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                                                FILED PURSUANT TO RULE 424(b)(3)

PROSPECTUS                                                    SEPTEMBER 23, 1999

                         GUILFORD PHARMACEUTICALS INC.

                        3,360,000 SHARES OF COMMON STOCK

                            ------------------------

     We have prepared this prospectus to allow the selling stockholders we
identify herein to sell up to 3,360,000 shares of our common stock. The selling
stockholders acquired the shares from us in a private placement. We will not
receive any of the proceeds from the sale of common stock by the selling
stockholders.

     Our common stock is traded on the Nasdaq Stock Market under the symbol
"GLFD." On September 22, 1999, the last reported sale price of our common stock
on Nasdaq was $14.94 per share.

         INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
                    SEE "RISK FACTORS" BEGINNING ON PAGE 2.

                            ------------------------

  NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THE COMMON
STOCK, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS ACCURATE
     OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

               The date of this prospectus is September 23, 1999.
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                                  THE COMPANY

     Guilford Pharmaceuticals Inc. is a biopharmaceutical company engaged in the
development and commercialization of novel products in two principal areas: (i)
targeted and controlled drug delivery systems using proprietary biodegradable
polymers for the treatment of cancer and other diseases; and (ii) therapeutic
and diagnostic products for neurological diseases and conditions. Our principal
executive offices are located at 6611 Tributary Street, Baltimore, Maryland
21224, and our telephone number is (410) 631-6300.

                                  RISK FACTORS

     An investment in our stock is very speculative and involves a high degree
of risk. In addition to the other information contained in this prospectus
(including the reports we incorporate by reference), you should consider the
following important factors carefully in evaluating our company and its business
before purchasing shares of our stock.

     In addition to historical information, this prospectus contains
forward-looking statements that reflect our current expectations regarding the
future results of our operations, economic performance and financial condition
as well as other matters that may affect our business. In general, we try to
identify these forward-looking statements by using words such as:

     - "anticipate,"

     - "believe,"

     - "estimate,"

     - "expect" and similar expressions.

     While these statements reflect our current plans and expectations and we
base the statements on information currently available to us, we cannot be sure
that we will be able to implement these plans successfully. We may never realize
any or all of our expectations.

     The forward-looking statements contained in this prospectus may cover many
topics, including the following:

     - our efforts in conjunction with Rhone-Poulenc Rorer Pharmaceuticals, Inc.
       ("RPR") to obtain international regulatory clearances to market and sell
       GLIADEL(R) Wafer ("GLIADEL") and to increase end-user sales of the
       product,

     - our efforts in conjunction with RPR to expand the labeled uses for
       GLIADEL,

     - our efforts to develop polymer drug delivery product line extensions and
       new polymer drug delivery products,

     - the conduct and completion of the research programs relating to our FKBP
       neuroimmunophilin ligand technology and other technologies,

     - clinical development activities, including commencement and conduct of
       clinical trials related to our polymer based drug delivery candidates,
       including GLIADEL, and our pharmaceutical product candidates including:

          - drug candidates falling under the FKBP neuroimmunophilin ligand
            technology, such as NIL-A,

          - NAALADase inhibitors,

          - PARP inhibitors, and

          - DOPASCAN(R) Injection ("DOPASCAN"),

     - our efforts to scale-up product candidates from laboratory bench
       quantities to commercial quantities,

     - our efforts to secure a supply of the active pharmaceutical ingredients
       for the clinical development and commercialization of our polymer-based
       and other drug candidates,

     - our efforts to manufacture drug candidates for clinical development and
       eventual commercial supply,

     - our strategic plans,

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     - our anticipated expenditures and the potential need for additional funds,
       and

     - our plans to implement solutions to the Year 2000 issue.

     All of these areas of our business involve significant risks and
uncertainties.

     Any of the statements we make in this prospectus (including the documents
we incorporate by reference) that are forward-looking are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
We wish to caution you that our actual results may differ significantly from the
results we discuss in the forward-looking statements, and you should not unduly
rely on them. Many factors that could cause or contribute to such differences
include those discussed below, as well as those discussed elsewhere in our
filings with the Securities and Exchange Commission. In addition, any
forward-looking statement we make in this document speaks only as of the date of
this prospectus, and we do not intend to update any such forward-looking
statement to reflect events or circumstances that occur after that date.

WE HAVE A HISTORY OF LOSSES AND OUR FUTURE PROFITABILITY IS UNCERTAIN.

     We cannot be sure that we will be able to achieve significant and sustained
revenues or realize sustained profitable operating results in the future.
Guilford was founded in July 1993 and, with the sole exception of 1996, we have
not earned a profit in any year since inception. Our losses stem mainly from the
significant amount of money that we have spent on research and development. As
of June 30, 1999, we had an accumulated deficit of $73.1 million. We expect to
have significant additional losses over the next several years.

     Most of our product candidates are in research or early stages of
pre-clinical and clinical development. Except for GLIADEL, none of our product
candidates has been marketed and sold to the public. At this time, nearly all of
our revenues have come from:

     - payments from RPR from the sale and distribution of GLIADEL,

     - one-time signing fees from our corporate partners under our collaboration
       agreements supporting the research, development and commercialization of
       our product candidates,

     - one-time payments from our corporate partners upon the achievement of
       specified regulatory or development milestones; for example, RPR's
       payment to us in July 1999 relating to approval in France to market and
       sell GLIADEL for the recurrent surgery indication, and

     - periodic research funding under our collaboration with Amgen Inc.

     We do not expect current and anticipated revenues from GLIADEL to be
sufficient to support all our anticipated future activities. Whether GLIADEL
sales will ever generate any significant revenues continues to remain uncertain.
In addition, we do not anticipate generating revenues from the sale of our
product candidates for the next several years, if ever. We will require payments
from our current corporate partners, principally RPR and Amgen, and any future
corporate partners, to fund our ongoing activities.

     Whether we will ever recognize significant revenues from Amgen in the form
of milestone payments or royalties paid on product sales is also subject to
significant risk and uncertainty. These risks are part of each of the following
activities, among others:

     - new product development,

     - the conduct of pre-clinical animal studies and human clinical trials,

     - applying for and obtaining regulatory approval to market and sell product
       candidates,

     - scale-up of the processes for making product candidates in quantities and
       qualities needed for research and development purposes to commercial
       scale manufacture needed to support marketing and sales of new products,
       and

     - commercialization of new products.

     We discuss these and other risks in greater detail below in this "Risk
Factors" section.

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     Whether we will ever be able to achieve sustained profitability in the
future will depend on many factors, including:

     - the successful marketing of GLIADEL by RPR,

     - receipt of regulatory clearance to market and sell GLIADEL in Europe,

     - receipt of regulatory clearance to market and sell GLIADEL for patients
       undergoing initial surgery for malignant glioma in the United States as
       well as Europe and other countries,

     - the successful development and commercialization of product candidates
       that result from our collaboration with Amgen, and

     - our ability to enter into additional collaborative arrangements and
       license agreements with other corporate partners for our product
       candidates and earlier stage technologies as we develop them.

     We will need to conduct substantial additional research, development and
clinical trials. We will also need to receive necessary regulatory clearances.
We expect that these research, development and clinical trial activities, and
regulatory clearances, together with future general and administrative
activities, will result in significant expenses for the foreseeable future.

OUR RESULTS OF OPERATIONS ARE LIKELY TO FLUCTUATE.

     Our revenues and expenses have fluctuated significantly in the past because
of the nature of their sources. This fluctuation has in turn caused our results
of operations to vary significantly from quarter to quarter and year to year. We
expect the fluctuations in our revenues and expenses to continue and thus our
results of operations should also continue to vary significantly. These
fluctuations are due to a variety of factors, including:

     - the timing and amount of sales of GLIADEL to RPR and RPR's sales to
       others,

     - the timing and realization of milestone and other payments from our
       corporate partners, including RPR and Amgen,

     - the timing and amount of expenses relating to our research and
       development, product development, and manufacturing activities, and

     - the extent and timing of costs related to our activities to obtain
       patents on our inventions and to extend, enforce and/or defend our patent
       and other rights to our intellectual property.

WE ARE DEPENDENT ON GLIADEL AND RPR FOR REVENUES.

     Our near term prospects depend to a large extent on sales by RPR of
GLIADEL, our only commercial product to date. GLIADEL was commercially launched
in the United States in February 1997. We currently do not know whether the
product will ever gain broad market acceptance or the extent of the marketing
efforts necessary to achieve broad market acceptance. If GLIADEL fails to gain
market acceptance, that failure would have a material adverse effect on our
business, financial condition and results of operations.

