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SECURITIES AND EXCHANGE COMMISSION

Pre-effective

Guilford Pharmaceuticals Inc.

6611 Tributary Street

Craig R. Smith, M.D.

Copies to:

     Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

         The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

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The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

Dear Guilford Pharmaceuticals Inc. and Gliatech Inc. Stockholders:

      The boards of directors of Guilford Pharmaceuticals Inc. and Gliatech Inc. have approved a merger agreement which provides for the merger of the two companies. In the merger, Gliatech will become wholly-owned by Guilford. We believe that the strategic combination of Guilford and Gliatech will create a strong product-focused organization with three marketed products, a development pipeline of ten additional product candidates and a diversified research pipeline.

      We cannot complete the merger unless the stockholders of Gliatech adopt the merger agreement and the stockholders of Guilford approve the issuance of Guilford shares in the merger. Each of us will hold a meeting of our stockholders to vote on this merger proposal. Your vote is very important. Whether or not you plan to attend your stockholders’ meeting, please take the time to vote by completing and mailing the enclosed proxy card to us. If you sign, date and mail your proxy card without indicating how you want to vote, your proxy will be counted as a vote in favor of the merger agreement. In the case of the Gliatech meeting, not returning your proxy card or not instructing your broker how to vote any shares held for you in “street name”’ will have the same effect as a vote against the merger. In the case of the Guilford meeting, not returning your card, or not instructing your broker how to vote any shares held for you in “street name,” will have no effect on the outcome of the vote taken at the meeting, but may affect the ability of Guilford to achieve a quorum at the meeting.

      The dates, times and places of the meetings are as follows:

      This document provides you with detailed information about these meetings and the proposed merger. You can also get information about our companies from publicly available documents that our companies have filed with the Securities and Exchange Commission. We encourage you to read this entire document carefully and thoughtfully, including the section entitled “Risk Factors” beginning on page   .

      All of the members of Gliatech’s board of directors and Gliatech’s executive officers, who collectively hold approximately 1.8% of the outstanding Gliatech common stock, have agreed to vote all of their shares of Gliatech common stock in favor of the merger.

      We strongly support this merger of our companies and join with all of the other members of our boards of directors in recommending that you vote in favor of the merger.

EACH VOTE IS IMPORTANT.

Neither the Securities and Exchange Commission nor any state securities regulator has approved or disapproved this document or the securities to be issued in the merger or determined if this document is accurate or adequate. Any representation to the contrary is a criminal offense.

This joint proxy statement/prospectus is dated            , 2000

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

      Notice is hereby given that Guilford Pharmaceuticals Inc. will hold a special meeting of stockholders at 10:00 a.m., local time, on            , 2000, at Guilford’s research and development facilities at 6411 Beckley Street, Baltimore, Maryland, 21224 to consider and vote on a proposal recommended by the board of directors of Guilford to:

	1.	approve the issuance of shares of Guilford common stock in the merger described in the Agreement and Plan of Merger, as amended, among Guilford Pharmaceuticals Inc., Gliatech Inc. and St. John Development Corp., a wholly-owned subsidiary of Guilford Pharmaceuticals Inc., dated as of May 29, 2000; and
	2.	transact other business as may properly come before the special meeting or any adjournment or postponement of the meeting.

      The board of directors of Guilford has fixed the close of business on            , 2000 as the record date for the determination of the stockholders entitled to notice of, and to vote at, the meeting and any adjournment or postponement of the meeting. A complete list of stockholders entitled to vote at the meeting will be open to examination by the stockholders during regular business hours for a period of ten days prior to the meeting at the principal executive offices of Guilford, 6611 Tributary Street, Baltimore, Maryland 21224.

      The board of directors of Guilford unanimously recommends that you vote to approve the issuance of Guilford shares in the merger at the special meeting.

	By order of the board of directors,
	Thomas C. Seoh Senior Vice President, General Counsel and Secretary

Baltimore, Maryland

      Whether or not you plan to attend the special meeting in person, and whether you own one or many shares, please complete, date, sign and promptly return the enclosed proxy card in the enclosed envelope, which requires no postage. You may revoke your proxy at any time before the vote is taken by delivering to the Secretary of Guilford a written revocation or a proxy with a later date or by voting your shares in person at the special meeting.

Please do not send stock certificates with your proxy card.

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

      Notice is hereby given that Gliatech Inc. will hold a special meeting of stockholders at 9:00 a.m., local time, on            , 2000, at the Embassy Suites Hotel – Beachwood, 3775 Park East Drive, Beachwood, Ohio, to consider and vote on a proposal recommended by the board of directors of Gliatech to:

	1.	adopt the Agreement and Plan of Merger, as amended, among Guilford Pharmaceuticals Inc., Gliatech Inc. and St. John Development Corp., a wholly-owned subsidiary of Guilford, dated as of May 29, 2000, pursuant to which Gliatech will become a wholly-owned subsidiary of Guilford; and
	2.	transact any other business that properly comes before the special meeting or any adjournment or postponement of the meeting.

      The board of directors of Gliatech has fixed the close of business on            , 2000 as the record date for the determination of the stockholders entitled to notice of, and to vote at, the meeting and any adjournment or postponement of the meeting. A complete list of stockholders entitled to vote at the meeting will be open to examination by the stockholders during regular business hours for a period of ten days prior to the meeting at the Embassy Suites Hotel – Beachwood, 3775 Park East Drive, Beachwood, Ohio.

      The board of directors of Gliatech has approved, adopted and declared advisable the merger agreement and the other transactions contemplated by the merger agreement and recommends that you vote to adopt the merger agreement at the special meeting.

      Adoption of the merger agreement is a condition of the merger. The merger will not be completed unless the merger agreement is adopted by the Gliatech stockholders.

	By order of the board of directors
	Thomas O. Oesterling, Ph.D. Chairman of the Board, President and Chief Executive Officer

Cleveland, Ohio
           , 2000

      All stockholders are cordially invited to attend the special meeting. It is important that your shares be represented at the meeting. Whether or not you plan to attend the special meeting in person, please complete, date, sign and promptly return the enclosed proxy card in the self-addressed enclosed envelope which requires no postage if mailed in the United States. You may revoke your proxy in the manner described in this joint proxy statement/prospectus at any time before the proxy has been voted at the special meeting.

Please do not send stock certificates with your proxy card.

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REFERENCES TO ADDITIONAL INFORMATION

      This joint proxy statement/prospectus incorporates important business and financial information about Guilford and Gliatech from other documents that are not included in or delivered with this joint proxy statement/prospectus. This information is available at the internet website that the SEC maintains at http://www.sec.gov and is also available to you without charge upon your written or oral request. You can obtain these documents, which are incorporated by reference in this joint proxy statement/prospectus, by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

      If you would like to request documents, please do so by            , 2000 in order to receive them before the special meetings. See “Where You Can Find More Information” beginning on page   .

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QUESTIONS AND ANSWERS ABOUT THE MERGER

Q:	Why are Guilford and Gliatech proposing the merger?
A:	We believe that the merger of Gliatech and Guilford will create a stronger organization with significant growth potential.
Q.	What will happen to Guilford and Gliatech as a result of the merger?
A:	If the merger is completed, Gliatech will become a wholly-owned subsidiary of Guilford.
Q:	What will a Gliatech stockholder receive in the merger?
A:	A Gliatech stockholder will receive 1.38 shares of Guilford common stock for each share of Gliatech common stock he or she owns. For any resulting fractional share, a stockholder will receive cash based on the market value of the fractional share of Guilford common stock. After the merger, Gliatech stockholders will own approximately 37% of the outstanding shares of Guilford common stock.
Q:	What will a Guilford stockholder receive in the merger?
A:	After the merger, a Guilford stockholder will continue to hold the same number of Guilford shares he or she now owns. These shares, however, will represent a smaller proportion of the outstanding shares of the combined company.
Q:	When do Guilford and Gliatech expect the merger to be completed?
A:	Guilford and Gliatech are working to complete the merger as quickly as possible. We anticipate that the merger will be completed during the third quarter of 2000.
Q:	What do I need to do now?
A:	You should carefully read and consider the information contained in this joint proxy statement/prospectus. You should then complete and sign your proxy card and return it in the enclosed return envelope as soon as possible so that your shares will be represented at your company’s special meeting.
	If you sign, date and mail your proxy card without identifying how you want to vote, your proxy will be voted “For” the merger. If you are a Gliatech stockholder and you do not vote, it will have the same effect as a vote “Against” the merger.
Q.	Are Guilford or Gliatech stockholders entitled to dissenters’ rights?
A:	No. Under Delaware law, which governs both companies, neither the Guilford stockholders nor the Gliatech stockholders are entitled to dissenters’ rights of appraisal or other rights to demand fair value for their shares in cash by reason of the merger.
Q:	Who must approve the merger?
A:	In addition to the approvals of the boards of directors of Guilford, Gliatech and St. John Development Corp., which have already been obtained, the stockholders of Guilford must approve the issuance of shares in the merger and the stockholders of Gliatech must adopt the merger agreement.
Q.	Can I change my vote after I mail my signed proxy?
A:	Yes. You can change your vote at any time before your proxy is voted at the special meeting of your company’s stockholders. You can do this in one of three ways. You can send a written notice stating that you would like to revoke your proxy. You can complete and submit a new proxy. If you choose either of these two methods, you must submit your notice of revocation or your new proxy for Guilford shares at the address on page      and for Gliatech shares at the address on page       .
	You can attend the special meeting of your company’s stockholders and vote in person.
Q:	If my shares are held in street name will my broker vote my shares in the merger?
A:	A broker will vote your shares with respect to the merger only if you provide him or her with instructions on how to vote. Your broker should mail information to you that will explain how to give voting instructions to your broker. Please provide instructions to your broker on how to vote your shares. If

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	you do not instruct your broker how to vote, your shares will not be voted.
Q:	Should I send in my certificates now?
A:	No, you should not send in your stock certificates with your proxy. Gliatech stockholders will receive instructions for exchanging your stock certificates if the merger is completed.
Q:	Who can help answer my questions?
A:	If you have any questions about the merger or if you need additional copies of this joint proxy statement/ prospectus or the enclosed proxy card, you should contact Guilford’s and Gliatech’s proxy solicitors:
	For Guilford:

	For Gliatech:

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SUMMARY

      This summary highlights selected information from this joint proxy statement/prospectus. It does not contain all of the detailed information that may be important to you. To understand the merger fully and for a more complete description of the legal terms of the merger, you should read carefully this entire document and the other documents to which we refer. For more information about Guilford and Gliatech, see “Where You Can Find More Information” on page           . Each item in this summary refers to the pages where that subject is discussed more fully.

The Companies

	Guilford Pharmaceuticals Inc.
	6611 Tributary Street
	Baltimore, Maryland 21224
	Telephone: (410) 631-6300

      Guilford Pharmaceuticals Inc. is a biopharmaceutical company engaged in the development and commercialization of novel products in two principal areas: (1) targeted and controlled drug delivery systems using proprietary biodegradable polymers for the treatment of cancer and other diseases or conditions; and (2) therapeutic and diagnostic products for neurological diseases and conditions.

