UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE
SECURITIES EXCHANGE ACT OF 1934

(Amendment No.)

Filed by the Registrantþx

Filed by a Party other than the Registranto¨

Check the appropriate box:


þxPreliminary Proxy Statement

o¨Confidential, for useFor Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

o¨Definitive Proxy Statement

o¨Definitive Additional Materials

o¨Soliciting MaterialMaterials Under Rule 14a-12

Medical Discoveries, Inc.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)

MEDICAL DISCOVERIES, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):

þxNo fee required.
o¨Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

1)(1)Title of each class of securities to which transaction applies: _________________________________________________

2)(2)Aggregate number of securities to which transaction applies: _________________________________________________
(3)
3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:0-11 (set forth the
amount on which the filing fee is calculated and state how it was determined): ___________________________________

4)(4)Proposed maximum aggregate value of transaction: ________________________________________________________

5)(5)Total fee paid:

 _____________________________________________________________________________________

o¨Fee paid previously with preliminary materials.
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4)(4)Date Filed:

 ______________________________________________________________________________________


MEDICAL DISCOVERIES, INC.
738 Aspenwood Lane1338 S. Foothill Drive #266
Twin Falls, Idaho 83301Salt Lake City, Utah 84108

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD MAY 21, 2004

To the Shareholders of Medical Discoveries, Inc.:


October __, 2007

Dear Shareholder:

You are cordially invited to attend a special meeting of the Annual Meeting of Shareholders (the “Meeting”)shareholders of Medical Discoveries, Inc. (the “Company”) to be held at 10:00 A.M. local time on Tuesday, October 30, 2007, at the Little America Hotel, 500Company's offices located at 6033 W. Century Blvd., Suite 1090 Los Angeles, California 90045.

As more fully described in the attached notice of special meeting and the accompanying proxy statement, the business to be addressed at the special meeting is consideration of a proposal to sell for cash, and the assumption of certain liabilities, all of our rights in and to “SaveCream”, a developmental stage topical aromatase inhibitor cream, to Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company.

Whether or not you plan to attend the special meeting, please submit your proxy to ensure your representation.

The Board of Directors recommends that you vote “FOR” the proposal to sell substantially all of our assets. You may attend the special meeting and vote in person even if you have submitted your proxy.
Sincerely,
Judy M. Robinett
Chief Executive Officer
MEDICAL DISCOVERIES, INC.
1338 S. Main Street, Foothill Drive #266
Salt Lake City, Utah 84108

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 30, 2007

Notice is hereby given that a special meeting of the shareholders of Medical Discoveries, Inc. will be held at 10:00 A.M. local time on Friday, May 21, 2004,Tuesday, October 30, 2007, at 1:00 p.m.the Company's offices located at 6033 W. Century Blvd., Suite 1090 Los Angeles, California 90045, for the following purposes:

     1. To elect three directors of the Company.
     2. To ratify the selection of Balukoff Lindstrom & Co., P.A. as independent accountants to audit the financial statements of the Company for the year ending December 31, 2004.
     3. To consider a proposal to amend and restate the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock of the Company to be designated in the future by the Board of Directors without further action by the shareholders.
     4. To approve the Company’s 2002 Stock Incentive Plan.
     5. To transact such other business as may properly come before the Meeting.

     Shareholders


1.To vote on a proposal to sell all of record atour rights in and to “SaveCream”, a developmental stage topical aromatase inhibitor cream, to Eucodis pursuant to the terms of that certain sale and purchase agreement, dated July 6, 2007, as amended (“Eucodis Agreement”), by and among Medical Discoveries, Inc., MDI Oncology, Inc., our wholly-owned subsidiary (“MDI Oncology”), and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”), as more fully described in the proxy statement accompanying this notice.

2.To transact such other business as may properly come before the special meeting or any adjournments or postponements thereof.

We have fixed the close of business on April 12, 2004 areSeptember 24, 2007, as the record date for the determination of shareholders entitled to notice of and to vote at the Meetingspecial meeting. Only our shareholders of record at the close of business on that date will be entitled to notice of and to vote at the special meeting or any adjournments or postponements thereof. This notice of special meeting and all adjournments of the Meeting. If youaccompanying proxy statement and proxy card are unablebeing sent to shareholders on or about October __, 2007.

You are cordially invited to attend the Meetingspecial meeting, but whether or not you plan to attend, please complete and sign the enclosed form of proxy and mail it promptly in person,the enclosed envelope. The proxy may be revoked at any time by filing a written revocation with our corporate secretary, by executing a later dated proxy and delivering it to our corporate secretary, or by attending the special meeting and voting in person.
By Order of the Board of Directors,

JUDY M. ROBINETT
Chief Executive Officer
October __, 2007
YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. IN ORDER TO ENSURE THAT YOUR SHARES ARE VOTED, PLEASE SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE. IF GIVEN, YOU MAY REVOKE YOUR PROXY BY FOLLOWING THE INSTRUCTIONS IN THE PROXY STATEMENT.

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE PROPOSAL DESCRIBED IN THE ATTACHED PROXY STATEMENT.
SUMMARY TERM SHEET - TRANSACTION WITH EUCODIS

This Summary Term Sheet summarizes certain material information regarding the proposed sale of assets to Eucodis under the Eucodis Agreement. You should carefully read this entire proxy statement for a more complete understanding of the transaction with Eucodis.
·Assets Sold (page 15)The assets being sold to Eucodis include (i) all of our right, title and interest in a certain Asset Purchase Agreement between Medical Discoveries, Inc. and the liquidator of Savetherapeutics AG, a German company in liquidation, dated as of March 11, 2005; (ii) all of our right, title and interest in that certain agreement between MDI Oncology and Eucodis, dated as of July 29, 2006, in connection with the co-development and licensing of “SaveCream”; and (iii) all of our right, title and interest under certain contracts relating to “SaveCream”. The foregoing represents a substantial portion of our assets.
·Purchase Price (page 16)The purchase price paid by Eucodis is approximately 4,007,534 euros or approximately $5,641,000 based on the currency conversion rate in effect as of September 25, 2007, comprising a cash payment of approximately $1.95 million, and Eucodis’s assumption of certain of our obligations and liabilities aggregating approximately $3.69 million. The financial terms of the Eucodis Agreement are denominated in euros, and we will be paid in euros. However, for convenience, the financial terms have been converted throughout the text of this proxy statement into U.S. dollars. Unless otherwise indicated, all amounts have been converted based upon the currency exchange rate in effect on September 25, 2007 of 1.4076 U.S. dollar for one euro. The currency exchange rate in effect as of the closing of the Eucodis transaction or at any future date may differ.
·
Obligations Assumed
and Discharged
Indebtedness (page 16)
Eucodis has agreed to assume aggregate of approximately $3.69 million or our current indebtedness that we owe to certain of our creditors. Eucodis will also assume all of our financial and other obligations under certain contracts relating to “SaveCream,” and certain other costs we have incurred since February 28, 2007 in connection with preserving the sold assets for the benefit of Eucodis through the closing of the transaction.
·Non-Competition (page 17)We have agreed to a non-compete provision for the duration of five years after the closing of the Eucodis transaction. Specifically, the non-compete provision restricts us from undertaking research and development activities with respect to “SaveCream.”
·Representation and Warranties (page 17)The Eucodis Agreement contains customary representations, warranties and covenants, which survive through the closing of the transaction.
·Closing Conditions (page 17)The closing of the transaction depends on meeting a number of conditions, including the following: our delivery to Eucodis of certain documents necessary to effect the transfer of the assets being sold, and us obtaining additional capital or a credit facility in the aggregate amount of at least $250,000.
·The Special Meeting (page 11)At the special meeting of our shareholders to be held on October 30, 2007, you will be asked to approve the transaction with Eucodis.
·Our Board’s Recommendation (page 14)Our board of directors has unanimously determined that the transaction with Eucodis is advisable, fair to, and in the best interests of our shareholders.

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QUESTIONS AND ANSWERS ABOUT THE TRANSACTION

Q:WHAT IS THIS PROXY STATEMENT AND WHY AM I RECEIVING IT?

A:You are receiving this proxy statement in connection with a special meeting of shareholders called by our Board of Directors for the purpose of soliciting shareholder votes for the sale of our SaveCream asset to Eucodis, our current European licensee and development partner, as more fully described in this proxy statement. You have been sent this proxy statement and the enclosed proxy card because our board of directors is soliciting your proxy to vote at the special meeting of shareholders called for the purpose of voting on the foregoing sale. Eucodis currently holds the exclusive rights to SaveCream within the European Union and certain other countries.

The assets being sold to Eucodis include (i) all of our right, title and interest, along with all of MDI Oncology’s right, title and interest, in that certain asset purchase agreement between Medical Discoveries, Inc. and the liquidator of Savetherapeutics AG, a German company in liquidation, dated as of March 11, 2005 (the “Savetherapeutics Contract”), including, among other things, our rights in and to “SaveCream”, a developmental topical aromatase inhibitor cream; (ii) all of MDI Oncology’s right, title and interest in that certain agreement between MDI Oncology and Eucodis, dated as of July 29, 2006, in connection with the co-development and licensing of the “SaveCream” product; and (iii) all of our (and MDI Oncology’s) right, title and interest under certain contracts relating to the “SaveCream” product ((i),(ii) and (iii) collectively, the “Purchased Assets”). This sale of the SaveCream asset to Eucodis will terminate any further obligation on the part of the Company or its subsidiary, MDI Oncology, to spend additional monies to develop SaveCream. This sale may constitute a sale of substantially all of our assets for purposes of Utah law, which governs our corporate matters. Accordingly, the sale is being submitted to our shareholders for approval pursuant to Section 16-10a-1202 of the Utah Revised Business Corporation Act.

Q:HOW MANY VOTES ARE REQUIRED TO APPROVE THE TRANSACTION?

A:Each share of common stock will entitle the holder to cast one vote. A majority of the issued and outstanding shares of our common stock, represented in proxy or in person, shall constitute a quorum. If a quorum exists, the affirmative vote of a majority of the shares of our common stock outstanding on the record date for the special meeting will be necessary for the approval of the Eucodis transaction. Abstentions and broker nonvotes will have the same effect as votes against the proposed transaction. Our outstanding shares of Series A Convertible Preferred Stock are not entitled to vote.

Q:WHAT WILL HAPPEN IF THE SHAREHOLDERS APPROVE THE TRANSACTION?

A:If the shareholders approve the transaction, then shortly following the special meeting, subject to the satisfaction of certain conditions set out in the sale and purchase agreement, the Company and MDI Oncology will sell to Eucodis the Purchased Assets in exchange for:

·a cash purchase price of approximately $1.95 million, which is payable to the Company at the closing; and

·Eucodis’s assumption of approximately $3.69 million of certain of our liabilities, as more fully discussed under “Proposal I - Terms of Sale and Purchase Agreement - Assumption of Liabilities”.

The approximately $1.95 million in cash proceeds received from the Eucodis sale will be used for general business purposes during the winding up of our old business operations. In addition, since we intend to either acquire or develop a new business, some of the cash proceeds may also be used for that new business. See, “Use of Proceeds” on page 14. It is currently our intent to retain the proceeds indefinitely in the Company. We do not anticipate that any distributions will be made to our shareholders in the near future,
if at all.
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Q.WHY IS THE BOARD OF DIRECTORS PROPOSING THE SALE OF SAVECREAM?

To date, we have been a developmental-stage bio-pharmaceutical company engaged in the research, validation, development and ultimate commercialization of two drug candidates referred to as MDI-P and SaveCream. Both of these drug candidates are urgedstill in development and neither has been approved by the U.S. Food and Drug Administration (the “FDA”). The total cost to develop these two drugs and to receive the approval from the FDA would cost many millions of dollars and take many more years. The Board of Directors has determined that we can no longer fund the development of the two drug candidates, and cannot obtain additional funding for these drug candidates. Accordingly, we have sought to maximize our return from our drug assets through their sale at this time, and to use the proceeds that we receive from the disposition of these technologies to pay off all creditors of the Company, and invest any residual proceeds into our new renewable bio-fuels business.

Q:WILL WE CONTINUE TO OPERATE AFTER THE EUCODIS TRANSACTION IS CLOSED?

A:The Eucodis sale will not result in the dissolution or liquidation of this company, and we plan to continue to operate the company, albeit in a new industry. We have agreed that, following the closing of the Eucodis transaction, neither we nor MDI Oncology will undertake research and development activities with respect to “SaveCream” or any other product which could be used in reasonable substitution of “SaveCream”, or commercialize any products based on “SaveCream”, except as may be otherwise expressly requested by Eucodis. We also intend to dissolve our MDI Oncology subsidiary after the sale to Eucodis.

Since signing the Eucodis Agreement, we have actively sought to develop a new business to maximize shareholder value. As disclosed on September 17, 2007, we have acquired some intellectual property related to the development of alternative energy bio-fuels, and have hired a seasoned energy executive with many years of experience in the alternate energy and bio-fuels industry, as our new President and Chief Operating Officer. We currently intend to develop this new alternative bio-fuels business.

Additional information regarding the bio-fuels purchase that we announced on September 17, 2007, and information regarding the additional members of our management team is available at the website of the Securities and Exchange Commission at www.sec.gov. You should also review the “Risk Factors” section beginning on page 10 for a discussion of some of the risks related to our future operations.

Q:HAS THE COMPANY RECEIVED A VALUATION OR FAIRNESS OPINION WITH RESPECT TO THE SALE?

A:No. Based on all factors, including the price paid for the SaveCream assets, the uncertainty as to title of those assets, and the book value of those assets, our Board of Directors determined that the purchase price being paid by Eucodis was fair to this company.
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Q;WHAT HAPPENS IF THE SHAREHOLDERS DO NOT APPROVE THE TRANSACTION.

A;If the sale of the SaveCream assets is not approved by the shareholders, the sale will be cancelled, and we will continue to own the SaveCream assets. However, since our Board has determined that it is not in the best interests of this company or our shareholders to continue to operate as a drug development company, and since we will no longer invest any funds in the development of SaveCream, we will not continue our efforts to develop that drug candidate. In fact, under the Eucodis Agreement, if the shareholders do not approve the sale of SaveCream to Eucodis, we are obligated to attempt to transfer to Eucodis, by means of a license, or otherwise, our rights to SaveCream.

Q;
WHEN IS THE EUCODIS TRANSACTION EXPECTED TO BE COMPLETED?

A:The transaction will close when certain conditions set forth in the sale and purchase agreement are satisfied or waived, or at such other time as is agreed by the parties. We expect the transaction to close on or before October 31, 2007.

Q:DOES THE BOARD OF DIRECTORS OF MEDICAL DISCOVERIES, INC. RECOMMEND VOTING FOR THE ACQUISITION?

A:Yes. After careful consideration of our financial position, the value of the SaveCream assets, the amount of time and funds needed to further develop the SaveCream drug candidate, and other factors, our board of directors has unanimously approved the sale of the SaveCream assets to Eucodis and determined that it is in the best interests of us and our shareholders. Our board of directors unanimously recommends that our shareholders vote “FOR” approval of the sale.

Q:WHAT SHOULD I DO NOW?

A:SEND IN YOUR PROXY CARD. After reviewing this document and its appendixes, indicate on your proxy card how you want to vote, and sign, date, and mail it in the enclosed envelope as soon as possible to ensure that your shares will be represented at the special meeting. If you sign, date, and send in your proxy and do not indicate how you want to vote, your proxy will be voted in favor of the proposed transaction and amendments. If you do not sign and send in your proxy, and if you do not attend and cast your vote in person at the special meeting, it will have the effect of voting against the transaction.

Q:IF MY SHARES ARE HELD IN “STREET NAME” BY MY BROKER, BANK OR OTHER NOMINEE, WILL IT VOTE MY SHARES FOR ME?

A:YES, IF YOU GIVE YOUR NOMINEE INSTRUCTIONS ON HOW TO VOTE. Your broker, bank or other nominee holder will vote your shares only if you provide it with instructions on how to vote. You should instruct your nominee how to vote your shares by following the directions it provides. If you do not provide instructions to your nominee, your shares will not be voted and this will have the effect of voting against the proposed transaction and amendments.

Q:CAN I CHANGE MY MIND AND REVOKE MY PROXY?

A:YES. You may revoke your proxy up to the time of the special meeting by taking any of the actions explained under “The Special Meeting--Solicitation, Voting and Revocation of Proxies” on page 11 of this proxy statement, including by giving a written notice of revocation, by signing and delivering a new later-dated proxy, or by attending the special meeting and voting in person.
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Q:CAN I VOTE MY SHARES IN PERSON?

A:YES. You may attend the special meeting and vote your shares in person even if you sign and mail your proxy card.

Q:DO I HAVE DISSENTERS’ RIGHTS?

A:No. Under Utah law, “dissenters’ rights” are not available to companies that have more than 2,000 shareholders. Based on information provided to us by our transfer agent, we have approximately 2,950 shareholders.

Q:HOW WILL THE ACQUISITION AFFECT MY SECURITIES OF MEDICAL DISCOVERIES, INC.

A:Following the closing of the Eucodis transaction, you will continue to hold the shares of our common stock that you owned prior to the sale.

Q.WHO IS PAYING FOR THIS PROXY SOLICITATION?

A:Our board of directors is making this solicitation and we will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In addition to the mailing of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic communications by our directors, officers and employees, who will not receive any additional compensation for such solicitation activities. We will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to shareholders.

Q:WHOM CAN I CALL WITH QUESTIONS?

A:If you want additional copies of this document, or if you want to ask any questions about the asset purchase agreement or the transaction, you should contact ____________, at (_____)
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SUMMARY

This summary highlights selected information from this proxy statement. It does not contain all of the information that you may consider to be important in determining how to vote on the proposed transaction. You should carefully read the entire document and the other documents to which we refer. These will give you a more detailed description of the proposed transaction. Each item in this summary refers to the pages where that subject is discussed in greater detail elsewhere in this proxy statement. In this proxy statement, the terms “we,” “our” and “us” refer to Medical Discoveries, Inc. and its wholly owned subsidiary, MDI Oncology, Inc., unless the context indicates otherwise.

THE PROPOSAL (PAGE 12)

At the special meeting of shareholders, our shareholders will consider and vote upon a proposal to approve the sale and purchase agreement, dated July 6, 2007, as amended (the “Eucodis Agreement”), between Medical Discoveries, Inc., MDI Oncology, Inc. (“MDI Oncology”), our wholly-owned subsidiary, and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”), which provides for the sale of certain of our assets to Eucodis, for an aggregate of approximately $5,641,000 (based on the currency conversion rate in effect as of September 25, 2007), comprising an approximately $1.95 million cash payment and Eucodis’ assumption and discharge of certain liabilities and indebtedness, in the aggregate amount of approximately $3.69 million. The closing of the transactions contemplated by the Eucodis Agreement is subject to the satisfaction of certain conditions, including our obligation to obtain additional capital or a credit facility in the aggregate amount of at least $250,000. We have already satisfied this condition. The Eucodis Agreement is the document that controls the proposed transaction between the three companies. We encourage you to read the entire Eucodis Agreement, which is attached to this proxy statement as Appendix A.

ASSETS TO BE SOLD AND PURCHASE PRICE (PAGE 15)

The assets being sold to Eucodis include (i) all of our right, title and interest in that certain asset purchase agreement between Medical Discoveries, Inc. and the liquidator of Savetherapeutics AG, a German company in liquidation, dated as of March 11, 2005, including, among other things, our rights in and to “SaveCream”, a developmental topical aromatase inhibitor cream used to treat breast cancer tumors; (ii) all of our right, title and interest in that certain agreement between MDI Oncology and Eucodis, dated as of July 29, 2006, in connection with the co-development and licensing of “SaveCream”; and (iii) all of our right, title and interest under certain contracts relating to “SaveCream”. In this proxy statement, we refer to the assets being sold to Eucodis as the “Purchased Assets”.

The purchase price paid by Eucodis for the Purchased Assets is approximately $5.64 million comprising:

·a cash payment of approximately $1.95 million, which is payable to the Company at the closing; and

·Eucodis’s assumption of certain obligations and liabilities, and discharge/pay-off of certain indebtedness on our behalf in the aggregate amount of approximately $3.69 million.

OBLIGATIONS TO BE ASSUMED AND DISCHARGED INDEBTEDNESS (PAGE 16)

Eucodis has agreed to relieve us of an aggregate of approximately $3.69 million constituting current indebtedness owed to seven of our creditors. In addition, Eucodis will assume all of our financial and other obligations under certain contracts relating to “SaveCream”, which will be assigned to Eucodis when the transaction closes, and certain other costs we have incurred since February 28, 2007, in connection with preserving the Purchased Assets for the benefit of Eucodis through the closing of the transaction. Other than the foregoing obligations, Eucodis will not assume or be liable for any of our obligations or liabilities.
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NON-COMPETITION (PAGE 17)

We have agreed to a non-compete provision for the duration of five years after the closing of the Eucodis transaction. Specifically, the non-compete provision restricts the us from undertaking research and development activities with respect to “SaveCream”, or any other product which could be used in reasonable substitution of “SaveCream, or commercializing any products based on “SaveCream, unless expressly authorized by Eucodis.

OUR REASONS FOR THE TRANSACTION (PAGE 12)

To date, we have been a developmental-stage bio-pharmaceutical company engaged in the research, validation, development and ultimate commercialization of two drug candidates referred to as MDI-P and SaveCream. MDI-P is a drug candidate being developed as an anti-infective treatment for bacterial infections, viral infections and fungal infections. SaveCream is a drug candidate being developed to reduce breast cancer tumors. Both of these drug candidates are still in development and neither has been approved by the U.S. Food and Drug Administration (the “FDA”). The total cost to develop these two drugs and to receive the approval from the FDA would cost many millions of dollars and take many more years.

Our board has now determined that we can no longer fund the development of the two drug candidates and cannot obtain additional funding for these drug candidates. Instead, our board has decided to maximize return from these assets and to invest the proceeds that it receives from the disposition of these technologies into a new business that we would develop. In reaching this decision, the board of directors considered a number of factors, including the following:

·The limited capital raising opportunities available to us, and the unlikely possibility that another entity would be interested in funding our drug development operations.

·The unlikelihood that we will receive requisite FDA approvals to pursue our MDI-P drug candidate through to commercialization.

·The costs of further development of the MDI-P and SaveCream drugs weighed against the limited markets for both drugs.

·The uncertainty of our title in the SaveCream assets. One of the co-inventors of the SaveCream technology is challenging title to the invention in legal proceedings in Hamburg, Germany.

The foregoing discussion of the information and factors considered by our board of directors is not intended to be exhaustive, but includes the material factors considered. In view of the variety of factors considered in connection with its evaluation of the transaction and the offer price, the board did not find it practicable to, and did not, quantify or otherwise assign relative weight to the specific factors considered in reaching its determinations and recommendations, and individual directors may have given differing weight to different factors.

Our board of directors has unanimously approved Eucodis Agreement. The board of directors believes that the transaction and the terms and provisions of the Eucodis Agreement are fair to and in the best interests of our shareholders. Therefore, the board of directors has unanimously recommended that you vote to approve the Eucodis Agreement and the transactions contemplated in the Eucodis Agreement.

USE OF PROCEEDS AND OPERATIONS AFTER THE TRANSACTION (PAGE 14)

Following the closing of the Eucodis transaction, neither we nor MDI Oncology will undertake research and development activities with respect to “SaveCream” or any other product which could be used in reasonable substitution of “SaveCream”, or commercialize any products based on “SaveCream”, except as may be otherwise expressly requested by Eucodis.
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At the closing of the Eucodis transaction, in addition to Eucodis’s assumption of certain indebtedness, as further described in this proxy statement, we will receive from Eucodis cash proceeds in the aggregate of approximately $1.95 million. At the time of the execution of the Eucodis Agreement, it was our intention to use the remaining net cash we receive from the Eucodis sale for our future working capital purposes and to fund the development of our recently announce bio-fuels business. At the time that we entered into the Eucodis Agreement, we had not made any determination about future business plans once the transaction with Eucodis closed.

