INCARA PHARMACEUTICALS CORPORATION
P.O. BOX 14287
3200 EAST HIGHWAY 54
CAPE FEAR BUILDING, SUITE 300
RESEARCH TRIANGLE PARK, NORTH CAROLINA 27709

---------------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 6, 2000
---------------------------------------------

TO THE STOCKHOLDERS OF INCARA PHARMACEUTICALS CORPORATION:

The Annual Meeting of Stockholders (the "Meeting") of Incara
Pharmaceuticals Corporation ("Incara") will be held at the North Carolina
Biotechnology Center, 15 Alexander Drive, Research Triangle Park, North
Carolina, on Thursday, April 6, 2000 at 5:00 p.m., for the following purposes:

1. To elect a board of five directors;

2. To approve amendments to Incara's 1995 Employee Stock Purchase Plan to
increase the number of shares of Common Stock reserved for issuance
thereunder from 200,000 shares to 400,000 shares;

3. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent auditors of Incara for the fiscal year ending September
30, 2000; and

4. To act upon such other matters as may properly come before the meeting
or any adjournment thereof.

These items are more fully described in the attached Proxy Statement.

The Board of Directors has fixed the close of business on February 7, 2000, as
the record date for the determination of stockholders entitled to notice of and
to vote at the Meeting or any adjournments thereof. A list of stockholders of
Incara entitled to vote at the Meeting will be available for examination by a
stockholder at Incara's office, for the ten days prior to the Meeting and during
normal business hours. All such stockholders are cordially invited to attend the
Meeting in person. However, to assure your representation at the Meeting, you
are urged to mark, sign, date and return the enclosed proxy card as promptly as
possible in the postage-prepaid envelope enclosed for that purpose. Any
stockholder attending the Meeting may vote in person, even if such stockholder
returned a proxy.

Incara's Proxy Statement and proxy is submitted herewith along with Incara's
Annual Report to Stockholders for the fiscal year ended September 30, 1999.

IMPORTANT--YOUR PROXY IS ENCLOSED

WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND PROMPTLY RETURN
THE ENCLOSED PROXY IN THE ENCLOSED ENVELOPE. NO POSTAGE IS REQUIRED FOR MAILING
IN THE UNITED STATES.

By Order of the Board of Directors

RICHARD W. REICHOW
EXECUTIVE VICE PRESIDENT,
CHIEF FINANCIAL OFFICER,
TREASURER AND SECRETARY
Research Triangle Park,
North Carolina
February 14, 2000

INCARA PHARMACEUTICALS CORPORATION
P.O. BOX 14287
3200 EAST HIGHWAY 54
CAPE FEAR BUILDING, SUITE 300
RESEARCH TRIANGLE PARK, NORTH CAROLINA 27709

PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
APRIL 6, 2000

INFORMATION CONCERNING SOLICITATION AND VOTING

The enclosed proxy is solicited by the Board of Directors (the "Board") of
Incara Pharmaceuticals Corporation, a Delaware corporation ("Incara" or the
"Company"), for use at Incara's Annual Meeting of Stockholders to be held at the
North Carolina Biotechnology Center, 15 Alexander Drive, Research Triangle Park,
North Carolina, at 5:00 p.m. on Thursday, April 6, 2000, and any adjournments
thereof (the "Meeting"). The cost of soliciting proxies will be borne by Incara.
In addition to solicitation of proxies by mail, employees of Incara, without
extra remuneration, might solicit proxies personally or by telephone. Incara
will reimburse brokerage firms and other custodians, nominees and fiduciaries
for their reasonable out-of-pocket expenses for forwarding proxy materials to
beneficial owners and seeking instruction with respect thereto. The mailing
address of the principal executive offices of Incara is P.O. Box 14287, Research
Triangle Park, North Carolina 27709. Copies of this Proxy Statement and
accompanying proxy card will be mailed to stockholders on or about February 14,
2000.

REVOCABILITY OF PROXIES

Any stockholder giving a proxy has the power to revoke it at any time before
it is voted by giving a later proxy or written notice to Incara (Attention:
Richard W. Reichow, Corporate Secretary), or by attending the Meeting and voting
in person.

VOTING

When the enclosed proxy is properly executed and returned (and not
subsequently properly revoked), the shares it represents will be voted in
accordance with the directions indicated thereon, or, if no direction is
indicated thereon, it will be voted:

1. FOR the election of the five nominees for director identified below;

2. FOR the approval of amendment to the 1995 Employee Stock Purchase Plan
to increase the number of shares of Common Stock reserved for issuance
thereunder from 200,000 shares to 400,000 shares;

3. FOR ratification of the appointment of PricewaterhouseCoopers LLP,
Raleigh, North Carolina, as independent auditors of Incara for the
fiscal year ending September 30, 2000; and

4. In the discretion of the proxies with respect to any other matters
properly brought before the stockholders at the Meeting.

RECORD DATE

Only the holders of record of Incara's Common Stock at the close of business
on the record date, February 7, 2000 (the "Record Date"), are entitled to notice
of and to vote at the Meeting. On the Record Date, 5,017,569 shares of Common
Stock were outstanding. Stockholders will be entitled to one vote for each share
of Common Stock held on the Record Date.

PROPOSAL NO. 1 - ELECTIONS OF DIRECTORS

NOMINEES

Incara's By-Laws provide that the number of directors constituting the Board
of Directors shall be no less than one nor greater then seven. The number of
directors currently authorized is five. Therefore, that number of directors are
to be elected to serve for one year, until the election and qualification of his
successor, or until his death, removal or resignation. It is intended that
proxies, not limited to the contrary, will be voted FOR all of the nominees
named below. If any nominee is unable or declines to serve as a director at the
time of the Meeting, the individuals named in the enclosed proxy may exercise
their discretion to vote for any substitute proposed by the Board of Directors.
Each nominee listed below has agreed to serve as a director if elected. None of
the nominees is related by blood, marriage or adoption to any other nominee or
any executive officer of Incara.

