AVAX TECHNOLOGIES INC, POS AM, 1998-04-21

AVAX TECHNOLOGIES INC
POS AM, 1998-04-21
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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As filed with the Securities and Exchange Commission on April 21, 1998

Registration No. 333-09349
================================================================================

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
POST-EFFECTIVE AMENDMENT NO. 4
TO
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------
AVAX TECHNOLOGIES, INC.
(Name of Small Business Issuer in Its Charter)
-----------
Delaware 2836 13-3575874
(State or jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification Number)
organization)

4520 Main Street
Suite 930
Kansas City, MO 64111
(816) 960-1333
www.avax-tech.com

(Address and telephone number of Small Business Issuer's principal executive
offices and principal place of business)

-----------

JEFFREY M. JONAS, M.D.
President and Chief Executive Officer
4520 Main Street
Suite 930
Kansas City, MO 64111
(816) 960-1333
(Name, address and telephone number of agent for service)

-----------

Copy to:

IRA L. KOTEL
Roberts, Sheridan & Kotel
A Professional Corporation
12 East 49th Street, 30th floor
New York, New York 10017
(212) 299-8600

-----------

Approximate date of proposed sale to the public: From time
to time after the effective date of this Registration Statement.

-----------

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, check the following box: |X|

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering: |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering: |_|

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: |_|

================================================================================
<PAGE>

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

Information contained may herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities not be sold nor may offers
to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

PROSPECTUS

Subject to Completion, Dated April 21, 1998

6,102,097 Shares
AVAX TECHNOLOGIES, INC.
Common Stock

This Prospectus relates to the offer (the "Offering") by the securityholders
named herein under the caption "Selling Securityholders" (collectively, the
"Selling Securityholders") for sale to the public of the following securities of
AVAX Technologies, Inc. (the "Company"): (i) 1,076,078 shares of the Company's
common stock, par value $.004 per share (the "Common Stock"); (ii) 4,976,790
shares of Common Stock issuable upon conversion of currently outstanding shares
of Series B Convertible Preferred Stock, par value $.01 per share, of the
Company ("Series B Preferred Stock"); and (iii) 49,229 shares of Common Stock
issuable upon (a) the conversion of shares of Series B Preferred Stock of the
Company issuable upon exercise of the warrants issued to the designees of the
placement agent of the Series B Offering described herein (the "Series B
Placement Warrants") and (b) exercise of warrants issued to the designees of the
placement agent for certain bridge financing transactions of the Company
described herein (the "Bridge Placement Warrants," and together with the Series
B Placement Warrants, the "Placement Warrants"). The number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock and upon exercise
of the Placement Warrants is subject to adjustment in certain events. This
Prospectus relates to the shares of Common Stock remaining to be sold in an
offering which commenced on July 7, 1997 for an aggregate of 7,047,788 shares of
Common Stock.

The Company will not receive any proceeds from the sale of shares of Common
Stock. The Company is not expected to receive any proceeds from the exercise of
the Placement Warrants since the Placement Warrants may be exercised pursuant to
a cashless exercise provision. In the event that the Placement Warrants are
exercised for cash, the Company intends to use such net cash proceeds (after
estimated expenses of this Offering of approximately $620,000) for general
working capital purposes. Proceeds, if any, from the exercise for cash of all
the Placement Warrants, before deduction of estimated expenses of this Offering,
would be approximately $160,000. Whether, how and to what extent any of the
Placement Warrants will be exercised, and whether the Placement Warrants are
exercised for cash or not, cannot be predicted by the Company.

The Selling Securityholders have advised the Company that they may sell,
directly or through brokers, all or a portion of the securities offered hereby
in negotiated transactions or in one or more transactions in the market at the
price prevailing at the time of sale. In connection with such sales, the Selling
Securityholders and any participating broker may be deemed to be "underwriters"
of the Common Stock within the meaning of the Securities Act of 1933. It is
anticipated that usual and customary brokerage fees will be paid by the Selling
Securityholders in all open market transactions. The Company will pay all other
expenses of this Offering. See "Plan of Distribution."

The Company has informed the Selling Securityholders that the anti-manipulation
provisions of Regulation M promulgated under the Securities Exchange Act of 1934
may apply to the sales of their shares offered hereby. The Company also has
advised the Selling Securityholders of the requirement for delivery of this
Prospectus in connection with any sale of the shares offered hereby.

The Company is in the research and development stage, has not had any operating
revenues, and at December 31, 1997, had an accumulated deficit of approximately
$7,520,147. The Company is continuing to incur losses and expects to incur
significantly increasing additional losses for the foreseeable future.

The Common Stock is listed for quotation on the Nasdaq SmallCap Market under the
symbol "AVXT." The last reported sale price of the Common Stock on the Nasdaq
SmallCap Market on April 16, 1998, was $ 4.063 per share. The prices of the
Common Stock which may be obtained on such market are not necessarily related to
the Company's assets, book value, results of operations or any other established
criteria of value, and should not be regarded as any indication of future market
price of the Common Stock. See "Risk Factors," "Description of Securities" and
"Plan of Distribution." There can be no assurance that an active trading market
in the Company's securities will develop or be sustained.

----------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
----------

THE COMMON STOCK HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

The date of this Prospectus is __________, 1998

<PAGE>

AVAILABLE INFORMATION

The Company is a "reporting company" as such term is employed in the Securities
Exchange Act of 1934 and intends to furnish to registered holders of Common
Stock, annual reports containing financial statements examined by an independent
accounting firm and quarterly reports for the first three quarters of each
fiscal year containing interim unaudited financial information.

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form SB-2 (together with all
amendments and exhibits thereto being herein referred to as the "Registration
Statement") under the Securities Act of 1933. For further information about the
Company and the securities offered hereby, reference is made to the Registration
Statement and to the financial statements and exhibits filed as a part thereof.
The statements contained in this Prospectus as to the contents of any contract
or any other document are not necessarily complete, and in each instance
reference is made to the copy of such contract or document filed as an exhibit
to the Registration Statement, each such statement being qualified in all
respects by such reference. The Registration Statement, as well as other reports
and other information filed by the Company, can be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's Regional Offices at 7
World Trade Center, New York, New York 10048. Copies of such material can be
obtained upon written request addressed to the Commission, Public Reference
Section, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a site on the World Wide Web at http://www.sec.gov that
contains reports, proxy and other information regarding registrants that file
electronically with the Commission.

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<PAGE>

PROSPECTUS SUMMARY

The following summary does not purport to be complete and is qualified in its
entirety by reference to the more detailed information and the financial
statements and notes thereto appearing elsewhere in this Prospectus, including,
without limitation, the information under "Risk Factors," or incorporated herein
by reference, and, accordingly, should be read in conjunction therewith. Unless
otherwise indicated to the contrary, the information in this Prospectus gives
effect to a two-for-one reverse stock split of the Common Stock effected on May
13, 1997.

COMPANY SUMMARY

AVAX(TM) Technologies, Inc. ("AVAX" or the "Company"), is a development stage
biopharmaceutical company which intends to acquire rights to, and to develop,
technologies and products for the treatment of cancer and other life-threatening
diseases. The Company initially intends to focus its efforts primarily on the
development of immunotherapies and chemotherapies for cancer. Immunotherapy is a
rapidly developing segment of the cancer therapeutic market.

In 1995, the Company licensed (the "TJU License") from Thomas Jefferson
University ("TJU") an issued U.S. patent and certain U.S. and foreign patent
applications covering a cancer vaccine containing a cancer patient's own
modified tumor cells, and a method for making and using such a vaccine. This
technology allows the Company to produce an autologous cell vaccine (an "AC
Vaccine") that attempts to stimulate the patient's immune system to eliminate
the cancer. This technology has emerged from research conducted at TJU and
primarily involves the removal of a patient's own tumor cells, modifying them
with a small molecule known as a hapten, and reintroducing the product back into
the patient. The approach is based on the premise that a patient's immune
response to a strongly immunogenic, hapten-modified tumor antigen may be
followed by the development of an immune response to the unmodified tumor
antigen, somewhat analogous to the phenomenon of drug-induced autoimmune
disease.

The Company's initial AC Vaccine(TM), M-Vax(TM), is currently undergoing
physician-sponsored human clinical trials based on an experimental protocol at
TJU as an outpatient, post-surgical, adjunct therapy for the treatment of
melanoma, and is believed by the Company to be the first therapeutic cancer
vaccine to show a substantial increase in the survival rate for patients with
stage 3 melanoma. In such ongoing clinical trials at TJU, over 300 melanoma
patients have been treated post-surgically on an outpatient basis with M-Vax. In
62 patients with stage 3 melanoma in protocols in which there has been
sufficient time for long-term follow-up, the five-year survival rate is
approximately 60%. This compares with the historical and control group stage 3
survival rate of approximately 20%, and the survival rate for treatment with
high dose alpha interferon of approximately 32% in stage 3 patients whom the
Company believes to be comparable to those treated with M-Vax. In patients over
50 years old treated with M-Vax, the five-year survival rate was approximately
71%. In the over 300 patients treated in studies, the Company believes that only
relatively minor side effects, such as mild transient nausea and soreness and
swelling at the site of the application of the M-Vax vaccine, have been
witnessed to date.

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<PAGE>

countries through corporate partnering strategies, although such strategies have
not yet been finalized or initiated. Denial of any regulatory approvals or any
significant delays in obtaining any of the same would have a material adverse
effect on the Company.

The Company also believes that the AC Vaccine technology may have applications
in the treatment of other cancers, which may include ovarian, breast, prostate,
lung and colorectal cancers and acute myelogenous leukemia (AML). The Company
intends to fund the preclinical and initial clinical development of this
technology for at least some of these indications. Accordingly, in addition to
continuing the clinical work on M-Vax, the Company has also entered into a
sponsored research agreement with TJU relating to the development of additional
immunotherapies based on the AC Vaccine technology. For example, the Company is
treating post-surgical stage 3 patients in its Phase I/II clinical trial of
O-Vax(TM), its AC Vaccine for ovarian cancer. This trial is being conducted at
TJU under the direction of Dr. David Berd and has already shown a positive
immune response, as measured by a delayed type hypersensitivity (DTH) test, in
the first seven of seven patients treated. The Company also plans to initiate a
similar Phase I/II clinical trial of C-Vax(TM), its AC Vaccine for colorectal
cancer, within the next year.

In connection with the Company's strategy to acquire, develop and commercialize
other potential biotechnology products and technologies, the Company has
licensed from Rutgers University and the University of Medicine and Dentistry of
New Jersey (collectively, "Rutgers"), certain patent applications relating to a
series of topoisomerase inhibitor compounds for the potential treatment of
cancer and infectious diseases (the "Rutgers License"). The Company also has
licensed from The Texas A&M University System ("Texas A&M"), an issued U.S.
patent and certain patent applications relating to a series of novel
anti-estrogen compounds for the potential treatment of cancer (the "Texas A&M
License"). Pursuant to the Rutgers License and the Texas A&M License (and under
its related sponsored research agreements with each of Rutgers and Texas A&M),
the Company intends to expend substantial resources on the research and
development of these compounds.

In order to contain costs, the Company may continue to use sponsored research
agreements and contract research organizations to help it develop its
technologies. At the appropriate time the Company may seek corporate partners to
provide the necessary resources and expertise for clinical development and to
manufacture, market and distribute products. In addition, the Company may seek
to explore the acquisition and subsequent development and commercialization of
additional commercially promising immunotherapy, chemotherapy and adjuvant
technologies. No assurance can be given that the Company will have the requisite
resources or that any such projects will be identified on terms favorable to the
Company, if at all.

The Company may seek to explore the acquisition and subsequent development and
commercialization of additional commercially promising immunotherapy and
adjuvant technologies. No assurance can be given that the Company will have the
requisite resources or that any such projects will be identified on terms
favorable to the Company, if at all.

The Company was incorporated in the State of New York on January 12, 1990, under
the name Nehoc, Inc. On May 29, 1992, it changed its name to Appex Technologies,
Inc. On October 22, 1992, the Company merged into Walden Laboratories, Inc.
("Walden"), a Delaware corporation, which was incorporated on September 18,
1992. On December 27, 1995, Walden sold its former leading product under
development, an over-the-counter nutritional dietary, medicinal and/or
elixorative food supplement or drug and related patents and intellectual
property to a subsidiary of Interneuron Pharmaceuticals, Inc. The Company
changed its name from Walden Laboratories, Inc., to AVAX Technologies, Inc.,
effective March 26, 1996.

The Company's principal executive office is located at 4520 Main Street, Suite
930, Kansas City, Missouri 64111. Its telephone number at that address is (816)
960-1333.

AVAX(TM), AC Vaccine(TM), M-Vax(TM), O-Vax(TM) and C-Vax(TM) are trademarks of
the Company. This Prospectus also includes trademarks of other companies.

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<PAGE>

OFFERING SUMMARY

Common Stock Outstanding
as of April 8, 1998: 4,897,483 shares of Common Stock, including
1,209,234 currently outstanding shares of Common
Stock directly held by the Selling
Securityholders.(1)

Common Stock Offered
by Selling Securityholders: 6,102,097 shares of Common Stock.

Risk Factors: The securities offered hereby involve a high
degree of risk. See "Risk Factors."

Nasdaq SmallCap
Market Symbol: AVXT

Use of Proceeds: The Company will not receive any proceeds from
the sale of shares of Common Stock. The Company
is not expected to receive any proceeds from the
exercise of the Placement Warrants since the
Placement Warrants may be exercised pursuant to
a cashless exercise provision. In the event that
the Placement Warrants are exercised for cash,
the Company intends to use such net cash
proceeds (after estimated offering expenses of
this Offering of approximately $620,000) for
general working capital purposes. Proceeds, if
any, from the exercise for cash of all the
Placement Warrants, before deduction of
estimated expenses of this Offering, would be
approximately $160,000. Whether, how and to what
extent any of the Placement Warrants will be
exercised, and whether the Placement Warrants
are exercised for cash or not, cannot be
predicted by the Company. See "Use of Proceeds,"
"Certain Transactions," "Selling
Securityholders" and "Description of
Securities."

- ----------
(1) Does not include (i) 5,010,683 shares of Common Stock issuable upon
conversion of currently outstanding shares of Series B Preferred Stock, (ii)
704,814 shares of Common Stock issuable upon (a) exercise of Bridge Placement
Warrants and (b) conversion of Series B Preferred Stock issuable upon exercise
of Series B Placement Warrants, (iii) 30,000 shares of Common Stock issuable
upon exercise of outstanding stock options at an exercise price of $1.20 per
share under the Company's 1992 Stock Option Plan, (iv) 407,500 shares of Common
Stock reserved for issuance of future options under the Company's 1992 Stock
Option Plan, (v) 1,232,016 shares of Common Stock reserved for issuance pursuant
to the employment arrangements among the Company and certain of its full-time
employees, officers, directors and consultants, and (vi) approximately 548,250
shares of Common Stock issuable upon exercise of other warrants to purchase
shares of Common Stock. See "Executive Compensation" and "Description of
Securities."

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<PAGE>

SUMMARY OF FINANCIAL DATA

The following table presents certain summary historical financial information
derived from the financial statements of the Company. The summary is qualified
in its entirety by, and should be read in conjunction with, "Management's
Discussion and Analysis of Financial Condition and Plan of Operations", and the
Financial Statements of the Company included elsewhere in this Prospectus.

Year Ended December 31,
-----------------------
1996 1997
---- ----
Statement of Operations Data:
Total operating loss.......... $(1,992,386) $(5,172,983)
Net loss...................... (1,536,842) (4,266,125)
Net loss attributable to common
stockholders............ (2,668,586) (4,266,125)
Net loss per common share (1). (.84) (1.14)
Weighted average number of shares
outstanding............. 3,182,058 3,750,440

December 31, 1997
-----------------
Balance Sheet Data:
Cash and cash equivalents..... $ 6,820,884
Marketable securities......... 9,102,028
Total current assets.......... 17,277,841
Total assets.................. 17,354,833
Amount payable to preferred stockholders 1,150,200
Amount payable to former officer 49,800
Total current liabilities..... 1,553,726
Deficit accumulated during development
stage................... (7,520,147)
Stockholders' equity.......... 15,801,107

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(1) See Note 1 to Financial Statements for an explanation of the determination
of shares used in computing Net income (loss) per common share.

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<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby is highly speculative
in nature, involves a high degree of risk and should not be purchased by persons
who cannot afford a loss of their entire investment. Each prospective investor
should consider carefully the risks inherent in and affecting both the business
of the Company and the value of the Common Stock and speculative factors
including, without limitation, the following risk factors, as well as other
information contained elsewhere in this Prospectus before making an investment
in the Common Stock.

HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY

The Company has incurred substantial operating losses since its inception. As of
December 31, 1997, the Company's accumulated deficit was approximately
$7,520,147. The Company expects to incur significant increasing operating losses
over the next several years, primarily due to the expansion of its research and
development programs, including clinical trials for M-Vax(TM) , O-Vax(TM),
C-Vax(TM) and preclinical studies and clinical trials for other products that it
may acquire or develop. The Company's ability to achieve profitability depends
upon, among other things, its ability to develop products, obtain regulatory
approval for its proposed products, and enter into agreements for product
development, manufacturing and commercialization. The Company's M-Vax , O-Vax
and C-Vax products do not currently generate revenue and the Company does not
expect to achieve revenues from these or other products for the foreseeable
future. Moreover, there can be no assurance that the Company will ever achieve
significant revenues or profitable operations from the sale of M-Vax, O-Vax,
C-Vax, or any other products that it may develop.

NEED FOR ADDITIONAL FINANCING; ISSUANCE OF SECURITIES; FUTURE DILUTION

In the future, the Company may require substantial additional financing to
continue research, undertake product development and to pursue the manufacturing
and marketing of any products that it may develop. The Company anticipates that
further funds may be raised through additional debt or equity financings
conducted by the Company, or through collaborative ventures entered into between
the Company and potential corporate partners. However, there can be no assurance
that any such offering will be consummated or that the Company will otherwise be
able to obtain additional financing or that such financing, if available, can be
obtained on terms favorable or acceptable to the Company. If such offerings are
not consummated or additional financing is not otherwise available, the Company
will be required to modify its business development plans or reduce or cease
certain or all of its operations.

While the Company may seek to enter into collaborative ventures with corporate
sponsors to fund some or all of its research and development activities, as well
as to manufacture or market any products which may be successfully developed,
the Company currently does not have any such arrangements with corporate
sponsors, and there can be no assurance that the Company will be able to enter
into such ventures on favorable or acceptable terms, if at all. In addition, no
assurance can be given that the Company will be able to complete a subsequent
public offering or private placement of its securities. Failure by the Company
to enter into such collaborative ventures or to receive additional funding to
complete its proposed product development programs either through a private
placement or a public offering could have a material adverse effect on the
Company. In the event that the Company obtains any additional funding, such
financings may have a dilutive effect on the holders of the Common Stock. See
"Risk Factors--Dependence on Third Parties for Additional Funds and for
Manufacturing, Marketing and Selling."