It is currently our intent to retain the proceeds indefinitely in the Company, and use such proceeds towards the start up of our new bio-fuels business. We do not anticipate that any distributions will be made to our shareholders in the near future, if at all.

Since signing into the Eucodis Agreement, we have actively sought to develop a new business to maximize shareholder value. As disclosed on September 17, 2007, we have acquired some intellectual property related to the development of alternative energy bio-fuels and have hired a seasoned energy executive with many years of experience in the alternate energy and bio-fuels industry, as our new President and Chief Operating Officer. We currently intend to develop this new bio-fuels business.

Additional information regarding the bio-fuels purchase that we announced on September 17, 2007 and information regarding the additional members of our management team is available at the website of the Securities and Exchange Commission at www.sec.gov. You should also review the “Risk Factors” section beginning on page 10 for a discussion of some of the risks related to our future operations.

WE DID NOT OBTAIN AN INDEPENDENT APPRAISAL OF THE SAVECREAM ASSETS

Our board of directors did not obtain an appraisal of the SaveCream assets. However, our board of directors believes that the purchase price being paid by Eucodis is at least equal to the fair market value of the Eucodis assests. The belief by our board of directors that we will receive at least the fair market value is based on the following factors: (a) We currently only own limited distribution and other rights available to license other parties - the rights to SaveCream in the European Union countries and certain other countries have already been licensed to Eucodis; (b) The market for a topical neoadjuvant therapeutic for the treatment of breast cancer is comparatively small compared to the cost to gain FDA approval; and (c) The uncertainty concerning ownership of title to the SaveCream asset due to on-going litigation in Germany between the Company, the German Bankruptcy Court, and one of the inventors of SaveCream. Additionally, because Eucodis currently is our development partner, holds rights to SaveCream in certain regions of the world, and is willing to assume all risk associated with the SaveCream, the board of directors believes the purchase price being paid by Eucodis represents fair value for the sale of the SaveCream asset.

OUR RECOMMENDATION TO OUR SHAREHOLDERS (PAGE 14)

Our board of directors believes that the transaction is fair to, and in the best interests of the company and its shareholders, and unanimously recommends that you vote “FOR” the proposal to approve the Eucodis Agreement and the transactions contemplated in the Eucodis Agreement.

CONDITIONS TO CLOSING OF THE TRANSACTION (PAGE 15)

The closing of the transaction depends on meeting a number of conditions, including the following:

·obtaining the consent of a majority of our outstanding voting shares;
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·the accuracy of our representations and warranties under the Eucodis Agreement being true on the closing date;

·our performance of all covenants and obligations required under the Eucodis Agreement;

·our delivery to Eucodis of certain documents necessary to effect the transfer of the Purchased Assets; and

·we obtain additional capital or a credit facility in the aggregate amount of at least $250,000 (a condition that we have already satisfied).

REGULATORY APPROVALS (PAGE 15)

There are no regulatory approvals required to close the transactions contemplated by the Eucodis Agreement.

REPRESENTATIONS AND WARRANTIES; COVENANTS (PAGES 17)

The Eucodis Agreement contains customary representations, warranties and covenants, which survive through the closing of the transaction.

CLOSING OF THE TRANSACTION (PAGE 15)

The closing of the transaction will take place promptly following the satisfaction, or waiver, of certain conditions set forth in the Eucodis Agreement, or at such other time as is agreed by the parties. The transaction is expected to close on or before October 31, 2007.

FEDERAL INCOME TAX CONSEQUENCES (PAGE 15)

We expect that we will recognize taxable gain for U.S. federal income tax purposes as a result of the transaction. However, because of our prior losses, we do not believe that we will have to pay any federal or state income taxes on the profit we make from this sale. We do not expect that our shareholders will recognize any gain or loss for U.S. federal income tax purposes as a result of the transaction.

ACCOUNTING TREATMENT (PAGE 15)

The transaction will be accounted for by us as a sale of assets.

THE SPECIAL MEETING (PAGE 11)

We will hold a special meeting of our shareholders at 10:00 A.M. local time, on Tuesday, October 30, 2007 at the Company's offices located at 6033 W. Century Blvd., Suite 1090 Los Angeles, California 90045. At the meeting, we will ask our shareholders to approve the transaction with Eucodis.

RECORD DATE; VOTING POWER (PAGE 11)

You may vote at the special meeting if you owned shares of our common stock as of the close of business on September 24, 2007, which was set as the record date for the special meeting by our board of directors. You will have one vote for each share of common stock you owned on that date. The holders of our outstanding shares of Series A Convertible Preferred Stock may not vote their shares of preferred stock.
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VOTE REQUIRED (PAGE 11)

If a quorum is present at the special meeting, then the proposals will be approved if more than 50% of the shares of common stock issued and outstanding on the record date cast votes favoring approval of the Eucodis Agreement and the transactions contemplated thereby. On the record date, 198,041,557 shares of our common stock were outstanding. Broker nonvotes will not be counted towards a quorum at the special meeting, and will count as votes against the proposal. Abstentions will be counted towards a quorum at the special meeting, and also will count as votes cast against the proposal. If you return the enclosedattached proxy card with no voting decision indicated, the proxy will be voted FOR the approval of all proposals made at the meeting.
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION

This proxy statement, and the documents to which we refer you to in this proxy statement, contain “forward-looking” statements that reflect our current views as itto future events and financial performance with respect to our operations in the feedstock/bio-diesel market and the expected closing of the transaction with Eucodis. There are forward-looking statements throughout this proxy statement, including, among others, in statements containing the words “believes,” “expects,” “anticipates,” “intends,” or other similar expressions.

You should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot assure you that the actual results or developments we anticipate will be realized. These forward-looking statements speak only as of the date on which the statements were made, and we undertake no obligation to update or revise any forward-looking statements as a result of new information, future events, or otherwise.

In addition to other factors and matters contained or incorporated in this document, we believe the following factors could cause actual results to differ materially from those discussed in the forward-looking statements:

IF THE TRANSACTION WITH EUCODIS IS NOT CONSUMMATED, WE LOSE APPROXIMATELY $5.2 MILLION OF CASH AND ASSUMPTION OF INDEBTEDNESS AND, THEREFORE, WILL HAVE TO FIND ADDITIONAL FUNDS TO CONTINUE OUR OPERATIONS.

In the event that the sale of the SaveCream assets is necessarynot consummated, we will not receive a net cash inflow of approximately $1.95 million and will not be relieved of our obligation to repay approximately $3.69 million of outstanding indebtedness that holderswe currently owe. The foregoing $1.95 million of cash would be used to fund some of our working capital needs. Without these funds, we will have to find alternative sources of revenues and funds, including raising funds from the sale of securities. No assurance can be given that we will be able to raise additional funds or that we will be able to continue our operations. In addition, if the sale to Eucodis is not consummated, we will still be obligated to repay approximately $3.69 million of currently outstanding debts and other liabilities. We do not have the resources to repay these amounts. Accordingly, these creditors may bring legal action against us to enforce their obligations, or they may elect to put this company into bankruptcy. In the event that this company is forced into bankruptcy, the shareholders could lose their entire investment in this company’s shares. However, based on the expected net proceeds from the Eucodis transaction, if the Eucodis transaction is completed, based on our current internal forecast, we believe that we will have sufficient capital to fund our working capital expenditures (excluding any capital expenditures for new project costs, and excluding any revenues that our new business may generate) for approximately three months after the date of the closing of the Eucodis sale.
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OUR FUTURE BUSINESS IS UNCERTAIN.

We anticipate that we will use the proceeds from the Eucodis transaction to fund our future working capital needs for our new line of business. In September 2007, we acquired certain intellectual properties related to the development of a new business in the rapidly growing biofuels industry. However, we have not yet acquired any assets or generated any revenues from this new business, and our ability to successfully develop a new business in this industry is highly uncertain. We will have substantial competition for business opportunities in the bio-fuels business.

THE TRANSACTION MAY NOT BE CONSUMMATED IF CERTAIN CLOSING CONDITIONS ARE NOT SATISFIED.

The closing of the Eucodis transaction is contingent on us satisfying certain closing conditions, including the satisfaction of the closing conditions set forth in the Eucodis Agreement, including, obtaining the consent of a majority of theour outstanding shares be present, in person or byvoting shares.

THE SPECIAL MEETING

GENERAL

This proxy in order to obtain a quorum for the Meeting. The proxy may be returned in the accompanying, self-addressed envelope, which requires no postage if mailed in the United States.

BY ORDER OF THE BOARD OF DIRECTORS
STEPHEN R. DRAKE,
Secretary

Dated: April 15, 2004

TABLE OF CONTENTS

PROXY STATEMENT Annual Meeting of Shareholders To Be Held May 21, 2004
INTRODUCTION
THE MEETING
PROPOSAL NO. 1 ELECTION OF DIRECTORS
INFORMATION CONCERNING THE BOARD OF DIRECTORS, BOARD COMMITTEES AND DIRECTOR COMPENSATION
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CODE OF ETHICS
AUDIT COMMITTEE REPORT
PROPOSAL NO. 2 RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
PRINCIPAL ACCOUNTANT FEES AND SERVICES
PROPOSAL NO. 3 PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION
PROPOSAL NO. 4 PROPOSAL TO APPROVE 2002 STOCK INCENTIVE PLAN
OTHER MATTERS
ANNUAL REPORT
SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING
ANNEX A
ANNEX B
ANNEX C

MEDICAL DISCOVERIES, INC.
738 Aspenwood Lane
Twin Falls, Idaho 83301

PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held May 21, 2004

INTRODUCTION

     This Proxy Statementstatement is being furnished to the shareholders of Medical Discoveries, Inc., a Utah corporation (“MDI” or the (the “Company”), in connection with the solicitation of proxies by the Boardboard of Directorsdirectors of the Company for use at the Annual Meeting of Shareholdersspecial meeting of the shareholders of Company (the “Meeting”) to be held on May 21, 2004October 30, 2007, and at any adjournments or postponements thereof.

     At The purpose of the Meeting, shareholdersspecial meeting is to consider and vote upon the sale and purchase agreement, as amended, among the Company, MDI Oncology, Inc. (“MDI Oncology”), a wholly-owned subsidiary of the Company, and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”), pursuant to which the Company will be asked:

     (1) To elect threesell certain of its assets to Eucodis.

RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED TO APPROVE THE TRANSACTION

The board of directors of the Company.
     (2) To ratify the selection of Balukoff Lindstrom & Co., P.A. as independent accountants to audit the consolidated financial statements of the Company and its subsidiaries for the year ending December 31, 2004.
     (3) To consider a proposal to amend and restate the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock of the Company to be designated in the future by the Board of Directors without further action by the shareholders.
     (4) To approve the Company’s 2002 Stock Incentive Plan.
     (5) To transact such other business as may properly come before the Meeting or any adjournments of the Meeting.

     The Board of Directors has fixed the close of business on April 12, 2004September 24, 2007, as the record date (the “Record Date”) for the determination of shareholders entitled to vote at the holdersspecial meeting. There were 198,041,557 shares of the Company’s common stock no par valueoutstanding (“Common Stock”), entitled to notice of and to vote at the Meeting. Each such shareholder will beeach entitled to one vote for eachper share, of Common Stock held on all matters to come before the Meeting and may vote in person or by proxy authorized in writing. At the close of business on April 12, 2004, there were 87,979,077 shares of Common Stock entitled to vote.

     This Proxy Statement and the accompanying form of proxy are first being sent to holders of the Common Stock on or about April 26, 2004.

THE MEETING

Date, Time and Place

     The Meeting will be held on May 21, 2004, at 1:00 p.m. local time, at the Little America Hotel, 500 S. Main Street, Salt Lake City, Utah.

Matters to be Considered

     At the Meeting, shareholders will be asked to consider, and to vote with respect to, the election of three directors, the ratification of the selection of independent accountants, the proposal to amend the Articles of Incorporation of the Company to increase the authorized shares of common stock of the Company from 100 million to 250 million and to authorize 50 million shares of undesignated preferred stock, and the approval of the Company’s 2002 Stock Incentive Plan. See “ELECTION OF DIRECTORS,” “RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS,” “PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION” and “APPROVAL OF THE 2002 STOCK INCENTIVE PLAN.” The Board of Directors knows of no matters that are to be brought before the Meeting other than as set forth in the Notice of Meeting. If any other matters properly come before the Meeting, the persons named in the enclosed form of proxy or their substitutes will vote in accordance with their best judgment on such matters.

Record Date; Shares Outstanding and Entitled to Vote

     Shareholders as of the close of business on the Record Date (i.e., April 12, 2004) are entitled to notice of and to vote at the Meeting. As of the Record Date, there were 87,979,077 shares of Common Stock outstanding and entitled to be voted. Each share of Common Stock entitles its holder to one vote.

Voting Procedures

Quorum.record date.


The presence at the Meeting,special meeting, in person or by proxy, of the holders of a majority of the issued and outstanding shares of the Common Stock outstandingon the record date is necessary to constitute a quorum for the transaction of business at the closespecial meeting. In the absence of business ona quorum, the Record Date will constitute a quorum.

Electionspecial meeting may be postponed from time to time until shareholders holding the requisite number of Directors. The Company does not have cumulative voting for directors. Undershares of the Utah Revised Business Corporation Act, for each share of Common Stock held, each shareholderare represented in person or by proxy. If a quorum is entitled to cast one vote for each ofpresent, then the three directorships to be filled. The three nominees for director receiving the highest number of votes casttransaction will be elected whether or not any one of them receivesapproved if the voteholders of a majority of the issued and outstanding shares of common stock vote in favor of the transaction, whether such votes are present in person or represented and entitled to voteby proxy at the Meeting.

Ratification of Selection of Independent Accountants. The ratification of the selection of Balukoff Lindstrom & Co., P.A. as independent accountants is being submitted to the shareholders because the Board of Directors believes that such action follows sound corporate practice and is in the best interests of the shareholders. If the shareholders do not ratify the selection of Balukoff Lindstrom & Co., P.A. by the affirmative vote of a majority of the shares of Common Stock represented and entitled to vote at the Meeting, the Audit Committee of the Board of Directors will reconsider this selection, although such a votespecial meeting. Broker non-votes will not be bindingcounted towards a quorum at the special meeting, and will count as votes against the transaction. Abstentions will be counted towards a quorum at the special meeting, but will also count as votes cast against the transaction. If you return the attached proxy card with no voting decision indicated, the proxy will be voted FOR the approval of the transaction. Each holder of record of shares of the Common Stock is entitled to cast, for each share registered in his or her name, one vote on the Audit Committee. transaction as well as on each other matter presented to a vote of shareholders at the special meeting.


If the shareholders ratifytransaction is approved at the selection,special meeting, it is expected that a closing of the Audit Committee, in its discretion, may nevertheless directtransaction will occur promptly after the appointmentother conditions to the transaction are satisfied. See “Terms of new independent accountants at any time if the Audit Committee believes that such a change would be inSale and Purchase Agreement -- Conditions to Closing the interestsTransaction.”
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SOLICITATION, VOTING AND REVOCATION OF PROXIES

This solicitation of proxies is being made by the board of directors of the Company, which will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials. In addition to the shareholders.

Approvalmailing of Proposal to Amend Articlesthese proxy materials, the solicitation of Incorporation. Under the Utah Revised Business Corporation Act, approvalproxies or votes may be made in person, by telephone or by electronic communications by directors, officers and employees of the proposalCompany, who will not receive any additional compensation for such solicitation activities. The Company also will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding proxy and solicitation materials to amend the Articles of Incorporation will require the vote of a majorityshareholders.


Shares of the shares of Common Stock that actually vote on the proposal.

Approval of 2002 Stock Incentive Plan. Under the Utah Revised Business Corporation Act, approval of the proposal to amend the Articles of Incorporation will require the vote of a majority of the shares of Common Stock that actually vote on the proposal.

Abstentions and Broker Non-votes. Abstentions and broker non-votes are counted for purposes of determining the number of shares represented and entitled to vote at the Meeting. However, abstentions and

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broker non-votes are not counted in determining the number of shares voted and do not represent a vote either FOR or AGAINST an item of business.

Voting and Revocation of Proxies

     Shareholders are requested to complete, date, sign and promptly return the accompanying form of proxy in the enclosed envelope. Shares of Common Stock represented by a proxy properly executed proxiessigned and received byat or prior to the Company and notspecial meeting, unless properly revoked, will be voted at the Meeting in accordance with the instructions contained therein.on the proxy. If a proxy is signed and returned without any voting instructions, are not given, proxiesshares of the Common Stock represented by the proxy will be voted FOR election of each nominee for director named herein, FOR ratification of the selection of independent accountants, FOR the approval of“FOR” the proposal to amendapprove the sale and restatepurchase agreement and the Articles of Incorporationtransaction and FORin accordance with the approvaldetermination of the Company’s 2002 Stock Incentive Plan.

     Any proxy signed and returned by amajority of the board of directors of the Company as to any other matter which may properly come before the special meeting, including any adjournment or postponement thereof. A shareholder may be revokedrevoke any proxy given pursuant to this solicitation by: (i) delivering to the corporate secretary of the Company, prior to or at any time before it is voted by filing with the Secretaryspecial meeting, a written notice revoking the proxy; (ii) delivering to the corporate secretary of the Company, at or prior to the address of the Company set forth herein, written notice of such revocation orspecial meeting, a duly executed proxy relating to the same shares and bearing a later date,date; or by attending the Meeting and(iii) voting in person.person at the special meeting. Attendance at the Meetingspecial meeting will not, in and of itself, constitute a revocation of a proxy.

Proxy Solicitation

All written notices of revocation and other communications with respect to the revocation of a proxy should be addressed to:


Medical Discoveries, Inc.
6033 W. Century Blvd, Suite 1090
Los Angeles, California, 90045

The Company’s board of directors is not aware of any business to be acted upon at the special meeting other than consideration of the transaction described herein. If, however, other matters are properly brought before the special meeting, or any adjournments or postponements thereof, the persons appointed as proxies will have the discretion to vote or act on such matters according to their best judgment.
PROPOSAL 1 - APPROVAL OF THE EUCODIS TRANSACTION

GENERAL

At the special meeting, the Company’s shareholders will consider and vote upon a proposal to approve the sale and purchase agreement, dated July 6, 2007 as amended (a copy of which is attached to this proxy statement as Appendix A and incorporated herein by reference) by and among the Company, will bear the costs of solicitation of proxiesMDI Oncology and Eucodis, which provides for the Meeting. In addition to solicitation by mail, directors, officers and regular employeessale of certain assets of the Company may solicit proxiesand MDI Oncology to Eucodis in exchange for approximately $1.95 million in cash and Eucodis’ assumption of approximately $3.69 million of liabilities and indebtedness of the Company and MDI Oncology. The terms of the sale and purchase agreement are more fully described below under “Terms of the Eucodis Agreement.”

THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO EXECUTE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE AND UNANIMOUSLY RECOMMENDS THAT THE SHARES REPRESENTED BY THE PROXY BE VOTED IN FAVOR OF THE EUCODIS AGREEMENT AND THE TRANSACTION.
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BACKGROUND AND REASONS FOR THE TRANSACTION

To date, the Company has been a developmental-stage bio-pharmaceutical company engaged in the research, validation, development and ultimate commercialization of two drug candidates referred to as MDI-P and SaveCream. MDI-P is a drug candidate being developed as an anti-infective treatment for bacterial infections, viral infections and fungal infections. SaveCream is a drug candidate being developed to reduce breast cancer tumors. Both of these drug candidates are still in development and neither has been approved by the U.S. Food and Drug Administration (the “FDA”). The total cost to develop these two drugs and to receive the approval from the FDA would cost many millions of dollars and take many more years. The Company attempted to fund its development costs through the sale of its equity securities, including the sale of its Series A Convertible Preferred Stock.

At the end of 2006, the Company had virtually no cash, had no source of revenues, had a working capital deficit of nearly $5,000,000, and had a total shareholders by telephone, telegram, personal interview or otherwise. Suchdeficit of $5,500,000. In addition, the holders of the Series A Convertible Preferred Stock informed the Company that they were no longer willing to fund the Company’s then current operations and biotechnology business strategy. In December 2006, three of the Company’s five directors officersresigned.

Because of its lack of capital, the Company was unable to fund any on-going operations and employees willwas not receive additional compensation butable to pay its professionals to audit the Company’s year end financial statements and to prepare the public company period reports the Company is required to file with the Securities and Exchange Commission. As a result, the Company is delinquent in its Securities and Exchange Commission filings and, in July 2007, the Company was de-listed from the OTC Bulletin Board.

In February 2007, the Company engaged a consulting firm to assist it in resolving its financial issues, to obtain advice regarding any strategic alternatives that may be reimbursedavailable to it, and to prevent the Company from losing all of its assets in bankruptcy. During the past several months, the Company has explored a number of transactions that would (i) prevent the Company’s shareholders from losing their entire investment in the Company and (ii) enable the Company to repay some of its currently outstanding debts and liabilities.

The Company’s Board evaluated the value of both of its developmental stage drug candidates. The commencement of human clinical trials of the Company’s MDI-P currently is on Full Clinical Hold by FDA under 21 CRF 312.42(b), and may not be initiated until deficiencies in the Company’s IND application are resolved to the FDA’s satisfaction. The FDA has concluded that the Company’s IND application did not contain sufficient toxicology and genetic toxicology data to support the safety of the proposed clinical trial. The Company considered the uncertainty of the efficacy and safety data of the MDI-P compound, the costs involved in further developing the compound, and the limited market, and thereafter concluded that the Company did not have the capability or capacity to take the MDI-P compound to commercialization. The Company also evaluated the value of its SaveCream drug candidate that is currently being co-developed with Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company (“Eucodis”), and determined that the highest value for out-of-pocket expensesthis drug candidate could be realized through a sale of that drug candidate to Eucodis.

In reaching this decision, the Company’s Board considered several, including, but not limited to the following:

·The limited capital raising opportunities available to the Company, and the unlikely possibility that another entity would be interested in funding the development of the Company’s drug candidates.

·The unlikelihood that the Company will receive the requisite FDA approvals for MDI-P to pursue the development of that drug candidate through to commercialization.

·The costs of further development of the MDI-P and SaveCream drugs weighed against the limited markets for both drugs.

·The availability of a potential buyer due to Eucodis’s pre-existing interest in the SaveCream drug (Eucodis currently is our development partner and holds rights to SaveCream in certain regions of the world).
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The foregoing discussion of the information and factors considered by the Board is not intended to be exhaustive, but includes the material factors considered. In view of the variety of factors considered in connection with such solicitation. Brokers, nominees, fiduciariesits evaluation of the transaction and the offer price, the Board did not find it practicable to, and did not, quantify or otherwise assign relative weight to the specific factors considered in reaching its determinations and recommendations, and individual directors may have given differing weight to different factors.

On July 6, 2007, the Company entered into an agreement with Eucodis (the “Eucodis Agreement”) to sell SaveCream for an aggregate of 4,007,534 euros (approximately U.S. $5,641,000 based on the currency conversion rate in effect as of September 25, 2007), which consideration is payable in cash and by the assumption of certain of the Company’s outstanding liabilities. The Company thereafter also entertained various offers to purchase the Company’s rights to the MDI-P compound, and on August 9, 2007, the Company sold the MDI-P compound for $310,000 in cash.

USE OF PROCEEDS AND OPERATIONS AFTER THE TRANSACTION

Following the closing of the Eucodis transaction, neither we nor MDI Oncology will undertake research and development activities with respect to “SaveCream” or any other product which could be used in reasonable substitution of “SaveCream”, or commercialize any products based on “SaveCream”, except as may be otherwise expressly requested by Eucodis.

At the closing of the Eucodis transaction, in addition to Eucodis’s assumption of certain indebtedness, as further described in this proxy statement, we will receive from Eucodis cash proceeds in the aggregate of approximately $1.95 million. These proceeds will be used to fund our future working capital needs and our future opertions. At the time of the execution of the Eucodis Agreement, we had not yet made any determination about future business plans once the transaction with Eucodis closed. Since signing into the Eucodis Agreement, we have actively sought to develop a new business to maximize shareholder value. As disclosed on September 17, 2007, we have acquired some intellectual property related to the development of alternative energy bio-fuels and have hired a seasoned energy executive with many years of experience in the alternate energy and bio-fuels industry, as our new President and Chief Operating Officer. We currently intend to develop this new alternative bio-fuels business.