	Gliatech Inc.
	23420 Commerce Park Road
	Cleveland, Ohio 44122
	Telephone: (216) 831-3200

      Gliatech Inc. is engaged in the discovery and development of biosurgical and therapeutic products to improve surgical outcomes and to treat neurological disorders. The biosurgical products include the ADCON® family of products and a proprietary monoclonal antibody to block the inappropriate activation of the complement pathway. The ADCON® family of products consists of proprietary, resorbable, carbohydrate polymer medical devices designed to inhibit scarring and adhesions following surgery. The proprietary monoclonal antibody is designed to block the inappropriate activation of the complement pathway and inhibit inflammation associated with a variety of indications such as coronary bypass surgery, heart attack and stroke. In addition to the biosurgical products, Gliatech is pursuing the development of small molecule drug candidates for the treatment of several neurological disorders, including Attention Deficit Hyperactive Disorder, sleep disorders, anxiety, schizophrenia and Alzheimer’s Disease.

The Merger (page      )

      The merger agreement is attached as Annex A to this joint proxy statement/prospectus and is incorporated by reference into this document. We encourage you to read the entire merger agreement because it is the legal document that governs the merger.

      Assuming the exercise of all outstanding Gliatech stock options, at the closing of the merger there would be 10,955,399 shares of Gliatech common stock outstanding. Guilford will issue up to 15,118,450 shares of its common stock in exchange for these shares. The aggregate value of the common stock Guilford will issue, based on the closing sale price of Guilford’s common stock on May 26, 2000, the last full trading day prior to the public announcement of the execution of the merger agreement, which was $15.50, would be $235 million. Based on the closing sale price of Guilford’s common stock on             , 2000, the last trading day for which information was available prior to printing this joint proxy statement/prospectus, which was $       , the aggregate value of the Guilford common stock to be issued in the merger would be $       .

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What You Will Receive in the Merger (page      )

      If the merger is completed as proposed, each outstanding share of Gliatech will be cancelled and each Gliatech stockholder will receive 1.38 shares of Guilford common stock for each share of Gliatech common stock that the stockholder owns. A Gliatech stockholder will also receive a cash payment for any fraction of a share of Guilford common stock that the stockholder would otherwise be entitled to receive.

	•	For example, a stockholder who owns 1,000 shares of Gliatech stock on the closing date will receive 1,380 Guilford shares. A stockholder who owns 10 shares of Gliatech will receive 13 shares of Guilford plus cash equal to .8 times the average closing price of a share of Guilford stock on the Nasdaq National Market for the 20 trading days ending three days prior to the effective date of the merger.

     Gliatech Employee Stock Options

      Each outstanding option to purchase shares of Gliatech common stock will be converted into an option to purchase a number of shares of Guilford common stock equal to the number of shares of Gliatech common stock that were subject to the option multiplied by 1.38. The exercise price per share for each Gliatech option will be divided by 1.38. Except for some acceleration of vesting that will occur as a result of the merger, all other terms of the option will remain unchanged.

The Guilford Special Meeting (page           )

      The special meeting of Guilford stockholders will be held at Guilford’s facilities at 6411 Beckley Street, Baltimore, Maryland on           , 2000, at 10:00 a.m., local time.

      At the special meeting, Guilford stockholders will be asked to vote to approve the issuance of shares in the merger. Approval of the share issuance requires the favorable vote of a majority of the shares of Guilford stock that vote on the proposal. There were           shares of Guilford common stock outstanding on           , 2000.

      You can vote at the special meeting of Guilford stockholders if you owned Guilford common stock at the close of business on           , 2000.

The Gliatech Special Meeting (page           )

      The special meeting of Gliatech stockholders will be held at the Embassy Suites Hotel — Beachwood, 3775 Park East Drive, Beachwood, Ohio, on           , 2000, at 9:00 a.m., local time.

      At the special meeting, Gliatech stockholders will be asked to vote to adopt the merger agreement. Adoption of the merger agreement requires the affirmative vote of more than 50% of the outstanding shares of Gliatech common stock.

      You can vote at the special meeting of Gliatech stockholders if you owned Gliatech common stock at the close of business on           , 2000. As of that date, directors and executive officers of Gliatech owned approximately      % of the outstanding shares of Gliatech common stock.

      If you do not vote your shares of Gliatech common stock, the effect will be the same as a vote against the merger agreement.

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Guilford’s Reasons for the Merger (page           )

      The Guilford board of directors has approved the issuance of Guilford shares in the merger agreement and the transactions contemplated by the merger agreement. In reaching its decision, the Guilford board of directors considered the following factors, among others:

	•	the combined company’s portfolio will include three marketed products and ten products in various stages of development, as well as a number of research projects;
	•	the combined company’s greater size will allow it to offer a broader array of biopolymer-based products for surgeons and novel potential treatments for neurological diseases;
	•	the impact of the merger on the ability of the combined company to take advantage of new opportunities to expand marketing, sales, manufacturing, process chemistry and clinical development capabilities that neither company could pursue as effectively on its own;
	•	the opinion of Prudential Securities Incorporated, Guilford’s financial advisor, that, as of the date of the opinion, the ratio for the exchange of shares of Gliatech common stock for shares of Guilford common stock in the merger was fair, from a financial point of view, to Guilford; and
	•	the terms of the merger agreement and the ability to complete the merger as a tax free reorganization for federal income tax purposes and a pooling of interests for accounting purposes.

      You should recognize, however, that Guilford’s stockholders may not achieve the benefits of the merger mentioned above because of the risks and uncertainties discussed in the section entitled “Risk Factors Relating to the Merger” beginning on page      , the section entitled “A Caution About Forward-Looking Statements” beginning on page      and the section entitled “Guilford’s Reasons for the Merger; Recommendation of its Board of Directors — Countervailing Factors beginning on page   .”

Gliatech’s Reasons for the Merger (page           )

      The Gliatech board of directors has approved, adopted and declared advisable the merger agreement and the other transactions contemplated by the merger agreement. In reaching its decision, the Gliatech board of directors considered the following factors, among others:

	•	the impact that the merger would have on the combined company’s capabilities in biopolymer development and the development of novel drugs for the treatment of central nervous system disorders;
	•	the impact of the merger on the combined company’s commercial platform, with three marketed biopolymer products for the surgical marketplace;
	•	the impact of the merger on the combined company’s research and development efforts, creating a broad and well-diversified pipeline of product candidates in clinical development;
	•	the impact of the merger on the combined company’s ability to expand its marketing and sales efforts, manufacturing capacity, process chemistry and small-scale pharmaceutical production, clinical development capacity and ability to in-license other surgical products;
	•	the ability of the combined company to share resources;
	•	based on the closing prices of Guilford’s common stock and Gliatech’s common stock as of May 23, 2000, the merger consideration represents an approximately 29% premium over Gliatech’s common stock, and upon completion of the merger, Gliatech stockholders will own approximately 37% of the combined company;

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	•	the opinion of SG Cowen Securities Corporation, Gliatech’s financial advisor, that, as of the date of the opinion, the exchange ratio was fair, from a financial point of view, to the holders of common stock of Gliatech; and
	•	the ability to complete the merger as a tax free reorganization for federal income tax purposes, except for tax payable on cash received by Gliatech stockholders for fractional shares.

      You should recognize, however, that Gliatech’s stockholders may not achieve the benefits of the merger mentioned above because of the risks and uncertainties discussed in the section entitled “Risk Factors Relating to the Merger” beginning on page      , the section entitled “A Caution About Forward-Looking Statements” beginning on page      and the section entitled “Gliatech’s Reasons for the Merger; Recommendation of its Board of Directors — Countervailing Factors” beginning on page   .

Our Recommendations to Stockholders

     Guilford (page           )

      The board of directors of Guilford recommends that its stockholders vote “For” the proposal to approve the issuance of Guilford shares in the merger.

     Gliatech (page           )

      The board of directors of Gliatech recommends that its stockholders vote “For” adoption of the merger agreement.

Opinion of Guilford Financial Advisor (page           )

      In deciding to approve the merger agreement, the Guilford board of directors considered a number of factors, including the opinion of its financial advisor, Prudential Securities Incorporated. On May 28, 2000, Prudential Securities Incorporated delivered to the Guilford board of directors its opinion that, as of that date, the Guilford common stock exchange ratio was fair, from a financial point of view, to Guilford.

      The full text of Prudential Securities Incorporated’s opinion, dated May 28, 2000, is attached to this joint proxy statement/prospectus as Annex B. We encourage you to read this opinion carefully for a description of the assumptions made, matters considered and limitations on the review undertaken. Prudential Securities Incorporated’s opinion is directed to the Guilford board and does not constitute a recommendation to any stockholder with respect to any matter relating to the proposed merger. Prudential Securities Incorporated’s opinion speaks only as of its date and Prudential Securities Incorporated is under no obligation to confirm its opinion as of a later date.

Opinion of Gliatech Financial Advisor (page           )

      In connection with the merger, the Gliatech board of directors received a written opinion from SG Cowen Securities Corporation that the exchange ratio was fair, from a financial point of view, to the holders of common stock of Gliatech. The opinion was delivered to the Gliatech board of directors on May 29, 2000.

      The full text of SG Cowen’s opinion, dated May 29, 2000, is attached to this joint proxy statement/prospectus as Annex C. We encourage you to read this opinion carefully for a description of the assumptions made, matters considered and limitations on the review undertaken. SG Cowen’s opinion, which speaks only as of May 29, 2000, is directed to the Gliatech board of directors and does not constitute a recommendation to any stockholder with respect to any matter relating to the proposed merger. The opinion is based on economic and market conditions on May 29, 2000, and SG Cowen has no obligation to update the opinion or confirm it as of a later date.

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Regulatory Approvals (page           )

      In order to complete the merger, we made filings on June 12, 2000 with the Department of Justice and the Federal Trade Commission. Guilford and Gliatech were granted early termination of the waiting period on June 26, 2000. There are no other regulatory approvals necessary to complete the merger.

Conditions to the Merger (page           )

      The merger will not be completed unless customary conditions are satisfied or waived by Guilford and Gliatech. Examples of conditions that cannot be waived are stockholder approval, regulatory approval and the absence of governmental action to block the merger. If either Guilford or Gliatech waives a material condition to the completion of the merger, it intends to resolicit stockholder approval of the merger. Material conditions to the completion of the merger would include the delivery of letters from each of Guilford’s and Gliatech’s independent public accountants that the accountants concur with their clients’ management’s conclusions that no conditions exist with respect to their client that would preclude accounting for the merger as a pooling of interests and the receipt by both companies of legal opinions that the merger will qualify as a reorganization within the meaning of the federal income tax laws.

Termination of the Merger Agreement (page           )

      The merger agreement may be terminated by either Guilford or Gliatech in a number of circumstances, in which case the merger will not be completed. Failure of either company’s stockholders to approve the merger is among the factors that could permit Guilford or Gliatech to terminate the merger agreement. Guilford may also terminate the merger agreement if the Gliatech board of directors withdraws its recommendation in favor of the merger or recommends an alternative transaction, among other reasons. Gliatech may terminate the merger agreement to pursue an alternative transaction under certain circumstances. See “Terms of the Merger Agreement — Termination of the Merger Agreement” on page           for a more detailed description of the termination provisions of the merger agreement.

Termination Fee (page           )

      If the merger agreement is terminated, under some circumstances, Gliatech may have to pay Guilford a termination fee of $6.5 million and may be required to reimburse Guilford’s expenses of up to $1.5 million. These amounts are payable when either party terminates the agreement because Gliatech’s board of directors determines to pursue an alternative transaction. See “Terms of the Merger Agreement — Termination Fee” on page           for more information about when a termination fee may become payable.

