Certain Factors that May Affect Future Results, Financial Condition and the
Market Price of Securities

     Need for Substantial Additional Funds. The Company had approximately $14.1
million of cash, cash equivalents and marketable securities at Sept. 30, 1998.
The Company may be required to seek additional financing in the future to
continue operations during such period in the event of cost overruns,
unanticipated expenses, a determination to pursue additional research projects,
or the failure to receive funds anticipated from other sources. The Company will
require substantial additional funds to finance its business activities on an
ongoing basis. The Company's actual future capital requirements will depend on
numerous factors, including, but not limited to, costs associated with
technologies and products which it may license from third parties, progress in
its research and development programs, including pre-clinical and clinical
trials, costs of filing and prosecuting patent applications and, if necessary,
enforcing issued patents or obtaining additional licenses to patents, competing
technological and market developments, the cost and timing of regulatory
approvals, the ability of the Company to establish collaborative relationships,
and the cost of establishing manufacturing, sales and marketing capabilities.
The Company has no current commitment to obtain other additional funds and is
unable to state the amount or potential source of any other additional funds.
Because of the Company's potential long-term capital requirements, it may
undertake additional equity offerings whenever conditions are favorable, even if
it does not have an immediate need for additional capital at that time.  There
can be no assurance that the Company will be able to obtain additional funding
when needed, or that such funding, if available, will be obtainable on
reasonable terms. Any such additional funding may result in significant dilution
to existing stockholders. If adequate funds are not available, the Company may
be required to accept unfavorable alternatives, including (i) the delay,
reduction or elimination of research and development programs, capital
expenditures, and marketing and other operating expenses, (ii) arrangements with
collaborative partners that may require the Company to relinquish material
rights to its products that it would not otherwise relinquish, or (iii) a merger
of the Company or a sale of the Company or its assets.

     Early Stage of Development. The Company is a development stage enterprise
and expects no significant revenue from the sale of products in the near future.
The Company's proprietary immunomodulator, ImmTher(R), has completed some Phase
II clinical trials for cancer with limited response in gross metastatic disease.
The Company initiated new randomized Phase II clinical trials for ImmTher(R) in
treating micro-metastasis in pediatric sarcomas with M.D. Anderson Cancer Center
in Houston and Memorial Sloan-Kettering Cancer Center in New York City.
ImmTher(R) recently received FDA Orphan drug designations for Ewings sarcoma and
osteosarcoma, the most prevalent bone cancers in children and young adults.
Additionally, the Company's second cancer drug, Perillyl alcohol ("POH") has
completed several Phase I trials as an anti-cancer drug at the University of
Wisconsin-Madison and with the Eastern Cooperative Oncology Group, and has
initiated three Phase II trials in breast, ovarian and prostate cancers, all
sponsored by the National Cancer Institute. Furthermore, the Company initiated
development of other monoterpene based cancer agents via a sponsored research
agreement with the University of Wisconsin-Madison. The Company's oral delivery
technology is in the pre-clinical development stage. As a result, the Company
must be evaluated in light of the problems, delays, uncertainties and
complications encountered in connection with early-stage biopharmaceutical
development. These risks include, but are not limited to, the possibilities that
any or all of the Company's potential products will be found to be ineffective
or toxic, or fail to receive necessary regulatory clearances in the United
States or abroad. To achieve profitable operations, the Company must
successfully develop, obtain regulatory approval for, introduce and successfully
market through a larger pharmaceutical partner, at a profit, products that are
currently in the research and development phase. The Company is currently not
profitable. No assurance can be given that the Company's research and
development efforts will be successful, that required regulatory approvals will
be obtained, that any of the Company's proposed products will be safe and
effective, that any such products, if developed and introduced, will be
successfully marketed or achieve market acceptance, or that such products can be
marketed at prices that will allow profitability to be achieved or sustained.
Failure of the Company to successfully develop, obtain regulatory approval for,
and introduce and market its products under development would have a material
adverse effect on the business, financial condition and results of operations of
the Company.