The Board of Directors has decided to develop a business to produce and sell seed oils, including seeds oils harvested from the planting and cultivation of Jatropha Curcas plant, for the purpose of providing feedstock oil intended for the generation of methyl ester, otherwise known as bio-diesel. The Company concluded that there was a significant opportunity to participate in the rapidly growing biofuels industry, which previously was mainly driven by high priced, food oil-based feedstocks. In order to commence its new Jatropha based biofuels business, effective September 7, 2007, the Company (i) hired Richard Palmer, an energy consultant, to act as the Company’s new President, Chief Operating Officer and future Chief Executive Officer, (ii) engaged Mobius Risk Group, LLC, a Texas company engaged in providing energy risk advisory services, to provide the Company with consulting services related to the development of the Jatropha bio-diesel business, and (iii) acquired certain proprietary rights, intellectual property, know-how, business plans, contracts, term sheets, business relationships, and other custodians have been requested to forward soliciting materialinformation relating to the beneficial ownerscultivation and production of sharesseed oil from the Jatropha plant for the production of Common Stock heldbio-diesel. In order to fund the Company’s operations until cash is generated from the sale of recordthe Eucodis sale and from the new Jatropha business, the Company on September 7, 2007 entered into a $1,000,000 loan and security agreement.
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Additional information regarding the bio-fuels purchase that we announced on September 17, 2007 and information regarding the additional members of our management team is available at the website of the Securities and Exchange Commission at www.sec.gov.

RECOMMENDATION OF THE BOARD OF DIRECTORS

The Board has determined that the approval of the sale and purchase agreement and the transaction is in the best interest of the Company’s shareholders. THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE COMPANY’S SHAREHOLDERS VOTE IN FAVOR OF THE APPROVAL OF THE AGREEMENT AND THE TRANSACTION.

REGULATORY APPROVALS

There are no regulatory approvals required to close the transactions contemplated by them,the Eucodis Agreement.

CERTAIN FEDERAL INCOME TAX CONSEQUENCES

We expect that the Company and such custodiansMDI Oncology, with which the Company files a consolidated tax return, will recognize taxable gain for U.S. federal income tax purposes as a result of the transaction. However, the Company believes that any taxes payable as a result of this sale will be reimbursed for their reasonable expenses.

Independent Accountants

The Company has been advised that representatives of Balukoff Lindstrom & Co., P.A.,offset by the Company’s independent accountantsprior operating losses and by losses during the remainder of fiscal 2007.


We do not expect that our shareholders will recognize any gain or loss for 2003, will attendU.S. federal income tax purposes as a result of the Meeting, will have an opportunity to make a statement if they desire to do so andtransaction.

ACCOUNTING TREATMENT

The transaction will be availableaccounted for by the Company and MDI Oncology as a sale of assets.


TERMS OF THE EUCODIS AGREEMENT

The following sets forth a summary of the material provisions of the sale and purchase agreement between the Company and Eucodis (the “Eucodis Agreement”). The description does not purport to respondbe complete and is qualified in its entirety by reference to appropriate questions.

PROPOSAL NO. 1

ELECTION OF DIRECTORS

At the Meeting, three directorssale and purchase agreement, a copy of which is attached hereto as Appendix A. All shareholders are urged to read the sale and purchase agreement in its entirety.


GENERAL

The Eucodis Agreement provides that, subject to approval by the shareholders of the Company and satisfaction of certain other conditions described below at “Conditions to Closing the Transaction,” the Company will sell certain of its assets to Eucodis.

ASSETS TO BE SOLD

The assets being sold to Eucodis include:

·all of the Company’s right, title and interest, along with all of MDI Oncology’s right, title and interest, in that certain asset purchase agreement between Medical Discoveries, Inc. and the liquidator of Savetherapeutics AG, a German company in liquidation, dated as of March 11, 2005 (the “Savetherapeutics Contract”), including, among other things, our rights in and to “SaveCream”, a developmental topical aromatase inhibitor cream;
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·all of MDI Oncology’s right, title and interest in that certain agreement between MDI Oncology and Eucodis, dated as of July 29, 2006, in connection with the co-development and licensing of the SaveCream drug;

·any and all of the Company’s and MDI Oncology’s rights, title and interests in the patents and patent applications acquired under the Savetherapeutics Contract, and any other patent and/or patent application pertaining to the SaveCream drug, owned or in possession or control of the Company or MDI Oncology;

·any and all United States and foreign regulatory files and data relating to the SaveCream drug in the possession of the Company and/or MDI Oncology, including marketing authorization procedures and preclinical and clinical studies;

·all of the Company’s right, title and interest in that certain asset purchase agreement between the Company and Attorney Hinnerk-Joachim Muller as Liquidator of Savetherapeutics AG i. L.;

·all of the Company’s right, title and interest in that side letter to the asset purchase agreement between the Company and Attorney Hinnerk-Joachim Muller as Liquidator of Savetherapeutics AG i. L.;

·all of MDI Oncology’s right, title and interest in that certain Assignment of Patent, Participation and Research Development Agreement between MDI Oncology and Professor Heinrich Weiland;

·all of MDI Oncology’s right, title and interest in that certain Assignment 1 to the Assignment of Patent, Participation and Research Development Agreement between MDI Oncology and Professor Heinrich Weiland; and

·all of the Company’s right, title and interest in that certain consulting agreement between the Company and Marc Ksessemeier.

The foregoing are collectively referred to in this proxy statement as the “Purchased Assets”.

In the event the sale to Eucodis is not approved by shareholders, we are obligated under the Eucodis Agreement to transfer to Eucodis rights to SaveCream, by means of a license or otherwise, on terms to be determined by the parties.

OBLIGATIONS TO BE ASSUMED BY EUCODIS

Eucodis has agreed to relieve us of an aggregate of approximately $3.69 million constituting current indebtedness owed to certain of our creditors. Specifically, at or prior to the entireclosing Eucodis will relieve the Company (and MDI Oncology, as applicable) from the indebtedness owed to Epstein, Becker and Green, LLP; H3 Pharma Consulting Group; Mayer, Brown, Rowe and Maw, LLP; Professor Heinrich Weiland; the Liquidator of Savetherapeutics AG i. L.; Marc Ksessemeier; and Millbank Tweed,

The foregoing obligations to be assumed by Eucodis are collectively referred to in this proxy statement as the “Assumed Indebtedness”.

Further, Eucodis will assume all of our financial and other obligations under certain contracts relating to “SaveCream”, which will be assigned to Eucodis when the transaction closes, and certain other costs we have incurred since February 28, 2007 in connection with preserving the Purchased Assets for the benefit of Eucodis through the closing of the transaction. Other than the foregoing obligations, Eucodis will not assume or be liable for any of our obligations or liabilities.
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PURCHASE PRICE

In exchange for the Purchased Assets, Eucodis shall relieve the Company of approximately $3.69 million of outstanding indebtedness (see “Obligations to be Assumed by Eucodis”) and pay to the Company a cash payment of approximately $1.95 million, which is payable to the Company on or before September 30, 2007.

NON-COMPETITION

Under the Eucodis Agreement, the Company and MDI Oncology have agreed to a non-compete provision for the duration of five years after the closing of the Eucodis transaction. Specifically, the non-compete provision restricts the us from undertaking research and development activities with respect to “SaveCream”, or any other product which could be used in reasonable substitution of “SaveCream, or commercializing any products based on “SaveCream, unless expressly authorized by Eucodis.

REPRESENTATIONS AND WARRANTIES

The Eucodis Agreement contains various representations and warranties of the Company and MDI Oncology including among others, representations and warranties related to:
·     due incorporation
·     due authorization,
·     consents
·     enforceability
·     corporate authority
·     contracts
·     no defaults or violations
·     litigation
·     no liens
·     no infringement

The Eucodis agreement contains various representations and warranties of Eucodis including among others, representations and warranties related to:
·     due incorporation
·     corporate authority
·     enforceability
·     due authorization


INDEMNIFICATION

The Company and MDI Oncology have agreed to indemnify Eucodis and its directors, officers, employees, agents and consultants against, and hold them harmless from, any and all losses incurred or suffered by any of them arising out of any of the following:

·any breach of any representation, warranty, covenant or agreement made by either of the Company or MDI Oncology under the Eucodis Agreement; and

·any act or omission by either of the Company or MDI Oncology in connection with the Purchased Assets to the extent that the cause for such claim was existing prior to or on July 6, 2007, or in connection with the transactions contemplated by the Eucodis Agreement.
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Eucodis has agreed to indemnify the Company and MDI Oncology and their directors, officers, employees, agents or consultants against, and hold them harmless from, any and all losses incurred or suffered by them arising out of any of the following:

·any breach of any representation, warranty, covenant or agreement made by Eucodis under the Eucodis Agreement;

·non payment by Eucodis of the Assumed Indebtedness; and

·any act or omission by Eucodis in connection with the Purchased Assets to the extent that the cause for such claim was created after July 6, 2007, or in connection with the transactions contemplated by the Eucodis Agreement.

OTHER COVENANTS

Each of the Company, MDI Oncology and Eucodis have agreed:

·to strictly protect and maintain the confidentiality of the confidential information belonging to the other parties with at least a reasonable standard of care that is no less than that which it uses to protect similar confidential information of its own;

·not to disclose, nor allow to be disclosed, the confidential information belonging to the other parties to any person other than to employees, consultants and counsel, on a need to know basis provided, that such recipients of the confidential information are bound by obligations of confidentiality no less strict than those contained in the Eucodis Agreement

·unless otherwise expressly provided for in the Eucodis Agreement, not use the confidential information belonging to the other parties for any purpose other than in relation to the exercise of its rights and obligations under the Eucodis Agreement; and

·take all necessary precautions to restrict access of the confidential information belonging to the other parties to unauthorized personnel.

CONDITIONS TO CLOSING THE TRANSACTION

The consummation of the transactions contemplated under the Eucodis Agreement is contingent on approval by the Company’s shareholders. In addition, the obligations of Eucodis, the Company and MDI Oncology to consummate the transaction at the closing are, subject to satisfaction of the following conditions precedent on or before the closing date:

·the accuracy of the Company’s and MDI Oncology’s representations and warranties under the Eucodis Agreement being true on the closing date;

·the Company’s and MDI Oncology’s performance of all covenants and obligations required under the Eucodis Agreement;

·the Company’s and MDI Oncology’s delivery to Eucodis of certain documents necessary to effect the transfer of the Purchased Assets; and

·the Company obtaining additional capital or a credit facility in the aggregate amount of at least $250,000.


AMENDMENT OF THE EUCODIS AGREEMENT

The Eucodis Agreement may be amended, modified or supplemented but only in writing signed by all of the parties.
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CLOSING

The closing of the transaction is to take place promptly following approval by the Company’s shareholders and the satisfaction of all of the closing conditions set forth in the Eucodis Agreement.

INFORMATION ABOUT THE COMPANIES

MEDICAL DISCOVERIES, INC.

Medical Discoveries, Inc. was incorporated on November 20, 1991 as a Utah corporation and maintains its principal offices at 1338 S. Foothill Drive, #266, Salt Lake City, Utah 84108. Information regarding our company is available at (212) 732-4300. We are a developmental-stage bio-pharmaceutical company engaged in the research, validation, development and ultimate commercialization of two drugs: MDI-P and SaveCream. Both of these drugs are still in development and have not been approved by the U.S. Food and Drug Administration (FDA). To date, we have not generated significant revenues from operations or realized a profit. In September 2007, the Company’s Board of Directors decided to develop a business to produce and sell seed oils, including seeds oils harvested from the planting and cultivation of Jatropha Curcas plant, for the purpose of providing feedstock oil intended for the generation of methyl ester, otherwise known as bio-diesel. The Company currently intends to operate solely as a bio-fuel company and will no longer pursue its drug development operations.
MDI Oncology, Inc., is our wholly owned subsidiary.

EUCODIS

Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH (“Eucodis”) is an Austrian company and with principal offices are located at Brunnerstrasser 59, 1235, 1230, Vienna, Austria.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table includes, as of September 30, 2007 information for each shareholder known by the Company to be elected to serve until the next annual meetingbeneficial owner of shareholders and until their successors shall be duly elected and qualified. If anymore than 5% of the nominees should be unavailable to serve, which is not now anticipated,outstanding shares of common stock, each director and Named Executive Officer (as defined in Item 402 of Regulation S-B under the proxies solicited hereby will be voted for such otherSecurities Act of 1933) of the Company, and all directors and executive officers of the Company as a group. Unless otherwise indicated, the Company believes that all persons as shall be designated bynamed in the present Board of Directors. Certain informationtable have sole voting and investment power with respect to each nominee for director is set forth below.all shares of common stock beneficially owned by them.

Name and Address of Beneficial Owner (1)
Shares Beneficially
Owned (2)
Percent
of Class
Certain Beneficial Owners:
   
NameAgePositionDirector Since
David R. Walker59Chairman of the Board ofMay 1996 
     
Directors
Mercartor Momentum Fund, LP
555 S. Flower St., Suite 4500
Los Angeles, CA 90071
 46,970,374 (3)(12) 20.1%
Judy M. Robinett
Mercartor Momentum Fund III, LP
555 S. Flower St., Suite 4500
Los Angeles, CA 90071
 5139,198,211 (4)(12) 17.2%
President and Chief
Monarch Pointe Fund, Ltd.
555 S. Flower St., Suite 4500
Los Angeles, CA 90071
 November 2000
71,336,909 (5)(12) 27.4%
Mobius Risk Group, LLC
Three Riverway, Suite 1700
Houston, Texas 77056
 54,810,220 (6) Executive Officer, Director
Larry Anderson54DirectorNominee27.7%

     The following paragraphs sets forth certain biographical information about

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Name and Address of Beneficial Owner (1) 
Shares Beneficiall
 Owned (2)
 
Percent
of Class
Directors/Named Executive Officers:
    
     
Judy M. Robinett 2,000,000 (7)(12) *
Richard Palmer 9,135,037 (8) 4.6%
David R. Walker 1,583,333 (9) *
Eric J. Melvin
Three Riverway, Suite 1700
Houston, Texas 77056
 54,810,220 (10) 27.7%
Martin Schroeder
92 Natoma St., #200
San Francisco, California 94105
 5,000,000 (11)(12) 2.5%
     
All Named Executive Officers and Directors as a group (5 persons)
 72,528,590 35.2%
__________________
*Less than 1%
(1) Unless otherwise indicated, the business address of each of the foregoing:

     David R. Walker joined the Board of Directors on May 2, 1996, and was appointed Chairman of the Board of Directors on May 10, 1998. He has served as Chairman of the Audit Committee since its inception in 2001. For over 20 years, Mr. Walker has held the office of General Manager of Sunheaven Farms, the largest

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onion growing and packing entity in the State of Washington with annual revenues in excess of $50 million. In the capacity of General Manager, Mr. Walker performs the functions of a traditional chief financial officer. Mr. Walker holds a Bachelor of Arts degree in economics from Brigham Young University with minors in accounting and finance.

     Judy M. Robinett has held the office of President and Chief Executive Officer since November, 2000, and joined the Board of Directors on February 9, 2001. Since 1994, she has owned and operated an international consulting company focused on strategic planning, finance, marketing, and distribution for entrepreneurs and established companies. Prior to that, Ms. Robinett’s employment positions included Vice President for Quality Improvement for a regional hospital, Division Manager for Universal Foods, Group Manager for EG&G’s Nuclear Training Facility in Idaho, and a Planner for the State of Idaho. Ms. Robinett has published more than 50 articles on business finance and operations andperson listed is a recognized authority on quality control. Ms. Robinett holds a Bachelors of Sciences degree in psychology and a Masters degree in labor economics from Utah State University.

     Larry Anderson has a wide range of investment banking, sales and entrepreneurial experience. He has held investment banking and stock broker positions with Merrill Lynch, Oppenhiemer Funds and Kidder Peabody, managing up to $300 million in accounts. Mr. Anderson has significant sales experience including holding national sales leader awards while at Automated Data Processing and Qantel. Mr. Anderson is an entrepreneur with numerous start-ups and turn-arounds to his credit. He currently owns and operates, among other companies, C Innovation, a leading K-12 educational software company, and Evolution, which provides various insurance and payroll services to third parties. Mr. Anderson currently lives inc/o Medical Discoveries, Inc., 1338 S. Foothill Drive, #266, Salt Lake City, Utah and attended college at Brigham Young University.

The three nominees receiving84108.

(2) For purposes of this table, shares are considered beneficially owned if the highest number of votes atperson directly or indirectly has the Meeting will be elected.The Board of Directors recommends asole or shared power to vote FOR eachor direct the voting of the director nominees.securities or the sole or shared power to dispose of or direct the disposition of the securities. Shares are also considered beneficially owned if a person has the right to acquire beneficial ownership of the shares within 60 days of September 30, 2007.

INFORMATION CONCERNING THE BOARD OF DIRECTORS,

BOARD COMMITTEES AND DIRECTOR COMPENSATION

Board Committees(3) Includes 18,036,277 shares that may be acquired upon the exercise of currently exercisable warrants, and Meetings

Audit Committee. The17,430,000 shares of common stock issuable upon conversion of 8,715 shares of Series A convertible preferred stock based on an assumed conversion price of $0.05, which is the minimum price at which such shares of Series A convertible preferred stock can be converted.

(4) Includes 9,360,701 shares that may be acquired upon the exercise of currently exercisable warrants, and 20,590,000 shares of common stock issuable upon conversion of 10,295 shares of Series A convertible preferred stock based on an assumed conversion price of $0.05, which is the minimum price at which such shares of Series A convertible preferred stock can be converted.
(5) Includes 4,575,495 shares that may be acquired upon the exercise of currently exercisable warrants, and 57,854,000 shares of common stock issuable upon conversion of 9,917 shares of Series A convertible preferred stock based on an assumed conversion price of $0.05, which is the minimum price at which such shares of Series A convertible preferred stock can be converted.
(6) Includes 23,490,095 shares subject to forfeiture in the event the Company has a separately-designated standing Audit Committee establishednot satisfied certain conditions by September 7, 2009.
(7) Includes 2,000,000 shares that may be acquired upon the exercise of currently exercisable options.
(8) Includes 3,915,016 shares subject to forfeiture in accordance with Section 3(a)(58)(A)the event the Company has not satisfied certain conditions by September 7, 2009. Mr. Palmer owns 13.33% of the Securities Exchange Actoutstanding membership interests of 1934. The functionsMobius. Mr. Palmer has options to acquire 12,000,000 shares of common stock, which options are not currently exercisable and will not become exercisable unless certain conditions are met. Neither the Audit Committee areshares held by Mobius, nor the foregoing options to assistpurchase 12,000,000 shares have not been included in the Board of Directors in fulfilling its responsibility to oversee the quality and integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications, independence and performance of the Company’s independent accountants, and significant financial matters. In discharging its duties, the Audit Committee is expected to:

• have the ultimate authority to select (subject to shareholder ratification, which ratification is not binding on the Audit Committee), compensate, evaluate and replace the Company’s independent accountants;
• review and approve the scope of the annual external audit;
• review and pre-approve the engagement of the Company’s independent accountants to perform audit and permitted non-audit services and the related fees;

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• meet independently with the Company’s accounting staff, independent accountants and senior management;
• review the integrity of the Company’s financial reporting process; and
• review the Company’s financial statements and disclosures and certain Securities and Exchange Commission filings.

     The current members of the Audit Committee are David R. Walker (Chairman) and Alvin Zidell, each of whom is independent as defined in Rule 4200(a)(14) of the National Association of Securities Dealers’ listing standards. There is currently one vacancy on the Audit Committee. The Board of Directors has adopted a written charter for the Audit Committee, which is attached as Annex A to this proxy statement. The Audit Committee meets at such times astable.

(9) Includes 750,000 shares that may be deemed necessary byacquired upon the Boardexercise of Directors or the Committee. The Audit Committeecurrently exercisable options.
(10) Includes 54,810,220 shares held four meetings during 2003. At each meeting, the Audit Committee met with management and the Company’s independent accountants, and with the independent accountants without management present.

Audit Committee Financial Expert. The Board of Directors has determined that David R. Walker is an audit committee financial expert as defined by Item 401(h) of Regulation S-K under the Securities Exchange Act of 1934.

     The Board of Directors held a total of five meetings during 2003. During 2003, each incumbent director attended 75% or more of the total number of meetings of the Board and the committees of the Board on which the director served.

     Directors are encouraged to attend the Company’s annual meetings of shareholders.

     The Company does not have a standing executive committee or compensation committee. The compensation of the President and Chief Executive Officer is determined by the Company’s independent directors.

     The Company does not have a standing nominating committee and the Board of Directors has not adopted a nominating committee charter. The Company is not required to have a compensation committee. However, the Board of Directors intends to establish a standing nominating committee prior to the 2005 Annual Meeting of shareholders. Currently, all members of the Board of Directors participate in the director nomination process. All membersname of the Board of Directors other than Judy M. Robinett are independent as defined in Rule 4200(a)(14) of the National Association of Securities Dealers’ listing standards. The Board of Directors has an informal policy to consider any director nominee nominated byMobius Risk Group, LLC, a security holder. The Board of Directors has no written policy concerning qualifications to serve as a director ofTexas limited liability company (“Mobius”). Mr. Melvin is the Company, but the Board of Directors considers numerous factors when nominating directors, including the nominee’s public company experience, the nominee’s biotechnology industry experience, the nominee’s ability through experience and existing relationships to further the goals of the Company, the nominee’s willingness and ability to participate actively on the Board, the nominee’s willingness and ability to serve on the Company’s Audit Committee and other future committees, the nominee’s ability to satisfy the independence standards for the Audit Committee and future expected nominating committee, and the nominee’s educational background. The current nominees for director were nominated by the President and Chief Executive Officer and were approved by the Board of Directors as nominees.

Director Compensation

     Directors who are not officers of the Company do not receive any regular compensation for their service on the board of directors, and directors who are officers of the Company receive no additional compensation for their service as a director of the Company. Directors are entitled to receive compensation for services unrelated to their service as a director to the extent that they provide such unrelated services to the Company. See “Certain Relationships and Related Transactions.”

     Directors of the Company and its subsidiaries are entitled to participate in the Company’s 2002 Stock Incentive Plan. During the year ended December 31, 2003, the Company granted options to purchase

5

300,000 shares of its Common Stock to its independent directors and granted options to purchase 14,500,000 shares of its Common Stock to its director who is also an officer of the Company.Mobius.

DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Following is a schedule of names and certain information regarding all of the directors and executive officers of the Company, as of April 2, 2004:

NameAgePosition
David R. Walker59Chairman of the Board of Directors
Judy M. Robinett51President and Chief Executive Officer
Alvin Zidell73Director
Nilesh Desai, M.D. 54Director
Stephen R. Drake35Secretary

     David R. Walker joined the Board of Directors on May 2, 1996, and was appointed Chairman of the Board of Directors on May 10, 1998. He has served as Chairman of the Audit Committee since its inception in 2001. For over 20 years, Mr. Walker has held the office of General Manager of Sunheaven Farms, the largest onion growing and packing entity in the State of Washington with annual revenues in excess of $50 million. In the capacity of General Manager, Mr. Walker performs the functions of a traditional chief financial officer. Mr. Walker holds a Bachelors of Arts degree in economics from Brigham Young University with minors in accounting and finance.

     Judy M. Robinett has held the office of President and Chief Executive Officer since November, 2000, and joined the Board of Directors on February 9, 2001. Since 1994, she has owned and operated an international consulting company focused on strategic planning, finance, marketing, and distribution for entrepreneurs and established companies. Prior to that, Ms. Robinett’s employment positions included Vice President for Quality Improvement for a regional hospital, Division Manager for Universal Foods, Group Manager for EG&G’s Nuclear Training Facility in Idaho, and a Planner for the State of Idaho. Ms. Robinett has published more than 50 articles on business finance and operations and is a recognized authority on quality control. Ms. Robinett holds a Bachelors of Sciences degree in psychology and a Masters degree in labor economics from Utah State University.