NAME OF NOMINEE AGE DIRECTOR SINCE
--------------- --- --------------
Clayton I. Duncan..............................50 1995
Joseph J. Ruvane, Jr...........................74 1995
David B. Sharrock..............................63 1995
Edgar H. Schollmaier...........................66 1998
Stephen M. Prescott, M.D.......................51 N/A

CLAYTON I. DUNCAN has been President, Chief Executive Officer and a director
of Incara since January 1995. From 1989 until December 1993, Mr. Duncan was
President and Chief Executive Officer of Sphinx Pharmaceuticals Corporation
("Sphinx"), a biopharmaceutical company which was acquired by Eli Lilly and
Company ("Lilly") in September 1994. From December 1993 until September 1994, he
served as an independent consultant to Sphinx with regard to the sale of Sphinx
to Lilly. From 1987 to 1989, Mr. Duncan was a General Partner of Intersouth
Partners, a venture capital firm. From 1979 to 1987, he was an executive with
Carolina Securities Corporation, a regional investment banking firm, serving as
Executive Vice President and a director from 1984 to 1987. Mr. Duncan was
founder and Chairman of the Board of CRX Medical, Inc., a medical products
company that conducted research and development in wound management, ophthalmic
disorders and interventional radiology. Mr. Duncan is also a director of Aeolus
Pharmaceuticals, Inc., CPEC LLC, and Renaissance Cell Technologies, Inc., all of
which are subsidiaries of Incara. Mr. Duncan received an M.B.A. from the
University of North Carolina at Chapel Hill. In addition, Mr. Duncan is a
director of The Forest at Duke, a continuing-care retirement community, and
Chairman of the Board of Directors of the Carolina Ballet, a professional ballet
company.

JOSEPH J. RUVANE, JR. has been director of Incara since May 1995. Mr. Ruvane
was a director of Sphinx from 1989 to 1994, serving as its Chairman of the Board
from 1990 to 1994. From 1988 to 1990, Mr. Ruvane served as Vice Chairman of the
Board of Directors of Glaxo, Inc. ("Glaxo"), a multi-national pharmaceutical
company. From 1981 to 1988 he served as President and Chief Executive Officer of
Glaxo. Mr. Ruvane also serves as a director of Connetics Corporation, a
biotechnology company, and Pozen, Inc., a privately held drug development
company.

DAVID B. SHARROCK has been a director of Incara since October 1995. Mr.
Sharrock was associated with Marion Merrell Dow, Inc., a multi-national
pharmaceutical company, and its predecessor companies for over 35 years until
his retirement in December 1993. Most recently, since December 1989, he served
as Executive Vice President, Chief Operating Officer and a director, and in
1988, he was named President and Chief Operating Officer of Merrell Dow
Pharmaceuticals Inc. Mr. Sharrock is also a director of Interneuron
Pharmaceuticals, Inc.("Interneuron") and Broadwing Inc.

EDGAR H. SCHOLLMAIER has been a director of Incara since May 1998. Mr.
Schollmaier is Chairman of Alcon Laboratories, Inc. ("Alcon"), a wholly owned
subsidiary of Nestle' SA. He served as President of Alcon from 1972 to 1997 and
was Chief Executive Officer for the last 20 years of that term. He is a graduate
of the University of Cincinnati and the Harvard Graduate School of Business
Administration. He serves as a director of DENTSPLY International, Inc., a
dental products company, and Stevens International Inc., a printing and
packaging company. In addition, he is a Regent of Texas Christian University and
a director of the University of Cincinnati Foundation, the Cook Children's
Hospital, Research to Prevent Blindness and the Foundation of the American
Academy of Ophthalmology.

STEPHEN M. PRESCOTT, M.D. is the Executive Director of the Huntsman Cancer
Institute at the University of Utah in Salt Lake City. Dr. Prescott received his
M.D. degree from Baylor College of Medicine in 1973 and then completed training
in Internal Medicine at the University of Utah. Dr. Prescott subsequently
undertook advanced research training in biochemistry and molecular biology at
Washington University School of Medicine. He joined the faculty at the
University of Utah in 1982 and currently is a Professor of Internal Medicine at
the University of Utah and holds the H.A. & Edna Benning Presidential Endowed
Chair in Human Molecular Biology and Genetics. His previous position at the
University of Utah (from 1998 - 1999) was Director of the Program in Human
Molecular Biology & Genetics, in the Eccles Institute.

INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES

The business of Incara is under the general management of the Board of
Directors as provided by the laws of Delaware and the By-Laws of Incara. During
the fiscal year ended September 30, 1999, the Board of Directors held six formal
meetings, excluding actions by unanimous written consent. Each member of the
Board attended all of the fiscal 1999 meetings of Board of Directors and Board
committees of which he was a member, except Mr. Sharrock did not attend a Board
meeting, an Audit Committee meeting and a Compensation Committee meeting and Dr.
Glenn L. Cooper, a former Board member, did not attend one Board meeting.

The Board of Directors has established an audit committee (the "Audit
Committee") and a compensation committee (the "Compensation Committee"). The
Board has no Nominating Committee. The Audit Committee currently consists of Mr.
Ruvane, Mr. Sharrock and Mr. Schollmaier. During fiscal 1999, the Audit
Committee held two formal meetings. The Audit Committee reviews the results and
scope of the audit and other services provided by Incara's independent public
accountants. The Compensation Committee currently consists of Mr. Ruvane, Mr.
Sharrock, and Mr. Schollmaier. During fiscal 1999, the Compensation Committee
held two formal meetings. The Compensation Committee makes recommendations to
the Board of Directors regarding salaries and incentive compensation for
officers of Incara, and determines the amount and type of equity incentives
granted to participants in Incara's 1994 Stock Option Plan (the "Option Plan")
and the 1999 Equity Incentive Plan.

VOTE REQUIRED

The five nominees receiving the highest number of affirmative votes of the
shares present or represented and entitled to be voted at the Meeting shall be
elected as directors of Incara. Votes withheld from any director will be counted
for purposes of determining the presence or absence of a quorum for the
transaction of business, but will be excluded from the vote on this proposal.

THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS THAT STOCKHOLDERS VOTE "FOR"
THE ELECTION OF THE NOMINEES LISTED ABOVE.

PROPOSAL NO. 2 - APPROVAL OF AMENDMENT
TO THE 1995 EMPLOYEE STOCK PURCHASE PLAN

Incara's 1995 Employee Stock Purchase Plan (the "ESPP") was adopted and
approved by the Board of Directors in October 1995 and by the stockholders of
Incara in November 1995. The ESPP is intended to qualify as an "employee stock
purchase plan" under Section 423 of the Internal Revenue Code of 1986, as
amended (the "Code"). A total of 400,000 shares of Common Stock have been
reserved for issuance under the ESPP, 200,000 of which are subject to
stockholder approval at the Meeting. As of December 31, 1999, 110,298 shares of
Common Stock had been purchased pursuant to the ESPP.

