCAL 1998                                                    HIGH       LOW
-----------                                                  --------   --------
<S>                                                          <C>        <C>
First Quarter August 1, 1997 to October 31, 1997)..........  $ 16.00     $ 9.25
Second Quarter (November 1, 1997 to January 31, 1998)......  $ 14.88     $ 9.88
Third Quarter (February 1, 1998 to April 30, 1998).........  $ 15.00     $12.13
Fourth Quarter (May 1, 1998 to July 31, 1998)..............  $ 13.75     $ 8.00
</TABLE>

 

<TABLE>
<CAPTION>
FISCAL 1999                                                    HIGH       LOW
-----------                                                  --------   --------
<S>                                                          <C>        <C>
First Quarter (August 1, 1998 to October 31, 1998).........  $ 10.25     $ 5.50
Second Quarter (November 1, 1998 to January 31, 1999)......  $ 17.75     $ 8.38
Third Quarter (February 1, 1999 to April 30, 1999).........  $ 14.25     $ 8.38
Fourth Quarter (May 1, 1999 to July 31, 1999)..............  $ 12.75     $ 8.75
</TABLE>

 

<TABLE>
<CAPTION>
FISCAL 2000                                                    HIGH       LOW
-----------                                                  --------   --------
<S>                                                          <C>        <C>
First Quarter (August 1, 1999 to October 31, 1999).........  $ 16.25     $10.00
Second Quarter (November 1, 1999 to January 31, 2000)......  $ 50.13     $12.75
Third Quarter (February 1, 2000 to April 30, 2000).........  $119.88     $34.81
Fourth Quarter (May 1, 2000 to July 31, 2000)..............  $ 84.50     $30.50
</TABLE>

 
    As of October 5, 2000, we had 155 stockholders of record of our common stock
and an estimated 4,000 beneficial owners. The closing sale price of our common
stock on October 4, 2000 was $104.56 per share.
 
    In March 2000, we completed a $120 million private placement of our 5.75%
Convertible Subordinated Notes due March 15, 2007. The notes bear interest
semi-annually on September 15 and March 15 of each year, beginning
September 15, 2000. The holders of the notes may convert all or a portion of the
notes into common stock at any time on or before March 15, 2007 at a conversion
price of $106.425 per share. The notes were offered to qualified institutional
buyers under the exemption from registration provided by Rule 144A under the
Securities Act of 1933, as amended, and to persons outside the United States
under Regulation S under the Securities Act. We incurred issuance costs related
to this offering of approximately $4.0 million, including discounts to J.P.
Morgan & Co., U.S. Bancorp Piper Jaffray, Chase H&Q and Warburg Dillon Read LLC,
the initial purchasers of the notes. The costs are being amortized into interest
expense over the seven-year term of the notes.
 
DIVIDEND POLICY
 
    We have never paid cash dividends. We do not expect to declare or pay any
dividends on our common stock in the foreseeable future. We intend to retain all
earnings, if any, to invest in our operations. The payment of future dividends
is within the discretion of our board of directors and will depend upon our
future earnings, if any, our capital requirements, financial condition and other
relevant factors.
 
                                       25

<PAGE>

ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA.
 

<TABLE>
<CAPTION>
                                                             FISCAL YEAR ENDED JULY 31,
                                                ----------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:       2000       1999       1998       1997       1996
-------------------------------------------     --------   --------   --------   --------   --------
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>        <C>        <C>        <C>        <C>
Contract research revenues....................  $ 21,441   $18,754    $ 5,037    $ 3,811    $ 2,640
                                                --------   -------    -------    -------    -------
Operating expenses:
Research and development......................    40,187    23,710     12,323      9,079      6,629
General and administrative....................     4,175     2,953      2,666      2,827      1,843
                                                --------   -------    -------    -------    -------
Total operating expenses......................    44,362    26,663     14,989     11,906      8,472
                                                --------   -------    -------    -------    -------
Operating loss................................   (22,921)   (7,909)    (9,952)    (8,095)    (5,832)
Other income (expense), net...................     2,694     1,514      2,087        843        397
                                                --------   -------    -------    -------    -------
Net loss......................................   (20,227)   (6,395)    (7,865)    (7,252)    (5,435)
Preferred stock dividends.....................        --        --       (900)        --         --
                                                --------   -------    -------    -------    -------
Net loss applicable to common shareholders....  $(20,227)  $(6,395)   $(8,765)   $(7,252)   $(5,435)
                                                ========   =======    =======    =======    =======
Basic and diluted net loss per common share...  $  (1.45)  $ (0.57)   $ (0.87)   $ (0.97)   $ (1.02)
                                                ========   =======    =======    =======    =======
Shares used in computing net loss per common
  share.......................................    13,914    11,265     10,056      7,451      5,351
                                                ========   =======    =======    =======    =======
</TABLE>

 

<TABLE>
<CAPTION>
                                                                   AS OF JULY 31,
                                                ----------------------------------------------------
CONSOLIDATED BALANCE SHEET DATA:                  2000       1999       1998       1997       1996
--------------------------------                --------   --------   --------   --------   --------
                                                       (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                             <C>        <C>        <C>        <C>        <C>
Cash, cash equivalents, and marketable
  securities..................................  $174,529   $28,328    $37,494    $22,749    $18,598
Total current assets..........................   180,080    35,662     37,840     22,981     19,064
Total assets..................................   192,702    44,374     42,085     24,260     20,454
Notes payable, less current portion...........     3,920     4,383        832          0        128
Convertible subordinated notes................   120,000         0          0          0          0
Total stockholders' equity....................    61,604    33,301     39,190     21,846     18,285
</TABLE>

 
                                       26

<PAGE>

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.
 
    THIS REPORT CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE RISKS AND
UNCERTAINTIES. SUCH STATEMENTS ARE SUBJECT TO CERTAIN FACTORS WHICH MAY CAUSE
OUR PLANS AND RESULTS TO DIFFER SIGNIFICANTLY FROM PLANS AND RESULTS DISCUSSED
IN FORWARD-LOOKING STATEMENTS. FACTORS THAT MIGHT CAUSE OR CONTRIBUTE TO SUCH
DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "IMPORTANT
FACTORS REGARDING FORWARD-LOOKING STATEMENTS" ATTACHED HERETO AS EXHIBIT 99.
 
OVERVIEW
 
    We are engaged in the development of biopharmaceutical products for the
treatment of patients with cardiovascular and autoimmune disorders, inflammation
and cancer. Since our inception in January 1992, we have devoted substantially
all of our resources to drug discovery, research, product and clinical
development. Since mid 1996, we have focused our resources increasingly to
clinical manufacturing and clinical development. We are currently examining our
two lead genetically altered antibody product candidates in eight different
clinical development programs. One of our lead genetically altered antibody
product candidates, 5G1.1-SC, which is in development in collaboration with
Procter & Gamble, has completed enrolling in an approximately 1000 patient Phase
IIb study for the treatment of inflammation caused by cardiopulmonary bypass
surgery. Two additional Phase II studies are in progress in myocardial
infarction patients, in the one study in patients receiving thrombolytic
therapy, and in the other in patients receiving angioplasty. Our other lead
genetically altered antibody product candidate 5G1.1 is in clinical development
for the treatment of a variety of chronic autoimmune diseases. As of
August 2000, enrollment has been completed in a Phase II clinical study in
rheumatoid arthritis patients and a Phase II study in membranous nephritis
patients is ongoing. In both of these indications, enrollment has commenced in
an additional 12 month open-label extension study to test safety. In addition,
we have commenced three separate Phase Ib pilot trials to study 5G1.1 in
patients with psoriasis, dermatomyositis, and bullous pemphigoid.
 
    To date, we have not received any revenues from the sale of products. We
have incurred operating losses since our inception. As of July 31, 2000 we had
an accumulated deficit of $67.2 million. We expect to incur substantial and
increasing operating losses for the next several years due to expenses
associated with:
 
    - product research and development;
 
    - pre-clinical studies and clinical testing;
 
    - regulatory activities;
 
    - manufacturing development, scale-up and manufacturing; and
 
    - developing a sales and marketing force.
 
    In September 2000, we acquired Prolifaron, Inc. a privately held
biopharmaceutical company located in San Diego, California. Prolifaron was
developing therapeutic antibodies addressing multiple diseases, including
cancer. The acquisition was in the form of a merger between our new wholly owned
subsidiary, Alexion Antibody Technologies, Inc., and Prolifaron. In the merger,
we are obligated to issue up to 400,000 shares of our common stock, with a value
of approximately $41 million, to the stockholders of Prolifaron. The acquisition
will be accounted for using the purchase method of accounting.
 
                                       27

<PAGE>
RESULTS OF OPERATIONS
 
FISCAL YEARS ENDED JULY 31, 2000, 1999 AND 1998
 
    We earned contract research revenues of $21.4 million for the fiscal year
ended July 31, 2000, $18.8 million for the fiscal year ended July 31, 1999, and
$5.0 million for the fiscal year ended July 31, 1998. The increase in the fiscal
year ended July 31, 2000 as compared to the fiscal year ended July 31, 1999 was
primarily due to the increased contract revenues from our collaborative research
and development agreement with Procter & Gamble. The increase in the fiscal year
ended July 31, 1999 as compared to the fiscal year ended July 31, 1998 was
primarily due to a non-refundable up-front license fee of $10.0 million which we
received from Procter & Gamble in February 1999 in connection with our entering
into the collaboration agreement with Procter & Gamble to develop and
commercialize 5G1.1-SC. Additionally, during fiscal year ended July 31, 1999, we
received $7.8 million in contract revenues from Procter & Gamble under our
collaborative research and development agreement.
 
    During the fiscal year ended July 31, 2000, we incurred expenses of
$40.2 million on research and development activities. In the fiscal year ended
July 31, 1999, we incurred expenses of $23.7 million, and in the fiscal year
ended July 31, 1998 we incurred expenses of $12.3 million in research and
development activities. The increase in research and development expenses in the
fiscal year ended July 31, 2000 as compared to the fiscal year ended July 31,
1999 was primarily attributable to the continued expansion of the clinical
trials of our lead C5 Inhibitor product candidates and the cost of manufacturing
development and manufacturing of our C5 Inhibitors for our clinical trials. In
the fiscal year ended July 31, 1999 the increase as compared to the fiscal year
ended July 31, 1998 was primarily attributable to an expansion of the clinical
trials of our lead C5 Inhibitor product candidates and process manufacturing
development for our C5 Inhibitor product candidates.
 
    Our general and administrative expenses were $4.2 million for the fiscal
year ended July 31, 2000, $3.0 million for the fiscal year ended July 31, 1999,
and $2.7 million for the fiscal year ended July 31, 1998. The increase in
general and administrative expenses in the fiscal year ended July 31, 2000 as
compared to fiscal year ended July 31, 1999 was principally due to higher
payroll-related costs, as well as higher facilities expenses related to
increased rent expense and space and professional fees related to public
relations and patent/legal costs. The increase in general and administrative
expenses in the fiscal year ended July 31, 1999 as compared to the fiscal year
ended July 31, 1998 was primarily related to higher recruiting expenses, legal
expenses related to business development and patent costs in the fiscal year
ended July 31, 1999.
 
    Other income, net, was $2.7 million for the fiscal year ended July 31, 2000,
$1.5 million for the fiscal year ended July 31, 1999, and $2.1 million for the
fiscal year ended July 31, 1998. The increase in the fiscal year ended July 31,
2000 was due to increased interest income from higher cash balances resulting
from the net proceeds obtained from the issuance of Subordinated Convertible
Notes and follow-on public offering of our common stock during fiscal 2000. The
decrease in other income, net, for the fiscal year ended July 31, 1999 was due
to lower cash balances available for investment as compared to amounts available
in fiscal year ended July 31, 1998.
 
    As a result of the above factors, we incurred net losses of $20.2 million
for the fiscal year ended July 31, 2000, $6.4 million for the fiscal year ended
July 31, 1999, and $7.9 million for the fiscal year ended July 31, 1998.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    Since our inception in January 1992, we have financed our operations and
capital expenditures principally through private placements of our common and
preferred stock, an initial public offering of our common stock and a subsequent
follow-on offering, convertible subordinated notes, other debt
 
                                       28

<PAGE>
financing, payments under corporate collaborations and grants, and equipment and
leasehold improvements financing.
 
    In March 2000, we completed a $120 million private placement of our 5.75%
Convertible Subordinated Notes due March 15, 2007. The notes bear interest
semi-annually on September 15 and March 15 of each year, beginning
September 15, 2000. The holders may convert all or a portion of the notes into
common stock at any time on or before March 15, 2007 at a conversion price of
$106.425 per share. We incurred issuance costs related to this offering of
approximately $4.0 million which are being amortized into interest expense over
the seven-year term of the notes. In May 2000, pursuant to a registration rights
agreement, we filed a registration statement under the Securities Act of 1933
with the SEC to register resales of the notes and the shares of common stock
into which the notes are convertible.
 
    In November 1999, we sold 3.415 million shares of common stock at a price of
$14.00 per share in a follow-on public offering, resulting in net proceeds of
approximately $44.4 million to the Company.
 
    In February 1999, we acquired the manufacturing assets, principally land,
buildings and laboratory equipment, for the xenotransplantation program
developed by US Surgical. We financed the purchase of the manufacturing assets
through a $3.9 million term note payable to US Surgical. Interest is 6.0% per
annum and is payable quarterly. The principal balance under the note is due in
May 2005. Security for this term note is the manufacturing assets that we
purchased.
 
    In the fiscal year ended July 31, 1998, we financed the purchase of
laboratory and process development equipment and leasehold improvements through
a $1.2 million secured term loan from a commercial bank. Principal payments of
$92,000 are payable quarterly through August 2001. As of July 31, 2000, the
outstanding balance on this term loan was $369,000. Principal is due with
interest at a variable rate which is reset quarterly. As of July 31, 2000, the
annualized interest rate was 8.46%. The term loan agreement requires us to
maintain a restricted cash balance equal to the outstanding loan balance divided
by 85% plus accrued interest in an interest earning money market account as
collateral for the note.
 
    As of July 31, 2000, our cash, cash equivalents, and marketable securities
totaled $174.5 million. At July 31, 2000, our cash and cash equivalents
consisted of $91.9 million of cash we hold in short-term highly liquid
investments with original maturities of less than three months. This increase in
cash, cash equivalents and marketable securities as compared to July 31, 1999
was due to the increase in available cash from our sale 5.75% Convertible
Subordinated Notes and the follow-on public offering of our common stock in
November 1999. As of July 31, 2000, we have invested $13.0 million in property
and equipment to support our research and development efforts. We anticipate our
research and development expense will increase significantly for the foreseeable
future to support our clinical and manufacturing development of our product
candidates.
 
    We lease our administrative and research and development facilities under an
operating lease at 25 Science Park, New Haven, Connecticut consisting of
approximately 80,000 square feet at a fixed monthly rate of approximately
$70,000. We expect to relocate our administrative and research and development
facilities at the end of calendar year 2000. Our pilot manufacturing plant,
encompassing approximately 21,000 square feet of labs and office space, is
currently being utilized for producing compounds for our current clinical trials
and will remain currently in New Haven, Connecticut at our current facilities.
In addition through a wholly-owned subsidiary, we own a transgenic manufacturing
facility located in the Northeast. We believe the laboratory space will be
adequate for our current research and development activities.
 
    In May 2000 we entered into a new lease for our headquarters and research
and development facility in Cheshire, Connecticut. The lease commenced in
August 2000 and has a term of ten years and six months. Occupancy of this lease
is contingent upon the timely departure of the current tenant and
 
                                       29

<PAGE>
subsequent additional work to be completed by the landlord. At this site we will
lease and occupy a total of 82,000 square feet of space. We expect to incur
initial leasehold improvements and relocation costs aggregating approximately
$2.5 million, of which $16,000 were incurred as of July 31, 2000. At our option,
the landlord is required to fund up to $2.5 million of these lease improvements
under a financing arrangement payable over the term of the lease at 11% per
annum. In addition, we will be required to pay a pro rata percentage of real
estate taxes and operating expenses. Monthly fixed rent starts at approximately
$80,000, increasing to approximately $95,500 over the term of the lease. We have
issued a $200,000 open letter of credit to secure the lease.
 
    In September 2000, we acquired Prolifaron, Inc. a privately held
biopharmaceutical company located in San Diego, California through a merger
between our wholly owned subsidiary, Alexion Antibody Technologies, Inc. and
Prolifaron. Alexion Antibody Technologies, Inc. leases approximately 3,400
square feet of labs and office space at a monthly fixed rent that starts at
approximately $3,100 increasing to approximately $3,400 over the term of the
lease and terminates in August 2002.
 
    Procter & Gamble has agreed to fund all clinical testing of our C5
Inhibitor, 5G1.1-SC, initially for use in cardiopulmonary bypass surgery,
myocardial infarction and angioplasty. The Procter & Gamble collaboration does
not involve any of our other product candidates.
 