     Alvin Zidell has been a Director of the Company since December 1, 1993. In the past five years, he has served as a Vice President of Zidell Properties, a building company in Dallas, Texas, President of Siding for Less, a siding installation company, and the owner of an investment company, Alvin Zidell Investments.

     Neal Desai, M.D., has served as a Director of the Company since January of 1999. Dr. Desai is a Diplomat of the American Board of Internal Medicine, and is the owner of Victory Olive Medical Group in Burbank, California, where he has practiced internal medicine since 1980.

Stephen R. Drake was elected Secretary of the Company effective as of April 1, 2004. He has served as legal counsel to the Company since November 2000. Mr. Drake is an attorney in private practice with Stoel Rives LLP in Boise, Idaho, where he practices corporate and securities law. Mr. Drake received a Bachelors of Arts degree,cum laude, from Albertson College in 1991 and a Juris Doctor degree,cum laude, from Willamette University College of Law in 1996.

The executive officers of the Company serve at the pleasure of the Board of Directors. None of the officers are currently employees of the Company.

EXECUTIVE COMPENSATION

     The following table sets forth certain summary information concerning compensation paid by the Company to the President and Chief Executive Officer (the “Named Executive Officer”) for the years ended

6

December 31, 2003, 2002, and 2001. No other executive officer of the Company received a total annual salary and bonus in excess of $100,000 during the year ended December 31, 2003.

Summary Compensation Table

                 
Securities
Underlying
SalaryOptions
Name and Principal Position(s)Year($)(a)Bonus ($)(#)
Judy M. Robinett  2003   200,000   —   14,500,000 
President and Chief  2002   193,336   300,000   500,000 
Executive Officer  2001   180,000   4,500(b)  1,000,000 

(a)Represents total amounts accrued for the period, whether or not actually paid. As of December 31, 2003, the Company had a total payable to Ms. Robinett of $785,000. During the year ended December 31, 2003, Ms. Robinett was actually paid $40,000 by the Company.
(b)Represents value of 30,000 shares of common stock of the Company granted on April 20, 2001, based on the closing price of the stock that day ($0.15).

     The following table sets forth certain summary information concerning options granted to the Named Executive Officer for the year ended December 31, 2003.

Options Granted in Last Fiscal Year

                     
Market
Percent of TotalPrice on
Number ofOptions Granted toExerciseDate of
SecuritiesEmployees inPriceGrantExpiration
Name and Principal Position(s)Underlying OptionsFiscal Year($/sh)($/sh)Date
Judy M. Robinett  500,000   100%  .01   .05   12/31/12 
President and Chief Executive Officer  14,000,000   100%  .02   .075   10/27/13 

     The following table sets forth certain summary information concerning options exercised by the Named Executive Officer during 2003, and the value of options held by such person at December 31, 2003 measured in terms of the average sale price reported for Common Stock on December 31, 2003 ($.1475, as reported by OTC Bulletin Board).

Aggregate Option Exercises in 2003 and Option Values at 12/31/2003

Number of
Securities UnderlyingValue of Unexercised
Unexercised Options atIn-the-Money Options at
SharesDecember 31,December 31,
Acquired onValue2003 (#)2003 ($)
NameExercise (#)Realized ($)Exercisable/UnexercisableExercisable/Unexercisable
Judy M. Robinett——16,000,000/02,060,000/0

The Company has never granted any freestanding stock appreciation rights.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth information regarding persons known by the Company to beneficially own, as defined by Rule 13d-3 under the Securities Exchange Act of 1934, more than 5% of Common Stock as of April 12, 2004, based solely on information regarding such ownership available to the Company in filings by such beneficial owners with the SEC on Schedules 13D and 13G. The following table also sets forth

7

information regarding beneficial ownership of Common Stock as of April 12, 2004, except as noted below, by the Directors and the Named Executive Officer and by the Directors and Named Executive Officer as a group.
          
Number of Shares
and Nature ofPercent
Beneficialof
Name and Address of Beneficial Owner(a)Ownership(b)Class
Certain Beneficial Owners:
        
Harvest Group, L.L.C  17,116,337   19.5 
 2985 North 935 East, Suite 9        
 Layton, UT 84041        
Judy M. Robinett  16,030,000(c)  15.4 
Directors/ Named Executive Officer:
        
David R. Walker  1,153,539(d)  1.3 
Judy M. Robinett  16,030,000(c)  15.4 
Alvin Zidell  882,062(e)  * 
Nilesh Desai, M.D.   567,415(f)  * 
All Directors and Executive Officers as a Group (4 persons)
  18,633,016(g)  17.6 

 *Less than 1%
(a)Unless otherwise indicated, the business address of each person listed is c/o Medical Discoveries, Inc., 738 Aspenwood Lane, Twin Falls, ID 83301.
(b)For purposes of this table, shares are considered to be beneficially owned if the person directly or indirectly has the sole or shared power to vote or direct the voting of the securities or the sole or shared power to dispose of or direct the disposition of the securities. Shares are also considered beneficially owned if a person has the right to acquire the beneficial ownership of the shares within 60 days of April 12, 2004. Unless otherwise indicated in these footnotes, each shareholder has sole voting and investment power with respect to the shares beneficially owned.
(c)Includes 16,000,000(11) Includes 5,000,000 shares that may be acquired upon the exercise of currently exercisable stock options.
(d)Includes 750,000 shares that may be acquired upon the exercise of currently exercisable stock options.
(e)Includes 750,000 shares that may be acquired upon the exercise of currently exercisable stock options.
(f)Includes 175,000 shares that may be acquired upon the exercise of currently exercisable stock options, 133,334 shares that may be acquired by the Desai Family Trust upon the exercise of currently exercisable warrants, and 197,081 shares of common stock owned by the Desai Family Trust.
(g)Includes 17,808,334 shares that may be acquired upon the exercise of currently exercisable stock options and warrants.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s Executive Officers and Directors, and persons who beneficially own more than 10% of the outstanding shares of Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission and furnish the Company with copies. Based solely upon a review of the copies of such forms furnished to the Company and written representations from certain reporting persons, the Company believes that for the year ended December 31, 2003 all persons subject to the reporting requirements of Section 16(a) filed the required reports on a timely basis, except as follows: In 2004, each of the directors of the Company filed a Form 3 because the Company’s records did not indicate whether or not they were previously filed. Following such filings, each of the directors also filed a Form 4 to report all transactions subsequent to the date they became subject to Section 16(a).

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company entered into an employment agreement with Judy M. Robinett as of May 15, 2002, pursuant to which Ms. Robinett serves as President and Chief Executive Officer of the Company. The term of the agreement is three years. The agreement provides for a signing bonus of $200,000 and an annual salary of $200,000. The agreement also provides for bonuses pursuant to which performance by Ms. Robinett at the target level established by the Board of directors for an annual bonus performance period will result in an incentive payment equal to 50% of her annual salary for the period. Pursuant to the agreement, Ms. Robinett is eligible to participate in all employee benefit programs of the Company applicable to management personnel and is also provided with the use of a Company-owned vehicle. However, the Company currently does not provide benefits or own a vehicle. In the event of termination for cause, death or disability, Ms. Robinett will be entitled to accrued compensation through the date of such event. In the event of termination otherwise than for cause, Ms. Robinett will be entitled, as severance pay, to a cash payment equal to her annual salary then in effect for the longer of two years or the unexpired portion of the term of the agreement. The agreement also contains customary provisions relating to confidentiality and ownership of intellectual property. The agreement does not, however, contain a non-compete provision.

CODE OF ETHICS

The Company is not required to adopt a code of ethics and has not adopted a formal code of ethics. The directors intend to do so during the upcoming fiscal year following election of the new Board of Directors.

AUDIT COMMITTEE REPORT

     The following is the report of the Audit Committee with respect to the Company’s audited financial statements for the fiscal year ended December 31, 2003.

Review with Management

     The Audit Committee has reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2003 with management.

Review and Discussion with Independent Accountants

     The Audit Committee has also discussed with Balukoff Lindstrom & Co., P.A., the Company’s independent accountants, the matters required to be discussed by Statement on Auditing Standards No. 90 (Communication with Audit Committees) regarding the auditor’s judgments about the quality of the Company’s accounting principles as applied in its financial reporting. The Audit Committee has also received the written disclosures and the letter from Balukoff Lindstrom & Co., P.A. required by Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees) and has discussed with Balukoff Lindstrom & Co., P.A. the matter of its independence.

9

Conclusion

     Based on the review and discussions described in the preceding paragraphs, the Audit Committee recommended to the Board of Directors that the Company’s audited financial statements for the fiscal year ended December 31, 2003 be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 for filing with the Securities and Exchange Commission.

Submitted by the Audit Committee

David R. Walker, Chairman

     Alvin Zidell

The information contained in this Audit Committee Report is not deemed to be soliciting material or to be filed with the Securities and Exchange Commission, except to the extent that the Company specifically incorporates it by reference into a document filed under the Securities Act of 1933 or the Securities Exchange Act of 1934. Such information is not incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference.

PROPOSAL NO. 2

RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS

The Audit Committee of the Board of Directors has selected Balukoff Lindstrom & Co., P.A. as independent accountants to audit the consolidated financial statements of the Company for the year ending December 31, 2004. Balukoff Lindstrom & Co., P.A. currently serves as the Company’s independent accountants.The Board of Directors recommends a vote FOR the ratification of the selection of Balukoff Lindstrom & Co., P.A. as the Company’s independent accountants for the year ending December 31, 2004.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Audit Fees

     The aggregate fees for professional services rendered by Balukoff Lindstrom & Co., P.A. for the audit of the Company’s annual financial statements for 2003 and 2002, the review of the financial statements included in the Company’s Forms 10-Q for 2003 and 2002 totaled $27,250 and $28,175, respectively.

Tax Fees

     The aggregate fees for professional services rendered by Balukoff Lindstrom & Co., P.A. for tax preparation and consultation, for the years ended 2003 and 2002, were $475 and $365, respectively.

The engagement of Balukoff Lindstrom & Co., P.A. to render audit and non-audit services for the periods described above was approved in advance by the Company’s audit committee. Any additional audit-related or permitted non-audit services proposed by management to be performed by Balukoff Lindstrom & Co., P.A. will be submitted to the Audit Committee for consideration and approval in advance of any engagement to perform such services.

PROPOSAL NO. 3

PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION

     The Company will require significant additional funding to continue to develop, research and seek regulatory approval of its technologies. In addition, the Company cannot survive, even in the near term, without immediate additional funding for operations. The Company does not currently generate any cash from operations and has no credit facilities in place or available. The Board of Directors believes it can raise capital

10

through private stock offerings and/or secondary public offerings. Effective April 1, 2004, the Board of Directors unanimously adopted a resolution to amend and restate the Articles of Incorporation of the Company in the form substantially as set forth in Annex B attached to this proxy statement to increase the number of authorized shares of Common Stock from 100 million to 250 million and to provide for 50 million shares of undesignated Preferred Stock. The Board’s resolution cannot be implemented without shareholder approval.

     As of April 12, 2004, the Company had outstanding 87,979,077 shares of Common Stock. Taking into consideration the shares of Common Stock reserved for issuance upon the exercise of stock options,currently exercisable warrants held by Emmes Consulting Group, LLC, a California limited liability company (“Emmes”). Mr. Schroeder is the Executive Vice President and convertible notes, there are no sharesManaging Director of Common Stock currently available for issuance.

     The proposed amendment will provideEmmes.

(12) Notwithstanding the Company with additional authorized and unissued shares of Common Stock and a new undesignated class of Preferred Stock, either of which may be used for various corporate purposes, including financing, business combination and acquisition transactions; stock splits and stock dividends; stock incentive and compensation plans or programs; and other business purposes. If the proposed Amended and Restated Articles of Incorporation are approved, the increased number of authorized shares of Common Stock will be available for issuance from time to time for such purposes and for such consideration as the Board of Directors may approve and no further vote of the shareholders of the Company will be required for such issuance, except as may be provided for under applicable law or the rules of any stock exchange or other market system on which the Common Stock may then beforegoing percentages, each person listed or traded. In addition, the newly created Preferred Stock will be available for designation and issuance from time to time by the Board of Directors without further vote of the shareholders of the Company, except as may be provided for under applicable law or the rules of any stock exchange or other market system on which the Common Stock or Preferred Stock may then be listed or traded.

     The rights of the Board of Directors to designate and issue specific series of Preferred Stock will include, without limitation, the right to determine or designate the following with respect to each series:

• The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the Board of Directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the Board of Directors;
• The dividend rate of such series, the conditions and times upon which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class or classes of stock or series thereof, or on the other series of the same class, and whether dividends shall be cumulative or noncumulative;
• The conditions upon which the shares of such series shall be subject to redemption by the Company and the times, prices and other terms and provisions upon which the shares of the series may be redeemed;
• Whether or not the shares of the series shall be subject to the operation of retirement or sinking fund provisions to be applied to the purchase or redemption of such shares and, if such retirement or sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
• Whether or not the shares of the series shall be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series of the same class and, if provision is made for conversion or exchange, the times, prices, rates, adjustments and other terms and conditions of such conversion or exchange;
• Whether or not the shares of the series shall have voting rights, in addition to the voting rights provided by law, and, if so, the terms of such voting rights;
• The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or upon distribution of assets of the Company; and

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• Any other designations, preferences, limitations and relative rights of the shares of such series, as the Board of Directors may deem advisable.

     Shareholders should refer to Annex B for the complete proposed Amended and Restated Articles of Incorporation.

     While the Company believes that equity offerings are a viable option to raise capital, there can be no assurance that the Company will actually commence any type of equity offering, or that if commenced, such an offering will be successful.

     The shares of Common Stock authorized pursuant to the proposed Amended and Restated Articles of Incorporation would be identical to the shares of Common Stock currently authorized. Holders of Common Stock do not have preemptive rights to subscribe for additional securities that may be issued by the Company. The authorization of additional shares of Common Stock pursuant to the proposed amendment will not, by itself, have any effect on the rights of existing shareholders. The issuance of such shares, however, could dilute the rights of existing shareholders.

     Because the proposed amendment would allow the Company to issue a significant number of shares of Common Stock and Preferred Stock in connection with future transactions, it is possible that a change in control of the Company could occur. However, no such transactions are contemplated at this time.

The proposed amendment is not intended to have any anti-takeover effect and is not part of any series of anti-takeover measures.The Board of Directors recommends a vote FOR the proposal to amend and restate the Articles of Incorporation.

PROPOSAL NO. 4

PROPOSAL TO APPROVE 2002 STOCK INCENTIVE PLAN

     As of July 11, 2002, the Board of Directors adopted the 2002 Stock Incentive Plan (the “Plan”), which was amended on March 6, 2003 to increase the number of shares of Common Stock subject to the Plan to 20 million. The Plan is submitted to the shareholders for approval at this Meeting.

     The Board of Directors of the Company believes that the availability of stock options and other stock incentives is an important factor in the Company’s ability to attract and retain qualified employees and to provide an incentive for them to exert their best efforts on behalf of the Company. In addition, in light of the limited amount of working capital available to it, the Company has, and may periodically continue to, use stock options and other incentive awards to compensate consultants that provide services to the Company.

Description of the 2002 Stock Incentive Plan

The following summary of the Plan is qualified in its entirety by reference to the full text of the Plan , a copy of which attached as Annex C to this proxy statement.

Purpose of the Plan

The purpose of the Plan is to enable the Company to attract and retain the services of (1) selected employees, officers and directors and (2) selected nonemployee agents, consultants, advisers and independent contractors. For purposes of the Plan, a person is considered to be employed by the Companyherein, individually or in the Company’s service if the personaggregate is employedlimited by the Company or in the serviceterms of the Company or any parent or subsidiaryour Series A convertible preferred stock and by applicable warrants to owning no more than 9.99% of the Company.

Administration

     The Company’s Board of Directors administers the Plan. Subject to the provisions of the Plan, the Board of Directors may adopt and amend rules and regulations relating to the administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to shares

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not imposed by law and make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan.

     The Board of Directors may delegate to a committee of the Board of Directors or specified officers of the Company, or both any or all authority for administration of the Plan except that only the Board of Directors may amend or terminate the Plan. The Board of Directors may delegate to any officer or officers of the Company authority to grant awards under the Plan, subject to any restrictions the Board of Directors may impose.

The interpretation and construction of the provisions of the Plan and related agreements by the Board of Directors is final and conclusive. The Board of Directors may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it deems expedient to carry the Plan into effect, and the Board of Directors shall be the sole and final judge of such expediency.

Eligibility and types of awards under the Plan

Grants under the Plan may be awarded to select directors, officers, employees, non-employee agents, consultants, advisers, and independent contractors of the Company or any parent or subsidiary of the Company. The Plan permits the Board of Directors to grant Incentive Stock Options, Nonstatutory Stock Options, stock bonus awards and to sell shares subject to any terms, conditions and restrictions they determine.

Shares Reserved for Issuance Under the 2002 Incentive Plan

     The Board of Directors has reserved a total of 20,000,000 shares of the Company’s common stock for issuance under the Plan. The number and kind of shares available for grants under the Plan and all other share amounts set forth in the Plan shall be appropriately adjusted by the Board of Directors if theour outstanding common stock is increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares, dividend payable in shares, recapitalization or reclassification. In addition, the Board of Directors shall make appropriate adjustment in the number and kind of shares as to which outstanding options, or unexercised portions thereof, shall be exercisable so that the optionee’s proportionate interest before and after the occurrence of the event is maintained. Any such adjustments by the Board of Directors shall be conclusive.

If an option granted under the Plan expires, terminates or is canceled, any unissued shares become available under the Plan. If shares awarded as a bonus or sold as restricted stock are forfeited to the Company or repurchased by the Company, the shares forfeited or repurchased shall again become available for issuance under the Plan.

Amendment and Termination of the Plan

     The Board of Directors may amend the Plan at any given time. Except as specified in the Plan with respect


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OTHER MATTERS

Management does not intend to treatment of options in case of a merger or reorganization and changes in outstanding options in connection with changes in capital structure, no change in an option already granted may be made without the consent of the holder of the option.

The Plan will continue until all shares available for issuance under the Plan have been issued and all restrictions on such shares have lapsed or when earlier terminated by the Board of Directors. The Board of Directors may suspend or terminate the Plan at any time. Early termination of the Plan shall not affect any outstanding options or shares subject to restrictions, any right of the Company to repurchase shares or the forfeitability of shares issued under the Plan.

Stock Options

     With respect to each grant, the Board of Directors determines the persons to whom options are granted, the option price, the number of shares subject to each option, the period of each option and the time or times

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at which the options may be exercised and whether the option is an Incentive Stock Option or a Nonstatutory Stock Option. At the time of grant of an option or at any time thereafter, the Board of Directors may provide that an optionee who exercised an option with Common Stock of the Company shall automatically receive a new option to purchase additional shares equal to the number of shares surrendered and may specify the terms and conditions of the new options.

     Only employees are eligible to receive Incentive Stock Options. The aggregate amount of shares for which Incentive Stock Options may become exercisable under the Plan and other stock incentive plans of the Company for the first time in any calendar year for an optionee may not exceed $100,000 measured on the fair market value of the stock on the date of grant. If the aggregate fair market value exceeds $100,000 in any year, that portion of the option or options that do not exceed $100,000, to the extent of whole shares, shall be treated as an Incentive Stock Option and the remaining portion shall be treated as a Nonstatutory Stock Option. This treatment will be applied to multiple options in the order in which they were granted. The Company will treat an exercise of all or any portion of an Incentive Stock Option below the $100,000 limitation as an Incentive Stock Option to the full extent permitted under the $100,000 limitation unless the optionee designates the option otherwise. The Board of Directors may at any time without the consent of the optionee convert an Incentive Stock Option into a Nonstatutory Stock Option.

Option Price. The Board of Directors shall determine the exercise price per share for an option at the time it is granted subject to certain restrictions. If the option is an Incentive Stock Option, the option price cannot be less than the fair market value of the common stock on the date of grant. If an optionee of an Incentive Stock Option at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company, the option price may not be less than 110% of the fair market value of the common stock on the date of grant. For this purpose, fair market value shall be the closing price of the common stock last reported before the time the option is granted, if the stock is publicly traded, orpresent any other valueitems of the common stock as specified by the Board of Directors.

Nontransferability. Incentive Stock Optionsbusiness and unless otherwise determined by the Board of Directors, Nonstatutory Stock Options under the Plan shall not be assignable or transferable by an optionee, either voluntarily or by operation of law, other than by the optionee’s will or the laws of descent or distribution of the state or country of domicile at the time of death of an optionee. During an optionee’s lifetime, an option may be exercised only by the optionee.

Duration and Exercise of Options. Options may be exercised in amounts and at times determined by the Board of Directors. Unless otherwise determined by the Board of Directors, if the optionee does not exercise an option in any one year for the full number of shares to which the optionee is entitled in that year, the optionee may purchase those shares in any subsequent year during the term of the option.

     Incentive Stock Options granted under the Plan expire on the date fixed by the Board of Directors subject to two restrictions:

     (i) no Incentive Stock Option may be exercised after the expiration of 10 years from the date it is granted, and
     (ii) if the recipient of an Incentive Stock Option owns stock possessing more than 10 percent of the combined voting power of all classes of our stock at the time of grant, the expiration date of the option may not be more than five years after the date of grant.

     If an optionee sells or otherwise disposes of the shares of common stock acquired on exercise of an Incentive Stock Option within two years after it is granted or within 12 months after it is exercised, then, within 30 days of the sale or disposition, the optionee shall notify the Company in writing of (i) the date of the sale or disposition, (ii) the amount realized on the sale or disposition and (iii) the nature of the sale or disposition.

     Unless otherwise determined by the Board of Directors, any option granted to a non-exempt employee of the Company subject to the overtime compensation provisions of Section 7 of the Fair Labor Standards Act (“FLSA”) shall not be exercisable until at least six months after the date it is granted. This six-month

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restriction on exercisability will cease to apply, however, if the employee dies, becomes disabled or retires, there is a change in ownership of the Company, or in other circumstances permitted by regulation, all as prescribed in Section 7(e)(8)(B) of the FLSA.

     Except as described under “Termination of Employment or Service, Death and Assignment” below or as determined by the Board of Directors, an option may not be exercised unless the optionee is an employee of, or is providing service to, the Company when exercised and has been continuously so employed or providing service since the date the option was granted. Absence on leave approved by the Company or on account of illness or disability shall not be deemed a termination or interruption of employment or service for this purpose. Unless otherwise determined by the Board of Directors, vesting of options shall continue during a medical, family or military leave of absence, whether paid or unpaid, and vesting of options shall be suspended during any other unpaid leave of absence.

     To exercise an option, the optionee must:

     (i) pay of the full purchase price for the shares purchased, and
     (ii) submit a written notice to us of the optionee’s binding commitment to purchase shares.

     The notice must specify the number of shares of common stock for which the optionee wishes to exercise the option and the date on which the optionee desires to complete the transaction.

     The full purchase price must be paid in cash or by check on or before the date specified for completion of the purchase of the shares unless the Board of Directors determines otherwise. Additionally, with the approval of the Board of Directors, an optionee may pay for all or some of the shares with shares of our common stock valued at fair market value, restricted stock, other contingent awards denominated in either stock or cash, promissory notes and other forms of consideration. Unless otherwise determined by the Board of Directors, common stock provided in payment must have been previously acquired by the optionee and held by the optionee for at least six months. For purposes of valuing the common stock provided in payment of the purchase price, the fair market value shall be the closing price of the common stock last reported before the time payment in common stock is made or, if earlier, committed to be made if the common stock is publicly traded, or, if not, another value of the common stock as specified by the Board of Directors. No shares shall be issued until full payment has been made, including all amounts owed for tax withholding. With the consent of the Board of Directors, an optionee may request the Company to apply the shares to be received upon the exercise of a portion of a stock option (even though stock certificates have not yet been issued) to satisfy the purchase price for additional portions of the option automatically. The optionee must comply with any requirements specified by the Board of Directors for satisfaction of applicable federal, state and local tax withholding requirements, as well as any applicable federal or state securities laws.