The ESPP is administered by the Compensation Committee of the Board of
Directors. Generally, each offering of Common Stock under the ESPP (an
"Offering") is for a period of 12 months. Offerings under the ESPP commence on
or about October 1 of each year. The first day of an Offering shall be the
"Offering Date" for such Offering. The Board may adjust the Offering dates and
periods, subject to certain limitations. The ESPP will continue until terminated
by the Board of Directors or until all of the shares reserved for issuance under
the ESPP have been issued.

Participation in the ESPP is limited to eligible employees of Incara and any
parent or subsidiary corporation of Incara designated by the Board of Directors
for inclusion in the ESPP (individually, a "Participating Company") who
authorize payroll deductions. Payroll deductions may not exceed 10% of
compensation. No person who owns shares or holds options to purchase, or who as
a result of participation in the ESPP would own shares or hold options to
purchase, 5% or more of the total combined voting power or value of all classes
of stock of Incara at the start of an Offering is entitled to participate in the
ESPP. In addition, employees who customarily work less than 20 hours per week or
who customarily work not more than five months in any calendar year are not
eligible to participate. Once an employee becomes a participant in the ESPP, the
employee will automatically participate in each successive Offering until such
time as the employee ceases to be an eligible employee, withdraws from the ESPP
or terminates employment.

On the last day of each Purchase Period (the "Purchase Date"), participants
purchase shares of Incara's Common Stock ("Shares") with their accumulated
payroll deductions. The purchase price per share (the "Purchase Price") at which
the shares are sold under the ESPP generally will be 85% of the lesser of the
fair market value of the Common Stock on the first day of the Offering or the
Purchase Date. The ESPP provides that if the fair market value of the Common
Stock on a Purchase Date other than the final Purchase Date of an Offering is
less than the fair market value of the Common Stock on the Offering Date for
such Offering, then every participant, unless such participant otherwise elects
in accordance with the ESPP, shall automatically be withdrawn from such Offering
at the end of such Purchase Date and after the acquisition of shares for such
Purchase Period and be enrolled in the next Offering commencing subsequent to
such Purchase Period.

The number of shares a participant purchases in each Offering is determined by
dividing the total amount of payroll deductions withheld from the participant's
compensation by the Purchase Price. Subject to certain limitations, during an
Offering each participant has a "Purchase Right" consisting of the right to
purchase the lesser of the whole number of shares determined by dividing $50,000
by the fair market value of a share on the first day of the Offering or 30,000
shares. However, participants may not purchase shares under the ESPP or any
other Company Plan under Section 423 of the Code having a fair market value
exceeding $25,000 (as determined for purposes of the Code as of the ESPP
Offering Date for each ESPP Offering Period) in any calendar year in which such
participant's Purchase Right with respect to such ESPP Offering Period remains
outstanding. Any cash balance remaining in the participant's account is refunded
to the participant as soon as practicable after the Purchase Date. If the refund
is less than the amount necessary to purchase a whole share, Incara may maintain
cash in the participant's account and apply it toward the purchase of shares in
the subsequent Purchase Period or Offering.

A participant may withdraw from an Offering at any time without affecting his
or her eligibility to participate in future Offerings. In effect, therefore, a
participant is given an option which he or she may or may not exercise at the
end of a Purchase Period. However, once a participant withdraws from an
Offering, that participant may not again participate in the same Offering.

In the event of a transfer of control of Incara (as defined in the ESPP), the
Board of Directors may arrange with the surviving, continuing, successor, or
purchasing corporation or parent corporation thereof (the "Acquiring
Corporation") to assume Incara's rights and obligations under the ESPP. Purchase
Rights that are neither assumed by the Acquiring Corporation nor exercised as of
the transfer of control terminate as of the date of the transfer of control.

The Board may amend or terminate the ESPP but may not affect Purchase rights
previously granted under the ESPP or adversely affect the right of any
participant except as permitted by the ESPP, as necessary to qualify the ESPP as

an "employee stock purchase plan" pursuant to Section 423 of the Code of to
obtain qualification or registration of the shares under applicable foreign,
federal or state securities laws. The stockholders must approve any amendment
increasing the shares reserved or changing the class of employees eligible for
participation in the ESPP or the definition of a corporation that may be
designated by the Board as a Participating Company within 12 months of the
adoption of such amendment by the Board.

Of the 200,000 shares subject to stockholder approval, the amount to be
received by any participant is not determinable at this time.

FEDERAL INCOME TAX CONSEQUENCES

The following summary is intended only as a general guide under current law as
to the United States federal income tax consequences of participation in the
ESPP and does not attempt to describe all possible federal or other tax
consequences of such participation. Furthermore, the tax consequences are
complex and subject to change, and a taxpayer's particular situation may be such
that some variation of the described rules is applicable. This summary assumes
that the exercise of a Purchase Right under the ESPP constitutes an exercise
pursuant to an "employee stock purchase plan" under Section 423 of the Code.

PURCHASE RIGHTS. Generally, there are no tax consequences to an employee of
either becoming a participant in the ESPP or purchasing Shares under the ESPP.
The tax consequences of a disposition of Shares vary depending on the period
such stock is held before its disposition. If a participant disposes of Shares
within two years of the Offering Date or one year after the Purchase Date on
which the Shares are acquired (a "disqualifying disposition"), the participant
recognizes ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the Shares on the disposition date
(determined without regard to securities law restrictions) over the purchase
price. Such income may be subject to withholding of tax. Any additional gain or
resulting loss recognized by the participant from the disposition of the Shares
is a capital gain or loss.

If the participant disposes of Shares more than two years after the Offering
Date or more than one year after the Purchase Date on which the Shares are
acquired, or dies while holding Shares (whether or not within such period) the
participant recognizes ordinary income in the year of disposition or death in an
amount equal to the lesser of (1) the excess of the fair market value of the
Shares on the date of disposition or death over the purchase price or (2) the
excess of the fair market value of the Shares on the Offering Date over the
purchase price. For this purpose, if the purchase price cannot be determined at
the date of the option grant, then the purchase price is determined as though
the option were exercised when granted. Any additional gain recognized by the
participant on the disposition of the Shares is a capital gain. If the fair
market value of the Shares on the date of disposition is less than the purchase
price (as so determined), there is no ordinary income, and the loss recognized
is a capital loss.

If an employee disposes of the Shares in a disqualifying disposition, Incara
is entitled to a deduction equal to the amount of ordinary income recognized by
the participant as a result, subject to the Section 162(m) deduction limit
discussed below. In all other cases, no deduction is allowed to Incara.