    We anticipate that our existing available capital resources with the
proceeds of our sale of $120 million of 5.75% Convertible Subordinated Notes,
together with the anticipated funding from the collaboration agreement with
Procter and Gamble, will provide us adequate funding for the clinical testing of
our C5 inhibitor product, 5G1.1-SC in cardiopulmonary bypass and acute coronary
syndromes. In addition, our interest earned on available cash and marketable
securities should be sufficient to fund our operating expenses and capital
requirements as currently planned for at least the next 30 months. While we
currently have no material commitments for capital expenditures other than the
leasehold improvements at the Cheshire facility, our future capital requirements
will depend on many factors, including:
 
    - progress of our research and development programs;
 
    - progress and results of clinical trials;
 
    - time and costs involved in obtaining regulatory approvals;
 
    - costs involved in obtaining and enforcing patents and any necessary
      licenses;
 
    - our ability to establish marketing and sales capabilities;
 
    - our ability to establish development and commercialization relationships;
      and
 
    - costs of manufacturing and manufacturing scale-up.
 
    We expect to incur substantial additional costs, for:
 
    - research;
 
    - pre-clinical studies and clinical testing;
 
    - manufacturing process development;
 
    - additional capital expenditures related to personnel, and facilities
      expansion;
 
    - clinical and commercial manufacturing requirements; and
 
    - marketing and sales.
 
    In addition to funds we may receive from our collaboration with Procter &
Gamble, we will need to raise or generate substantial additional funding in
order to complete the development and commercialization of our product
candidates. In addition, if and when we achieve contractual
 
                                       30

<PAGE>
milestones related to product development and product license applications and
approvals, additional payments would be required if we elect to continue and
maintain our licenses with our licensors, aggregating up to a maximum of
$5.5 million. Our additional financing may include public or private debt or
equity offerings, equity line facilities, bank loans and/or collaborative
research and development arrangements with corporate partners. There can be no
assurance that funds will be available on terms acceptable by us, if at all, or
that discussions with potential strategic or collaborative partners will results
in any agreements on a timely basis, if at all. The unavailability of additional
financing could require us to delay, scale back or eliminate certain research
and product development programs or to license third parties to commercialize
products or technologies that we would otherwise undertake ourself, any of which
could have a material adverse effect.
 
    For tax reporting purposes, as of July 31, 2000, we had approximately
$64.6 million of federal net operating loss carryforwards which expire through
2020 and $5.6 million of tax credit carryforwards which expire commencing in
fiscal 2008. Provisions of the Tax Reform Act of 1986 may limit our ability to
utilize net operating loss and tax credit carryforwards in any given year if
certain events occur, including a provision relating to cumulative changes in
ownership interests in excess of 50% over a three-year period. We cannot assure
you that our ability to utilize the net operating loss and tax credit
carryforwards in future years will not be limited as a result of a change in
ownership.
 

I
TEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
 
    The Company accounts for its marketable securities in accordance with
Statement of Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" ("SFAS 115"). All of the cash
equivalents and marketable securities are treated as available-for-sale under
SFAS 115.
 
    Investments in fixed rate interest earning instruments carry a degree of
interest rate risk. Fixed rate securities may have their fair market value
adversely impacted due to a rise in interest rates. Due in part to these
factors, the Company's future investment income may fall short of expectations
due to changes in interest rates or the Company may suffer losses in principal
if forced to sell securities which have seen a decline in market value due to
changes in interest rates. The Company's marketable securities are held for
purposes other than trading and we believe that we currently have no material
adverse market risk exposure. The marketable securities as of July 31, 2000, had
maturities of less than two years. The weighted-average interest rate on
marketable securities at July 31, 2000 and 1999 was 6.9% and 5.7%, respectively.
The fair value of marketable securities held at July 31, 2000 was
$82.7 million.
 
    At July 31, 2000, we had aggregate fixed rate debt of approximately
$124 million. If interest rates associated with this debt were increased 10%, a
corresponding increase in our annual interest expense of approximately $700,000
would occur.
 

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
 
    The consolidated financial statements and supplementary data of the Company
required in this item are set forth at the pages indicated in Item 14(a)(1).
 

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE.
 
    Not applicable.
 
                                       31

<PAGE>

                                    PART III
 

ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES.
 
    Set forth below is certain information regarding our executive officers,
directors and key employees:
 

<TABLE>
<CAPTION>
NAME                                             AGE                   POSITION WITH ALEXION
----                                           --------   ------------------------------------------------
<S>                                            <C>        <C>
John H. Fried, Ph.D.(1)(2)(3)................     70      Chairman of the Board of Directors
 
Leonard Bell, M.D.(3)........................     42      President, Chief Executive Officer, Secretary,
                                                          Treasurer, Director
 
David W. Keiser..............................     49      Executive Vice President, Chief Operating
                                                          Officer
 
Stephen P. Squinto, Ph.D.....................     44      Executive Vice President and Head of Research
 
Barry P. Luke................................     42      Vice President of Finance and Administration,
                                                          Assistant Secretary
 
Nancy Motola, Ph.D...........................     47      Vice President of Regulatory Affairs and Quality
                                                          Assurance
 
Samuel Chu, Ph.D.(4).........................     50      Vice President of Process Sciences and
                                                          Manufacturing
 
Christopher F. Mojcik, M.D., Ph.D.(4)........     40      Vice President of Clinical Development
 
Scott A. Rollins, Ph.D.(4)...................     37      Vice President of Drug Development and Project
                                                          Management
 
Katherine S. Bowdish, Ph.D...................     43      Vice President of Antibody Discovery
 
Daniel N. Caron (4)..........................     37      Senior Director of Operations and Engineering
 
William Fodor, Ph.D.(4)......................     42      Senior Director of Xenotransplantation
 
Jerry T. Jackson (2).........................     59      Director
 
Max Link, Ph.D.(1)(2)(3).....................     60      Director
 
Joseph A. Madri, Ph.D., M.D..................     54      Director
 
Leonard Marks, Jr., Ph.D.(1).................     79      Director
 
R. Douglas Norby (1).........................     65      Director
 
Alvin S. Parven (2)..........................     60      Director
</TABLE>

 
------------------------
 
(1) Member of our Audit Committee of the Board of Directors.
 
(2) Member of our Compensation Committee of the Board of Directors.
 
(3) Member of our Nominating Committee of the Board of Directors.
 
(4) Key employee.
 
                                       32

<PAGE>
    Each director will hold office until the next annual meeting of stockholders
and until his or her successor is elected and qualified or until his or her
earlier resignation or removal. Each officer serves at the discretion of the
board of directors. Each of our executive officers is a party to an employment
agreement with us.
 
    JOHN H. FRIED, PH.D.  has been the Chairman of our board of directors of
Alexion since April 1992. Since 1992, Dr. Fried has been President of Fried &
Co., Inc., a health technology venture firm. Dr. Fried was a director of Syntex
Corp., a life sciences and health care company, from 1982 to 1994 and he served
as Vice Chairman of Syntex from 1985 to January 1993 and President of the Syntex
Research Division from 1976 to 1992. Dr. Fried has originated more than 200 U.S.
Patents and has authored more than 80 scientific publications. Dr. Fried
received his B.S. in Chemistry and Ph.D. in Organic Chemistry from Cornell
University.
 
    LEONARD BELL, M.D.  incorporated by reference herein to the section of this
Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    DAVID W. KEISER incorporated by reference herein to the section of this
Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    STEPHEN P. SQUINTO, PH.D.  incorporated by reference herein to the section
of this Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    BARRY P. LUKE incorporated by reference herein to the section of this Report
in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS entitled
"EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    NANCY MOTOLA, PH.D.  incorporated by reference herein to the section of this
Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    SAM CHU, PH.D.  incorporated by reference herein to the section of this
Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    CHRISTOPHER F. MOJCIK, M.D., PH.D.  incorporated by reference herein to the
section of this Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    SCOTT A. ROLLINS, PH.D.  incorporated by reference herein to the section of
this Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    KATHERINE S. BOWDISH, PH.D.  incorporated by reference herein to the section
of this Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    WILLIAM FODOR, PH.D.  incorporated by reference herein to the section of
this Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    DANIEL N. CARON incorporated by reference herein to the section of this
Report in Part I, Item 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
entitled "EXECUTIVE OFFICERS AND KEY EMPLOYEES OF THE COMPANY"
 
    JERRY T. JACKSON has been a director of Alexion since September 1999. He was
employed by Merck & Co. Inc., a major pharmaceutical company, from 1965 until
his retirement in 1995. During this time, he had extensive experience in sales,
marketing and corporate management, including joint ventures. From 1993 until
1995, Mr. Jackson served as Executive Vice President of Merck with broad
 
                                       33

<PAGE>
responsibilities for numerous operating groups including Merck's International
Human Health, Worldwide Human Vaccines, the AgVet Division, Astra/Merck U.S.
Operations, as well as worldwide marketing. During 1993, he was also President
of the Worldwide Human Health Division in 1993. He served as Senior Vice
President of Merck from 1991 to 1992 responsible for Merck's Specialty Chemicals
and previously, he was President of Merck's Sharp & Dohme International.
Mr. Jackson serves as a director of Cor Therapeutics, Inc., Molecular
Biosystems, Inc., and Crescendo Pharmaceuticals Corporation. Mr. Jackson
received his B.A. from University of New Mexico.
 
    MAX LINK, PH.D.  has been a director of Alexion since April 1992. From
May 1993 to June 1994, Dr. Link was Chief Executive Officer of Corange
(Bermuda), the parent company of Boehringer Mannheim Therapeutics, Boehringer
Mannheim Diagnostics and DePuy Orthopedics. From 1992 to 1993, Dr. Link was
Chairman of the Board of Sandoz Pharma, Ltd., a manufacturer of pharmaceutical
products. From 1987 to 1992, Dr. Link was the Chief Executive Officer of Sandoz
Pharma and a member of the Executive Board of Sandoz, Ltd., Basel. Prior to
1987, Dr. Link served in various capacities with the United States operations of
Sandoz, including as President and Chief Executive Officer. Dr. Link is also a
director of Access Pharmaceuticals, Inc., Discovery Labs, Inc., Protein Design
Labs, Inc., and Cell Therapeutics, Inc., each a publicly held pharmaceutical
company, as well as Human Genome Sciences Inc. and Celsion Corporation.
 
    JOSEPH A. MADRI, PH.D., M.D.  is a founder of Alexion and has been a
director of Alexion since February 1992. Since 1980, Dr. Madri has been on the
faculty of the Yale University School of Medicine and is currently a Professor
of Pathology. Dr. Madri serves on the editorial boards of numerous scientific
journals and he is the author of over 175 scientific publications. Dr. Madri
works in the areas of regulation of angiogenesis, vascular cell-matrix
interactions, cell-cell interactions, lymphocyte-endothelial cell interactions
and endothelial and smooth muscle cell biology and has been awarded a Merit
award from the National Institutes of Health. Dr. Madri received his B.S. and
M.S. in Biology from St. John's University and M.D. and Ph.D. in Biological
Chemistry from Indiana University.
 
    LEONARD MARKS, JR., PH.D.  has been a director of Alexion since April 1992.
Since 1985 Dr. Marks has served as an independent corporate director and
management consultant. Dr. Marks serves on the board of directors of
Ubizen, Inc. (formerly Netvision Technologies Inc.). Dr. Marks served as a
director of Airlease Management Services, an aircraft leasing company (a
subsidiary of Bank America Leasing & Capital Corporation), from 1995 to
March 1998, and Northern Trust Bank of Arizona, a commercial and trust bank
subsidiary of Northern Trust of Chicago, from 1995 to March 1998. Prior to 1985,
Dr. Marks held various positions in academia and in the corporate sector
including Executive Vice President, Castle & Cooke, Inc. from 1972 to 1985.
Dr. Marks received his B.A. in Economics from Drew University and an M.B.A. and
Doctorate in Business Administration from Harvard University.
 
    R. DOUGLAS NORBY has been been a director of Alexion since September 1999.
Since 1996, Mr. Norby has been the Executive Vice President and Chief Financial
Officer of LSI Logic Corporation, a semiconductor company, and he has also
served on the Board of LSI. From September 1993 until November 1996, he served
as Senior Vice President and Chief Financial Officer of Mentor Graphics
Corporation, a software company. Mr. Norby served as President of Pharmetrix
Corporation, a drug delivery company, from July 1992 to September 1993, and from
1985 to 1992, he was President and Chief Operating Officer of Lucasfilm, Ltd.,
an entertainment company. From 1979 to 1985, Mr. Norby was Senior Vice President
and Chief Financial Officer of Syntex Corporation, a pharmaceutical company.
Mr. Norby received a B.A. in Economics from Harvard University and an M.B.A.
from Harvard Business School.
 
    ALVIN S. PARVEN has been a director of Alexion since May 1999. Since 1997,
Mr. Parven has been President of ASP Associates, a management and strategic
consulting firm. From 1994 to 1997, Mr. Parven was Vice President at Aetna
Business Consulting, reporting to the Office of the Chairman of Aetna. From 1987
to 1994, Mr. Parven was Vice President, Operations at Aetna Health Plans. Prior
 
                                       34

<PAGE>
to 1987, he served in various capacities at Aetna including Vice President,
Pension Services from 1983 to 1987. Mr. Parven received his B.A. from
Northeastern University.
 
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE
 
    The information concerning the Company's directors regarding compliance with
Section 16(a) of the Securities Exchange Act of 1934 required by this Item will
be set forth in the Company's definitive Proxy Statement, to be filed within 120
days after the end of the fiscal year covered by this Annual Report on Form
10-K, and is incorporated by reference to the Company's Proxy Statement.
 

ITEM 11.  EXECUTIVE COMPENSATION.
 
    The information required by this Item will be set forth in the Company's
definitive Proxy Statement, to be filed within 120 days after the end of the
fiscal year covered by this Annual Report on Form 10-K, and is incorporated by
reference to the Company's Proxy Statement.
 

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICAL OWNERS AND MANAGEMENT.
 
    The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of October 1, 2000, except as
otherwise noted in the footnotes: (1) each person known by us to own
beneficially more than 5% percent of our outstanding common stock; (2) each
director and each named executive officer; and (3) all directors and executives
of Alexion as a group.
 

<TABLE>
<CAPTION>
                                                                                      PERCENTAGE OF
                                                                                       OUTSTANDING
                                                                NUMBER OF SHARES        SHARES OF
NAME AND ADDRESS OF BENEFICIAL OWNER(1)                       BENEFICIALLY OWNED(2)   COMMON STOCK
---------------------------------------                       ---------------------   -------------
<S>                                                           <C>                     <C>
BB Biotech AG Vordergrasse 3 ...............................        1,824,113             11.8%
8200 Schaffhausen
CH/Switzerland(3)
Scudder Kemper Investments, Inc. ...........................        1,615,000             10.4%
345 Park Avenue
New York, NY 10154(4)
Janus Capital Corporation ..................................        1,185,695              7.7%
100 Fillmore Street, Suite 400
Denver, Colorado 80206-4923(5)
Franklin Advisors, Inc.  ...................................        1,004,500              6.5%
777 Mariners Island Blvd., 7th Flr
San Mateo, CA 94404(6)
AMVESCAP, PLC ..............................................          871,640              5.6%
1315 Peachtree Street, NE
Atlanta, GA 30309(7)
The Kaufmann Fund, Inc.  ...................................          837,300              5.4%
140 E. 45th Street, 43rd floor
New York, NY 10017(8)
Leonard Bell, M.D.(9).......................................          698,434              4.4%
Stephen P. Squinto, Ph.D.(10)...............................          202,950              1.3%
David W. Keiser(11).........................................          197,175              1.3%
John H. Fried, Ph.D.(12)....................................           92,336                *
Joseph Madri, Ph.D., M.D.(13)...............................           58,800                *
Max Link, Ph.D.(14).........................................           26,823                *
Leonard Marks, Jr., Ph.D.(15)...............................           17,300                *
Nancy Motola, Ph.D..........................................            8,875                *
Jerry T. Jackson(17)........................................            2,500                *
R. Douglas Norby(18)........................................            2,500                *
Alvin S. Parven(19).........................................            1,400                *
All Directors and Executive Officers as a group                     1,430,236              8.7%
  (13 persons)(20)..........................................
</TABLE>

 
--------------------------
*   Less than one percent.
 
                                       35

<PAGE>
(1) Unless otherwise indicated, the address of all persons is 25 Science Park,
    Suite 360, New Haven, Connecticut 06511.
 
(2) To the Company's knowledge, except as set forth below, the persons named in
    the table have sole voting and investment power with respect to all shares
    of Common Stock shown as beneficially owned by them, subject to community
    property laws where applicable and the information contained in the
    footnotes in this table.
 
(3) This figure is based upon information set forth in Amendment No. 3 to
    Schedule 13D dated May 27, 1998, filed jointly by BB Biotech AG and Biotech
    Target, S.A. Biotech Target, S.A., a Panamanian corporation, is a wholly-
    owned subsidiary of BB Biotech AG. BB Biotech AG is a holding company
    incorporated in Switzerland. BB Biotech AG disclosed that it may be deemed
    to share with Biotech Target, S.A. the voting and dispositive power with
    respect to these shares.
 
(4) This figure is based upon information set forth in Schedule 13G dated
    December 10, 1999. Scudder disclosed that it has shared voting power with
    respect to 154,000 shares. Scudder disclaims beneficial ownership of the
    shares held by it.
 
(5) This figure is based upon information set forth in Schedule 13F dated
    August 14, 2000.
 
