content: Page 1 of 8 pages
  
                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
  
  
  
                                      FORM 8-K
  
  
  
                                   CURRENT REPORT
  
  
       Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
  
  
        Date of Report (date of earliest event reported): November 10, 1998
  
  
  
                             MOLECULAR BIOSYSTEMS, INC.
               (Exact name of registrant as specified in its charter)
  
  
  
                            Delaware 1-10546 36-30878632
  (State or other juris- (Commission file (IRS employer diction of incorporation)
                           number) identification number)
  
  
  
               10030 Barnes Canyon Road, San Diego, California 92121
                      (Address of principal executive offices)
  
  
  
         Registrant's telephone number, including area code: (619) 812-7200
  
  
  
  
  
  
  <PAGE>
  
  Item 5.  Other Events.
  
         Cost Reduction Measures
  
         In the Company's second quarter 10-Q, the Company announced that revenues
  from sales of OPTISON(r) to Mallinckrodt Inc.  ("Mallinckrodt") would be reduced
  in the near term. Although Mallinckrodt's sales of OPTISON to end users continue
  to grow, with December being the strongest month to date, the Company  continues
  to expect  that its  revenues  from  sales of  OPTISON  for the  quarters  ended
  December 31, 1998 and March 31, 1999 will be lower than  revenues  from sales of
  OPTISON  for the  quarters  ended  June  30,  1998  and  September  30,  1998 as
  Mallinckrodt manages its current inventory of the product.  Mallinckrodt expects
  its efforts in medical  education and  reimbursement to continue to increase end
  user sales.
  
          As a result of the slower than planned ramp up of OPTISON  sales, the
  Company actively evaluated cost reduction measures and, on November 10, 1998,
  announced the initiation of a multi-phase program to reduce expenses and 
  preserve capital.
  
          The Company anticipates that the initial phase, which affected 
  approximately 40 employees of the Company's 140-person workforce, will reduce
  the Company's payroll and related cash expenditures by approximately 
  $5.0 million annually.  Subsequent phases will include further reductions of 
  the Company's headcount as a result of the planned out-sourcing of the Company's
  manufacturing operations.
  
          The impact of the cost reduction measures on the Company's  financial
  results  will include a one-time  charge of $7.2  million for the quarter  ended
  December 31, 1998. This charge will include $6.1 million in nonrecurring charges
  and $1.1 million in cost of sales. The $6.1 million nonrecurring charge includes
  $3.1  million for the write off of fixed  assets,  capitalized  license fees and
  capitalized  patent costs that will no longer be used by the Company as a result
  of the planned out-sourcing of manufacturing  operations and the discontinuation
  of certain projects, $2.3 million of severance costs, and approximately $700,000
  of technology  transfer  costs and other costs related to the Company's  plan to
  out-source manufacturing. Of this $6.1 million nonrecurring charge, $3.0 million
  will require cash outflows.
  
          As indicated above, cost of sales for the fiscal third quarter will also
  include a one-time charge associated with these cost reduction measures.   
  Approximately $1.1 million in inventories, including materials required for the 
  technology transfer, will be expensed through cost of sales in the third quarter
  as a result of the planned out-source of manufacturing.  Of this $1.1 million, 
  $500,000 will require cash outflows.
  
          In addition to these charges in the quarter ended December 31, 1998, the
  Company also  expects to write off another $2.8 million in fixed assets  through
  accelerated depreciation over the next 12-15 months as the manufacturing process
  is out-sourced.
  
  
         Changes in Management
  
         The Company also announced on December 3, 1998 key changes in management.
  Elizabeth L. Hougen was named to the position of Chief Financial Officer, 
  effective January 1, 1999.  The move was in response to the planned departure 
  of Gerard A. Wills, vice president of finance and Chief Financial Officer.  The
  Company also announced on December 3, 1998 the appointment of 
  Howard Dittrich, M.D., vice president of medical and regulatory affairs, to the 
  newly created office of executive vice president.  In addition, the Company
  reports that Thomas Jurgensen, vice president - legal and general counsel, and 
  William Ramage, vice president of marketing, are no longer with the Company 
  effective November 24, 1998.
  