SECTION 162(M) DEDUCTION LIMIT. Under Section 162(m) of the Code, the
allowable deduction for compensation paid or accrued with respect to the chief
executive officer and each of the four most highly compensated executive
officers of a publicly-held corporation (the "Covered Employees") is limited to
no more than $1 million per year for fiscal years beginning on or after January
1, 1994. Income to a Covered Employee under the ESPP is subject to the Section
162(m) deduction limit.

PROPOSED AMENDMENT

In January 2000, the Board of Directors adopted an amendment to the ESPP to
increase the number of shares reserved for issuance thereunder from 200,000
shares to 400,000 shares.

At the Meeting, the stockholders are being asked to approve the amendment to
the ESPP to increase the number of shares authorized for issuance thereunder
from 200,000 shares to 400,000 shares. The Board of Directors believes that
increasing the number of shares available under the ESPP will benefit Incara,
because it will provide participants with more opportunities to purchase shares
pursuant to the ESPP which will be helpful in attracting, retaining and
motivating valued employees.

VOTE REQUIRED

The affirmative vote of the holder of a majority of the shares of Incara's
0Common Stock present or represented and voting on this proposal at the Meeting
will be required to approve this amendment. Votes withheld on this proposal will
be counted for purposes of determining the presence of absence of a quorum for
the transaction of business and will be treated as shares represented and voting
on this proposal at the Meeting. While there is no definitive statutory or case
law authority in Delaware as to the proper treatment of abstentions, Incara
believes that abstentions should be counted for purposes of determining both
whether a quorum is present at the Meeting and the total number of shares
represented and voting on this proposal at the Meeting. In the absence of
controlling precedent to the contrary, Incara intends to treat abstentions in
this manner, which means they will have the same effect as votes against the
proposal. In a 1988 case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme Court
held that, while broker non-votes may be counted for purposes of determining the
presence or absence of a quorum of the transaction of business, broker non-votes
should not be counted for purposes of determining the number of shares
represented and voting with respect to the particular proposal on which the
broker has expressly not voted. Broker non-votes with respect to this proposal
will therefore not be considered represented and voting and, accordingly, will
not affect the determination as to whether the requisite vote has been obtained
to approve this proposal.

THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS A VOTE "FOR" THE PROPOSED
AMENDMENT TO THE 1995 EMPLOYEE STOCK PURCHASE PLAN.

PROPOSAL NO. 3 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors of Incara has appointed the firm of
PricewaterhouseCoopers LLP, Raleigh, North Carolina to serve as the independent
auditors of Incara for the fiscal year ending September 30, 2000, and recommends
that the stockholders ratify such action. PricewaterhouseCoopers has audited
the accounts of Incara and its subsidiaries since Incara's inception in March
1994 and has advised Incara that it does not have, and has not had, any direct
or indirect financial interest in Incara or its subsidiaries in any capacity
other than that of serving as independent auditors. Representatives of
PricewaterhouseCoopers are expected to attend the Meeting. They will have an
opportunity to make a statement, if they desire to do so, and will also be
available to respond to appropriate questions.

The affirmative vote of the holders of a majority of the shares of Incara's
Common Stock present or represented and voting on this proposal at the Meeting
shall constitute ratification of the appointment of PricewaterhouseCoopers. If
the appointment of PricewaterhouseCoopers is not ratified by the stockholders,
the Board of Directors will reconsider its selection.

THE BOARD OF DIRECTORS HAS APPROVED AND RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS AS INDEPENDENT
AUDITORS OF INCARA FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2000.

OTHER INFORMATION

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the ownership of
shares of Incara's Common Stock as of the Record Date by (i) each person known
by Incara to beneficially own more than 5% of the outstanding shares of Common
Stock, (ii) each director of Incara, (iii) each of the Named Officers, as listed
under " --Executive Compensation -- Summary Compensation" below, and (iv) all
directors and executive officers of Incara as a group. Except as indicated in
footnotes to this table, the persons named in this table have sole voting and
investment power with respect to all shares of Common Stock indicated below. As
of the Record Date Incara had 5,017,569 shares of Common Stock outstanding.
Share ownership in each case includes shares issuable upon exercise of options
that may be exercised within 60 days after the Record Date for purposes of
computing the percentage of Common Stock owned by such person but not for
purposes of computing percentage owned by any other person.

BENEFICIALLY PERCENTAGE
OWNED OWNED
-------------- ------------

Clayton I. Duncan (1)............................................................ 598,932 11.4%
Joseph J. Ruvane, Jr. (2)........................................................ 49,172 *
David B. Sharrock (3)............................................................ 41,951 *
Edgar H. Schollmaier (4)......................................................... 31,062 *
Stephen M. Prescott, M.D. (4).................................................... 6,000 *
David P. Ward (5)................................................................ 237,314 4.6%
Richard W. Reichow (6)........................................................... 259,582 5.1%
Barbara S. Schilberg (7)......................................................... 91,941 1.8%
W. Bennett Love (8).............................................................. 87,750 1.7%.
Wellington Management Company, LLP............................................... 399,100 8.0%
75 State Street
Boston, Massachusetts 02107
W. Ruffin Woody, Jr.............................................................. 310,000 6.2%
124 B. South Main Street
Roxboro, North Carolina 27573
Interneuron Pharmaceuticals, Inc. ............................................... 281,703 5.6%
One Ledgemont Center
99 Hayden Avenue
Lexington, Massachusetts 02421
All directors and executive officers as a group (9 persons) (9)..................1,494,295 25.8%
_____________
*Less than one percent

(1) Includes 227,375 shares owned (of which, 188,375 shares are unvested shares
of restricted stock) by Mr. Duncan, 120,000 shares owned by Mr. Duncan's
children, and 251,557 shares issuable upon exercise of options held by Mr.
Duncan. Mr. Duncan disclaims beneficial ownership of the shares held by his
children.

(2) Includes 3,000 shares owned and 46,172 shares issuable upon exercise of
options held by Mr. Ruvane.

(3) Includes 1,000 shares owned and 42,951 shares issuable upon exercise of
options held by Mr. Sharrock.

(4) Consists of shares issuable upon exercise of options held by named
individual.

(5) Includes 120,814 shares owned (of which, 120,000 shares are unvested shares
of restricted stock) and 116,500 shares issuable upon exercise of options
held by Dr. Ward.