     To date, we have received clearance from the FDA to market GLIADEL in the
United States for a limited subset of patients suffering from brain cancer. This
clearance extends to those patients for whom surgical tumor removal, commonly
referred to as "resection", is indicated and who have recurrent forms of the
brain cancer glioblastoma multiforme. A recurrent form of glioblastoma
multiforme is one in which the cancer has returned after initial surgery to
remove a brain tumor. The number of patients undergoing recurrent surgery for
glioblastoma multiforme is very limited, and we believe the total annual
incidence of glioblastoma multiforme in the United States is less than 10,000.

     In order to expand the medical uses, commonly referred to as "indications",
for which RPR may market GLIADEL, we and RPR must successfully complete
additional lengthy clinical trials. Thereafter, we and RPR will have to apply to
the FDA and international health regulatory authorities for clearance to market
GLIADEL for patients undergoing initial surgery for glioblastoma multiforme and
potentially other brain cancers. We cannot be sure that we and RPR will be able
to successfully complete these clinical trials or receive the desired regulatory
clearance. If GLIADEL fails to receive regulatory clearance, that failure would
limit RPR's ability to market GLIADEL for use in patients beyond the current
narrow indication. The failure

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would also have a material adverse effect on our business prospects, financial
condition and results of operations.

     In addition, RPR has filed for marketing clearance for the current
indication for GLIADEL in a number of foreign countries, and as of the date of
this prospectus, RPR has received international regulatory approvals to market
and sell GLIADEL in only a limited number of foreign countries, including France
and Germany. RPR may not be able to obtain any other international regulatory
approvals for GLIADEL. If RPR fails to obtain those approvals, the failure would
have a material adverse effect on our business prospects, financial condition
and results of operations.

     We have granted RPR exclusive worldwide (excluding Scandinavia and Japan)
marketing, sales and distribution rights for GLIADEL. However, our agreements
with RPR do not impose any minimum requirements on RPR for the purchase of
GLIADEL from us or for the sale of GLIADEL to end-users. Therefore, we have no
control over the revenues we receive from the sale and distribution of GLIADEL,
which depend completely on RPR's marketing efforts. In addition, prior to the
February 1997 commercial launch of GLIADEL in the United States, RPR's oncology
sales force had no previous experience in marketing a product to neurosurgeons.
We cannot be sure that RPR will elect to continue or increase its marketing and
promotional activities for GLIADEL or that its efforts in that regard will be
successful. The inability or unwillingness of RPR to aggressively market and
promote GLIADEL would have a material adverse effect on our business, financial
condition and results of operations.

     GLIADEL is also a very fragile product and can easily break into many
pieces if not handled with great care. Product recalls due to excessive breakage
of the GLIADEL wafers or for other reasons could also have a material adverse
effect on our business, financial condition and results of operations.

     RPR must make designated one-time milestone payments to us upon achieving
specified domestic and international regulatory approvals. By and large, RPR is
responsible for the timing and content of the applications necessary for
international regulatory clearances to market and sell GLIADEL. Thus, whether
GLIADEL will receive these clearances depends heavily on the efforts of RPR. We
cannot be sure any or all of these milestones will be satisfied in a manner so
as to entitle us to receive the corresponding milestone payments from RPR. The
potential milestone payments are significant, and failure to achieve the
designated regulatory objectives could have a material adverse effect on our
business, financial condition and result of operations.

THE SUCCESS OF OUR AMGEN COLLABORATION IS DEPENDENT ON A NUMBER OF FACTORS, MOST
OF WHICH ARE OUTSIDE OF OUR CONTROL.

     Regulatory and development milestone payments as well as royalty amounts on
product sales payable to us under our collaboration with Amgen depend on a
number of factors. Many of these factors are not within our control, including:

     - the selection of one or more appropriate lead compounds,

     - successful completion of pre-clinical and clinical development
       activities,

     - application for and obtaining regulatory clearances to market potential
       products,

     - commercialization of products, and

     - the successful preservation and extension of the patent and other
       intellectual property rights licensed to Amgen.

     All of these activities are subject to significant risks and uncertainties.
For a description of these and other material risks related to the research,
development and commercialization of the FKBP neuroimmunophilin ligand
technology, you should read the following sections contained in this "Risk
Factors" discussion:

     - "We face technological uncertainties related to research, development and
       commercialization,"

     - "We may be unable to protect our proprietary rights, permitting
       competitors to duplicate our products and services,"

     - "We are dependent on licensed intellectual property,"

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     - "Pre-clinical and clinical trial results for our products may not be
       favorable,"

     - "Our products use novel alternative technologies and therapeutic
       approaches which have not been widely studied," and

     - "Our business is dependent on our ability to keep pace with the latest
       technological changes"

     Moreover, under the terms of our collaboration with Amgen, we have no
control over the development activities regarding the FKBP neuroimmunophilin
ligand technology, which have been left to the sole discretion of Amgen. Our
agreement with Amgen also does not specify a binding timetable for achieving
development and commercialization goals with respect to the FKBP
neuroimmunophilin ligand technology. If Amgen determines to conduct clinical
trials on a product candidate resulting from our collaboration, Amgen still may
not be able successfully to complete those clinical trials and then receive
clearance from the FDA or foreign regulatory authorities to market and sell any
such products.

     The FKBP neuroimmunophilin ligand technology we have licensed to Amgen
represents a new approach to the treatment of certain types of neurological and
other diseases and conditions. We and Amgen have very limited experience in
taking the kinds of compounds likely to result from our work and formulating
them into final drug products appropriate for sale to the public. In addition,
both of us have limited experience with the scale-up of such compounds from the
quantity and quality needed to support research and development efforts to
quantities needed to support commercial scale distribution. Also, both we and
Amgen have limited experience with the manufacture of compounds of this type for
commercial sale. There is a risk that Amgen will not be successful in scaling-up
and manufacturing any such compounds needed for commercial sale. For a more
complete description of the kinds of risks associated with product manufacture,
you should read the section entitled "We have limited manufacturing
capabilities" below.

     If Amgen is able to obtain all regulatory approvals necessary to market a
product resulting from our collaboration, our agreement does not specify any
minimum sales requirements for Amgen. Thus, any royalty amounts payable to us in
the future will depend entirely on the sales and marketing efforts of Amgen, an
activity over which we will have no control. In addition, our agreement with
Amgen does not prevent Amgen from pursuing technologies for product candidates
competitive with the FKBP neuroimmunophilin ligand technology in the future.

WE HAVE LIMITED MANUFACTURING CAPABILITIES.

     To commercialize GLIADEL, we must be able to manufacture this product in
sufficient quantities, in compliance with regulatory requirements, and at
acceptable costs. We manufacture GLIADEL at our manufacturing facility in
Baltimore, Maryland, which consists of production laboratories and redundant
cleanrooms. We estimate that the facility currently has the capacity to
manufacture approximately 8,000 GLIADEL treatments per year.

     Although we believe this GLIADEL manufacturing facility meets the FDA's
current requirements for good manufacturing practices, which are commonly
referred to as "cGMP", and the FDA has inspected the facility in the past, we
have manufactured only limited quantities of GLIADEL in the facility. We cannot
be sure that we will be able to continue to satisfy applicable regulatory
standards, including cGMP requirements, and other requirements relating to the
manufacture of GLIADEL in the facility.

     We also face risks inherent in the operation of a single facility for
manufacture of GLIADEL. These risks include:

     - unforeseen plant shutdowns due to personnel, equipment or other factors,
       and

     - the possible inability of the facility to produce GLIADEL in quantities
       sufficient to meet demand.

     Any delay in the manufacture of GLIADEL could result in delays in product
shipment. Delays in product shipment would have a material adverse effect on our
business, financial condition and results of operations.

     Currently, we have no manufacturing capabilities for our product
candidates, including DOPASCAN. Consequently, in order to complete the
commercialization process of any of our product candidates, we must either
acquire, build or expand our internal manufacturing capabilities or rely on
third parties to manufacture

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these product candidates. We cannot be sure that we or our corporate partners,
including Amgen, will be able to (1) acquire, build or expand facilities that
will meet quality, quantity and timing requirements or (2) enter into
manufacturing contracts with others on acceptable terms, or at all. Our
inability, or that of our corporate partners, to accomplish these tasks could
have a material adverse effect on our business, financial condition and results
of operations.

     Third-party manufacturers must also comply with FDA, Drug Enforcement
Administration, and other regulatory requirements for their facilities,
including the FDA's cGMP regulations. In addition, manufacture of product
candidates on a limited basis for investigational use in animal studies or human
clinical trials does not guarantee that large-scale, commercial production is
viable. Small changes in methods of manufacture can affect the safety, efficacy,
controlled release or other characteristics of a product. Changes in methods of
manufacture, including commercial scale-up, can, among other things, require the
performance of new clinical studies. Moreover, if we decide to manufacture one
or more of our product candidates ourselves, we would incur substantial start-up
expenses and need to expand our facilities and hire additional personnel.

WE FACE TECHNOLOGICAL UNCERTAINTIES RELATED TO RESEARCH, DEVELOPMENT AND
COMMERCIALIZATION.