 
     History of Losses; Uncertainty of Future Financial Results. The Company has
experienced significant operating losses since its inception, has a significant
accumulated deficit, and expects to incur losses for the next several years. The
amount of net losses may vary significantly from year-to-year and quarter-to-
quarter and depend on, among other factors, the success of the Company in
securing collaborative partners and the progress of research and pre-clinical
and clinical development programs. The Company's ability to attain profitability
will depend, among other things, on its successfully completing development of
its product candidates, obtaining regulatory approvals, establishing
manufacturing, sales and marketing capabilities and obtaining sufficient funds
to finance its activities. There can be no assurance that the Company will be
able to achieve profitability or that profitability, if achieved, can be
sustained.

     Dependence on Elan Joint Ventures. The Company's strategy for research,
development and commercialization of certain of its products is to rely in part
upon various arrangements with corporate partners. As a result, the Company's
products are dependent in large part upon the subsequent success of such third
parties in performing pre-clinical studies and clinical trials, obtaining
regulatory approvals, manufacturing and marketing. In January 1998, the Company
entered into a joint venture with Elan Corporation, plc ("Elan") for the
exclusive research, development and commercialization of oral and mucosal
prophylactic and therapeutic vaccines. In October 1998, the Company entered into
a second joint venture with Elan for the exclusive research, development and
commercialization of products using Elan's Medipad(TM) drug delivery system for
two drugs in undisclosed fields. In connection with the two joint ventures, the
Company is obligated to fund each joint venture's research and development
activities in an amount up to approximately $1.5 million during the first year
of each joint venture and in proportion to its ownership interest in each joint
venture thereafter. In the event the Company does not have sufficient resources
to meet its funding obligations under the two joint ventures as well as other
ongoing research and development activities of the Company, the Company's
funding obligations under the two joint ventures could have a material adverse
effect on the Company's business, financial condition or results of operations.
The Company intends to pursue additional collaborations in the future. There can
be no assurance that the Company will be able to negotiate additional acceptable
collaborative arrangements or that such arrangements will be successful. No
assurance can be given that the Company's collaborative partners will be able to
obtain FDA approval for any licensed compounds, that any such licensed
compounds, if so approved, will be able to be commercialized successfully, or
that the Company will realize any revenues pursuant to such arrangements.
Although the Company believes that parties to collaborative arrangements
generally have an economic motivation to succeed in performing their contractual
responsibilities, the amount and timing of resources which they devote to these
activities are not within the control of the Company. There can be no assurance
that such parties will perform their obligations as expected or that current or
potential collaborators will not pursue treatments for other diseases or seek
alternative means of developing treatments for diseases targeted by
collaborative programs with the Company or that any additional revenues will be
derived from such arrangements. If any collaborative partner breaches or
terminates its agreement with the Company or otherwise fails to conduct its
collaborative activities in a timely manner, the development or
commercialization of the product candidate or research program under such
collaboration agreement may be delayed, the Company may be required to undertake
unforeseen additional responsibilities or to devote unforeseen additional
resources to such development or commercialization, or such development or
commercialization could be terminated. The termination or cancellation of
collaborative arrangements could also adversely effect the Company's financial
condition, intellectual property position and results of

 
operations. In addition, disagreements between collaborators and the Company
have in the past and could in the future lead to delays in the collaborative
research, development or commercialization of certain product candidates, or
could require or result in legal process or arbitration for resolution. These
consequences could be time consuming, expensive and could have a material
adverse effect on the Company's business, financial condition or results of
operations.

     Limited Experience and Dependence on Third Parties for Completion of
Clinical Trials, Manufacturing and Marketing. The Company has no experience with
receipt of government approvals or marketing pharmaceutical products and has
limited experience with clinical testing and manufacturing. The Company may seek
to form alliances with established pharmaceutical companies for the testing,
manufacturing and marketing of, and pursuit of regulatory approval for, its
products. There can be no assurance that the Company will be successful in
forming such alliances or that the Company's partners would devote adequate
resources to, and successfully market, the Company's products. If the Company
instead performs such tasks itself, it will be required to develop expertise
internally or contract with third parties to perform these tasks. This will
place increased demands on the Company's resources, requiring the addition of
new management personnel and the development of additional expertise by existing
management personnel. The failure to acquire such services or to develop such
expertise could materially adversely affect prospects for the Company's success.
All of the Company's scientific and clinical advisors are employed by others and
may have commitments to or consulting or advisory contracts with other entities
that may limit their availability to the Company.