Termination of Employment or Service, Death and Assignment. Unless otherwise determined by the Board of Directors, if an optionee ceases to be employed by or to provide service to the Company for any reason other than death, total disability or bona fide early retirement, as defined in the Plan, the optionee may exercise any option that he or she holds at the date that employment terminates at any time before the expiration date of the option or 3 months (6 months for a Nonqualified Stock Option) following the termination date of the optionee, whichever is earlier, but only if and to the extent the option was exercisable as of the termination date. Any portion of an option not exercisable at the date of termination will lapse.

     Unless otherwise determined by our Board of Directors, if the optionee’s employment or service terminates because of total disability, the optionee may exercise any option held on the termination date at any time before the earlier of the option’s expiration date or 3 months (6 months for a Nonqualified Stock Option) after the date of termination, but only to the extent the option was exercisable on the date of termination. The term “total disability” means a medically determinable mental or physical impairment of the optionee which is expected to result in death or which has lasted or is expected to last for a continuous period of 12 months or more and which, in the opinion of the Board of Directors and the opinion of two independent physicians, causes the optionee to be unable to perform his or her duties as an employee, director, officer or consultant of the Company and to be engaged in any substantial gainful activity. Total disability shall be deemed to have

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occurred on the first day after the two independent physicians have furnished their written opinion of total disability to the Company and the Board of Directors has reached an opinion of total disability.

     Unless otherwise determined by the Board of Directors, if an optionee dies while in the Company’s employment or providing services to the Company, any option may be exercised at any time before the expiration date of the option or before the date that is 12 months after the date of death, whichever is the shorter period. The option may be exercised, however, only if and to the extent the optionee was entitled to exercise the option at the date of death and only by the person or persons to whom the optionee’s rights under the option pass by the optionee’s will or by the laws of descent and distribution of the state or country of the optionee’s domicile at the time of death.

To the extent that the option of any deceased optionee or any optionee whose employment or service terminates is not exercised within the applicable period, all further rights to purchase shares pursuant to the option shall cease and terminate.

Stock Bonuses

     The Board of Directors may award shares under the Plan as stock bonuses. Shares awarded as a bonus shall be subject to the terms, conditions and restrictions determined by the Board of Directors. The restrictions may include restrictions concerning transferability and forfeiture of the shares awarded. The Board of Directors may require the recipient to sign an agreement as a condition of the award, but may not require the recipient to pay any monetary consideration other than amounts necessary to satisfy tax withholding requirements. The agreement may contain any terms, conditions, restrictions, representations and warranties required by the Board of Directors. The certificates representing the shares awarded shall bear any legends required by the Board of Directors.

The Company may require any recipient of a stock bonus to pay to the Company in cash or by check upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the recipient fails to pay the amount demanded, the Company may withhold that amount from other amounts payable to the recipient, including salary, subject to applicable law. With consent of the Board of Directors, a recipient may satisfy this obligation, in whole or in part, by instructing the Company to withhold from any shares to be issued or by delivering to the Company other shares of common stock of the Company. However, the number of shares so withheld or delivered cannot exceed the minimum amount necessary to satisfy the required withholding obligations.

Restricted Stock

     Subject to any restrictions imposed by applicable law and the Plan, the Board of Directors may issue shares of “restricted stock” under the Plan for any consideration (including promissory notes and services) determined by the Board of Directors. Shares of restricted stock issued under the Plan shall be subject to the terms, conditions and restrictions of the Plan and any other terms, conditions and restrictions determined by the Board of Directors. The restrictions may include, subject to any limitations imposed by applicable law, without limitation, restrictions concerning transferability, repurchase by the Company and forfeiture of the shares issued.

     The purchase price for any shares of restricted stock issued to any person possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary must be at least 100% of the fair market value of the common stock of the Company on the date the purchase agreement is signed.

     All shares of restricted stock must be subject to a purchase agreement, which must be executed by the Company and the prospective purchaser of the shares of restricted stock before the delivery of certificates representing the shares to the purchaser. The purchase agreement may contain any terms, conditions, restrictions, representations and warranties required by the Board of Directors. The certificates representing the shares shall bear any legends required by the Board of Directors.

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     The rights of any purchaser of shares of restricted stock are nonassignable and nontransferable, either voluntarily or by operation of law, except by will, by the laws of descent and distribution of the state or country of such person’s at the time of death.

The Company may require any recipient of restricted stock to pay to the Company in cash or by check upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the recipient fails to pay the amount demanded, the Company, its parent or a subsidiary may withhold that amount from other amounts payable to the recipient, including salary, subject to applicable law. With consent of the Board of Directors, a recipient may satisfy this obligation, in whole or in part, by instructing the Company to withhold from any shares to be issued or by delivering to the Company other shares of common stock of the Company. However, the number of shares so withheld or delivered cannot exceed the minimum amount necessary to satisfy the required withholding obligation.

Performance-based Awards

Under the Plan, the Board of Directors may grant performance-based awards. These awards are intended to qualify as qualified performance-based compensation under Section 162(m) of the Code and regulations thereunder (“Performance-based Awards”). Performance-based Awards shall be denominated at the time of grant either in common stock of the Company or in dollar amounts. Performance-based Awards may be granted in whole or in part if the Company achieves written objective goals established by the Board of Directors over a designated period of time. Payment of an award earned may be in cash or stock or both as determined by the Board of Directors. In addition to the requirement that participants satisfy certain performance goals, the Board of Directors may impose additional restrictions to payment under a Performance-based Award.

Tax Consequences

The following is a general discussion of certain federal income tax considerations concerning Incentive Stock Options and Nonstatutory Stock Options. The discussion does not describe any tax consequences of stock bonuses, stock appreciation rights, restricted stock or cash bonus rights, nor does the discussion describe any tax consequences under the tax laws of any state, locality or foreign jurisdiction. Furthermore, the discussion is based on the provisions of the Code and regulations, and rulings and judicial decisions thereunder, as of the date hereof, and such authorities may be repealed or modified retroactively so as to result in federal income tax consequences different from those discussed below.The discussion below does not discuss all federal income tax consequences that may be relevant to a particular optionee, and is not intended as tax advice. Each optionee is urged to consult his or her individual tax adviser.

Incentive Stock Options. Certain options authorized to be granted under the Plan are intended to qualify as Incentive Stock Options for federal income tax purposes. Under federal income tax law currently in effect, the optionee will recognize no income upon grant or upon a proper exercise of the Incentive Stock Option, although such exercise may produce alternative minimum tax liability for the optionee. If an employee exercises an Incentive Stock Option and does not dispose of any of the option shares within two years following the date of grant and within one year following the date of exercise, then any gain realized upon subsequent disposition of the shares will be treated as income from the sale or exchange of a capital asset. Ordinarily, if an employee disposes of shares acquired upon exercise of an Incentive Stock Option before the expiration of either the one-year holding period or the two-year waiting period, the amount by which the fair market value of the shares on the exercise date exceeds the exercise price will be taxable as ordinary compensation income in the year of such disqualifying disposition; however, on certain sales or exchanges the amount that is taxable as ordinary compensation is limited to the amount by which the amount realized on the disposition exceeds the exercise price. The Company will not be allowed any deduction for federal income tax purposes at either the time of the grant or exercise of an Incentive Stock Option. Upon any disqualifying disposition by an employee, the Company will generally be entitled to a deduction to the extent the employee realized ordinary income.

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Nonqualified Stock Options. Certain options authorized to be granted under the Plan will be treated as Nonstatutory Stock Options for federal income tax purposes. Under federal income tax law presently in effect, no income is realized by the grantee of an Nonstatutory Stock Option pursuant to the Plan until the option is exercised. At the time of exercise of an Nonstatutory Stock Option, the optionee will realize ordinary compensation income, and the Company will generally be entitled to a deduction, in the amount by which the market value of the shares subject to the option at the time of exercise exceeds the exercise price. The Company is required to withhold on the income amount. Upon the sale of shares acquired upon exercise of an Nonstatutory Stock Option, the excess of the amount realized from the sale over the market value of the shares on the date of exercise will be taxable.

     An employee who receives stock in connection with the performance of services will generally realize taxable income at the time of receipt unless the shares are not substantially vested for purposes of Section 83 of the Code and the employee elects within 30 days after the original transfer to recognize income in connection with the original transfer under Section 83(b) of the Code. If the shares are not vested at the time of receipt, the employee will realize taxable income in each year in which a portion of the shares substantially vest, unless the employee a Section 83(b) election is made. The Company generally will be entitled to a tax deduction equal to the amount includable as income by the employee at the same time or times as the employee recognizes income with respect to the shares. The Company is required to withhold on the income amount.

Stock Bonuses. A stock bonus will generally result in compensation income for the recipient equal to the fair market value of the stock granted on the date it is granted. When the recipient sells the stock obtained as a stock bonus, the recipient will recognize capital gain or loss in an amount equal to the amount realized upon the sale less the recipient’s basis. The recipient’s basis will be any income previously recognized with respect to the stock.

Restricted Stock. No income is recognized by a recipient of restricted stock upon the grant of the stock, unless the recipient elects within 30 days (pursuant to section 83(b) of the Code) to recognize income at the time the recipient receives the stock. If the recipient makes the section 83(b) election, the recipient may not deduct amounts subsequently returned to the Company. If the recipient does not make the section 83(b) election, the recipient will generally recognize ordinary income and be subject to reporting and withholding requirements when the restrictions on the stock are removed. The income recognized by the recipient will be the fair market value of the restricted stock on the date the restrictions are removed less any amount paid for the shares. When the recipient sells the restricted stock, the recipient will recognize capital gain or loss in an amount equal to the amount realized upon the sale less the recipient’s basis. The recipient’s basis will be what the recipient paid for the restricted stock plus any income previously recognized.

Performance-based Awards. No income is recognized by a recipient of a performance-based award upon the grant of the award. The recipient will generally recognize ordinary income and be subject to reporting and withholding requirements when the performance criteria established in the award are achieved. If payment of the award is in cash, the income recognized will be the amount of cash receivable by the recipient on the date the performance criteria is achieved less any amount paid for the shares. If payment of the award is in the form of stock, the income recognized will be the fair market value of the stock on the date the performance criteria are achieved less any amount paid for the shares. If payment of the award is in the form of stock, when the recipient sells the stock, the recipient will recognize capital gain or loss in an amount equal to the amount realized upon the sale less the recipient’s basis in the stock. The recipient’s basis will be what the recipient paid for the restricted stock plus any income previously recognized.

Non-Transferability of Options

     Each stock option granted under the Plan by its terms shall be nonassignable and nontransferable by an optionee, either voluntarily or by operation of law, other than by will or the laws of descent or distribution upon the death of an optionee, by instrument to an intervivos or testamentary trust in which the options are to be passed to beneficiaries upon the death of the person establishing the trust or by gift to immediate family. An option may be exercised only by an optionee or, after death, by a successor or representative of an optionee.

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Conditions to Issuance of Stock

     The Company is under no obligation to effect the registration pursuant to the Securities Act of 1933, as amended (the “Securities Act”) of any shares of common stock to be issued under the Plan or to effect similar compliance under any state laws. The Company is not obligated to cause to be issued or delivered any certificates evidencing shares of common stock pursuant to the Plan unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws and regulations of any governmental authority and the requirements of any securities exchange on which shares of common stock are traded. The Company may require, as a condition of the issuance and delivery of certificates evidencing shares of common stock pursuant to the Plan, that the recipient of such shares make such covenants, agreements and representations, and that such certificates bear such legends as the Company, in its sole discretion, deems necessary or desirable.

NUMBER OF OPTIONS RECEIVED OR TO BE RECEIVED BY SPECIFIED PERSONS

The following table contains information regarding the number of options to purchase Common Stock granted under the Plan to the groups and individuals in the table as of April 12, 2004. No awards other than options have been granted under the Plan. The Company is unable to determine the amount of awards that may be granted in the future to such groups and individuals because grants of awards are subject to the discretion of the Board of Directors.

Number of Options
Name and PositionGranted Under the Plan
David R. Walker, Director600,000
Judy M. Robinett, President and Chief Executive Officer and Director14,500,000
Alvin Zidell, Director100,000
Nilesh Desai, Director100,000
Stephen R. Drake, Secretary (non-employee)300,000
Deirdra Burgess (non-employee consultant)150,000
Dan Robinson (non-employee consultant)150,000
John Cardis (non-employee consultant)100,000
All current executive officers as a group14,500,000
All current directors who are not executive officers as a group800,000
All employees, including all current officers who are not executive officers, as a group-0-

     The closing price of a share of common stock of the Company on April 12, 2004, as reported by the OTC Bulletin Board, was $0.14 per share.

The Board of Directors recommends a vote FOR the proposal to approve the Plan.

OTHER MATTERS

As of the date of this Proxy Statement, the Board of Directors knows of no other matters that will be brought before the special meeting. Whether or not you plan to be presented for actionattend the special meeting, please sign and date the enclosed proxy card and return it in the enclosed envelope to ensure your representation at the Annual Meeting. However, if anyspecial meeting.

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WHERE YOU CAN FIND MORE INFORMATION

The Company files reports, proxy statements, and other information with the SEC. You can read and copy these reports, proxy statements, and other information concerning the Company at the SEC’s Public Reference Room at 450 Fifth Street, N. W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further business should properly come beforeinformation on the Annual Meeting, the persons named as proxies in the accompanying form will vote on such business in accordance with their best judgment.

ANNUAL REPORT

     A copy ofPublic Reference Room. You can review the Company’s Annual Report is being mailed to shareholders together with theseelectronically filed reports, proxy materials.

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SHAREHOLDER PROPOSALS FOR 2005 ANNUAL MEETING

Any proposal submitted by a shareholder for actionand information statements on the SEC’s Internet site at the Company’s 2005 Annual Meeting of Shareholders must be submitted in a letter to the Secretary of the Company and received by the Company by December 29, 2004 in order for such proposal to be included in the Company’s proxy statement and form of proxy relating to such meeting. The proposal must be in the form required by, and will be subject to the other requirements of, the applicable rules of the Securities and Exchange Commission. With respect to proposals submitted by a shareholder other than for inclusion in the Company’s proxy statement and form of proxy for the 2005 Annual Meeting, notice of any such proposal must be submitted in a letter to the Secretary of the Company and received by the Company by March 12, 2005. The notice must be in the form required by, and will be subject to the other requirements of, the Bylaws of the Company. Any proxies solicited by the Board of Directors for the 2005 Annual Meeting may confer discretionary authority to vote on any proposal notice of which is not timely received.http://www.sec.gov.


PLEASE SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ACCOMPANYING ENVELOPE AS PROMPTLY AS POSSIBLE. YOU MAY REVOKE THE PROXY BY GIVING WRITTEN NOTICE OF REVOCATION TO THE COMPANY PRIOR TO THE SPECIAL MEETING, BY EXECUTING A LATER DATED PROXY AND DELIVERING IT TO COMPANY’S CORPORATE SECRETARY PRIOR TO THE SPECIAL MEETING OR BY ATTENDING THE SPECIAL MEETING AND VOTING IN PERSON.
 
By Order of the Board of Directors,
Stephen R. Drake,
Secretary

David Walker
Chairman
Dated: April 12, 2004

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ANNEX A

CHARTER

October __, 2007

22
MEDICAL DISCOVERIES, INC.

1338 S. FOOTHILL DRIVE #266
SALT LAKE CITY, UTAH 84108

PROXY FOR THE SPECIAL MEETING OF THESHAREHOLDERS
AUDIT COMMITTEE OFTO BE HELD OCTOBER 30, 2007.

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF
MEDICAL DISCOVERIES, INC.

PURPOSE

The primary functionundersigned, having received notice of the Audit Committee (the “Committee”) is to assist the BoardSpecial Meeting of DirectorsShareholders of Medical Discoveries, Inc., (the “Corporation”) in fulfilling its oversight responsibilities with respect to (i) the financial reports and other financial information provided by the Corporation to its shareholders and others, (ii) the Corporation’s system of internal control, and (iii) the Corporation’s audit, accounting, and financial reporting processes generally.

     In particular, and without limiting the generality of the foregoing, a purpose of the Committee is to undertake the duties of an audit committee described in applicable rules of the Securities and Exchange Commission (the “Commission”) and any other similar rules of any securities exchange or trading facility to which the Corporation may become subject.

     In carrying out its purpose, the Committee shall (i) serve as an independent and objective monitor of the performance of the Corporation’s financial reporting process and system of internal control, (ii) review and appraise the audit efforts of the Corporation’s independent accountants and internal accounting and finance department, and (iii) provide for open, ongoing communication among the independent accountants, financial and senior management and the Board of Directors concerning the Corporation’s financial condition and results of operations.

COMPOSITION

     The Committee shall be comprised of two or more directors, as determined by the Board of Directors. The members of the Committee shall be appointed annually by the Board of Directors. Each member shall meet the applicable independence and experience requirements of the NASD, and at least one member of the Committee shall have accounting or related financial management expertise. Except as otherwise expressly provided herein, a majority of the Committee shall constitute a quorum and shall be empowered to conduct any business that the Committee is empowered to conduct. One member of the Committee shall be designated the Chair, provided, however, that, in the absence of the designated Chair, another member of the Committee shall be designated by the members present, in person or by conference telephone call, and shall serve as Chair.

MEETINGS

     The Committee shall meet at least four times annually, or more frequently as circumstances dictate. The Committee shall meet at least annually, and more often as warranted, with the independent accountants to discuss any matters that the Committee or the auditors believes should be discussed privately. The Committee shall maintain a high degree of independence both in establishing its agenda and directly accessing various members of management. The Committee shall meet annually with management regarding their systems of internal control, results of audits, and accuracy of financial reporting. All such meetings may be held in person or, at the option of the Chair, by conference telephone call or any combination of the above. If any participant in any such meeting will participate by conference telephone call, such participant shall, whenever reasonably possible, be furnished with copies of financial statements, reports or other significant documents to be discussed at the meeting so as to permit such participant to engage in discussions of the subject matter of the meetings in all material respects as if such participant had attended in person; provided, however, that written or other materials generated at the meeting may, at the option of the Chair, be described to a participant by

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conference telephone call if, as a practical matter, such materials cannot be concurrently electronically transmitted to such participant.

RESPONSIBILITIES AND DUTIES

     The Committee’s responsibility is oversight, and it recognizes that the Corporation’s management is responsible for preparing the Corporation’s financial statements. Additionally, the Committee recognizes that financial management, as well as the independent accountants, have more knowledge and more detailed information about the Corporation than do the members of the Committee. Consequently, in carrying out its oversight responsibilities the Committee is not providing any expert or special assurance as to the Corporation’s financial statements or any professional certification as to the independent accountants’ work.

     The following functions shall be the common recurring activities of the Committee in carrying out its oversight responsibility. In particular, and without limiting the generality of the foregoing, the Committee shall, to the extent it may reasonably do so, undertake the responsibilities and duties prescribed by the NASD, the Commission or other similar regulatory bodies having jurisdiction over the financial affairs of the Corporation and the following list of functions shall be deemed to include such responsibilities and duties, as they may be promulgated from time to time, as if they were specifically listed below. The functions listed below are set forth as a guide with the understanding that the Committee may diverge from this guide as appropriate in the circumstances.

• Review with a representative of financial management and the independent accountants the financial information contained in the Corporation’s Quarterly Report on Form 10-Q prior to its filing, the Corporation’s earnings announcements prior to release, and the results of the independent accountants’ review of Interim Financial Information pursuant to Statement of Accounting Standards (SAS) 71. The Chair may represent the entire Committee, either in person or by telephone conference call, for purposes of this review.
• Review with management and the independent accountants following the completion of the annual audit of the Corporation’s consolidated financial statements included in the Annual Report on Form 10-K for the last fiscal year, and prior to its filing:

     (1) the Corporation’s annual consolidated financial statements and related footnotes;
     (2) the independent accountants’ audit of the consolidated financial statements and their report;
     (3) any significant changes required in the independent accountants’ examination plan;
     (4) any serious difficulties or disputes with management encountered during the course of the audit; and
     (5) other matters related to the conduct of the audit which are to be communicated to the Committee under generally accepted auditing standards including discussions relating to the independent accountants’ judgments about such matters as the quality, not just the acceptability, of the Corporation’s accounting practices and other items set forth in SAS 61 (Communication with Audit Committees) or other such auditing standards that may in time modify, supplement or replace SAS 61.

• On an annual basis, the Committee should ensure receipt of, and review with the independent accountants, a written statement required by Independence Standards Board (ISB) Standard No. 1, as may be modified or supplemented. The Committee will actively engage the independent accountants in a dialogue regarding any disclosed relationships or services that may impact their objectivity and independence. The Committee will recommend that the Board of Directors take appropriate action on any disclosed relationships that may reasonably be thought to bear on the independence of the accountants and satisfy itself that the Corporation has engaged independent accountants as required by the Securities Acts administered by the Commission.

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• The Committee will have prepared and review the Audit Committee Report for inclusion in the proxy statement for the annual shareholders’ meeting. The Audit Committee Report must state whether the Committee:

     (1) has reviewed and discussed the audited consolidated financial statements with management;
     (2) has discussed with the independent accountants the matters required to be discussed by SAS 61, as may be modified, supplemented or replaced; and
     (3) has received the written disclosures from the independent accountants regarding the independent accountants’ independence required by ISB Standard No. 1, as may be modified or supplemented, and has discussed with the accountants their independence; and
     (4) has recommended to the Board of Directors, based on the review and discussions referred to in above items (1) through (3), that the Corporation’s audited consolidated financial statements be included in the Annual Report on Form 10-K for the last fiscal year for filing with the Commission.

• The Committee and Board of Directors are responsible for the selection, evaluation and, where appropriate, replacement of the independent accountants. Selection for the ensuing calendar year will be submitted to the shareholders for ratification or rejection at the annual meeting of shareholders. Consistent with these responsibilities, it is recognized that the independent accountants are ultimately accountable to the Board of Directors and Committee.
• Review and reassess the adequacy of the Audit Committee Charter on an annual basis. The charter will be included as an appendix to the annual shareholders’ meeting proxy statement triennially or in the next annual shareholders’ meeting proxy statement following any significant amendment to the charter.
• In consultation with the independent accountants and the internal auditors, regularly review the integrity of the Corporation’s financial reporting processes and system of internal control.
• Review and concur in the appointment, replacement, reassignment or dismissal of the internal auditors. Confirm and assure the objectivity of the internal auditors.
• Review the performance of the internal accounting and finance department, including the objectivity and authority of its reporting obligations, the proposed audit plans for the coming year, and the coordination of such plans with the independent accountants.
• Review from time to time as reasonably necessary the Corporation’s policies and procedures with respect to officers’ expense accounts and perquisites, including their use of corporate assets, and consider the results of any review of these areas by the internal accounting and finance department or the independent accountants.
• Review legal and regulatory matters that may have a material impact on the Corporation’s consolidated financial statements, related compliance policies and programs, and reports received from regulators.

OTHER POWERS AND RESPONSIBILITIES

     In addition to the activities described above, the Committee will perform such other functions as necessary or appropriate under law, the Corporation’s Articles of Incorporation or Bylaws, and the resolutions and other directives of the Board of Directors.

     The Committee shall have the power to conduct or authorize investigations into any matters within its scope of responsibilities and shall be empowered to retain independent counsel, accountants, or others to assist it in the conduct of any investigation.

     The duties and responsibilities of a member of the Committee are in addition to those duties generally pertaining to a member of the Board of Directors.

     The Committee will report its actions to the Board of Directors with such recommendations as the Committee may deem appropriate.

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ANNEX B

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF
MEDICAL DISCOVERIES, INC.
1.Name

The name of the corporation is Medical Discoveries, Inc. (the “Corporation”).

2.Purposes and Powers

The Corporation is organized for any and all lawful purposes for which a corporation may be organized under the Utah Revised Business Corporation Act (the “Act”).