In addition, the Company currently has an employee stock option plan under which
its officers and directors will be eligible to receive stock options exercisable
for Common Stock at exercise prices which may be lower than the current market
price of the Common Stock. Similarly, under employment arrangements with certain
full-time employees, officers, directors and consultants of the Company, the
Company has granted such employees, officers, directors and consultants options
for Common Stock at exercise prices that may be lower than the prevailing market
price of the Common Stock from time to time. Such stock option grants under the
employee stock option plan if any, and to certain of the full-time employees,
officers, directors and consultants of the Company, may dilute the value of the
Common Stock. See "Management" and "Description of Securities--1992 Stock Option
Plan; Other Options."

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<PAGE>

DEVELOPMENT STAGE COMPANY

Although the Company was organized in January 1990, it has only conducted
limited research activities, principally through its license and research
agreements with TJU, Rutgers and Texas A&M, and has not generated any
significant revenues to date from operations. Accordingly, the Company must be
evaluated in light of the expenses, delays, uncertainties and complications
typically encountered by newly established biopharmaceutical businesses, many of
which uncertainties and complications may be beyond the Company's control. These
include, but are not limited to, unanticipated problems relating to product
development, testing, regulatory compliance, manufacturing, marketing and
competition, and additional costs and expenses that may exceed current
estimates. There can be no assurance that the Company will successfully develop
and commercialize any products, generate any revenues or ever achieve profitable
operations. See "Business."

TECHNOLOGICAL UNCERTAINTY AND EARLY STAGE OF PRODUCT DEVELOPMENT

The technologies and products which the Company intends to develop are in the
early stages of research and development, require significant further research,
development and testing and are subject to the risks of failure inherent in the
development of products based on innovative or novel technologies. These risks
include, but are not limited to, the possibility that any or all of the
Company's proposed products will be found to be ineffective or unsafe, that the
products once developed, although effective, are uneconomical to market, that
third parties hold proprietary rights that preclude the Company from marketing
such products or that third parties market a superior or equivalent product and
that the Company will be unable to secure a meaningful patent position for such
products. See "Uncertainty Regarding Patents and Proprietary Rights; TJU Patent
Reissuance Application." The results of initial preclinical and clinical testing
of the Company's current and proposed products under development are neither
necessarily predictive of results that will be obtained from subsequent or more
extensive preclinical and clinical testing nor necessarily acceptable to the
United States Food and Drug Administration (the "FDA") or other similar agencies
to support applications for marketing permits.

The Company's agreements with (i) TJU, its licensor for the AC Vaccine
technology, (ii) Rutgers, its licensor for certain anti-cancer and
anti-infective technology and (iii) Texas A&M, its licensor for certain
anti-cancer technology, do not contain any representations by the licensors as
to the safety or efficacy of the inventions or discoveries covered thereby. The
Company is unable to predict whether the research and development activities it
is funding will result in any commercially viable products or applications.
Further, due to the extended testing required before marketing clearance can be
obtained from the FDA or other similar agencies, the Company is not able to
predict with any certainty, when, if ever, it will be able to commercialize any
of its proposed products.

The market for biotechnology in general, and for cancer immunotherapies such as
the AC Vaccine technology and other possible future products, in particular, are
characterized by rapidly changing technology, evolving industry standards and
frequent new product introductions. The Company's future success will depend
upon its ability to develop and commercialize its existing product and to
develop new products. There can be no assurance that the Company will
successfully complete the development of its existing product or of any future
product or that the Company's current or future products will achieve market
acceptance. Any delay or failure of M-Vax, O-Vax, C-Vax, or any future product
which the Company may develop, in achieving market acceptance would materially
and adversely affect the Company's business. In addition, there can be no
assurance that products or technologies developed by others will not materially
render the Company's existing or future products or technologies non-competitive
or obsolete.

This Prospectus includes estimates by the Company of the number of patients with
a particular type of cancer or other diseases, the number of patients who were
administered a particular vaccine or drug and the number of patients who
received or might have been candidates for a particular type of treatment. There
can be no assurance that such estimates accurately reflect the true market or
the extent to which any of the Company's products, if successfully developed,
will actually be used by patients. Furthermore, even if patient use occurs,
there can be no assurance that the Company's sales of its products for such uses
will be profitable. Failure of the Company to successfully develop, obtain
regulatory approval for, introduce and market M-Vax, O-Vax, C-Vax, and any
possible future products would have a material adverse effect on the Company.

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<PAGE>

GOVERNMENT REGULATION; NO ASSURANCE OF PRODUCT APPROVAL

The proposed products of the Company will be subject to very stringent federal,
state and local government regulations, including, without limitation, the
Federal Food, Drug and Cosmetic Act, and its state and local counterparts.
Similar regulatory frameworks exist in other countries where the Company may
consider marketing its products. To date, TJU and Dr. David Berd, the inventor
of the AC Vaccine technology, have conducted the ongoing clinical trials at TJU
pursuant to an FDA-approved physician sponsored Investigational New Drug
Application ("IND"). The Company met earlier with the FDA to discuss the
clinical results obtained with M-Vax, the use of such results in support of the
submission of a Company-sponsored IND to the FDA, and to review its proposed
development program, which includes Phase III clinical trials for M-Vax. Prior
to marketing M-Vax, O-Vax, C-Vax, or any other possible product the Company may
develop, such product must undergo an extensive regulatory approval process. Any
denials or delays in obtaining requisite approvals would be likely to have a
material adverse effect on the Company.

The regulatory process includes extensive preclinical and clinical testing of
any product to establish its safety and efficacy. This testing can take many
years and require the expenditure of substantial capital and other resources. In
the U.S., clinical trials are stringently regulated by the FDA, and the FDA may
suspend clinical trials at any time if it determines that patients are being
exposed to an unreasonable health risk, or for certain other reasons. Delays or
denials of marketing approval are encountered regularly due to the submission of
unacceptable or incomplete data as deemed by the FDA or other similar regulatory
agency, or due to regulatory policy for product approvals. In addition, new
government regulations may be established that could delay or prevent regulatory
approval of the Company's products under development. These delays may be
encountered both domestically and abroad. There is no assurance that even after
clinical testing, regulatory approval will ever be obtained. If regulatory
approval is obtained, the uses for which any products may be marketed will be
limited to specific indications. Following regulatory approval, if any, a
marketed product and its manufacturer are subject to continual regulatory review
and periodic inspections. In the U.S., the Company would be required to comply
with FDA requirements for manufacturing, labeling, advertising, record keeping
and reporting of adverse experiences and other information. In addition, the
Company would be required to comply with federal and state health care
anti-kickback laws and other health care fraud and abuse laws that pertain to
the marketing of pharmaceuticals. Failure to comply with regulatory requirements
could subject the Company to administrative or judicial enforcement actions,
including but not limited to product seizures, injunctions, civil penalties,
criminal prosecution, refusals to approve new products or withdrawal of existing
approvals, as well as increased product liability exposure, any of which could
have a material adverse affect on the Company. Development and marketing of the
Company's products outside the U.S. will be subject to foreign regulatory
requirements governing clinical trials, marketing approval, manufacturing and
pricing. Failure to comply with these requirements could result in enforcement
actions or penalties or could delay introduction of the Company's products in
certain countries.

Failure of the Company to obtain and maintain regulatory approval of its
proposed products, processes or facilities would have a material adverse effect
on the business, financial condition and results of operations of the Company.
In addition, many academic institutions and companies doing research in the
field of cancer immunotherapy are using a variety of approaches and
technologies. Any adverse results obtained by such researchers in preclinical or
clinical studies, even if not directly or indirectly related to the Company's
potential products or approaches, could adversely affect the regulatory
environment for immunotherapy or other biotechnology products generally, and
possibly lead to delays in the approval process for the Company's potential
products. See "Business--Government Regulation."

DEPENDENCE ON OTHERS FOR CLINICAL DEVELOPMENT OF, AND REGULATORY APPROVALS FOR,
MANUFACTURING AND MARKETING OF PHARMACEUTICAL PRODUCTS

The Company anticipates that it may in the future seek to enter into
collaborative agreements with pharmaceutical, or other biotechnology companies,
for the development of, clinical testing of, seeking of regulatory approval for,
and manufacturing, marketing and commercialization of, certain of its products.
The Company may in the future grant to its collaborative partners, if any,
rights to license and commercialize any pharmaceutical products developed under
these collaborative agreements and such rights would limit the Company's
flexibility in considering alternatives for the commercialization of such
products. Under such agreements, the Company may rely on such collaborative
partners to conduct research efforts and clinical trials on, obtain regulatory
approvals for, manufacture, market and commercialize certain of the Company's
products. Although the Company believes that such collaborative partners might
have an

9
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economic motivation to commercialize the pharmaceutical products which they may
license, the amount and timing of resources devoted to these activities
generally will be controlled by each such individual partner. There can be no
assurance that the Company will be successful in establishing any collaborative
arrangements, or that, if established, such future partners will be successful
in commercializing products or that the Company will derive any revenues from
such arrangements. Although the Company intends to pursue such collaborative
arrangements in the future, there are no specific arrangements, proposals, plans
or understandings with respect to any such collaborative arrangements.

DEPENDENCE ON THIRD PARTIES FOR ADDITIONAL FUNDS AND FOR MANUFACTURING,
MARKETING AND SELLING

The Company currently does not have the resources to commercially manufacture,
directly market or sell M-Vax, O-Vax, C-Vax, or any products it may develop in
the future. Accordingly, the Company may be dependent on corporate partners or
other entities for, and may have only limited control over, commercial scale
manufacturing, marketing and selling of its products. The inability of the
Company to acquire such third party manufacturing, distribution, marketing and
selling arrangements for the Company's anticipated products will have a material
adverse effect on the Company's business. There can be no assurance that the
Company will be able to enter into any arrangements for the manufacturing,
marketing and selling of its products. While the Company is in the process of
establishing commercial scale manufacturing facilities, such endeavor will
require substantial additional funds, the hiring and retention of significant
additional personnel and compliance with extensive regulations applicable to
such a facility. There can be no assurance that the Company will be able to
successfully establish such a facility, hire such personnel or successfully
manufacture products for sale at competitive prices. See
"Business--Manufacturing and Marketing."

DEPENDENCE ON LICENSES AND SPONSORED RESEARCH AGREEMENTS

The Company relies heavily on third parties for a variety of functions,
including certain functions relating to research and development. As of April 8,
1998, the Company had only six full-time employees. The Company is party to
several license and research agreements which place substantial responsibility
on the Company's licensors for research and clinical development of its products
and technologies.

In particular, the Company is dependent upon the TJU License as the basis of its
proprietary AC Vaccine technology and is dependent upon a sponsored research
agreement with TJU for research and development efforts in connection therewith.
Pursuant to the TJU License, the Company is obligated to pay an up-front license
fee, to use due diligence in developing and bringing products to market and to
make certain payments upon the achievement of certain milestones. The Company is
also obligated to make royalty payments on the sales, if any, of products
resulting from such licensed technology and, is responsible for the costs of
filing and prosecuting patent applications and maintaining issued patents. In
addition, the Company is required to invest a minimum amount per year in the AC
Vaccine technology as well as sponsored research at TJU. The Company is
similarly dependent upon the Rutgers License and Texas A&M License for certain
of its technology, and has financial and other obligations thereunder (and under
its related sponsored research agreements with each of Rutgers and Texas A&M)
which are similar to those under the TJU agreements.

As the Company currently does not have laboratory facilities, the Company's
research and development activities are intended to be conducted by universities
or other institutions pursuant to sponsored research agreements. The sponsored
research agreement entered into by the Company, TJU and Dr. Berd generally
requires periodic payments by the Company to TJU on a quarterly basis. There are
similar types of obligations under the Rutgers License and Texas A&M License.

If the Company does not meet its financial, development, or other obligations in
a timely manner under its license agreements or related sponsored research
agreements, the Company could lose the rights to its proprietary technology or
the right to have its licensors and others conduct its research and development
efforts, any of which could have a material adverse effect on the Company. TJU
has the right to terminate the R&D agreement on 30 days' written notice if it
becomes unable for any reason to complete the Study.

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UNCERTAINTY REGARDING PATENTS AND PROPRIETARY RIGHTS; TJU PATENT REISSUANCE
APPLICATION

The biotechnology industry places importance on obtaining patent and trade
secret protection for new technologies, products and processes. Also,
particularly in the case of biological therapies, additional protection may be
afforded by the regulatory approval process. The success of the Company will
depend in substantial part on its ability, on the ability of its current
licensors and on the ability of its potential future licensors, if any, to
obtain patents, defend such patents, maintain trade secrets, obtain regulatory
approvals and operate without infringing upon the proprietary rights of others,
both in the United States and in foreign countries. The patent position of firms
relying upon biotechnology is highly uncertain and involves complex legal and
factual questions. To date there has emerged no consistent policy regarding the
breadth of claims allowed in biotechnology patents or the degree of protection
afforded under such patents.

More specifically, the Company relies on TJU's issued patent for its proprietary
patent rights in and to the AC Vaccine technology and may rely on certain United
States patents and pending patent applications, as well as a pending foreign
Patent Cooperation Treaty ("PCT") application, relating to various aspects of
its present and future products and processes. The patent application and
issuance process can be expected to take several years and could entail
considerable expense to the Company, as it may be responsible for such costs
under the terms of any technology agreements. There can be no assurance that
patents will issue as a result of any applications or that existing patents and
any patents resulting from such applications, will be sufficiently broad to
afford protection against competitors with similar technology. In addition,
there can be no assurance that any issued patents will be enforceable and will
not be subject to reexamination or reissue, or challenged, invalidated, or
circumvented. There can be no assurance that the rights granted thereunder will
provide competitive advantages to the Company. The commercial success of the
Company will also depend upon avoiding infringement of patents issued to
competitors. A United States patent application is maintained under conditions
of confidentiality while the application is pending, so the Company cannot
determine the inventions being claimed in pending patent applications filed by
third parties. As a result, the Company cannot be certain that its scientists
were the first to make inventions covered by its patents and patent
applications.

In the event a third party has filed a patent application relating to an
invention claimed in a Company patent application, the Company or its licensor
may be required to participate in an interference proceeding in the United
States Patent and Trademark Office to determine priority of the invention, which
could result in substantial uncertainties and cost for the Company, even if the
eventual outcome is favorable to the Company. An adverse outcome could subject
the Company to significant liabilities to third parties and require the Company
to license disputed rights from third parties at an undeterminable cost or to
cease using the technology. In addition to patent litigation and interferences,
a third party may at some time seek to have a patent of the Company reexamined
in the Patent Office on the basis of prior art. The Company, or a licensor of
the Company, may also at some time seek reexamination, or reissue, of a Company
patent.

The Company has recently submitted an application for reissue for the purpose of
strengthening the TJU patent in light of a prior art reference which may have a
material adverse impact on the patent. The prior art reference relates to the
publication, slightly more than one year prior to the filing of the patent, of
an abstract for an oral presentation given by the inventor of the AC Vaccine
technology. Although the Company believes that there is a sound basis for this
reissue application, there can be no assurance that a patent will issue from the
application, or that any such patent will be enforceable and will not be
challenged, invalidated, or circumvented. In connection with the application for
reissuance, the Company may seek to have the patent's claims modified to
reconcile such claims with the prior art reference. There can be no assurance
that the validity or enforceability of the Company's patents and its
applications, if issued, would be upheld by a court. In the absence of an
enforceable patent, the Company may rely upon significant regulatory barriers to
competition.

While no patent that could be potentially infringed by manufacture, use or sale
of the Company's product candidates has come to the attention of the Company,
the Company's product candidates are still in the development stage, and neither
their formulations nor their method of manufacture have been finalized. Thus,
there can be no assurance that the manufacture, use or sale of the Company's
product candidates will not infringe patent rights of others. The Company may be
unable to avoid infringement of any such patents and may have to seek a license,
defend an infringement action, or challenge the validity of the patents in
court. There can be no assurance that a license will be available to the
Company, if at all, upon terms and conditions acceptable to the Company or that
the Company will prevail in any patent litigation. Litigation may be necessary
to defend or enforce the Company's patent and license rights or to determine the
scope and validity of others' proprietary rights. Defense and enforcement of
patent claims can be expensive and time consuming, even in those instances in
which the outcome is favorable to the Company, and can result in the diversion
of substantial resources from the Company's other activities. There can be no
assurance that the Company will have sufficient resources to pursue such
litigation. If the Company does not obtain a license under any such patents, is
found liable for infringement, or is not able to have them declared invalid, the
Company may be liable for significant money damages, may encounter significant
delays in bringing products to market, or may be precluded from participating in
the manufacture, use or sale of

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<PAGE>

products or methods of treatment covered by such patents, any of which could
have a material adverse effect on the Company's business, results of operation
and financial condition. See "Business-- Proprietary Technology."

In its product development activities, the Company relies substantially on
certain technologies which are not patentable or proprietary and are therefore
available to the Company's competitors. The Company also relies on certain
proprietary trade secrets and know-how which are not patentable. Further, the
Company may also rely upon certain regulatory barriers to prevent competitors
from using the Company's technologies. Although the Company has taken steps to
protect its unpatented trade secrets and know-how, in part through the use of
confidentiality agreements with its employees, consultants and certain of its
contractors, there can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or be independently
developed or discovered by competitors. If the Company's employees, scientific
consultants or collaborators develop inventions or processes independently that
may be applicable to the Company's product candidates, disputes may arise about
ownership of propriety rights to those inventions and processes. Such inventions
and processes will not necessarily become the Company's property, but may remain
the property of those persons or their employers. Protracted and costly
litigation could be necessary to enforce and determine the scope of the
Company's proprietary rights. Failure to obtain or maintain patent and trade
secret protection, for any reason, could have a material adverse effect on the
Company. Certain of the Company's patents are directed to inventions developed
within academic institutions (from which the Company earlier acquired rights to
such patents) with funds from United States government agencies. As a result of
these arrangements, the United States government may have rights in certain
inventions developed during the course of the performance of federally funded
projects as required by law or agreements with the funding agency. Several bills
affecting patent rights have been introduced in the United States Congress.
These bills address various aspects of patent law, including publication, patent
term, re-examination, subject matter and enforceability. It is not certain
whether any of these bills will be enacted into law or what form new laws may
take. Accordingly, the effect of legislative change on the Company's
intellectual property rights is uncertain.