     Reliance on Patents and Other Proprietary Rights. The pharmaceutical
industry places considerable importance on obtaining patent and trade secret
protection for new technologies, products and processes. The Company's success
will depend, in part, on its ability to obtain protection for its products and
technologies under United States and foreign patent laws and other intellectual
property laws, to preserve its trade secrets and to operate without infringing
the proprietary rights of third parties. There can be no assurance that the
research conducted by or on behalf of the Company will result in any patentable
technology or products. Even if patents are obtainable, the procedure for
obtaining patents is expensive, time consuming and can be subject to lengthy
litigation. No assurance can be given that patents issued to or licensed by the
Company will not be challenged, invalidated or circumvented, or that the rights
granted thereunder will provide competitive advantages to the Company. There can
be no assurance that the Company's patent applications will be approved, that
the Company will develop additional products that are patentable, that any
issued patent will provide the Company with any competitive advantage or
adequate protection for its inventions or will not be challenged by others, or
that the patents of others will not have an adverse effect on the ability of the
Company to do business. Competitors may have filed applications, may have
been issued patents or may obtain additional patents and proprietary rights
relating to products or processes competitive with those of the Company.
Furthermore, there can be no assurance that others will not independently
develop similar products, duplicate any of the Company's products or design
around any patented products developed by the Company. Moreover, it is
possible, with respect to some patentable items, that the Company may conclude
that better protection would be afforded by not seeking patents. Although the
Company has endeavored, and will continue to endeavor, to prevent disclosure of
any confidential information by adopting a policy to bind its scientific
advisors and scientific and management employees and consultants by
confidentiality agreements. No assurance can be given that others will not
independently develop substantially equivalent proprietary information and

 
techniques or otherwise gain access to the Company's trade secrets, or that the
Company can effectively protect its rights to its unpatented trade secrets. Any
such discovery or disclosure would likely have an adverse effect on the
Company.

     The Company currently has several patents issued and patent applications
pending in the United States and foreign countries. Although the Company intends
to apply for additional patents, there can be no assurance that the Company will
obtain patents either under the pending applications or any future applications
or that any of its existing or any future patent will provide effective
protection against competitive products. If patent or other proprietary rights
cannot be obtained and maintained by the Company, its products may face
significantly increased competition.

     The application of patent law to the area of biotechnology is relatively
new and has resulted in considerable litigation. The ability of the Company to
obtain patents, licenses and similar rights and the nature, extent and
enforceability of the intellectual property rights, if any, that are obtained as
a result of its research programs involve complex legal and factual issues. For
example, the Company is dependent upon its license of oral delivery technology
from MIT and its license of Perillyl alcohol from the Wisconsin Alumni Research
Foundation. No assurance can be given that the technology underlying such
license will be profitable, or that the Company will retain its license for such
technology or that the Company will obtain patent protection outside the United
States. The issues are more significant with respect to any product based upon
natural substances, for which available patent protection may be limited due to
the prior use or reported utility of such products (or their natural sources) to
treat various disorders or diseases. There can be no assurance as to the degree
of protection that proprietary rights, when and if established, will afford the
Company. To the extent that the Company relies on trade secret protection and
confidentiality agreements to protect technology, there can be no assurance that
others will not independently develop similar technology, or otherwise obtain
access to the Company's findings or research materials embodying those findings.

     There is also a substantial risk in the rapidly developing biotechnology
industry that patents and other intellectual property rights held by the Company
could be infringed by others or that products developed by the Company or their
method of manufacture could be covered by patents owned by other companies. To
the extent that any infringement should occur with respect to any patents issued
to the Company or licenses granted to the Company, or if the Company is alleged
to have infringed on patents or licenses held by others, the Company could be
faced with the expensive prospect of litigating such claims; if the Company were
to have insufficient funds on hand to finance its litigation, it might be forced
to negotiate a license with such other parties or to otherwise resolve such a
dispute on terms less favorable to the Company than could result from successful
litigation.