3.Authorized Shares

     The aggregate number of shares of capital stock that the Corporation is authorized to issue is two hundred fifty million (250,000,000), of which two hundred million (200,000,000) are shares of common stock, no par value (the “Common Stock”), and fifty million (50,000,000) are shares of preferred stock, no par value (the “Preferred Stock”). The designations, preferences, limitations and relative rights of each class of stock are as follows:

(a) Preferred Stock. The Preferred Stock may be issued in one or more series, from time to time, with each such series to have such designations, preferences, limitations and relative rights as shall be stated and expressed in an amendment to these Articles of Incorporation providing for the issue of such series. The board of directors of the Corporation is hereby expressly vested with authority to amend these Articles of Incorporation, without the prior approval of the Corporation’s shareholders, to: (x) create one or more series of the Preferred Stock, fix the number of shares of each such series, and designate and determine, in whole or part, the preferences, limitations, and relative rights of each series of the Preferred Stock; (y) alter or revoke the designations, preferences, limitations and relative rights of any wholly unissued series of the Preferred Stock; or (z) increase or decrease the number of shares constituting any series of the Preferred Stock the number of shares of which was originally fixed by the board of directors, either before or after the issuance of shares of the series; provided, however, that the number may not be decreased below the number of shares of such series then outstanding, or increased above the total number of authorized shares of the Preferred Stock available for designation as a part of such series. Without limiting the foregoing, the authority of the board of directors with respect to each such series shall include, but not be limited to, the determination or fixing of the following:

     (i) The distinctive designation and number of shares comprising such series, which number may (except where otherwise provided by the board of directors in creating such series) be increased or decreased (but not below the number of shares then outstanding) from time to time by like action of the board of directors;
     (ii) The dividend rate of such series, the conditions and times upon which such dividends shall be payable, the relation which such dividends shall bear to the dividends payable on any other class or classes of stock or series thereof, or on the other series of the same class, and whether dividends shall be cumulative or noncumulative;
     (iii) The conditions upon which the shares of such series shall be subject to redemption by the Corporation and the times, prices and other terms and provisions upon which the shares of the series may be redeemed;
     (iv) Whether or not the shares of the series shall be subject to the operation of retirement or sinking fund provisions to be applied to the purchase or redemption of such shares and, if such

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retirement or sinking fund be established, the annual amount thereof and the terms and provisions relative to the operation thereof;
     (v) Whether or not the shares of the series shall be convertible into or exchangeable for shares of any other class or classes, with or without par value, or of any other series of the same class and, if provision is made for conversion or exchange, the times, prices, rates, adjustments and other terms and conditions of such conversion or exchange;
     (vi) Whether or not the shares of the series shall have voting rights, in addition to the voting rights provided by law, and, if so, subject to the limitations hereinafter set forth, the terms of such voting rights;
     (vii) The rights of the shares of the series in the event of voluntary or involuntary liquidation, dissolution or upon distribution of assets of the Corporation; and
     (viii) Any other designations, preferences, limitations and relative rights of the shares of such series, as the board of directors may deem advisable.

(b) Common Stock

(i) Dissolution

     (A) In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, after any preferential amount with respect to the Preferred Stock has been paid or reserved, the holders of Common Stock and the holders of any series of Preferred Stock entitled to participate in the distribution of assets are entitled to receive the net assets of the Corporation.

(ii) Voting

     (A) At every meeting of the shareholders, every holder of shares of the Common Stock shall be entitled to one vote in person or by proxy for each share of such Common Stock standing in his name on the stock transfer records of the Corporation.
     (B) No shareholder shall have the right to cumulate votes in the election of directors.

(iii) Preemptive Rights. No holder of shares of the Common Stock of the Corporation shall, as such holder, be entitled as of right to subscribe for, purchase or receive any part of any new or additional issue of stock of any class, whether now or hereafter authorized, or of bonds, debentures or other securities convertible into or exchangeable for stock, but all such additional shares of stock of any class, or bonds, debentures or other securities convertible into or exchangeable for stock, may be issued and disposed of by the board of directors on such terms and for such consideration, so far as may be permitted by law, and to such persons, as the board of directors in its absolute discretion may deem advisable.

4.Officer and Director Liability

     (a) The Corporation will indemnify and advance expenses to its directors, officers, employees, fiduciaries or agents and to any person who is or was serving at the Corporation’s request as a director, officer, partner, trustee, employee, fiduciary or agent of another domestic or foreign corporation or other person or of an employee benefit plan (and their respective estates or personal representatives) to the fullest extent as from time to time permitted by Utah law.

     (b) The personal liability of the directors and officers of the Corporation to the Corporation or its shareholders, or to any third person, will be eliminated or limited to the fullest extent as from time to time permitted by Utah law.

     (c) Any repeal or modification of this Article 4 by the shareholders of the Corporation will not adversely affect any right or protection of any person existing at the time of such repeal or modification.

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5.Amended and Restated Articles

     These Amended and Restated Articles of Incorporation supersede, replace, and restate in their entirety the original Articles of Incorporation of the Corporation and any amendments thereto. Any reference herein to Articles of Incorporation will be deemed a reference to these Amended and Restated Articles of Incorporation.

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ANNEX C

MEDICAL DISCOVERIES, INC.

2002 STOCK INCENTIVE PLAN

1.     Purpose. The purpose of this 2002 Stock Incentive Plan (the “Plan”) is to enable Medical Discoveries, Inc. (the “Company”) to attractbe held at the Company's offices located at 6033 W. Century Blvd., Suite 1090 Los Angeles, California 90045 10:00 A.M. local time on Tuesday, October 30, 2007, hereby designates and retainappoints Richard Palmer and Martin Schroeder, and each of them, as attorney and proxy for the servicesundersigned, with full power of (i) selected employees, officers and directorssubstitution, to vote all shares of common stock of Medical Discoveries, Inc. that the Companyundersigned is entitled to vote at such meeting or at any parent or subsidiary ofadjournment thereof, with all the Company and (ii) selected nonemployee agents, consultants, advisers and independent contractors ofpowers the Company or any parent or subsidiary of the Company. For purposes of this Plan, a person is consideredundersigned would possess if personally present, such proxies being directed to be employed by or in the service of the Company if the person is employed by or in the service of any entity (the “Employer”) that is either the Company or a parent or subsidiary of the Company.

2.     Shares Subject to the Plan. Subject to adjustmentvote as providedspecified below and in Section 10,their discretion on any other business that may properly come before the shares tomeeting.


This proxy when properly executed will be offered undervoted in the Plan shall consist of Common Stockmanner directed herein by the undersigned shareholder. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1.

PROPOSAL 1. To approve the sale of the Company, and the total numberSaveCream assets of shares of Common Stock that may be issued under the Plan shall be 20,000,000 shares. IfMedical Discoveries, Inc. to Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an option or Performance-Based Award granted under the Plan expires, terminates or is canceled, the unissued shares subject to that option or Performance-Based Award shall again be available under the Plan. If shares awarded as a bonusAustrian company (“Eucodis”), pursuant to Section 7 or sold pursuantthe terms of that certain sale and purchase agreement, as amendmed, by and among Medical Discoveries, Inc, MDI Oncology, Inc., our wholly-owned subsidiary, and Eucodis.
¨ FOR
¨ AGAINST
¨ ABSTAIN
2.In their discretion the proxies are authorized to vote upon such other business as may properly come before the meeting.

The undersigned reserves the right to Section 8 under the Plan are forfeited to or repurchased by the Company, the number of shares forfeited or repurchased shall again be available under the Plan.

3.     Effective Date and Duration of Plan.

3.1     Effective Date. The Plan shall become effective as of July 11, 2002. No Incentive Stock Option (as defined in Section 5 below) granted under the Plan shall become exercisable and no payments shall be made under a Performance-Based Award, however, until the Plan is approved by the affirmative vote of the holders of a majority of the shares of Common Stock represented at a shareholders meeting at which a quorum is present or by means of unanimous consent resolutions, and the exercise of any Incentive Stock Options granted under the Plan before approval shall be conditioned on and subject to that approval. Subject torevoke this limitation, options and Performance-Based Awards may be granted and shares may be awarded as bonuses or sold under the PlanProxy at any time afterprior to the effective date and before termination ofProxy being voted at the Plan.

3.2     Duration.Meeting. The Plan shall continue in effect until all shares available for issuance underProxy may be revoked by delivering a signed revocation to the Plan have been issued and all restrictions on the shares have lapsed. The Board of Directors may suspend or terminate the PlanCompany at any time except with respect to options, Performance-Based Awards and shares subject to restrictions then outstanding under the Plan. Termination shall not affect any outstanding options, any outstanding Performance-Based Awards or any right of the Company to repurchase shares or the forfeitability of shares issued under the Plan.

4.     Administration.

4.1     Board of Directors. The Plan shall be administered by the Board of Directors of the Company, which shall determine and designate the individuals to whom awards shall be made, the amount of the awards and the other terms and conditions of the awards. Subjectprior to the provisions ofMeeting, by submitting a later-dated Proxy, or by attending the Plan,Meeting in person and casting a ballot. The undersigned hereby revokes any proxy previously given to vote such shares at the Board of Directors may adopt and amend rules and regulations relating to administration of the Plan, advance the lapse of any waiting period, accelerate any exercise date, waive or modify any restriction applicable to shares (except those restrictions imposed by law) and make all other determinations in the judgment of the Board of Directors necessary or desirable for the administration of the Plan. The interpretation and construction of the provisions of the Plan and related agreements by the Board of Directors shall be final and conclusive. The Board of Directors may correct any defect or supply any omission or reconcile any inconsistency in the Plan or in any related agreement in the manner and to the extent it deems expedient to carry the Plan into effect, and the Board of Directors shall be the sole and final judge of such expediency.

4.2     Committee. The Board of Directors may delegate to any committee of the Board of Directors (the “Committee”) any or all authority for administration of the Plan. If authority is delegated to the Committee, all references to the Board of Directors in the Plan shall mean and relate to the Committee, except (i) as

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Meeting.

otherwise provided by the Board of Directors and (ii) that only the Board of Directors may amend or terminate the Plan as provided in Sections 3 and 11.

5.     Types of Awards, Eligibility, Limitations. The Board of Directors may, from time to time, take the following actions, separately or in combination, under the Plan: (i) grant Incentive Stock Options, as defined in Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), as provided in Sections 6.1 and 6.2; (ii) grant options other than Incentive Stock Options (“Non-Statutory Stock Options”) as provided in Sections 6.1 and 6.3; (iii) award stock bonuses as provided in Section 7; (iv) sell shares subject to restrictions as provided in Section 8; and (v) award Performance-Based Awards as provided in Section 9. Awards may be made to employees, including employees who are officers or directors, and to other individuals described in Section 1 selected by the Board of Directors; provided, however, that only employees of the Company or any parent or subsidiary of the Company (as defined in subSections 424(e) and 424(f) of the Code) are eligible to receive Incentive Stock Options under the Plan. The Board of Directors shall select the individuals to whom awards shall be made and shall specify the action taken with respect to each individual to whom an award is made. At the discretion of the Board of Directors, an individual may be given an election to surrender an award in exchange for the grant of a new award.

6.     Option Grants.

6.1     General Rules Relating to Options.

Signature
  6.1-1     Terms of Grant. The Board of Directors may grant options under the Plan. With respect to each option grant, the Board of Directors shall determine the number of shares subject to the option, the exercise price, the period of the option, the time or times at which the option may be exercised and whether the option is an Incentive Stock Option or a Non-Statutory Stock Option. At the time of the grant of an option or at any time thereafter, the Board of Directors may provide that an optionee who exercised an option with Common Stock of the Company shall automatically receive a new option to purchase additional shares equal to the number of shares surrendered and may specify the terms and conditions of such new options.
Date: 
  6.1-2     Exercise of Options. Except as provided in Section 6.1-4 or as determined by the Board of Directors, no option granted under the Plan may be exercised unless at the time of exercise the optionee is employed by or in the service of the Company and shall have been so employed or provided such service continuously since the date the option was granted. Except as provided in Sections 6.1-4 and 10, options granted under the Plan may be exercised from time to time over the period stated in each option in amounts and at times prescribed by the Board of Directors, provided that options may not be exercised for fractional shares. Unless otherwise determined by the Board of Directors, if an optionee does not exercise an option in any one year for the full number of shares to which the optionee is entitled in that year, the optionee’s rights shall be cumulative and the optionee may purchase those shares in any subsequent year during the term of the option.
Signature
Date: 
  6.1-3     Nontransferability. Each Incentive Stock Option and, unless otherwise determined by the Board of Directors, each other option granted under the Plan by its terms (i) shall be nonassignable and nontransferable by the optionee, either voluntarily or by operation of law, except by will or by the laws of descent and distribution of the state or country of the optionee’s domicile at the time of death, and (ii) during the optionee’s lifetime, shall be exercisable only by the optionee.
6.1-4     Termination of EmploymentNOTE: Please sign exactly as name appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, trustee, guardian or Service.
6.1-4(a)     General Rule. Unless otherwise determined by the Board of Directors, if an optionee’s employment or service with the Company terminates for any reason other than because of total disability or deathcorporate officer, please give full title as provided in Sections 6.1-4(b) and (c), his or her option may be exercised at any time before the expiration date of the option or the expiration of 30 days after the date of termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of termination.such.

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6.1-4(b)     Termination Because of Total Disability. Unless otherwise determined by the Board of Directors, if an optionee’s employment or service with the Company terminates because of total disability, his or her option may be exercised at any time before the expiration date of the option or before the date 12 months after the date of termination, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of termination. The term “total disability” means a medically determinable mental or physical impairment that is expected to result in death or has lasted or is expected to last for a continuous period of 12 months or more and that, in the opinion of the Company and two independent physicians, causes the optionee to be unable to perform his or her duties as an employee, director, officer or consultant of the Employer and unable to be engaged in any substantial gainful activity. Total disability shall be deemed to have occurred on the first day after the two independent physicians have furnished their written opinion of total disability to the Company and the Company has reached an opinion of total disability.
6.1-4(c)     Termination Because of Death. Unless otherwise determined by the Board of Directors, if an optionee dies while employed by or providing service to the Company, his or her option may be exercised at any time before the expiration date of the option or before the date 12 months after the date of death, whichever is the shorter period, but only if and to the extent the optionee was entitled to exercise the option at the date of death and only by the person or persons to whom the optionee’s rights under the option shall pass by the optionee’s will or by the laws of descent and distribution of the state or country of domicile at the time of death.
6.1-4(d)     Amendment of Exercise Period Applicable to Termination. The Board of Directors may at any time extend the 30-day and 12-month exercise periods any length of time not longer than the original expiration date of the option. The Board of Directors may at any time increase the portion of an option that is exercisable, subject to terms and conditions determined by the Board of Directors.
6.1-4(e)     Failure to Exercise Option. To the extent that the option of any deceased optionee or any optionee whose employment or service terminates is not exercised within the applicable period, all further rights to purchase shares pursuant to the option shall cease and terminate.
6.1-4(f)     Leave of Absence. Absence on leave approved by the Employer or on account of illness or disability shall not be deemed a termination or interruption of employment or service. Unless otherwise determined by the Board of Directors, vesting of options shall continue during a medical, family or military leave of absence, whether paid or unpaid, and vesting of options shall be suspended during any other unpaid leave of absence.
6.1-5     Purchase of Shares.
6.1-5(a)     Notice of Exercise. Unless the Board of Directors determines otherwise, shares may be acquired pursuant to an option granted under the Plan only upon the Company’s receipt of written notice from the optionee of the optionee’s binding commitment to purchase shares, specifying the number of shares the optionee desires to purchase under the option and the date on which the optionee agrees to complete the transaction, and, if required to comply with the Securities Act of 1933, containing a representation that it is the optionee’s intention to acquire the shares for investment and not with a view to distribution.
6.1-5(b)     Payment. Unless the Board of Directors determines otherwise, on or before the date specified for completion of the purchase of shares pursuant to an option exercise, the optionee must pay the Company the full purchase price of those shares in cash or by check or, with the consent of the Board of Directors, in whole or in part, in Common Stock of the Company valued at fair market value, restricted stock or other contingent awards denominated in either stock or cash, promissory notes and other forms of consideration. Unless otherwise determined by the Board of Directors, any Common Stock provided in payment of the purchase price must have been previously acquired and held by the optionee for at least six months. The fair market value of Common Stock provided in payment of the purchase price shall be the closing price of the Common Stock last reported before the time payment in Common Stock is made or, if earlier, committed to be made, if the Common Stock is publicly traded, or another value of the

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APPENDIX A

SALE AND PURCHASE AGREEMENT

AMONG

MEDICAL DISCOVERIES INC.

AND

MDI ONCOLOGY, INC.

AND

EUCODIS PHARMACEUTICALS FORSCHUNGS-und ENTWICKLUNGS GmbH


Dated
July 6, 2007

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Common Stock as specified by the Board of Directors. No shares shall be issued until full payment for the shares has been made, including all amounts owed for tax withholding. With the consent of the Board of Directors, an optionee may request the Company to apply automatically the shares to be received upon the exercise of a portion of a stock option (even though stock certificates have not yet been issued) to satisfy the purchase price for additional portions of the option.
6.1-5(c)     Tax Withholding. Each optionee who has exercised an option shall, immediately upon notification of the amount due, if any, pay to the Company in cash or by check amounts necessary to satisfy any applicable federal, state and local tax withholding requirements. If additional withholding is or becomes required (as a result of exercise of an option or as a result of disposition of shares acquired pursuant to exercise of an option) beyond any amount deposited before delivery of the certificates, the optionee shall pay such amount, in cash or by check, to the Company on demand. If the optionee fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the optionee, including salary, subject to applicable law. With the consent of the Board of Directors, an optionee may satisfy this obligation, in whole or in part, by instructing the Company to withhold from the shares to be issued upon exercise or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so withheld or delivered shall not exceed the minimum amount necessary to satisfy the required withholding obligation.
6.1-5(d)     Reduction of Reserved Shares. Upon the exercise of an option, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued upon exercise of the option (less the number of any shares surrendered in payment for the exercise price or withheld to satisfy withholding requirements).
6.1-6     Limitations on Grants to Non-Exempt Employees. Unless otherwise determined by the Board of Directors, if an employee of the Company or any parent or subsidiary of the Company is a non-exempt employee subject to the overtime compensation provisions of Section 7 of the Fair Labor Standards Act (the “FLSA”), any option granted to that employee shall be subject to the following restrictions: (i) the option price shall be at least 85 percent of the fair market value, as described in Section 6.2-4, of the Common Stock subject to the option on the date it is granted; and (ii) the option shall not be exercisable until at least six months after the date it is granted; provided, however, that this six-month restriction on exercisability will cease to apply if the employee dies, becomes disabled or retires, there is a change in ownership of the Company, or in other circumstances permitted by regulation, all as prescribed in Section 7(e)(8)(B) of the FLSA.
6.2     Incentive Stock Options. Incentive Stock Options shall be subject to the following additional terms and conditions:

6.2-1     Limitation on Amount of Grants. If the aggregate fair market value of stock (determined as of the date the option is granted) for which Incentive Stock Options granted under this Plan (and any other stock incentive plan of the Company or its parent or subsidiary corporations, as defined in subSections 424(e) and 424(f) of the Code) are exercisable for the first time by an employee during any calendar year exceeds $100,000, the portion of the option or options not exceeding $100,000, to the extent of whole shares, will be treated as an Incentive Stock Option and the remaining portion of the option or options will be treated as a Non-Statutory Stock Option. The preceding sentence will be applied by taking options into account in the order in which they were granted. If, under the $100,000 limitation, a portion of an option is treated as an Incentive Stock Option and the remaining portion of the option is treated as a Non-Statutory Stock Option, unless the optionee designates otherwise at the time of exercise, the optionee’s exercise of all or a portion of the option will be treated as the exercise of the Incentive Stock Option portion of the option to the full extent permitted under the $100,000 limitation. If an optionee exercises an option that is treated as in part an Incentive Stock Option and in part a Non-Statutory Stock Option, the Company will designate the portion of the stock acquired pursuant to the exercise of the Incentive Stock Option portion as Incentive Stock Option stock by issuing a separate certificate for that portion of the stock and identifying the certificate as Incentive Stock Option stock in its stock records.

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6.2-2     Limitations on Grants to 10 percent Shareholders. An Incentive Stock Option may be granted under the Plan to an employee possessing more than 10 percent of the total combined voting power of all classes of stock of the Company or any parent or subsidiary (as defined in subSections 424(e) and 424(f) of the Code) only if the option price is at least 110 percent of the fair market value, as described in Section 6.2-4, of the Common Stock subject to the option on the date it is granted and the option by its terms is not exercisable after the expiration of five years from the date it is granted.
6.2-3     Duration of Options. Subject to Sections 6.1-2, 6.1-4 and 6.2-2, Incentive Stock Options granted under the Plan shall continue in effect for the period fixed by the Board of Directors, except that by its terms no Incentive Stock Option shall be exercisable after the expiration of 10 years from the date it is granted.
6.2-4     Option Price. The option price per share shall be determined by the Board of Directors at the time of grant. Except as provided in Section 6.2-2, the option price shall not be less than 100 percent of the fair market value of the Common Stock covered by the Incentive Stock Option at the date the option is granted. The fair market value shall be the closing price of the Common Stock last reported before the time the option is granted, if the stock is publicly traded, or another value of the Common Stock as specified by the Board of Directors.
6.2-5     Limitation on Time of Grant. No Incentive Stock Option shall be granted on or after the tenth anniversary of the last action by the Board of Directors adopting the Plan or approving an increase in the number of shares available for issuance under the Plan, which action was subsequently approved within 12 months by the shareholders.
6.2-6 Early Dispositions. If within two years after an Incentive Stock Option is granted or within 12 months after an Incentive Stock Option is exercised, the optionee sells or otherwise disposes of Common Stock acquired on exercise of the Option, the optionee shall within 30 days of the sale or disposition notify the Company in writing of (i) the date of the sale or disposition, (ii) the amount realized on the sale or disposition and (iii) the nature of the disposition (e.g., sale, gift, etc.).

6.3 Non-Statutory Stock Options. Non-Statutory Stock Options shall be subject to the following terms and conditions, in addition to those set forth in Section 6.1 above:

6.3-1 Option Price. The option price for Non-Statutory Stock Options shall be determined by the Board of Directors at the time of grant and may be any amount determined by the Board of Directors.
6.3-2 Duration of Options. Non-Statutory Stock Options granted under the Plan shall continue in effect for the period fixed by the Board of Directors.