     The research, development and commercialization of pharmaceutical drugs
inherently involve significant risk. Before we or our corporate partners can be
in a position to commercialize a new product (i.e., to market, distribute and
sell the product), each of us will have to:

     - expend substantial capital and effort to develop our product candidates
       further, which includes conducting extensive and expensive pre-clinical
       animal studies and human clinical trials,

     - apply for and obtain regulatory approval to market and sell such product
       candidates, and

     - conduct other costly activities related to preparation for product
       launch, among many other activities.

     In some of our research programs, we are using compounds that we consider
to be "prototype" compounds in the research phase of our work. These compounds
include the PARP inhibitor GPI-6150 and the cocaine binding inhibitor GPI-2138.
By prototype compounds we mean compounds that we are using primarily to
establish that a relevant scientific mechanism of biological or chemical action
could have commercial application in diagnosing, treating or preventing disease.
These activities are sometimes referred to as establishing the "proof of
principle" of a particular approach to drug research and development. We
generally do not consider our prototype compounds to be lead compounds
acceptable for further development into a product(s) because of factors that
render them unsuitable as drug candidates. Such factors include sub-optimal
metabolic or pharmacokinetic characteristics or unfavorable patent coverage. In
order to develop commercial products, we will need to conduct research using
other compounds that share the key aspects of the prototype compounds but do not
have the unsuitable characteristics. We cannot be sure that this will always be
possible.

     In addition, our product candidates are subject to the risks of failure
inherent in the development of products based on new and unproved technologies.
These risks include the possibility that:

     - our new approaches will not result in any products that gain market
       acceptance;

     - a product candidate will prove to be unsafe or ineffective, or will
       otherwise fail to receive and maintain regulatory clearances necessary
       for marketing,

     - a product, even if found to be safe and effective, could still be
       difficult to manufacture on the large scale necessary for
       commercialization or otherwise not be economical to market,

     - a product will unfavorably interact with other types of commonly used
       medications, thus restricting the circumstances in which it may be used,

     - proprietary rights of third parties will preclude us from manufacturing
       or marketing a new product, or

     - third parties will market superior or more cost-effective products.

     As a result, our activities, either directly or through corporate partners,
may not result in any commercially viable products.

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WE ARE DEPENDENT ON COLLABORATIONS WITH THIRD PARTIES FOR THE DEVELOPMENT AND
COMMERCIALIZATION OF OUR PRODUCTS.

     Our resources are limited, particularly because we are developing our
technologies for a variety of different diseases. Our business strategy requires
that we enter into various arrangements with:

     - corporate partners, such as RPR and Amgen,

     - academic investigators at universities, such as The Johns Hopkins
       University ("Johns Hopkins") and others,

     - licensors of technologies, such as Johns Hopkins, Massachusetts Institute
       of Technology and Research Triangle Institute,

     - licensees of our technologies, such as Daiichi Radioisotope Laboratories,
       Ltd. and others.

     Our success depends in large part upon the efforts of these parties.

     Like many small biopharmaceutical companies, our business strategy includes
finding larger pharmaceutical companies to collaborate with us to support the
research, development and commercialization of our product candidates. In trying
to attract corporate partners to collaborate with us in the research,
development and commercialization process, we face serious competition from
other small biopharmaceutical companies and even the in-house research and
development staffs of the larger pharmaceutical companies themselves. If we are
unable to enter into such arrangements with corporate partners, this failure may
severely limit our ability to proceed with the research, development,
manufacture or sale of product candidates. For example, we are actively seeking
corporate partners to assist in the development of DOPASCAN as well as our
NAALADase and PARP inhibitor neuroprotective drug programs, but we may not find
suitable corporate partners for these programs.

     It is common in many corporate partnerships in our industry for the larger
partner to have responsibility for conducting pre-clinical studies and human
clinical trials and/or preparing and submitting applications for regulatory
approval of potential pharmaceutical or other products. That is the case with
some of our current corporate partnerships, including our collaboration with
Amgen. It is possible that this will also be the case with future arrangements
into which we may enter. If one of our collaborative partners fails to develop
or commercialize successfully any of our product candidates, this failure could
materially and adversely affect our business, financial condition and results of
operations.

     Furthermore, larger pharmaceutical companies often explore multiple
technologies and products for the same medical conditions. Therefore, they are
likely to enter into collaborations with our competitors for products addressing
the same medical conditions targeted by our technologies. Thus our
collaborators, including Amgen, may pursue alternative technologies or product
candidates either on their own or in collaboration with others, including our
competitors, in order to develop treatments for the diseases or disorders
targeted by our collaborative arrangements. Depending on how other product
candidates advance, a corporate partner may slow down or abandon its work on our
product candidates or terminate its collaborative arrangement with us in order
to focus on these other prospects.

     We also depend to a large extent on technology license agreements with
third parties, including our agreements with Johns Hopkins relating to the
neuroimmunophilin ligand technology. This license agreement and others we have
require that we meet a specified schedule for achieving designated research,
development and regulatory milestones and that we spend minimum amounts of money
to develop the technology, as well as make specified payments from proceeds from
corporate partners and royalty payments. If we are unable to meet or agree upon
these requirements under a license, our licensor could terminate the license and
thus deprive us of access to key technology. A deprivation of this type could
have a material adverse effect on our business, financial condition and results
of operations.

WE MAY BE UNABLE TO OBTAIN THE ADDITIONAL CAPITAL NEEDED TO OPERATE AND GROW OUR
BUSINESS.

     We will require substantial funds in order to continue our research and
development programs and pre-clinical and clinical testing and to manufacture
and, where applicable, market our products. We cannot be sure that we will be
able to obtain any future funds that we may require on acceptable terms, or at
all. Under our

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operating lease with a trust affiliated with First Union National Bank for our
new research and development facility, we are required to hold, in the
aggregate, unrestricted cash, cash equivalents and investments of $40 million at
all times during the term of the lease. In addition, we are required to maintain
specified amounts of cash ($24.8 million restricted at June 30, 1999) as
collateral at First Union under this arrangement and other loan agreements with
First Union. These requirements may limit our ability to access our capital in
the future.

     Our capital requirements depend on numerous factors, including:

     - the progress of our research and development programs,

     - the progress of pre-clinical and clinical testing,

     - the time and costs involved in obtaining regulatory approvals,

     - the cost of filing, prosecuting, defending and enforcing any patent
       claims and other intellectual property rights,

     - competing technological and market developments,

     - changes in our existing research relationships with universities and
       others,

     - our ability to establish collaborative arrangements with large
       pharmaceutical companies and others,

     - the requirements and timing of entering into technology licensing
       agreements and other similar arrangements, and

     - the progress of efforts to scale-up manufacturing processes.

     We may use our existing resources before we may otherwise expect because of
changes in our research and development and commercialization plans or other
factors affecting our operating expenses or capital expenditures, including
potential acquisitions of other businesses, assets or technologies.

     We anticipate that we will fund future capital requirements through a
combination of:

     - revenues generated under our agreements with RPR relating to GLIADEL,

     - revenues generated under our agreement with Amgen related to the FKBP
       neuroimmunophilin ligand technology,

     - public or private financings as necessary,

     - borrowings from RPR under our loan agreement with it,

     - new agreements with corporate partners for the research, development and
       commercialization of our technologies, and/or

     - other potential sources.

     Our ability to raise future capital on acceptable terms depends on
conditions in the public and private equity markets and our performance, as well
as the overall performance of other companies in the biopharmaceutical and
biotechnology sectors.

OUR STOCK PRICE IS VOLATILE.

     The market price of our stock has been and is likely to continue to be
highly volatile, and an investment in our shares involves substantial risks. The
market prices for shares of smaller biotechnology companies like ours have a
history of being highly volatile. Furthermore, the stock market generally and
the market for stocks of companies with lower market capitalizations, like us,
have from time to time experienced and likely will again experience significant
price and volume fluctuations that are unrelated to the operating performance of
a particular company.

     From time to time, stock market professionals publish research reports
covering our business and our future prospects. A number of factors may limit
our ability to meet the expectations of securities analysts or investors and
thus may adversely affect our stock price. Such factors include:

     - announcements by us or our competitors of clinical results, technological
       innovations, product sales, new products or product candidates,

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     - developments or disputes concerning patent or proprietary rights,

     - regulatory developments affecting our products,

     - period-to-period fluctuations in the results of our operations, and

     - market conditions for emerging growth companies and biopharmaceutical
       companies.

WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, PERMITTING COMPETITORS TO
DUPLICATE OUR PRODUCTS AND SERVICES.

     Any success will depend in large part on our ability to:

     - obtain, maintain and enforce patent protection for our products and
       processes,

     - license rights to patents from third parties,

     - maintain trade secret protection, and

     - operate without infringing upon the proprietary rights of others.