     Uncertainty of Clinical Trials and Results. The results of clinical trial
and pre-clinical testing for the Company's products are subject to varying
interpretations. Furthermore, studies conducted with alternative designs or on
alternative populations could produce results that vary from those expected.
Therefore, there can be no assurance that the results or the Company's
interpretation of them will be accepted by governmental regulators or the
medical community. Even if the development of the Company's products in the pre-
clinical phase advances to the clinical stage, there can be no assurance that
they will prove to be safe and effective. The products that are successfully
developed, if any, will be subject to requisite regulatory approval prior to
their commercial sale, and the approval, if obtainable, may

 
take several years.  Generally, only a very small percentage of the number of
new pharmaceutical products initially developed is approved for sale. Even if
new products are approved for sale, there can be no assurance that they will be
commercially successful. The Company may encounter unanticipated problems
relating to development, manufacturing, distribution and marketing, some of
which may be beyond the Company's financial and technical capacity to solve.
The failure to address such problems adequately could have a material adverse
effect on the Company's business, financial condition or results of operations.
No assurance can be given that the Company will succeed in the development and
marketing of any new drug products, or that they will not be rendered obsolete
by products of competitors.

     Uncertainty of Health Care Reform Measures. Federal, state and local
officials and legislators (and certain foreign government officials and
legislators) have proposed or are reportedly considering proposing a variety of
reforms to the health care systems in the United States and abroad. The Company
cannot predict what health care reform legislation, if any, will be enacted in
the United States or elsewhere. Significant changes in the health care system
in the United States or elsewhere are likely to have a substantial impact over
time on the manner in which the Company conducts its business. Such proposals
and changes could have a material adverse effect on the Company's ability to
raise capital. Furthermore, the Company's ability to commercialize its potential
products may be adversely affected to the extent that such proposals
have a material adverse effect on the business, financial condition and
profitability of other companies that are prospective corporate partners with
respect to certain of the Company's proposed products.

     Uncertain Extent of Price Flexibility and Third-Party Reimbursement. The
Company's ability to commercialize its products successfully will depend in part
on the extent to which appropriate reimbursement levels for the cost of such
products and related treatment are obtained from government authorities, private
health insurers and other organizations, such as health maintenance
organizations ("HMOs"). Third party payers are increasingly challenging the
prices charged for medical products and services. Also, the trend towards
managed health care in the United States and the concurrent growth of
organizations such as HMOs, which could control or significantly influence the
purchase of health care services and products, as well as legislative proposals
to reduce government insurance programs, may all result in lower prices for the
Company's products. The cost containment measures that health care providers are
instituting could affect the Company's ability to sell its products and may have
a material adverse effect on the Company.

     Government Regulation; Need for FDA and Other Regulatory Approval. Prior to
marketing, each of the Company's products must undergo an extensive regulatory
approval process conducted by the U.S. Food and Drug Administration (the "FDA")
and applicable agencies in other countries. The process, which focuses on safety
and efficacy and includes a review by the FDA of pre-clinical testing and
clinical trials and investigating as to whether good laboratory and clinical
practices were maintained during testing, takes many years and requires the
expenditure of substantial resources. The Company is, and will be dependent on
the external laboratories and medical institutions conducting its pre-clinical
testing and clinical trials to maintain both good laboratory practices
established by the FDA and good clinical practices. Data obtained from pre-
clinical and clinical testing are subject to varying interpretations which could
delay, limit or prevent regulatory approval. In addition, delays or rejection
may be encountered based upon changes in FDA policy for drug approval during the
period of development and by the requirement for regulatory review of each
submitted Product License Approval or New Drug Application. There can be no
assurance that, even after such time and

 
expenditures, regulatory approval will be obtained for any of the Company's
product candidates. Moreover, such approval may entail significant limitations
on the indicated uses for which a drug may be marketed. Even if such
regulatory approval is obtained, a marketed therapeutic product and its
manufacturer are subject to continual regulatory review, and later discovery
of previously unknown problems with a product or manufacturer may result in
restrictions on such product or manufacturing, including withdrawal of such
product from the market. Change in the manufacturing procedures used by the
Company for any of the Company's approved drugs are subject to FDA review,
which could have an adverse effect upon the Company's ability to continue the
commercialization or sale of a drug. The process of obtaining FDA and foreign
regulatory approval is costly and time consuming, and there can be no
assurance that any product that the Company may develop will be deemed to be
safe and effective by the FDA. The Company will not be permitted to market any
product it may develop in any jurisdiction in which the product does not
receive regulatory approval.