CONDUCTING BUSINESS ABROAD

To the extent the Company conducts business outside the United States, it
intends to do so through licenses, joint ventures or other contractual
arrangements for the development, manufacturing and marketing of its products.
No assurance can be given that the Company will be able to establish foreign
operations successfully through such a plan, or that foreign applications will
avoid opposition and be approved. No assurance can be given that the foreign
coverage will be available or that the manufacturing and marketing of its
products through such licenses, joint ventures other arrangements will be
commercially successful. The Company might also have greater difficulty
obtaining proprietary protection for its products and technologies outside the
United States and enforcing its rights in foreign courts.

For clinical investigation and marketing outside the United States, the Company
also is subject to foreign regulatory requirements governing human clinical
trials and marketing approval for drugs. The requirements governing the conduct
of clinical trials, product licensing, pricing and reimbursement vary widely for
European countries both within and outside the European Union ("EU"). Outside
the United States, the Company's ability to market a product is contingent upon
receiving a marketing authorization from the appropriate regulatory authority.
At present, foreign marketing authorizations are applied for at a national
level, although with the EU certain registration procedures are available to
companies wishing to market their products in more than one EU member state. If
the regulatory authority is satisfied that adequate evidence of safety, quality
and efficacy has been presented, a marketing authorization will be granted. The
system for obtaining marketing authorizations within the EU registration system
is a dual one in which certain products, such as biotechnology and high
technology products and those containing new active substances, will have access
to a central regulatory system that provides registration throughout the entire
EU. Other products will be registered by national authorities in individual EU
member states, operating on a principle of mutual recognition. This foreign
regulatory approval process includes, at least, all of the risks associated with
FDA approval set forth above. The Company could possibly have greater difficulty
in obtaining any such approvals and also might find it more difficult to protect
its intellectual property abroad.

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DEPENDENCE UPON KEY PERSONNEL AND CONSULTANTS

The Company is highly dependent upon its officers and directors, as well as its
Scientific Advisory Board members, consultants and collaborating scientists.
Except for its six full-time employees, each of the Company's officers,
directors, advisors and consultants devotes only a portion of his or her time to
the Company's business and for the most part are involved with other
substantially full-time activities. The loss of certain of these individuals,
including, without limitation, Jeffrey M. Jonas, M.D., the Company's President
and Chief Executive Officer, could have a material adverse effect on the Company
unless the Company could promptly hire qualified replacements. The Company
maintains a key-man life insurance policy on Dr. Jonas in the amount of only $3
million. In addition, several of the Company's full-time employees, officers and
consultants have only recently joined the Company. Although the Company has
entered into letters of employment with many of its full-time employees,
officers and consultants, such letters of employment do not contain provisions
which would prevent any of them from resigning at any time. See "Management".

Competition for qualified employees among pharmaceutical and biotechnology
companies is intense, and the loss of any of such persons, or an inability to
attract, retain and motivate any additional highly skilled employees required
for the expansion of the Company's activities, could have a material adverse
effect on the Company. There can be no assurance that the Company will be able
to retain its existing personnel or to attract additional qualified employees
and such failure likely would have a material adverse effect on the Company.

LACK OF MANUFACTURING FACILITIES

In order to successfully commercialize its product candidates, the Company must
be able to manufacture its products in commercial quantities, in compliance with
regulatory requirements, at acceptable costs and in a timely manner. The
manufacture of the types of biopharmaceutical products that are likely to be
developed by the Company present several risks and difficulties. For example,
the manufacture of M-Vax, O-Vax, C-Vax and other compounds the Company may
develop for use in the Company's current and future products and technologies is
complex, can be difficult to scale-up when large scale production is required
and can be subject to delays, inefficiencies and poor or low yields of quality
products. The Company may also be subject to risks relating to the expense, or
unavailability of, products and compounds manufactured or sold by third parties
which are required for use on a comparative basis in clinical trials and studies
for the Company's products. There can be no assurance that the Company will be
able to procure such products and compounds at an acceptable cost or in
sufficient quantities without delays or other adverse effects upon the Company's
development programs.

The Company currently has interim manufacturing capacity which it believes is
reasonably adequate to support the commencement of the clinical programs and
expects to expand its manufacturing staff and facilities, to establish an
additional facility or facilities and to contract with third parties to assist
it with production. There can be no assurance that the Company will be able to
obtain from third party manufacturers adequate supplies in a timely fashion for
commercialization, or that commercial quantities of any such products, if
approved for marketing, will be available from contract manufacturers at
acceptable costs. In the event the Company proceeds with establishing a
full-scale commercial manufacturing facility, the Company will require
substantial additional funds and will be required to hire and train significant
numbers of employees and comply with the extensive regulations applicable to
such a facility. There is no assurance that AVAX will be able to develop a
current Good Manufacturing Practices ("cGMP") manufacturing facility sufficient
for all clinical trials or commercial-scale manufacturing. The cost of
manufacturing certain products may make them prohibitively expensive. In
addition, in order to successfully commercialize its product candidates, the
Company may be required to reduce the cost of production, and there can be no
assurance that the Company will be able to do so. See "Business--Manufacturing
and Marketing."

COMPETITION

The Company's proposed cancer immunotherapy business is characterized by
intensive research efforts and intense competition. Many companies, research
institutes, hospitals and universities are working to develop products and
processes in the Company's fields of research. Most of these entities have
substantially greater financial, technical, manufacturing, marketing,
distribution and other resources than the Company and include, among others,
Schering Plough Corporation, Chiron Corporation, Bristol-Myers Squibb and
Johnson & Johnson. Certain of such companies have

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<PAGE>

experience in undertaking testing and clinical trials of new or improved
products similar in nature to that which the Company is developing. In addition,
certain competitors have already begun testing similar compounds or processes
and may introduce such products or processes before the Company. Accordingly,
other companies may succeed in developing products earlier than the Company or
that are more effective than those proposed to be developed by the Company.
Further, it is expected that competition in the Company's field will intensify.
There can be no assurance that the Company will be able to compete successfully
in the future. See "Business--Competition."

RISK OF PRODUCT LIABILITY

Should the Company develop and market any products, the marketing of such
products, through third-party arrangements or otherwise, may expose the Company
to product liability claims. Though the Company presently carries product
liability insurance, there can be no assurance that such insurance will protect
the Company against all claims of product liability. The Company may be required
to indemnify its licensor against certain product liability claims incurred as a
result of the products developed by the Company. The Company's licensors have
not made, and are not expected to make, any representations as to the safety or
efficacy of the inventions covered by the license or as to any products which
may be made or used under rights granted therein or thereunder. In addition, it
is possible that license and collaborative agreements which the Company may
enter into in the future may also include similar insurance requirements. There
can be no assurance that in the future adequate insurance coverage will be
available in sufficient amounts or at a reasonable cost, or that a product
liability claim or recall would not have a material adverse effect on the
Company.

UNCERTAINTY OF PRODUCT PRICING AND REIMBURSEMENT; HEALTH CARE REFORM AND RELATED
MEASURES

The levels of revenues and profitability of pharmaceutical and/or biotechnology
products and companies may be affected by efforts of governmental and third
party payors to contain or reduce the costs of health care through various
means. For example, in certain foreign markets, pricing or profitability of
prescription pharmaceuticals is subject to government control. In the United
States there have been, and the Company expects that there will continue to be,
a number of federal and state proposals to implement similar government control.
The United States Congress continually considers a number of legislative and
regulatory reforms that may affect companies engaged in the health care industry
in the United States. Pricing constraints on the Company's products, if
approved, could have a material adverse effect on the Company. Although the
Company cannot predict whether these proposals will be adopted or what effects
such proposals may have on its business, the existence and pendency of such
proposals could have a material adverse effect on the Company in general. In
addition, the Company's ability to commercialize potential pharmaceutical and/or
biotechnology products may be adversely affected to the extent that such
proposals have a material adverse effect on other companies that are prospective
collaborators with respect to any of the Company's product candidates.

In addition, in the United States and elsewhere, sales of medical products and
services are dependent in part on the availability of reimbursement to the
consumer from third party payors, such as government and private insurance
plans. Third party payors are increasingly challenging the prices charged for
medical products and services. If the Company succeeds in bringing one or more
products to the market, there can be no assurance that these products will be
considered cost effective and that reimbursement to the consumer will be
available or will be sufficient to allow the Company to sell their products on a
competitive basis. See "Risk Factors--Government Regulation; No Assurance of
Product Approval."

NO ASSURANCE OF IDENTIFICATION OF ADDITIONAL PROJECTS; CERTAIN INTERLOCKING
RELATIONSHIPS; POTENTIAL CONFLICTS OF INTEREST

The Company initially intends to be engaged primarily in the development and
commercialization of the AC Vaccine technology, as well as the potential
anti-cancer and anti-infective technology licensed pursuant to the Rutgers
License and the potential anti-cancer technology licensed pursuant to the Texas
A&M License. See "Business." From time to time, if and when the Company's
resources allow, the Company may explore the acquisition and subsequent
development and commercialization of additional biomedical and pharmaceutical
products and technologies. However, there can be no assurance that the Company
will be able to identify any additional products or technologies and, even if
suitable products or technologies are identified, there can be no assurance that
the Company will have sufficient resources to pursue any such products or
technologies in the foreseeable future.

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Certain of the directors of the Company are officers of Paramount Capital
Investments, LLC. See "Management." Paramount Capital Investments, LLC, is a
merchant bank specializing in biotechnology companies. In the regular course of
its business, Paramount Capital Investments, LLC, 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 Paramount Capital Investments,
LLC, nor any other person is obligated pursuant to any agreement or
understanding with the Company to make any additional products or technologies
available to the Company, and there can be no assurance, and purchasers of the
Common Stock should not expect, that any biomedical or pharmaceutical product or
technology identified by Paramount Capital Investments, LLC, or any other person
in the future will be made available to the Company. In addition, certain of the
officers, directors, consultants and advisors to the Company may from time to
time serve as officers, directors, consultants or advisors to other
biopharmaceutical or biotechnology companies. There can be no assurance that
such other companies will not in the future have interests in conflict with
those of the Company.

CONTROL BY CURRENT OFFICERS, DIRECTORS AND PRINCIPAL STOCKHOLDERS

The Company's directors, executive officers and principal stockholders
beneficially own approximately 37% of the outstanding shares of Common Stock.
Accordingly, the Company's executive officers, directors, principal stockholders
and certain of their affiliates have the ability to exert substantial influence
over the direction and policies of the Company and, if they choose to act in
concert, the election of the Company's Board of Directors and the outcome of
issues submitted to the Company's stockholders. See "Principal Stockholders."

VOLATILITY OF STOCK PRICE

The market price of the Common Stock like that of many other development-stage
public pharmaceutical or biotechnology companies, may be highly volatile.
Factors such as announcements of technological innovations or new commercial
products by the Company or its competitors, disclosure of results of preclinical
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 any products developed by the
Company and general conditions may have a significant or adverse effect on the
market price of the Common Stock. Also, the trading price of the Common Stock
may respond to quarterly variations in operating results, announcements of
innovations or new products by the Company or its competitors and other events
or factors, including, but not limited to, the sale or attempted sale of a large
amount of such securities into the market. In addition, market fluctuations may
adversely affect the market prices of such securities. See "Description of
Securities."

POTENTIAL ADVERSE EFFECT OF SHARES ELIGIBLE FOR FUTURE SALE

As of April 8, 1998, 4,897,483 shares of Common Stock were issued and
outstanding of which the Company believes that, other than those shares
registered in this Offering, only 1,487,822 shares of Common Stock are
"restricted securities" and under certain circumstances may, in the future, be
sold in compliance with Rule 144 under the Securities Act of 1933 (the "Act"),
unless they are held by "affiliates" of the Company as that term is used under
the Act. In general, under Rule 144 as currently in effect, subject to the
satisfaction of certain conditions and certain manner of sale and notice
requirements, including the requirement that there is adequate current public
information with respect to the Company as contemplated by Rule 144, a person
(or persons whose shares are aggregated), including persons who may be deemed an
affiliate of the Company as that term is defined under the Act, who beneficially
owned restricted shares of Common Stock for at least one year is entitled to
sell, within any three-month period, a number of shares that does not exceed (i)
the greater of one percent of the total number of outstanding shares of the same
class, or (ii) the average weekly trading volume during the four calendar weeks
immediately preceding the sale. A person who presently is not and who has not
been an affiliate of the Company for at least three months immediately preceding
the sale and who has beneficially owned the shares of Common Stock for at least
two years is entitled to sell such shares under Rule 144(k) without regard to
the volume limitations described above.

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<PAGE>

In addition, the Company has issued and outstanding, or issuable, warrants and
options to purchase an aggregate of 2,873,351 shares of Common Stock (excluding
49,229 shares of Common Stock underlying Series B Placement Warrants and Bridge
Placement Warrants that are being registered in this Offering). Any employee,
officer or director of the Company who acquired his or her shares prior to the
effective date of the Registration Statement at a time when the Company was not
subject the reporting requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") or who holds vested options as of the
effective date of the Registration Statement, pursuant to a written compensatory
plan or contract is entitled to rely on the resale provisions of Rule 701. Rule
701 permits non-affiliates to sell their Rule 701 shares without having to
comply with the public information, holding period, volume limitation or notice
provisions of Rule 144 and permits affiliates to sell their Rule 701 shares
without having to comply with Rule 144's holding period restrictions, in each
case commencing 90 days after the effective date of the Registration Statement.

The Company also has 5,010,683 shares of Common Stock that are issuable upon
conversion of Series B Preferred Stock. Certain of the stockholders and holders
of shares of Common Stock issuable upon exercise of Series B Preferred Stock
(including shares of Common Stock issuable upon conversion of shares of Series B
Preferred Stock issuable upon exercise of Series B Placement Warrants), and
other warrants of the Company, have certain demand and piggyback registration
rights. The Company's current Registration Statement, to which this Prospectus
relates, pertains to the resale of up to 6,102,097 shares of Common Stock and
the Company may, in the future, agree to register other shares of Common Stock
held by eligible persons' including officers of the Company, on Form S-8
relating to shares of Common Stock issuable upon exercise of such persons' stock
options or warrants, including, without limitation, under its 1992 Stock Option
Plan. See "Description of Securities--1992 Stock Option Plan", "Other Options",
"Warrants" and "Registration Rights". Exercise of any registration rights could
involve substantial expense to the Company.

In addition, the vesting dates for the shares issuable upon exercise of the
Company's stock options are also subject to acceleration under certain
circumstances, including certain changes in control of the Company, subject to
certain exceptions.

Holders of the Company's warrants and options are likely to exercise them when,
in all likelihood, the Company could obtain additional capital on terms more
favorable than those provided by warrants and options. Further, while these
warrants and options are outstanding, the Company's ability to obtain additional
financing on favorable terms may be affected adversely by the presence of such
securities and the terms thereof. No prediction can be made as to the effect, if
any, that the availability of such shares for sale will have on the market
prices that may be quoted from time to time on the Nasdaq Smallcap Market.
Nevertheless, the possibility that substantial amounts of the Common Stock may
be sold in the public market may adversely affect the prevailing market prices
for the Common Stock and could impair the Company's ability to raise capital in
the future through the sale of equity securities. Actual sales or the prospect
of future sales of shares of the Common Stock, whether such shares are
"restricted shares" under Rule 144, or are otherwise eligible for resale without
restriction, may have a depressive effect upon the price of the Common Stock and
the market therefor.

LIMITED PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE

The Common Stock is listed for quotation on the Nasdaq SmallCap Market. There
can be no assurance that there will be an active trading market for the Common
Stock during or after the Offering. The absence of an active trading market
would reduce the liquidity of an investment in the Common Stock. To the extent
that brokerage firms act as market makers, they may be a dominating influence in
any market that might develop, and the degree of participation by such firms may
significantly affect the price and liquidity of the Common Stock. These firms
may discontinue such activities at any time or from time to time. The prices at
which the Common Stock may be offered in the market will be determined by these
firms and the purchasers and sellers of the Common Stock, based in part on
market factors, and may not necessarily relate to the Company's assets, book
value, results of operations or other established and quantifiable criteria of
value. The trading price of the Common Stock, including, without limitation, any
Common Stock to be offered by the Selling Shareholders, could be subject to wide
fluctuations in response to quarterly variations in operating results,
announcements of technological innovations or new products by the Company or its
competitors and other events or factors. In addition, the stock market has
experienced volatility that has particularly affected the market prices of
equity securities of many biotechnology companies and that often has been
unrelated to the operating performance of such companies. These broad market
fluctuations may affect adversely the market price of the Common Stock. See
"Plan of Distribution."

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<PAGE>

UNCERTAINTY OF LISTING ON NASDAQ SMALLCAP MARKET; MARKET ILLIQUIDITY

Although the Common Stock has been approved for initial listing and quotation on
the Nasdaq SmallCap Market, such market has recently adopted stricter continuing
listing criteria, which the Company is required to meet. Accordingly, continued
inclusion of the Common Stock on the Nasdaq SmallCap Market pursuant to the
recently adopted stricter standards requires that: (i) the Company have net
tangible assets of $2,000,000, or a market capitalization of $35 million or
more, or net income in two of the three most recent fiscal years of at least
$500,000; (ii) the Company's public float have a market value of at least $1
million and a public float of at least 500,000 shares; (iii) the minimum bid
price for the Common Stock be at least $1.00 per share; (iv) the Common Stock
have at least two active market makers and be held of record by at least 300
shareholders and (v) the Company adhere to certain corporate governance
provisions. . For purposes of determining compliance with the public float
requirements, shares of stock held by officers, directors and 10%-or-greater
stockholders are excluded. There can be no assurance that the Company and the
Common Stock will continue to satisfy the requirements for maintaining a listing
on the Nasdaq SmallCap Market.

If the Company is unable to satisfy the continuing maintenance requirements as
they may be in effect or applied from time to time, the Common Stock may be
delisted from the Nasdaq SmallCap Market. In such event, trading, if any, in the
Common Stock would thereafter probably be conducted on the OTC Bulletin Board or
in the over-the-counter market through the National Quotation Bureau (the "pink
sheets") and the Company would again be required to comply with the Nasdaq
SmallCap Market's initial listing criteria in order to have the Common Stock
re-approved for listing and quotation thereon. Consequently, the liquidity of
the Common Stock could be impaired materially and adversely, not only in the
number of securities that can be bought and sold at a given price, but also
through delays in the timing of transactions and reduction in security analysts'
and media coverage of the Company, which could result in lower prices for the
Common Stock than might otherwise be attained and could also result in a larger
spread between the bid and asked prices for the Common Stock. See "Risks of Low
Price Stock; Possible Effect of "Penny Stock" Rules on Liquidity for the Common
Stock."