          Patent Issues
  
          On December 15,  1998,  the Company  announced  that it had received
  correspondence  from the U.S. Patent & Trademark  Office (PTO) with respect to a
  patent held by Sonus  Pharmaceuticals,  Inc ("Sonus") subject to a reexamination
  proceeding  initiated by the  Company.  On the basis of  amendments  after final
  rejection  in  reexamination  proceedings,  the PTO has  indicated  that certain
  claims in Sonus' U.S. Patent No.  5,558,094  ('094) are allowable by the agency,
  subject to the  issuance of a  reexamination  certificate.  According to the PTO
  correspondence, none of the original '094 patent claims which Sonus had asserted
  against MBI will be allowed by the PTO without amendment.  In June 1998, the PTO
  rejected the Sonus patent in its original form,  based on prior art not cited by
  Sonus.
  
          Subsequent to the December 15, 1998 announcement, the Company received 
  correspondence from the PTO with respect to another patent held by Sonus subject
  to a reexamination proceeding initiated by the Company.  The PTO has indicated 
  that certain claims of U.S. Patent 5,573,751 ('751) are also allowable by the 
  agency, subject to the issuance of a reexamination certificate.  According to
  the PTO correspondence, certain of the '751 patent claims which Sonus has 
  asserted against the Company will be allowed in their original form.
       
          The '094 and '751 patents are involved in a lawsuit pending in the 
  U.S. District Court in Seattle.  In the litigation, the Company continues to 
  challenge the validity of these patents and their applicability to the Company's
  products.
  
        Copies of the press releases that the Company issued on November 10, 1998,
  December 3, 1998,  and December 15, 1998 are attached to this Report as Exhibits
  10.1, 10.2 and 10.3, respectively.
  
      Statements  in  this  current  report  on  Form  8-K,  including  statements
  regarding  anticipated  increases in end user sales of OPTISON,  may  constitute
  forward looking  statements and are subject to numerous risks and uncertainties,
  including  the expense and uncertain  outcome of the patent  litigation to which
  the  company  is  a  party,  including  the  possibility  of  injunctive  relief
  prohibiting  the  company  from  selling  OPTISON;  decisions  by the Patent and
  Trademark Office favoring competitors' patents;  delays or inability to continue
  marketing  OPTISON  in  Europe  as a  result  of  regulatory  delays  or  patent
  litigation;   the  failure  of  OPTISON  to  achieve  broad  market  acceptance;
  difficulties  and  delays  with  respect  to  marketing  and  sales  activities,
  including the failure of physicians and third party payors to adopt OPTISON as a
  standard  of  care;  the  Company's   future  capital  needs;   the  failure  to
  successfully  complete pivotal  clinical trials;  the development of competitive
  products by others;  delays by regulatory  authorities  in approving  additional
  indications  for OPTISON,  including the  evaluation  of  myocardial  perfusion;
  manufacturing problems;  general uncertainties  accompanying the development and
  introduction of new products;  and other risks detailed from time to time in the
  company's  filings  with the  Securities  and  Exchange  Commission.  The actual
  results may differ  materially  from those  projected in this current  report on
  Form 8-K. The Company  disclaims any obligation to update the statements in this
  current report on Form 8-K.
  
  <PAGE>
  
                                     Signature
  
             Pursuant to the requirements of the Securities  Exchange Act of 1934,
  the  registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
             Date:   January 11, 1999.
  
  
             Molecular Biosystems, Inc.
  