     The Company is also subject to various foreign, federal, state and local
laws, regulations and recommendations (collectively "Governmental Regulations")
relating to safe working conditions, laboratory and manufacturing practices, the
experimental use of animals and the use, manufacture, storage, handling and
disposal of hazardous or potentially hazardous substances, including radioactive
compounds and infectious disease agents, used in connection with the Company's
research and development work and manufacturing processes. Although the Company
believes it is in compliance with all other Governmental Regulations in all
material respects there can be no assurance that the Company will not be
required to incur significant costs to comply with Governmental Regulations in
the future.

     Competition; Technological Change. There is substantial competition in the
pharmaceutical field in general and in vaccine development and liposomal
formulation in particular. The Company's competitors include companies with
financial resources, and licensing, research and development staffs and
facilities substantially greater than those of the Company. Competitors in the
vaccine development field include major pharmaceutical companies, specialized
biotechnology firms, universities and governmental agencies, including American
Home Products, the Merck Company, SmithKline Beecham, MedImmune, Aviron and
Chiron. Competitors in the liposomal formulation field include The Liposome
Company, NexStar and Sequus. Competitors in the field of the oral delivery of
drugs include Emisphere, which is currently in Phase II trials for oral heparin
and in pre-clinical development with oral hormones, and Cortecs, which has
several products in clinical development. Additionally there are numerous major
pharmaceutical companies and biotech companies developing new cancer therapies.
Many competitors have greater experience than the Company in undertaking pre-
clinical testing and clinical trials and obtaining FDA and other regulatory
approvals. There can be no assurance that the Company's competitors will not
succeed in developing similar technologies and products more rapidly than the
Company and that these technologies and products will not be more effective than
any of those that are being or will be developed by the Company, or that such
competitors' technologies and products will not render the Company's
technologies and products obsolete or noncompetitive.

     Manufacturing and Marketing Capabilities. The Company does not now
have, and probably will not have in the foreseeable future, the resources to
manufacture or directly market on a large commercial scale any products which
it may develop. In connection with the Company's research and development
activities, it will seek to enter into collaborative arrangements with
pharmaceutical companies to assist in funding development costs, including the

 
costs of clinical testing necessary to obtain regulatory approvals. It is
expected that these entities will also be responsible for commercial scale
manufacturing which must be in compliance with applicable FDA regulations. The
Company anticipates that such arrangements may involve the grant by the Company
of the exclusive or semi-exclusive right to sell specific products to specified
market segments in particular geographic territories in exchange for a royalty,
joint venture, future co-marketing or other financial interest. The Company
believes that these arrangements will be more effective in promoting and
distributing therapeutic products in the United States in view of the Company's
limited resources and the extensive marketing networks and large advertising
budgets of large pharmaceutical companies. To date, the Company has not entered
into any collaborative marketing agreements or distributorship arrangements for
any of its proposed products and there can be no assurance that the Company
will be able to enter into any such arrangements on favorable terms or at all.
The Company may ultimately determine to establish its own manufacturing and/or
marketing capability, at least for certain products, in which case it will
require substantial additional funds and personnel.

     Use of Hazardous Materials; Environmental Matters. The Company's
research and development involves the controlled use of small quantities of
hazardous materials, chemicals and various radioactive compounds. Although the
Company believes that its safety procedures for handling and disposing of such
materials comply with the standards prescribed by federal, state and local
regulations, the risk of accidental contamination or injury from these
materials cannot be eliminated. In the event of such an accident, the Company
could be held liable for any resulting damages, and any such liability could
exceed the resources of the Company. There can be no assurance that the Company
will not be required to incur significant costs to comply with environmental
laws and regulations in the future, nor that the operations, business or assets
of the Company will not be materially adversely affected by current or future
environmental laws or regulations.