(6) This figure is based upon information disclosed to the Company by Franklin
    Advisers, Inc. representing its ownership as of September 18, 2000.
 
(7) This figure is based upon information disclosed to the Company by AMVESCAP,
    PLC representing its ownership as of August 31, 2000.
 
(8) This figure is based upon information set forth in Schedule 13G dated
    June 8, 2000.
 
(9) Includes 538,334 shares of Common Stock that may be acquired upon the
    exercise of options within 60 days of October 1, 2000 and 300 shares, in
    aggregate, held in the names of Dr. Bell's three minor children. Excludes
    146,666 shares obtainable through the exercise of options, granted to
    Dr. Bell, which are not exercisable within 60 days of October 1, 2000 and
    90,000 shares held in trust for Dr. Bell's children of which Dr. Bell
    disclaims beneficial ownership. Dr. Bell disclaims beneficial ownership of
    the shares held in the name of his minor children.
 
(10) Includes 151,250 shares of Common Stock which may be acquired upon the
    exercise of options within 60 days of October 1, 2000 and 6,200 shares, in
    aggregate, held in the names of Dr. Squinto's two minor children of which
    6,000 shares are in two trusts managed by his wife. Excludes 51,250 shares
    obtainable through the exercise of options, granted to Dr. Squinto, which
    are not exercisable within 60 days of October 1, 2000. Dr. Squinto disclaims
    beneficial ownership of the shares held in the name of his minor children
    and the foregoing trusts.
 
(11) Includes 161,875 shares of Common Stock which may be acquired upon the
    exercise of options within 60 days of October 1, 2000 and 300 shares, in
    aggregate, held in the names of Mr. Keiser's three minor children. Excludes
    65,625 shares obtainable through the exercise of options, granted to
    Mr. Keiser, which are not exercisable within 60 days of October 1, 2000.
    Mr. Keiser disclaims beneficial ownership of the shares held in the name of
    his minor children.
 
(12) Excludes 14,000 shares obtainable through the exercise of options granted
    to Dr. Fried, which are not exercisable within 60 days of October 1, 2000.
 
(13) Includes 13,800 shares of Common Stock which may be acquired on the
    exercise of options within 60 days of October 1, 2000. Excludes 14,000
    obtainable through the exercise of options granted to Dr. Madri, which are
    not exercisable within 60 days of October 1, 2000.
 
                                       36

<PAGE>
(14) Includes 1,500 shares of Common Stock which may be acquired upon the
    exercise of options within 60 days of October 1, 2000. Excludes 14,000
    shares obtainable through the exercise of options, granted to Dr. Link,
    which are not exercisable within 60 days of October 1, 2000.
 
(15) Includes 16,300 shares of Common Stock which may be acquired upon the
    exercise of options within 60 days of October 1, 2000. Excludes 14,000
    shares obtainable through the exercise of options granted to Dr. Marks,
    which are not exercisable within 60 days of October 1, 2000.
 
(16) Includes 8,875 shares of Common Stock, which may be acquired upon the
    exercise of options within 60 days of October 1, 2000. Excludes 53,125
    shares obtainable through the exercise of options, granted to Dr. Motola,
    which are not exercisable within 60 days of October 1, 2000.
 
(17) Includes 2,500 shares of Common Stock, which may be acquired upon the
    exercise of options within 60 days of October 1, 2000. Excludes 17,000
    shares obtainable through the exercise of options, granted to Mr. Jackson,
    which are not exercisable within 60 days of October 1, 2000.
 
(18) Includes 2,500 shares of Common Stock, which may be acquired upon the
    exercise of options within 60 days of October 1, 2000. Excludes 17,000
    shares obtainable through the exercise of options, granted to Mr. Norby,
    which are not exercisable within 60 days of October 1, 2000.
 
(19) Includes 1,400 shares of Common Stock, which may be acquired upon the
    exercise of options within 60 days of October 1, 2000. Excludes 17,000
    shares obtainable through the exercise of options, granted to Mr. Parven,
    which are not exercisable within 60 days of October 1, 2000
 
(20) Consists of shares beneficially owned by Drs. Bell, Fried, Link, Madri,
    Marks, Motola, Squinto and Messrs. Jackson, Keiser, Norby and Parven, and
    certain other officers. Includes 978,061 shares of Common Stock, which may
    be acquired upon the exercise of options within 60 days of October 1, 2000.
 

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
 
    In June and October 1992, we entered into patent licensing agreements with
Oklahoma Medical Research Foundation and Yale University. The agreements provide
that we will pay to these institutions royalties based on sales of products
incorporating technology licensed thereunder and also license initiation fees,
including annual minimum royalties that increase in amount based on the status
of product development and the passage of time. Under policies of OMRF and Yale,
the individual inventors of patents are entitled to receive a percentage of the
royalties and other license fees received by the licensing institution. Some of
our founders and scientific advisors are inventors under patent and patent
applications, including Dr. Bell, one of our directors and our President and
Chief Executive Officer, Dr. Madri, one of our directors, Dr. Squinto, Executive
Vice President and Head of Research, and Dr. Rollins, Vice President of Drug
Development and Project Management, with respect to patent applications licensed
from Yale and therefore, entitled to receive a portion of royalties and other
fees payable by us.
 
                                       37

<PAGE>

                                    PART IV
 

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
(A)(1)  FINANCIAL STATEMENTS
 
       The financial statements required by this item are submitted in a
    separate section beginning on page F-1 of this report.
 
  (2)  FINANCIAL STATEMENT SCHEDULES
 
       Schedules have been omitted because of the absence of conditions under
    which they are required or because the required information is included in
    the financial statements or notes thereto.
 
  (3)  EXHIBITS:
 

<TABLE>
<C>     <S>
  3.1   Certificate of Incorporation, as amended.*(1)
 
  3.2   Bylaws.*(1)
 
  4.1   Specimen Common Stock Certificate.*(1)
 
 10.1   Employment Agreement, dated April 1, 2000, between the
        Company and Dr. Leonard Bell.*(2)
 
 10.2   Employment Agreement, dated October 2, 2000, between the
        Company and David W. Keiser.
 
 10.3   Employment Agreement, dated October 22, 1997, between the
        Company and Dr. Stephen P. Squinto.*(3)
 
 10.4   Employment Agreement, dated October 22, 1997 between the
        Company and Dr. Louis A. Matis.*(3)
 
 10.5   Employment Agreement, dated July 1993, between the Company
        and Dr. James A. Wilkins, as amended.*(1)
 
 10.6   Administrative Facility Lease, dated August 23, 1995,
        between the Company and Science Park Development
        Corporation.*(1)
 
 10.7   Research and Development Facility Lease, dated August 23,
        1995, between the Company and Science Park Development
        Corporation.*(1)
 
 10.8   Option Agreement, dated April 1, 1992 between the Company
        and Dr. Leonard Bell.*(1)
 
 10.9   Company's 1992 Stock Option Plan, as amended.*(4)
 
10.10   Company's 1992 Outside Directors Stock Option Plan, as
        amended.*(5)
 
10.11   Form of Investor Rights Agreement, dated December 23, 1994,
        between the Company and the purchasers of the Company's
        Series A Preferred Stock, as amended.*(1)
 
10.12   Exclusive License Agreement dated as of June 19, 1992 among
        the Company, Yale University and Oklahoma Medical Research
        Foundation.*(2)
 
10.13   License Agreement dated as of September 30, 1992 between the
        Company and Yale University, as amended July 2, 1993.*(1)+
</TABLE>

 
                                       38

<PAGE>

<TABLE>
<C>     <S>
10.14   License Agreement dated as of August 1, 1993 between the
        Company and Biotechnology Research and Development
        Corporation ("BRDC"), as amended as of July 1, 1995.*(1)+
 
10.15   License Agreement dated January 25, 1994 between the Company
        and The Austin Research Institute.*(1)+
 
10.16   Exclusive Patent License Agreement dated April 21, 1994
        between the Company and the National Institutes of
        Health.*(1)+
 
10.17   License Agreement dated July 22, 1994 between the Company
        and The Austin Research Institute.*(1)+
 
10.18   License Agreement dated as of January 10, 1995 between the
        Company and Yale University.*(1)+
 
10.19   Advanced Technology Program ("ATP"), Cooperative Agreement
        70NANB5H, National Institute of Standards and Technology,
        entitled "Universal Donor Organs for Transplantation," dated
        September 15, 1995.*(1)+
 
10.20   U.S. Department of Health and Human Services, National
        Heart, Lung and Book Institute, Small Business Research
        Program, Phase II Grant Application, entitled "Role of
        Complement Activation in Cardiopulmonary Bypass," dated
        December 14, 1994; and Notice of Grant Award dated September
        21, 1995.*(1)+ License Agreement dated as of May 27, 1992
        between the Company and Yale University, as amended
        September 23, 1992.*(1)+
 
10.21   Agreement to be Bound by Master Agreement dated as of August
        1, 1993 between the Company and BRDC.*(1)
 
10.22   Research and Development Facility Lease, dated April 1,
        1996, between the Company and Science Park Development
        Corporation.*(7)
 
10.23   License Agreement dated March 27, 1996 between the Company
        and Medical Research Council.*(7)+
 
10.24   License Agreement dated May 8, 1996 between the Company and
        Enzon, Inc.*(7)+
 
10.25   Stock Purchase Agreement dated September 8, 1997 by and
        between the Company and Biotech.Target S.A. *(8)+
 
10.26   Stock Purchase Agreement dated March 4, 1998 by and between
        the Company and Biotech.Target S.A. *(8)+
 
10.27   Asset Purchase Agreement date as of February 9, 1999 between
        the Company and United States Surgical Corporation.*(9)
 
10.28   Collaboration Agreement dated January 25, 1999 between the
        Company and the Procter & Gamble Company, as amended.*(9)+
 
10.29   Letter agreement dated September 14, 1999 between the
        Company and Leonard Bell.*(9)
 
 23.1   Consent of Arthur Andersen LLP.
 
 27.1   Financial data Schedule.
 
 99.1   Risk Factors.
</TABLE>

 
------------------------
 
*   Previously filed
 
                                       39

<PAGE>
    (1) Incorporated by reference to the Company's Registration Statement on
       Form S-1 (Reg. No. 333-00202).
 
    (2) Incorporated by reference to the Company's Quarterly Report on Form 10Q
       for the quarter ended April 30, 2000.
 
    (3) Incorporated by reference to the Company's Annual report on Form 10-K
       for the fiscal year ended July 31, 1997.
 
    (4) Incorporated by reference to the Company's Registration Statement on
       Form S-8 (Reg. No. 333-71879) filed on February 5, 1999.
 
    (5) Incorporated by reference to the Company's Registration Statement on
       Form S-8 (Reg. No. 333-71985) filed on February 8, 1999.
 
    (6) Incorporated by reference to the Company's Amendment No. 1 to
       Registration Statement Forms S-1 (Reg. No. 333-19905) filed on April 4,
       1997.
 
    (7) Incorporated by reference to the Company's Annual report on Form 10-K
       for the fiscal year ended July 31, 1996.
 
    (8) Incorporated by reference to the Company's Annual report on Form 10-K
       for the fiscal year ended July 31, 1998.
 
    (9) Incorporated by reference to the Company's Annual report on Form 10-K
       for the fiscal year ended July 31, 1999.
 
    +  Confidential treatment was granted for portions of such document.
 
(B)  REPORTS ON FORM 8-K
 
       None.
 
(C)  EXHIBITS.
 
       See (a)(3) above.
 
(D)  FINANCIAL STATEMENT SCHEDULES
 
       See (a)(2) above.
 
                                       40

<PAGE>

                                   SIGNATURES
 
    Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on October 5, 2000.
 

<TABLE>
<S>                                                    <C>  <C>
                                                       ALEXION PHARMACEUTICALS, INC.
 
                                                       By:               /s/ LEONARD BELL
                                                            -----------------------------------------
                                                                        Leonard Bell, M.D.
                                                               PRESIDENT, CHIEF EXECUTIVE OFFICER,
                                                                     SECRETARY AND TREASURER
 
                                                       By:             /s/ DAVID W. KEISER
                                                            -----------------------------------------
                                                                         David W. Keiser
                                                                EXECUTIVE VICE PRESIDENT AND CHIEF
                                                                        OPERATING OFFICER
</TABLE>

 
    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
 

<TABLE>
<CAPTION>
                        NAME                                       TITLE                    DATE
                        ----                                       -----                    ----
<C>                                                    <S>                            <C>
                                                       President, Chief Executive
                  /s/ LEONARD BELL                       Officer, Secretary,
     -------------------------------------------         Treasurer and Director        October 5, 2000
                 Leonard Bell, M.D.                      (principal executive
                                                         officer)
 
                                                       Executive Vice President and
                 /s/ DAVID W. KEISER                     Chief Operating Officer
     -------------------------------------------         (principal financial          October 5, 2000
                   David W. Keiser                       officer)
 
                  /s/ BARRY P. LUKE                    Vice President of Finance and
     -------------------------------------------         Administration (principal     October 5, 2000
                    Barry P. Luke                        accounting officer)
 
                  /s/ JOHN H. FRIED
     -------------------------------------------       Chairman of the Board           October 5, 2000
                John H. Fried, Ph.D.                     of Directors
 
                /s/ JERRY T. JACKSON
     -------------------------------------------       Director                        October 5, 2000
                  Jerry T. Jackson
 
                    /s/ MAX LINK
     -------------------------------------------       Director                        October 5, 2000
                   Max Link, Ph.D.
</TABLE>

 
                                       41

<PAGE>
 

<TABLE>
<CAPTION>
                        NAME                                       TITLE                    DATE
                        ----                                       -----                    ----
<C>                                                    <S>                            <C>
                 /s/ JOSEPH A. MADRI
     -------------------------------------------       Director                        October 5, 2000
            Joseph A. Madri, Ph.D., M.D.
 
                  /s/ LEONARD MARKS
     -------------------------------------------       Director                        October 5, 2000
              Leonard Marks, Jr., Ph.D.
 
                /s/ R. DOUGLAS NORBY
     -------------------------------------------       Director                        October 5, 2000
                  R. Douglas Norby
 
                 /s/ ALVIN S. PARVEN
     -------------------------------------------       Director                        October 5, 2000
                   Alvin S. Parven
</TABLE>

 
                                       42

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
                       CONSOLIDATED FINANCIAL STATEMENTS
                          AS OF JULY 31, 2000 AND 1999
       AND FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JULY 31, 2000
                                 TOGETHER WITH

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 

<TABLE>
<CAPTION>
                                                                PAGE
                                                              --------
<S>                                                           <C>
 
Report of Independent Public Accountants....................    F-2
 
Consolidated Balance Sheets as of July 31, 2000 and 1999....    F-3
 
Consolidated Statements of Operations for the Years Ended
  July 31, 2000, 1999 and 1998..............................    F-4
 
Consolidated Statements of Stockholders' Equity for the
  Years Ended July 31, 2000, 1999
  and 1998..................................................    F-5
 
Consolidated Statements of Cash Flows for the Years Ended
  July 31, 2000, 1999 and 1998..............................    F-7
 
Notes to Consolidated Financial Statements..................    F-8
</TABLE>


<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
 
To the Board of Directors and Stockholders of
Alexion Pharmaceuticals, Inc.:
 
    We have audited the accompanying consolidated balance sheets of Alexion
Pharmaceuticals, Inc. (a Delaware corporation) and subsidiary as of July 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended July 31, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
 
    We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
 
    In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Alexion Pharmaceuticals, Inc. and subsidiary as of July 31, 2000 and 1999, and
the consolidated results of their operations and their cash flows for each of
the three years in the period ended July 31, 2000, in conformity with accounting
principles generally accepted in the United States.
 