RISKS OF LOW-PRICED STOCK; POSSIBLE EFFECT OF "PENNY STOCK" RULES ON LIQUIDITY
FOR THE COMMON STOCK

The Exchange Act requires additional disclosure relating to the market for penny
stocks in connection with trades in any stock defined as a penny stock. The
Commission's regulations generally define a penny stock to be any equity
security that has a market price of less than $5.00 per share, subject to
certain exceptions. Such exceptions include any equity security listed on the
Nasdaq SmallCap Market, subject to certain trade reporting requirements, and any
equity security issued by an issuer that has (i) net tangible assets of at least
$2 million, if such issuer has been in continuous operation for three years,
(ii) net tangible assets of at least $5 million, if such issuer has been in
continuous operation for less than three years, or (iii) average annual revenue
of at least $6 million, if such issuer has been in continuous operation for less
than three years. Though the Company believes that it currently meets the net
tangible assets test, there can be no assurance that the Company will meet the
requirements of the foregoing financial exceptions. Thus, if the price per share
of the Common Stock were to be less than $5.00 per share and the Company was
unable to continue to meet the requirements for listing on the Nasdaq SmallCap
Market, failure to qualify under one of the foregoing exceptions would require
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the Commission relating to the penny stock market. Disclosure is
also required to be made about sales commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements are required to be sent disclosing
recent price information for the penny stock held in the account and information
on the limited market in penny stocks. In any event, even if the Common Stock
were exempt from such restrictions, they would remain subject to Section
15(b)(6) of the Exchange Act, which gives the Commission the authority to
prohibit any person that engages in unlawful conduct while participating in a
distribution of penny stock from associating with a broker-dealer or
participating in a distribution of penny stock, if the Commission finds that
such a restriction would be in the public interest. Accordingly, if the Common
Stock is subject to the rules on penny stocks, the market liquidity for such
securities could be materially and adversely affected.

In addition, if the Common Stock fails to meet the minimum market price, the net
tangible asset or the annual revenue tests set forth above, but is quoted on the
OTC Bulletin Board (as to which there can be no assurance), then trading in the
Common Stock would be regulated pursuant to Rules 15-g-1 through 15-g-6 and
15-g-9 promulgated under the Exchange

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<PAGE>

Act for non-National Association of Securities Dealers Automotive Quotation
System and non-exchange listed securities. Under such rules, broker-dealers who
recommend such securities to persons other than established customers and
"accredited investors" must make a special written suitability determination
that the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to this transaction. Securities are exempt from
these rules if the market price of the Common Stock is at least $5.00 per share.
Consequently, such Exchange Act rules may affect the ability of broker-dealers
to make a market in such shares and may affect the ability of holders of Common
Stock to sell in the secondary market.

ANTITAKEOVER EFFECTS OF PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND
DELAWARE LAW

The Company's Articles of Incorporation, as amended, authorize the issuance of
up to 5,000,000 shares of preferred stock, par value $.01 per share, of which
300,000 shares are authorized for issuance as shares of Series B Preferred
Stock, of which approximately 219,022 are issued and outstanding as Series B
Preferred Stock or reserved for issuance upon the exercise of Series B Placement
Warrants. As of April 8, 1998, the Company's Certificate of Incorporation
authorizes the issuance of "blank check" preferred stock with such designation,
rights and preferences as may be determined from time to time by the Board of
Directors. Accordingly, the Board of Directors is empowered, without stockholder
approval, to issue a new series of preferred stock with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting power
or other rights of the holders of the Common Stock. In the event of issuance,
the new series of preferred stock could be utilized, under certain
circumstances, as a method of discouraging, delaying or preventing a change in
control of the Company. Although the Company has no present intention to issue
any additional shares of its preferred stock, other than those already
authorized for issuance upon exercise of the Placement Warrants, there can be no
assurance that the Company will not do so in the future. See "Description of
Securities."

The Company is subject to Section 203 of the General Corporation Law of the
State of Delaware which, subject to certain exceptions, prohibits a Delaware
corporation from engaging in any business combination with any interested
stockholder for a period of three years following the date that such stockholder
became an interested stockholder. In general, Section 203 defines an interested
stockholder as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or person affiliated
with or controlling or controlled by such entity or person. The foregoing
provisions could have the effect of discouraging others from making tender
offers for the Company's shares and, as a consequence, they also may inhibit
fluctuations in the market price of the Company's shares that could result from
actual or rumored takeover attempts. Such provisions also may have the effect of
preventing changes in the management of the Company.

POTENTIAL CONVERSION PRICE RESET OF SERIES B PREFERRED STOCK

In May and June 1996, the Company consummated an offering of units consisting of
shares of Series B Preferred Stock and Common Stock. The 259,198 shares of
Series B Preferred Stock sold in such offering were convertible at the option of
the holders thereof into shares of Common Stock, at an initial conversion rate
of 25 shares of Common Stock per share of Series B Preferred Stock,
corresponding to a conversion price equal to $4.00 per share (the "Initial
Conversion Price"). As of June 11, 1997, 13,250 shares of Series B Preferred
Stock had been converted to Common Stock. The Initial Conversion Price was
adjusted effective June 11, 1997, because the average closing bid price of the
Common Stock for the 30 consecutive trading days immediately preceding such date
was less than $5.40. The average was, in fact, $5.175 per share. Accordingly,
the conversion price was adjusted to $3.83 per share, which corresponds to a new
conversion rate of 26.0875 shares of Common Stock per share of Series B
Preferred Stock. The conversion price (and, consequently the number of shares of
Common Stock issuable upon conversion) is subject to further adjustment upon the
occurrence of certain events. See "Description of Securities--Conversion." Any
such reset of the conversion price applicable to the Series B Preferred Stock
would result in the issuance of additional shares of Common Stock upon
conversion of the Series B Preferred Stock, and would have a dilutive effect on
purchasers of the Common Stock offered hereby.

In addition, in consideration for their agreement to extend the "lock-up"
provisions described below which are applicable to the shares of Common Stock
issuable upon conversion of the Series B Preferred Stock, certain holders of
shares of Series B Preferred Stock are entitled to be issued additional shares
of Common Stock upon the happening of certain events. See "Description of
Securities--Lock-Up." The occurrence of such an event and the issuance of the
additional shares of Common Stock would have a dilutive effect on purchasers of
the Common Stock offered hereby.

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<PAGE>

FORWARD LOOKING STATEMENTS

Certain written and oral statements made or incorporated by reference by the
Company or its representatives in this Prospectus, other reports and filings
with the Commission, press releases, conferences or otherwise, are "forward
looking statements", within the meaning of the Private Securities Litigation
Reform Act of 1995 ("PSLRA") and Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking statements
include, without limitation, any statement that may predict, forecast, indicate,
or imply future results, performance or achievements, and may contain the words
"estimate", "project", "intend", "forecast", "anticipate", "plan", "planning",
"expect", "believe", "will", "will likely", "should", "could", "would", "may" or
words or expressions of similar meaning. In addition, except for historical
matters, certain other statements set forth in this Prospectus and elsewhere by
the Company from time to time, including, without limitation, the Company's
research and development programs, the possible filing of INDs or marketing
applications for M-Vax, O-Vax, C-Vax, or any other products the Company may
develop, the seeking of joint development or licensing arrangements with
pharmaceutical companies, the research and development of particular compounds
and technologies for particular indications and the period of time for which the
Company's existing resources will enable the Company to fund its operations and
to meet the continuing listing requirements for the quotation of its securities
on the Nasdaq SmallCap Market and the possibility of contracting with other
parties additional licenses to develop, manufacture and market commercially
viable products, are forward-looking statements within the meaning of the PSLRA.
Such forward-looking statements are based upon the Company's current belief as
to the outcome, occurrence and timing of future events or current expectations
and plans based upon, among other things, assumptions made by, and information
currently available to management, including management's own knowledge and
assessment of the Company's industry, competition and current regulatory
environment. All such statements involve significant risks and uncertainties.
Many important factors affect the Company's ability to achieve the stated
outcomes and to successfully develop and commercialize its product candidates,
including, among other things, the ability to obtain substantial additional
funds, obtain and maintain all necessary patents or licenses, to demonstrate the
safety and efficacy of product candidates at each state of development, to meet
applicable regulatory standards and receive required regulatory approvals, to
meet obligations and required milestones under its license agreements, to be
capable of producing drug candidates in commercial quantities at reasonable
costs, to compete successfully against other products and to market products in
a profitable manner. Although the Company believes that its assumptions
underlying the forward-looking statements are reasonable, any of the assumptions
could prove inaccurate and, therefore, there also can be no assurance that the
statements included in this Prospectus and elsewhere will prove to be accurate.
In addition, such risks and uncertainties included herein and elsewhere are not
exhaustive. Other sections of this Prosepectus and the Company's other filings
with the Commission from time to time, may include additional factors which
could impact adversely upon the Company's business and other financial
performance. Moreover, the Company operates in a very competitive and rapidly
changing environment. New risk factors emerge from time to time and it is not
possible for management to predict all such risk factors, nor can it assess the
impact of all such factors on the Company's business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements. Accordingly, in light of
the significant uncertainties inherent in these statements included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives and plans of the Company will be
achieved; in fact, actual results could differ materially from those
contemplated by such forward-looking statements. Given these risks,
uncertainties and limitations, investors should not rely upon forward-looking
statements as a predictor of actual results. AVAX does not undertake any
obligation to release publicly any revisions to these forward-looking statements
or to reflect the occurrence of unanticipated events.

YEAR 2000

Pursuant to the Company's Year 2000 Plan, the Company is currently evaluating
its computerized systems to assure that the transition to the Year 2000 will not
disrupt the Company's operations. The Company also intends to evaluate the
systems of its key suppliers, vendors and other collaborators. Presently, the
Company does not believe that Year 2000 compliance will result in material
investments by the Company, nor does the Company anticipate that the so-called
Year 2000 problem will have any material adverse effect on the business,
operations or financial performance of the Company. There can be no assurance,
however, that the Year 2000 problem will not adversely affect the Company and
its business, particularly in an indirect manner by virtue of any problems
encountered by third parties with whom it does business.

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<PAGE>

NO DIVIDENDS

The Company has never paid cash dividends on its capital stock and does not
anticipate paying any cash dividends for the foreseeable future. See "Dividend
Policy."

20
<PAGE>

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of shares of Common
Stock. The Company is not expected to receive any proceeds from the exercise of
the Placement Warrants since the Placement Warrants may be exercised pursuant to
a cashless exercise provision. In the event that the Placement Warrants are
exercised for cash, the Company intends to use such net cash proceeds (after
estimated offering expenses of this Offering of approximately $620,000) for
general working capital purposes. Proceeds, if any, from the exercise for cash
of all the Placement Warrants, before deduction of estimated expenses of this
Offering, would be approximately $160,000. Whether, how and to what extent any
of the Placement Warrants will be exercised, and whether the Placement Warrants
are exercised for cash or not, cannot be predicted by the Company.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Common Stock was publicly traded on the OTC Bulletin Board from December 19,
1996 through July 9, 1997. Since July 10, 1997, the Common Stock has been listed
for quotation on the Nasdaq SmallCap Market under the symbol "AVXT". The
following table sets forth, for the periods indicated, the high and low closing
bid prices for the Common Stock, as reported by the National Quotation Bureau
and/or Nasdaq, for the quarters presented. Certain of the prices set forth below
may represent inter-dealer quotations, without adjustment for markups, markdowns
and commissions and may not reflect actual transactions.

-------------------------------------------------------
High Low
-------------------------------------------------------
Fiscal year ended December 31, 1998
First quarter 4 1/2 3 5/8
Second quarter (through April 8, 4 1/2 4 3/16
1998)
-------------------------------------------------------
Fiscal year ended December 31, 1997
First quarter $6 3/4 $5 1/2
Second quarter 5 7/8 4 1/4
Third quarter 5 3/8 4
Fourth quarter 4 1/2 3 1/2
-------------------------------------------------------
Fiscal year ended December 31, 1996
Fourth quarter 6 5 3/4
-------------------------------------------------------

The last reported sale price of the Common Stock on the Nasdaq SmallCap Market
on April 16, 1998 was $ 4.063 per share. At April 8, 1998, there were 4,868,137
shares of Common Stock outstanding, which were held by approximately 800
shareholders of record.

DIVIDEND POLICY

The Company has not paid any cash dividends on its Common Stock since its
formation. The payment of dividends, if any, in the future, with respect to the
Common Stock, is within the discretion of the Board of Directors of the Company
and will depend on the Company's earnings, capital requirements, financial
condition and other relevant factors. The Board of Directors of the Company does
not presently intend to declare any dividends on the Common Stock in the
foreseeable future. The Company anticipates that all earnings and other
resources of the Company, if any, will be retained by the Company for investment
in its business.

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CAPITALIZATION

The following table sets forth the capitalization of the Company as of December
31, 1997. This table should be read in conjunction with the Company's financial
statements, and the related notes thereto. See "Financial Statements."

December 31,
Stockholders' equity 1997
------------
Preferred Stock, $.01 par value:
Authorized Shares - 5,000,000, including Series B -
300,000 shares
Series B convertible preferred stock:
Issued and outstanding shares - 204,159 (liquidation
preference - $27,561,465) $ 2,041

Common Stock, $.004 par value:
Authorized shares - 50,000,000
Issued and outstanding shares - 4,582,305 18,329

Additional paid-in capital 23,995,640

Subscription receivable (432)

Deferred compensation (694,324)

Deficit accumulated during the developmental stage (7,520,147)
------------

Total stockholders' equity $ 15,801,107
============

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND PLAN OF OPERATION

GENERAL

Since its inception, the Company has concentrated its efforts and resources in
the development and commercialization of biotechnology and pharmaceutical
products and technologies. The Company has been unprofitable since its founding
and has incurred a cumulative net loss of approximately $7,520,147 as of
December 31, 1997. The Company expects to incur significantly increasing
operating losses over the next several years, primarily due to the expansion of
its research and development programs, including clinical trials for M-Vax,
O-Vax, C-Vax and other preclinical studies and clinical trials for other
products that may arise from the AC Vaccine technology and from the compounds
licensed from Rutgers and Texas A&M and other products that it may acquire or
develop.

The Company's ability to achieve profitability depends upon, among other things,
its ability to develop products, obtain regulatory approval for its proposed
products, and enter into agreements for product development, manufacturing and
commercialization. The Company's M-Vax, O-Vax and C-Vax products do not
currently generate revenue and the Company does not expect to achieve revenues
from these or other products for the foreseeable future. Moreover, there can be
no assurance that the Company will ever achieve significant revenues or
profitable operations from the sale of M-Vax, O-Vax, C-Vax, or any other
products that it may develop.

PLAN OF OPERATION

The Company is currently engaged in the development and commercialization of
biotechnology and pharmaceutical products and technologies. In November 1995,
the Company acquired the rights to the AC Vaccine technology pursuant to the TJU
License. The Company initially intends to be engaged primarily in the
development and commercialization of the AC Vaccine technology, as well as the
potential anti-cancer and anti-infective technology licensed pursuant to the
Rutgers License and the potential anti-cancer technology licensed pursuant to
the Texas A&M License. See "Business." The Company anticipates that during the
next 12 months it will conduct substantial research and development of the AC
Vaccine technology, including, without limitation, Phase III clinical trials on
M-Vax, the Company's lead AC Vaccine technology for metastatic melanoma. The
Company also anticipates that it will expend substantial resources on the
research and development of that same technology for the treatment of other
cancers, which may include ovarian, breast, prostate, lung and colorectal cancer
and acute myelogenous leukemia (AML). For example, the is treating post-surgical
stage 3 patients in its Phase I/II clinical trial of O-Vax, its AC Vaccine for
ovarian cancer. This trial is being conducted at TJU under the direction of Dr.
David Berd. The Company also plans to initiate a similar Phase I/II clinical
trial of C-Vax, its AC Vaccine for colorectal cancer, within the next 12 months.
It is also expected that during the next 12 months, in order to support these
clinical trial efforts, the Company will be required to expend substantial
resources on the establishment of laboratory facilities for the manufacture of
its products. See "Business--Technology Applications and Product Candidates,"
"Research and Development" and "Manufacturing and Marketing."

In connection with the Company's strategy to acquire, develop and commercialize
other potential biotechnology products and technologies, in December 1996, the
Company acquired the exclusive worldwide rights to a series of compounds for the
potential treatment of cancer and other infectious diseases from Rutgers.
Additionally, in February 1997, the Company acquired the exclusive worldwide
rights to another series of compounds for the potential treatment of cancer from
Texas A&M. Pursuant to the Rutgers License, the Texas A&M License, and the
related sponsored research agreements with each of Rutgers and Texas A&M, the
Company intends to expend substantial resources on the research and development
of these compounds.

While there can be no assurance, the Company may acquire additional products and
technologies during the next 12 months, which may or may not be in the cancer
immunotherapy field. Should the Company acquire such additional products or
technologies, it is anticipated that such additional products or technologies
will require substantial resources for research, development and clinical
evaluation. However, there can be no assurance that the Company will be able to
obtain the additional financing necessary to acquire and develop such additional
products and technologies. In addition, there can be no assurance, that changes
in the Company's research and development plans or other changes which would or
could alter the Company's operating expenses will not require the Company to
reallocate funds among its planned

23
<PAGE>

activities and curtail certain planned expenditures. In such event, the Company
may need additional financing. There can be no assurance as to the availability
or the terms of any required additional financing, when and if needed. In the
event that the Company fails to raise any funds it requires, it may be necessary
for the Company to significantly curtail its activities or cease operations.

During the last 12 months, the Company's Research and Development and General
and Administrative expenses increased significantly from $.7 to $2.4 million and
from $1.3 to $2.7 million, respectively. These increases relate primarily to the
progress made in preparing the AC Vaccine technology for phase III clinical
trials in melanoma, commencement of a proof-of-concept study in ovarian cancer
with the same technology and completion of a Class 10,000 "clean room"
laboratory for clinical manufacturing of the vaccine. Research and development
costs also increased due to the licensing of the topoisomerase inhibitor
compounds from Rutgers and the licensing of the anti-estrogen compounds from
Texas A&M. General and administrative expenses also increased due to the
completion of the registration of the shares issued in the Company's 1996
private placement and the listing of such shares on the Nasdaq Small Cap Market.
The Company anticipates that, over the next 12 months, expenses will continue to
increase, particularly as development proceeds with the AC Vaccine and the
Rutgers and Texas A&M compounds.