  
  
             By      /s/ Elizabeth L. Hougen
                        Elizabeth L. Hougen
                  Executive Director, Finance and Chief Financial Officer
  
  
  <PAGE>
  
                                   Exhibit Index
  
                                                                    Sequentially
       Exhibit        Description                                   Numbered Page
  
       10.1           Press release (November 10, 1998)                  6
       10.2           Press release (December 3, 1998)                   8
       10.3           Press release (December 15, 1998)                  9
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text: Page 1 of 8 pages
  
                                   UNITED STATES
                         SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
       Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
  
        Date of Report (date of earliest event reported): November 10, 1998
  
                             MOLECULAR BIOSYSTEMS, INC.
               (Exact name of registrant as specified in its charter)
  
                            Delaware 1-10546 36-30878632
  (State or other juris- (Commission file (IRS employer diction of incorporation)
                           number) identification number)
  
               10030 Barnes Canyon Road, San Diego, California 92121
                      (Address of principal executive offices)
  
         Registrant's telephone number, including area code: (619) 812-7200
  Item 5.  Other Events.
  
         Cost Reduction Measures
  
         In the Company's second quarter 10-Q, the Company announced that revenues
  from sales of OPTISON(r) to Mallinckrodt Inc.  ("Mallinckrodt") would be reduced
  in the near term. Although Mallinckrodt's sales of OPTISON to end users continue
  to grow, with December being the strongest month to date, the Company  continues
  to expect  that its  revenues  from  sales of  OPTISON  for the  quarters  ended
  December 31, 1998 and March 31, 1999 will be lower than  revenues  from sales of
  OPTISON  for the  quarters  ended  June  30,  1998  and  September  30,  1998 as
  Mallinckrodt manages its current inventory of the product.  Mallinckrodt expects
  its efforts in medical  education and  reimbursement to continue to increase end
  user sales.
  
          As a result of the slower than planned ramp up of OPTISON  sales, the
  Company actively evaluated cost reduction measures and, on November 10, 1998,
  announced the initiation of a multi-phase program to reduce expenses and 
  preserve capital.
  
          The Company anticipates that the initial phase, which affected 
  approximately 40 employees of the Company's 140-person workforce, will reduce
  the Company's payroll and related cash expenditures by approximately 
  $5.0 million annually.  Subsequent phases will include further reductions of 
  the Company's headcount as a result of the planned out-sourcing of the Company's
  manufacturing operations.
  
          The impact of the cost reduction measures on the Company's  financial
  results  will include a one-time  charge of $7.2  million for the quarter  ended
  December 31, 1998. This charge will include $6.1 million in nonrecurring charges
  and $1.1 million in cost of sales. The $6.1 million nonrecurring charge includes
  $3.1  million for the write off of fixed  assets,  capitalized  license fees and
  capitalized  patent costs that will no longer be used by the Company as a result
  of the planned out-sourcing of manufacturing  operations and the discontinuation
  of certain projects, $2.3 million of severance costs, and approximately $700,000
  of technology  transfer  costs and other costs related to the Company's  plan to
  out-source manufacturing. Of this $6.1 million nonrecurring charge, $3.0 million
  will require cash outflows.
  
          As indicated above, cost of sales for the fiscal third quarter will also
  include a one-time charge associated with these cost reduction measures.   
  Approximately $1.1 million in inventories, including materials required for the 
  technology transfer, will be expensed through cost of sales in the third quarter
  as a result of the planned out-source of manufacturing.  Of this $1.1 million, 
  $500,000 will require cash outflows.
  
          In addition to these charges in the quarter ended December 31, 1998, the
  Company also  expects to write off another $2.8 million in fixed assets  through
  accelerated depreciation over the next 12-15 months as the manufacturing process
  is out-sourced.
  
         Changes in Management
  
         The Company also announced on December 3, 1998 key changes in management.
  Elizabeth L. Hougen was named to the position of Chief Financial Officer, 
  effective January 1, 1999.  The move was in response to the planned departure 
  of Gerard A. Wills, vice president of finance and Chief Financial Officer.  The
  Company also announced on December 3, 1998 the appointment of 
  Howard Dittrich, M.D., vice president of medical and regulatory affairs, to the 
  newly created office of executive vice president.  In addition, the Company
  reports that Thomas Jurgensen, vice president - legal and general counsel, and 
  William Ramage, vice president of marketing, are no longer with the Company 
  effective November 24, 1998.
  