/s/ ARTHUR ANDERSEN LLP
 
Hartford, Connecticut
September 5, 2000 (except with respect

to the matter discussed in Note 15 as to
which the date is September 22, 2000)
 
                                      F-2

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
                          CONSOLIDATED BALANCE SHEETS
 
                             (AMOUNTS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                                   JULY 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents.................................  $ 91,858   $24,238
  Marketable securities.....................................    82,671     4,090
  Reimbursable contract costs:
    Billed..................................................     3,660     4,577
    Unbilled................................................     1,435     2,285
    Prepaid expenses........................................       456       472
                                                              --------   -------
      Total current assets..................................   180,080    35,662
PROPERTY, PLANT, AND EQUIPMENT, net.........................     8,213     7,413
DEFERRED FINANCING COSTS, net (Note 6)......................     3,752        --
OTHER ASSETS................................................       657     1,299
                                                              --------   -------
      Total assets..........................................  $192,702   $44,374
                                                              ========   =======
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
CURRENT LIABILITIES:
  Current portion of notes payable..........................  $    369   $   368
  Accounts payable..........................................     2,100     3,544
  Accrued expenses..........................................     1,229     2,255
  Accrued interest..........................................     2,730        73
  Deferred revenue..........................................       750       450
                                                              --------   -------
      Total current liabilities.............................     7,178     6,690
                                                              --------   -------
NOTES PAYABLE, less current portion included above..........     3,920     4,383

                                                              --------   -------
CONVERTIBLE SUBORDINATED NOTES (Note 6).....................   120,000        --
                                                              --------   -------
 
COMMITMENTS AND CONTINGENCIES (NOTES 7, 9, 12 AND 15)
 
STOCKHOLDERS' EQUITY:
  Common stock $.0001 par value; 25,000 shares authorized;
    15,146 and 11,304 shares issued at July 31, 2000 and
    1999, respectively......................................         2         1
  Additional paid-in capital................................   128,836    80,291
  Accumulated deficit.......................................   (67,214)  (46,987)
  Other comprehensive loss..................................       (20)       (4)
  Treasury stock, at cost, 12 shares........................        --        --
                                                              --------   -------
      Total stockholders' equity............................    61,604    33,301
                                                              --------   -------
      Total liabilities and stockholders' equity............  $192,702   $44,374
                                                              ========   =======
</TABLE>

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-3

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
                     CONSOLIDATED STATEMENTS OF OPERATIONS
                (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED JULY 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CONTRACT RESEARCH REVENUES..................................  $ 21,441   $18,754    $ 5,037
                                                              --------   -------    -------
 
OPERATING EXPENSES:
  Research and development..................................    40,187    23,710     12,323
  General and administrative................................     4,175     2,953      2,666
                                                              --------   -------    -------
    Total operating expenses................................    44,362    26,663     14,989
                                                              --------   -------    -------
 
OPERATING LOSS..............................................   (22,921)   (7,909)    (9,952)
 
OTHER INCOME AND EXPENSE:
  Interest income...........................................     5,833     1,702      2,129
  Interest expense..........................................    (3,139)     (188)       (42)
                                                              --------   -------    -------
    Net loss................................................   (20,227)   (6,395)    (7,865)
 
PREFERRED STOCK DIVIDENDS...................................        --        --       (900)
                                                              --------   -------    -------
NET LOSS APPLICABLE TO COMMON
  SHAREHOLDERS..............................................  $(20,227)  $(6,395)   $(8,765)
                                                              ========   =======    =======
BASIC AND DILUTED NET LOSS PER
  COMMON SHARE (NOTE 2).....................................  $  (1.45)  $ (0.57)   $ (0.87)
                                                              ========   =======    =======
SHARES USED IN COMPUTING BASIC AND DILUTED
  NET LOSS PER COMMON SHARE.................................    13,914    11,265     10,056
                                                              ========   =======    =======
</TABLE>

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-4

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                             (AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
                                          CONVERTIBLE
                                        PREFERRED STOCK        COMMON STOCK       ADDITIONAL                     OTHER
                                      -------------------   -------------------    PAID-IN     ACCUMULATED   COMPREHENSIVE
                                       SHARES     AMOUNT     SHARES     AMOUNT     CAPITAL       DEFICIT      GAIN (LOSS)
                                      --------   --------   --------   --------   ----------   -----------   -------------
<S>                                   <C>        <C>        <C>        <C>        <C>          <C>           <C>
BALANCE, July 31, 1997..............      --       $ --       8,858      $ 1       $ 53,665      $(31,827)        $  7
Issuance of Series B convertible
  preferred stock, net of issuance
  costs of $493.....................     400         --          --       --          9,507            --           --
Issuance of common stock in payment
  of preferred stock dividend.......      --         --          71       --            900          (900)          --
Conversion of Series B convertible
  preferred stock into common
  stock.............................    (400)        --         936       --             --            --           --
Issuance of common stock, net of
  issuance costs of $49.............      --         --         837       --         11,779            --           --
Issuance of common stock from
  exercise of warrants..............      --         --         513       --          3,858            --           --
Issuance of common stock from
  exercise of stock options.........      --         --          22       --             67            --           --
Net change in unrealized losses on
  marketable securities.............      --         --          --       --             --            --           (2)
Net loss............................      --         --          --       --             --        (7,865)          --
Comprehensive loss..................
                                        ----       ----      ------      ---       --------      --------         ----
BALANCE, July 31, 1998..............      --         --      11,237        1         79,776       (40,592)           5
Issuance of common stock from
  exercise of stock options.........      --         --          67       --            383            --           --
Compensation expense related to
  grant of stock options............      --         --          --       --            132            --           --
Net change in unrealized losses on
  marketable securities.............      --         --          --       --             --            --           (9)
Net loss............................      --         --          --       --             --        (6,395)          --
Comprehensive loss..................
                                        ----       ----      ------      ---       --------      --------         ----
BALANCE, July 31, 1999..............      --       $ --      11,304      $ 1       $ 80,291      $(46,987)        $ (4)
                                        ====       ====      ======      ===       ========      ========         ====
 
                 The accompanying notes are an integral part of these consolidated financial statements.
 
<CAPTION>
                                        TREASURY STOCK,
                                            AT COST             TOTAL           TOTAL
                                      -------------------   STOCKHOLDERS'   COMPREHENSIVE
                                       SHARES     AMOUNT       EQUITY           LOSS
                                      --------   --------   -------------   -------------
<S>                                   <C>        <C>        <C>             <C>
BALANCE, July 31, 1997..............      12       $ --        $21,846
Issuance of Series B convertible
  preferred stock, net of issuance
  costs of $493.....................      --         --          9,507
Issuance of common stock in payment
  of preferred stock dividend.......      --         --             --
Conversion of Series B convertible
  preferred stock into common
  stock.............................      --         --             --
Issuance of common stock, net of
  issuance costs of $49.............      --         --         11,779
Issuance of common stock from
  exercise of warrants..............      --         --          3,858
Issuance of common stock from
  exercise of stock options.........      --         --             67
Net change in unrealized losses on
  marketable securities.............      --         --             (2)        $     (2)
Net loss............................      --         --         (7,865)          (7,865)
                                                                               --------
Comprehensive loss..................                                           $ (7,867)
                                        ----       ----        -------         ========
BALANCE, July 31, 1998..............      12         --         39,190
Issuance of common stock from
  exercise of stock options.........      --         --            383
Compensation expense related to
  grant of stock options............      --         --            132
Net change in unrealized losses on
  marketable securities.............      --         --             (9)        $     (9)
Net loss............................      --         --         (6,395)          (6,395)
                                                                               --------
Comprehensive loss..................                                           $ (6,404)
                                        ----       ----        -------         ========
BALANCE, July 31, 1999..............      12       $ --        $33,301
                                        ====       ====        =======
                                         The accompanying notes are an
                                             integral part of these
                                             consolidated financial
                 The accompanying no               statements.
</TABLE>

 
                                      F-5

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                       (AMOUNTS IN THOUSANDS) (CONTINUED)

<TABLE>
<CAPTION>
                                          CONVERTIBLE
                                        PREFERRED STOCK        COMMON STOCK       ADDITIONAL                     OTHER
                                      -------------------   -------------------    PAID-IN     ACCUMULATED   COMPREHENSIVE
                                       SHARES     AMOUNT     SHARES     AMOUNT     CAPITAL       DEFICIT      GAIN (LOSS)
                                      --------   --------   --------   --------   ----------   -----------   -------------
<S>                                   <C>        <C>        <C>        <C>        <C>          <C>           <C>
BALANCE, July 31, 1999..............      --       $ --      11,304      $ 1       $ 80,291      $(46,987)        $ (4)
Issuance of common stock from
  exercise of options...............      --         --         225       --          1,697            --           --
Noncash compensation expense related
  to grant of stock options to
  employees and consultants.........      --         --          --       --            430            --           --
Issuance of common stock from
  exercise of warrants..............      --         --         202       --          1,998            --           --
Issuance of common stock, net of
  issuance costs of $3,391..........      --         --       3,415        1         44,420            --           --
Net change in unrealized losses on
  marketable securities.............      --         --          --       --             --            --          (16)
Net loss............................      --         --          --       --             --       (20,227)          --
Comprehensive loss..................
                                        ----       ----      ------      ---       --------      --------         ----
BALANCE, July 31, 2000..............      --       $ --      15,146      $ 2       $128,836      $(67,214)        $(20)
                                        ====       ====      ======      ===       ========      ========         ====
 
                 The accompanying notes are an integral part of these consolidated financial statements.
 
<CAPTION>
                                        TREASURY STOCK,
                                            AT COST             TOTAL           TOTAL
                                      -------------------   STOCKHOLDERS'   COMPREHENSIVE
                                       SHARES     AMOUNT       EQUITY           LOSS
                                      --------   --------   -------------   -------------
<S>                                   <C>        <C>        <C>             <C>
BALANCE, July 31, 1999..............      12       $ --        $33,301
Issuance of common stock from
  exercise of options...............      --         --          1,697
Noncash compensation expense related
  to grant of stock options to
  employees and consultants.........      --         --            430
Issuance of common stock from
  exercise of warrants..............      --         --          1,998
Issuance of common stock, net of
  issuance costs of $3,391..........      --         --         44,421
Net change in unrealized losses on
  marketable securities.............      --         --            (16)             (16)
Net loss............................      --         --        (20,227)         (20,227)
Comprehensive loss..................                                           $(20,243)
                                        ----       ----        -------         --------
BALANCE, July 31, 2000..............      12       $ --        $61,604
                                        ====       ====        =======         ========
                                         The accompanying notes are an
                                             integral part of these
                                             consolidated financial
                 The accompanying no               statements.
</TABLE>

 
                                      F-6

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (AMOUNTS IN THOUSANDS)
 

<TABLE>
<CAPTION>
                                                               FOR THE YEARS ENDED JULY 31,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $(20,227)  $ (6,395)  $ (7,865)
  Adjustments to reconcile net loss to net cash used in
    operating activities:
    Depreciation and amortization...........................     1,769        889        598
    Compensation expense related to grant of stock
      options...............................................       430        132         --
    Change in assets and liabilities--
      Reimbursable contract costs...........................     1,767     (6,725)      (137)
      Prepaid expenses......................................        16       (263)        23
      Accounts payable......................................    (1,444)     2,734         82
      Accrued expenses......................................    (1,026)     1,459       (406)
      Accrued interest......................................     2,657         51         22
      Deferred revenue......................................       300        383       (279)
                                                              --------   --------   --------
        Net cash used in operating activities...............   (15,758)    (7,735)    (7,962)
                                                              --------   --------   --------
CASH FLOWS FROM INVESTING ACTIVITIES:
  (Purchases of) proceeds from marketable securities, net...   (78,597)     1,895         20
  Purchases of property, plant, and equipment...............    (2,229)    (1,912)    (2,057)
  Investment in licensed technology.........................       (40)        --         --
                                                              --------   --------   --------
        Net cash used in investing activities...............   (80,866)       (17)    (2,037)
                                                              --------   --------   --------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Net proceeds from issuance of preferred and common
    stock...................................................    48,116        383     25,211
  Repayments of capital lease obligations...................        --         --         (8)
  Borrowings under notes payable............................        --         --      1,200
  Repayments of notes payable...............................      (462)      (369)      (130)
  Issuance of convertible subordinated notes, net of
    deferred financing costs of $3,937......................   116,063         --         --
  Other.....................................................       527        467     (1,508)
                                                              --------   --------   --------
        Net cash provided by financing activities...........   164,244        481     24,765
                                                              --------   --------   --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS........    67,620     (7,271)    14,766
CASH AND CASH EQUIVALENTS, beginning of period..............    24,238     31,509     16,743
                                                              --------   --------   --------
CASH AND CASH EQUIVALENTS, end of period....................  $ 91,858   $ 24,238   $ 31,509
                                                              ========   ========   ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest expense............................  $    296   $    188   $     42
                                                              ========   ========   ========
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
  Fixed assets acquired pursuant to seller financing........  $     --   $  3,920   $     --
                                                              ========   ========   ========
  Preferred stock dividends paid in common stock............  $     --   $     --   $    900
                                                              ========   ========   ========
</TABLE>

 
  The accompanying notes are an integral part of these consolidated financial
                                  statements.
 
                                      F-7

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
(1) ORGANIZATION AND OPERATIONS
 
    Alexion Pharmaceuticals, Inc. ("Alexion" or the "Company") was organized in
1992 and is engaged in the development of proprietary products for the treatment
of cardiovascular, autoimmune and neurologic disorders. The Company is currently
conducting Phase II clinical trials for its two lead C5 Inhibitor product
candidates, 5G1.1-SC and 5G1.1. The Company is also developing Apogen
immunotherapeutic products to target T-cells and related disorders and is
developing therapies employing the transplantation of cells from other species
into humans known as xenotransplantation.
 
    The Company has incurred consolidated losses since inception and has made no
product sales to date.
 
    The Company may need additional financing to obtain regulatory approvals for
its product candidates, fund operating losses, and, if deemed appropriate,
establish manufacturing, sales, marketing and distribution capabilities.
 
    The Company expects to incur substantial expenditures in the foreseeable
future for the research and development and commercialization of its products.
The Company will seek to raise necessary funds through public or private equity
or debt financing, bank loans, collaborative or other arrangements with
corporate sources, or through other sources of financing.
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
    PRINCIPLES OF CONSOLIDATION
 
    The accompanying consolidated financial statements include Alexion
Pharmaceuticals, Inc. and its wholly-owned subsidiary Columbus Farming
Corporation ("Columbus"). Columbus was formed on February 9, 1999 to acquire
certain manufacturing assets from United States Surgical Corporation ("US
Surgical"), a subsidiary of Tyco International (see Notes 3 and 5). All
significant inter-company balances and transactions have been eliminated in
consolidation.
 
    CASH AND CASH EQUIVALENTS
 
    Cash and cash equivalents are stated at cost, which approximates market, and
includes short-term highly liquid investments with original maturities of less
than three months.
 
    MARKETABLE SECURITIES
 
    The Company invests in marketable debt securities of highly rated financial
institutions and investment-grade debt instruments and limits the amount of
credit exposure with any one entity.
 
    The Company has classified its marketable securities as "available for sale"
and, accordingly, carries such securities at aggregate fair value. Unrealized
gains or losses are included in other comprehensive income (loss) as a component
of stockholders' equity. At July 31, 2000, the Company's marketable securities
had a maximum maturity of less than two years with an average of approximately
twelve months. The weighted average interest rate associated with these
marketable debt securities is 6.9% and 5.7% as of July 31, 2000 and 1999,
respectively.
 
                                      F-8

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    The following is a summary of marketable securities at July 31, 2000 and
1999 (dollars in thousands):
 

<TABLE>
<CAPTION>
                                              AMORTIZED     UNREALIZED       FAIR
                                                COST      GAINS (LOSSES)    VALUE
                                              ---------   --------------   --------
<S>                                           <C>         <C>              <C>
Federal agency obligations..................   $43,435         $(14)       $43,421
Corporate bonds.............................    39,256           (6)        39,250
                                               -------         ----        -------
  Total marketable securities at July 31,
    2000....................................   $82,691         $(20)       $82,671
                                               =======         ====        =======
Federal agency obligations..................   $ 2,088         $ (9)       $ 2,079
Corporate bonds.............................     2,006            5          2,011
                                               -------         ----        -------
  Total marketable securities at July 31,
    1999....................................   $ 4,094         $ (4)       $ 4,090
                                               =======         ====        =======
</TABLE>

 
    PROPERTY, PLANT, AND EQUIPMENT
 
    Property, plant, and equipment is recorded at cost and is depreciated over
the estimated useful lives of the assets involved. Depreciation commences at the
time the assets are placed in service and is computed using the straight-line
method over the estimated useful lives of the assets (see Note 3). Maintenance
and repairs are charged to expense when incurred.
 

<TABLE>
<CAPTION>
ASSET                                                       ESTIMATED USEFUL LIFE
-----                                                       ---------------------
<S>                                                         <C>
Building and building improvements........................  15 years
Laboratory equipment......................................  5 years
Office equipment..........................................  3 years
Furniture.................................................  3 years
</TABLE>

 
    LONG-LIVED ASSETS
 
    The Company accounts for its investments in long-lived assets in accordance
with Statement of Financial Accounting Standard No. 121, "Accounting for the
Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of"
(SFAS 121). SFAS 121 requires a company to review long-lived assets for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The Company has reviewed its
long-lived assets and determined that no impairments exist.
 
    REVENUE RECOGNITION
 
    Contract research revenues recorded by the Company consist of research and
development support payments, license fees, and milestone payments under
collaborations with third parties and amounts received under various government
grants.
 
    Research and development support revenues are recognized as the related work
is performed and expenses are incurred under the terms of the contracts for
development activities. Revenues derived from the achievement of milestones are
recognized when the milestone is achieved. Non-refundable license fees received
in exchange for specific rights to the Company's technologies, research,
potential
 
                                      F-9

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
products and markets are recognized as revenues as earned in accordance with the
terms of the contracts (see below for recently issued accounting standard).
 
    Unbilled reimbursable contract costs as shown on the accompanying
consolidated balance sheets represent reimbursable costs incurred in connection
with research contracts which have not yet been billed. The Company bills these
costs and recognizes the costs and related revenues in accordance with the terms
of the contracts.
 
    Deferred revenue results from cash received or amounts receivable in advance
of revenue recognition under research and development contracts (see Note 8).
 
    RESEARCH AND DEVELOPMENT EXPENSES
 
    Research and development costs are expensed in the period incurred.
 
    USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
 
    The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
 
    COMPREHENSIVE INCOME (LOSS)
 
    The Company reports and presents comprehensive income (loss) in accordance
with SFAS No. 130 "Reporting Comprehensive Income," which establishes standards
for reporting and display of comprehensive income (loss) and its components in a
full set of general purpose financial statements. The objective of the statement
is to report a measure of all changes in equity of an enterprise that result
from transactions and other economic events of the period other than
transactions with owners (comprehensive income (loss)). The Company's other
comprehensive income (loss) arises from net unrealized gains (losses) on
marketable securities. The Company has elected to display comprehensive income
(loss) as a component of the statements of stockholders' equity.
 
    NET LOSS PER COMMON SHARE
 
    The Company computes and presents net loss per common share in accordance
with SFAS No. 128, "Earnings Per Share." The Company computes basic net loss per
share by dividing net loss by the weighted average shares of common stock
outstanding during the year. There is no difference in basic and diluted net
loss per common share as the effect of stock options, warrants and convertible
subordinated debt which would be included in the computation of diluted net loss
per share is anti-dilutive for all periods presented. These outstanding stock
options, warrants, and convertible subordinated debt entitled holders to acquire
3,829,887, 2,568,587, and 1,947,986 shares of common stock at July 31, 2000,
1999, and 1998, respectively.
 
                                      F-10

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
    RECENTLY ISSUED ACCOUNTING STANDARDS
 
    Staff Accounting Bulletin No. 101 (SAB 101), Revenue Recognition, was issued
in December 1999. SAB 101 will require companies to recognize certain up-front
non-refundable fees over the life of the related collaboration agreement when
such fees are received in conjunction with collaboration agreements which have
multiple elements. The Company is required to adopt this new accounting
principle through a cummulative charge to retained earnings through the
statements of operations, in accordance with the provisions of APB Opinion
No. 20, in fiscal 2001. The Company believes that the adoption of SAB 101 will
have a material impact on its future operating results as it applies to the
$10.0 million up-front non-refundable payment received by it in connection with
its collaboration with Procter & Gamble (see Note 8). The Company's historical
financial statements reflect this payment as revenue in the year ended July 31,
1999. Based on guidance currently available, the Company will be required to
record the $10.0 million fee as revenue over the future life, as defined, of the
collaboration agreement. As of July 31, 2000, the Company had not yet adopted
this new accounting principle.
 
    In June 1998, the Financial Accounting Standards Board (FASB) issued SFAS
No. 133, ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS AND FOR HEDGING
ACTIVITIES (SFAS No. 133) which provides a comprehensive and consistent standard
for the recognition and measurement of derivatives and hedging activities. SFAS
No. 133 is effective for fiscal years beginning after June 15, 2000. In
June 1999, the FASB issued SFAS No. 137, "Accounting for Derivative Financial
Instruments and Hedging Activities--Deferral of the Effective Date of SFAS
No. 133--an Amendment of SFAS No. 133" for the sole purpose of updating the
effective date of adoption of SFAS No. 133 to January 1, 2001. The Company does
not believe that the adoption of SFAS No. 133 will have an impact on its results
of operations or financial condition as the Company holds no derivative
financial instruments and does not engage in hedging activities.
 
(3) PROPERTY, PLANT, AND EQUIPMENT
 
    A summary of equipment is as follows (dollars in thousand):
 

<TABLE>
<CAPTION>
                                                                 JULY 31,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Land......................................................  $   364    $   364
Building and building improvements........................    4,070      3,080
Laboratory and support equipment..........................    7,378      6,541
Furniture and office equipment............................    1,217        815
                                                            -------    -------
                                                             13,029     10,800
Less--Accumulated depreciation and amortization...........   (4,816)    (3,387)
                                                            -------    -------
                                                            $ 8,213    $ 7,413
                                                            =======    =======
</TABLE>

 
    During 1999, the Company acquired land, building, and additional laboratory
equipment at a total cost of approximately $3.9 million financed with a note
payable to US Surgical (see Note 5).
 
                                      F-11

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(4) ACCRUED EXPENSES
 
    A summary of accrued expenses is as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                   JULY 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Research and development expenses...........................   $  176     $1,333
Payroll and employee benefits...............................      809        617
Other.......................................................      244        305
                                                               ------     ------
                                                               $1,229     $2,255
                                                               ======     ======
</TABLE>

 
(5) NOTES PAYABLE
 
    A summary of notes payable is as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                   JULY 31,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
Term loan payable to a bank requiring quarterly principal
  payments of $92 payable through August 2001 bearing
  interest at a variable rate which is repriced quarterly.
  The rate as of July 31, 2000 was 8.46%. The term loan
  agreement requires the Company to maintain a restricted
  cash balance equal to the outstanding loan balance divided
  by 85% plus accrued interest in an interest bearing
  account as collateral for the note........................   $  369     $  831
Term note payable to US Surgical bearing interest at 6% per
  annum, payable quarterly. The principal balance under the
  note matures in May 2005. The note payable is secured by
  certain manufacturing assets of Columbus..................    3,920      3,920
                                                               ------     ------
                                                                4,289      4,751
Less--Current portion.......................................      369        368
                                                               ------     ------
    Total long-term.........................................   $3,920     $4,383
                                                               ======     ======
</TABLE>

 
    Future repayments of the notes payable are scheduled as follows (dollars in
thousands):
 

<TABLE>
<CAPTION>
YEAR ENDING JULY 31,
--------------------
<S>                                                           <C>
2001........................................................   $  369
2005........................................................    3,920
                                                               ------
                                                               $4,289
                                                               ======
</TABLE>

 
(6) CONVERTIBLE SUBORDINATED NOTES
 
    In March 2000, the Company completed a $120 million private placement of
5.75% Convertible Subordinated Notes due March 15, 2007. The notes bear interest
payable semi-annually on September 15 and March 15 of each year, beginning
September 15, 2000. The holders may convert all
 
                                      F-12

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(6) CONVERTIBLE SUBORDINATED NOTES (CONTINUED)
or a portion of the notes into common stock at any time on or before March 15,
2007 at a conversion price of $106.425 per share.
 
    The notes are subordinated to all the Company's existing and future senior
indebtedness and are effectively subordinated to all of the indebtedness and
other liabilities (including trade and other payables) of the Company and its
subsidiary. The indenture governing the notes does not limit the amount of
indebtedness, including senior indebtedness, which the Company and its
subsidiary may incur.
 
    Noteholders may require the Company to repurchase their notes upon a
repurchase event as defined by the loan agreement in cash, or, at the option of
the Company, in common stock, at 105% of the principal amount of the notes, plus
accrued and unpaid interest.
 
    The notes are not entitled to any sinking fund. At any time or from time to
time on or after March 20, 2003 and ending on March 14, 2007, the Company may
redeem some or all the notes on at least 30 days notice as a whole or, from time
to time, in part at certain premiums over the principal amount plus accrued
interest.
 
    The Company incurred deferred financing costs related to this offering of
approximately $4.0 million which are recorded in the consolidated balance sheet
and are being amortized as a component of interest expense over the seven-year
term of the notes. Amortization expense associated with the financing costs was
$185,000 for the year ended July 31, 2000.
 
(7) LICENSE AND RESEARCH & DEVELOPMENT AGREEMENTS
 
    The Company has entered into a number of license and research and
development agreements since its inception. These agreements have been made with
various research institutions, universities, and government agencies in order to
advance and obtain technologies management believes important to the Company's
overall business strategy.
 
    License agreements generally provide for an initial fee followed by annual
minimum royalty payments. Additionally, certain agreements call for future
payments upon the attainment of agreed to milestones, such as, but not limited
to, Investigational New Drug (IND) application or Product License Approval
(PLA). These agreements require minimum royalty payments based upon sales
developed from the applicable technologies, if any.
 
    Research and development agreements generally provide for the Company to
fund future project research from one to ten years. Based upon these agreements,
the Company may obtain exclusive and non-exclusive rights and options to the
applicable technologies developed as a result of the applicable research. The
Company's policy is to expense research and development payments as incurred.
 
                                      F-13

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(7) LICENSE AND RESEARCH & DEVELOPMENT AGREEMENTS (CONTINUED)
    The minimum payments (assuming non-termination of the above agreements) as
of July 31, 2000, for each of the next five years are as follows (dollars in
thousands):
 

<TABLE>
<CAPTION>
        YEAR                         RESEARCH AND
       ENDING            LICENSE     DEVELOPMENT
      JULY 31,          AGREEMENTS    AGREEMENTS
---------------------   ----------   ------------
<S>                     <C>          <C>
 2001.......               $394         $8,869
 2002.......                487          1,602
 2003.......                367             --
 2004.......                347             --
 2005.......                402             --
</TABLE>

 
    Should the Company achieve certain milestones related to product development
and product license applications and approvals, additional payments would be
required. The agreements also require the Company to fund certain costs
associated with the filing of patent applications.
 
(8) CONTRACT RESEARCH REVENUES
 
    During the three years ended July 31, 2000 the Company recorded contract
research revenues from research and development support payments, license fees
and milestone payments under collaboration with third parties and amounts
received from various government grants.
 
    In February 1999, as part of the termination of the U.S. Surgical
Collaborative research and development agreement, the Company purchased certain
manufacturing assets and effected the return of all technology rights of its
xenotransplantation program from US Surgical. The Company financed the asset
purchase with a $3.9 million note payable to U.S. Surgical (see Note 5). In
November 1997, the Company and US Surgical were awarded a three-year,
$2 million cooperative agreement from the Commerce Department's National
Institute of Standards and Technology (NIST) to fund a joint xenotransplantation
project. This agreement was modified into a single entity agreement in
February 1999. In October 1998, the Company was awarded another three-year
$2 million agreement from NIST to fund a xenotransplantation project. In
November 1999, the Company was awarded a three-year $2 million agreement from
NIST to fund another xenotransplantation project.
 
    In January 1999, the Company and Procter & Gamble Pharmaceuticals Inc.
("P&G") entered into an exclusive collaboration to develop and commercialize
5G1.1-SC, one of the Company's lead product candidates. Under this
collaboration, the Company will initially pursue the development of 5G1.1-SC for
the treatment of inflammation caused by cardiopulmonary bypass surgery, heart
attack, and angioplasty. P&G has agreed to fund all clinical development and
manufacturing costs relating to 5G1.1-SC for these indications. Additionally,
P&G has agreed to pay the Company up to $95 million in payments, which include a
non-refundable upfront license fee, milestone payments, and research and
development support payments. The Company will also receive royalties on
worldwide sales of 5G1.1-SC, if any, for all indications. The Company also has a
preferred position relative to third-party manufacturers to manufacture 5G1.1-SC
worldwide. The Company shares co-promotion rights with P&G to sell, market and
distribute 5G1.1-SC in the United States, and has granted P&G the exclusive
rights to sell, market and distribute 5G1.1-SC outside of the United States.
Through July 31, 2000, the Company recorded revenues of $37.5 million from P&G,
including receiving a non-refundable upfront
 
                                      F-14

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(8) CONTRACT RESEARCH REVENUES (CONTINUED)
license fee of $10 million in fiscal 1999 and $27.5 million for research and
development support expenses (see Note 2 for recently issued accounting
standards related to revenue recognition).
 
    A summary of revenues generated from contract research collaboration and
grant awards is as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                         YEAR ENDED JULY 31,
                                                    ------------------------------
COLLABORATION/GRANT AWARDS                            2000       1999       1998
--------------------------                          --------   --------   --------
<S>                                                 <C>        <C>        <C>
P&G...............................................  $19,708    $17,753     $   --
NIST..............................................    1,733        834        857
US Surgical.......................................       --         --      3,780
GTI/Novartis......................................       --        167        400
                                                    -------    -------     ------
                                                    $21,441    $18,754     $5,037
                                                    =======    =======     ======
</TABLE>

 
(9) COMMITMENTS
 
    The Company has entered into three-year and five-year employment agreements
with its executives. These agreements provide that these individuals will
receive aggregate annual base salaries of approximately $914,000 as of July 31,
2000. These individuals may also receive discretionary bonus awards, as
determined by the Board of Directors.
 
    As of July 31, 2000, the Company leases its administrative offices and a
portion of its research & development facilities under an operating lease at 25
Science Park, New Haven, Connecticut (Science Park).
 
    In May 2000, the Company entered into a new lease for its headquarters and
research & development facilities in Cheshire, Connecticut. The lease commenced
in August 2000 and has a term of ten years and six months. Occupancy of the
leased facility is contingent upon the timely departure of the current tenant
and subsequent additional work to be completed by the landlord. At this site the
Company will lease and occupy a total of 82,000 square feet of space. The
Company expects to incur initial leasehold improvements and relocation costs
aggregating approximately $2.5 million, of which $16,000 were incurred as of
July 31, 2000. At the Company's option, the landlord is required to fund up to
$2.5 million of these improvements under a financing arrangement payable over
the term of the lease at 11% per annum. In addition, the Company will be
required to pay a pro rata percentage of real estate taxes and operating
expenses. Monthly fixed rent starts at approximately $80,000, increasing to
approximately $95,500 over the term of the lease. The Company has issued a
$200,000 open letter of credit to secure the lease.
 
    The pilot manufacturing plant, which is used for producing compounds for
clinical trials, will remain in the current facility encompassing approximately
21,000 square feet of labs and offices at Science Park. Monthly fixed rent for
the plant starts at approximately $16,500 increasing to $18,300 through
December 2002.
 
    Lease expense for the Company's facilities was $694,000, $420,000, and
$415,000 for the years ended July 31, 2000, 1999 and 1998, respectively.
 
                                      F-15

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(9) COMMITMENTS (CONTINUED)
    Future minimum annual rental payments as of July 31, 2000, under other
noncancellable operating leases (primarily for equipment) are approximately
$56,000, $56,000, $56,000, $56,000, and $32,000 for the five years ended
July 31, 2004, respectively.
 
(10) COMMON STOCK AND PREFERRED STOCK
 
    FISCAL 2000 SECONDARY PUBLIC OFFERING
 
    In November 1999, the Company sold 3.415 million shares of common stock at a
price of $14 per share in a follow-on public offering resulting in net proceeds
of approximately $44.4 million to the Company.
 
    FISCAL 1998 PRIVATE PLACEMENTS
 
    In September 1997, the Company completed the private placement of 400,000
shares of Series B convertible preferred stock for aggregate consideration of
$10 million to a single institutional investor, Biotech Target S.A., a
wholly-owned subsidiary of BB Biotech AG. The net proceeds to the Company were
approximately $9.5 million. The investor was entitled to a dividend of $2.25 per
share of Series B convertible preferred stock if this stock was held through
March 4, 1998. In March 1998 the investor converted the preferred stock into
935,782 shares of common stock and dividends of $900,000 were paid by the
delivery of an additional 70,831 shares of the Company's common stock. Also, in
March 1998, Biotech Target S.A. purchased an additional 670,000 shares of common
stock for aggregate consideration of approximately $8.8 million.
 
    In September 1997, the Company sold 166,945 shares of its common stock to
U.S. Surgical for aggregate consideration of $3.0 million. The sale of common
stock was made in connection with the modification of the joint development
agreement between the Company and U.S. Surgical.
 
(11) STOCK OPTIONS AND WARRANTS
 
    STOCK OPTIONS
 
    Under the Company's 1992 Stock Option Plan, as amended, incentive and
nonqualified stock options may be granted for up to a maximum of 3.1 million
shares of common stock to directors, officers, key employees and consultants of
the Company. Under the Company's 1992 Stock Option Plan for Outside Directors,
as amended, the Company has registered an additional 200,000 shares of common
stock for issuance upon exercise of options granted under the plan. Options
generally become exercisable in equal proportions over three to four years and
remain exercisable for up to ten years after the grant date, subject to certain
conditions.
 