(6) Includes 143,782 shares owned (of which, 120,000 shares are unvested shares
of restricted stock) and 115,800 shares issuable upon exercise of options
held by Mr. Reichow.

(7) Includes 1,941 shares owned and 90,000 shares issuable upon exercise of
options held by Ms. Schilberg.

(8) Includes 51,750 shares owned (of which, 44,000 shares are unvested shares
of restricted stock) and 36,000 shares issuable upon exercise of options
held by Mr. Love.

(9) See footnotes (1)-(8). Also includes 58,591 shares owned (of which, 49,000
shares are unvested shares of restricted stock) and 36,000 shares issuable
upon exercise of options held by an executive officer who is not a Named
Officer.

EXECUTIVE COMPENSATION

SUMMARY COMPENSATION

The following table sets forth all compensation earned for services rendered
to it in all capacities for the fiscal years ended September 30, 1999, 1998 and
1997, by Incara's Chief Executive Officer and by the four most highly
compensated officers who earned at least $100,000 in the respective fiscal year
(collectively, the "Named Officers").

SUMMARY COMPENSATION TABLE

Annual Compensation Long Term Compensation Awards
------------------------ ---------------------------------------
Name and Fiscal Stock Options Restricted Stock All Other
Principal Position Year Salary Bonus (Shares) (Shares) (2) Compensation (1)
- ------------------------------- -------- ----------- ---------- ------------------- -------------------- -------------------

Clayton I. Duncan 1999 $300,000 $84,000 --- 188,375 $2,934
President and Chief 1998 295,225 78,652 235,877 --- 2,791
Executive Officer 1997 275,600 95,400 --- --- 3,345

David P. Ward, M.D. 1999 235,000 51,994 --- 120,000 3,993
Executive Vice President, 1998 221,250 44,520 140,000 --- 3,657
Research & Development 1997 207,000 54,000 20,000 --- 3,134

Richard W. Reichow 1999 235,000 54,637 --- 120,000 3,044
Executive Vice President, 1998 212,250 46,825 140,000 --- 2,811
Chief Financial Officer, 1997 196,650 52,725 20,000 --- 3,192
Treasurer and Secretary

Barbara S. Schilberg (3) 1999 230,000 16,447 --- --- 1,397
Executive Vice President 1998 17,466 --- 180,000 --- 66
and General Counsel

W. Bennett Love 1999 122,000 23,028 --- 44,000 1,608
Vice President, Corporate 1998 117,333 17,480 54,000 --- 1,554
Planning/Communications 1997 105,452 17,280 29,000 --- 1,708

- ----------------------
(1) Consists of life and long-term disability insurance premiums and health
club fees reimbursed or paid on behalf of the Named Officers.
(2) As of September 23, 1999, the Named Officer purchased the number of
shares of restricted stock indicated at par value ($0.001 per share) and
cancelled stock options to purchase an equal number of shares of common
stock. The shares of restricted stock vest over up to three years from
the date of grant and vesting could be accelerated pursuant to certain
events, such as a change of control or an involuntary termination of
employment. No shares were vested as of September 30, 1999. The value of
the restricted stock received by the Named Officer, based on the closing
price of Incara's stock on September 23, 1999 ($0.625), was as follows:
for Mr. Duncan $117,546; for Dr. Ward $74,880; for Mr. Reichow $74,880;
and for Mr. Love $27,456.
(3) Ms. Schilberg has resigned, effective January 31, 2000.

MANAGEMENT INCENTIVE PLAN

The Compensation Committee and the Board of Directors has approved a
Management Incentive Plan ("MIP") for the executive officers of Incara.
The MIP provides for cash payments to the executive officers upon the
achievement of certain corporate and individual objectives. The MIP is
intended to be an annual compensation program. For the calendar year ended
December 31, 1999 and the calendar year ended December 31, 1998, the corporate
objectives related primarily to the development and commercialization of
bucindolol and the identification and advancement of other potential products
or programs. The corporate and individual objectives for calendar 1999 have
been evaluated and measured, and cash payments will be made to the executive
officers in January 2000.

OPTION GRANTS, EXERCISES AND HOLDINGS AND FISCAL YEAR-END OPTION VALUES

No stock option grants were made to any of the Named Officers during
the fiscal year ended September 30, 1999.

The following table sets forth certain information concerning all stock
options exercised during the fiscal year ended September 30, 1999 by the Named
Officers, and the number and value of unexercised options held by the Named
Officers as of September 30, 1999:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

Number of Value of
Securities Underlying Unexercised
Unexercised Options In-the-Money Options
Shares at September 30, 1999 at September 30, 1999(2)
Acquired Value ---------------------------------- ---------------------------------
Name on Exercise Realized (1) Exercisable Unexerciseable Exercisable Unexerciseable
- ---------------------- ------------- -------------- ------------- -----------------------------------------------------

Clayton I. Duncan - - 251,557 - $ 57,546 $ -
David P. Ward, M.D. - - 116,500 - 28,588 -
Richard W. Reichow - - 115,800 - 28,381 -
Barbara S. Schilberg - - 45,000 135,000 - -
W. Bennett Love - - 36,000 - - -

- ----------------------
(1) Market value of underlying securities on the date of exercise, minus the
exercise price.

(2) Value based on the difference between the fair market value of the shares
of Common Stock at September 30, 1999 ($0.65625), as quoted on the Nasdaq
Stock Market, and the exercise price of the options.

EMPLOYMENT AGREEMENTS

In September 1999, Incara entered into individual severance agreements with
Mr. Duncan, Dr. Ward, Mr. Reichow and Mr. Love. The severance agreements provide
that if the officer's employment with Incara is terminated, without just cause,
subsequent to a change in control as defined in the severance agreements, such
officer shall receive a severance benefit of two and one-half times his annual
base salary and average bonus.

In December 1997, Incara entered into a three-year employment agreement with
Mr. Duncan. The agreement provides for an annual base salary (which was
increased to $330,000 in January 2000) and annual bonuses based on the
achievement of performance milestones to be mutually agreed upon by Mr. Duncan
and the Board or its Compensation Committee. The agreement with Mr. Duncan also
provides that during the term of the agreement and, unless Mr. Duncan terminates
his employment for cause, for a period of one year thereafter, Mr. Duncan will
not compete with Incara, directly or indirectly. In the event Mr. Duncan's
employment is terminated by the Board, other than in a change in control and
without just cause, Incara shall continue to pay for a period of one year, Mr.
Duncan's base salary plus a percentage of his salary equal to the average annual
bonus percentage earned for the two years prior to the date of termination.