     Patent protection for our technologies and products will be a crucial
factor in our ability to develop and commercialize our products. Large
pharmaceutical companies consider a strong patent estate critical when they
evaluate whether to enter into a collaborative arrangement to support the
research, development and commercialization of a technology. Without the
prospect of reasonable patent protection, it would be difficult for a corporate
partner, or our company for that matter, to justify the time and money that is
necessary to complete the development of a product.

     The rules and criteria for receiving and enforcing a patent for
pharmaceutical and biotechnological inventions are in flux and are unclear in
many respects. The ultimate scope of patent protection afforded these types of
patents remains uncertain, and a number of our product candidates are subject to
this uncertainty.

     Many others, including companies, universities and other research
organizations, work in the areas of our business, and we cannot be sure that the
claims contained in our issued patents will be interpreted as broadly as we
would like in light of the inventions of these other parties. In addition, we
cannot be sure that the claims set forth in our pending patent applications will
issue in the form submitted. These claims may be narrowed or stricken, and the
applications may not ever ultimately result in valid and enforceable patents.
Thus, we cannot be sure that our patents and patent applications will adequately
protect our product candidates.

     We are aware of a company which has asserted publicly that it has patents
and pending patent applications in the United States and in certain foreign
countries covering the use of various classes of chemical compounds which are or
may be related to neuroimmunophilin ligands ("NILs") to treat a variety of
neurological disorders. We do not believe that our neurotrophic compounds,
including those under the FKBP neuroimmunophilin ligand technology licensed to
Amgen, infringe on this company's patents. Nevertheless, we cannot be certain
that our neurotrophic product candidates will not infringe or be dominated by
this company's current patents or patents that may issue in the future, or those
of any other company.

     In order to protect our proprietary position with respect to our
neuroimmunophilin ligands, we filed an opposition in 1998 in an effort to
prevent the final issuance of a European patent to the company we reference in
the immediately preceding paragraph. While we do not believe the claims of this
European patent are valid, any final issuance could result in future litigation
if this company were to allege that we infringed the claims of this patent in
Europe.

     Furthermore, we cannot be sure that any or all of the patent applications
assigned or licensed to us from third parties will be granted. We cannot offer
assurances that we will develop additional products or processes that are
patentable, or that any patents issued to us, or licensed by us, will provide us
with any competitive advantages or adequate protection for our products. We also
cannot be sure that others will not successfully challenge, circumvent or
invalidate any of our existing or future patents or intellectual property.

                                      -10-
   11

     Our policy is to control the disclosure and use of our know-how and trade
secrets by entering into confidentiality agreements with our employees,
consultants and third parties. There is a risk, however, that:

     - these parties will not honor our confidentiality agreements,

     - others will independently develop equivalent or competing technology,

     - disputes will arise concerning the ownership of intellectual property or
       the applicability of confidentiality obligations, or

     - disclosure of our trade secrets will occur regardless of these
       contractual protections.

     In our business, we often work with consultants and research collaborators
at universities and other research organizations. To the extent that any of
these consultants or research collaborators uses intellectual property owned by
others as part of their work with us, disputes may arise between us and these
other parties as to which one of us has the rights to intellectual property
related to or resulting from the work done.

     We support and collaborate in research conducted in universities, such as
Johns Hopkins, and in governmental research organizations, such as the National
Institutes of Health. We cannot be sure that we will have or be able to acquire
exclusive rights to the inventions or technical information that result from
work performed by university personnel or at these organizations. Also, disputes
may arise as to which party should have rights in research programs that we
conduct on our own or in collaboration with others that are derived from or
related to the work performed at the university or governmental research
organization. In addition, in the event of a contractual breach by us, some of
our collaborative research contracts provide that we must return the technology
rights (including any patents or patent applications) to the contracting
university or governmental research organization.

     Questions of infringement of intellectual property rights, including patent
rights, may involve highly technical and subjective analyses. Some or all of our
existing or future products or technologies may now or in the future infringe
the rights of other parties. These other parties might initiate legal action
against us to enforce their claims, and our defense of the claims might not be
successful.

     We may incur substantial costs if we must defend against charges of
infringement of patent or proprietary rights of third parties. We may also incur
substantial costs if we find it necessary to protect our own patent or
proprietary rights by bringing suit against third parties, including suits
involving our neurotrophic product candidates. We could also lose rights to
develop or market products or be required to pay monetary damages or royalties
to license proprietary rights from third parties. In response to actual or
threatened litigation, we may seek licenses from third parties or attempt to
redesign our products or processes to avoid infringement. We cannot be sure that
we will be able to obtain licenses on acceptable terms, or at all, or
successfully redesign our products or processes.

     In addition to the risk that we could be a party to patent infringement
litigation, the U.S. Patent and Trademark Office, or its foreign counterparts,
could require us to participate in patent interference proceedings that it
declares. These proceedings are often expensive and time-consuming, even if we
were to prevail in such a proceeding. We may also be forced to initiate legal
proceedings to protect our patent position or other proprietary rights. These
proceedings typically are costly, protracted, and offer no assurance of success.

     Under our collaboration, Amgen is responsible for preparing, filing,
prosecuting, maintaining and defending patent applications and patents relating
to the FKBP neuroimmunophilin ligand technology. We cannot be sure that Amgen
will pursue these activities in the same manner or as vigorously as we would if
we had that responsibility. Furthermore, Amgen has the option to take the lead
in bringing actions to enforce patent rights relating to the FKBP
neuroimmunophilin ligand technology and to defend against third party
infringement suits regarding that technology. While Amgen and Guilford have
agreed to consult with each other on such matters, in the event of disagreement,
Amgen's decisions will control.

WE ARE DEPENDENT ON LICENSED INTELLECTUAL PROPERTY.

     We have licensed intellectual property, including patents, patent
applications and know-how, from universities and others, including intellectual
property underlying GLIADEL, DOPASCAN and the neuroim-

                                      -11-
   12

munophilin ligand technology. Some of our product development programs depend on
our ability to maintain rights under these licenses. Under the terms of our
license agreements, we are generally obligated to:

     - exercise diligence in the research and development of these technologies,

     - achieve specified development and regulatory milestones,

     - expend minimum amounts of resources in bringing potential products to
       market,

     - make specified royalty and milestone payments to the party from which we
       have licensed the technology, and

     - reimburse patent costs to these parties.

     In addition, these license agreements obligate us to abide by
record-keeping and periodic reporting obligations. Each licensor has the power
to terminate its agreement if we fail to meet our obligations under that
license. We may not be able to meet our obligations under these license
agreements. Furthermore, these obligations may conflict with our obligations
under other agreements that we have.

     If we default under any of these license agreements, we may lose our right
to market and sell any products based on the licensed technology. Losing our
marketing and sales rights would have a material and adverse effect on our
business, financial condition and results of operations. Our license agreements
require that we pay a royalty on sales of GLIADEL to the university that
licensed us the technology underlying that product. In addition, we will have to
pay milestone and/or royalty payments in connection with the successful
development and commercialization of DOPASCAN and any products that result from
the NIL and PARP technologies.

     In the future, to support our product development efforts, we may need
research materials or scientific information that researchers at universities or
other organizations generate. We cannot be sure that we will be able to obtain
this scientific information or research materials in a timely manner or at all.

REVENUES FROM OUR PRODUCTS ARE DEPENDENT IN PART ON REIMBURSEMENT FROM
HEALTHCARE PAYORS, WHICH IS UNCERTAIN.

     Sales of our product candidates will depend in part on the availability of
reimbursement from third-party healthcare payors, such as government insurance
plans, including Medicare and Medicaid in the United States, private insurance
and managed care plans. Reimbursement policies for GLIADEL remain uncertain,
both domestically and internationally. We cannot be sure that any reimbursement
will be available for GLIADEL or any of our product candidates under
development. Furthermore, even if reimbursement is available, we cannot be sure
that it will be available at price levels sufficient to realize an appropriate
return on our investment in GLIADEL or our other products in development.

WE ARE DEPENDENT ON ONE SOURCE OF SUPPLY FOR SEVERAL OF OUR KEY PRODUCT
COMPONENTS.

     Currently, we are able to purchase some of the key components for GLIADEL
and our product candidates only from single source suppliers. These vendors are
subject to many strict regulatory requirements regarding the supply of these
components. We cannot be sure that these suppliers will comply, or have
complied, with applicable regulatory requirements or that they will otherwise
continue to supply us with the key components we require. If suppliers are
unable or refuse to supply us, or will supply us only at a prohibitive cost, we
may not be able to access additional sources at acceptable prices, on a timely
basis, if ever.

     The current formulation of GLIADEL utilizes the chemotherapeutic agent
BCNU, which is also known as "carmustine." Currently we have the option to
procure BCNU from only two sources in the United States, and we are not aware of
any supplier outside of the United States. We currently obtain BCNU from one of
these two U.S. suppliers on a purchase order basis and not through any long-term
supply agreement. If we fail to receive key supplies necessary for the
manufacture of GLIADEL on a timely basis at a reasonable cost, delays in product
shipment could result. Delays of this type would have a material adverse effect
on our business, financial condition and results of operations.