    Statement of Financial Accounting Standard No. 123, Accounting for
Stock-Based Compensation (SFAS 123) requires the measurement of the fair value
of stock options or warrants to be included in the statement of income or
disclosed in the notes to financial statements. The Company has determined that
it will continue to account for stock-based compensation for employees under
Accounting Principles Board Opinion No. 25 and elect the disclosure-only
alternative under SFAS 123. The Company has computed the pro forma disclosure
required under SFAS 123 for options granted
 
                                      F-16

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(11) STOCK OPTIONS AND WARRANTS (CONTINUED)
using the Black-Scholes option pricing model prescribed by SFAS 123. The
weighted average assumptions used are as follows:
 

<TABLE>
<CAPTION>
                                                      2000       1999       1998
                                                    --------   --------   --------
<S>                                                 <C>        <C>        <C>
Risk free interest rate...........................    6.00%      5.00%      5.25%
Expected dividend yield...........................       0%         0%         0%
Expected lives....................................  5 years    5 years    5 years
Expected volatility...............................      85%        65%        61%
</TABLE>

 
    Had compensation cost for the Company's stock option plans been determined
based on the fair value at the grant dates of awards under these plans
consistent with the method of SFAS 123, the Company's net loss and pro forma net
loss per common share would have been increased to the pro forma amounts
indicated below (dollars in thousands, except per share amounts):
 

<TABLE>
<CAPTION>
                                                     2000       1999       1998
                                                   --------   --------   --------
<S>                                                <C>        <C>        <C>
Net loss:
  As reported....................................  $(20,227)  $(6,395)   $(8,765)
  Pro forma......................................   (22,887)   (8,419)    (9,958)
Net loss per common share:
  As reported....................................  $  (1.45)  $ (0.57)   $ (0.87)
  Pro forma......................................     (1.64)    (0.74)     (0.99)
</TABLE>

 
    A summary of the status of the Company's stock option plans at July 31,
2000, 1999 and 1998 and changes during the years then ended is presented in the
table and narrative below:
 

<TABLE>
<CAPTION>
                                2000                    1999                    1998
                        ---------------------   ---------------------   ---------------------
                                     WEIGHTED                WEIGHTED                WEIGHTED
                                     AVERAGE                 AVERAGE                 AVERAGE
                                     EXERCISE                EXERCISE                EXERCISE
                         OPTIONS      PRICE      OPTIONS      PRICE      OPTIONS      PRICE
                        ----------   --------   ----------   --------   ----------   --------
<S>                     <C>          <C>        <C>          <C>        <C>          <C>
Outstanding at August
  1...................   2,348,587    $ 8.10     1,727,986    $7.40      1,484,284    $ 6.63
  Granted.............     644,800     63.18       780,750     9.64        279,750     11.31
  Exercised...........    (225,083)     7.56       (66,587)    5.75        (21,864)     3.16
  Cancelled...........     (84,089)    17.34       (93,562)    9.73        (14,184)    11.29
                        ----------    ------    ----------    -----     ----------    ------
Outstanding at July
  31..................   2,684,215    $21.09     2,348,587    $8.10      1,727,986    $ 7.40
                        ==========    ======    ==========    =====     ==========    ======
Options exercisable at
  July 31.............   1,443,554    $ 7.26     1,238,398    $6.46        883,063    $ 5.73
Weighted-average fair
  value of options
  granted during the
  year................                $45.02                  $6.52                   $ 6.42
</TABLE>

 
    During fiscal 1998, options to purchase 279,750 shares of common stock were
granted to employees at exercise prices equal to the fair value of the stock at
the date of grant.
 
    During fiscal 1999, options to purchase 513,500 shares of common stock were
granted to employees at an exercise prices equal to the fair value of the stock
at the date of grant. The weighted
 
                                      F-17

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(11) STOCK OPTIONS AND WARRANTS (CONTINUED)
average exercise price of these options was $9.98 per share. The weighted
average fair value of these options at the date of grant was $5.89 per option.
In addition, options to purchase 267,250 shares of common stock were granted to
employees subject to shareholders' approving an increase in total shares
available to be granted under the plan. These options were granted at an
exercise price of $9.00 per share which was equal to the fair value of the
common stock at the date of grant. However, the exercise price of these options
was less than the fair value of the stock at the date of shareholder approval.
Accordingly, the Company is recording compensation expense based upon this
difference over the vesting period associated with these options. Compensation
expense associated with these options is $191,000 and $132,000 for the years
ended July 31, 2000 and 1999, respectively. Aggregate compensation expense of
approximately $430,000 associated with these option grants is expected to be
recognized over the next two years. The weighted average fair value of these
options at the date of shareholder approval was $7.73 per option.
 
    During fiscal 2000, options to purchase 644,800 shares of common stock were
granted to employees and consultants of the Company at an exercise price equal
to the fair value of the stock at the date of grant. In accordance with EITF
96-18, "Accounting for Equity Instruments that Are Issued to Other Than
Employees for Acquiring or in Conjunction with Selling, Goods or Services", the
Company is recording compensation expense based upon the fair value of the
options granted to consultants over the vesting term. Compensation expense
related to these options was $239,000 for the year ended July 31, 2000.
 
    The following table presents weighted average price and life information
about significant option groups outstanding at July 31, 2000:
 

<TABLE>
<CAPTION>
                                                          WEIGHTED
                                                           AVERAGE     WEIGHTED                  WEIGHTED
                                                          REMAINING     AVERAGE                  AVERAGE
RANGE OF                                     NUMBER      CONTRACTUAL   EXERCISE      NUMBER      EXERCISE
EXERCISE PRICES                            OUTSTANDING   LIFE (YRS)      PRICE     EXERCISABLE    PRICE
---------------                            -----------   -----------   ---------   -----------   --------
<S>                                        <C>           <C>           <C>         <C>           <C>
$ 2.37-$ 8.24...........................      611,710          4.0     $    3.44      601,960     $ 3.38
$ 8.25-$ 9.50...........................      662,965          8.5          9.25      255,429       9.16
$ 9.51-$10.50...........................      570,082          6.3         10.21      530,039      10.19
$10.51-$17.00...........................      232,458          7.9         12.60       56,126      12.52
$62.00-$85.00...........................      607,000          9.9         65.27           --         --
                                            ---------       ------     ---------    ---------     ------
                                            2,684,215          7.3     $   21.09    1,443,554     $ 7.26
                                            =========       ======     =========    =========     ======
</TABLE>

 
    WARRANTS
 
    In connection with the Company's initial public offering in 1996, the
Company sold to its underwriter, for nominal consideration, warrants to purchase
220,000 shares of common stock. These warrants are exercisable at a price of
$9.90 per share for a period of forty-two (42) months commencing on August 27,
1997. During fiscal 2000, warrants to purchase 201,883 shares were exercised
resulting in proceeds of $2.0 million to the Company.
 
                                      F-18

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(12) RIGHTS TO PURCHASE PREFERRED STOCK
 
    In February 1997, the Board of Directors of the Company declared a dividend
of one preferred stock purchase right for each outstanding share of common stock
(including all future issuances of common stock). Under certain conditions, each
right may be exercised to purchase one one-hundredth of a share of a new series
of preferred stock at an exercise price of $75.00, subject to adjustment. The
rights may be exercised only after a public announcement that a party acquired
20% or more of the Company's common stock or after commencement or public
announcement to make a tender offer for 20% or more of the Company's common
stock. The rights, which do not have voting rights, expire on March 6, 2002, and
may be redeemed by the Company at a price of $.01 per right at any time prior to
their expiration or the acquisition of 20% or more of the Company's stock. The
preferred stock purchasable upon exercise of the rights will have a minimum
preferential dividend of $10.00 per year, but will be entitled to receive, in
the aggregate, a dividend of 100 times the dividend declared on a share of
common stock. In the event of a liquidation, the holders of the shares of
preferred stock will be entitled to receive a minimum liquidation payment of
$100 per share, but will be entitled to receive an aggregate liquidation payment
equal to 100 times the payment to be made per share of common stock.
 
    In the event that the Company is acquired in a merger, other business
combination transaction, or 50% or more of its assets, cashflow, or earning
power are sold, proper provision shall be made so that each holder of a right
shall have the right to receive, upon exercise thereof at the then current
exercise price, that number of shares of common stock of the surviving company
which at the time of such transaction would have a market value of two times the
exercise price of the right.
 
(13) 401(K) PLAN
 
    The Company has a 401(k) plan. Under the plan, employees may contribute up
to 15 percent of their compensation with a maximum of $10,500 per employee in
calendar year 2000. Effective January 1998, Company matching contributions of
$0.50 for each dollar deferred (up to the first 6% of compensation) were
authorized by the Board of Directors. The Company had matching contributions of
approximately $127,000, $85,000, and $48,000 for the years ended July 31, 2000,
1999 and 1998, respectively.
 
(14) INCOME TAXES
 
    At July 31, 2000, the Company has available for federal tax reporting
purposes, net operating loss carryforwards of approximately $64.6 million which
expire through 2020. The Company also has federal and state research and
development credit carryforwards of approximately $5.6 million which begin to
expire commencing in fiscal 2008. The Tax Reform Act of 1986 contains certain
provisions that may limit the Company's ability to utilize net operating loss
and tax credit carryforwards in any given year if certain events occur,
including cumulative changes in ownership interests in excess of 50% over a
three-year period. Accordingly there can be no assurance that the Company's
ability to utilize its existing net operating loss and tax credit carryforwards
in future periods will not be limited as a result of the effect of changes in
ownership in excess of 50% over a three year period.
 
    The Company follows SFAS No. 109, "Accounting for Income Taxes." This
statement requires that deferred income tax assets and liabilities reflect the
impact of "temporary differences" between the amount of assets and liabilities
for financial reporting purposes and such amounts as measured by tax laws and
regulations.
 
                                      F-19

<PAGE>
                         ALEXION PHARMACEUTICALS, INC.
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
(14) INCOME TAXES (CONTINUED)
    The components of deferred income taxes as follows (dollars in thousands):
 

<TABLE>
<CAPTION>
                                                                 JULY 31,
                                                            -------------------
                                                              2000       1999
                                                            --------   --------
<S>                                                         <C>        <C>
Deferred tax assets:
  Net operating loss carryforwards, federal and state.....  $24,250    $16,801
  Tax credit carryforwards................................    5,580      2,218
  Other...................................................      230        144
                                                            -------    -------
Total deferred tax assets.................................   30,060     19,163
Less: Valuation allowance for deferred tax assets.........   30,060     19,163
                                                            -------    -------
Net deferred tax assets...................................  $    --    $    --
                                                            =======    =======
</TABLE>

 
    The Company has not yet achieved profitable operations. Accordingly,
management believes the tax benefits as of July 31, 2000 do not satisfy the
realization criteria set forth in SFAS No. 109 and has recorded a valuation
allowance for the entire deferred tax assets.
 
(15) SUBSEQUENT EVENT
 
    In September 2000, the Company acquired all the outstanding stock and stock
options of Prolifaron, Inc., a formerly privately held company which possesses
combinatorial human antibody library technologies and expertise for
approximately $41 million. The Company will finance the acquisition through the
issuance of up to 400,000 shares of common stock and stock options, in
aggregate. The acquisition will be accounted for under the purchase method of
accounting.
 
                                      F-20





<PAGE>

                                                                  Exhibit 10.2

                              EMPLOYMENT AGREEMENT

                  This EMPLOYMENT AGREEMENT (the "Agreement") dated as of
October 2, 2000, by and between Alexion Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), and David Keiser (the "Executive").


                               W I T N E S S E T H


                  WHEREAS, the Company wishes to employ Executive in an
executive capacity and Executive is desirous of being so employed;

                  NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:

                  1.       EMPLOYMENT, DUTIES AND ACCEPTANCE.

                           (a) The Company hereby employs the Executive for the
Term (as hereinafter defined), to render full-time services to the Company as
Executive Vice-President and Chief Operating Officer ("COO"), and to perform
such duties commensurate with such office as he shall reasonably be directed by
the Board of Directors (the "Board") of the Company to perform, which duties
shall be consistent with the provisions of the By-laws in effect on the date
hereof that relate to the duties of the COO and Executive Vice President. The
Executive will report directly to the President.

                           (b) The Executive hereby accepts such employment and
agrees to render the services described above.

                  2.       TERM OF EMPLOYMENT.

                           The
 term of the Executive's employment under this
Agreement (the "Term") commenced as of July 17, 2000 (the "Effective Date") and
shall end on the second anniversary thereof unless sooner terminated pursuant to
Section 7 or 8 of this Agreement. This Agreement shall not be renewed unless
otherwise mutually agreed by the parties.

                  3.       COMPENSATION.

                           (a) As full compensation for all services to be
rendered pursuant to this Agreement, the Company agrees to pay the Executive,
during the Term, an annual base salary of $234,000 for the first year of the
Term and for each subsequent year of the Term an amount to be determined by the
Company, payable in such installments as is the policy of the Company with
respect to executive employees of the Company (the "Salary").

                           (b) Executive may receive bonuses on such dates, in
such amounts and on such other terms as may be determined by the Board of
Directors in its sole discretion. In the sole discretion of the Board of
Directors, such bonuses, if any, may be paid in the form of grants of stock of
the Company or non-qualified stock options, each granted pursuant to plans
adopted by the Company and approved by the Company's Board of Directors.

<PAGE>

                           (c) The Company shall pay or reimburse the Executive
for all reasonable expenses actually incurred or paid by him during the Term in
the performance of his services under this Agreement, upon presentation of
expense statements or vouchers or such other supporting information as it
reasonably may require.

                           (d) The Executive shall be eligible under any
incentive plan, stock option plan, stock award plan, bonus, participation or
extra compensation plan, relocation plan, pension, group insurance or other
so-called "fringe" benefits which the Company generally provides for its
executives.

                  4.       OTHER BENEFITS.

                                    In addition to all other benefits contained
herein, the Executive shall be entitled to:

                                    (1) Payment of health, disability, and life
insurance at regular rates; and

                                    (2) Vacation time of four weeks per year
taken, subject to fulfillment of his duties hereunder, in accordance with the
vacation policy of the Company during the Term.

                  5.       CONFIDENTIALITY.

                           The Executive agrees that the "Proprietary
Information and Inventions Agreement" annexed hereto as EXHIBIT A and made a
part hereof shall be deemed to be a part of this Employment Agreement.

                  6.       NON-COMPETITION.

                           (a) During the Term the Executive shall not (1)
provide any services, directly or indirectly, to any other business or
commercial entity or (2) participate in the formation of any business or
commercial entity. For a period of one year following the date of termination,
if terminated by the Company for Cause or by the Executive for any reason other
than as provided in Section 8 hereof, the Executive shall not (1) provide any
services, directly or indirectly, to any other business or commercial entity
engaged in the Company's Field of Interest or (2) participate in the formation
of any business or commercial entity engaged in the Company's Field of Interest;
provided, however, that nothing contained in this Section 6 shall be deemed to
prohibit the Executive from acquiring, solely as an investment, shares of
capital stock (or other interests) of any corporation (or other entity) not
exceeding 2% of such corporation's (or other entity's) then outstanding shares
of capital stock. The "Company's Field of Interest" means the primary business
of the Company as determined from time to time by the Board of Directors. This
Section 6 shall be subject to written waivers that may be obtained by the
Executive from the Company.

                           (b) If the Executive commits a breach, or threatens
to commit a breach, of any of the provisions of this Section 6 or EXHIBIT A, the
Company shall have the right and remedy to have the provisions of this Agreement
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such breach or threatened breach will cause
irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company.

<PAGE>

                           (c) If any of the covenants contained in Section 5, 6
or 10, or any part thereof, is hereafter construed to be invalid or
unenforceable, the same shall not affect the remainder of the covenant or
covenants, which shall be given full effect without regard to the invalid
portions.

                           (d) If any of the covenants contained in Section 5, 6
or 10, or any part thereof, is held to be unenforceable because of the duration
of such provision or the area covered thereby, the parties agree that the court
making such determination shall have the power to reduce the duration and/or
area of such provision and, in its reduced form, such provision shall then be
enforceable.

                           (e) The parties hereto intend to and hereby confer
jurisdiction to enforce the covenants contained in Sections 5, 6 and 10 upon the
courts of any state within the geographical scope of such covenants. In the
event that the courts of any one or more of such states shall hold any such
covenant wholly unenforceable by reasons of the breadth of such scope or
otherwise, it is the intention of the parties hereto that such determination not
bar or in any way affect the Company's right to the relief provided above in the
courts of any other states within the geographical scope of such other
covenants, as to breaches of such covenants in such other respective
jurisdictions, the above covenants as they relate to each state being, for this
purpose, severable into diverse and independent covenants.

                  7.       TERMINATION BY THE COMPANY.

                           (a) The Company may terminate this Agreement without
Cause or if any one or more of the following shall occur:

                                    (1) The Executive shall die during the Term;
PROVIDED, HOWEVER, that the Executive's legal representatives shall be entitled
to receive his Salary through the last day of the month in which his death
occurs.

                                    (2) The Executive shall become physically or
mentally disabled so that he is unable substantially to perform his services
hereunder for (a) a period of 120 consecutive days, or (b) for shorter periods
aggregating 180 days during any twelve-month period. Notwithstanding such
disability the Company shall continue to pay the Executive his Salary through
the date of such termination.

                                    (3) The Executive acts, or fails to act, in
a manner that provides Cause for termination. For purposes of this Agreement,
the term "Cause" means (a) the Executive's indictment for, or conviction of, any
crime or serious offense involving money or other property which constitutes a
felony in the jurisdiction involved, (b) the Executive's wilful and continual
neglect or failure to discharge his duties, responsibilities, and obligations as
Executive Vice President and COO of the Company after notice and a reasonable
opportunity to cure, (c) the Executive's wilful misconduct or wilful breach of
his fiduciary duties to the Company in connection with the performance of his
duties, (d) the Executive's violation of any of the non-competition provisions
of Section 6 hereof or the Executive's breach of any confidentiality provisions
contained in EXHIBIT A hereto or (e) any act of fraud or embezzlement by the
Executive involving the Company or any of its Affiliates.

                           (b) All determinations of Cause or termination
pursuant this Section 7 shall be determined by the Board (excluding the
Executive if he is at such time a member of the Board).

<PAGE>

                  8.       TERMINATION BY THE EXECUTIVE.

                                    The Executive may terminate this Agreement
on written notice to the Company in the event of a material breach of the terms
of this Agreement by the Company and such breach continues uncured for 30 days
after notice of such breach is first given; PROVIDED, HOWEVER, it shall
constitute the termination of this Agreement if such breach is for the payment
of money and continues uncured for ten days after notice of such breach is
given.