In November 1998, Incara entered into three-year employment agreements with
each of Dr. Ward and Mr. Reichow. The agreements provide for base salaries and
annual bonuses based upon the achievement of performance milestones to be
mutually agreed upon by the officer and the Chief Executive Officer, the Board
or the Compensation Committee. The agreements also provide that during their
term and, unless the employee terminates his employment for cause, for a period
of nine months thereafter, the employee will not compete with Incara, directly
or indirectly. In the event that the employment of Dr. Ward or Mr. Reichow is
terminated by the Board, other than in a change in control and without just
cause, Incara shall continue to pay, for a period of nine months, Dr. Ward or
Mr. Reichow, as the case may be, his base salary plus a percentage of his salary
equal to the average annual bonus percentage earned for the two years prior to
the date of termination.

In November 1998, Incara entered into a three-year employment agreement with
Mr. Love. The agreement provides for base salary and annual bonus based upon the
achievement of performance milestones to be mutually agreed upon by Mr. Love and
the Chief Executive Officer, the Board or the Compensation Committee. The
agreement also provides that during its term and, unless Mr. Love terminates his
employment for cause, for a period of six months thereafter, Mr. Love will not
compete with Incara, directly or indirectly. In the event that the employment of
Mr. Love is terminated by the Board, other than in a change in control and
without just cause, Incara shall continue to pay Mr. Love his base salary for a
period of six months.

COMPENSATION OF DIRECTORS

All directors are reimbursed for expenses incurred in connection with each
board or committee meeting attended. For fiscal 1999 and through January 17,
2000, each director who was not an employee of Incara received a fee of $2,000
per

Board meeting attended in person. In addition, the Option Plan provided for
the grant of nonstatutory options to non-employee directors of Incara pursuant
to a non-discretionary, automatic grant mechanism (the "Automatic Grant
Program"). Each non-employee director of Incara ("Eligible Director") was
granted a stock option to purchase 5,000 shares of Incara Common Stock on the
date each such person first became an Eligible Director. Each Eligible Director
thereafter was granted automatically each year upon re-election (except in the
year his or her initial director stock option was granted) an option to purchase
3,000 shares of Incara Common Stock as long as such director was a member of the
Board. The exercise price of options granted under the Automatic Grant Program
is the fair market value of Incara's Common Stock on the date of grant. Such
options became exercisable ratably over 36 months commencing one month from the
date of grant and will expire the earlier of 10 years after the date of grant or
90 days after termination of the director's service on the Board.

After a review of director compensation programs of other companies in its
industry, on January 18, 2000, the Compensation Committee and the Board adopted
a new compensation program for Eligible Directors. Each Eligible Director will
receive an annual retainer of $13,000 and will receive a fee of $500 for each
Board meeting attended in person. The annual retainer will be due on the date
that the Eligible Director is elected or re-elected to the Board of Directors.
Directors may elect to receive all or a portion of their annual retainer as an
option to purchase Common Stock. Any remainder will be paid in cash. Any option
elected will enable the director to purchase a number of shares equal to three
times the number of shares that could have been purchased with the portion of
the annual retainer elected to be received as an option. The exercise price per
share for the option will be the fair market value of the Common Stock on the
date of the grant. The date of grant will be the date the annual retainer is
granted to the director. These options will be fully vested upon grant and will
be exercisable for ten years from the date of the grant. This director
compensation program was adopted on January 18, 2000, subject to the transition
policy that the date of the annual retainer and the grant date shall be January
18, 2000 for each Eligible Director who was a director on the date the program
was adopted and the director shall not receive any additional retainer at the
Meeting. In addition, the Automatic Grant Program was revised to increase the
initial stock option grant for new Eligible Directors from 5,000 shares to
10,000 shares and the annual automatic stock option grant was increased from
3,000 shares to 6,000 shares. The options will become exercisable ratably over
36 months commencing one month from the date of grant and will expire 10 years
after the date of grant.

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

Neither the material in this report, nor the performance graph included in
this proxy statement under the heading "-- Performance Graph" (the "Performance
Graph"), is soliciting material, is or will be deemed filed with the Securities
and Exchange Commission or is or will be incorporated by reference in any filing
of Incara under the Securities Act of 1933, as amended, or the Exchange Act,
whether made before or after the date of this proxy statement and irrespective
of any general incorporating language in such filing.

The Compensation Committee is responsible for establishing compensation policy
and administering the compensation programs of Incara's executive officers. The
Compensation Committee met two times during fiscal 1999 to review executive
compensation policies, compensation programs, and individual salaries and awards
for the executive officers. The purpose of this report is to inform stockholders
of Incara's compensation policies for executive officers and the rational for
the compensation paid to executive officers in fiscal 1999.

COMPENSATION PHILOSOPHY

Incara's compensation program is designed to motivate and reward the
executives responsible for the financial and strategic objectives essential to
Incara's long-term success and stockholder value. The financial goals for
compensation plans are reviewed and approved by the Compensation Committee.

Incara's total compensation philosophy is designed to support its overall
objective of creating value for its stockholders. Key objectives of this
philosophy are:

o To attract and retain key executives critical to the long-term success of
Incara;

o To support a performance-oriented environment that rewards performance with
respect to Incara's short-term and long-term financial goals;

o To encourage maximum performance through the use of appropriate incentive
programs; and

o To align the interests of executives with those of Incara's stockholders by
providing a significant portion of compensation in Incara's Common Stock.

BASE SALARY

The Compensation Committee annually reviews the base salary of each officer.
In determining appropriate salary levels, the Compensation Committee considers
individual performance, experience, level of responsibility, internal equity and
external pay practices for the comparable positions. The Compensation Committee
has decided not to use the compensation information of the companies included in
the CRSP Nasdaq Pharmaceuticals Stocks Index shown in the Performance Graph
because most of the companies included in the index are larger than Incara and
therefore the information is not considered to be comparable.

MANAGEMENT INCENTIVE PLAN

Incara has established the MIP to reward participants for their contributions
to the achievement of company-wide performance goals. Each year the Board will
approve both the performance measures selected and the specific financial
targets used under the MIP. The Compensation Committee believes these goals will
drive the future success of the Company's business and will enhance stockholder
value. Awarded amounts are directly related to performance. The amount
individual executives may earn (target awards) is directly dependent upon the
individual's position, responsibility and ability to impact the Company's
financial success. The MIP target payment as a percentage of base salary for the
Chief Executive Officer is 40%, for executive vice presidents it is 30% and for
the other vice presidents it is 25%. An individual may earn from 0% to 200% of
the MIP target percentage.