     The manufacture of DOPASCAN requires that a precursor compound be labeled
with a radioactive isotope of iodine, known as Iodine-123, to form the final
product. Only a limited number of companies

                                      -12-
   13

worldwide are capable of performing the necessary "radioiodination" of the
precursor and distribution of the final product. Currently, we do not have any
arrangement for the manufacture and supply of DOPASCAN nor do we have the
internal capability to manufacture DOPASCAN ourselves. Consequently, we will not
be in a position to commence Phase III or other clinical trials for DOPASCAN
until we locate a qualified supplier.

     We have assessed the companies that we believe are currently capable of
manufacturing a product like DOPASCAN. Based on this assessment, we believe a
significant risk exists that we may not be able to find a manufacturer who can
meet the quality and cost requirements required to conduct the Phase III
clinical trials that will be necessary to support application to the FDA for
regulatory approval. Inability to come to agreement with a suitable manufacturer
for the clinical and commercial supply of DOPASCAN on acceptable terms would
prevent us from developing this product candidate further.

THE U.S. GOVERNMENT HOLDS RIGHTS WHICH MAY PERMIT IT TO LICENSE TO THIRD PARTIES
TECHNOLOGY WE CURRENTLY HOLD THE EXCLUSIVE RIGHT TO USE.

     The U.S. government holds rights that govern aspects of certain of the
technologies licensed to us. These rights include a non-exclusive, royalty-free,
worldwide license for the government to practice or have practiced resulting
inventions for any governmental purpose. In addition, the U.S. government has
the right to grant to others licenses that may be exclusive under any of these
inventions if the government determines that:

     - adequate steps have not been taken to commercialize such inventions,

     - the grant is necessary to meet public health or safety needs, or

     - the grant is necessary to meet requirements for public use under federal
       regulations.

     The U.S. government also has the right to take title to a subject invention
if we fail to disclose the invention, and may elect to take title within
specified time limits. The U.S. government may acquire title in any country in
which we do not file a patent application within specified time limits.

     Federal law requires any licensor of an invention partially funded by the
federal government to obtain a commitment from any exclusive licensee, such as
us, to manufacture products using the invention substantially in the United
States. Further, these rights include the right of the government to use and
disclose technical data relating to licensed technology that was developed in
whole or in part at government expense. Our principal technology license
agreements contain provisions recognizing these rights.

     We have entered into a contract with the U.S. Army, funded by the Office of
National Drug Control Policy, commonly referred to as the "Drug Czar", to
provide financial support for research being conducted by us on a potential
cocaine inhibitor. That contract permits the U.S. government to obtain unlimited
rights to data developed in the course of our performance if we do not use the
data within five years after termination of the contract to conduct further
laboratory investigation and/or clinical trials aimed at developing a commercial
product to combat drug abuse.

PRE-CLINICAL AND CLINICAL TRIAL RESULTS FOR OUR PRODUCTS MAY NOT BE FAVORABLE.

     In order to obtain regulatory approval for the commercial sale of any of
our product candidates, we must conduct both pre-clinical studies and human
clinical trials. These studies and trials must demonstrate that the product is
safe and effective for the clinical use for which we are seeking approval.
Together with RPR, we commenced a Phase III clinical trial for GLIADEL in
December 1997 in patients undergoing initial surgery for the brain cancer
malignant glioma. We cannot be sure that the results of this or other clinical
trials we may conduct in the future will be successful. Adverse results from
this or any future trial would have a material adverse effect on our business,
financial condition and results of operations.

     We also face the risk that we will not be permitted to undertake or
continue clinical trials for any of our product candidates in the future. Even
if we are able to conduct such trials, we may not be able to demonstrate
satisfactorily that the products are safe and effective and thus qualify for the
regulatory approvals needed to market and sell them. Results from pre-clinical
studies and early clinical trials are often not accurate indicators of results
of later-stage clinical trials that involve larger human populations.

                                      -13-
   14

WE ARE SUBJECT TO EXTENSIVE GOVERNMENTAL REGULATION, WHICH MAY CHANGE AND HARM
OUR BUSINESS.

     Our research, pre-clinical development and clinical trials, and the
manufacturing and marketing of our product candidates, are subject to extensive
regulation by numerous governmental authorities in the United States and other
countries, including the FDA and the DEA. Controlled drugs such as GLIADEL and
radiolabeled drugs such as DOPSCAN are subject to additional requirements.
Except for GLIADEL, none of our product candidates has received marketing
clearance from the FDA. In addition, none of our product candidates has received
clearance from any foreign regulatory authority for commercial sale, except with
respect to GLIADEL, which has received marketing clearance in a limited number
of foreign countries.

     As a condition to approval of our product candidates under development, the
FDA could require additional pre-clinical, clinical or other studies. Any
requirement that we perform additional pre-clinical, clinical or other studies,
or purchase clinical or other data from other companies could have a material
adverse effect on our business, financial condition and results of operations.

     In order to obtain FDA approval of a new drug product for a specific
clinical use, we must demonstrate to the satisfaction of the FDA that the
product is safe and effective for its intended use. We must also demonstrate
that the product is capable of being manufactured in accordance with applicable
regulatory standards. Significant risks exist that:

     - we will not be able to satisfy the FDA's requirements with respect to any
       of our drug product candidates or with respect to the proposed expanded
       labeling for GLIADEL for patients undergoing initial surgery for
       malignant glioma, or

     - even if the FDA does approve our product candidates or expanded labeling,
       the FDA will approve less than the full scope of uses or labeling that we
       seek.

     Failure to obtain regulatory drug approvals on a timely basis could have a
material adverse effect on our business, financial condition and results of
operations.

     Even if we are able to obtain necessary FDA approval, the FDA may
nevertheless require post-marketing testing and surveillance to monitor the
approved product and continued compliance with regulatory requirements. The FDA
may withdraw product approvals if we or our corporate partners, such as RPR in
the case of GLIADEL, do not maintain compliance with regulatory requirements.
The FDA may also withdraw product approvals if problems concerning safety or
efficacy of the product occur following approval.

     The process of obtaining FDA and other required approvals or licenses and
of meeting other regulatory requirements to test and market drugs, including
controlled substances and radiolabeled drugs, is rigorous and lengthy. It has
required, and will continue to require, that we expend substantial resources. We
will need to conduct clinical trials and other studies on all of our product
candidates before we are in a position to file a new drug application for
marketing and sales approval. Unsatisfactory clinical trial results and other
delays in obtaining regulatory approvals or licenses would prevent the marketing
of the products we are developing. Until we receive the necessary approvals or
licenses and meet other regulatory requirements, we will not receive revenues or
royalties related to product sales.

     In addition to the requirements for product approval, before a
pharmaceutical product may be marketed and sold in some foreign countries, the
proposed pricing for the product must be approved as well. Products may be
subject to price controls or limits on reimbursement. The requirements governing
product pricing and reimbursement vary widely from country to country and can be
implemented disparately at the national level. As to reimbursement, the European
Union generally provides options for its fifteen Member States to restrict the
range of medicinal products covered by their national health insurance systems.
The European Union also generally provides options for its Member States to
control the prices of medicinal products for human use. A Member State may
approve a specific price for the medicinal product or it may, instead, adopt a
system of direct or indirect controls on the profitability of the company
placing the medicinal product on the market. We cannot guarantee that any
country which has price controls or reimbursement limitations for
pharmaceuticals will allow favorable reimbursement and pricing arrangements for
our products or those of our corporate partners, including RPR and its
applications for GLIADEL outside the United States.

                                      -14-
   15

     Where applicable, we hope to capitalize on current FDA regulations and the
new provisions of the FDA Modernization Act of 1997. These regulations or
provisions permit "fast track", expedited or accelerated approval or more
limited "treatment use" of, and cost recovery for, certain experimental drugs
under limited circumstances. The fast track and treatment provisions, and FDA's
accelerated, expedited and treatment regulations apply generally only to:

     - drug products intended to treat severely debilitating or serious or
       life-threatening diseases, and

     - drug products that provide meaningful therapeutic benefit to patients
       over existing treatments, that potentially address an unmet medical need,
       or that are for diseases for which no satisfactory or comparable therapy
       exists.

     The FDA Modernization Act contains provisions patterned after the
accelerated approval regulations and other provisions pertaining to expanded
access, i.e., treatment uses. Since some of the new statutory provisions and
current FDA regulations are different from one another, it is unclear how they
will apply, if at all, to our drug candidates. We cannot be sure that our drug
candidates will qualify for fast track, accelerated or expedited approvals or
for treatment use and cost recovery.