Material Federal Income Tax Consequences (page           )

      One of the conditions to the completion of the merger is the receipt of opinions of counsel that the exchange of Gliatech common stock for Guilford common stock qualifies as a tax-free exchange of stock for United States federal income tax purposes. Gliatech stockholders, however, will be taxed on any cash received for any fraction of a share.

      Determining the actual tax consequences of the merger to a Gliatech stockholder can be complicated. These consequences will depend on the stockholder’s specific situation and on variables not within the control of Gliatech or Guilford. Gliatech stockholders should consult with their own tax advisors for a full understanding of the tax consequences to them of the merger.

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Accounting Treatment (page           )

      The companies have structured the merger to be accounted for as a pooling of interests for financial reporting and accounting purposes in accordance with generally accepted accounting principles.

      Under this accounting treatment, upon completion of the merger, the assets and liabilities of Gliatech would be added to those of Guilford at their recorded book values and the stockholders’ equity accounts of Guilford and Gliatech would be combined on Guilford’s consolidated balance sheet. On a pooling of interests accounting basis, Guilford will retroactively restate its financial statements issued after completion of the merger to reflect the consolidated combined financial position and results of operations of Guilford and Gliatech as if the merger had taken place as of the beginning of the earliest period covered by such financial statements.

      Guilford will assume all outstanding options to purchase shares of Gliatech common stock. Although the vesting of some Gliatech stock options will accelerate as a result of the merger, Guilford will not recognize any compensation expense because the accelerated vesting of the options occurred in accordance with the original terms of the stock option award.

Interests of Gliatech Officers, Directors and Some Employees in the Merger

      In considering the Gliatech board’s recommendation that you vote for the merger agreement, you should be aware that the interests in the merger of the Gliatech officers, directors and some employees, are different from, or in addition to, their rights as Gliatech stockholders.

      These interests exist because of severance arrangements, change of control agreements, acceleration of option vesting and other agreements. These agreements and arrangements will provide the officers and some employees with retention benefits and severance benefits if their employment is terminated after completion of the merger.

      Also, following the merger, Guilford will indemnify, and provide directors’ and officers’ insurance for, the directors and officers of Gliatech for events occurring before the merger, including events that are related to the agreement and plan of merger. Three members of the Gliatech board of directors will join the Guilford board of directors following the merger, and those members who are not employed by Guilford will receive options to purchase Guilford common stock upon joining the Guilford board as new members. Additional interests of Gliatech’s officers, directors and some employees are described under “The Merger — Interests of Gliatech Officers, Directors and Some Employees in the Merger.”

      The members of the Gliatech board of directors knew about these additional interests, and considered them, when they approved the merger.

Comparison of Stockholder Rights (page           )

      When the merger is completed, Gliatech stockholders will become holders of Guilford common stock. Their rights will continue to be governed by Delaware law, but will also be governed by Guilford’s certificate of incorporation and bylaws instead of Gliatech’s certificate of incorporation and bylaws. The material differences between the rights of Guilford’s stockholders and those of Gliatech’s stockholders are summarized beginning on page           .

Where You Can Find More Information (page           )

      If you would like more information about Guilford or Gliatech, it can be found in documents filed by each company with the SEC. Instructions on how you can obtain copies of these documents are on page           .

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Recent Developments

      Gliatech Interim Results of Operations. On July 26, 2000, Gliatech announced that product sales for the quarter ended June 30, 2000 were $7.0 million, as compared to $7.9 million in the second quarter of 1999. In the announcement, Gliatech stated that the decrease in product sales was due primarily to lower sales of ADCON®-L in the United States and that as a result of the temporary import embargo of ADCON®-L in late 1999, the second quarter of 2000 represents the first full fiscal quarter of sales during 2000. Gliatech’s total revenues were $7.3 million in the second quarter of 2000, as compared to $8.3 million in the second quarter of 1999. Gliatech reported a net loss of $230,000 in the second quarter of 2000, compared to net income of $950,000 in the second quarter of 1999. The net loss for the second quarter of 2000 included approximately $590,000 in expenses related to the proposed merger with Guilford. Exclusive of these expenses, Gliatech would have reported net income of approximately $360,000.

      Settlement of Litigation. In June 2000, Cartech Company, Ltd. filed a lawsuit against Gliatech and Guilford alleging breach of and interference with Gliatech’s build-to-suit lease agreement with Cartech. The parties subsequently entered into a settlement agreement to resolve the litigation. Pursuant to the settlement agreement, Guilford agreed to pay Cartech $4.5 million within seven days after the merger has closed, or, if the merger agreement is terminated prior to closing or if the merger does not close by December 1, 2000, Gliatech will pay Cartech $4.5 million. In the event that Gliatech makes the payment to Cartech and upon Gliatech’s written request, Gliatech and Cartech will enter into good faith negotiations for a new build-to-suit lease and Gliatech will receive a credit against the cost of the new lease of up to $2,187,500. The lawsuit has been dismissed by Cartech without prejudice, and the parties have agreed to a full mutual release of claims and termination of the existing build-to-suit lease effective upon receipt by Cartech of the payment by Guilford or Gliatech. Pending such payment, Cartech has agreed to abstain from further legal action against Guilford and Gliatech.

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GUILFORD PHARMACEUTICALS INC.

SELECTED HISTORICAL FINANCIAL INFORMATION

      The information in the following selected historical financial information for the years ended December 31, 1995, 1996, 1997, 1998 and 1999 is derived from Guilford’s audited consolidated financial statements. You should read this information in conjunction with the consolidated financial statements and the notes to the consolidated financial statements, included in Guilford’s annual report on form 10-K, filed March 30, 2000, which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” on page           . Guilford’s financial statements for each of the five years ended December 31, 1999 were audited by KPMG LLP, independent public accountants. The selected historical financial information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is derived from unaudited consolidated financial statements included in Guilford’s quarterly report on form 10-Q, filed May 12, 2000, which is incorporated by reference into this joint proxy statement/prospectus. These statements, in the opinion of management, reflect all financial adjustments necessary for the fair presentation of the unaudited interim financial information. The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results to be expected for the entire year.

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GLIATECH INC.

SELECTED HISTORICAL FINANCIAL INFORMATION

      The information in the following selected historical financial information for the years ended December 31, 1995, 1996, 1997, 1998 and 1999 is derived from Gliatech’s audited consolidated financial statements. You should read this information in conjunction with the consolidated financial statements and the notes to the consolidated financial statements, included in Gliatech’s annual report on form 10-K, filed March 30, 2000, which is incorporated by reference into this joint proxy statement/prospectus. See “Where You Can Find More Information” on page      . Gliatech’s financial statements for each of the five years ended December 31, 1999 were audited by Ernst & Young LLP, independent public accountants. The selected historical financial information as of March 31, 2000 and for the three months ended March 31, 1999 and 2000 is derived from unaudited consolidated financial statements included in Gliatech’s quarterly report on form 10-Q, filed May 15, 2000, which is incorporated by reference into this joint proxy statement/prospectus. These statements, in the opinion of management, reflect all financial adjustments consisting of normal recurring accruals considered necessary for the fair presentation of the unaudited interim financial information. The results of operations for the three months ended March 31, 2000 are not necessarily indicative of the results to be expected for the entire year.

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SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

      The information in the following selected unaudited pro forma combined financial information of Guilford and Gliatech is derived from the unaudited pro forma condensed combined financial statements which are presented later in this joint proxy statement/prospectus and give effect to the merger as a pooling of interests. You should read this information in conjunction with the unaudited pro forma condensed combined financial statements and relevant notes. We present the selected unaudited pro forma combined financial information for illustrative purposes only. This information is not necessarily indicative of the operating results or financial position that would have occurred if the merger had been completed. In addition, it does not necessarily represent or predict future operating results or the financial position of the combined companies.

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COMPARATIVE HISTORICAL AND PRO FORMA PER SHARE DATA

(UNAUDITED)

      The following table summarizes certain per share information for Guilford and Gliatech on a historical, pro forma combined, and equivalent pro forma combined basis. You should read the information below along with the selected historical financial information and the unaudited pro forma combined financial data included elsewhere in this joint proxy statement/prospectus. The pro forma combined financial information is not necessarily indicative of the future operating results or the actual results that would have occurred had the merger occurred at the beginning of the periods presented. Neither Guilford nor Gliatech has declared or paid any cash dividends during any of the periods presented.

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MARKET PRICES AND DIVIDENDS PAID

      Guilford common stock is listed and trades on the Nasdaq National Market under the symbol “GLFD,” and Gliatech common stock is listed and trades on the Nasdaq National Market under the symbol “GLIA.” As of           , Guilford common stock was held of record by approximately           persons, and Gliatech common stock was held of record by approximately           persons. This table sets forth for the indicated periods the high and low sales prices per share of Guilford and Gliatech common stock as reported by the Nasdaq National Market for the periods indicated. Neither Guilford nor Gliatech has historically paid dividends to its common stockholders. Guilford does not intend to pay dividends following the merger.

      On May 26, 2000, the last full trading day prior to the public announcement of execution of the merger agreement, the closing sale price, as reported by the Nasdaq National Market, for Guilford common stock was $15.50, and for Gliatech common stock was $16.38. On           , 2000, the last full trading day for which information was available prior to the printing of this joint proxy statement/prospectus, the closing sale price, as reported by the Nasdaq Stock Market, for Guilford common stock was $          , and for Gliatech common stock was $          . The market prices of Guilford and Gliatech common stock are subject to fluctuation. As a result, Guilford and Gliatech stockholders are urged to obtain current market quotations for Guilford and Gliatech shares.

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS

      Guilford and Gliatech have made in this joint proxy statement/ prospectus and in the documents referred to in this proxy statement/ prospectus forward-looking statements that are subject to risks and uncertainties. These statements are based on the beliefs and assumptions of the management of the companies and on the information currently available to management. Forward-looking statements include information concerning possible or assumed future results of Guilford, Gliatech and the combined company and may be preceded by, followed by, or otherwise include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates” or similar expressions. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, you should understand that there are or will be important factors, in addition to those discussed elsewhere in this joint proxy statement/ prospectus and in the documents referred to in this joint proxy statement/ prospectus, that could affect the future results of the combined company following the merger and that could cause actual results to differ materially from those expressed in such forward-looking statements, including but not limited to the following:

	•	uncertainties relating to government and regulatory approvals, policies or other matters;
	•	legal proceedings;
	•	other unforeseen adverse effects of the merger, including the inability to successfully integrate the operations and business of the two companies.
	•	uncertainties relating to the achievement of the anticipated benefits of the merger; and
	•	the loss of the services of Guilford’s or Gliatech’s key employees.

      Except for their ongoing obligations to disclose material developments as required by the federal securities laws, Guilford and Gliatech do not intend to update forward-looking statements after they distribute this joint proxy statement/ prospectus. For those statements, Guilford and Gliatech claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

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RISK FACTORS

      By voting in favor of the merger agreement and the merger, Gliatech stockholders will be choosing to invest in Guilford common stock. Any investment in Guilford common stock involves a high degree of risk. In addition to the other information included or incorporated by reference in this joint proxy statement/ prospectus, you should carefully read and consider the following factors in evaluating the proposals to be voted on at your company’s stockholders meeting. We direct your attention to Annex D, which sets forth other risk factors contained in Guilford’s annual report on form 10-K for the year ended December 31, 1999, which are incorporated in this joint proxy statement/prospectus by reference.