          Patent Issues
  
          On December 15,  1998,  the Company  announced  that it had received
  correspondence  from the U.S. Patent & Trademark  Office (PTO) with respect to a
  patent held by Sonus  Pharmaceuticals,  Inc ("Sonus") subject to a reexamination
  proceeding  initiated by the  Company.  On the basis of  amendments  after final
  rejection  in  reexamination  proceedings,  the PTO has  indicated  that certain
  claims in Sonus' U.S. Patent No.  5,558,094  ('094) are allowable by the agency,
  subject to the  issuance of a  reexamination  certificate.  According to the PTO
  correspondence, none of the original '094 patent claims which Sonus had asserted
  against MBI will be allowed by the PTO without amendment.  In June 1998, the PTO
  rejected the Sonus patent in its original form,  based on prior art not cited by
  Sonus.
  
          Subsequent to the December 15, 1998 announcement, the Company received 
  correspondence from the PTO with respect to another patent held by Sonus subject
  to a reexamination proceeding initiated by the Company.  The PTO has indicated 
  that certain claims of U.S. Patent 5,573,751 ('751) are also allowable by the 
  agency, subject to the issuance of a reexamination certificate.  According to
  the PTO correspondence, certain of the '751 patent claims which Sonus has 
  asserted against the Company will be allowed in their original form.
       
          The '094 and '751 patents are involved in a lawsuit pending in the 
  U.S. District Court in Seattle.  In the litigation, the Company continues to 
  challenge the validity of these patents and their applicability to the Company's
  products.
  
        Copies of the press releases that the Company issued on November 10, 1998,
  December 3, 1998,  and December 15, 1998 are attached to this Report as Exhibits
  10.1, 10.2 and 10.3, respectively.
  
      Statements  in  this  current  report  on  Form  8-K,  including  statements
  regarding  anticipated  increases in end user sales of OPTISON,  may  constitute
  forward looking  statements and are subject to numerous risks and uncertainties,
  including  the expense and uncertain  outcome of the patent  litigation to which
  the  company  is  a  party,  including  the  possibility  of  injunctive  relief
  prohibiting  the  company  from  selling  OPTISON;  decisions  by the Patent and
  Trademark Office favoring competitors' patents;  delays or inability to continue
  marketing  OPTISON  in  Europe  as a  result  of  regulatory  delays  or  patent
  litigation;   the  failure  of  OPTISON  to  achieve  broad  market  acceptance;
  difficulties  and  delays  with  respect  to  marketing  and  sales  activities,
  including the failure of physicians and third party payors to adopt OPTISON as a
  standard  of  care;  the  Company's   future  capital  needs;   the  failure  to
  successfully  complete pivotal  clinical trials;  the development of competitive
  products by others;  delays by regulatory  authorities  in approving  additional
  indications  for OPTISON,  including the  evaluation  of  myocardial  perfusion;
  manufacturing problems;  general uncertainties  accompanying the development and
  introduction of new products;  and other risks detailed from time to time in the
  company's  filings  with the  Securities  and  Exchange  Commission.  The actual
  results may differ  materially  from those  projected in this current  report on
  Form 8-K. The Company  disclaims any obligation to update the statements in this
  current report on Form 8-K.
  Signature
  
             Pursuant to the requirements of the Securities  Exchange Act of 1934,
  the  registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
             Date:   January 11, 1999.
  
             Molecular Biosystems, Inc.
  
             By      /s/ Elizabeth L. Hougen
                        Elizabeth L. Hougen
                  Executive Director, Finance and Chief Financial Officer
  Exhibit Index
  
                                                                    Sequentially
       Exhibit        Description                                   Numbered Page
  
       10.1           Press release (November 10, 1998)                  6
       10.2           Press release (December 3, 1998)                   8
       10.3           Press release (December 15, 1998)                  9