     Because controlled drug products and radiolabeled drugs are subject to
special regulations in addition to those applicable to other drugs, some of our
products and product candidates, including DOPASCAN, are or may be subject to
regulation by the DEA as controlled substances and by the Nuclear Regulatory
Commission as radiolabeled drugs. The NRC licenses persons who use nuclear
materials and establishes standards for radiological health and safety. The DEA
is responsible for the control of manufacture, distribution and dispensing of
controlled substances, including the equipment and raw materials used in their
manufacture and packaging in order to prevent such articles from being diverted
into illicit channels of commerce. Registration is required and other activities
involving controlled substances are subject to a variety of record keeping and
security requirements, and to permits and authorizations and other requirements.
States often have requirements for controlled substances, as well. Certain
exceptions are granted by the DEA from requirements for permits and
authorizations to export or import materials related to or involving controlled
substances. If we are unable to continue to obtain exceptions from the DEA for
shipment abroad or other activities, as we have in the past, this situation
could have a material adverse effect on us.

     We have obtained registrations for our facilities from the DEA. We have
also obtained exceptions from the DEA with respect to various of our activities
involving DOPASCAN, including the shipment of specified quantities of a
precursor of this product candidate to an overseas collaborative partner.
However, we cannot be sure that these exceptions will be sufficient to cover our
future activities or that the DEA will not revoke the exceptions. We also cannot
be sure that we will be able to meet the other requirements to test, manufacture
and market controlled substances or radiolabeled drugs, or that we will be able
to obtain additional necessary approvals, permits, authorizations, registrations
or licenses to meet state, federal and international regulatory requirements to
manufacture and distribute these products. The FDA Modernization Act required
the FDA to issue and finalize within one and one-half years regulations
governing the approval of radiolabeled drugs. Final regulations were issued in
May 1999. These cover general factors relevant to safety and effectiveness,
possible indications for radiopharmaceuticals, and the evaluation criteria for
safety and effectiveness. We do not know and cannot predict how these and other
provisions may affect the potential for approval of DOPASCAN.

OUR PRODUCTS USE NOVEL ALTERNATIVE TECHNOLOGIES AND THERAPEUTIC APPROACHES WHICH
HAVE NOT BEEN WIDELY STUDIED.

     Many of our product development efforts focus on novel alternative
therapeutic approaches and new technologies that have not been widely studied.
Applications for these approaches and technologies include, among other things,
the treatment of brain cancer, the diagnosis and monitoring of Parkinson's
disease, the promotion of nerve growth and the prevention of neuronal damage.
These approaches and technologies may not be successful. We are applying these
approaches and technologies in our attempt to discover new treatments for
conditions that are also the subject of research and development efforts of many
other companies. Our competitors may succeed in developing technologies or
products that are more effective or economical than those we are developing.
Rapid technological change or developments by others may result in our
technology or product candidates becoming obsolete or noncompetitive.

                                      -15-
   16

OUR BUSINESS IS DEPENDENT ON OUR ABILITY TO KEEP PACE WITH THE LATEST
TECHNOLOGICAL CHANGES.

     The technological areas in which we work continue to evolve at a rapid
pace. Our future success depends upon maintaining our ability to compete in the
research, development and commercialization of products and technologies in our
areas of focus. Competition from pharmaceutical, chemical and biotechnology
companies, universities and research institutions is intense and expected to
increase. Many of these competitors have substantially greater research and
development capabilities and experience and manufacturing, marketing, financial
and managerial resources than we do, and represent significant competition for
us.

     Acquisitions of competing companies by large pharmaceutical companies or
other companies could enhance the financial, marketing and other resources
available to these competitors. These competitors may develop products that are
superior to those we are developing. We are aware of the development by other
companies and research scientists of alternative approaches to:

     - the treatment of malignant glioma,

     - the diagnosis of Parkinson's disease,

     - the promotion of nerve growth and repair,

     - the treatment and prevention of neuronal damage, and

     - the treatment of cocaine addiction.

     Our competitors may develop products that render our products or
technologies noncompetitive or obsolete. In addition, we may not be able to keep
pace with technological developments.

OUR PRODUCTS MUST COMPETE WITH OTHERS TO GAIN MARKET ACCEPTANCE.

     Any product candidate that we develop and for which we gain regulatory
approval, including GLIADEL, must then compete for market acceptance and market
share. An important factor will be the timing of market introduction of
competitive products. Accordingly, we expect that the relative speed with which
we and competing companies can develop products, complete the clinical testing
and approval processes, and supply commercial quantities of the products to the
market will be an important element of market success.

     Significant competitive factors include:

     - capabilities of our collaborators,

     - product efficacy and safety,

     - timing and scope of regulatory approval,

     - product availability,

     - marketing and sale capabilities,

     - reimbursement coverage from insurance companies and others,

     - the amount of clinical benefit of our product candidates relative to
       their cost,

     - the method of administering a product,

     - price, and

     - patent protection.

     Our competitors may develop more effective or more affordable products or
achieve earlier product development completion, patent protection, regulatory
approval or product commercialization than we do. Our competitors' achievement
of any of these goals could have a material adverse effect on our business,
financial condition and results of operations.

                                      -16-
   17

WE HAVE LIMITED CLINICAL AND REGULATORY COMPLIANCE CAPABILITIES.

     We have limited resources in the areas of product testing and regulatory
compliance. Consequently, in order to carry our products through the necessary
regulatory approvals and prepare our product candidates for commercialization
and marketing, we will have to:

     - expend capital to acquire and expand such capabilities,

     - reach collaborative arrangements with third parties to provide these
       capabilities, or

     - contract with third parties to provide these capabilities.

WE ARE SUBJECT TO RISKS OF PRODUCT LIABILITY.

     We may potentially become subject to large liability claims and significant
defense costs as a result of the design, manufacture or marketing of our
products, including GLIADEL, or the conduct of clinical trials involving these
products. A product liability-related claim or recall could have a material
adverse effect on us. We currently maintain only $15 million of product
liability insurance covering clinical trials and product sales. We cannot be
sure that this existing coverage or any future insurance coverage we obtain will
be adequate. Furthermore, we cannot be sure that our insurance will cover any
claims made against us.

     Product liability insurance varies in cost. It can be difficult to obtain,
and we may not be able to purchase it in the future on terms acceptable to us,
or at all. We also may not be able to otherwise protect against potential
product liability claims. If this occurs, it could prevent or inhibit the
clinical development and/or commercialization of any products we are developing.

WE ARE DEPENDENT ON QUALIFIED PERSONNEL AND CONSULTANTS.

     We depend heavily on the principal members of our management and scientific
staff, including Craig R. Smith, M.D., our Chief Executive Officer, and Solomon
H. Snyder, M.D., who is a member of our Board of Directors and a consultant to
our company. The loss of the services of either of these individuals or other
members of our senior management team could have a material adverse effect on
our business, financial condition and results of operations.

     We have entered into a consulting agreement with Dr. Snyder and an
employment agreement with Dr. Smith, each of which provides protection for our
proprietary rights. Nevertheless, either Dr. Snyder or Dr. Smith may terminate
his relationship with us at any time. Accordingly, we cannot be sure that either
of these individuals or any of our other employees or consultants will remain
with us. In the future they may take jobs or consulting positions with our
competitors. These employees or consultants may also choose to organize
competing companies or ventures.

     Our planned activities will require individuals with expertise in many
areas including:

     - medicinal chemistry and other research specialties,

     - pre-clinical testing,

     - clinical trial management,

     - regulatory affairs,

     - manufacturing, and

     - business development.

     These planned activities will require additional personnel, including
management personnel, and will also require existing management personnel to
develop added expertise. Recruiting and retaining qualified personnel,
collaborators, advisors and consultants will be critical to our activities. We
cannot be sure that we will be able to attract and retain the personnel
necessary for the development of our business. Furthermore, many pharmaceutical,
biotechnology and health care companies and academic and other research
institutions compete intensely for experienced scientists. If we are not able to
hire the necessary experienced scientists or develop the necessary expertise,
this inability could have a material adverse effect on us. In addition, we also
depend on the support of our collaborators at research institutions and our
consultants.

                                      -17-
   18

WE CURRENTLY LACK SALES AND MARKETING EXPERIENCE.

     We currently do not have a sales force, and we have no experience in
marketing or selling a product in a commercial setting. If we decide to
establish an in-house sales force, our efforts may not be successful in this
regard. In addition, if we succeed in bringing additional products to market,
our sales force will have to compete with many other companies that currently
have extensive and well-funded marketing and sales operations. We cannot be sure
that our marketing and sales efforts would compete successfully against these
other companies.

OUR BUSINESS INVOLVES USING HAZARDOUS AND RADIOACTIVE MATERIALS AND ANIMAL
TESTING, ALL OF WHICH MAY RESULT IN ENVIRONMENTAL LIABILITY.