Also, during the past 12 months, the Company hired two new employees and it
anticipates that over the next 12 months it may hire additional new employees,
particularly in connection with the establishment of facilities for the clinical
development and manufacture of the AC Vaccine products or any other technologies
which may have been, or may be, acquired. The timing and cost of hiring any
additional employees or the establishment of any such facility may vary
depending on need and currently cannot be predicted with any certainty, however,
the Company currently estimates that the establishment of its GMP manufacturing
facility in Philadelphia will necessitate approximately $1,500,000 to $2,500,000
in funding, and take approximately six-to-twelve months to complete. The initial
$150,000 in funding for such facility is expected to come from a mortgage loan
from the Philadelphia Economic Development Corporation referred to below. The
balance of such funding is expected to come from the Company's existing working
capital. See "Liquidity and Capital Resources".

LIQUIDITY AND CAPITAL RESOURCES

The Company currently anticipates that its current resources should be
sufficient to fund operations for approximately the next 24-36 months based upon
the Company's current operating plan. The Company does not currently expect to
be required to raise additional capital in the next 12 months, although from
time to time, depending upon its anticipated future needs, the Company may avail
itself of opportunities in the capital markets to raise additional capital if
acceptable terms may be obtained. However, since the Company's working capital
requirements will depend upon numerous factors, including, without limitation,
progress of the Company's research and development programs, preclinical and
clinical testing, timing and cost of obtaining regulatory approvals, changes in
levels of resources that the Company devotes to the development of manufacturing
and marketing capabilities, competitive and technological advances, status of
competitors, and the ability of the Company to establish collaborative
arrangements with other organizations, there can be no assurance that the
Company will be able to meets its business objectives under its current
operations plan and/or not need to raise additional capital. Since the Company
has no committed external sources of capital, and expects no product revenues
for the foreseeable future, it will likely require additional financing to fund
future operations. The Company has received authorization from the Philadelphia
Economic Development Corporation for a $150,000 Economic Stimulus Mortgage Loan,
at a fixed interest rate of 3 percent, to assist the Company in establishing its
GMP manufacturing facility in Philadelphia. The loan is subject to negotiation
and execution of definitive documentation. There can be no assurance, however,
that the Company will be able to obtain additional funds it will require for its
projects on acceptable terms, if at all. If adequate funds are not available the
Company may be required to delay, reduce the scope of or eliminate one or more
of its research or development programs; to obtain funds through arrangements
with collaborative partners or others that may require the Company to relinquish
rights to certain technologies, product candidates or products that the Company
would otherwise seek to develop or commercialize itself; or to license the
rights to such products on terms that are less favorable to the Company that
might otherwise be available. See "Risk Factors--Accumulated Deficit;
Uncertainty of Future Profitability."

24
<PAGE>

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
No. 130, Reporting Comprehensive Income, which is effective for years beginning
after December 15, 1997, and will be adopted by the Company in 1998. The
Statement establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Management does not believe that this Statement will have any impact on the
results of operations or the financial position of the Company.

25
<PAGE>

BUSINESS

GENERAL

AVAX Technologies, Inc. ("AVAX" or the "Company"), is a development stage
biopharmaceutical company which intends to acquire rights to, and to develop,
technologies and products for the treatment of cancer and other life-threatening
diseases. The Company initially intends to focus its efforts primarily on the
development of immunotherapies and chemotherapies for cancer. Immunotherapy is a
rapidly developing segment of the cancer therapeutic market.

In 1995, the Company licensed (the "TJU License") from Thomas Jefferson
University ("TJU") an issued U.S. patent and certain U.S. and foreign patent
applications covering a cancer vaccine containing a cancer patient's own
modified tumor cells, and a method for making and using such a vaccine. This
technology allows the Company to produce an autologous cell vaccine (an "AC
Vaccine") that attempts to stimulate the patient's immune system to eliminate
the cancer. This technology has emerged from research conducted at TJU and
primarily involves the removal of a patient's own tumor cells, modifying them
with a small molecule known as a hapten, and reintroducing the product back into
the patient. The approach is based on the premise that a patient's immune
response to a strongly immunogenic, hapten-conjugated tumor antigen may be
followed by the development of an immune response to the unmodified tumor
antigen, somewhat analogous to the phenomenon of drug-induced autoimmune
disease.

26
<PAGE>

In connection with the Company's strategy to acquire, develop and commercialize
other potential biotechnology products and technologies, the Company has
licensed from Rutgers University and the University of Medicine and Dentistry of
New Jersey (collectively, "Rutgers"), certain patent applications relating to a
series of topoisomerase inhibitor compounds for the potential treatment of
cancer and infectious diseases (the "Rutgers License"), and from The Texas A&M
University System ("Texas A&M"), an issued U.S. patent and certain patent
applications relating to a series of novel anti-estrogen compounds for the
potential treatment of cancer (the "Texas A&M License"). Pursuant to the Rutgers
License and the Texas A&M License (and under its related sponsored research
agreements with each of Rutgers and Texas A&M), the Company intends to expend
substantial resources on the research and development of these compounds.

BACKGROUND AND SCIENTIFIC RATIONALE OF THE AC VACCINE TECHNOLOGY

Cancer is characterized by the uncontrolled growth and spread of abnormal cells
which escape the body's protective immune surveillance system, invade healthy
tissues and destroy normal tissue function and ultimately lead to a person's
death if untreated. Cancers, composed of either solid tumors or blood-borne
cancerous cells, over time tend to spread to other tissues and organs in the
body (metastasis). Cancer may be diagnosed at any stage of the disease, from
very early (best prognosis) to very late (worst prognosis). When cancer is
detected early and has not yet metastasized (spread) to other organs and
tissues, surgical removal of the tumor is often effective. Unfortunately, many
cancers are not discovered until metastatic cancer cells from the primary tumor
have already entered the blood or lymphatic system and established new tumors at
distant sites. These cells, and the tumors they form, are difficult to diagnose
and treat with current technology.

As of 1997, the National Cancer Institute (NCI) estimates that approximately 7.4
million people living in the United States were diagnosed as having cancer. The
incidence of cancer continues to increase. The NCI also estimates that the
overall cost to the health care system of treating these patients is
approximately $104 billion. The Company is aware of estimates that deaths from
cancer will surpass cardiovascular mortality worldwide by the end of the
century.

Although some progress has been made, few effective treatments are available for
most adult solid tumors, which often metastasize and invade other organs before
they are detected. The standard treatment for solid tumors is surgery. While
this treatment is effective in many types of cancers, in cases in which removal
of the tumor is incomplete or in which the tumor has metastasized, the patient's
prognosis is poor. Chemotherapy and radiation therapy are rather crude
treatments since they kill cells indiscriminately, destroying normal as well as
malignant cells, leading to toxic side-effects and thereby limiting the
usefulness of these therapies. A safe, effective treatment for residual and
metastatic disease is clearly needed. Such a treatment, if effective and safe,
would increase patient survival and may, therefore, be widely adopted.

Although, many different types of drugs are used to treat a variety of cancers,
no one drug has been found to be a cure for the disease. Given the need for new
effective treatments for cancer, a drug which may effectively treat cancer could
have a large market potential. Although there can be no assurance, the Company
believes that an AC Vaccine, developed to effectively treat the recurrence of
cancer after surgery, is likely to have a sizable market share. Surgery, in many
cases is the first treatment performed on cancer patients, and if such a
treatment following surgery were to prove broadly applicable and safe, its
market potential could be significant while enabling the health care system to
realize significant overall cost savings due to a reduction in the number of
cases of recurrent disease requiring hospitalization and ongoing clinical and
home care.

Immunotherapy is an emerging cancer treatment modality that the Company believes
shows promise for utilizing a patient's own immune system to recognize and
eliminate cancer cells. There are a number of different types of immunotherapies
such as cytokines, antibodies, activated cell therapy and vaccines currently
under development by third parties. See "Business--Competition." In all cases,
immunotherapies attempt to modulate the body's immune system to contain and
eliminate cancer cells. In concept, immunotherapies should have fewer
side-effects than chemotherapies and should be relatively well-tolerated by the
patient. Thus, although there can be no assurance of success, the Company
believes immunotherapies have the potential to be effective and by reason of
their selectivity, relatively safe anti-cancer therapeutic agents.

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TECHNOLOGY APPLICATIONS AND PRODUCT CANDIDATES

The AC Vaccine Technology

The Company's primary proprietary technology is a patented autologous cell
vaccine (an "AC Vaccine") that attempts to stimulate the patient's own immune
system to recognize, contain and eliminate cancer cells. The technology
primarily involves the removal of a patient's own tumor cells, conjugating them
to a small molecule known as a hapten-dinitro phenyl (DNP), and reintroducing
the product back into the patient with an adjuvant, which is an immunological
agent that increases the immune response. Haptenization is the process of
modifying a larger molecule with a smaller molecule. The small molecule known as
a hapten, is recognized by the immune system and elicits an immune response
against the larger molecule. The approach is based on the premise that a
patient's immune response to a strongly immunogenic, hapten-modified tumor
antigen may be followed by the development of an immune response to the
unmodified tumor antigen, somewhat analogous to the phenomenon of drug-induced
autoimmune disease. Therefore, the process of haptenizing a patient's tumor
cells may allow the unhaptenized cancer cells to be recognized by the body's
immune system leading to an immune response against the patient's tumor cells
and their potential elimination from the body.

In practice, the Company's initial therapy would be used as an adjunct to
surgical treatment of tumors. In one proposed model, the surgeon would remove
the patient's tumor and send the cells to the Company where they would be
processed and stored. The vaccine would then be created and sent to the
patient's doctor as each dose is required for administration of the vaccine on
an outpatient basis. The patient's response to the treatment would then be
monitored using standard protocols.

The Company is initially developing this technology for the treatment of
metastatic melanoma but believes that it possibly could have applications in the
treatment of a variety of solid tumors such as ovarian, breast, prostate, lung
and colorectal cancer and may have applications in the treatment of acute
myelogenous leukemia (AML).

M-Vax

General. The Company's lead product, M-Vax, is a post-surgical treatment for
stage 3 melanoma. Melanoma is a highly malignant tumor that can spread so
rapidly that it can be fatal within months of diagnosis. The incidence of
melanoma is increasing at a faster rate than most other cancers in the United
States, Australia, northern Europe and Canada. Although there are several
causative factors, rising exposure by the general population to UV radiation in
sunlight appears to be the most significant factor behind this increase. With
the incidence growing at a rate in excess of 6% annually, it is estimated that
melanoma affects over 200,000 people in the United States, with approximately
40,300 new cases diagnosed in 1997.

Melanoma patients may be categorized according to the following staging system:

o Stage 1-- lesion less than 1.5mm thickness and no apparent metastasis;

o Stage 2-- lesion greater than 1.5mm thickness and local spreading from primary
cancer site;

o Stage 3-- metastasis to regional draining lymph nodes and regional spread from
primary cancer site; and

o Stage 4-- distant metastasis.

Surgical excision of the tumor mass and any of the nearby lymph nodes into which
there has been metastasis, followed by high dose alpha interferon, which is
currently the only FDA-approved treatment for patients with stage 3 melanoma.
However, in many cases survival is restricted by the inability of surgery to
guarantee removal of all the tumor cells. It is highly possible for the patient
to remain with undetected metastasis. Further, use of high dose alpha interferon
is associated with many severe side effects, often leading to either reduction
in dosage or complete discontinuation before the full course of treatment is
completed. Due to its limited efficacy and highly toxic side effects,
chemotherapy and radiation have not been widely used in the treatment of these
patients. The five-year survival rate for these patients is believed by the
Company to be approximately 20%. Recently, the FDA approved the use of high dose
alpha interferon for the post-surgical treatment of melanoma patients. In
clinical studies alpha interferon has demonstrated a five-year survival rate
that

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the Company believes to be approximately 32% in stage 3 patients whom the
Company believes to be comparable to those treated with M-Vax. Thus, the Company
believes that there is a clear need for an effective post-surgical treatment of
stage 3 melanoma patients, one that would contain metastasis and prevent
recurrent disease.

Clinical Trials. Dr. David Berd, the inventor of the patented technology
licensed to the Company by TJU, is a clinical oncologist at TJU. Dr. Berd has
been conducting physician-sponsored clinical trials for the treatment of
melanoma using M-Vax for approximately the past eight years.

In such ongoing clinical trials at TJU, over 300 melanoma patients have been
treated post-surgically on an outpatient basis with M-Vax. In 62 patients with
stage 3 melanoma in protocols in which there has been sufficient time for
long-term follow-up, the five-year survival rate is approximately 60%. This
compares with the historical and control group survival rates of about 20%, and
the survival rate for treatment with high dose alpha interferon of approximately
32% in stage 3 patients whom the Company believes to be comparable to those
treated with M-Vax. In patients over 50 years old treated with M-Vax, the
five-year survival rate was approximately 71%. The Company believes that the
results to date of the ongoing clinical trial represent the first substantial
increase in survival for stage 3 melanoma patients treated by immunotherapy. In
the over 300 patients treated in studies, the Company believes that only
relatively minor side effects, such as soreness and mild transient nausea and
swelling at the site of the application of the M-Vax vaccine, have been
witnessed to date.

David Berd, M.D., Professor of Medicine and Clinical Oncologist at TJU and the
inventor of the AC Vaccine technology, has conducted the ongoing clinical trials
at TJU pursuant to an FDA-approved, physician-sponsored Investigational New Drug
Application ("IND"). The Company met earlier with the FDA to discuss the
clinical results obtained with M-Vax, the use of such results in support of the
submission of a Company-sponsored IND to the FDA, and to review its proposed
development plan. Following such meeting, the Company reviewed with the FDA a
proposed phase 3 protocol and the Company's plans to submit a Company-sponsored
IND to support the pivotal trial program. This IND has been submitted to the
FDA, is currently under review, and addresses product
characterization/manufacturing issues raised by the FDA to ensure that all
pivotal data will support a product license application. No patients will be
enrolled in the pivotal trial program until the Company and the FDA are
satisfied that all product issues are resolved. Depending upon the results of
such clinical trials, it is the Company's intention to use the results of these
Company-sponsored clinical trials along with the results of the clinical trials
conducted at TJU, as the basis for the filing of an application for FDA approval
to market M-Vax. During the third and fourth quarters of 1997 the Company
designed and developed a class 10,000 clean room at TJU to be used as interim
capacity which the Company believes is adequate to support commencement of the
Phase III clinical program. Completion of these studies, however, is dependent
upon the Company's ability to establish additional Good Manufacturing Practice
("cGMP") facilities which will be needed for compliance with certain regulatory
standards promulgated by the FDA. To that end, the Company has entered into a
lease for space in Philadelphia, Pennsylvania to begin construction of such a
facility. While management of the Company anticipates that such additional
facilities will be established in a timely manner, there can be no assurance of
the adequacy of the manufacturing or of FDA acceptance. Delays in either
manufacturing capability or regulatory approval would delay completion of these
studies and could have a material adverse effect on the Company. Depending upon
the results of the anticipated clinical trials, the Company intends to use the
results of these Company-sponsored clinical trials along with the results of the
clinical trial conducted at TJU, as the basis for the filing of an application
for FDA approval to market M-Vax. The Company's management estimates that it may
be in the position to submit such application for FDA approval in approximately
the year 2000 or 2001. The targeted timetable for filing a marketing application
depends upon the rate of enrollment of both clinical sites and patients in the
Phase III studies, the adequacy of the overall clinical outcome data from these
trials, and ultimately acceptance by the FDA of the studies. A delay in
enrollment of either clinical sites or patients would delay completion of the
trials. Moreover, equivocal clinical outcomes from such trials would have the
effect of at least delaying the timetable for submission of a marketing
application and would impact negatively on regulatory acceptance of the studies
in connection with the possible approval of such marketing application.

The Company also may pursue a similar regulatory approval and commercialization
strategy for M-Vax in Australia, Canada, Mexico and certain other countries
through corporate partnering strategies, although such strategies have not yet
been finalized or initiated. Denial of any regulatory approvals or any
significant delays in obtaining any of the same, would have a material adverse
effect on the Company.

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The Company is treating post-surgical stage 3 patients in its Phase I/II
clinical trial of O-Vax, its AC Vaccine for ovarian cancer. This trial is being
conducted at TJU under the direction of Dr. Berd and has already shown a
positive immune response, as measured by a DTH test, in the first seven of seven
patients. The Company intends for further clinical trials to be conducted for
the purpose of collecting Phase I/II preliminary efficacy data with respect to
the effectiveness of O-Vax in treating advanced stages of ovarian cancer, and to
use the results of all such Company-sponsored trials to support the commencement
of a subsequent Phase III program for O-Vax.

The Company also plans to initiate a similar Phase I/II clinical trial of
C-Vax(TM), its AC Vaccine for colorectal cancer, during 1998.

There can be no assurance, however, that the foregoing forward-looking
statements with respect to the Company's intended timetable for the commencement
of the Phase III clinical trials for M-Vax, the eventual filing of a marketing
application for M-Vax and the Company's intended timetable for clinical trials
for O-Vax and C-Vax will be met. For a discussion of certain of the risks and
uncertainties which may impact upon such timing, see "Risk Factors--Development
Stage Company", "Technological Uncertainty and Early Stage of Product
Development", "Government Regulation; No Assurance of Product Approval",
"Dependence on Others for Clinical Development of, and Regulatory Approvals for,
Manufacturing and Marketing of Pharmaceutical Products", "Dependence on Licenses
and Sponsored Research Agreements", "Lack of Manufacturing Facilities", "Forward
Looking Statements" and the other items under "Risk Factors".

In addition, the Company has recently entered into a Technical Testing Agreement
(the "Illinois Agreement") with the University of Illinois ("Illinois"),
pursuant to which Illinois will conduct testing in order to determine whether an
animal model can be used to demonstrate the therapeutic potential of
DNP-vaccine, such as the Company's AC Vaccine, in experimental tumor models, and
the value of adjunctive therapies. In consideration of the Illinois Agreement,
the Company and Illinois have agreed to a budget of approximately $160,000 for
the expected two-year term of the study, which shall be funded by the Company.