7.     Stock Bonuses. The BoardSALE AND ASSET PURCHASE AGREEMENT
This Sale and Asset Purchase Agreement (this “Agreement”, which term is intended to include all exhibits, schedules and other documents attached hereto or referred to herein) is made and entered into on July 6, 2007 (the “Effective Date”) by and among Medical Discoveries, Inc., a Utah corporation, whose principal place of Directors may award sharesbusiness is 1338 South Foothill Drive, #266, Salt Lake City, Utah 84108 (“MDI”), MDI Oncology, Inc., a Delaware corporation and wholly-owned subsidiary of MDI, whose principal place of business is 1338 South Foothill Drive, #266, Salt Lake City, Utah 84108 (“MDI Oncology” and, together with MDI, the “MDI Parties”) and Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH, an Austrian company whose principal place of business is Brunnerstrasse 59, 1230, Vienna, Austria (“EUCODIS”; collectively, the MDI Parties and EUCODIS are referred to as the “Parties”).
RECITALS
MDI purchased substantially all of the intellectual property assets of Savetherapeutics AG a German company in liquidation pursuant to an agreement with its liquidator dated March 11, 2005 (the “Savetherapeutics Contract”), as a result of which the MDI Parties own, among other things, patents, patent applications, pre-clinical study data and anecdotal clinical trial data concerning “SaveCream”, a developmental topical aromatase inhibitor cream (the “Product”).
MDI Oncology and EUCODIS entered into an agreement for the co-development and license of the Product as of July 29, 2006 (the “Co-Development Contract”).
On March 8, 2007, the Parties entered into a letter of intent for the acquisition by EUCODIS of all of the MDI Parties’ rights under the PlanSavetherapeutics Contract, and all intellectual property and other rights belonging to the MDI Parties, whether subsequently acquired or developed by or though the efforts of the MDI Parties or otherwise which are related to the Product.
NOW, THEREFORE, in consideration of the mutual covenants, agreements, representations and warranties herein, the Parties agree as stock bonuses. Shares awardedfollows:
ARTICLE 1
DEFINITIONS
For purposes of this Agreement, the following definitions shall apply unless specifically stated otherwise
1.1“Affiliate” shall mean, with respect to any Person, any other Person controlling, controlled by or under direct or indirect common control with such Person. A Person shall be deemed to control a corporation (or other entity) if such Person possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of such corporation (or other entity), whether through the ownership of voting securities, by contract or otherwise
1.2“Agreement” shall have the meaning set forth in the heading of this document.
1.3“Assigned Contracts” shall have the meaning set forth in Section 3.2(a) of this Agreement.
1.4“Closing” shall have the meaning set forth in Section 4.1(b).
1.5“Co-Development Contract” shall have the meaning set forth in the Recitals to this Agreement.
1.6“Commitment” shall have the meaning set forth in Section 4.1 of this Agreement.
1.7“Confidential Information” shall have the meaning set forth in Section 8.1 of this Agreement.
1.8“Creditor Indebtedness” shall have the meaning set forth in Section 3.1(a) of this Agreement.
Appendix D - 2
1.9 “Effective Date” shall have the meaning set forth in the heading of this Agreement.
1.10 “Encumbrance” shall mean any title defect, mortgage, assignment, pledge, hypothecation, security interest, lien, charge, option, claim of others or encumbrance of any kind.
1.11“Escrow Agent” shall mean the New York City law firm of Otterbourg, Steindler, Houston & Rosen, P.C.
1.12“EUCODIS” shall have the meaning set forth in the heading of this Agreement.
1.13“Excess Portion” shall have the meaning set forth in Section 3.1(b) of this Agreement.
1.14“MDI” shall have the meaning set forth in the heading of this Agreement.
1.15“MDI Creditor” shall have the meaning set forth in Section 3.1(a) of this Agreement.
1.16“MDI Oncology” shall have the meaning set forth in the heading of this Agreement.
1.17“MDI Parties” shall have the meaning set forth in the heading of this Agreement.
1.18“MDI Retained Creditors” shall have the meaning set forth in Section 6.1(s) of this Agreement.
1.19Parties” shall have the meaning set forth in the heading of this Agreement.
1.20“Patent Rights” shall mean all of the MDI Parties' right, title and interest in the patents and patent applications acquired under the Savetherapeutics Contract or in connection therewith, and any other patent and/or patent application pertaining to the Product, owned or in possession or control of or under contract for the MDI Parties, and any division, continuation, continuation-in-part, renewal, extension, reexamination or reissue of each such patent and any and all corresponding US and foreign counterpart patent applications or patents.
1.21“Product” shall have the meaning set forth in the Recitals to this Agreement.
1.22“Purchased Assets” shall have the meaning set forth in Section 2.1 of this Agreement.
1.23“Purchase Price” shall have the meaning set forth in Section 3.1 of this Agreement.
1.24“Person” shall mean any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture or other entity of any kind.
1.25“Savetherapeutics Contract” shall have the meaning set forth in the Recitals to this Agreement.
1.26“Schmidt Litigation” shall have the meaning set forth in Section 3.2(b) of this Agreement.
1.27“Transfer Documents” shall have the meaning set forth in Section 2.5 of this Agreement.
Appendix E - 3
ARTICLE 2
SALE, ASSIGNMENT AND TRANSFER OF PURCHASED ASSETS
2.1Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations and warranties of the Parties herein set forth, promptly following satisfaction of the conditions to the Closing set forth in Article 4 of this Agreement, the MDI Parties are selling, assigning, transferring, conveying and delivering, as a bonusthe case may be, to EUCODIS, and EUCODIS shall purchase and, as set forth in Article 3 of this Agreement, pay for, all of the MDI Parties’ rights, title and interests in and relating to the Product and the following related assets of the MDI Parties (collectively, the “Purchased Assets”):
(a)All of the intellectual property and all contractual and other rights, if any, acquired by the MDI Parties pursuant to the Savetherapeutics Contract;
(b)All of the rights of the MDI Parties under the Co-Development Contract, including without limitation the intellectual property and all contractual and other rights acquired by the MDI Parties pursuant to the Co-Development Contract;
(c)Any and all Patent Rights, inventions, discoveries, rights in confidential data (including know-how and trade secrets), manufacturing methods and processes, trademarks, trade names, brand names, logos, trade dress, copyrights and other intellectual property and goodwill associated with the Product, owned or in possession or control of or under contract to acquire by the MDI Parties, in each case whether registered or unregistered, and including without limitation all applications for and renewals or extensions of such rights, and all similar or equivalent rights or forms of protection;
(d)Any and all United States and foreign regulatory files and data relating to the Product in the possession or control of the MDI Parties, including without limitation marketing authorization procedures and preclinical and clinical studies; and,
(e)All rights of the MDI Parties under the Assigned Contracts.
2.2The Purchased Assets are being sold, assigned, transferred, conveyed and delivered to EUCODIS free of any and all liabilities, obligations and Encumbrances except only for those as may be described in reasonable detail in Exhibit 2.2 (to the extent that Exhibit 2.2 has been attached to this Agreement prior to the Effective Date).
2.3Upon the Closing, all of the Purchased Assets and all non-publicly available information relating thereto shall be considered to be Confidential Information belonging to EUCODIS, and the MDI Parties shall no longer have any rights thereto or therein.
2.4The MDI Parties shall be solely responsible for all sales, use, transfer, value added and other related taxes, if any, arising out of the sale by MDI Parties of the Purchased Assets to EUCODIS pursuant to this Agreement.
2.5Simultaneously with the execution and delivery of this Agreement by the Parties, the MDI Parties shall deliver to the Escrow Agent (in original, fully executed form) all assignments, bills of sale and other documents which are necessary, sufficient or reasonably desirable to effect the transfer of the Purchased Assets to EUCODIS, along with all other documents referred to in this Agreement as being delivered to EUCODIS on or prior to the Closing (collectively, the “Transfer Documents”). The Transfer Documents shall be held by the Escrow Agent for delivery as set forth in Article 4 of this Agreement.
Appendix E - 4
ARTICLE 3
PURCHASE PRICE; TIMING OF PAYMENTS; DISCHARGE OF CERTAIN DEBTS
3.1The purchase price for the Purchased Assets (the “Purchase Price”) shall consist of the following:
(a)Relief of the MDI Parties from an aggregate of two million four hundred sixty-nine thousand seventy-two Euros (2,469,072€) of indebtedness, which is comprised of the following amounts (each a “Creditor Indebtedness”) owed to the following creditors of the MDI Parties (each an “MDI Creditor”):
(i)1,850,000 € owed to the Liquidator of Savetherapeutics AG;
(ii)205,000 € owed to Professor Wieland;
(iii)188,197€ owed to Mayer, Brown, Rowe and Maw, LLP;
(iv)127,875 € owed to Epstein, Becker and Green, LLP;
(v)46,000 € owed to H3 Pharma;
(vi)31,000 € owed to Millbank Tweed (Bob Koch); and
(vii)21,000 € owed to Marc Kessemeier
(b)An aggregate of one million five hundred thirty-eight thousand four hundred and sixty-two Euros (1,538,462€) (herein, the “Excess Portion”).
(c)On or before September 30, 2007, EUCODIS shall pay the Excess Portion to the MDI Parties or to another party as the MDI Parties may so direct.
(d)MDI Parties shall be responsible to cause the transfer of the Purchased Assets to EUCODIS by the Closing.
(e) On Closing, EUCODIS shall deliver to the MDI Parties, in form and substance reasonably satisfactory to the MDI Parties, releases from each of the MDI Creditors forever discharging and releasing the MDI Parties from any liability for any of their respective Creditor Indebtedness.
3.2In addition, on the Closing, EUCODIS shall assume and shall be financially responsible for:
(a)The financial obligations of the MDI Parties arising under the assigned contracts described in reasonable detail in Exhibit 3.2(a) (to the extent that Exhibit 3.2(a) has been attached to this Agreement prior to the Effective Date); provided, however, that the benefits of each of such assigned contracts (the “Assigned Contracts”) has been validly assigned to EUCODIS in accordance with the terms thereof.
(b)All costs accruing after February 28, 2007 which were necessarily incurred by or on behalf of the MDI Parties to maintain any of the Purchased Assets, including but not limited to: (i) the costs to file and maintain, throughout the world, any of the Patent Rights, and (ii) the legal fees and related legal costs incurred in connection with the legal proceedings in Hamburg, Germany to obtain certain rights belonging to the MDI Parties by co-inventor Dr. Alfred Schmidt (the “Schmidt Litigation”); provided, however, that a reasonably detailed description of such costs are set forth in Exhibit 3.2(b) (to the extent that Exhibit 3.2(b) has been attached to this Agreement prior to the Effective Date) and that such costs are backed up by duly rendered invoices (or receipts) and the amounts set forth thereon for any costs do no exceed the amounts listed on Exhibit 3.2(b) by more than ten percent (10%). After the Effective Date, the MDI Parties shall continue to vigorously prosecute the Schmidt action (which shall be conducted at the direction, and under the control, of EUCODIS) at the sole expense of EUCODIS until such time, if any, as EUCODIS can be substituted for the MDI Parties in such action. For purposes of clarification, the reasonably incurred out-of-pocket expenses of the MDI Parties and their representatives (including legal fees and costs), in furnishing such assistance as may be reasonably requested by EUCODIS, shall be at the sole expense of EUCODIS.
Appendix E - 5
ARTICLE 4
CONDITIONS TO THE CLOSING
4.1. The Closing shall occur if the following conditions are met:
(a)The MDI Parties shall have delivered to the Escrow Agent all of the Transfer Documents,
(b)The Escrow Agent shall not deliver the Transfer Documents to EUCODIS until such time as EUCODIS has delivered to the MDI Parties (i) the Excess Portion of the Purchase Price without any off set or deduction, and (ii) releases from each of the MDI Creditors in which such MDI Creditors forever discharges and releases the MDI Parties from any liability for any of their respective Creditor Indebtedness, or paid in full the amounts set forth in Section 3.1(a) to the MDI Parties for the account of such MDI Creditor. 
4.2In the event that the Closing does not occur by September 30, 2007, and unless the parties have otherwise agreed in writing, the Escrow Agent shall deliver the Transfer Documents to the MDI Parties or to whomever as the MDI Parties may so direct.

4.3Irrespective of any provision of this Agreement to the contrary, the obligation of EUCODIS to purchase the Purchased Assets is subject to the terms, conditions and restrictions determined byfulfillment, at or before the BoardClosing, of Directors. The restrictions may include restrictions concerning transferability and forfeitureeach of the shares awarded, together withfollowing conditions (all or any other restrictions determined by the Board of Directors. The Board of Directorswhich may require the recipient to sign an agreement as a condition of the award, but may not require the recipient to pay any monetary consideration other than amounts necessary to satisfy tax withholding requirements. The agreement may contain any terms, conditions, restrictions, representations and warranties required by the Board of Directors. The certificates representing the shares awarded shall bear any legends required by the Board of Directors. The Company may require any recipient of a stock bonus to pay to the Company in cash or by check upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the recipient fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the recipient, including salary, subject to applicable law. With the consent of the Board of Directors, a recipient may satisfy this obligation,be waived in whole or in part by instructingEUCODIS in its sole discretion):
(a)Each of the Companyrepresentations and warranties made by the MDI Parties in this Agreement shall be true and correct in all material respects on and as of the Closing as though such representation or warranty was made on and as of the Closing.
(b)The MDI Parties shall have performed and complied with, in all material respects, each agreement, covenant and obligation required by this Agreement to withholdbe so performed or complied with by the MDI Parties at or before the Closing.
(c)The MDI Parties shall have delivered to the Escrow Agent all of the Transfer Documents.
(d)Since the Effective Date, MDI shall have obtained additional capital or a credit facility aggregating in the amount of at least $250,000.00.
(e)The MDI Parties shall have delivered or caused to be delivered to the Escrow Agent or to EUCODIS any and all originals and copies of documents pertaining to Purchased Assets and the Product, which are within the possession or control of the MDI Parties, along with any additional documents reasonably requested by EUCODIS.
4.4In the event that, before the Creditor Indebtedness of any MDI Creditor has been fully satisfied, actions are taken pursuant to which either of the MDI Parties voluntarily declares bankruptcy (however evidenced), or involuntary is caused to become bankrupt, then the unpaid amount(s) of any still outstanding Creditor Indebtedness shall be paid into the court having jurisdiction over the bankrupt’s estate.
4.5If valid transfer of title to any Purchased Assets or portion thereof is not made on the Closing and can not be made by the MDI Parties promptly thereafter, or if the circumstances that make such assignment or transfer or any claim to any of the Purchased Assets to EUCODIS questionable or impracticable for any reason, it shall be the obligation of the MDI Parties to determine another way by which EUCODIS shall be able to utilize the Purchased Assets with equal or at least substantially similar economical effect, including (if agreeable to EUCODIS) under an exclusive, royalty-free, perpetual license with the right to sublicense.
ARTICLE 5
DELIVERIES BY THE MDI PARTIES; RESIDUAL RIGHTS
5.1As soon as possible, but no later than within fifteen (15) business days after the Effective Date, the MDI Parties shall deliver or cause to be delivered to the Escrow Agent any and all originals and copies of documents pertaining to Purchased Assets and the Product, which are within the possession or control of the MDI Parties. All of such documents after the Closing are considered to be Confidential Information of EUCODIS in accordance with Article 8 of this Agreement.
Appendix E - 6
5.2Promptly after the Effective Date, the MDI Parties shall deliver to the Escrow Agent (or if the Closing has occurred, to EUCODIS) such additional assignments and bills of sale transferring title to the Purchased Assets and the Product as EUCODIS reasonably shall request, and promptly following the Closing shall cause the change of title to such assets to be recorded by applicable patent offices as appropriate
5.3The MDI Parties shall be entitled to retain one copy of any documents being delivered, but only in its legal files for evidential purposes in respect of its confidentiality obligations in relation to this Agreement or other matters related hereto.
5.4It is expressly understood and agreed that EUCODIS is not the successor to either of the MDI Parties in their business affairs, and EUCODIS undertakes no responsibility, obligation or liability, expressed or implied, under any contract of the MDI Parties that are not Assigned Contracts, and that such other contracts shall remain the sole responsibility of the MDI Parties.
5.5For the period of five (5) years from the Closing, neither of the MDI Parties, nor any of its or their Affiliates shall be a party to, or assist with or undertake, either on its own, with third parties or on behalf of third parties, any research and development with respect to the Product or any product which could be used in reasonable substitution thereof, nor commercialize any products based on the Product, save as requested by EUCODIS.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1The MDI Parties represent, warrant and covenant to EUCODIS as of the Effective Date and at the Closing as follows:
(a)MDI is a corporation duly and validly existing and in good standing under the laws of the State of Utah. MDI Oncology is a corporation wholly-owned by MDI which is duly and validly existing and in good standing under the laws of the State of Delaware, and does not conduct business in any other jurisdiction. Each of the MDI Parties has all requisite power and authority to own its assets, including the Purchased Assets, and to carry on its business as presently conducted.
(b)Each of the MDI Parties has all requisite power and authority to execute and deliver and perform its obligations under this Agreement and to consummate the transactions contemplated by this Agreement.
(c)All acts (corporate or otherwise) required to be taken by or on the part of, and all approvals required to be obtained by, each of the MDI Parties necessary to enter into this Agreement, consummate the transactions contemplated by this Agreement and perform its obligations under this Agreement have been duly and properly taken by such MDI Party.
(d)This Agreement has been duly and validly executed and delivered by the MDI Parties, and constitutes the legal, valid and binding obligation of the MDI Parties enforceable against the MDI Parties in accordance with its terms, subject to applicable bankruptcy, moratorium, reorganization, insolvency and similar laws of general application relating to or affecting the rights and remedies of creditors generally and to general equitable principles (regardless of whether a proceesings is brought in equity or at law).
(e)The Purchased Assets do not constitute all or substantially all of the assets of MDI.
(f)The execution and delivery of this Agreement by each of the MDI Parties, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times (i) violate or conflict with any provision of its respective Certificate of Incorporation or By-Laws, or (ii) result in a violation by such MDI Party of any law to which it or any of its properties or assets are subject.
Appendix E - 7
(g)The execution and delivery of this Agreement by each of the MDI Parties, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times violate, or conflict with, or result in a breach of any provision of, or constitute a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any agreement lease, instrument, obligation, understanding or arrangement to which such MDI Party is a party or by which any of its properties or assets is subject.
(h)Except as set forth in Exhibit 6.1(h) (to the extent that Exhibit 6.1(h) has been attached to this Agreement prior to the Effective Date), there is no litigation, proceeding, investigation, arbitration or claim pending, or, to the best of the knowledge of the MDI Parties, threatened against the MDI Parties, and there is, to the best of the MDI Parties’ knowledge, no reasonable basis for any such action, which affects in whole or in part either MDI Party’s ability to consummate the transactions contemplated by this Agreement, the performance of the MDI Parties obligations hereunder or the ability of EUCODIS to fully enjoy the Purchased Assets.
(i)To the best of the MDI Parties’ knowledge, the use of the Purchased Assets does not infringe intellectual property rights of third parties, except to the extent as may have been alleged in the Schmidt Litigation, (ii) the Purchased Assets are free from any sharesliens, charges and Encumbrances or other rights of third parties, (iii) the full enjoyment of the Purchased Assets are not dependant on any rights of third parties, (iv) no fraudulent or other improper document has been filed with any third governmental agency which may invalidate any of the rights enjoyed by the Purchased Assets, and (v) the Purchased Assets are, to the best knowledge of the MDI Parties, valid and enforceable against third parties, and there are no grounds for revocation, invalidation or re-examination of any of the Purchased Assets
(j)Except as set forth in Exhibit 6.1(j) (to the extent that Exhibit 6.1(j) has been attached to this Agreement prior to the Effective Date), no permit, consent, approval or authorization of, or declaration, filing or registration with, any governmental authority or other third party is or will be necessary to be issuedmade or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so withheld or delivered shall not exceed the minimum amount necessary to satisfy the required withholding obligation. Upon the issuance of a stock bonus, the

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number of shares reserved for issuance under the Plan shall be reducedobtained by the numberMDI Parties in connection with (i) the execution and delivery by MDI of shares issued, lessthis Agreement, (ii) the numberconsummation by them of shares withheldthe transactions contemplated under this Agreement, or delivered to satisfy withholding obligations.

8.     Restricted Stock. The Board of Directors may issue shares under(iii) the Plan for any consideration (including promissory notes and services) determinedperformance by the BoardMDI Parties of Directors. Shares issuedtheir obligations under this Agreement.