     Product Liability Exposure; Limited Insurance Coverage. The testing and
marketing of pharmaceutical products entails an inherent risk of exposure
To product liability claims from adverse effects of products. As of March 10,
1998, the Company has increased its liability insurance with limits of liability
to $10.0 million for each claim from $1.0 million, and $10.0 million in the
aggregate, from $3.0 million. There is no assurance that current or future
policy limits will be sufficient to cover all possible liabilities. Further,
there can be no assurance that adequate product liability insurance will
continue to be available in the future or that it can be maintained at
reasonable costs to the Company. In the event of a successful product liability
claim against the Company, lack or insufficiency of insurance coverage could
have an adverse effect on the Company.

     Dependence on Key Personnel and Scientific Advisors; Evolution of
Management. The Company is dependent on the principal members of its management
and scientific staff, the loss of whose services could impede the achievement
of development objectives. The Company's founder, Chairman of the Board, and
Scientific Director, Gerald Vosika, M.D., resigned in February 1998, and is now
a consultant to the Company.  His consulting agreement expires in May 1999.
Furthermore, as the Company's focus evolves, the Company's need for certain
skills may diminish and the need for other skills may arise. Thus, recruiting
and retaining qualified scientific personnel to perform research and development
work in the future will also be critical to the Company's success and may lead
to further evolution of the Company's management.  Although the Company believes
it will be successful in attracting and retaining skilled and experienced
scientific personnel, there can be no assurance that the Company will be able to
attract and retain such personnel on acceptable terms given the

 
competition among numerous pharmaceutical and health care companies,
universities and non-profit research institutions for experienced scientists and
managers.

     The Company's scientific advisors are employed on a full-time basis by
unrelated employers and some have one or more consulting or other advisory
arrangements with other entities which at times may conflict with their
obligations to the Company. Inventions or processes discovered by such persons,
other than those to which the Company's licenses relate, or those for which the
Company is able to acquire licenses or those which were invented while
performing consulting services under contract to the Company, will most likely
not become the property of the Company, but will remain the property of such
persons or such persons' full-time employers. Failure to obtain needed patents,
licenses or proprietary information held by others could have a material adverse
effect on the Company's business, financial condition or results of
operations.

     Limited Personnel; Dependence on Contractors. As of November 13, 1998, the
Company had sixteen full-time employees. With the exception of these employees,
the Company relies, and for the foreseeable future will rely, on certain
independent organizations, advisors and consultants to provide certain services
with regard to clinical research. There can be no assurance that their services
will continue to be available to the Company on a timely basis when needed, or
that the Company could find qualified replacements. The Company's advisors and
consultants generally sign agreements that provide for confidentiality of the
Company's proprietary information. However, there can be no assurance that the
Company will be able to maintain the confidentiality of the Company's
technology, the dissemination of which could have a material adverse effect on
the Company's business, financial condition or results of operations.

     Conducting Business Abroad. Although the Company currently does not
conduct business outside the United States, it is in discussions with potential
strategic partners for the in-licensing and out-licensing of technology and the
development and marketing of its products. No assurance can be given that the
Company will be able to establish arrangements covering foreign countries, that
the necessary foreign regulatory approvals for its product candidates will be
obtained, that foreign patent coverage will be available or that the development
and marketing of its products through such licenses, joint ventures or other
arrangements will be commercially successful. The Company may also have greater
difficulty obtaining proprietary protection for its products and technologies
outside the United States rather than in it, and enforcing its rights in foreign
courts rather than in United States courts.

     Limited Availability of Net Operating Loss Carry Forwards. For Federal
income tax purposes, net operating loss and tax credit carryforwards as of
December 31, 1997 are approximately $5.2 million and $322,000, respectively.
These carryforwards will expire beginning in 2004 through 2011. The Tax Reform
Act of 1986 provided for a limitation on the use of net operating loss and tax
credit carryforwards following certain ownership changes. The Company believes
that the Private Placement, together with certain prior issuances of common
stock, is likely to restrict severely the Company's ability to utilize its net
operating losses and tax credits. Additionally, because U.S. tax laws limit the
time during which net operating loss and tax credit carryforwards may be applied
against future taxable income tax liabilities, the Company may not be able to
fully utilize its net operating loss and tax credits for federal income tax
purposes.