The value of the Guilford stock that Gliatech stockholders will receive in the merger will depend on its market price at the time of the merger.

      If the market price of Guilford common stock changes, the value of the Guilford common stock that a Gliatech stockholder will receive will also change, because the formula for converting Gliatech common stock into Guilford common stock uses a fixed exchange ratio of 1.38 shares of Guilford common stock for each share of Gliatech common stock. This change could negatively affect the value of the consideration Gliatech stockholders will receive in the merger. Conversely, a decline in the price of a share of Gliatech common stock relative to the price per share of Guilford common stock could have a negative effect on Guilford because there would be no corresponding downward adjustment in the number of shares Gliatech stockholders will receive to reflect the decreased market value of Gliatech, or the increased market value of Guilford. The following table shows recent stock prices of Guilford and Gliatech, and their ratios compared to the exchange ratio in the merger:

Officers, directors and some employees of Gliatech may have conflicts of interest that influence their decision to approve the merger.

      You should be aware of potential conflicts of interest of, and the benefits available to, directors and executive officers of Gliatech when considering the Gliatech board of directors recommendation of the merger agreement. As discussed below under “The Merger — Interests of Gliatech’s Officers, Directors and Some Employees in the Merger,” the executive officers, directors and some employees of Gliatech have interests in the merger that are in addition to, or different from, their interests as Gliatech stockholders. These interests include, among other things, accelerated vesting of options under Gliatech’s Amended and Restated 1989 Stock Option Plan, the executive officers and some employees of Gliatech will be entitled to receive retention and severance benefits as a result of the merger. In addition, three members of Gliatech’s current board of directors will join Guilford’s board of directors following the merger.

The termination fee may discourage other companies from trying to acquire Gliatech.

      In the merger agreement, Gliatech agreed to pay a termination fee to Guilford in specified circumstances, including where a third party acquires Gliatech or the board of directors of Gliatech ceases to recommend the merger. This agreement could discourage other companies from trying to acquire Gliatech if they were not willing to offer to Gliatech stockholders an amount greater than the amount

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Guilford may not be able to successfully integrate Gliatech into its operations, which could decrease the value of the merger to both companies’ stockholders.

      The integration of Gliatech into the operations of Guilford involves a number of risks, including:

	•	difficulty integrating operations and personnel at geographically separated locations;
	•	diversion of management attention at a time when key negotiations regarding possible corporate partnerships and a new emphasis on higher efficiency in product development programs are underway at Guilford;
	•	potential disruption of ongoing business because of the unknown reactions to the combination of Guilford and Gliatech by corporate partners and other key constituencies;
	•	inability to retain key scientific and research personnel, particularly because of the desire by Guilford to relocate many of these personnel;
	•	inability to successfully incorporate acquired products, product candidates and research projects with Guilford’s existing products pipeline and research projects; and
	•	inability to maintain uniform standards, controls, procedures and policies.

Failure to overcome these risks or any other problems encountered in connection with the merger could decrease the perceived and actual value of the merger, and that could have a negative impact upon the price of the Guilford common stock.

The costs of the merger, the costs of integrating the Guilford and Gliatech businesses and other potential adjustments are substantial.

      Guilford estimates that it will incur direct transaction-related expenses of approximately $7.5 million. These costs will consist of transaction fees for investment bankers, attorneys, accountants and other related costs incurred by Guilford and Gliatech and will reduce the cash available to fund operations. Additional personnel-related costs of approximately $2.5 million and lease termination and facility charges of $5.3 million will also be recognized by Guilford.

      There can be no assurance that Guilford will not incur additional charges in excess of these amounts to reflect costs associated with the merger, including the costs of integrating the Guilford and Gliatech businesses.

The FDA could issue a formal warning letter or take enforcement action against Gliatech.

      Gliatech’s Netherlands-based contract manufacturer for ADCON®-L was the subject of an FDA warning letter in September 1999 that led to a temporary import ban on all ADCON®-L shipments to the United States. That ban was lifted in December 1999 after a successful reinspection of the contract manufacturer. In early 2000, the FDA inspected Gliatech’s Ohio facilities and issued to Gliatech a “Form 483” report containing specific observations by the FDA inspectors. In March 2000, Gliatech responded to the observations in the Form 483. Gliatech has not received further information from the FDA regarding the status of the agency’s review of Gliatech’s responses, except that the FDA informed Gliatech that the responses were under review. Actions the FDA may take could include the issuance of a formal warning letter or other enforcement action. These actions could have a material adverse effect on Gliatech and the combined company after the merger.

Gliatech is the subject of legal proceedings.

      Gliatech is the defendant in two lawsuits: a product liability lawsuit relating to ADCON®-L and a wrongful discharge lawsuit brought by a former medical affairs officer of Gliatech. The petition for

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THE GUILFORD SPECIAL MEETING

Date, Time and Place; Matters to be Considered

      We are furnishing this joint proxy statement/ prospectus to stockholders of Guilford in connection with the solicitation of proxies by the Guilford board of directors for use at a special meeting of Guilford stockholders. The special meeting of Guilford stockholders is scheduled to be held on           , 2000, at 10:00 a.m., local time, at the Guilford facilities at 6411 Beckley Street, Baltimore, Maryland 21224. At the Guilford special meeting, Guilford stockholders will be asked to consider and vote upon a proposal to approve the issuance of shares of Guilford common stock under the Agreement and Plan of Merger, as amended, among Guilford Pharmaceuticals Inc., Gliatech Inc. and St. John Development Corp., dated as of May 29, 2000. The Guilford stockholders might also be asked to vote upon a proposal to adjourn the Guilford special meeting for the purpose, among others, of allowing additional time for the solicitation of additional votes to approve the issuance of shares pursuant to the merger agreement. The Guilford board of directors knows of no other business that will be presented for consideration at the Guilford special meeting. This joint proxy statement/ prospectus and accompanying proxy are being first sent to Guilford stockholders on or about                , 2000.

Proxies

      If you are a Guilford stockholder entitled to vote at the meeting, you may vote your shares either in person or by duly authorized proxy. You may use the proxy accompanying this joint proxy statement/ prospectus if you are unable to attend the Guilford special meeting in person or if you wish to have your shares voted by proxy even if you do attend the Guilford special meeting. You may revoke any proxy given by you in response to this solicitation at any time before the proxy is voted at the Guilford special meeting by delivering a written notice of revocation, by delivery to Guilford of a subsequently dated, properly executed proxy or by attending the Guilford special meeting and electing to vote in person. Your attendance at the Guilford special meeting, by itself, will not constitute a revocation of a proxy. You should address any written notices of proxy revocation to: Guilford Pharmaceuticals Inc., 6611 Tributary Street, Baltimore, Maryland 21224, Attention: Corporate Secretary.

      All shares represented by effective proxies on the accompanying form of Guilford proxy card received by Guilford at or before the Guilford special meeting, and not revoked before they are exercised, will be voted at the Guilford special meeting in accordance with their terms. If no instructions are given on such proxies, they will be voted “For” the issuance of shares pursuant to the merger agreement and at the discretion of the proxies on any other matters that properly come before the Guilford special meeting or any adjournments or postponements thereof, including motions to adjourn or postpone the meeting. The Guilford board is not aware of any other matters to be presented at the Guilford special meeting other than matters incidental to the conduct of the Guilford special meeting. If any matters should be presented at the Guilford special meeting for action, the persons named in the accompanying proxy card will vote the proxy in their own discretion.

Solicitation of Proxies

      Guilford and Gliatech have agreed that all expenses incurred in connection with the filing, printing and mailing of this joint proxy statement/ prospectus and the registration statement of which this joint proxy statement/ prospectus is a part shall be shared equally by Guilford and Gliatech. Other than these expenses, Guilford will bear the entire cost of soliciting proxies from Guilford stockholders. In addition to soliciting proxies by mail, Guilford will request banks, brokers and other record holders to send proxies and proxy materials to the beneficial owners of Guilford common stock and secure their voting instructions. Guilford will reimburse these record holders for their reasonable expenses in so doing. Guilford intends to use D.F. King & Co., Inc. as a proxy solicitor to solicit proxies from stockholders, either personally, or by telephone, telegram, facsimile or electronic or United States mail, and will pay D.F. King a fee of approximately $6,000 for these services plus reimbursement of expenses. Additionally, if a telephone campaign to investors becomes necessary and is authorized by Guilford, there could be a charge of

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Record Date and Voting Rights

      Record Date. The Guilford board of directors has fixed the close of business on           as the record date for the Guilford special meeting. Under the Delaware General Corporation Law and our bylaws, only holders of record of shares of Guilford common stock on the record date will be entitled to notice of and to vote at the Guilford special meeting. As of the record date,            shares of Guilford common stock were outstanding and entitled to vote on the issuance of shares in the merger. On the record date, there were           record holders of Guilford common stock.

      Voting Rights and Vote Required. Each Guilford stockholder is entitled to one vote for each share of Guilford common stock held on the record date with regard to the proposal to approve the issuance of shares in the merger. The affirmative vote of a majority of the total votes cast at a meeting at which a quorum is present is required to approve the issuance of shares in the merger.

      Quorum Requirements. A majority of the Guilford common stock outstanding and entitled to vote, represented in person or by proxy, constitutes a quorum for consideration of each matter at the Guilford special meeting. If a quorum is not present at the Guilford special meeting, Guilford intends to adjourn it in order to solicit additional proxies.

      Abstentions, Failures to Vote, and Broker Non-Votes. Abstentions may be specified with respect to the proposal being considered at the Guilford special meeting. A properly executed proxy marked “Abstain” will be counted as present for purposes of determining whether there is a quorum. Because the affirmative votes of a majority of the total votes cast are required to approve the issuance of shares in the merger, a proxy marked “Abstain” with respect to the question, or the failure of a Guilford stockholder to return a proxy or vote in person at the Guilford special meeting or by other permitted means, will have no effect on the outcome of the vote taken at a meeting at which a quorum is present. Absent specific instructions from the beneficial owner of shares of Guilford common stock, brokers who hold shares in street name for customers are not permitted to vote such shares with respect to the approval of the issuance of the shares in the merger. These “broker non-votes” will also be counted for the purpose of determining a quorum, but will not effect the outcome of the vote taken at the special meeting because they do not constitute votes cast at the meeting.

      The Guilford board urges you to complete, date and sign the accompanying proxy card and return it promptly in the enclosed, postage-paid envelope.

      As of the record date, Guilford directors and executive officers owned approximately            million shares of Guilford common stock, or approximately      % of the shares entitled to vote at the Guilford special meeting. It is currently expected that each director or executive officer will vote the shares of Guilford common stock beneficially owned by him for approval of the issuance of the shares in the merger.

Recommendation of the Guilford Board of Directors

      The Guilford board of directors has determined that the merger is fair to and in the best interests of Guilford and its stockholders, and therefore recommends that the Guilford stockholders vote “For” approval of the issuance of the Guilford shares as contemplated in the merger agreement.