(k)One or both of the Plan shall beMDI Parties are a party to each of the Assigned Contracts, all of which (i) are in full force and effect, (ii) constitute binding and enforceable obligations, (iii) subject to the terms and conditions thereof, are assignable to EUCODIS, and restrictions determined(iv) are being duly assigned to EUCODIS at the Closing.
(l)Except as set forth in Exhibit 6.1(l) (to the extent that Exhibit 6.1(l) has been attached to this Agreement prior to the Effective Date), all of the Purchased Assets are legally, beneficially, and solely owned by the Board of Directors. The restrictions may include restrictions concerning transferability, repurchase by the CompanyMDI Parties, and forfeiturethere are no pending or threatened claims or any other undisclosed liabilities that could impair any right or claim of the shares issued, togetherMDI Parties is assigning and transferring that may be deemed to be part of, or arise under or are related to, the Purchased Assets to EUCODIS under this Agreement or that may cause any liability to be incurred by EUCODIS as the result of its use of the Purchased Assets after the Closing.
(m)The MDI Parties have not granted any third parties any rights relating to the Product or relating in any way to any of the rights obtained pursuant to the Savetherapeutics Contract.
(n)Schedule 6.1(n) contains a complete and correct list of (i) all documents relating to the Savetherapeutics Contract, including without limitation the Savetherapeutics Contract, all exhibits and schedules thereto, all amendments thereof and all correspondence pertaining thereto with, or on behalf of, the liquidator of Savetherapeutics AG, dated subsequent to March 11, 2005, (ii) all invoices and other debit memoranda from each of the MDI Creditors which support the Creditor Indebtedness, and (iii) all contracts, findings and correspondence with any other restrictions determinedthird parties, including consultants, which relate to the Purchased Assets and which were obtained on or after March 11, 2005. Prior to or on the Effective Date, the MDI Parties have delivered or are delivering to EUCODIS or as it may direct a true and complete copy of each item listed on Schedule 6.1(n).
Appendix E - 8
(o)As specifically set forth in this Agreement, the MDI Parties shall timely fulfill obligations which relate to or otherwise affect, in any respect, the Purchased Assets. The MDI Parties shall indemnify and reimburse EUCODIS and its officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses incurredby EUCODIS and its officers, directors, employees, consultants and agents arising from any claims by the Boardcontractual parties of Directors. the Assigned Contracts in relation to the non-fulfillment of any obligations of the MDI Parties prior to the Effective Date.
(p)The MDI Parties shall be responsible for obtaining any consents and approvals by the contractual parties to the Assigned Contracts necessary to effectuate the assignment of the Assigned Contracts to EUCODIS, and to obtain the consent and approval of the MDI Creditors for the assumption and transfer of their debt to EUCODIS; provided, however, that EUCODIS shall render the MDI Parties reasonable help in obtaining such consents and approvals.
(q)If valid transfer of title to any Purchased Assets or portion thereof is not made on the Closing and can not be made by the MDI Parties promptly thereafter, or if the circumstances that make such assignment or transfer or any claim to any of the Purchased Assets to EUCODIS questionable or impracticable for any reason, it shall be the obligation of the MDI Parties to determine another way by which EUCODIS shall be able to utilize the Purchased Assets with equal or at least substantially similar economical effect, including (if agreeable to EUCODIS) under an exclusive, royalty-free, perpetual license with the right to sublicense.
(r)Prior to or on the Effective Date, the MDI Parties have delivered or are delivering to the Escrow Agent an opinion of recognized counsel, addressed to EUCODIS, relating to the representations contained in clauses (a) through (f) above reasonably satisfactory to counsel for EUCODIS, which may contain such reasonable qualifications and exceptions as are customary.
(s)Schedule 6.1(s) contains a complete and correct list of creditors of the MDI Parties (including the MDI Creditors) and the amounts owed by the MDI Parties as of June 30, 2007, except for not more than in aggregate of $5, 000 of unlisted indebtedness. After subtracting from such list any Creditor Indebtedness of a MDI Creditor included on such list, the remaining balance is less than $1,850,000.
6.2EUCODIS represents, warrants and covenants to the MDI Parties as follows:
(a)EUCODIS is a company duly organized, validly existing and in good standing under the laws of Austria and has all requisite power and authority to own its assets and to carry on its business as presently conducted.
(b)EUCODIS has all requisite power and authority to execute and deliver and perform its obligations under this Agreement and to consummate the transactions contemplated hereby.
(c)All Common Stock issuedacts (corporate or otherwise) required to be taken by or on the part of, and all approvals required to be obtained by, EUCODIS necessary to enter into this Agreement, consummate the transactions contemplated by this Agreement and perform its obligations under this Agreement have been duly and properly taken by EUCODIS.
(d)This Agreement has been duly and validly executed and delivered by EUCODIS and constitutes the legal, valid and binding obligation of EUCODIS enforceable against EUCODIS in accordance with its terms, subject to applicable bankruptcy, moratorium, reorganization, insolvency and similar laws of general application relating to or affecting the rights and remedies of creditors generally and to general equitable principles (regardless of whether a proceedings is brought in equity or at law).
Appendix E - 9
(e)The execution and delivery of this Agreement by EUCODIS, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times (i) violate or conflict with any provision of its operative governing documents, or (ii) result in a violation by EUCODIS of any law to which it or any of its properties or assets are subject.
(f)The execution and delivery of this Agreement by EUCODIS, the consummation by it of the transactions contemplated by this Agreement, and the performance by it of its obligations under this Agreement does not, and will not at all relevant times violate, or conflict with, or result in a breach of any provision of, or constitute a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any agreement lease, instrument, obligation, understanding or arrangement to which EUCODIS is a party or by which any of its properties or assets is subject.
(g)EUCODIS shall timely fulfill after the Closing all obligations incurred to the MDI Parties under or pursuant to this Section 8Agreement. EUCODIS shall be subject to a purchase agreement, which shall be executed indemnify and reimburse the MDI Parties and their officers, directors, employees and agents from and against all liabilities, claims, damages, costs and expenses incurredby the CompanyMDI Parties and their officers, directors, employees and agents arising from any claims by the prospective purchasercontractual parties of the shares before the delivery of certificates representing the sharesAssigned Contracts in relation to the purchaser. The purchase agreement may containnon-fulfillment of any terms, conditions, restrictions, representationsobligations of EUCODIS arising on or after the Closing..
(h)If any MDI Creditor does not agree to have its debt obligation assumed by, and warranties required by the Board of Directors. The certificates representing the sharestransferred to, EUCODIS, then EUCODIS shall bear any legends required by the Board of Directors. The Company may require any purchaser of restricted stock to pay to the Company in cash or by check upon demand amounts necessary to satisfy any applicable federal, state or local tax withholding requirements. If the purchaser fails to pay the amount demanded,set forth in Section 3.1(a) to MDI for the Companyaccount of such MDI Creditor, and MDI shall immediately make payment to such MDI Creditor and will be solely responsible for such payment. MDI shall provide written notification to EUCODIS that said payment to such MDI Creditor has been made by MDI.
6.3In addition to any obligations of indemnification by the MDI Parties set forth under this Agreement, the MDI Parties shall indemnify, defend and hold harmless EUCODIS and its officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by EUCODIS and its officers, directors, employees and agents arising from the breach of any of the representations, warranties or covenants made by the MDI Parties under this Agreement.
6.4In addition to any obligations of indemnification by EUCODIS set forth under this Agreement, EUCODIS shall indemnify, defend and hold harmless the MDI Parties and their officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by the MDI Parties and its officers, directors, employees and agents arising from the breach of any of the representations, warranties or covenants made by EUCODIS under this Agreement.
ARTICLE 7
INDEMNIFICATION
7.1From and after the Closing, the MDI Parties shall defend, indemnify and hold harmless EUCODIS and its officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by EUCODIS and its officers, directors, employees, consultants and agents arising from or out of (a) any breach of any representation, warranty, covenant or agreement made by the MDI Parties in this Agreement, (b) any act or omission by the MDI Parties (or their agents and employees) in connection with (i) the Purchased Assets, (ii) the Assigned Contracts, to the extent that the cause for such claim was existing prior to or on the Effective Date, or (iii) the transactions contemplated by this Agreement; provided, however, that with respect to the Creditor Indebtedness owing to the MDI Creditors, the MDI Parties shall have no liability.
7.2From and after the Closing, EUCODIS shall defend, indemnify and hold harmless the MDI Parties and their officers, directors, employees, consultants and agents from and against all liabilities, claims, damages, costs and expenses (including reasonable attorney's fees) incurred by the MDI Parties and their officers, directors, employees, consultants and agents arising from or out of (a) any breach of any representation, warranty, covenant or agreement made by EUCODIS in this Agreement, (b) non-payment of the Creditor Indebtedness to the MDI Parties, or (c) any act or omission by EUCODIS (or its agents and employees) in connection with (i) the Purchased Assets, (ii) the Assigned Contracts, to the extent that the cause for such claim was created after the Effective Date, or (iii) the transactions contemplated by this Agreement.
Appendix E - 10
7.3No obligation of indemnification shall arise relating to a third party claim or cause of action unless the indemnified Party making such claim shall: (a) notify the indemnifying Party of such claim promptly upon becoming aware of the existence or threatened existence of any such claim giving rise to or that may give rise to a claim of indemnification hereunder, and (b) allow the indemnifying Party full control over the defense of such claim and (c) cooperate in the defense of such claim at the indemnifying Party’s expense. Notwithstanding any contrary provision in this Article, the failure to so notify, provide information and assistance shall not relieve the indemnifying Party of its obligations to the indemnified Party hereunder if and to the extent that the indemnifying Party is materially prejudiced thereby. If the indemnifying Party does not timely acknowledge its indemnification obligation hereunder with respect to such claim, or elects not to defend such claim, the indemnified Party shall have the right, but not the obligation, to defend and settle such claim until such time as the indemnifying Party acknowledges in writing its indemnification obligation hereunder with respect to such claim or elects in writing to defend and settle such claim in accordance with the indemnification provisions herein. The indemnified Party shall, at its own cost, have the right to participate in any legal proceeding, settlement negotiation or other like event, and to contest and defend a claim and to be represented by legal counsel of its choosing, but shall have no right to settle a claim without the prior written approval of the indemnifying Party.
7.4Each Party shall cooperate with and provide to the other all information and assistance which the latter may reasonably request in connection with any claim entitling any party to indemnification hereunder.
7.5No party shall be responsible for or bound by any settlement that imposes any obligation on it that is made without its prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
7.6For avoidance of any doubt, this Section applies to the situation when (a) both Parties are named defendants, as well as (b) a Party is named a defendant and deems that it may have any right to recourse or indemnification against the other Party under this Agreement.
ARTICLE 8
CONFIDENTIALITY
8.1For purposes of this Agreement, “Confidential Information” shall mean information and data in any medium, including oral, written or electronic, disclosed in connection with this Agreement, relating to the Purchased Assets or the Employer may withholdtransactions contemplated by this Agreement, along with any trade secrets, business information, technical information, or marketing information that amount from other amounts payablethe party disclosing the information deems confidential and has appropriately marked as such prior to disclosing such information to the purchaser, including salary, subjectreceiving party. The terms and conditions of this Agreement (but not its existence) are deemed to applicable law. Withbe Confidential Information that shall not be disclosed to third parties without the written consent of the BoardParties, with the exception of Directors,any regulatory filings, press releases as set forth in Section 9.11, or disclosures to investors that a purchaserParty may satisfybe required to make under either applicable laws and regulations. Irrespective of the foregoing, Confidential Information shall not include information that (a) was reported as nonconfidential by EUCODIS in writing prior to disclosure, (b) was lawfully in the public domain prior to Closing, or becomes publicly available other than through breach of this obligation,Agreement, (c) is publicly disclosed pursuant to legal, judicial or administrative proceedings or otherwise required by law (including, without limitation, regulations promulgated by the U.S. Securities and Exchange Commission), subject to the MDI Parties giving all reasonable prior notice and assistance to EUCODIS to allow it to seek protective or other court orders; and/or (d) is approved for release in writing by EUCODIS. From and after the Closing, all Confidential Information relating to the Purchased Assets shall be deemed to be Confidential Information belonging to EUCODIS.
Appendix E - 11
8.2Each Party shall:
(a)strictly protect and maintain the confidentiality of the Confidential Information belonging to any other Party with at least a reasonable standard of care that is no less than that which it uses to protect similar confidential information of its own;
(b)not disclose, nor allow to be disclosed, the Confidential Information belonging to any other Party to any person other than to employees, consultants and counsel, on a need to know basis; provided, however, that such recipients of the Confidential Information are bound by obligations of confidentiality no less strict than those contained herein;
(c)unless otherwise expressly provided for in this Agreement, not use the Confidential Information belonging to any other Party for any purpose other than in relation to the exercise of its rights and obligations under this Agreement; and,
(d)take all necessary precautions to restrict access of the Confidential Information belonging to any other Party to unauthorized personnel; and immediately notify the Party to which the Confidential Information belongs in the event of any unauthorized disclosure or loss of such Confidential Information.
8.3The MDI Parties shall not publish or otherwise disclose any Confidential Information about or in relation to the Purchased Assets generated or known to them before or after the Effective Date, without the explicit prior written approval of EUCODIS.
8.4No Party shall assert that anything disclosed or discussed constitutes a waiver of attorney-client privilege or attorney work-product.
8.5The Parties acknowledge and agree that monetary damages may not be adequate in the event of a default under this Article and that the non-defaulting Party shall be entitled, without the posting of a bond, to seek injunctive relief by a court or other body granting such relief, in which event such relief or receipt of monetary damages shall not constitute an election of remedies; and the non-defaulting Party is independently entitled to each and every remedy available by law for a default under this Article.
8.6The provisions of this Article, from and after the Effective Date, shall supersede and fully replace any confidentiality obligations established between the Parties in relation to the Purchased Assets prior to the Effective Date.
ARTICLE 9
MISCELLANEOUS
9.1Notice. All notices, requests, demands or other communications to or upon the respective Parties hereto shall be deemed to have been given or made the earlier of (a) actual receipt or refusal to accept receipt, (b) two (2) business days after deposit with a recognized overnight courier service, (c) receipt by facsimile or electronic means, when such delivery is confirmed by the recipient or his agent, or (d) five business days after mailing when deposited in the mails, registered mail or certified, return receipt requested, postage prepaid, addressed to the respective party at the following address (or to such other person or address as is specified elsewhere in this Agreement for specific purposes):

If to EUCODIS:
Eucodis Pharmaceuticals Forschungs - und Entwicklungs GmbH
Brunnerstrasser 59, 1235
1230, Vienna, Austria
Attention: Wolfgang Schoenfeld, M.D.
If to MDI:
Medical Discoveries, Inc.
1338 South Foothill Drive # 266
Salt Lake City, Utah 84108
Attention: Judy M. Robinett
If to MDI Oncology:
MDI Oncology, Inc.
1338 South Foothill Drive # 266
Salt Lake City, Utah 84108
Attention: Judy M. Robinett
Appendix E - 12
The above addresses for receipt of notice may be changed by any Party by notice, given as provided herein, which notice shall be effective only upon actual receipt.
9.2Entire Agreement. This Agreement contains the entire understanding of the Parties with regard to the transactions contemplated by this Agreement, superseding in all respects any and all prior oral or written agreements or understandings pertaining to the subject matter hereof, other than the Co-Development Contract. This Agreement can be amended, modified or supplemented only by an agreement in writing which is signed by the Parties to be charged.
9.3Incorporation of Exhibits and Schedules. The Exhibits and Schedules attached to this Agreement are incorporated herein and are hereby made a part of this Agreement.
9.4Severability. If and to the extent that any court of competent jurisdiction holds any provision or part of this Agreement to be invalid or unenforceable, such holding shall in no way affect the validity of the remainder of this Agreement before any other court or in any other jurisdiction.
9.5Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the Parties.
9.6AssignmentThe benefits of this Agreement (but not the obligations set forth hereunder) can be assigned or otherwise transferred in whole or in part by instructingeither party without the Company to withhold from any shares to be issued or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so withheld or delivered shall not exceed the minimum amount necessary to satisfy the required withholding obligation. Upon the issuance of restricted stock, the number of shares reserved for issuance under the Plan shall be reduced by the number of shares issued, less the number of shares withheld or delivered to satisfy withholding obligations.

9.     Performance-Based Awards. The Board of Directors may grant awards intended to qualify as qualified performance-based compensation under Section 162(m) of the Code and the regulations thereunder (“Performance-Based Awards”). Performance-Based Awards shall be denominated at the time of grant either in Common Stock (“Stock Performance Awards”) or in dollar amounts (“Dollar Performance Awards”). Payment under a Stock Performance Award or a Dollar Performance Award shall be made, at the discretion of the Board of Directors, in Common Stock (“Performance Shares”), or in cash or in any combination thereof. Performance-Based Awards shall be subject to the following terms and conditions:

9.1     Award Period. The Board of Directors shall determine the period of time for which a Performance-Based Award is made (the “Award Period”).
9.2     Performance Goals and Payment. The Board of Directors shall establish in writing objectives (“Performance Goals”) that must be met by the Company or any subsidiary, division or other unit of the Company (“Business Unit”) during the Award Period as a condition to payment being made under the Performance-Based Award. The Performance Goals for each award shall be one or more targeted levels of performance with respect to one or more of the following objective measures with respect to the Company or any Business Unit: earnings, earnings per share, stock price increase, total shareholder return (stock price increase plus dividends), return on equity, return on assets, return on capital, economic value added, revenues, operating income, inventories, inventory turns, cash flows or any of the foregoing before the effect of acquisitions, divestitures, accounting changes, and restructuring and special charges (determined according to criteria established by the Board of Directors). The Board of Directors shall also establish the number of Performance Shares or the amount of cash payment to be made under a Performance-Based Award if the Performance Goals are met or exceeded, including the fixing of a maximum payment. The Board of Directors may establish other restrictions to payment under a Performance-Based Award, such as a continued employment requirement, in addition to satisfaction of the Performance Goals. Some or all of the Performance Shares may be issued at the time of the award as restricted shares subject to forfeiture in whole or in part if Performance Goals or, if applicable, other restrictions are not satisfied.
9.3     Computation of Payment. During or after an Award Period, the performance of the Company or Business Unit, as applicable, during the period shall be measured against the Performance Goals. If the Performance Goals are not met, no payment shall be made under a Performance-Based Award. If the

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Performance Goals are met or exceeded, the Board of Directors shall certify that fact in writing and certify the number of Performance Shares earned or the amount of cash payment to be made under the terms of the Performance-Based Award.
9.4     Tax Withholding. Each participant who has received Performance Shares shall, upon notification of the amount due, pay to the Company in cash or by check amounts necessary to satisfy any applicable federal, state and local tax withholding requirements. If the participant fails to pay the amount demanded, the Company or the Employer may withhold that amount from other amounts payable to the participant, including salary, subject to applicable law. With the consent of the Board of Directors, a participant may satisfy this obligation, in whole or in part, by instructing the Company to withhold from any shares to be issued or by delivering to the Company other shares of Common Stock; provided, however, that the number of shares so delivered or withheld shall not exceed the minimum amount necessary to satisfy the required withholding obligation.
9.5     Effect on Shares Available. The payment of a Performance-Based Award in cash shall not reduce the number of shares of Common Stock reserved for issuance under the Plan. The number of shares of Common Stock reserved for issuance under the Plan shall be reduced by the number of shares issued upon payment of an award, less the number of shares delivered or withheld to satisfy withholding obligations.

10.     Changes in Capital Structure.

10.1     Stock Splits, Stock Dividends. If the outstanding Common Stock of the Company is hereafter increased or decreased or changed into or exchanged for a different number or kind of shares or other securities of the Company by reason of any stock split, combination of shares, dividend payable in shares, recapitalization or reclassification, appropriate adjustment shall be made by the Board of Directors in the number and kind of shares available for grants under the Plan and in all other share amounts set forth in the Plan. In addition, the Board of Directors shall make appropriate adjustment in the number and kind of shares as to which outstanding options, or portions thereof then unexercised, shall be exercisable, so that the optionee’s proportionate interest before and after the occurrence of the event is maintained. Notwithstanding the foregoing, the Board of Directors shall have no obligation to effect any adjustment that would or might result in the issuance of fractional shares, and any fractional shares resulting from any adjustment may be disregarded or provided for in any manner determined by the Board of Directors. Any such adjustments made by the Board of Directors shall be conclusive.
10.2     Mergers, Reorganizations, Etc. In the event of a merger, consolidation, plan of exchange, acquisition of property or stock, split-up, split-off, spin-off, reorganization or liquidation to which the Company is a party or any sale, lease, exchange or other transfer (in one transaction or a series of related transactions) of all, or substantially all, of the assets of the Company (each, a “Transaction”), the Board of Directors shall, in its sole discretion and to the extent possible under the structure of the Transaction, select one of the following alternatives for treating outstanding options under the Plan:

     10.2-1     Outstanding options shall remain in effect in accordance with their terms.
     10.2-2     Outstanding options shall be converted into options to purchase stock in one or more of the corporations, including the Company, that are the surviving or acquiring corporations in the Transaction. The amount, type of securities subject thereto and exercise price of the converted options shall be determined by the Board of Directors of the Company, taking into account the relative values of the companies involved in the Transaction and the exchange rate, if any, used in determining shares of the surviving corporation(s) to be held by holders of shares of the Company following the Transaction. Unless otherwise determined by the Board of Directors, the converted options shall be vested only to the extent that the vesting requirements relating to options granted hereunder have been satisfied.
     10.2-3     The Board of Directors shall provide a period of 30 days or less before the completion of the Transaction during which outstanding options may be exercised to the extent then exercisable, and upon the expiration of that period, all unexercised options shall immediately terminate. The

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Board of Directors may, in its sole discretion, accelerate the exercisability of options so that they are exercisable in full during that period.

10.3     Dissolution of the Company. In the event of the dissolution of the Company, options shall be treated in accordance with Section 10.2-3.
10.4     Rights Issued by Another Corporation. The Board of Directors may also grant options and stock bonuses and Performance-Based Awards and issue restricted stock under the Plan with terms, conditions and provisions that vary from those specified in the Plan, provided that any such awards are granted in substitution for, or in connection with the assumption of, existing options, stock bonuses, Performance-Based Awards and restricted stock granted, awarded or issued by another corporation and assumed or otherwise agreed to be provided for by the Company pursuant to or by reason of a Transaction.

11.     Amendment of the Plan. The Board of Directors may at any time modify or amend the Plan in any respect. Except as provided in Section 10, however, no change in an award already granted shall be made without thetransferring party receiving prior written consent of the holderother party; provided, however, that the rights of the award if the change would adversely affect the holder.

12.     Approvals. The Company’s obligationsnon-transferring party under the Plan are subject to the approvalthis Agreement remain unaffected.

9.7Waiver. A waiver by any party of state and federal authorities or agencies with jurisdiction in the matter. The Company will use its best efforts to take steps required by state or federal law or applicable regulations, including rules and regulationsany of the Securitiesterms and Exchange Commission andconditions of this Agreement in any stock exchange on which the Company’s shares may then be listed, in connection with the grants under the Plan. The foregoing notwithstanding, the Companyinstance shall not be obligateddeemed or construed to be a waiver of such term or condition for the future.
9.8Headings. Headings in this Agreement are included for ease of reference only and have no legal effect.
9.9Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.
9.10Applicable Law. This Agreement is governed by and shall be construed in accordance with the laws of the State of Delaware, regardless of any conflicts of laws provisions. Any disputes under this Agreement shall be first submitted to resolution by the chief executive of the MDI Parties and CEO of EUCODIS, and if the said persons (or their nominees) cannot reach agreement on the disputed issue within a period of thirty (30) days, the Parties shall refer the issue to arbitration under the Rules of Arbitration of the American Arbitration Association, to which the Parties hereby consent. The arbitration shall take place in New York City, New York with three arbitrators, two of whom shall have significant experience in the biotech/pharmaceutical licensing area. The arbitration proceedings shall be conducted in the English language. The arbitrators shall apportion the expenses of the arbitration (including the legal fees and expenses incurred by the parties) between the parties. Any judgment of the arbitrators shall be enforceable in any court of competent jurisdiction.
Appendix E - 13
9.11Further Assurances. The Parties shall provide, grant and/or execute any additional documents or declarations and shall provide any other assistance that may reasonably be requested to enable EUCODIS to acquire and manage the Purchased Assets properly and in full. Except (a) as otherwise provided herein to the contrary, and (b) for the costs of recording any assignments to EUCODIS for the Patent Rights in patent offices worldwide, which cost shall be at the expense of EUCODIS, each of the Parties shall bear its own expenses, including without limitation the expenses relating to the duplication and delivery of documents and the expenses relating to the preparation of this Agreement, the documents referred to herein and the actions being taken (whether before or after the Effective Date) to enable such Party to comply with its representations, warranties, covenants and agreements contained herein.
9.12Press Release. The Parties shall have the right to issue or deliver Common Stock underpress releases relating to its entry into this Agreement; provided, however, that prior to release, the Plan ifreleasing Party provides the other Parties with a draft of the press release in sufficient time for the non-releasing Party to comment on the release. At no time shall any Party issue a release which places the other Parties at risk with any governmental authority as such issuance or delivery would violate state or federal securities laws.relates to its public company position.

Appendix E - 14
SIGNATURE PAGE
13.     Employment and Service Rights. Nothing inIn Witness Whereof, the Plan or any award pursuant to the Plan shall (i) confer upon any employee any rightParties have caused this Agreement to be continuedduly executed in the employment of an Employer or interfere in any way with the Employer’s right to terminate the employee’s employment at will at any time, for any reason, with or without cause, or to decrease the employee’s compensation or benefits, or (ii) confer upon any person engaged by an Employer any right to be retained or employed by the Employer or to the continuation, extension, renewal or modification of any compensation, contract or arrangement with or by the Employer.

14.     Rights as a Shareholder. The recipient of any award under the Plan shall have no rights as a shareholder with respect to any shares of Common Stock untiltheir respective names and on their behalf, on the date the recipient becomes the holder of record of those shares. Except as otherwise expressly provided in the Plan, no adjustment shall be made for dividends or other rights for which the record date occurs before the date the recipient becomes the holder of record.first above written.

Adopted: July 11, 2002

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[FORM OF PROXY]

PROXY

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FOR ANNUAL MEETING OF SHAREHOLDERS
MAY 21, 2004 AT 1:00 P.M.

MEDICAL DISCOVERIES, INC.

     The undersigned shareholder of Medical Discoveries, Inc. hereby appoints David R. Walker and Judy M. Robinett and each of them, as attorneys and proxies, each with the power to act without the other and with power of substitution and revocation, and hereby authorizes them to represent the undersigned and vote, as designated on the other side, all shares of stock of Medical Discoveries, Inc. standing in the name of the undersigned with all powers that the undersigned would possess if present at the Annual Meeting of Shareholders of the Company to be held May 21, 2004 or any adjournments or postponements thereof.

Receipt of the Notice of Annual Meeting of Shareholders and the Proxy Statement furnished herewith is hereby acknowledged.

(Continued and to be marked, dated and signed on the other side)

FOLD AND DETACH HERE

Annual Meeting of

Shareholders
MEDICAL DISCOVERIES, INC.

May 21, 2004

1:00 p.m.
Little America Hotel
500 S. Main Street
Salt Lake City, Utah

EUCODIS PHARMACEUTICALS FORSCHUNGS-
UND ENTWICKLUNGS GmbH
MEDICAL DISCOVERIES, INC.
 
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER(S). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2, 3 AND 4.Please mark your votes as indicated in this example X
1. ELECTION OF DIRECTORS(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE NOMINEES LISTED BELOW)
FOR all nominees listed to the right (except as marked to the contrary herein)WITHHOLD AUTHORITY
To vote for all nominees listed to the right		NOMINEES: David R. Walker, Judy M. Robinett, Larry Anderson

(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee’s name in the space provided below.)
      
      

2. RATIFICATION OF SELECTION OF BALUKOFF LINDSTROM & CO., P.A. AS INDEPENDENT ACCOUNTANTSBy:		 (THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RATIFICATION OF THE SELECTION OF BALUKOFF LINDSTROM & CO., P.A. AS INDEPENDENT ACCOUNTANTS)
FORAGAINSTABSTAINBy:   
 

3. PROPOSAL TO AMEND AND RESTATE ARTICLES OF INCORPORATION		(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO AMEND AND RESTATE THE ARTICLES OF INCORPORATION)
FORAGAINSTABSTAIN

4. PROPOSAL TO APPROVE THE 2002 STOCK INCENTIVE PLAN		(THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSAL TO APPROVE THE 2002 STOCK INCENTIVE PLAN)
FORAGAINSTABSTAIN

5. In their discretion the Proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournment thereof.		The signature should agree with the name on your stock certificate. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee, or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
Wolfgang Schoenfeld, M.D.  Judy RobinettDated: -------------------------------------------------------------------------------- , 2004
 
      
(Signature)Title:		Chief Executive OfficerTitle:President & CEO
      
(Signature if held jointly)MDI ONCOLOGY, INC.
By: 
Judy Robinett
Title:President & CEO

PLEASE SIGN, DATE, AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE

Appendix E - 15
FOLD AND DETACH HERE

Admission Ticket

Annual Meeting of

Shareholders
MEDICAL DISCOVERIES, INC.
May 21, 2004
1:00 p.m.

Little America Hotel

500 S. Main Street
Salt Lake City, Utah