     Our research and development processes involve the controlled use of
hazardous and radioactive materials. We and our collaborative partners are
subject to international, federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of hazardous and
radioactive materials. We believe that the safety procedures relating to our
in-house research and development and manufacturing efforts comply in all
material respects with the standards prescribed by such laws and regulations.
However, we cannot completely eliminate the risk of accidental contamination or
injury from these materials. Moreover, we cannot be sure that our collaborative
partners are currently complying with the governing standards. We also cannot be
sure that we and our collaborative partners will be in compliance with such
standards in the future. If a regulatory authority determines that we or our
collaborative partners are not complying with the governing laws and
regulations, that determination could have a material adverse effect on our
business, operations or finances. In addition, we and/or our collaborative
partners could be held liable for damages, fines or other liabilities, which
could exceed our resources.

     We believe that we are and will continue to be in compliance in all
material respects with applicable environmental laws and regulations and
currently do not expect to make material capital expenditures for environmental
control facilities in the near term. However, we may have to incur significant
costs to comply with environmental laws and regulations in the future. In
addition, future environmental laws or regulations may have a material adverse
effect on our operations, business or assets.

     Many of the research and development efforts we sponsor involve the use of
laboratory animals. Changes in laws, regulations or accepted clinical procedures
may adversely affect these research and development efforts. Social pressures
that would restrict the use of animals in testing or actions against us or our
collaborators by groups or individuals opposed to testing using animals could
also adversely affect these research and development efforts.

THE COMMON STOCK SOLD IN THIS OFFERING OR THE PUBLIC SALE OF OTHER SHARES MAY
INCREASE THE AMOUNT OF OUR COMMON STOCK ON THE PUBLIC MARKET, CAUSING OUR STOCK
PRICE TO DECLINE.

     As of the date of this prospectus, we had approximately 23 million shares
of common stock outstanding. As of that date, we had issued options to purchase
an aggregate of approximately 4,180,855 million shares of our common stock and
warrants to purchase approximately 700,000 additional shares of our common
stock.

     A significant portion of our outstanding common stock is freely tradable in
the public markets. The shares offered by this prospectus are also eligible for
sale in the public markets. Additionally, shares issuable upon exercise of
outstanding options and warrants would be freely tradable in the public markets.
Amgen, which holds approximately 640,095 shares of our common stock and warrants
to purchase an additional 700,000 shares, has rights to register the shares of
common stock underlying these options and warrants with the SEC for sale in the
public market, or may sell shares under SEC Rule 144. Amgen may exercise its
registration rights at any time.

     If we were to initiate a public offering of our shares in the future to
raise additional capital, Amgen could require us to include their shares in that
registration. If Amgen requests inclusion in the registration, the sale of its
shares could limit our ability to raise the desired additional capital. We
cannot predict what effect, if any, sales of shares of our common stock by Amgen
or the availability for sale such shares will have on the market prices of our
common stock prevailing from time to time. The possibility that substantial
amounts of our

                                      -18-
   19

common stock may be sold in the public market could create a downward force on
the prevailing market prices for our common stock. This possibility could also
impair our ability to raise capital through the sale of our stock.

     During the term of the outstanding warrants and options, the holders can
take advantage of a rise in the market price of our common stock by purchasing
the shares underlying their warrants and options from us and then reselling
those shares on the public market. The holders can profit from the difference
between the price they have to pay to us to issue the shares to them and the
higher price for which they can sell the shares on the public market.
Accordingly, holders of options and warrants will most likely exercise them at
times when the market price of our common stock is high relative to the exercise
prices of the options and warrants with the intention of promptly reselling the
shares in the public market.

     This practice could negatively affect our other stockholders in certain
ways, including the following:

     - placing downward pressure on the market price for our common stock by
       adding to the volume of our shares available for sale at a given time;

     - diluting the interests of other stockholders by issuing shares at
       below-market prices upon the exercise of options and warrants; and

     - limiting our ability to sell shares to the public market since we might
       want to raise capital at times that our stock price is relatively higher.

EFFECTING A CHANGE OF CONTROL OF GUILFORD WOULD BE DIFFICULT, WHICH MAY
DISCOURAGE OFFERS FOR SHARES OF OUR COMMON STOCK.

     Our certificate of incorporation and the Delaware General Corporation Law
contain provisions that may delay or prevent an attempt by a third party to
acquire control of us. These provisions include the requirements of Section 203
of the Delaware General Corporation Law. In general, Section 203 prohibits
designated types of business combinations, including mergers, for a period of
three years between us and any third party who owns 15% or more of our common
stock. This provision does not apply if:

     - our Board of Directors approves of the transaction before the third party
       acquires 15% of our stock,

     - the third party acquires at least 85% of our stock at the time its
       ownership goes past the 15% level, or

     - our Board of Directors and two-thirds of the shares of our common stock
       not held by the third party vote in favor of the transaction.

     We have also adopted a stockholder rights plan intended to deter hostile or
coercive attempts to acquire us. Under the plan, if any person or group acquires
more than 20% of our common stock without approval of the Board of Directors
under specified circumstances, our other stockholders have the right to purchase
shares of our common stock, or shares of the acquiring company, at a substantial
discount to the public market price. The plan thus makes an acquisition much
more costly to a potential acquirer.

     Our certificate of incorporation also authorizes us to issue up to
4,700,000 shares of preferred stock in one or more different series with terms
fixed by the Board of Directors. We do not have to obtain stockholder approval
to issue preferred stock in this manner. Issuance of these shares of preferred
stock could have the effect of making it more difficult for a person or group to
acquire control of us. No shares of our preferred stock are currently
outstanding. While our Board of Directors has no current intentions or plans to
issue any preferred stock, issuance of these shares could also be used as an
anti-takeover device.

OUR OPERATIONS AND BUSINESS COULD BE DISRUPTED OR DAMAGED IF OUR SYSTEMS AND
PRODUCTS ARE NOT YEAR 2000 COMPLIANT.

     We have conducted and continue to conduct a review of our internal computer
systems to determine whether these systems will experience a so-called "Year
2000 problem". We have also made inquiries of third parties with which we do
business with respect to their computer systems, to determine whether their
systems will experience a Year 2000 problem. A Year 2000 problem would result
from a computer system, which includes embedded software in computer chips,
recognizing the first two digits of a year after the year 1999 as "19" instead
of "20", thereby reading the wrong year.

                                      -19-
   20

     While at this point we believe we have identified and replaced or corrected
all internal computer systems that would cause a significant Year 2000 problem,
we cannot be sure that we have not missed one or more internal computer systems
that could be adversely affected by the Year 2000 problem. If our remediation
efforts later prove to be inadequate, this failure could disrupt important
operations that could affect the manufacture of GLIADEL as well as research,
development and commercialization of our potential products. We would then be at
a competitive disadvantage relative to companies that have corrected Year 2000
problems.

     In addition, the third parties with which we do business may not identify
and replace in a timely manner those of their computer systems that will fail or
not properly function because of a Year 2000 problem. These third parties
include our corporate partners such as RPR and Amgen, our banks and the
financial institutions that hold our financial assets, and our significant
vendors. Other than making inquiries of these third parties and assessing their
responses, we are not in a position to verify independently the Year 2000
compliance status of these third parties. In most cases we have limited or no
ability to directly influence the Year 2000 compliance activities of these third
parties. Failure of any or all of these third parties to achieve substantial
Year 2000 compliance could have a material adverse effect on our business,
financial condition and results of operations.

     Finally, our ability to continue to manufacture GLIADEL, conduct our
research and product development programs, and function as a viable business
enterprise depends on the continued availability of various basic infrastructure
systems. These include electric power, telecommunications and transportation
systems. We cannot be sure that the Year 2000 issue will not disrupt these
infrastructure systems. If such disruptions were to occur in the Baltimore,
Maryland metropolitan region where our manufacturing facilities and research and
development laboratories are located, or in areas in which we or the third
parties on which we rely conduct business, these disruptions could very well
have a material adverse effect on our business, financial condition, results of
operations, or business prospects.

                                      -20-
   21

                      WHERE YOU CAN FIND MORE INFORMATION

     We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference rooms in Washington, D.C.,
New York, New York and Chicago, Illinois. Please call the SEC at 1-800-732-0330
for further information on the public reference rooms.

     The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to these documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below (and any amendments thereto) and any
future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until the selling stockholders sell all of their
common stock:

     - Annual Report on Form 10-K for the fiscal year ended December 31, 1998;

     - Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
       1999;

     - Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1999;

     - Current Report on Form 8-K filed September 13, 1999;

     - The description of our common stock contained in Form 8-A filed on March
       25, 1994.

     To obtain a copy of these filings at no cost, you may write or telephone us
at the following address:

              Corporate Secretary
              Guilford Pharmaceuticals Inc.
              6611 Tributary Street
              Baltimore, MD 21224
              (410) 631-6300

                                      -21-
   22

                                USE OF PROCEEDS

     We will not receive any proceeds from the sale of the common stock.