Topoisomerase Inhibitors

The Rutgers License relates to a series of novel anticancer compounds being
prepared and studied under the direction of Professors Edmund LaVoie and Leroy
Liu at Rutgers University (the "Rutgers Compounds"). The Rutgers Compounds have
proven effective on animal models during preclinical studies, and, although
there can be no assurance, the Company believes that they may be effective on
humans. The Rutgers Compounds fall into six distinct and varied chemical
classes, and have been shown to inhibit topoisomerase I or topoisomerase II
activities, depending on the exact structure. Topoisomerases are key enzymes
needed for remolding DNA, a necessary function for malignant tumor growth.
Inhibitors of these enzymes have been proven to be clinically-useful anticancer
therapies. In addition to having topoisomerase-inhibiting characteristics, some
of the Rutgers compounds have shown activity against fungal as well as parasitic
organisms. Both United States and non-U.S. patents have been filed for the
Rutgers Compounds and their anticancer and anti-infective uses. Although such
compounds are in an early stage of preclinical development for solid tumor,
antifungal and parasitic indications, the Company intends to pursue development
of one or more of these compounds. The Company's management anticipates that the
preclinical work may lead to indentification of a lead compound by early 1998,
and that an IND for such compound may be filed with the FDA during 1998, or
early 1999. However, there can be no assurance that any such compounds will
ultimately reach a stage of clinical testing or commercialization. For a
discussion of certain risks which may impact upon the timing and outcomes of the
development of the Rutgers compounds, see "Risk Factors--Development Stage
Company", "Technological Uncertainty and Early Stage of Product Development",
"Government Regulation; No Assurance of Product Approval", "Dependence on Others
for Clinical Development of, and Regulatory Approvals for, Manufacturing and
Marketing of Pharmaceutical Products", "Dependence on Licenses and Sponsored
Research Agreements", "Lack of Manufacturing Facilities", "Forward Looking
Statements" and the other items under "Risk Factors".

Novel Anti-Estrogens

The Texas A&M License relates to a series of novel anticancer compounds (the
"Texas A&M Compounds") being prepared and studied under the direction of
Professor Stephen Safe at Texas A&M University. The unique activity against

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solid tumors exhibited by the Texas A&M Compounds can be classified as
anti-estrogen, although they appear to act indirectly on the estrogen receptor
through a novel pathway. Anti-estrogens have been proven to be clinically-useful
anticancer therapies. United States patents for both the Texas A&M Compounds and
their anticancer uses have been filed. Although non-U.S. patent filings have not
yet been made, the Company expects that foreign patent coverage will be pursued
as the result of ongoing laboratory research. Although such compounds are in a
early stage of preclinical development for solid tumor indications, the Company
intends to pursue development of one or more of these compounds. The Company's
management anticipates that the preclinical work may lead to indentification of
a lead compound early 1998, and that an IND for such compound may be filed with
the FDA during 1998, or early 1999. However, there can be no assurance that any
such compounds will ultimately reach a stage of clinical testing or
commercialization. For a discussion of certain risks which may impact upon the
timing and outcomes of the development of the Texas A&M compounds, see "Risk
Factors--Development Stage Company", "Technological Uncertainty and Early Stage
of Product Development", "Government Regulation; No Assurance of Product
Approval", "Dependence on Others for Clinical Development of, and Regulatory
Approvals for, Manufacturing and Marketing of Pharmaceutical Products",
"Dependence on Licenses and Sponsored Research Agreements", "Lack of
Manufacturing Facilities", "Forward Looking Statements" and the other items
under "Risk Factors".

RESEARCH AND DEVELOPMENT

Autologous Cell Vaccines

In connection with the TJU License entered into in November 1995, TJU, Dr. Berd,
as TJU's principal investigator, and the Company entered into a Clinical Study
and Research Agreement pursuant to which TJU and Dr. Berd began a research and
clinical study program for the further development of the AC Vaccine technology
for additional cancer targets. In turn, the Company agreed to fund such research
as follows: $220,094 for the first year of the agreement, $220,381 for the
second year of the agreement and at least $100,000 for the third year of the
agreement. Following the third year, the Company is obligated to spend a minimum
of $500,000 per year on the development of the AC Vaccine technology until
commercialized in the United States. If following the third year, the Company
files for FDA approval of a Company-sponsored marketing application for the
right to market a product arising from such technology, the Company may elect to
spend less than $500,000 per year on the development of the AC Vaccine
technology during the period of time the marketing application is under review
by the FDA. If the Company does not meet its financial, development, or other
obligations in a timely manner under its license agreements or related sponsored
research agreements, the Company could lose the rights to its proprietary
technology or the right to have its licensors and others conduct its research
and development efforts, any of which could have a material adverse effect on
the Company. TJU has the right to terminate the R&D agreement on 30 days'
written notice if it becomes unable for any reason to complete the Study. See
"Risk Factors--Dependence on Licenses and Sponsored Research Agreements."

Topoisomerase Inhibitors

In consideration of the license granted to the Company by Rutgers in December
1996, the Company has committed to the funding of research for each of the first
three years of the Rutgers License at a rate of $100,000 per year as well as the
payment of certain indirect overhead costs. The Company also is obligated to pay
Rutgers for certain overhead costs for such three-year period on a deferred
basis. In addition, the Company is obligated to spend an aggregate of $200,000
in the first year, $300,000 in the second year and $500,000 each year thereafter
until the first year of commercial marketing of a product derived from the
Rutgers compounds, for the development, research (including the $100,000
research funding commitment in each of the first three years), manufacture,
regulatory approval, marketing and selling of a product derived from the Rutgers
compounds. If the Company fails to make such payments in accordance with the
terms of the Rutgers License, Rutgers would be entitled to terminate the
agreement and no further research would be performed thereunder. The termination
of the Rutgers License could have a material adverse effect on the Company. See
"Risk Factors--Dependence on Licenses and Sponsored Research Agreements."

It is expected that the research and development effort with respect to these
compounds will be conducted at Rutgers under the direction of Edmond J. LaVoie,
Ph.D., the co-originator of the technology underlying the Rutgers License. Dr.
LaVoie is Professor of Medicinal Chemistry and Chairman of the Department of
Pharmaceutical Chemistry at Rutgers and is a member of the Company's Scientific
Advisory Board. See "Management--Scientific Advisory Board."

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Novel Anti-Estrogens

In consideration of the license granted to the Company by Texas A&M in February
1997, the Company has committed to the funding of research in the amount of
$108,750 for each of the first three years. In addition, the Company is required
to achieve certain milestones toward development of a licensed product within
certain specified time frames. If the Company fails to make such payments or
achieve such milestones in accordance with the terms of the Texas A&M License,
Texas A&M would be entitled to terminate the agreement and no further research
would be performed thereunder. The termination of the Texas A&M License could
have a material adverse effect on the Company. See "Risk Factors--Dependence on
Licenses and Sponsored Research Agreements."

It is anticipated that the research and development effort with respect to the
potential anti-cancer compounds licensed under the Texas A&M License will be
conducted at Texas A&M under the direction of Stephen H. Safe, Ph.D., the
originator of the technology underlying the Texas A&M License. Dr. Safe is Sid
Kyle Professor of Toxicology at Texas A&M and is a member of the Company's
Scientific Advisory Board. See "Management--Scientific Advisory Board."

PROPRIETARY RIGHTS

The TJU License

Pursuant to the TJU License, the Company has licensed an issued U.S. patent and
certain U.S. and foreign patent applications covering a process for the
modification of a patient's own tumor cells into a cancer vaccine. The TJU
License is a royalty-bearing license for the rights to such patented vaccine
technology, and provides for certain payments upon the occurrence of certain
milestones. As consideration for the TJU License, the Company paid $10,000 to
TJU, and issued 229,121.5 shares of Common Stock to each of TJU and Dr. Berd,
representing 7.5% (15% in the aggregate) of the Company's total outstanding
voting securities at the time of issuance.

The Company is obligated to make certain milestone payments to TJU as follows:
$10,000 upon initiation of the first clinical trial that is approved by the FDA
(or comparable international agency), $10,000 upon the first filing of a
marketing application with the FDA (or comparable filing with a comparable
international agency), and $25,000 upon receipt by the Company of approval from
the FDA (or comparable international agency) to market products relating to the
AC Vaccine technology. In addition, the Company is obligated to pay royalties on
its net sales revenue and a percentage of all revenues received from sublicenses
relating to the AC Vaccine technology. Failure to comply with the terms of the
TJU License may cause its termination, which would have a material adverse
effect on the Company. See "Risk Factors--Dependence on Licenses and Sponsored
Research Agreements."

The Rutgers License

Pursuant to the Rutgers License, the Company has licensed certain U.S. and
foreign patent applications relating to a series of compounds for the potential
treatment of cancer and infectious diseases. The Company paid $15,000 as
consideration for the Rutgers License, and has agreed to pay an additional
$15,000 license maintenance fee in each subsequent year. The Company has also
committed to the issuance to Rutgers of warrants to purchase 125,000 shares of
Common Stock at a price of $8.24 per share. Such warrants are exercisable upon
the achievement of certain development-related milestones. The first 75,000 of
such warrants will expire in 2006 and the final 50,000 of such warrants will
expire in 2011. These warrants will provide for cashless exercise, piggyback
registration rights and certain anti-dilution rights.

The Company also has agreed to fund research in the amount of $100,000 per year
for the first three years of the Rutgers License as well as to pay for certain
indirect overhead costs during such time. The Company also is obligated to pay
on a deferred basis for certain overhead costs for such three-year period. The
license maintenance fee is not payable in years where research funding is equal
to or greater than $100,000.

The Company is also obligated to pay certain milestone payments as follows:
$15,000 on the earlier of October 31, 1999 or the date of first filing of an IND
application with the FDA, or comparable international agency, $25,000 on the
earlier of October 31, 2001 or the date of initiation of Phase II trials in the
United States or another major market country, $45,000

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on the earlier of October 31, 2005 or the date of first filing of a marketing
application with the FDA, or comparable international agency and $150,000 on the
earlier of October 31, 2008 or the date of receipt by the Company of approval
from the FDA or comparable international agency to market products. In addition,
the Company is required to pay royalties on its worldwide net sales revenue
derived from the Rutgers compounds and a percentage of all revenues received
from sublicenses of products derived from these compounds. Failure to comply
with the terms of the Rutgers License may cause its termination, which would
have a material adverse effect on the Company. See "Risk Factors--Dependence on
Licenses and Sponsored Research Agreements."

The Texas A&M License

Pursuant to the Texas A&M License, the Company has licensed an issued U.S.
patent and certain U.S. and foreign patent applications relating to a series of
compounds for the potential treatment of cancer. Under the terms of the
agreement, the Company is obligated to pay future milestone payments, royalties
on its net sales revenue derived from these compounds and a percentage of all
revenues received from sublicensees of such compounds. The Company also has
agreed to fund research in the amount of $108,750 for each of the first three
years of the Texas A&M License. Failure to comply with the terms of the Rutgers
License may cause its termination, which would have a material adverse effect on
the Company. See "Risk Factors--Dependence on Licenses and Sponsored Research
Agreements."

In the future, the Company may require additional licenses from other parties to
develop, manufacture and market commercially viable products effectively. The
Company's commercial success will depend in part on obtaining and maintaining
such licenses. There can be no assurance that such licenses can be obtained or
maintained on commercially reasonable terms, if at all, that the patents
underlying such licenses will be valid and enforceable or that the proprietary
nature of the technology underlying such licenses will remain proprietary. The
Company presently intends to pursue aggressively the broadest patent coverage
possible for all of its intellectual property. See "Risk Factors--Uncertainty
Regarding Patents and Proprietary Rights; TJU Patent Reissuance Application."

COMPETITION

The Company is aware of estimates that more than 300 companies are reported to
have approximately 1,250 cancer drugs under development worldwide, of which a
substantial number are under development in the United States. Many of such
drugs or other substances under development involve chemotherapeutic agents and
cancer immunotherapies and, thus, are, or may be, in direct competition with the
Company's AC Vaccine or compounds resulting from development work pursuant to
the Rutgers License or the Texas A&M License. Such future competitor products
and drugs may perform more effectively or safely than the Company's product
candidates.

Many of the companies engaged in anticancer research and development and in
acquiring rights to the products of such research and development, including
biotechnology companies, have substantially greater financial, technical,
scientific, manufacturing, marketing and other resources than the Company and
have more experience in developing, marketing and manufacturing therapeutics,
including performing the preclinical testing and clinical trials that are
required for obtaining FDA and other regulatory approvals. Included among the
Company's competitors are: (i) large established pharmaceutical and
biotechnology companies with commitments to oncology or antiviral research,
development and marketing, including, without limitation, Schering Plough
Corporation, Chiron Corporation, Bristol-Myers Squibb and Johnson & Johnson;
(ii) smaller biotechnology companies with similar strategies, including IDEC
Pharmaceuticals, Inc. and Biomira Diagnostics; and (iii) many development stage
companies licensing and/or developing oncology therapeutics.

In addition, many research institutes, hospitals and universities are working to
develop products and processes in the same field of cancer that may in the
future be in direct competition with the Company's present and future products.

A number of companies or research institutions are developing cancer vaccines,
including, without limitation, Ribi ImmunoChem Research, Inc. and Progenics,
Inc., in melanoma; AltaRex, Genentech and Biomira, in ovarian cancer; and
PerImmune, Inc. and Aphton Corporation, in colorectal cancer. The principal
competitive factors in the area of cancer immunotherapies are (i) the efficacy
of the product and (ii) the timing of the entry of the product into the market.
Although there is significant competition, to date, the Company believes that
none of such immunotherapies have demonstrated the increase in survival over the
same period of time that the Company's technology has shown in

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melanoma. Although there can be no assurance, the Company also believes that its
AC Vaccine technology may be applicable to a variety of solid tumors such as
ovarian, breast, prostate, lung and colorectal cancer and may have applications
in the treatment of acute myelogenous leukemia (AML) and therefore may not be as
limited as certain other approaches. With respect to the timing of the entry of
the product, there can be no assurance as to when, if at all, any of the
Company's potential products will be approved. See "Risk Factors--Technological
Uncertainty and Early Stage of Product Development", "Government Regulation; No
Assurance of Product Approval", "Dependence on Others For Clinical Development
of, and Regulatory Approvals for, Manufacturing and Marketing of Pharmaceutical
Products", "Dependence on Licenses and Sponsored Research Agreements",
"Dependence Upon Key Personnel and Consultants" and "Lack of Manufacturing
Facilities".

MANUFACTURING AND MARKETING

The Company does not currently have the resources to commercially manufacture or
directly market any products that it may develop. In connection with its
research and development activities, the Company may seek to enter into
collaborative arrangements with pharmaceutical, medical device, health care,
chemical or other companies to assist in further funding as well as in
development, commercial manufacturing and/or marketing of its products if such
activities are commercially feasible. These partners may also be responsible for
commercial scale manufacturing, which will be subject to compliance with
applicable FDA regulations. The Company anticipates that such arrangements may
involve the grant of exclusive or semi-exclusive rights to sell specific
products to specified market segments or particular geographic territories in
exchange for a royalty, joint venture, future co-marketing or other financial
interests.

To date, the Company has not entered into any collaborative commercial
manufacturing or marketing agreements for any of its potential products. There
can be no assurance that the Company will be able to enter into any such
arrangements on favorable terms, if at all. Such collaborative marketing
arrangements, whether licenses, joint ventures or otherwise, may result in lower
revenues than would otherwise be generated if the Company conducted the
marketing of their own products. See "Risk Factors--Dependence on Third Parties
for Additional Funds and for Manufacturing, Marketing and Selling."

The Company may elect to establish its own commercial manufacturing facilities
for the products and technologies that it may develop. In the event the Company
decides to establish manufacturing facilities, the Company will be required to
hire and train significant numbers of employees and to comply with the extensive
cGMP regulations applicable to such a facility. The establishment of any such
facilities and eventual expansion of operations to commercial levels, as well as
the hiring of qualified employees, could require substantial expenditures. In
addition, at least some of the Company's products produced at its facilities
will probably be regulated as biologics. In that event, the Company would be
required to file with the FDA in order to obtain an establishment license (or
similar license) for its facilities. Legislation that would eliminate the
requirement for an establishment license is currently pending before Congress,
but there is no assurance that this legislation will be enacted. Any delay in
the FDA's approval of (or its refusal to grant) such a license would delay or
prevent marketing of the relevant product. See "Risk Factors--Lack of
Manufacturing Facilities" "--Dependence on Others for Clinical Development of,
and Regulatory Approvals for Manufacturing and Marketing of Pharmaceutical
Products."

GOVERNMENT REGULATION

The research, preclinical development, clinical trials, product manufacturing
and marketing which may be conducted by the Company is subject to regulation by
the FDA and similar health authorities in foreign countries. The proposed
products and technologies of the Company also may be subject to certain other
federal, state and local government regulations, including, without limitation,
the Federal Food, Drug and Cosmetic Act, and their state, local and foreign
counterparts. Although there can be no such assurance, the Company does not
believe that compliance with such laws and regulations has, nor is presently
expected to have, a material adverse effect on the business of the Company.
However, the Company cannot predict the extent of the adverse effect on its
business or the financial and other cost that might result from any government
regulations arising out of future legislative, administrative or judicial
action. See "Risk Factors--Government Regulation; No Assurance of Product
Approval."

Generally, the steps required before a pharmaceutical or therapeutic biological
agent may be marketed in the United States include: (i) preclinical laboratory
tests, in vivo preclinical studies in animals, toxicity studies and formulation
studies; (ii)

34
<PAGE>

the submission to the FDA of an IND application for human clinical testing, that
must become effective before human clinical trials commence; (iii) adequate and
well-controlled human clinical trials to establish the safety and efficacy of
the drug; (iv) the submission of a marketing application to the FDA; and (v) FDA
approval of the marketing application prior to any commercial sale or shipment
of the drug.

Preclinical studies include laboratory evaluation of the product, conducted
under Good Laboratory Practice (GLP) regulations, and animal studies to assess
the pharmacological activity and the potential safety and effectiveness of the
drug. The results of the preclinical studies are submitted to the FDA in the
IND. Unless the FDA objects to an IND, it becomes effective 30 days following
submission and the clinical trial described in the IND may then begin.

Every clinical trial must be conducted under the review and oversight of an
institutional review board (IRB) at each institution participating in the trial.
The IRB evaluates, among other things, ethical factors, the safety of human
subjects, and the possible liability of the institution.

Clinical trials are typically conducted in three sequential phases, although the
phases may overlap. Phase I represents the initial introduction of the drug to a
small group of healthy subjects to test for safety, dosage tolerance, and the
essential characteristics of the drug. Phase II involves studies in a limited
number of patients to test the safety and efficacy of the drug at different
dosages. Phase III trials involve large-scale evaluation of safety and
effectiveness, usually (though not necessarily) in comparison with placebo or an
existing treatment.

The results of the preclinical and clinical trials are submitted to the FDA as
part of an application to market the drug. The marketing application also
includes information pertaining to the chemistry, formulation, manufacture of
the drug and each component of the final product. The FDA review of a marketing
application takes from one to two years on average to complete, though reviews
of treatments for cancer and other life-threatening diseases may be accelerated.
However, the process may take substantially longer if the FDA has questions or
concerns about a product. Following review, the FDA may ultimately decide that
an application does not satisfy regulatory and statutory criteria for approval.
In some cases, the FDA may approve a product but require additional clinical
tests following approval (i.e., Phase IV).