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THE GLIATECH SPECIAL MEETING

Date, Time and Place; Matters to be Considered

      We are furnishing this joint proxy statement/prospectus to stockholders of Gliatech in connection with the solicitation of proxies by Gliatech’s board of directors for use at a special meeting of Gliatech stockholders. The special meeting of Gliatech’s stockholders is scheduled to be held on           , 2000, at 9:00 a.m., local time, at the Embassy Suites Hotel — Beachwood, 3775 Park East Drive, Beachwood, Ohio. It may be adjourned or postponed to another date and/ or place for proper purposes. The purpose of the Gliatech special meeting is to consider and vote upon a proposal to adopt the Agreement and Plan of Merger among Gliatech, Guilford and a wholly-owned subsidiary of Guilford. The Gliatech stockholders also might be asked to vote upon a proposal to adjourn the Gliatech special meeting for the purpose, among others, of allowing additional time for the solicitation of additional votes to adopt the merger agreement. The Gliatech board of directors knows of no other business that will be presented for consideration at the Gliatech special meeting. If any other matters properly come before the Gliatech special meeting, the persons named in the accompanying proxy or their substitutes will vote in accordance with their best judgment on such matters. This joint proxy statement/ prospectus and accompanying proxy are being first sent to Gliatech stockholders on or about           , 2000.

Proxies

      You may vote shares either in person or by duly authorized proxy. You may use the proxy accompanying this joint proxy statement/ prospectus if you are unable to attend the Gliatech special meeting in person or if you wish to have your shares voted by proxy even if you do attend the Gliatech special meeting. You may revoke any proxy given by you in response to this solicitation at any time before the proxy is voted at the Gliatech special meeting:

	•	by delivering a written notice of revocation;
	•	by delivering to Gliatech a subsequently dated, properly executed proxy; or
	•	by attending the Gliatech special meeting and electing to vote in person.

Your attendance at the Gliatech special meeting, by itself, will not constitute a revocation of a proxy. You should address any written notices of proxy revocation to: Gliatech Inc., 23420 Commerce Park Road, Cleveland, Ohio 44122, Attention: Corporate Secretary.

      All shares of Gliatech common stock represented by effective proxies on the accompanying form of Gliatech proxy received by Gliatech at or before the Gliatech special meeting, and not revoked before they are exercised, will be voted at the Gliatech special meeting in accordance with their terms. If no instructions are given, the Gliatech proxies will be voted “For” the adoption of the merger agreement and at the discretion of the proxies on any other matters that properly come before the Gliatech special meeting. If you do not vote, it will have the same effect as a vote “Against” the merger. The Gliatech board of directors is not aware of any other matters to be presented at the Gliatech special meeting other than matters incidental to the conduct of the Gliatech special meeting.

Solicitation of Proxies

      Guilford and Gliatech have agreed that all expenses incurred in connection with the filing, printing and mailing of this joint proxy statement/prospectus and the registration statement of which this joint proxy statement/prospectus is a part shall be shared equally by Guilford and Gliatech. Other than these expenses, Gliatech will bear the entire cost of soliciting proxies from Gliatech stockholders. In addition to the solicitation of proxies by mail, officers, directors, employees and agents of Gliatech may solicit proxies by correspondence, telephone, telegraph, telecopy or other electronic means, or in person, but without extra compensation. Gliatech has retained Morrow & Co., Inc., a proxy solicitation firm, to assist it in the solicitation of proxies for the Gliatech special meeting at a cost of approximately $6,500, plus reimbursement of reasonable out-of-pocket expenses. Gliatech will request banks, brokers and other record

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Record Date and Voting Rights

      Record Date. The Gliatech board of directors has fixed the close of business on           , 2000 as the record date for the determination of the Gliatech stockholders entitled to vote at the Gliatech special meeting. A complete list of stockholders entitled to vote at the meeting will be open to examination by the stockholders during regular business hours for a period of ten days before the Gliatech special meeting at the Embassy Suites Hotel — Beachwood, 3775 Park East Drive, Beachwood, Ohio. As of the record date,           shares of Gliatech common stock were outstanding and entitled to vote on the adoption of the merger agreement. On the record date, there were           record holders of Gliatech common stock.

      Voting Rights. Each Gliatech stockholder is entitled to one vote for each share of Gliatech common stock held on the record date with regard to the proposal to adopt the merger agreement and with regard to any matter that may properly come before the Gliatech special meeting.

      Quorum Requirements. A majority of the Gliatech common stock outstanding and entitled to vote, represented in person or by proxy, constitutes a quorum for consideration of each matter at the Gliatech special meeting. If a quorum is not present at the Gliatech special meeting, management will adjourn the special meeting in order to solicit additional proxies.

      Vote Required. The adoption of the merger agreement requires the affirmative vote of more than 50% of the outstanding shares of Gliatech common stock.

      Abstentions, Failures to Vote, and Broker Non-votes. Abstentions may be specified with respect to the proposal being considered at the Gliatech special meeting. A properly executed proxy marked “Abstain” will be counted as present for purposes of determining whether there is a quorum. Because the affirmative votes of a majority of the outstanding shares of the Gliatech common stock are required for the adoption of the merger agreement, a proxy marked “Abstain” with respect to the merger agreement will have the effect of a vote “Against” the adoption of the merger agreement. In addition, the failure of a Gliatech stockholder to return a proxy or vote in person at the Gliatech special meeting will have the effect of a vote “Against” the adoption of the merger agreement.

      Absent specific instructions from the beneficial owner of shares of Gliatech common stock, brokers who hold shares in street name for customers are not permitted to vote these shares with respect to the adoption of the merger agreement. Because the affirmative vote described above is required for the adoption of the merger agreement, a broker non-vote will have the effect of a vote “Against” the adoption of the merger agreement.

      Because adoption of the merger agreement requires the affirmative vote of more than 50% of the outstanding shares of Gliatech common stock at the Gliatech special meeting, abstentions and broker non-votes will have the same effect as negative votes. The failure to vote your shares also will have the same effect as a negative vote. Accordingly, the Gliatech board of directors urges you to complete, date and sign the accompanying proxy and return it promptly in the enclosed, postage-paid envelope.

      As of the record date, Gliatech directors and executive officers owned approximately            shares of Gliatech common stock, or approximately      % of the shares entitled to vote at the Gliatech special meeting and they have entered into agreements with Gliatech in which they have agreed to vote their shares “For” adoption of the merger agreement. See “The Merger — Gliatech Stockholder Agreements” on page           for more information about these agreements.

Recommendation of the Gliatech Board of Directors

      The Gliatech board of directors has approved, adopted and declared advisable the merger agreement and the other transactions contemplated by the merger agreement. The Gliatech board of directors recommends that the Gliatech stockholders vote “For” the adoption of the merger agreement.

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THE MERGER

      The following information relating to the merger is not intended to be a complete description of all the information relating to the merger but is intended to include the material terms of the merger. More detailed information is contained elsewhere in this joint proxy statement/ prospectus, including the Annexes. A copy of the merger agreement is set forth in Annex A and is incorporated by reference into this joint proxy statement/ prospectus. You are urged to read the merger agreement carefully for a complete description of the terms of the merger.

General

      The merger agreement provides that a wholly-owned subsidiary of Guilford, St. John Development Corp., will merge with and into Gliatech, and Gliatech will be the surviving corporation. As a result, Gliatech will become a wholly-owned subsidiary of Guilford. Immediately following completion of the merger:

	•	former Gliatech common stockholders will collectively own approximately           million shares or 37% of Guilford common stock, based on shares outstanding as of May 29, 2000; and
	•	approximately           million shares of Guilford common stock will be issuable upon the exercise of Gliatech options that will be converted into Guilford options at the time of the merger.

      As a result of the merger, each share of Gliatech common stock will be converted into the right to receive 1.38 shares of Guilford common stock, as described under “Terms of the Merger Agreement – Conversion of Gliatech Common Stock; Treatment of Options.” Fractional shares of Guilford common stock will not be issued in the merger. Gliatech stockholders entitled to a fractional share will be paid cash for such fractional shares, in the manner described under “Terms of the Merger Agreement – Conversion of Gliatech Common Stock; Treatment of Options.” Guilford and Gliatech expect that the merger will be completed immediately following the stockholder meetings. We anticipate that the merger will be completed in the third quarter of 2000.

Background of the Merger

      In the second half of 1999, members of Gliatech’s management recommended to Gliatech’s board of directors that it consider a variety of strategic alternatives while at the same time taking steps to enhance operations, results and business operations of Gliatech. These strategic alternatives included potential acquisitions of complementary businesses, products or technology, dispositions, strategic partnering opportunities for Gliatech’s products in development and other strategic alliances to enhance stockholder value.

      At the Gliatech board of directors meeting held on August 25, 1999, the board of directors responded to this recommendation by appointing a Development Committee consisting of Thomas O. Oesterling, Ph.D., Gliatech’s Chairman of the Board and Chief Executive Officer, Robert P. Pinkas and Ronald D. Henriksen. The Development Committee was given the authority to review and make recommendations to the board of directors with respect to development opportunities, including, without limitation, the pursuit of potential acquisitions or dispositions, strategic partnering opportunities or other strategic alternatives. In pursuing the objective to consider potential strategic alternatives, Gliatech’s management, at the direction of the Development Committee, engaged in discussions regarding potential business combinations or strategic transactions with several candidates beginning in August 1999 and ending with the execution of the definitive merger agreement with Guilford.

      The first of these discussions took place in late August 1999 with Company A, a Nasdaq-listed company engaged in the development and commercialization of proprietary human health care products. On August 26, 1999, Dr. Oesterling and Rodney E. Dausch, Gliatech’s Executive Vice President and Chief Financial Officer, engaged in general discussions with members of Company A’s management relating to a potential business combination. This initial discussion led to a further meeting on

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      On September 30, 1999, Dr. Oesterling and a consultant of Gliatech met with a member of management of a second possible strategic partner, Company B, to discuss a potential business combination. Company B is a Nasdaq-listed company and is engaged in the development and marketing of a portfolio of products, including instruments and medical devices.

      On November 10, 1999, Dr. Oesterling, Mr. Dausch and a representative of SG Cowen met with members of management of a third possible strategic partner, Company C, and a representative of Company C’s financial advisor to discuss a potential business combination. Company C is a publicly-traded pharmaceutical company whose common stock is listed on Nasdaq.

      At the Gliatech board of directors meeting held on November 17, 1999, members of Gliatech’s management gave an extensive presentation regarding their recent discussions with Company A, Company B and Company C. At the meeting, the board of directors instructed management to continue to pursue their efforts and to apprise the board of directors of significant discussions as they occurred.

      After this November 1999 meeting, Dr. Oesterling and Mr. Dausch held a second meeting with a member of Company B’s management at Gliatech’s executive offices on November 19, 1999. During this meeting, members of management of Gliatech and a member of Company B’s management continued to pursue discussions regarding a potential business combination.

      In early November 1999, Guilford’s Chairman, President and Chief Executive Officer, Dr. Craig R. Smith, attended a conference sponsored by Prudential Securities. At the conference, representatives of Prudential Securities brought to Dr. Smith’s attention the possible strategic fit that could result from a business combination with Gliatech. Dr. Smith had had no prior contact with Gliatech. Dr. Smith and other representatives of Guilford reviewed publicly available information about Gliatech and subsequently called representatives of Prudential Securities to ask Prudential Securities to inquire of Gliatech if it would be interested in a preliminary discussion.