                              SELLING STOCKHOLDERS

     We are registering all 3,360,000 shares covered by this prospectus on
behalf of the selling stockholders named in the table below. We issued all of
the shares to the selling stockholders in a private placement. We have
registered the shares to permit the selling stockholders and their pledgees,
donees, transferees or other successors-in-interest, including persons that
receive their shares from selling stockholders as a gift, partnership
distribution or another non-sale related transfer after the date of this
prospectus (collectively, the "Selling Stockholders"), to resell the shares when
they deem appropriate.

     The following table sets forth the following information with respect to
each Selling Stockholder as of the date of this prospectus: (i) name of the
Selling Stockholder; (ii) the number and percentage of total outstanding shares
of Guilford common stock the Selling Stockholder beneficially owned before this
offering; (iii) the number of shares of common stock the Selling Stockholder is
offering; and (iv) the number of total outstanding shares of Guilford common
stock that the Selling Stockholder will own after the Selling Stockholder sells
all of the shares in this offering. None of the Selling Stockholders has had a
material relationship with us within the last three years other than as a result
of the ownership of the shares or other securities of Guilford. We do not know
how long the Selling Stockholders will hold the shares before selling them and
we currently have no agreements, arrangements or understandings with any of the
Selling Stockholders regarding the sale of any of the shares. The shares offered
by this prospectus may be offered from time to time by the Selling Stockholders
named below.

     The applicable percentage of total Guilford outstanding Shares beneficially
owned before the offering is based on 23,041,395 shares of Common Stock
outstanding, giving effect to the issuance of 3,360,000 shares to the Selling
Stockholders in the private placement.



                                               NUMBER OF     PERCENTAGE OF
                                                 SHARES      TOTAL GUILFORD
                                              BENEFICIALLY    OUTSTANDING
                                                 OWNED           SHARES                         NUMBER OF
                                                 BEFORE       BENEFICIALLY                     SHARES OWNED
              NAME OF SELLING                     THE         OWNED BEFORE      NUMBER OF       AFTER THE
                STOCKHOLDER                     OFFERING      THE OFFERING    SHARES OFFERED     OFFERING
              ---------------                 ------------   --------------   --------------   ------------
                                                                                   
Alta BioPharma Partners, L.P. ..............    248,634           1.08%          248,634              --
Alta Embarcadero BioPharma Partners, LLC....      9,372              *             9,372              --
Guilford Chase Partners (AltaBio), LLC......    141,994              *           141,994              --
Aries Domestic Fund, L.P....................     44,715              *            44,715              --
Aries Domestic Fund II, L.P. ...............      2,430              *             2,430              --
The Aries Master Fund.......................    102,855              *           102,855              --
Baystar Capital, L.P. ......................    225,000              *           225,000              --
CFBD I, LLC.................................    152,000              *           100,000          52,000
Chase Venture Capital Associates(1).........    366,280           1.59%          366,280              --
Closefire Ltd...............................     30,000              *            30,000              --
Pogue Capital International Ltd. ...........     70,000              *            70,000              --
Dompe farmaceutici s.p.a ...................    186,000              *           186,000              --
Formula Growth Fund.........................    105,000              *           105,000              --
Formula Unit Trust..........................    125,000              *           125,000              --
IDS Life Series Fund, Inc. -- Equity
  Portfolio.................................    750,000           3.26%          750,000              --
Narragansett I, L.P.........................    192,500              *           192,500              --
Narragansett Offshore, Ltd..................     57,500              *            57,500              --
Quantum Partners LDC........................    371,000           1.61%          371,000              --
Vector Later-Stage Equity Fund II (QP),
  L.P. .....................................    279,750           1.21%          279,750              --
Vector Later-Stage Equity Fund II, L.P. ....     93,250              *            93,250              --


- ---------------
(1) Number of shares beneficially owned before the offering and number of shares
    offered includes 141,280 shares owned and offered by Alta BioPharma
    Partners, L.P., in which Chase Venture Capital Associates holds a beneficial
    interest.

  * less than 1%

                                      -22-
   23

                              PLAN OF DISTRIBUTION

     The Selling Stockholders may sell the common stock from time to time. The
Selling Stockholders will act independently of us in making decisions regarding
the timing, manner and size of each sale. The Selling Stockholders may make
these sales on one or more exchanges, in the over-the-counter market or
otherwise, at prices and terms that are then-prevailing or at prices related to
the then-current market price, or in privately negotiated transactions. The
Selling Stockholders may use one or more of the following methods to sell the
common stock:

     - a block trade in which the Selling Stockholder's broker or dealer will
       attempt to sell the shares as agent, but may position and resell all or a
       portion of the block as a principal to facilitate the transaction;

     - a broker or dealer may purchase the common stock as a principal and then
       resell the common stock for its own account pursuant to this prospectus;

     - an exchange distribution in accordance with the rules of the applicable
       exchange; and

     - ordinary brokerage transactions and transactions in which the broker
       solicits purchasers.

     To the extent required, this prospectus may be amended or supplemented from
time to time to describe a specific plan of distribution. If the plan of
distribution involves an arrangement with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, the supplement will disclose:

     - the name of each Selling Stockholder and of the participating
       broker-dealer(s);

     - the number of shares involved;

     - the price at which the shares were sold;

     - the commissions paid or discounts or concessions allowed to such
       broker-dealer(s), where applicable;

     - that such broker-dealer(s) did not conduct any investigation to verify
       the information set out or incorporated by reference in this prospectus;
       and

     - other facts material to the transaction.

     In effecting sales, broker-dealers engaged by the Selling Stockholders may
arrange for other broker-dealers to participate in the resales.

     The Selling Stockholders may enter into hedging transactions with
broker-dealers in connection with distributions of the shares or otherwise. In
these transactions, broker-dealers may engage in short sales of the shares in
the course of hedging the positions they assume with Selling Stockholders. The
Selling Stockholders may also sell shares short and redeliver the shares to
close out such short positions. The Selling Stockholders may enter into options
or other transactions with broker-dealers which require the delivery to the
broker-dealer of the shares. The broker-dealer may then resell or otherwise
transfer such shares pursuant to this prospectus. The Selling Stockholders also
may loan or pledge the shares to a broker-dealer. The broker-dealer may sell the
shares so loaned, or upon default, the broker-dealer may sell the pledged shares
pursuant to this prospectus.

     Broker-dealers or agents may receive compensation in the form of
commissions, discounts or concessions from Selling Stockholders. Broker-dealers
or agents may also receive compensation from the purchasers of the shares for
whom they act as agents or to whom they sell as principal, or both. Compensation
as to a particular broker-dealer might be in excess of customary commissions and
will be in amounts to be negotiated in connection with the sale. Broker-dealers
or agents and any other participating broker-dealers or the Selling Stockholders
may be deemed to be "underwriters" within the meaning of section 2(11) of the
Securities Act of 1933 in connection with sales of the shares. Accordingly, any
such commission, discount or concession received by them and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
discounts or concessions under the Securities Act. Because Selling Stockholders
may be deemed "underwriters" within the meaning of section 2(11) of the
Securities Act, the Selling Stockholders will be subject to the prospectus
delivery requirements of the Securities Act.

                                      -23-
   24

     Any shares covered by this prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.

     The shares will be sold only through registered or licensed brokers or
dealers if required under applicable state securities laws. In addition, in
certain states the shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.

     Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
Selling Stockholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the Selling Stockholders. We will make copies of
this prospectus available to the Selling Stockholders and have informed them of
the need to deliver copies of this prospectus to purchasers at or prior to the
time of any sale of the shares.

     We will bear all costs, expense and fees in connection with the
registration of the shares. The Selling Stockholders will bear all commissions
and discounts, if any, attributable to the sale of the shares. The Selling
Stockholders may agree to indemnify any broker-dealer or agent that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act. We have agreed to
indemnify the Selling Stockholders against certain liabilities in connection
with their offering of the shares, including liabilities arising under the
Securities Act.

                                 LEGAL MATTERS

     Certain legal matters with respect to the common shares offered hereby have
been passed upon for Guilford by Hogan & Hartson L.L.P., Baltimore, Maryland.

                                    EXPERTS

     The consolidated financial statements of Guilford Pharmaceuticals Inc. and
subsidiaries as of December 31, 1998 and 1997, and for each of the years in the
three-year period ended December 31, 1998, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent certified public accountants, incorporated by reference herein,
and upon the authority of such firm as experts in accounting and auditing.

                                      -24-
   25

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                               TABLE OF CONTENTS



                                                         PAGE
                                                         ----
                                                      
The Company............................................    2
Risk Factors...........................................    2
Where You Can Find More Information....................   21
Use of Proceeds........................................   22
Selling Stockholders...................................   22
Plan of Distribution...................................   23
Legal Matters..........................................   24
Experts................................................   24


                                3,360,000 SHARES

                         GUILFORD PHARMACEUTICALS INC.

                                  COMMON STOCK

                          ---------------------------
                              P R O S P E C T U S
                          ---------------------------

                               SEPTEMBER 23, 1999

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