In addition to obtaining FDA approval for each product, each domestic drug
manufacturing establishment must be registered with, and approved by, the FDA.
Domestic manufacturing establishments are subject to inspections by the FDA and
must comply with Good Manufacturing Practice ("GMP"). To supply products for use
in the United States, foreign manufacturing establishments must comply with GMP
and are subject to periodic inspection by the FDA or by corresponding regulatory
agencies in such countries under reciprocal agreements with the FDA. As
permitted by FDA regulations, the M-Vax and O-Vax phase I/II human clinical
trials are being conducted by TJU under the supervision of Dr. David Berd
pursuant to an FDA-approved physician sponsored IND. Following an earlier
meeting with the FDA to discuss the clinical results obtained with M-Vax, the
use of such results in support of the submission of a Company-sponsored IND to
the FDA, and to review its proposed development plan, the Company reviewed a
proposed phase III protocol with FDA, as well as its plans to submit a
Company-sponsored IND to support the pivotal trial program. This IND has been
sumbitted to the FDA, is currently under review, and addresses product
characterization/manufacturing issues raised by FDA to ensure that all pivotal
data will support a product license application. No patients will be enrolled in
the pivotal trial program until the Company and FDA are satisfied that all
product issues are resolved. Depending upon the results of such clinical trials,
it is the Company's intention to use the results of these Company-sponsored
clinical trials along with the results of the clinical trial conducted at TJU,
as the basis for the filing of an application for FDA approval to market M-Vax.
Even if the Company eventually receives FDA approval of a marketing application
to commercialize any of its products, there can be no assurance that the Company
will be able to successfully manufacture such product at a commercially
acceptable cost.

If marketing approval of any Company product is granted, the Company must
continue to comply with FDA requirements not only for manufacturing, but also
for labeling, advertising, record keeping, and reporting to the FDA of adverse
experiences and other information. In addition, the Company must comply with
federal and state health care antikickback laws and other health care fraud and
abuse laws that affect the marketing of pharmaceuticals. Failure to comply with
applicable laws and regulations could subject the Company to administrative or
judicial enforcement actions, including but not limited to product seizures,
injunctions, civil penalties, criminal prosecution, refusals to

35
<PAGE>

approve new products or withdrawal of existing approvals, as well as increased
product liability exposure, any of which could have a material adverse effect on
tile company's business, financial condition, or results of operations.

For clinical investigation and marketing outside the United States, the Company
also is subject to foreign regulatory requirements governing human clinical
trials and marketing approval for drugs. The requirements governing the conduct
of clinical trials, product licensing, pricing and reimbursement vary widely for
European countries both within and outside the European Community ("EU").
Outside the United States, the Company's ability to market a product is
contingent upon receiving a marketing authorization from the appropriate
regulatory authority. At present, foreign marketing authorizations are applied
for at a national level, although within the EU certain registration procedures
are available to companies wishing to market their products in more than one EU
member state. If the regulatory authority is satisfied that adequate evidence of
safety, quality and efficacy has been presented, a marketing authorization will
be granted. The system for obtaining marketing authorizations within the EU
registration system is a dual one in which certain products, such as
biotechnology and high technology products and those containing new active
substances, will have access to a central regulatory system that provides
registration throughout the entire EU. Other products will be registered by
national authorities in individual EU member states, operating on a principle of
mutual recognition. This foreign regulatory approval process includes, at least,
all of the risks associated with FDA approval set forth above. The Company could
possibly have greater difficulty in obtaining any such approvals and also might
find it more difficult to protect its intellectual property abroad.

SOURCES AND AVAILABILITY OF RAW MATERIALS

The Company does not expect to encounter significant difficulties in obtaining
raw materials for M-Vax, O-Vax or C-Vax, since they are primarily composed of a
readily available chemical reagent, DNP, and the patient's own tumor cells.
Should the supply of DNP significantly decrease, the Company may encounter
problems preparing M-Vax, O-Vax, C-Vax, or any other AC Vaccine technology.

COMPLIANCE WITH ENVIRONMENTAL LAWS

The Company's business may be subject to regulation under federal, state, local,
and foreign laws regarding environmental protection and hazardous substance
control. The Company believes that its compliance with these laws will have no
adverse impact upon its capital expenditures, earnings or competitive position.
Federal, state and foreign agencies and legislative bodies have expressed
interest in the further environmental regulation of the biotechnology industry.
The Company is unable to estimate the extent and impact of such, if any, future
federal, state, local legislation or administrative environmental action.

EMPLOYEES

The Company utilizes a product development strategy that includes contracting
out its research and development, and to a certain extent, some other functions
in order to minimize the expenses and overhead associated with full-time
employees. Consistent with this strategy, as of April 8, 1998, the Company had
six full-time employees, including Jeffrey M. Jonas, M.D., its President and
Chief Executive Officer, David L. Tousley, C.P.A., its Chief Financial Officer,
and Ernest W. Yankee, Ph.D., its Executive Vice President. Its other
consultants, scientific advisors, part-time officers and directors devote only a
portion of their time to the business of the Company. The Company believes that
it maintains good relations with its employees, consultants, scientific
advisors, part-time officers and directors. See "Risk Factors--Lack of
Management and Employees" and "--Dependence Upon Key Personnel and Consultants."

FACILITIES

The Company's executive offices are located at 4520 Main, Suite 930, Kansas
City, Missouri 64111. In October of 1996, the Company entered into a three-year
lease for approximately 2,800 square feet of office space with a monthly rental
of approximately $5,400, beginning in the fourth month. This lease was amended
in December 1997 to add approximately 1,300 additional square feet of office
space for the remainder of the original lease term which increased the monthly
rental by approximately $2,700.

36
<PAGE>

The Company anticipates that in the future it may own or lease its own facility
for the manufacturing of its potential products and has entered into a 10-year
lease for approximately 11,900 square feet of space in Philadelphia,
Pennsylvania to begin construction of such a facility. The lease began in
February 1998, contains options for expansion in 1999 and 2002 and contains an
option to terminate at the end of the fifth year. The initial monthly rental is
approximately $10,400.

The research work of the Company is currently being conducted at TJU, Rutgers
and Texas A&M pursuant to their respective license and research agreements with
the Company. See "Risk Factors--Lack of Facilities," --"Dependence on Third
Parties for Additional Funds and for Manufacturing, Marketing and Selling," and
"--Dependence on Others for Clinical Development of, and Regulatory Approvals
for, and Manufacturing and Marketing of Pharmaceutical Products" and "Certain
Transactions."

LEGAL PROCEEDINGS

An application for reissue of the TJU patent is being made to address a prior
art reference which may have a material adverse impact on the patent. Although
the Company believes that there is a sound basis for this reissue application,
there can be no assurance that a patent will issue from the application, or that
any such patent will be enforceable and will not be challenged, invalidated, or
circumvented. See "Uncertainty Regarding Patents and Proprietary Rights; TJU
Patent Reissuance Application".

The Company's application for a federal trademark registration for the name AVAX
has been opposed by a third party. This opposition proceeding concerns the right
of the Company to obtain a federal trademark registration in the United States
Patent & Trademark Office for the name AVAX. Although the Company believes there
is a sound basis for denial of the opposition and allowance of its application
to register the name AVAX, there can be no assurance that the Company will
prevail in this proceeding. There is also no assurance that the Company will
desire or be able to continue using the name AVAX at some future time. The
Company does not believe that an adverse outcome in this proceeding will
materially affect its business.

The Company is not aware of any other pending or threatened legal actions which,
in the opinion of management, based on known information, is likely to have a
material adverse effect on the Company's business.

RESEARCH AND DEVELOPMENT EXPENSE

For fiscal years 1996 and 1997, the Company incurred research and development
expense of $738,991 and $2,448,976, respectively. Research and development
expense for the period from inception has been $4,801,285. See "Financial
Statements." Although there can be no assurance, the Company intends to spend
increasingly more on research and development in the foreseeable future.

37
<PAGE>

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The following table sets forth the names and positions of the executive officers
and directors of the Company:

Name Age Position
- ---- --- --------

Jeffrey M. Jonas, M.D. 45 Chief Executive Officer,
President and Director
Edson D. de Castro 59 Director
John K.A. Prendergast, Ph.D. 44 Director
Carl Spana, Ph.D. 35 Director
Michael S. Weiss 32 Secretary and Director
David L. Tousley, C.P.A. 42 Chief Financial Officer
Ernest W. Yankee, Ph.D. 54 Executive Vice President

Jeffrey M. Jonas, M.D., has been the Chief Executive Officer, President and
Director of the Company since June 1, 1996. Prior to joining the Company, from
1994 to 1996, Dr. Jonas was the Vice President of Clinical Development and the
Chief Medical Officer of Upjohn Laboratories. From 1991 to 1994, he was the Vice
President of Worldwide Pharmaceutical Regulatory Affairs, the Director of
Psychopharmacology and the Director of Clinical Development III for Upjohn
Company. Prior thereto, Dr. Jonas was a research and clinical
psychopharmacologist in the Boston area. Dr. Jonas has authored a book on
Prozac(TM), and over 100 scientific articles, abstracts and book chapters. Dr.
Jonas received his M.D. from Harvard Medical School in 1979 and a B.A. in
Biology and English from Amherst College in 1975.

Mr. Edson D. de Castro has been a member of the Board of Directors of the
Corporation since October 1993. Since 1990, Mr. de Castro has been consulting
for companies and participating as a member of certain Boards of Directors. Mr.
de Castro was one of five co-founders of Data General Corporation in 1968 for
which, from 1968 to 1989, he served as its President and Chief Executive
Officer, and from 1989 to 1990, he served as its Chairman of the Board of
Directors. From 1995 to 1997, Mr. de Castro was the Chief Executive Officer and
Chairman of the Board of Directors of Xenometrix, Inc. Mr. de Castro was a
founder and Executive Committee Member of the Massachusetts High Tech Council.
Mr. de Castro is a Trustee of Boston University. In addition, Mr. de Castro
serves on the Board of Directors of Boston Life Sciences, Inc. Mr. de Castro
received his B.S. in Electrical Engineering from the University of Lowell in
1960.

John K.A. Prendergast, Ph.D., has been a director of the Corporation since July
1996. Dr. Prendergast has served as President and principal of Summercloud Bay,
Inc., a biotechnology-consulting firm, since 1993. He is a co-founder and/or a
member of the Board of Ingenex, Inc., Atlantic Pharmaceuticals, Inc., Optex
Ophthamologics, Inc., Gemini Gene Therapies, Inc., Channel Therapeutics, Inc.,
Xenometrix, Inc., Avigen, Inc., and Palatin Technologies, Inc. From October 1991
through December 1997, Dr. Prendergast was a Managing Director of Paramount
Capital Investments, LLC and a Managing Director of The Castle Group Ltd. Dr.
Prendergast received his M.Sc. and Ph.D. from the University of New South Wales,
Sydney, Australia and a C.S.S. in Administration and Management from Harvard
University.

Carl Spana, Ph.D., has been a Director of the Corporation since September 1995
and was its Interim President from August 1995 to June 15, 1996. Dr. Spana is
currently an Executive Vice President and Chief Technology Officer of Palatin
Technologies, Inc. Since June 1996, Dr. Spana has served as Executive Vice
President and Chief Technology Officer of RhoMed Incorporated. From 1993 to
1996, Dr. Spana was responsible for discovering, evaluating, and commercializing
new biotechnologies through his work at Paramount Capital Investments, LLC where
he was an Associate Director. Dr. Spana has been a co-founder of several private
biotechnology firms. From 1991 to 1993, Dr. Spana was a Research Associate at
Bristol-Myers Squibb where he was involved in scientific research in the field
of immunology that led to the initiation of several new drug discovery programs.
Dr. Spana currently is a member of the Board of Directors of Palatin
Technologies, Inc. Dr. Spana received his Ph.D. in Molecular Biology from The
Johns Hopkins University and a B.S. in Biochemistry from Rutgers University.

38
<PAGE>

Michael S. Weiss, Esq., has been a Director of the Corporation since March 1996
and Secretary of the Corporation since September 1995. Mr. Weiss is Senior
Managing Director of Paramount Capital, Inc. and certain of its affiliates, and
has been employed by Paramount Capital, Inc. since 1993. Prior to that, Mr.
Weiss was an attorney with Cravath, Swaine & Moore. Mr. Weiss is a Director of
Pacific Pharmaceuticals, Inc. and Palatin Technologies, Inc., Vice Chairman of
the Board of Genta, Inc., Chairman of the Board of Directors of Procept, Inc.,
and Secretary of Atlantic Pharmaceuticals, Inc., each of which is a publicly
traded biotechnology company. In addition, Mr. Weiss is a Director of several
privately-held biotechnology companies. Mr. Weiss received his J.D. from
Columbia University School of Law and a B.S. in Finance from the State
University of New York at Albany.

David L. Tousley, C.P.A., has been the Chief Financial Officer of the Company
since October 1, 1996. Prior to joining the Company, from 1989 to 1996, Mr.
Tousley was the Controller and then the Vice President for Finance and
Administration of Connaught Laboratories, Inc. Mr. Tousley received his M.B.A.
in Accounting from Rutgers University Graduate School of Business in 1978 and
his B.A. in English from Rutgers College in 1977.

Ernest W. Yankee, Ph.D., has been an Executive Vice President of the Company
since October 1, 1996. Prior to joining the Company, he served as the Director
of Clinical Development of the Upjohn Company from 1994 to 1996. From 1990 to
1994, he was the Director of Preclinical Development-Scientific Affairs of the
Upjohn Company. Dr. Yankee received his Ph.D. from the University of California
at Los Angeles in 1970 and his B.A. in Chemistry from La Sierra University in
1965.

All directors hold office until the next annual meeting of stockholders of the
Company and until their successors have been elected and qualified. Officers
serve at the discretion of the Board of Directors. The Company's Certificate of
Incorporation and bylaws provide that directors and officers shall be
indemnified against liabilities arising from their service as directors or
officers to the fullest extent permitted by the laws of the State of Delaware,
which generally requires that the individual act in good faith and in a manner
he or she reasonably believes to be in, or not opposed to, the Company's best
interests.

The Company has only six full time employees. Mr. Weiss currently devotes only a
portion of his time to the Company as Corporate Secretary and does not currently
receive compensation from the Company for such services. Certain of the officers
and directors of the Company currently do and may from time to time in the
future serve as officers or directors of other biopharmaceutical or biotechnical
companies. There can be no assurance that such other companies will not in the
future have interest in conflict with those of the Company. See "Risk Factors --
No Assurance of Identification of Additional Projects," and "--Certain
Interlocking Relationships; Potential Conflicts of Interest."

BOARD COMMITTEES

The Company's Board of Directors has a Compensation Committee. The Compensation
Committee sets the compensation for certain of the Company's personnel and
administers the Company's 1992 Stock Option Plan. The Compensation Committee
consists of Dr. Spana and Mr. Weiss.

The Company's Board of Directors also has an Audit Committee. The Audit
Committee reviews the professional services provided by the Company's
independent accountants and monitor the scope and the results of the annual
audit, reviews proposed changes in the Company's financial and accounting
standards and principles, and the Company's policies and procedures with respect
to its internal accounting, auditing and financial controls and make
recommendations to the Board of Directors on the engagement of the independent
accountants, as well as other matters that may come before it or as directed by
the Board of Directors. The Audit Committee is composed of Dr. Jonas, Dr. Spana
and Mr. de Castro.

39
<PAGE>

SCIENTIFIC ADVISORY BOARD

The Company has a Scientific Advisory Board that consists of individuals with
extensive experience in the Company's fields of interest. It is expected that
the Scientific Advisory Board members will meet as a board with management and
key scientific employees of the Company on a semi-annual basis and in smaller
groups or individually on an informal basis. The Company anticipates that the
Scientific Advisory Board members will assist the Company in identifying
scientific and product development opportunities, in reviewing and evaluating
scientists and other employees. Presently, the Scientific Advisory Board members
consists of:

David Berd, M.D. -- Chairman Clinical Oncologist at the Jefferson Cancer Center
of TJU and Inventor of the Company's AC Vaccine
technology.

Edmond J. LaVoie, Ph.D. Professor of Medicinal Chemistry and Chairman of
the Department of Pharmaceutical Chemistry at
Rutgers University.

Margalit Mokyr, Ph.D. Professor of Biochemistry at the University of
Illinois College of Medicine.

Stephen H. Safe, Ph.D. Sid Kyle Professor of Toxicology at Texas A&M
University.

Robert J. Belt, M.D. Medical Director at the Peet Cancer Center of
Saint Luke's Hospital in Kansas City.

Drs. Berd and LaVoie are compensated pursuant to their consulting agreements
with the Company. See "Employment Agreements, Termination and Severance
Arrangements." Drs. LaVoie, Mokyr, Safe and Belt each recently entered into a
Scientific Advisory Board Agreement with the Company, where they agreed to serve
on the Scientific Advisory Board for a period of two years, subject to automatic
annual renewal periods. Pursuant to their respective agreements with the
Company, each such SAB member shall receive $2,000 per meeting, and may, in the
discretion of the Board of Directors of the Company or Compensation Committee
thereof, receive additional compensation in the form of options to purchase
shares of Common Stock of the Company or otherwise.

Members of the Scientific Advisory Board may be employed by or have consulting
agreements with entities other than the Company, some of which may conflict or
compete with the Company, or which may, limit a particular member's availability
to the Company. Certain of the institutions with which the Scientific Advisory
Board members are affiliated may have regulations or policies which are unclear
with respect to the ability of such personnel to act as part-time consultants or
in other capacities for a commercial enterprise. Regulations or policies now in
effect or adopted in the future might limit the ability of the Scientific
Advisory Board members to consult with the Company. The loss of the services of
certain of the Scientific Advisory Board members could have a material adverse
effect on the Company.

Although each of the members of the Scientific Advisory Board has the customary
contractual obligation to keep confidential and not to disclose nor use any
confidential or proprietary information of the Company's, inventions or
processes discovered by any Scientific Advisory Board member, in certain
instances or unless otherwise agreed, will not become the property of the
Company but will remain the property of such person or of such person's
full-time employers. In addition, the institutions with which the Scientific
Advisory Board members are affiliated may make available the research services
of their scientific and other skilled personnel, including the Scientific
Advisory Board members to entities other than the Company. In rendering such
services, such institutions may be obligated to assign or license to a
competitor of the Company patents and other proprietary information which may
result from such services, including research performed by an advisor or
consultant for a competitor of the Company.