      On December 8, 1999, Dr. Oesterling, Mr. Dausch and a representative of SG Cowen held a second meeting with members of Company C’s management and a representative of Company C’s financial advisor to further discuss a potential business combination.

      At the Gliatech board of directors meeting held on December 16, 1999, members of Gliatech’s management updated the board of directors regarding potential strategic alternatives and ongoing discussions with possible strategic partners.

      In early January, Company A and Gliatech discussed the benefits of a merger of the two companies, but no agreement was reached with respect to price or other definitive terms. Also in early January, Company C discussed with Gliatech a transaction involving the merger of Company C and Gliatech. This discussion was also general in nature and no agreement was reached with respect to price or other definitive terms.

      On January 4, 2000, in order to better evaluate potential strategic alternatives, Gliatech formally entered into a letter agreement with SG Cowen, pursuant to which SG Cowen agreed to act as Gliatech’s exclusive financial advisor with respect to a potential transaction with either Company B or Company C.

      As a result of the contact initiated through Prudential Securities, on January 11 and 19, 2000, Dr. Smith met with Dr. Oesterling and Mr. Dausch. At these meetings, Dr. Smith introduced Guilford to the Gliatech representatives and discussed his views of the possible advantages of a strategic combination. The parties followed up the January 19 meeting with further telephonic contacts over the next several weeks.

      At the Gliatech board of directors meeting held on January 12, 2000, members of Gliatech’s management updated the board of directors regarding potential strategic alternatives and possible strategic

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      On February 2, 2000, Guilford and Gliatech executed a confidentiality agreement. On February 3, 2000, Guilford formally engaged Prudential Securities as its financial advisor for a possible business combination with Gliatech. On February 4 and February 7, 2000, Guilford and Gliatech exchanged confidential financial information.

      On February 10, 2000, representatives of Guilford and Prudential Securities spoke by telephone with representatives of Gliatech and SG Cowen, and, at Gliatech’s request, the Guilford representatives generally discussed terms and conditions of a potential business combination between Guilford and Gliatech, subject to due diligence and further analysis. Also on February 10, 2000, Dr. Oesterling and Mr. Dausch met with members of management of a fourth possible strategic partner, Company D, to discuss a potential business combination. Company D is a Nasdaq-listed company engaged in the research, development, manufacture and marketing of biopharmaceutical products.

      At the Guilford board of directors meeting on February 15, 2000, Dr. Smith described the contacts he had had to date with Gliatech, and the Guilford board of directors discussed the possible benefits of a combination with Gliatech.

      At the Gliatech board of directors meeting held on February 17, 2000 at which all board members other than Theodore E. Haigler, Jr. were present, members of Gliatech’s management made a presentation to the board of directors regarding the evaluation and analysis of business development opportunities and other strategic alternatives for Gliatech. Dr. Oesterling, Mr. Dausch and representatives of SG Cowen also updated the board regarding potential strategic alternatives and financing opportunities.

      On February 18, 2000, Mr. Dausch informed Dr. Smith that the Gliatech board of directors had discussed a possible combination with Guilford and had authorized management to pursue discussions further. Further discussions about the possible structure of a combination, roles of Gliatech management in a combined entity and other matters occurred by telephone among representatives of Guilford, Gliatech and their respective financial advisors through the end of February 2000.

      On March 2, 2000, Dr. Smith, Andrew R. Jordan, Guilford’s Senior Vice President and Chief Financial Officer and John P. Brennan, Guilford’s Senior Vice President, Operations, met in Cleveland with Dr. Oesterling and Mr. Dausch to discuss issues relating to a possible combination of the two companies and employee and officer status in the combined company if a business combination were to be completed.

      On March 9, 2000, Gliatech and SG Cowen amended their letter agreement. Pursuant to this amendment, SG Cowen agreed to act as Gliatech’s exclusive financial advisor with respect to a potential transaction with either Company B, Company C, Company D or Guilford.

      At a telephonic meeting of Gliatech’s board of directors held on March 10, 2000, Dr. Oesterling updated the board regarding potential strategic alternatives. Present at this meeting were Dr. Oesterling, Messrs. Pinkas, Henriksen, Haigler and Ufheil. Also present were Mr. Dausch and representatives of Jones, Day, Reavis & Pogue. During the discussion, the board of directors was apprised of the status of discussions, and the representatives of Jones Day generally discussed directors’ legal duties and responsibilities in considering potential business combinations. Also on March 10, 2000, Dr. Oesterling, Mr. Dausch, Dr. Zupon and other members of Gliatech’s management met with members of Company C’s management at Gliatech’s executive offices to further discuss a potential business combination.

      On March 10, 2000, Mr. Dausch called Mr. Jordan and informed him that the Gliatech board desired to continue discussions with Guilford and that Guilford would be informed later when due diligence could begin in Cleveland. On March 13, 2000, Mr. Dausch informed Mr. Jordan that Guilford representatives could commence due diligence in Cleveland immediately.

      From March 15, 2000 to March 17, 2000, members of Guilford’s management and representatives of Hogan & Hartson L.L.P., Prudential Securities and KPMG conducted a due diligence investigation of

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      On March 20, 2000, Mr. Dausch, Michael A. Zupon, Ph.D., Gliatech’s Executive Vice President, Research & Development, and other members of Gliatech’s management met with Mr. Brennan and other members of Guilford’s management at Gliatech’s executive offices. At the meeting, the attendees discussed issues relating to the manufacture and sale of ADCON® and the status of Gliatech’s other pharmaceutical programs.

      On March 20, 2000, Denise Battles, Guilford’s Vice President of Corporate Quality and Louise Peltier, Guilford’s Director of Regulatory Affairs, met with members of Gliatech’s management at Gliatech’s headquarters to discuss corporate quality and regulatory issues involving Gliatech.

      At a meeting of Gliatech’s Development Committee held on March 30, 2000, Dr. Smith gave a presentation to the Development Committee and Mr. Dausch. The presentation concerned the strategic benefits of a possible business combination. Upon completion of Dr. Smith’s presentation, the Development Committee discussed the Guilford presentation. After excusing representatives of Guilford, the members of the Development Committee discussed the status of other potential strategic alternatives.

      On April 3, 2000, Dr. Smith was informed by Gliatech that formal negotiations regarding a possible combination could begin on April 13, 2000. Guilford continued due diligence meetings and calls through April 10, 2000, and during that period further discussions regarding financial terms were held between Guilford and Gliatech representatives.

      On April 6, 2000, Mr. Dausch, Dr. Zupon and other members of Gliatech’s management met with Thomas C. Seoh, Guilford’s Senior Vice President, General Counsel and Secretary, and Dana Hilt, M.D., Guilford’s Vice President, Clinical Research and Drug Metabolism, at Gliatech’s executive offices. The attendees at the meeting discussed in depth various items of follow-up due diligence. Guilford’s legal advisors and members of Guilford’s management continued to follow up on due diligence issues through the signing of the merger agreement.

      On April 6 and 7, 2000, representatives from Guilford’s Corporate Quality and Operations Departments visited Gliatech’s contract manufacturing facility in the Netherlands and met with Gliatech’s Director of Quality Systems to conduct a due diligence investigation of the facility.

      On April 11, 2000, Dr. Oesterling, Mr. Dausch, Dr. Zupon, and other members of Gliatech’s management held a second meeting with members of Company D’s management to further discuss a potential business combination.

      On April 12, 2000, Hogan & Hartson L.L.P. forwarded drafts of a merger agreement and related documents to Gliatech. On April 13, 2000, a meeting was held in Cleveland at which Dr. Smith, and other representatives of Guilford, Hogan & Hartson L.L.P. and Prudential Securities, as well as Dr. Oesterling and other representatives of Gliatech, Jones Day and SG Cowen were in attendance. Discussions were held on the strategic benefits of a combination, and at the end of that meeting, the Guilford representatives proposed a possible ratio between Gliatech and Guilford stockholders in a combined company. The proposed ratio would have resulted in Gliatech stockholders owning 30% of the combined company following the merger and Guilford stockholders owning 70% of the combined company. The Gliatech representatives indicated that the proposed possible ratio would not be acceptable to Gliatech’s board. The representatives of Hogan & Hartson L.L.P., Jones Day, Prudential Securities and SG Cowen left the meeting, although the representatives of Guilford and Gliatech met the next morning, as previously arranged, to discuss a marketing and sales plan for a combined company with a business consultant who had been retained by Guilford. Although Gliatech and Guilford elected not to pursue a

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      On April 20, 2000, Mr. Dausch, Dr. Zupon and another member of Gliatech’s management met with members of management of a fifth possible strategic partner, Company E, to discuss a potential business combination. Company E is a large publicly-traded company with its equity securities listed on the New York Stock Exchange that is engaged in the development, manufacture and distribution of diversified products in the health care industry.

      On May 5, 2000, representatives of Prudential Securities and SG Cowen held discussions. The SG Cowen representatives indicated that the Development Committee had authorized SG Cowen to pursue further discussions with Guilford. In addition, Messrs. Jordan and Dausch had telephonic discussions from time to time on May 8 through May 12, 2000 about a possible exchange ratio and possible transaction structure.

      On May 10, 2000, Mr. Dausch, Dr. Zupon and other members of Gliatech’s management met with members of Company D’s management at Gliatech’s executive offices to further discuss a potential business combination.

      On May 15, 2000, Michael Lang, Gliatech’s Director of Business Development, visited Guilford’s facilities to conduct a due diligence investigation of Guilford’s drug development programs.

      At the Gliatech board of directors meeting following the annual stockholders meeting held on May 16, 2000, members of Gliatech’s management updated the board of directors regarding the status of potential business combinations. Present were all the members of the board of directors, Mr. Dausch, Dr. Zupon and a representative of Jones Day, and representatives of SG Cowen were present by telephone. At the meeting, members of management and the board of directors extensively discussed a potential transaction with Guilford. The representative of Jones Day also generally discussed the legal duties and responsibilities of the Gliatech board of directors in connection with a business combination. At the conclusion of the meeting, the Gliatech board of directors authorized management to continue discussions with Guilford.

      Guilford’s board of directors also met on May 16, 2000, and at that meeting representatives of Prudential Securities presented a financial analysis of a possible transaction with Gliatech and a representative of Hogan & Hartson L.L.P. discussed possible transaction terms and legal issues. The Guilford board extensively discussed the possible transaction and authorized management to continue negotiations with Gliatech.

      As a result of discussions in April and early May and the Gliatech and Guilford board of directors meetings on May 16, 2000, Guilford and Gliatech began to negotiate definitive documents to implement a proposed merger between Gliatech and Guilford. On May 17, 2000, members of Gliatech’s management as well as its legal, financial and accounting advisors began to conduct legal, financial and accounting due diligence on Guilford. In connection with the negotiation of the definitive documents and due diligence inquiries, many conference calls and meetings took place at Gliatech’s and Guilford’s executive offices and via telephone.

      From May 17 through May 29, 2000, Dr. Oesterling and Mr. Dausch had several discussions with the members of the Development Committee regarding the status of the negotiations with Guilford.

      On May 18, 2000, representatives of Gliatech, Jones Day and SG Cowen visited Guilford’s offices in Baltimore to perform on-site due diligence. Follow-up due diligence occurred by telephone on both Guilford’s and Gliatech’s behalf on May 19, 2000.