     Potential Volatility of Price; Low Trading Volume. The market price of

 
the Common Stock, like that of many other development-stage public
pharmaceutical or biotechnology companies, has been highly volatile and may
continue to be in the future. Factors such as announcements of technological
innovations or new commercial products by the Company or its competitors,
disclosure of results of pre-clinical and clinical testing, adverse reactions to
products, governmental regulation and approvals, developments in patent or other
proprietary rights, public or regulatory agency concerns as to the safety of
products developed by the Company and general market conditions may have a
significant effect on the market price of the Common Stock and its other equity
securities. Since August 6, 1998, the Company's common stock has been thinly
traded on the American Stock Exchange. There can be no assurance that a more
active trading market will develop in the future.

     Dividends. The Company has never paid cash dividends on its common stock
and does not anticipate paying any such dividends in the foreseeable future. The
Company currently intends to retain its earnings, if any, for the development of
its business.

     Certain Interlocking Relationships; Potential Conflicts of Interest. Steve
H. Kanzer, C.P.A., Esq., a director of the Company, is a Senior Managing
Director of Paramount Capital, Inc. ("Paramount"). Paramount Capital Asset
Management, Inc. ("PCAM") is the investment manager and general partner of The
Aries Fund, a Cayman Island Trust, and the Aries Domestic Fund, L.P.,
respectively, each of which is a significant shareholder of the Company. Lindsay
A. Rosenwald, M.D., the President and sole stockholder of PCAM, is also the
President and sole stockholder of Paramount. Dr. Rosenwald is also President and
sole stockholder of Paramount Capital Investment LLC ("PCI"), a merchant banking
and venture capital firm specializing in biotechnology companies. In addition,
certain officers, employees and/or associates of Paramount and/or its affiliates
own securities in the Company's subsidiaries. In the regular course of its
business, PCI identifies, evaluates and pursues investment opportunities in
biomedical and pharmaceutical products, technologies and companies. Generally,
Delaware corporate law requires that any transactions between the Company and
any of its affiliates be on terms that, when taken as a whole, are substantially
as favorable to the Company as those then reasonably obtainable from a person
who is not an affiliate in an arms-length transaction. Nevertheless, neither
such affiliates nor PCI is obligated pursuant to any agreement or understanding
with the Company to make any additional products or technologies available to
the Company, nor can there be any assurance, and the Company does not expect and
purchasers of the securities offered hereby should not expect, that any
biomedical or pharmaceutical product or technology identified by such affiliates
or PCI in the future will be made available to the Company. In addition, certain
of the current officers and directors of the Company or certain of any officers
or directors of the company hereafter appointed may from time to time serve as
officers or directors of other biopharmaceutical or biotechnology companies.
There can be no assurance that such other companies will not have interests in
conflict with those of the Company.

     Concentration of Ownership and Control. The Company's directors,
executive officers and principal stockholders and certain of their affiliates
have the ability to influence the election of the Company's directors and most
other stockholder actions. In particular, pursuant to the Placement Agency
Agreement, so long as 50% of the Private Placement Shares remain outstanding
and subject contractual rights described in the subscription agreement between
The Company and each signatory thereto (the "Subscription Agreements"), the
Company may not do any of the following without the Placement Agent's prior
approval: (i) issue or increase the authorized amount or alter the terms of any
securities of the Company senior to, or on parity with, the Private Placement

 
Shares with respect to voting, liquidation or dividends, (ii) alter the
Company's charter documents in any manner that would adversely affect the
relative rights, preferences, qualifications, limitations or restrictions of
the Private Placement Shares or of certain contractual rights described in the
Subscription Agreements, (iii) incur indebtedness in excess of $1.0 million,
(iv) incorporate or acquire any subsidiaries and (v) enter any transactions with
affiliates of the Company. In addition, the Company's Board of Directors
cannot exceed seven persons without the prior written consent of the Placement
Agent. These arrangements may discourage or prevent any proposed takeover of the
Company, including transactions in which stockholders might otherwise receive a
premium for their shares over the then current market prices. Such
stockholders may influence corporate actions, including influencing elections
of directors and significant corporate events. See also, "--Certain
Interlocking Relationships; Potential Conflicts of Interest."