For calendar 1999 and calendar 1998, Incara's corporate objectives focused
primarily on the development and commercialization of bucindolol and the
identification and advancement of other potential products or programs. For
calendar 1998, the Company achieved a weighted average of 70% of its corporate
objectives, as the bucindolol and in-licensing objectives were 100% satisfied
and the other objectives were not met.

Company and individual performance for the calendar 1999 objectives has been
evaluated, and cash payments will be made to the executive officers in January
2000. See "-- Executive Compensation -- Management Incentive Plan".

STOCK OPTIONS

The Option Plan offered by Incara has been established to provide all
employees of Incara with an opportunity to share, along with stockholders of
Incara, in the long-term performance of Incara. Stock options only have value to
the employee if the price of Incara's stock appreciates in value from the date
the stock options were granted. Stockholders also benefit from such stock price
appreciation.

Grants of stock options are generally made upon commencement of employment,
with additional grants being made periodically to all eligible employees, and,
occasionally, following a significant change in job responsibility, scope or
title. Stock options granted under the Option Plan generally have vesting
schedules of three to four years and expire ten years from the date of grant.
The exercise price of options granted under the Option Plan is usually 100% of
fair market value of the Common Stock on the date of grant. See "-- Executive
Compensation --Option Grants, Exercises and Holdings and Fiscal Year -- End
Option Values".

RESTRICTED STOCK

As an integral component of a management and employee retention program
designed to motivate, retain and provide incentive to the Company's management,
employees and key consultants, the Compensation Committee and the Board adopted
the 1999 Equity Incentive Plan (the "1999 Plan") in September 1999. The 1999
Plan provides for the grant of restricted stock ("Restricted Stock") awards
which entitle employees and consultants to receive up to an aggregate of
1,400,000 shares of the Company's Common Stock upon satisfaction of specified
vesting periods. As of September 30, 1999, Restricted Stock awards to acquire an
aggregate of 1,209,912 shares had been granted to employees and key consultants
of the Company in consideration of services rendered by the participants to the
Company, the cancellation of options for an equal number of shares of Common
Stock and payment of the par value of the shares. The shares of Restricted Stock
vest over up to three years from the date of grant and vesting could be
accelerated pursuant to certain events, such as a change of control or an
involuntary termination of employment.

CEO COMPENSATION

Mr. Duncan's base salary and grants of restricted stock and stock options for
fiscal 1999 were determined in accordance with the criteria described in the
Base Salary, Stock Options and Restricted Stock sections of this report. The
annual base salary of Mr. Duncan was set at $300,000 as of January 3, 1998 and
his salary was not changed during 1999. In January 2000, it was increased to
$330,000. Mr. Duncan received a bonus of $84,000 in January 1999 pursuant to the
MIP for calendar 1998. Mr. Duncan did not receive any stock options during
fiscal 1999. He cancelled stock options to purchase 188,375 shares in connection
with his grant of 188,375 shares of Restricted Stock.

CONCLUSION

The Compensation Committee believes that Incara's compensation policies are
structured to result in the highest level of performance from Incara's
executives. By providing a significant portion of each executive's total
potential compensation under the MIP and by providing each executive with a
significant number of shares of restricted stock and stock options, the
Compensation Committee believes that it has closely aligned Incara executive's
personal interests with those of the Company and the stockholders. The
Compensation Committee intends to continue to review and analyze its policies in
light of the environment in which the Company competes for executives.

Submitted by: The Compensation Committee

JOSEPH J. RUVANE, JR.
DAVID B. SHARROCK
EDGAR H. SCHOLLMAIER

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee consists of Mr. Ruvane, Mr. Sharrock and Mr.
Schollmaier. Mr. Ruvane, Mr. Sharrock and Mr. Schollmaier were not at any time
during fiscal 1999 or at any other time an officer or employee of Incara. No
executive officer of Incara serves as a member of the board of directors or
compensation committee of any entity which has one or more executive officers
serving as a member of the Board of Directors of Incara or the Compensation
Committee.

PERFORMANCE GRAPH

The following graph shows a four-year (1) comparison of cumulative total
stockholder returns (2) for Incara, the CRSP Nasdaq Pharmaceuticals Stocks Index
and the CRSP Total Return Index of the Nasdaq Stock Market. (The "CRSP" is the
Center for Research in Securities Prices at the University of Chicago.) The
graph assumes that $100 was invested on February 1, 1996 (the date of Incara's
IPO) in each of Incara's Common Stock, the stocks in the CRSP Nasdaq
Pharmaceuticals Stocks Index and the stocks in the CRSP Total Return Index of
the Nasdaq Stock Market.

02/01/96 09/30/96 09/30/97 09/30/98 09/30/99
-------- -------- -------- -------- --------

Incara 100.0 165.0 150.0 26.7 4.4
Pharmaceuticals 100.0 95.1 106.1 91.4 154.6
Nasdaq 100.0 116.7 160.2 162.9 264.5

- ------------------
(1) Indicates comparison of total return for all of fiscal 1999, 1998 and
1997 and solely for that period of fiscal 1996 (February 1, 1996 -
September 30, 1996) during which Incara's Common Stock was registered
under Section 12 of the Exchange Act.

(2) Total return assumes reinvestment of dividends. Total returns for the
Nasdaq Stock Market and the Nasdaq Pharmaceuticals Stocks indices are
weighted based on market capitalization.

CERTAIN TRANSACTIONS

On July 15, 1999, Incara restructured its corporate relationship with
Interneuron to reduce Interneuron's majority ownership of Incara in exchange for
an increased ownership by Interneuron of CPEC, Inc. (the "Restructuring"). Prior
to the Restructuring, CPEC, Inc. was owned 80.1% by Incara and 19.9% by
Interneuron. As a preliminary step in the Restructuring, Incara acquired
Interneuron's 19.9% interest in CPEC, Inc., which was then merged into CPEC LLC,
a Delaware limited liability company. Incara redeemed 4,229,381 of the 4,511,084
shares of Incara Common Stock owned by Interneuron, in exchange for a 65.0%
ownership of CPEC LLC and cancellation of certain liabilities owed to
Interneuron by Incara and CPEC, Inc. which totalled $2,421,000.