      On May 23, 2000, representatives of Gliatech, Jones Day and SG Cowen met at the offices of Hogan & Hartson L.L.P. in Baltimore with representatives of Guilford, Hogan & Hartson L.L.P. and Prudential Securities. Negotiations occurred on that day regarding the draft merger agreement and related agreements, as well as other business issues. These negotiations continued among the parties daily through May 28, 2000.

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      On May 28, 2000, the Guilford board of directors met telephonically, having been provided by Hogan & Hartson L.L.P. with current drafts of the merger agreement and related documentation and by Prudential Securities with certain financial analyses. Dr. Smith summarized the status of negotiations. A representative of Hogan & Hartson L.L.P. reviewed the merger documentation with the board of directors and discussed legal issues. Representatives of Prudential Securities described the financial analysis performed by that firm with respect to the possible combination with Gliatech at a proposed 1.38 to 1 exchange ratio and delivered the oral opinion of Prudential Securities, later confirmed in writing, that as of that date the proposed exchange ratio was fair to Guilford from a financial point of view. Following discussion, the Guilford board of directors then unanimously concluded that the merger was in the best interests of Guilford’s stockholders and unanimously approved the proposed merger agreement and related documentation, the issuance of Guilford shares in the merger, authorized Guilford’s officers to complete the merger agreement and related documentation and execute the same, and recommended approval of the issuance of Guilford shares in the merger by the Guilford stockholders.

      On May 29, 2000, the Gliatech board of directors held a telephonic meeting to review with Gliatech’s management and representatives of Jones Day and SG Cowen the status of the negotiations and the proposed terms and conditions of the merger agreement. During this meeting, representatives of Jones Day reviewed the legal duties and responsibilities of the Gliatech board of directors in connection with the proposed transaction. In addition, representatives of Jones Day reviewed the material non-financial terms and conditions to the merger agreement. SG Cowen reviewed its financial analysis of the exchange ratio and delivered to the Gliatech board of directors an opinion to the effect that, as of that date and based upon and subject to the matters described in its opinion, the exchange ratio was fair, from a financial point of view, to the stockholders of Gliatech. In addition, members of management discussed the severance and retention arrangements for employees of Gliatech. Following a thorough discussion, the Gliatech board of directors by unanimous vote of all members present and constituting a quorum (with William A. Clarke not present) approved, adopted and declared advisable the merger agreement and the other transactions contemplated by the merger agreement to the stockholders of Gliatech and recommended adoption of the merger agreement by the stockholders of Gliatech.

      On the evening of May 29, 2000, the merger agreement, the stockholder agreements and related documents were executed. The execution of the merger agreement was announced on the morning of May 30, 2000 by issuance of a joint press release by Guilford and Gliatech.

Guilford’s Reasons for the Merger

      At a meeting held on May 28, 2000, the Guilford board of directors unanimously determined that the merger is fair to and in the best interests of Guilford and its stockholders, approved the merger and the transactions contemplated by the merger agreement and unanimously resolved to recommend to Guilford stockholders approval of the issuance of Guilford shares in the merger. In reaching these conclusions, the Guilford board of directors considered the advice it had received at that meeting and prior meetings from its financial advisors, legal counsel and members of Guilford management with regard to financial, legal, regulatory, accounting and business matters related to the merger. The Guilford board of directors also considered a number of factors that weighed both in favor of and against recommending approval of the merger, including the following, which are all of the material factors the Guilford board considered:

Factors Weighing in Favor of the Merger

	•	Product Portfolio. The strategic fit between the two companies in technology platforms and products is particularly strong. Gliatech’s ADCON® family of products, product candidates and its discovery and development programs for drugs to treat central nervous system disorders will fit well with Guilford’s neurological and biopolymer product programs, and the combined company will

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		have three marketed products and ten product candidates in development that are complementary. The combined company’s product and product candidate portfolio is as follows:

           Biopolymer Platform

	The combined company’s portfolio will include three marketed biopolymer products and six biopolymer products in various stages of development.

           Commercial Platform:

	—	ADCON®-L Gel — a polymer gel approved for the inhibition of post-surgical scarring and adhesions following lumbar spine surgery. ADCON®-L is currently available in the U.S. and 28 international markets and is the only product to receive FDA market clearance for this use.
	—	GLIADEL® Wafer — a site-specific biopolymer-based chemotherapeutic approved to treat recurrent glioblastoma multiforme — a common form of malignant brain cancer. Since its approval by the FDA in 1996, GLIADEL® Wafer has received marketing authorizations in 21 countries. GLIADEL® Wafer is currently marketed by Aventis S.A., Guilford’s corporate partner, except in Scandinavia, where it is marketed by Orion Pharma Corporation.
	—	ADCON®-T/N Gel — a polymer gel approved for the inhibition of post-surgical scarring and adhesions following tendon and peripheral nerve surgery. ADCON®-T/N Gel is currently available in 28 international markets, excluding the United States.

           Development Platform:

	—	GLIADEL® Wafer — for first line therapy of glioblastoma multiforme. A Phase III clinical trial is expected to be completed this summer.
	—	ADCON®-P Liquid — a biopolymer liquid to inhibit post-surgical scarring following pelvic and gynecological surgeries. ADCON®-P is currently in pivotal trials.
	—	ADCON®-A Liquid — a biopolymer liquid to inhibit post-surgical scarring following abdominal and colorectal surgeries. ADCON®-A has completed patient enrollment in a pilot study and is expected to enter pivotal trials this year.
	—	PACLIMERTM Microspheres — a proprietary, site-specific biopolymer formulation of paclitaxel intended for the treatment of ovarian cancer. PACLIMERTM Microspheres is currently in Phase I clinical development.
	—	ADCON®-I Gel (using ADCON®-L Gel) — to inhibit adhesions following breast augmentation and reconstructive surgery. ADCON®-I has recently completed enrollment in a pilot clinical trial.
	—	Lidomer™ Microspheres — a controlled release biopolymer formulation of lidocaine, an analgesic agent that is currently used to provide local pain relief. Lidomer™ Microspheres is currently in late-stage pre-clinical development.

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           Neurological Platform

	In addition to its biopolymer platform, the combined company will have four neurological products in various stages of development. Products in the company’s neuroscience development pipeline will include:

           Development Platform:

	—	PERCEPTIN™ — a selective histamine H3 receptor antagonist being investigated as a novel treatment for Attention Deficit Hyperactivity Disorder. Phase I studies have been completed and enrollment in a Phase II trial has begun.
	—	Neuroimmunophilin ligands — novel small molecules that are being investigated for the promotion of nerve growth and repair. Guilford’s development partner, Amgen, has recently completed Phase I studies with “NIL-A,” the lead compound, and Guilford anticipates that Phase II development for Parkinson’s disease will begin this year.
	—	GPI-15715 — a novel pro-drug of propofol, currently the world’s best selling general anesthetic. GPI-15715 is a water soluble pro-drug of propofol that may avoid some of the side effects associated with propofol. GPI-15715 is currently in late stage pre-clinical development.
	—	GPI-5693 — a small molecule NAALADase inhibitor to treat neuropathic pain associated with diabetic peripheral neuropathy. Clinical development is scheduled to begin later this year.

           Research Programs:

	—	PARP Inhibitors — compounds to inhibit cell damage and death in acute and chronic neurodegenerative disorders including stroke, spinal cord trauma, Parkinson’s disease and inflammation.
	—	Serine Racemase — compounds to inhibit cell damage and death in acute and chronic neurodegenerative disorders including stroke, spinal cord trauma, Parkinson’s disease and inflammation.
	—	Inflammation-producing glial cells — compounds to slow or inhibit progression of Alzheimer’s disease.
	—	H3 Agonists — compounds to treat anxiety and insomnia.
	—	Glycine Transporters — potential treatment for schizophrenia.
	—	Properdin — a monoclonal antibody that may be useful in treating inflammatory disease.

	•	Critical Mass. The combined company’s greater critical mass will allow for significant benefits, including the ability to:

	—	offer a greater array of biopolymer-based products for surgeons and novel potential treatments for neurological diseases;
	—	take advantage of greater marketing and manufacturing capacity to increase revenue growth from product sales;
	—	draw upon the extensive expertise and knowledge of the combined company’s operating personnel;
	—	achieve greater operating efficiencies through operational synergies and elimination of redundancies in personnel and facilities;

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	—	take advantage of new opportunities to expand marketing, sales, manufacturing, process chemistry and clinical development capabilities that neither company could pursue as effectively on its own; and
	—	take advantage of the greater market capitalization of the combined company to attract greater research analyst coverage and possibly broader institutional and retail share ownership, thereby enhancing liquidity for all stockholders and enhancing the access to capital.

	•	Terms of Merger Agreement. The financial and legal terms of the merger agreement, including an exchange ratio that provides certainty as to the total number of Guilford shares issuable in the merger, the tax-free nature of the transaction for federal income tax purposes, the advantages of pooling of interests accounting treatment and the provisions of the merger agreement intended to protect Guilford’s interests in the event an alternative offer for Gliatech is made by a third party.
	•	Financial Analysis. Presentations by Prudential Securities Incorporated and management of Guilford at the Guilford board meetings on May 16 and May 28, 2000 relating to projections of the combined company’s future financial performance over the next five years, based upon internal projections prepared by Gliatech and Guilford management.
	•	Opinion of Financial Advisor. The financial analysis prepared by Prudential Securities Incorporated and presented at Guilford board meetings on May 16 and May 28, 2000, and the opinion rendered by Prudential Securities Incorporated on May 28, 2000, as to the fairness of the exchange ratio to Guilford from a financial point of view.

Countervailing Factors

      The Guilford board of directors also considered the following countervailing factors in its deliberations concerning the merger:

	•	The possible impact on the combined company of FDA issues arising out of the FDA inspection of Gliatech and possible future FDA actions, as well as product liability and other lawsuits, relating to Gliatech’s ADCON®-L product, as further described above under “Risk Factors.”
	•	The fact that the merger consideration is in the form of a fixed exchange ratio between Guilford’s and Gliatech’s stocks means that a decline in Gliatech’s stock price relative to Guilford’s could have a negative effect on Guilford because there will be no corresponding downward adjustment in the number of shares Gliatech stockholders will receive to reflect the decreased market value of Gliatech (or increased market value of Guilford).
	•	Uncertainty regarding stockholders’, employees’ and corporate partners’ reactions to the merger.
	•	Possible difficulties integrating and retaining the two companies’ management and employees, and the potentially negative effects from seeking to relocate some Gliatech employees from Ohio to Maryland.
	•	The possibility that anticipated cost savings and operational synergies will not be achieved as planned, which could have a material adverse effect on the combined company’s ability to achieve its future earnings goals.
	•	The distraction of Guilford management from day-to-day operations as a result of the merger, at a time when key negotiations regarding possible corporate partnerships and a new emphasis on higher efficiency in product development programs are underway at Guilford.
	•	Substantial estimated direct and indirect costs associated with the merger, including personnel retention and severance costs, financial advisory, legal, accounting, printing and other fees, facility closure and lease termination costs, particularly relating to Gliatech’s existing and new headquarters facilities in Ohio, personnel relocation expenses and other integration costs.

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      In view of the variety of factors considered in connection with its evaluation of the merger, the Guilford board of directors did not quantify or otherwise assign relative weights to the factors considered in reaching its conclusions. In addition, individual members of the Guilford board of directors may have given different weights to different factors. However, on an overall basis, the Guilford board of directors concluded that the factors favoring the merger outweigh the countervailing factors.