                  9.       SEVERANCE.

                                    (a) If, within the Term of this Agreement,
the Company terminates this Agreement for any reason other than Cause, death, or
disability, or if the Executive terminates this Agreement pursuant to Section 8,
then: (1) the Company shall pay the Executive a lump sum cash payment (the
"Severance Payment") equal to the greater of (x) the annual salary for the
remainder of the then current year of employment and (y) six months salary at
the annual rate for the then current year of employment; and (2) for options
granted to the Executive prior to the date of termination, the Company shall
accelerate the vesting schedule for such options such that the number of such
options vested on the day of termination shall be equal to the number of such
options vested if the Executive were to have been continuously employed by the
Company until the date twelve months after the date of termination. After
termination of employment for any reason other than death of the Executive, the
Company shall continue to provide all benefits subject to COBRA at its expense
for the maximum required COBRA period.

                                    (b) If the Executive is unable to continue
his employment/service due to his death or unable to continue his employment and
perform his duties due to physical or mental incapacity or disability, with or
without reasonable accommodation, in accordance with applicable law, for a
period of six months or more, all stock options and stock awards (and similar
equity rights), held by Executive prior to his death/disability, or the
expiration of the Agreement, shall vest and become immediately exercisable and
remain exercisable through their original terms with all rights. This Section
9(b) shall survive the expiration or termination of the Agreement, except for
any terminations pursuant to Section 7(a)(3) or 7(b).

                  10.      INDEMNIFICATION.

                                    The Company shall indemnify the Executive,
to the maximum extent permitted by applicable law, against all costs, charges
and expenses incurred or sustained by him in connection with any action, suit or
proceeding to which he may be made a party by reason of his being an officer,
director or employee of the Company or of any subsidiary or affiliate of the
Company. The Company shall provide, at its expense, Directors and Officers
insurance for the Employee in amounts reasonably satisfactory to the Executive
to the extent available at reasonable rates, which determination shall be made
by the Board.

                  11.      ARBITRATION.

                                    Any controversy or claim arising out of or
relating to this Agreement or the breach thereof shall be settled by arbitration
in the City of New York, in accordance with the rules then existing of the
American Arbitration Association (three arbitrators), and judgment upon the
award rendered may be entered in any court having jurisdiction thereof. The
parties shall be free to pursue any remedy before the 

<PAGE>

arbitration tribunal that they shall be otherwise permitted to pursue in a court
of competent jurisdiction. The award of the arbitrators shall be final and
binding. During the pendency of any arbitration or any dispute not yet submitted
to arbitration, the Company shall not be entitled to any offset against
payments, stock awards or other benefits due to the Executive under this
Agreement or otherwise.

                  12.      NOTICES.

                                    All notices, requests, consents and other
communications required or permitted to be given hereunder shall be in writing
and shall be deemed to have been duly given if sent by private overnight mail
service (delivery confirmed by such service), registered or certified mail
(return receipt requested and received), telecopy (confirmed receipt by return
fax from the receiving party) or delivered personally, as follows (or to such
other address as either party shall designate by notice in writing to the other
in accordance herewith):

<PAGE>

                           If to the Company:

                           Alexion Pharmaceuticals, Inc.
                           25 Science Park
                           New Haven, Connecticut  06510

                           Telephone:       203-776-1790
                           Fax:             203-776-2089


                           If to the Executive:

                           David Keiser
                           37 Georgetown Circle
                           Madison, CT 06443

                           Telephone:       203-421-5691

                  13.      GENERAL.

                           (a) This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Connecticut applicable
to agreements made and to be performed entirely in Connecticut.

                           (b) This Agreement sets forth the entire agreement
and understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements and understandings, written or
oral, relating to the subject matter hereof. No representation, promise or
inducement has been made by either party that is not embodied in this Agreement,
and neither party shall be bound by or liable for any alleged representation,
promise or inducement not so set forth.

                           (c) This Agreement may be amended, modified,
superseded, canceled, renewed or extended, and the terms or covenants hereof may
be waived, only by a written instrument executed by the parties hereto, or in
the case of a waiver, by the party waiving compliance. The failure of a party at
any time or times to require performance of any provision hereof shall in no
manner affect the right at a later time to enforce the same. No waiver by a
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, or any one or more or continuing waivers of any such
breach, shall constitute a waiver of the breach of any other term or covenant
contained in this Agreement.

<PAGE>

                           (d) This Agreement shall be binding upon the legal
representatives, heirs, distributees, successors and assigns of the parties
hereto.

                  IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above written.

ALEXION PHARMACEUTICALS, INC.

By       /s/ Leonard Bell
         -------------------------------------
         Leonard Bell
         President and Chief Executive Officer

         /s/ David Keiser
         -------------------------------------
         David Keiser

<PAGE>

                                    EXHIBIT A

                          ALEXION PHARMACEUTICALS, INC.


                PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT


                  I recognize that ALEXION Pharmaceuticals, Inc., a Delaware
corporation (the "Company", which term includes any subsidiaries thereof), is
engaged in multiple aspects of pharmaceutical development and biotechnology.

                  I understand that:

                  A. As part of my employment by the Company I am expected to
make new contributions of value of the Company.

                  B. My employment creates a relationship of confidence and
trust between me and the Company with respect to any information:

                           (1) Applicable to the business of the Company and
made known to me by the Company or learned by me during the period of my
employment; or

                           (2) Applicable to the business of any client,
customer or strategic partner of the Company, which may be made known to me by
the Company or by any client, customer or strategic partner of the Company, or
learned by me during the period of my employment.

                  C. The Company possesses and will continue to possess
information that has been created, discovered or developed, or has otherwise
become known to the Company (including without limitation information created,
discovered, developed or made known by or to me during the period of my
employment by the Company), and/or in which property or other rights have been
assigned or otherwise conveyed to the Company, which information has commercial
value in the business in which the Company is engaged and none of which is in
the public domain except through the breach by me or anyone else of a
confidentiality duty. All of the aforementioned information is hereinafter
called "Proprietary Information." By way of illustration, but not limitation,
Proprietary Information includes "Developments (as herein defined), data and
know-how, techniques, marketing plans and opportunities, cost and pricing data,
strategies, forecasts and customer lists. By way of illustration, but not
limitation, "Developments" includes developments, improvements, discoveries,
trade secrets, technologies, processes, research, methods, procedures, designs,
models, testing systems, research, assays, compounds, molecules, organisms, gene
sequences, cell lines, complement inhibitors and other re-agents (including the
composition thereof), uses of any of the foregoing, computer software and
programs (including source code and related documentation), test and/or
experimental data and results, specifications, laboratory notebooks, drawings
and technical information and materials.

                  D. As used herein, the period of my employment includes any
time in which I may be retained by the Company as a consultant.

<PAGE>

                  In consideration of my employment or continued employment, as
the case may be, and the compensation received by me from the Company from time
to time, I hereby agree as follows:

                  1. Prior to entering the employ of the Company, I have
terminated employment with one or more prior employers. I agree to indemnify and
hold harmless the Company, its directors, officers and employees against any
liabilities and expenses including reasonable attorneys' fees and amounts paid
in settlement, incurred by any of them in connection with any claim by any of my
prior employers that the termination of my employment with such employer, my
employment by the Company, or use of any skills and knowledge by the Company is
a violation of contract or law.

                  2. All Proprietary Information shall be the sole property of
the Company and its assigns, and the Company and its assigns shall be the sole
owner of all patents, copyrights, trade secrets and trademarks and other rights
in connection therewith. I hereby assign to the Company any and all rights I may
have or acquire in all Proprietary Information. At all times, both during my
employment by the Company and after its termination, I will keep in confidence
and trust all Proprietary Information, and I will not use or disclose any
Proprietary Information without the written consent of the Company, except as
may be necessary in the ordinary course of performing my duties as an employee
of the Company.

                  3. During the period of my employment by the Company I will
not, without the Company's express written consent, engage in any employment or
activity in any competitive business, other than for the Company.

                  4. I will promptly disclose to the Company, or any persons
designated by it, all Developments, improvements, processes, techniques,
know-how, data and Developments made or conceived or reduced to practice or
learned by me, either alone or jointly with others, during the period of my
employment by the Company which are related to or useful in the business of the
Company, or result from use of premises owned, leased or contracted for by the
Company (all said Developments, improvements, processes, techniques, know-how,
data and documentation, shall be collectively hereinafter called "Know-how").

                  5. I agree that all Know-how shall be the sole property of the
Company and its assigns, and the Company and its assigns shall be the sole owner
of all patents, copyrights, trademarks and other rights in connection therewith.
I hereby assign to the Company any rights I may have or acquire in all Know-how.

                  I understand that this paragraph 5 does not apply to Know-how
for which no equipment, supplies, facility or trade secret information of the
Company was used and which was developed entirely on my own time, and (a) which
does not relate (1) to the business of the Company or (2) to the Company's
actual or demonstrably anticipated research or development, or (b) which does
not result from any work performed by me for the Company. I agree to execute any
documents requested by the Company to effectuate the intent of this paragraph.

                  6. The Company shall have the right (but shall not be
obligated) to use, assert and/or apply for patent, copyright, trademark and
other statutory or common law protection for any or all Know-how in any and all
countries. I agree to assist the Company in every reasonable way without
additional compensation (but at the Company's expense), to apply for, prosecute
and obtain, and from time to time enforce, defend and protect, any and all
patent, copyright, trademark and other statutory or 

<PAGE>

common law protection for any of the Know-how in any and all countries. I shall,
whether during or following my employment by the Company, at the Company's
request and expense, but without additional compensation to me, execute any and
all assignments, transfers, applications and other papers covering any Know-how
which may be considered necessary or helpful by the Company in furtherance of
the foregoing and/or to accomplish the assignment, transfer and/or license of
any Know-how to persons designated by the Company.

                  7. In the event of the termination of my employment by me or
by the Company for any reason, I will deliver to the Company all documents,
materials, compounds, samples, plasmids, proteins, probes and data of any nature
pertaining to my work with the Company and I will not take with me any documents
or data of any description or any reproduction of any description containing or
pertaining to any Proprietary Information, and Know-how.

                  8. I represent that to the best of my knowledge my performance
of all the terms of this Agreement and as an employee of the Company does not
and will not breach any agreement to keep in confidence proprietary information
acquired by me in confidence or in trust prior to my employment by the Company.
I have not entered into, and I agree I will not enter into, any agreement either
written or oral in conflict herewith.

                  9. I understand as part of the consideration for the offer of
employment extended to me by the Company and of my employment or continued
employment by the Company, that I have not brought and will not bring with me to
the Company or use in the performance of my responsibilities at the Company any
materials or documents of a former employer which are not generally available to
the public, unless I have obtained written authorization from the former
employer for their possession and use.

                  Accordingly, this is to advise the Company that the only
materials or documents of a former employer which are not generally available to
the public that I have brought or will bring to the Company or have used or will
use in my employment are identified on SCHEDULE A attached hereto, and, as to
each such item, I represent that I have obtained prior to the effective date of
my employment with the Company written authorization for their possession and
use in my employment with the Company.

                  I also understand that, in my employment with the Company, I
am not to breach any obligation of confidentiality that I have to former
employers, and I agree that I shall fulfill all such obligations during my
employment with the Company.

                  10. In the event that any provision herein would be held to be
invalid, prohibited or unenforceable in any jurisdiction for any reason
(including, but not limited to, any provision which may be held unenforceable
because of the scope, duration or area of its applicability), unless narrowed by
construction, this Agreement shall, as to such jurisdiction, be construed as if
such invalid, prohibited or unenforceable provision had been more narrowly drawn
so as not to be invalid, prohibited or unenforceable (and the court making any
such determination as to any provision shall have the power to modify such
scope, duration or area or all of them, and such provision shall then be
applicable in such modified form in such jurisdiction only). If, notwithstanding
the foregoing, any provision herein would be held to be invalid, prohibited or
unenforceable in any jurisdiction for any reason, such provision, as to such
jurisdiction, shall be ineffective to the extent of such invalidity, prohibition
or unenforceability, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in any
other jurisdiction.

<PAGE>

                  11. By reason of the fact that irreparable harm would be
sustained by the Company in the event that there is a breach by me of any of the
terms, covenants and agreements set forth herein, in addition to any other
rights that the Company may otherwise have, the Company shall be entitled to
apply to any court of competent jurisdiction and obtain specific performance
and/or injunctive relief against me, without making a showing that monetary
damages would be inadequate and without the requirement of posting any bond or
other security whatsoever, in order to enforce or prevent any breach or
threatened breach of any of the terms, covenants and agreements set forth
herein, and I will not object thereto.

<PAGE>

                  12. This Agreement shall be binding upon me, my heirs,
executors, assigns and administrators and shall inure to the benefit of the
Company, its successors and assigns.

                  This Agreement shall be governed in all respects by the laws
of the State of Delaware, applicable to agreements made and to be performed
solely therein.


Dated: __________________________   By: ____________________________


ACCEPTED AND AGREED TO:
ALEXION PHARMACEUTICALS, INC.


By: _____________________________


Title: ___________________________







<PAGE>

                                                                    Exhibit 23.1







CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report included in this Form 10-K, into the Company's previously filed
Registration Statements File numbers 333-19905, 333-24863, 333-29617, 333-41397,
333-47645, 333-71879, 333-71985 and 333-36738.

/s/ ARTHUR ANDERSEN LLP

Hartford, Connecticut
October 5, 2000






<TABLE> <S> <C>


<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET, THE STATMENT OF OPERATIONS, AND THE STATEMENT OF CASH FLOWS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   12-MOS
<FISCAL-YEAR-END>                          JUL-31-2000
<PERIOD-START>                             AUG-01-1999
<PERIOD-END>                               JUL-31-2000
<CASH>                                          91,858
<SECURITIES>                                    82,671
<RECEIVABLES>                                    5,095
<ALLOWANCES>                                         0
<INVENTORY>                                          0
<CURRENT-ASSETS>                               180,080
<PP&E>                                          13,029
<DEPRECIATION>                                 (4,816)
<TOTAL-ASSETS>                                 192,702
<CURRENT-LIABILITIES>                            7,178
<BONDS>                                        123,920
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                          0
<COMMON>                                             2
<OTHER-SE>                                      61,604
<TOTAL-LIABILITY-AND-EQUITY>                   192,702
<SALES>                                              0
<TOTAL-REVENUES>                                21,441
<CGS>                                                0
<TOTAL-COSTS>                                   44,362
<OTHER-EXPENSES>                                     0
<LOSS-PROVISION>                                     0
<INTEREST-EXPENSE>                               2,694
<INCOME-PRETAX>                               (20,227)
<INCOME-TAX>                                         0
<INCOME-CONTINUING>                           (20,227)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (20,227)
<EPS-BASIC>                                     (1.45)
<EPS-DILUTED>                                   (1.45)
        

</TABLE>







<PAGE>

                                                                   EXHIBIT 99.1

                                  RISK FACTORS

      YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS BEFORE YOU DECIDE
TO INVEST IN ALEXION. YOU SHOULD ALSO CONSIDER THE OTHER INFORMATION IN THIS
PROSPECTUS AND INFORMATION INCORPORATED BY REFERENCE IN THIS PROSPECTUS. THE
RISKS AND UNCERTAINTIES BELOW ARE NOT THE ONLY ONES FACING ALEXION BECAUSE WE
ARE ALSO SUBJECT TO ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO
US. IF ANY OF THESE RISKS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION,
OPERATING RESULTS OR CASH FLOWS COULD BE HARMED.

      IF WE CONTINUE TO INCUR OPERATING LOSSES, WE MAY BE UNABLE TO CONTINUE OUR
OPERATIONS.

      We have incurred losses since we started our company in January 1992. As
of July 31, 2000, we had an accumulated deficit of approximately $67.2 million.
If we continue to incur operating losses and fail to become a profitable
company, we may be unable to continue our operations. Since we began our
business, we have focused on research and development of product candidates. We
have no products that are available for sale. We expect to continue to operate
at a net loss for at least the next several years as we continue our research
and development efforts, continue to conduct clinical trials
 and develop
manufacturing, sales, marketing and distribution capabilities. Our future
profitability depends on our receiving regulatory approval of our product
candidates and our ability to successfully manufacture and market approved
drugs. The extent of our future losses and the timing of our profitability are
highly uncertain.

      IF WE DO NOT OBTAIN REGULATORY APPROVAL FOR OUR DRUG PRODUCTS WE WILL NOT
BE ABLE TO SELL OUR DRUG PRODUCTS.

      We cannot sell or market our drugs without regulatory approval. If we
cannot obtain regulatory approval for our products, the value of our company and
our results of operations will be harmed. In the United States, we must obtain
approval from the U.S. Food and Drug Administration, or FDA, for each drug that
we intend to sell. Obtaining FDA approval is typically a lengthy and expensive
process, and approval is highly uncertain. Foreign governments also regulate
drugs distributed outside the United States. None of our product candidates has
received regulatory approval to be marketed and sold in the United States or any
other country. We do not anticipate receiving regulatory approval of any of our
product candidates for at least the next several years.

      IF OUR DRUG TRIALS ARE DELAYED OR ACHIEVE UNFAVORABLE RESULTS, WE WILL NOT
BE ABLE TO OBTAIN REGULATORY APPROVAL FOR OUR PRODUCTS.