In May 1998, Incara acquired all of the outstanding stock of Transcell
Technologies, Inc. ("Transcell") in a merger (the "Transcell Merger") of
Transcell with and into Incara and also acquired certain related technology
rights held by Interneuron in exchange for Incara Common Stock with an aggregate
market value of $14,200,000. In addition, Incara issued replacement stock
options and warrants to purchase 241,705 shares and 17,783 shares, respectively,
of Incara Common Stock to Transcell employees consultants and warrant holders,
with a total estimated value of $1,507,000. Prior to the Transcell Merger,
Transcell and Incara were both majority-owned subsidiaries of Interneuron. Under
the terms of the Agreement and Plan of Merger between Incara, Transcell and
Interneuron dated March 2, 1998, Transcell stockholders receive Incara Common
Stock in three installments. The first installment of 320,151 shares was issued
upon closing the transaction on May 8, 1998 (the "Closing"). In exchange for
certain license and technology rights held by Interneuron, and for Interneuron's
continuing guarantee of certain of Transcell's lease obligations, Incara issued
to Interneuron 174,672 shares of Incara Common Stock at Closing with a value of
$3,000,000 and agreed to pay Interneuron a royalty on net sales of certain
products that might result from a Research Collaboration and Licensing Agreement
originally entered into among Transcell, Interneuron and Merck & Co., Inc. In
lieu of the second installment payment due to Interneuron, Interneuron retained
281,703 shares of Incara Common Stock as part of the Restructuring. On August 9,
1999, Incara issued 867,583 shares of Incara Common Stock, valued at
approximately $1.38 per share, to the other former Transcell stockholders as
payment for their second installment of the Transcell Merger in the principal
amount of $1,202,000. The third and final installment of approximately
$2,900,000 to the former Transcell stockholders, including Interneuron, is due
in February 2000 and will be paid in shares of Incara Common Stock, calculated
based on the per share price at that time.

Incara has adopted a policy that all transactions between Incara and its
executive officers, directors and other affiliates must be approved by a
majority of the members of the Board of Directors of Incara and by a majority of
the disinterested members of the Board, and must be on terms no less favorable
to Incara than could be obtained from unaffiliated third parties. In addition,
the policy requires that any loans by Incara to its executive officers,
directors or other affiliates be for bona fide business purposes only.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

To Incara's knowledge, there were no reports required under Section 16(a) of
the Exchange Act that were not timely filed during the fiscal year ended
September 30, 1999.

DEADLINE FOR STOCKHOLDER PROPOSALS

Stockholders having proposals that they desire to present at next year's
annual meeting of stockholders of Incara should, if they desire that such
proposals be included in Incara's Proxy Statement relating to such meeting,
submit such proposals in time to be received by Incara not later than October
17, 2000. To be so included, all such submissions must comply with the
requirements of Rule 14a-8 promulgated under the Exchange Act and the Board of
Directors directs the close attention of interested stockholders to that Rule.
Proposals may be mailed to Richard W. Reichow, Corporate Secretary, Incara
Pharmaceuticals Corporation, P.O. Box 14287, Research Triangle Park, North
Carolina 27709.

If a stockholder of the Company wishes to present a proposal before the 2001
Annual Meeting, but does not wish to have the proposal considered for inclusion
in the Company's proxy statement and proxy card, such stockholder must also give
written notice to the Secretary of the Company at the address noted above. The
Secretary must receive such notice no later than January 1, 2001. If a
stockholder fails to provide timely notice of a proposal to be presented at the
2001 Annual Meeting, the proxies designated by the Board of Directors of the
Company will have discretionary authority to vote on any such proposal.

OTHER MATTERS

The Board of Directors knows of no other business to be brought before the
Meeting, but it is intended that, as to any such other business, the shares will
be voted pursuant to the proxy in accordance with the best judgement of the
person or persons acting thereunder.

INCARA PHARMACEUTICALS CORPORATION

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS

PROXY

The undersigned, a stockholder of Incara Pharmaceuticals Corporation, a
Delaware corporation ("Incara"), hereby constitutes and appoints Clayton I.
Duncan and Richard W. Reichow, or either of them, attorneys and proxies with
full power of substitution to act and vote all shares of the undersigned at the
annual meeting of stockholders of Incara to be held at the North Carolina
Biotechnology Center, 15 Alexander Drive, Research Triangle Park, North Carolina
on April 6, 2000 commencing at 5:00 p.m., Eastern Time, and any adjournment(s)
thereof (the "Meeting"). The undersigned hereby directs this proxy to be voted
as follows:

(Continued and to be signed on other side)

A [X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.

FOR ALL NOMINEES WITHHOLD AUTHORITY
LISTED AT RIGHT TO VOTE FOR ALL
(except as marked to NOMINEES LISTED
the contrary below) AT RIGHT

1. The election of five directors. [ ] [ ]

INSTRUCTION: To withhold authority NOMINEES:
to vote for any individual nominee Clayton I. Duncan
strike a line through the nominee's Joseph J. Ruvane, Jr.
name listed at right. David B. Sharrock
Edgar H. Schollmaier
Stephen M. Prescott, M.D.

2. The approval of an amendment to the 1995 Employee Stock Purchase Plan to
increase the number of shares of Common Stock reserved for issuance thereunder
from 200,000 to 400,000 shares, as described in the accompanying Proxy
Statement.

FOR AGAINST ABSTAIN

[ ] [ ] [ ]

3. The ratification of the appointment of PricewaterhouseCoopers LLP as the
independent auditors of the Company for the fiscal year ending September 30,
2000.

[ ] [ ] [ ]

THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IN THE ABSENCE OF ANY DIRECTION,
THIS PROXY WILL BE VOTED FOR PROPOSALS 1-3, WITH DISCRETION TO VOTE UPON SUCH
OTHER MATTERS AS MAY BE BROUGHT BEFORE THE MEETING. ANY PROXY HERETOFORE GIVEN
BY THE UNDERSIGNED FOR THE MEETING IS HEREBY REVOKED AND DECLARED NULL AND VOID
AND WITHOUT ANY EFFECT WHATSOEVER.

PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE WHETHER OR NOT YOU PLAN TO BE PRESENT AT THE MEETING. IF YOU ATTEND THE
MEETING, YOU CAN VOTE EITHER IN PERSON OR BY YOUR PROXY.

(SEAL)
- ----------------- ------------------------------------
Signature Print name and title, if appropriate

(SEAL) DATED: , 2000
- ----------------- ------------------------------------ --------
Signature Print name and title, if appropriate

NOTE: [Please sign exactly as name appears on certificate(s)]