Recommendation of the Guilford Board of Directors

      The Guilford board unanimously found the merger and the merger agreement, and the issuance of Guilford stock to Gliatech stockholders in the merger, to be fair to and in the best interests of Guilford and its stockholders and recommends that Guilford stockholders vote “for” approval of the issuance of Guilford shares in the merger.

Opinion of Guilford Financial Advisor

      On May 28, 2000, Prudential Securities Incorporated delivered its oral opinion to the board of directors of Guilford, which opinion was confirmed in writing as of that date, to the effect that, as of such date, the exchange ratio was fair, from a financial point of view, to Guilford (the “Prudential Securities Opinion”). Prudential Securities presented the financial analysis and assumptions underlying its oral opinion at the meeting of the board of directors of Guilford on May 28, 2000.

      In requesting the Prudential Securities Opinion, the Guilford board of directors did not give any special instructions to Prudential Securities or impose any limitation upon the scope of the investigation that Prudential Securities used to deliver the Prudential Securities Opinion. A copy of the Prudential Securities Opinion, which sets forth the assumptions made, all material matters considered and limits on the review undertaken, is attached to this proxy statement as Annex B and is incorporated herein by reference. The summary of the Prudential Securities Opinion set forth below is qualified in its entirety by reference to the full text of the Prudential Securities Opinion. Guilford stockholders are urged to read the Prudential Securities Opinion in its entirety.

      The Prudential Securities Opinion is addressed to the board of directors of Guilford, and is directed only to the fairness of the exchange ratio to Guilford as of May 28, 2000 from a financial point of view. It does not constitute a recommendation to any stockholder as to how such stockholder should vote at the meeting or as to any other action such stockholder should take regarding the merger.

      In conducting its analysis and arriving at the Prudential Securities Opinion, Prudential Securities reviewed such information and considered such financial data and other factors as Prudential Securities deemed relevant under the circumstances, including the following:

	•	a draft, dated May 25, 2000, of the merger agreement;
	•	publicly-available historical financial and operating data for Guilford, including, but not limited to:

	(a)	Guilford’s annual report on form 10-K for the fiscal year ended December 31, 1999;
	(b)	Guilford’s quarterly report on form 10-Q for the quarter ended March 31, 2000;
	(c)	Guilford’s proxy statement for the annual meeting of stockholders held on May  16, 2000;

	•	information relating to Guilford, including internal financial statements and other financial and operating data concerning Guilford, including financial forecasts for future fiscal years, prepared by the management of Guilford;
	•	publicly available historical financial and operating data for Gliatech, including, but not limited to:

	(a)	Gliatech’s annual report on form 10-K for the fiscal year ended December 31, 1999;
	(b)	Gliatech’s quarterly report on form 10-Q for the quarter ended March 31, 2000;
	(c)	Gliatech’s proxy statement for the annual meeting of stockholders held on May  16, 2000.

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	•	information relating to Gliatech, including internal financial statements and other financial and operating data concerning Gliatech, including financial forecasts for future fiscal years, prepared by the management of Gliatech;
	•	historical stock prices and trading volumes of Guilford common stock and Gliatech common stock;
	•	publicly-available financial, operating and stock market data concerning several companies engaged in businesses Prudential Securities deemed reasonably similar to that of Guilford and Gliatech;
	•	the financial terms of several recent transactions Prudential Securities deemed relevant to its inquiry; and
	•	such other financial studies, analyses and investigations as Prudential Securities deemed relevant to its inquiry.

      Prudential Securities assumed, with Guilford’s consent, that the draft of the merger agreement that Prudential Securities reviewed (as referred to above) would substantially conform in all material respects to the merger agreement when in final form and that the merger would be completed on the terms described in the merger agreement without any waiver of any material terms or conditions.

      Prudential Securities discussed with the senior management of Guilford and Gliatech: (1) the prospects for their respective businesses; (2) the financial impact of the merger on the respective companies; and (3) such other matters as Prudential Securities deemed relevant.

      In connection with its review and analysis and in the preparation of the Prudential Securities Opinion, Prudential Securities relied upon the accuracy and completeness of the financial and other information publicly-available or otherwise provided to Prudential Securities by Guilford and Gliatech and did not undertake any independent verification of such information or any independent valuation or appraisal of any of the assets or liabilities of Guilford or Gliatech. With respect to certain financial forecasts provided to Prudential Securities by Guilford or Gliatech, Prudential Securities assumed that such information, and the assumptions and bases therefor, represented each respective management’s best then available estimate as to the future financial performance of Guilford and Gliatech, respectively, and that each of Guilford and Gliatech would perform in accordance with such projections. Prudential Securities assumes no responsibility for and expresses no view as to such forecasts and the assumptions under which they were prepared. For the purposes of the Prudential Securities Opinion, Prudential Securities assumed the merger qualifies as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and that the transaction contemplated by the merger agreement will be completed as described in the merger agreement and in this document.

      The Prudential Securities Opinion is based on economic, financial and market conditions as they existed on May 28, 2000 and can only be evaluated as of that date. Prudential Securities assumes no responsibility to update or revise the Prudential Securities Opinion based upon events or circumstances occurring after such date.

      The Prudential Securities Opinion, including Prudential Securities’ presentation of such opinion to the Guilford board of directors, was one of the many factors that the board of directors took into consideration in making its determination to recommend approval of the merger agreement. Consequently, Prudential Securities’ analyses described below should not be viewed as determinative of the opinion of the Guilford board of directors. The exchange ratio was determined through arm’s length negotiations between Guilford and Gliatech and was approved by the Guilford board of directors.

      The Prudential Securities Opinion does not address nor should it be construed to address the relative merits of the merger or alternative business strategies that may be available to Guilford. In addition, the Prudential Securities Opinion does not in any manner address the prices at which Guilford common stock will trade following completion of the merger.

      In arriving at the Prudential Securities Opinion, Prudential Securities performed a variety of financial analyses, including those summarized herein. The summary set forth below of the analyses presented to

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      Precedent Transactions Analysis. Prudential Securities analyzed the consideration paid in 15 recent merger and acquisition transactions that Prudential Securities deemed to be reasonably similar to the merger, and considered (1) the multiple of the acquired entity’s enterprise value (defined as equity value plus total debt, minus cash and cash equivalents) to the acquired entity’s latest twelve months’ revenue and the multiple of the acquired entity’s equity value (defined as the price paid per share in the transaction multiplied by the diluted number of shares outstanding) to the acquired entity’s tangible book value; and (2) the applicable premiums paid over the acquired entity’s public stock trading prices one day, one week and four weeks prior to the announcement of each transaction, all based on publicly available information for such transactions. Prudential Securities selected these transactions based on its knowledge of Guilford’s and Gliatech’s financial and operating characteristics, the financial terms of the merger, familiarity with and experience in the industries in which Guilford and Gliatech operate and its review and assessment of the publicly-available financial terms of recent acquisition transactions. Prudential Securities did not identify any reasonably similar transactions that were excluded from its analysis. The transactions considered were the combinations of:

	•	Biomatrix, Inc. and Genzyme Biosurgery;
	•	The Liposome Company Inc. and Elan Corp plc;
	•	Roberts Pharmaceutical Corporation and Shire Pharmaceuticals Group plc;
	•	Allelix Biopharmaceuticals Inc. and NPS Pharmaceuticals, Inc.;
	•	LeukoSite, Inc. and Millennium Pharmaceuticals, Inc.;
	•	U.S. Bioscience, Inc. and MedImmune, Inc.;
	•	SIBIA Neurosciences, Inc. and Merck & Co., Inc.;
	•	NeXstar Pharmaceuticals, Inc. and Gilead Sciences, Inc.;
	•	SEQUUS Pharmaceuticals, Inc. and ALZA Corporation;
	•	TheraTech, Inc. and Watson Pharmaceuticals, Inc.;
	•	Penederm Incorporated and Mylan Laboratories, Inc.;
	•	Virus Research Institute, Inc. and T Cell Sciences, Inc.;
	•	Neurex Corporation and Elan Corporation plc;

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	•	Somatogen, Inc. and Baxter International Inc.; and
	•	Sequana Therapeutics, Inc. and Arris Pharmaceuticals Corp.

      The precedent transactions used in this analysis were found to imply for the acquired entity enterprise values within a range of 5.3x to 16.8x latest twelve months’ revenue and equity values within a range of 3.5x to 34.4x tangible book value. Applying such multiples to Gliatech’s operating results for the twelve months ended March 31, 2000 resulted in implied ranges for the exchange ratio of 0.792 to 4.366.

      The precedent transactions used in this analysis were found to imply for the acquired entity a premium within a range of 7.8% to 91.7%, 28.9% to 128.9% and 23.4% to 169.6% for the one day, one week and four week periods prior to the announcements, respectively. Applying such premiums to Gliatech’s diluted market capitalization (defined as diluted shares outstanding multiplied by Gliatech’s closing stock price on May 25, 2000) resulted in implied ranges for the exchange ratio of 1.221 to 2.339.

      Publicly-Traded Product Companies Analysis. Prudential Securities employed an analysis of publicly-traded “product” companies considered by Prudential Securities to be reasonably similar to Gliatech to establish a range of implied exchange ratios. Prudential Securities selected these companies, as well as those used in the publicly-traded biomaterial companies analysis summarized below, based on its knowledge of Gliatech’s financial and operating characteristics, its familiarity with and experience in the industries in which Gliatech operates and its review and assessment of publicly available financial data for such companies. Prudential Securities did not identify any such companies that were excluded from its analysis. Prudential Securities analyzed publicly-available historical financial results, including multiples of current enterprise value to revenue for the twelve months ended March 31, 2000 and total assets as of March 31, 2000, and multiples of current equity value (defined as the closing stock price on May 25, 2000 multiplied by basic shares outstanding) to the tangible book value as of March 31, 2000 of certain publicly-traded product companies. The publicly-traded product companies used in the analysis included:

	•	Bio-Technology General Corp;
	•	Cephalon, Inc.;
	•	Connetics Corporation;
	•	CryoLife, Inc.;
	•	GelTex Pharmaceuticals, Inc.;
	•	Guilford Pharmaceuticals Inc.;
	•	Kos Pharmaceuticals, Inc.; and
	•	PathoGenesis Corporation.

      Based on the May 25, 2000 closing stock prices, the product companies were found to have current enterprise values within a range of 2.9x to 13.3x latest twelve months revenues and within a range of 1.5x to 10.4x total assets, and current equity values within a range of 2.6x to 9.7x tangible book value. Applying such multiples to Gliatech’s latest twelve months’ revenues, total assets and tangible book value, resulted in implied ranges for the exchange ratio of 0.481 to 2.052.

      Publicly-Traded Biomaterials Companies Analysis. Prudential Securities employed an analysis of publicly-traded biomaterials companies considered by Prudential Securities to be reasonably similar to Gliatech to establish a range of implied exchange ratios. Prudential Securities analyzed publicly-available historical financial results, including multiples of current enterprise value to latest twelve months’ revenue and total assets and multiples of current equity value to the tangible book value of certain publicly-traded biomaterials companies. The publicly-traded biomaterials companies used in this analysis included:

	•	Advanced Tissue Sciences, Inc.;
	•	Anika Therapeutics, Inc.;