      We must conduct extensive testing of our product candidates before we can
obtain regulatory approval for our products. We need to conduct both preclinical
animal testing and clinical human trials. These tests and trials may not achieve
favorable results. We would need to reevaluate any drug that did not test
favorably and either alter the drug or the dose, or abandon the drug development
project. As a result, we would not be able to obtain regulatory approval on a
timely basis, if ever.

      There are other reasons why drug testing could be delayed. For human
trials, patients must be recruited and each product candidate must be tested for
each clinical indication, at various doses and formulations. Also to ensure
safety and effectiveness, the effect of drugs often must be studied over a long
period of time, especially for the chronic diseases that we are studying.
Unfavorable results or insufficient patient enrollment in our clinical trials
could delay or cause us to abandon a product development program.

<PAGE>

      Additional factors that can cause delay or termination of our clinical
trials include:

      o     slow patient enrollment;

      o     long treatment time required to demonstrate effectiveness;

      o     lack of sufficient supplies of the product candidate;

      o     adverse medical events or side effects in treated patients;

      o     lack of effectiveness of the product candidate being tested; and

      o     lack of sufficient funds.

      IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL
BE UNABLE TO CONTINUE OR COMPLETE OUR PRODUCT DEVELOPMENT.

      In the future, we will need to raise substantial additional capital to
fund operations and complete our product development. We may not get funding
when we need it or on favorable terms. If we cannot raise adequate funds to
satisfy our capital requirements, we may have to delay, scale-back or eliminate
our research and development activities or future operations. We might have to
license our technology to others. This could result in sharing revenues which we
might otherwise retain for ourselves. Any of these actions may harm our
business.

      The amount of capital we may need depends on many factors, including:

      the progress, timing and scope of our research and development
            programs;

      the progress, timing and scope of our preclinical studies and
            clinical trials;

      the time and cost necessary to obtain regulatory approvals;

      the time and cost necessary to further develop manufacturing processes,
      arrange for contract manufacturing or build manufacturing facilities
      and obtain the necessary regulatory approvals for those facilities;

      the time and cost necessary to develop sales, marketing and
      distribution capabilities; and

      any new collaborative, licensing and other commercial relationships that 
      we may establish.

      IF OUR COLLABORATION WITH PROCTER & GAMBLE IS TERMINATED, WE MAY BE UNABLE
TO COMMERCIALIZE 5G1.1-SC IN THE TIME EXPECTED, IF AT ALL, AND OUR BUSINESS
WOULD BE HARMED.

      We rely exclusively on Procter & Gamble to provide funding and additional
resources for the development and commercialization of 5G1.1-SC. These include
funds and resources for:

      clinical development and manufacturing;

      obtaining regulatory approvals; and

      sales, marketing and distribution efforts worldwide.

<PAGE>

      We cannot guarantee that Procter & Gamble will devote the resources
necessary to successfully develop and commercialize 5G1.1-SC. Either party may
terminate our collaboration agreement for specified reasons, including a
material breach or the occurrence of a change of control.

      Termination of our agreement with Procter & Gamble would cause significant
delays in the development of 5G1.1-SC and result in additional development
costs. We would need to fund the development and commercialization of 5G1.1-SC
on our own or identify a new development partner. We might also have to repeat
testing already completed with Procter & Gamble.

      IF WE ARE UNABLE TO ENGAGE AND RETAIN THIRD-PARTY COLLABORATORS, OUR
RESEARCH AND DEVELOPMENT EFFORTS MAY BE DELAYED.

      We depend upon third-party collaborators to assist us in the development
of our product candidates. If any of our existing collaborators breaches or
terminates its agreement with us or does not perform its development work under
the agreement, we would experience significant delays in the development or
commercialization of our product candidates. We would also experience
significant delays if we cannot engage additional collaborators when required.
In either event, we would be required to devote additional funds or other
resources to these activities or to terminate them.

      We cannot assure you that:

      we will be able to negotiate acceptable collaborative agreements to
      develop or commercialize our products;

      any arrangements with third parties will be successful; or

      current or potential collaborators will not pursue treatments for other
      diseases or seek other ways of developing treatments for our disease
      targets.

      IF WE CANNOT PROTECT THE CONFIDENTIALITY AND PROPRIETARY NATURE OF OUR
TRADE SECRETS, OUR BUSINESS AND COMPETITIVE POSITION WILL BE HARMED.

      Our business requires using sensitive technology, techniques and
proprietary compounds which we protect as trade secrets. However, since we are a
small company, we also rely heavily on collaboration with suppliers, outside
scientists and other drug companies. Collaboration presents a strong risk of
exposing our trade secrets. If our trade secrets were exposed, it would help our
competitors and adversely affect our business prospects.

      In order to more effectively protect our drugs and technology, we need to
obtain patents covering the drugs and technologies we develop. Our drugs are
expensive and time-consuming to test and develop. Without patent protection,
competitors may copy our methods, or the chemical structure or other aspects of
our drug. Even if we obtain patents, the patents may not be broad enough to
protect our drugs from copy-cat products.

      IF WE ARE FOUND TO BE INFRINGING ON PATENTS OWNED BY OTHERS, WE MAY BE
FORCED TO OBTAIN A LICENSE TO CONTINUE THE SALE OR DEVELOPMENT OF OUR DRUGS AND
PAY DAMAGES.

      Parts of our technology, techniques and proprietary compounds and
potential drug candidates may conflict with patents owned by or granted to
others. If we cannot resolve these conflicts, we may be liable for damages or be
required to obtain costly licenses. For example, we are aware of broad patents
owned by others relating to the manufacture, use and sale of recombinant
humanized antibodies, recombinant humanized single chain antibodies,

<PAGE>

recombinant human antibodies, recombinant human single chain antibodies, and
genetically engineered animals. Many of our products are genetically engineered
antibodies, including recombinant humanized antibodies, recombinant humanized
single chain antibodies, recombinant human antibodies, recombinant human single
chain antibodies, and other products are tissues from animals.

      We have received notices from the owners of some of these patents claiming
that their patents may be relevant to the development of some of our drug
candidates. In response to some of these notices, we have obtained licenses.
However, with regard to other patents, we have either determined in our judgment
that:

o     our products do not infringe the patents;

o     we do not believe the patents are valid; or

o     we have identified and are testing various modifications which we believe
      should not infringe the patents and which should permit commercialization
      of our product candidates.

      Any patent holders could sue us for damages and seek to prevent us from
selling or developing our drugs. Legal disputes can be costly and time consuming
to defend. If any of these actions are successful, we could be required to pay
damages or to obtain a license to sell or develop our drugs. A required license
may not be available on acceptable terms, if at all.

      IF THE TESTING OR USE OF OUR PRODUCTS HARMS PEOPLE, WE COULD BE SUBJECT TO
COSTLY AND DAMAGING PRODUCT LIABILITY CLAIMS.

      The testing, manufacturing, marketing and sale of drugs for use in humans
exposes us to product liability risks. Side effects and other problems from
using our products could give rise to product liability claims against us. We
might have to recall our products, if any, from the marketplace. Some of these
risks are unknown at this time. For example, little is known about the potential
long-term health risks of transplanting pig tissue into humans, a goal of our
UniGraft product development program.

      In addition, we may be sued by people who participate in our clinical
trials. A number of patients who participate in such trials are already
critically ill when they enter a study. Any waivers we may obtain from people
who sign up for our trials may not protect us from liability or litigation. Our
product liability insurance may not cover all potential liabilities. Moreover,
we may not be able to maintain our insurance on acceptable terms. As a result of
these factors, a product liability claim, even if successfully defended, could
have a material adverse effect on our business, financial condition and results
of operations.

      IF WE CANNOT MANUFACTURE OUR DRUG CANDIDATES IN SUFFICIENT AMOUNTS AT
ACCEPTABLE COSTS AND ON A TIMELY BASIS, WE MAY BE UNABLE TO MEET THE NEED FOR
MATERIALS FOR PRODUCT TESTING AND LATER, FOR POTENTIAL SALE IN THE MARKET.
EITHER EVENT WOULD HARM OUR BUSINESS.

      For our drug trials, we need to produce sufficient amounts of product for
testing. We do not have the capacity to produce more than one product candidate
at a time. In addition, our small manufacturing plant cannot manufacture enough
of our product candidates for later stage clinical development. We depend on a
few outside suppliers for manufacturing. If we experience interruptions in the
manufacture of our products for testing, our drug development efforts will be
delayed. If any of our outside manufacturers stops manufacturing our products or
reduces the amount manufactured, we will need to find other alternatives. If we
are unable to find an acceptable outside manufacturer on reasonable terms, we
will 

<PAGE>


have to divert our own resources to manufacturing. As a result, our ability to
conduct testing would be materially adversely affected. Submission of products
and new development programs for regulatory approval would be delayed. Our
competitive position and our prospects for achieving profitability could be
materially and adversely affected.

      We have no experience or capacity for manufacturing drug products in
volumes that will be necessary to support commercial sales. If we are unable to
establish and maintain commercial scale manufacturing within our planned time
and cost parameters, sales of our products and our financial performance will be
adversely affected.

      We may encounter problems in any of the following areas as we attempt to
increase the scale, process or size of manufacturing:

o     design, construction and qualification of manufacturing facilities
      that meet regulatory requirements;

o     production yields from the manufacturing process;

o     purity of our drug products;

o     quality control and assurance;

o     shortages of qualified personnel; and

o     compliance with FDA regulations.

      IF OUR BUSINESS AND PRODUCTS, EVEN AFTER REGULATORY APPROVAL IS OBTAINED,
FAIL TO COMPLY WITH REGULATORY REQUIREMENTS, OUR ABILITY TO SELL PRODUCTS AND
CONDUCT BUSINESS WILL BE HARMED.

      Even if we receive regulatory approval for any product, our business will
always be subject to substantial regulation by the FDA or a comparable foreign
regulatory agency. The discovery of previously unknown problems with a product
or its manufacture may result in restrictions on the product or manufacturer,
including withdrawal of the product from the market. The consequences for
failure to comply with applicable regulatory requirements can be serious,
resulting in:

o     warning letters;

o     fines and other civil penalties;

o     suspended regulatory approvals;

o     refusal to approve pending applications or supplements to approved
      applications;

o     refusal to permit exports from the United States;

o     product recalls;

o     seizure of products;

o     injunctions;

<PAGE>


o     operating restrictions;

o     total or partial suspension of production; and/or

o     criminal prosecutions.

      Any of these consequences could result in withdrawal of approval, or
require reformulation of the drug, additional preclinical testing or clinical
trials, changes in labeling of the product, and/or additional marketing
applications. We would be required to expend time and resources in correcting
the problem, including any adverse publicity associated with the problem, in
order to put the product back on the market. These delays and uses of resources
would hurt our business, profitability and reputation.

      IF WE ARE UNABLE TO ESTABLISH SALES, MARKETING AND DISTRIBUTION
CAPABILITIES, OR TO ENTER INTO AGREEMENTS WITH THIRD PARTIES TO DO SO, WE WILL
BE UNABLE TO SUCCESSFULLY MARKET AND SELL FUTURE DRUG PRODUCTS.

      We have no sales, marketing or distribution personnel or capabilities. If
we are unable to establish those capabilities, either by developing our own
capabilities or entering into agreements with others, we will not be able to
successfully sell our products. In that event, we will not be able to generate
significant revenues. We cannot guarantee that we will be able to hire the
qualified sales and marketing personnel we need. We may not be able to enter
into any marketing or distribution agreements on acceptable terms, if at all. We
are relying on Procter & Gamble for sales, marketing and distribution, of
5G.1-SC. Procter & Gamble, or any future collaborators, may not succeed at
selling any of our future drug products.

      IF WE ARE UNABLE TO OBTAIN REIMBURSEMENT FROM GOVERNMENT HEALTH
ADMINISTRATION AUTHORITIES, PRIVATE HEALTH INSURERS AND OTHER ORGANIZATIONS FOR
OUR FUTURE PRODUCTS, OUR PRODUCTS MAY BE TOO COSTLY FOR REGULAR USE AND OUR
ABILITY TO GENERATE REVENUES WOULD BE HARMED.

      Our future revenues and profitability will be affected by the continuing
efforts of governmental and private third-party payors to contain or reduce the
costs of health care through various means. If these entities refuse to provide
reimbursement with respect to our products or determine to provide a low level
of reimbursement, our products may be too costly for general use. Any limitation
on the use of our products will have a material adverse effect on our ability to
generate revenues and achieve profitability. We expect a number of federal,
state and foreign proposals to control the cost of drugs through government
regulation. We are unsure of the form that any health care reform legislation
may take or what actions any of these authorities and private payors may take in
response to the proposed reforms. Therefore, we cannot precisely predict the
effect of any reform on our business.

      EVEN IF WE SUCCESSFULLY DEVELOP OUR PRODUCTS FOR TRANSPLANTING ANIMAL
CELLS INTO HUMANS, THIS TECHNOLOGY MAY NOT BE ACCEPTED BY THE MARKET DUE TO
MEDICAL CONCERNS OR UNANTICIPATED REGULATION.

      Our program for the development of animal cells for transplantation into
humans may never result in any therapeutic products. This technology is subject
to extensive clinical testing and we are not aware of any such technology that
has been approved for sale by the FDA or comparable foreign regulatory
authorities. Even if we succeed in developing these products, our products may
not be widely accepted by the medical community or third-party payors until more
facts are established and ethical consensus is reached regarding the use of
animal cells. In addition, concerns relating to the risk of introducing new
animal viruses to infect the human species through the transplantation process
may also create additional regulatory hurdles for FDA approval. If accepted, the
degree of acceptance may limit the

<PAGE>


size of the market for our products. Moreover, due to the controversial nature
of transplantation of animal cells into humans generally, market prices for our
securities may be subject to increased volatility.

      IF OUR COMPETITORS GET TO THE MARKETPLACE BEFORE WE DO WITH BETTER OR
CHEAPER DRUGS, OUR DRUGS MAY NOT BE PROFITABLE TO SELL OR TO CONTINUE TO
DEVELOP.

      Each of Avant Immunotherapeutics, Inc, Leukosite Inc., a subsidiary of 
Millenium Pharmaceuticals, Inc., Tanox, Inc., Abbott Laboratories, Gliatech 
Inc. and Biocryst Pharmaceuticals have publicly announced their intentions to 
develop drugs which target the inflammatory effects of complement in the 
immune system. We are also aware that Pfizer, Inc., SmithKline Beecham Plc 
and Merck & Co., Inc. are also attempting to develop complement inhibitor 
therapies. Each of Cambridge Antibody Technology, PLC, MorphoSys AG and Dyax 
Corporation have publicly announced intentions to develop therapeutic human 
antibodies from libraries of human antibody genes. Additionally, each of 
Abgenix Inc. and Medarex, Inc. have publicly announced intentions to develop 
therapeutic human antibodies from mice that have been bred to include some 
human antibody genes. These and other large pharmaceutical companies with 
significantly greater resources than ours, may develop, manufacture and 
market better or cheaper drugs than our product candidates. They may 
establish themselves in the marketplace before we are able to even finish our 
clinical trials. Larger pharmaceutical companies also compete with us to 
attract academic research institutions as drug development partners, 
including for licensing these institutions' proprietary technology. If our 
competitors successfully enter into such arrangements with academic 
institutions, we will be precluded from pursuing those specific unique 
opportunities and may not be able to find equivalent opportunities elsewhere.

      IF WE FAIL TO RECRUIT AND RETAIN PERSONNEL, OUR RESEARCH AND PRODUCT
DEVELOPMENT PROGRAMS MAY BE DELAYED.

      We are highly dependent upon the efforts of our senior management and
scientific personnel. There is intense competition for qualified scientific and
technical personnel. Since our business is very science-oriented and
specialized, we need to continue to attract and retain such people. We may not
be able to continue to attract and retain the qualified personnel necessary for
developing our business. If we lose the services of, or fail to recruit, key
scientific and technical personnel, our research and product development
programs would be significantly and detrimentally affected.

      In particular, we highly value the services of Dr. Leonard Bell, our
President and Chief Executive Officer. The loss of his services could materially
and adversely affect our ability to achieve our development objectives.

      THE RIGHTS THAT HAVE BEEN AND MAY IN THE FUTURE BE GRANTED TO OUR
STOCKHOLDERS MAY FRUSTRATE ATTEMPTS BY OTHERS TO TAKE OVER OUR COMPANY.

      We have in place a shareholder rights plan, or "poison pill," which
enables our board of directors to issue rights to purchase preferred stock when
someone acquires 20% or more of the outstanding shares of our common stock. As a
result of the plan, anyone wishing to take over the company would most likely be
forced to negotiate a transaction with the company in order not to trigger the
pill. If we refused to negotiate, or negotiations were unsuccessful, a proposed
takeover could be frustrated. This would prevent our stockholders from
participating in a takeover or tender offer which might be of substantial value
to them.

      In addition, under our certificate of incorporation, our board of
directors is authorized to issue one or more series of preferred stock with
rights and preferences determined by the board. The preferences and rights of
any preferred stock may be superior to those of the holders of our common stock.
By issuing 

<PAGE>

preferred stock with superior right to the common stock, the board could
frustrate a person who wishes to take over the company through a tender offer
for the outstanding common stock. These provisions are also intended to
encourage any person interested in acquiring us to negotiate with and obtain the
approval of our board of directors. These provisions could also delay, deter or
frustrate a merger or change in control.