40
<PAGE>

BOARD COMPENSATION

In September 1997, as compensation for services rendered and to be rendered as
members of the Company's Board of Directors, the Company issued to each of Mr.
de Castro, Dr. Spana, Dr. Prendergast and Mr. Weiss, options to purchase 40,000
shares of Common Stock, exercisable for seven years at an exercise price equal
to $4.50 per share. Such options shall vest at a rate of 1/16 per quarter for a
period of four years, commencing on December 1, 1997. The Company currently
intends to compensate its directors on an annual basis, at the election of each
such director (which election must be made annually by December 15th of the year
immediately prior to the year in which such compensation is earned (the
"Election Date")), as follows: (i) $ 10,000, payable quarterly in arrears (the
"Director's Fee"), or (ii) options to purchase that number of shares of Common
Stock in an amount equal to the result obtained by multiplying (A) two by (B)
the result obtained by dividing (x) the Director's Fee by (y) the closing price
of the Common Stock on the Election Date, or the last business day preceding the
Election Date (the "Closing Price"); which options shall vest at a rate of 1/4
per quarter over a one-year period and shall be exercisable for a period of
seven years at an exercise price equal to the Closing Price. All directors have
elected to be compensated for their 1998 services with options to purchase
common stock and accordingly, in December, 1997, were each issued options to
purchase 5,161 shares of Common Stock with the foregoing terms at an exercise
price of $3.875 per share of Common Stock. In the event of a change of control
(as defined in the applicable stock option agreements), each of the foregoing
outstanding stock options, generally, will immediately vest in full, either at
the time of such event, or upon the subsequent termination of such individual's
service with AVAX.

Dr. Jonas receives no compensation for service on the Board of Directors or any
committee thereof. All directors of the Company are reimbursed for travel
expenses incurred in attending board and committee meetings.

The Company may retain additional board members in the future. Certain of the
directors may have consulting agreements and/or received stock grants in
consideration for services rendered to the Company, other than services rendered
as members of the Board. See "Executive Compensation" and "Certain
Transactions."

EXECUTIVE COMPENSATION

The following Summary Compensation Table sets forth the compensation earned by
the persons serving as the Company's chief executive officer and the other named
executive officers (collectively the "Named Officers") for the last three fiscal
years. No other executive officer earned compensation in excess of $100,000 for
services rendered to the Company for any such fiscal year and no executive
officer, who would have otherwise been included in such table, resigned or
terminated employment during that year. With respect to the persons and periods
covered in the following table, the Company made no restricted stock awards and
had no long-term incentive plan payouts.

<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation

Restricted Common Shares of Common All Other
Name and Principal Bonus Stock Award(s) Stock Underlying Compensation
Position Year Salary ($) ($) ($) Options/SARs (#) ($)
- ------------------------ ------ ------------------- ------------ ------------------- ------------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Jeffrey M. Jonas, M.D.
- -- President and Chief
Executive Officer 1997 $214,656.63 $100,000 -0- 150,000.0 -0-
1996 $117,712.29 $ 12,500(1) -0- 318,872.5 -0-
David L. Tousley,
C.P.A. -- Chief
Financial Officer 1997 $154,500.00 $50,000 -0- 60,000 $62,570.54(2)
1996 $35,288.44 -0- -0- 125,000 -0-

41
<PAGE>

Ernest W. Yankee,
Ph.D. - Executive Vice
President 1997 $150,750.10 $50,000 -0- 60,000 $70,631.27(3)
1996 $36,250.02 -0- -0- 125,000 -0-
</TABLE>

(1) Represents amount paid to Dr. Jonas as a signing bonus in connection with
his letter of employment. See "Management--Employment Agreements;
Termination and Severance Arrangements."

(2) Includes $62,287.04 paid in connection with Mr. Tousley's relocation and
temporary living expenses in accordance with his letter of employment and
$283.50 in group term life insurance premiums for insurance coverage in
excess of $50,000, paid by the Company.

(3) Includes $69,906.27 paid in connection with Dr. Yankee's relocation and
temporary living expenses in accordance with his letter of employment and
$725.00 in group term life insurance premiums for insurance coverage in
excess of $50,000, paid by the Company.

The following table sets forth certain information concerning stock options
granted during the fiscal year ended December 31, 1997 to the Named Officers.
The Corporation does not grant stock appreciation rights.

<TABLE>
<CAPTION>
Option/SAR Grants In Last Fiscal Year

% of Total
Shares of Common Stock Options/SARs Granted
Underlying Options/SARs to Employees in Fiscal Exercise or Base
Name Granted (#) Year Price ($/share) Expiration Date
- --------------------------- ------------------------- ------------------------ ------------------ -----------------------------
<S> <C> <C> <C> <C>
Jeffrey M. Jonas, M.D. 150,000 40.54% 4.50 July 1, 2004
David L. Tousley, 60,000 16.22% 4.50 July 1, 2004
Ernest W. Yankee, Ph.D. 60,000 16.22% 4.50 July 1, 2004
</TABLE>

The following table sets forth certain information concerning stock options held
by the Named Officers on December 31, 1997. No stock options were exercised by
the Named Officers during the fiscal year ended December 31, 1997.

<TABLE>
<CAPTION>
Aggregate Option Exercises In Last Fiscal Year and Fiscal Year-End Option Values

Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at December 31, 1997 (#) at December 31, 1997 ($) (1)
-------------------------------- ----------------------------
Shares Acquired
Name on Exercise (#) Exercisable Unexercisable Exercisable Unexercisable
- ------------------------------ ------------------- ----------------- ------------------- ------------------- ---------------------
<S> <C> <C> <C> <C> <C>
Jeffrey M. Jonas, M.D. -0- 132,077 336,795 $321,363.19 $535,605.31
David L. Tousley, C.P.A. -0- 35,000 150,000 $83,984.37 $251,953.13
Ernest W. Yankee, Ph.D. -0- 35,000 150,000 $83,984.37 $251,953.13
</TABLE>

(1) Value is based on the difference between the option exercise price and
$3.6875, the fair market value of the Common Stock on December 31, 1997 (based
upon the closing price on such day on the Nasdaq SmallCap Market), multiplied by
the number of shares of Common Stock issuable upon exercise of the options.

42
<PAGE>

EMPLOYMENT AGREEMENTS; TERMINATION AND SEVERANCE ARRANGEMENTS

On May 17, 1996, the Company entered into a letter of employment (the "Jonas
Employment Letter") with Dr. Jeffrey M. Jonas, pursuant to which Dr. Jonas
became the President, Chief Executive Officer and a Director of the Company for
an initial term of four years, effective as of June 1, 1996. Pursuant to the
terms of the Jonas Employment Letter, Dr. Jonas will receive an annual salary of
$200,000, in addition to a signing bonus of $12,500. Dr. Jonas will also receive
a minimum annual bonus of $25,000 at the end of the first year of his employment
and an additional discretionary bonus of up to $175,000. Dr. Jonas also received
options to acquire 318,872.5 shares of Common Stock at an exercise price of
$1.00. Such options will vest at a rate of 1/16 per quarter over a four-year
period, and are exercisable for a period of seven years. In June 1997, Dr. Jonas
received a bonus of $100,000 and his annual salary was increased to $225,000. In
July 1997, Dr. Jonas received options to acquire an additional 150,000 shares of
Common Stock at an exercise price of $4.50 per share. Such options will vest at
a rate of 1/12 per quarter over a three-year period, and are exercisable for a
period of seven years. The Jonas Employment Letter also provides that the
Company and Dr. Jonas intend to enter into a more formal employment agreement
which will contain, among other things, severance arrangements and non-compete
provisions. Dr. Jonas will also be eligible for additional stock options and
bonuses based upon outstanding performance. In the event that a Change of
Control (as defined in the Jonas Employment Letter) occurs and, prior to the
expiration of the initial term of the Jonas Employment Letter, Dr. Jonas'
employment thereunder is terminated by the Company without cause or by Dr. Jonas
with cause, all options previously granted to Dr. Jonas which remain unvested
will immediately vest.

On September 13, 1996, the Company entered into a letter of employment (the
"Tousley Employment Letter") with David L. Tousley, pursuant to which Mr.
Tousley became the Chief Financial Officer of the Company for an initial term of
four years. Pursuant to the terms of the Tousley Employment Letter, Mr. Tousley
will receive an annual salary of $150,000. Mr. Tousley will also receive a
minimum annual bonus of $25,000 at the end of the first year of his employment
and an additional discretionary bonus of up to $125,000. Mr. Tousley also
received options to acquire 125,000 shares of Common Stock at an exercise price
of $1.00 per share. In July 1997, Mr. Tousley received options to acquire an
additional 60,000 shares of Common Stock at an exercise price of $4.50 per
share. All such options will vest at a rate of 1/16 per quarter over a four-year
period, and are exercisable for a period of seven years. The Tousley Employment
Letter also provides that the Company and Mr. Tousley intend to enter into a
more formal employment agreement which will contain, among other things,
severance arrangements and non-compete provisions. Mr. Tousley shall also be
entitled to such additional compensation in the form of bonuses, raises or
otherwise as the Board of Directors of the Company may determine. In the event
that a Change of Control (as defined in the Tousley Employment Letter) occurs
and, prior to the expiration of the initial term of the Tousley Employment
Letter, Mr. Tousley's employment thereunder is terminated by the Company without
cause or Mr. Tousley with cause, all options previously granted to Mr.
Tousley which remain unvested will immediately vest.

On September 13, 1996, the Company entered into a letter of employment (the
"Yankee Employment Letter") with Ernest W. Yankee, Ph.D., pursuant to which Dr.
Yankee became an Executive Vice President of the Company for an initial term of
four years. Pursuant to the terms of the Yankee Employment Letter, Dr. Yankee
will receive an annual salary of $145,000. Dr. Yankee will also receive a
minimum annual bonus of $25,000 at the end of the first year of his employment
and an additional discretionary bonus of up to $83,750. Dr. Yankee also received
options to acquire 125,000 shares of Common Stock at an exercise price of $1.00
per share. In July 1997, Dr. Yankee received options to acquire an additional
60,000 shares of Common Stock at an exercise price of $4.50 per share. All such
options will vest at a rate of 1/16 per quarter over a four-year period, and are
exercisable for a period of seven years. The Yankee Employment Letter also
provides that the Company and Dr. Yankee intend to enter into a more formal
employment agreement which will contain, among other things, severance
arrangements and non-compete provisions. Dr. Yankee shall also be entitled to
such additional compensation in the form of bonuses, raises or otherwise as the
Board of Directors of the Company may determine. In the event that a Change of
Control (as defined in the Yankee Employment Letter) occurs and, prior to the
expiration of the initial term of the Yankee Employment Letter, Dr. Yankee's
employment thereunder is terminated by the Company without cause or by Dr.
Yankee with cause, all options previously granted to Dr. Yankee which remain
unvested will immediately vest.

43
<PAGE>

On February 22, 1996, the Company entered into a consulting agreement (the
"Spana Consulting Agreement") with Dr. Carl Spana, a Director and the then
Interim President of the Company. Pursuant to the Spana Consulting Agreement,
Dr. Spana is entitled to a consulting fee of $25,000 per annum payable on a
monthly basis, commencing upon the consummation of the Series B Offering. The
Spana Consulting Agreement is for an initial term of three years, and is
renewable for one year terms thereafter at the discretion of both parties and
may be terminated upon 30 days' notice by either party. Dr. Spana's tenure as
Interim President of the Company included the period from March 1996 to June
1996, when the Company did not have a Chief Executive Officer. At the time of
Dr. Jonas' appointment as the President and Chief Executive Officer of the
Company, Dr. Spana resigned from his position as Interim President. See "Certain
Transactions."

In May 1996, the Company entered into a consulting agreement with Dr. David Berd
(the "Berd Consulting Agreement"). Pursuant to such consulting agreement, Dr.
Berd is entitled to a $36,000 per year consulting fee payable on a monthly basis
accruing from January 1, 1996, the payment of which commenced upon the
consummation of the Series B Offering. The Berd Consulting Agreement is for a
term of three years subject to early termination upon the happening of certain
events. If Dr. Berd's consulting agreement is terminated without cause, Dr. Berd
will be entitled to six months' severance pay. In addition, Dr. Berd has agreed
to serve as Chairman of the Company's Scientific Advisory Board.

In July 1997, the Company entered into a consulting agreement with a member of
its Scientific Advisory Board, Dr. Edmond J. LaVoie (the "LaVoie Consulting
Agreement"). Pursuant to such consulting agreement, Dr. LaVoie is entitled to a
consulting fee of $20,000 per annum, payable quarterly. In addition, Dr. LaVoie
received options to acquire 30,000 shares of Common Stock, exercisable for a
period of seven years at an exercise price of $4.50 per share. The LaVoie
Consulting Agreement is for an initial term of three years, and is renewable for
one year periods thereafter upon the mutual agreement of the parties.

44
<PAGE>

CERTAIN TRANSACTIONS

Pursuant to a private offering held in May and June 1996, the Company
consummated an offering of Series B Preferred Stock (the "Series B Offering")
pursuant to which the Company raised aggregate gross proceeds of approximately
$25,800,000. In connection with services rendered by Paramount Capital, Inc., as
placement agent ("Paramount" or the "Placement Agent"), for the Series B
Offering, and pursuant to a placement agency agreement entered into by the
Company and the Placement Agent, the Company paid the Placement Agent cash
commissions of approximately $2,324,000, a non-accountable expense allowance of
approximately $1,033,000 and placement warrants ("Series B Placement Warrants")
to acquire approximately 25,820 shares of Series B Preferred Stock, exercisable
until June 11, 2006 at an exercise price of $110 per share of Series B Preferred
Stock. See "Description of Securities."

Pursuant to the placement agency agreement for the Series B Offering, on June
12, 1996, the Company and the Placement Agent entered into a Financial Advisory
Agreement, pursuant to which the Placement Agent will act as the Company's
financial advisor. Such engagement provides that the Placement Agent will
receive a monthly retainer of $4,000 per month for a minimum of 24 months, plus
expenses and success fees.

On October 20, 1995, the Company entered into an Engagement & Technology
Acquisition Agreement with The Castle Group, LLC ("The Castle Group"), which may
be deemed an affiliate of both the Company and the Placement Agent, pursuant to
which The Castle Group identified, negotiated and acquired for the Company the
TJU License. In consideration for the conveyance of the license, TJU and Dr.
Berd were both granted 229,121.5 shares of Common Stock. In connection
therewith, The Castle Group and its designees were granted and sold 916,485.5
shares of Common Stock of the Company at a price of $.004 per share. Prior to
the acquisition of the TJU License, the Company had no technological assets
other than it's former lead product under development, which was sold in
December 1995.

Dr. Lindsay A. Rosenwald, a substantial shareholder of the Company, is the
Chairman and sole shareholder of each of the Placement Agent and Paramount
Capital Investments, LLC. Dr. Rosenwald personally collateralized loans to the
Company from NatWest Bank N.A., pursuant to which the Company incurred principal
and interest indebtedness of approximately $55,000. Such indebtedness was paid
in full as of June 30, 1996. Dr. Rosenwald also extended a line of credit to the
Company. As of June 30, 1996, the Company paid the outstanding principal amount
and accrued interest under such line of credit, which was approximately
$250,000. In addition, in 1995 and 1996, Paramount acted as placement agent,
pursuant to a placement agency agreement, for a bridge financing for the Company
as to which Paramount was paid $90,000 in commissions and received warrants to
purchase 31,250 shares of Common Stock. Two of the investors in these bridge
financings were private investment funds managed by a company for which Dr.
Rosenwald is President. Also, Michael S. Weiss, Director and Secretary of the
Company, is a Senior Managing Director of Paramount and General Counsel of
Paramount Capital Investments, LLC. Wayne Rubin, at that time the Treasurer of
the Company, is Chief Financial Officer of Paramount and Paramount Capital
Investments, LLC. Dr. Carl Spana, a Director of the Company, was at that time a
Vice President of Paramount Capital Investments, LLC. Dr. John K.A. Prendergast,
also a Director of the Company, is a Managing Director of Paramount Capital
Investments, LLC.

In consideration of services rendered on behalf of the Company in connection
with the acquisition and negotiation of the Rutgers License, on February 13,
1997, the Company agreed to pay Samuel P. Wertheimer, Ph.D., $25,000, and Carl
Spana, Ph.D., $15,000. In addition, the Company agreed to issue to each of Drs.
Wertheimer and Spana warrants to purchase 6,375 shares of Common Stock at an
exercise price of $6.00 per share, exercisable for seven years. In consideration
of services rendered on behalf of the Company in connection with the acquisition
and negotiation of the Texas A&M License, on February 13, 1997, the Company
agreed to pay Fred Mermelstein, Ph.D., $40,000 and to issue to Dr. Mermelstein
warrants to purchase 12,750 shares of Common Stock at an exercise price of $6.00
per share, exercisable for seven years. Drs. Wertheimer and Mermelstein are
employees of Paramount Capital Investments, LLC. Dr. Spana is a Director of the
Company.

On March 17, 1998, the Company entered into a consulting agreement with Timothy
McInerney, pursuant to which the Company agreed to issue to Mr. McInerney
options to purchase 50,000 shares of Common Stock at an exercise price of $4.00,
exercisable for seven years. Mr. McInerney is an employee of Paramount.

45
<PAGE>

Pursuant to the Company's Certificate of Incorporation and bylaws, the Company
has agreed to indemnify the Directors and Officers of the Company to the maximum
extent permissible under Delaware law. Insofar as indemnification for
liabilities arising under the Securities Act of 1933 (the "Act") may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing, or otherwise, the Company has been advised that, in the
opinion of the Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable.

46
<PAGE>

PRINCIPAL STOCKHOLDERS

The following table sets forth, as of the date of this Prospectus, certain
information regarding the beneficial ownership of the Common Stock (i) by each
person known by the Company to be the beneficial owner of more than five percent
of the outstanding shares of the Common Stock, (ii) by each of the named
executive officers and directors of the Company and (iii) by all officers and
directors of the Company as a group.

<TABLE>
<CAPTION>
Name and Address of Beneficial Owner Number of Percentage of Class
Owner (1) Title of Stock Shares Beneficially Owned
- ------------------------------------ ------------------ ----------- -------------------
<S> <C> <C> <C>
Lindsay A. Rosenwald, M.D. (2)
787 Seventh Avenue,
44th Floor Common Stock 773,056 16.18%
New York, NY 10019 Series B Preferred 10,000 (3) *
Peter K. Hilal, M.D. (4)
60 East 42nd Street
Suite 1946
New York, NY 10165 Common Stock 280,500 5.75%
Jeffrey M. Jonas, M.D. (5) Common Stock 196,936 3.88%
Carl Spana, Ph.D. (6) Common Stock 73,707 1.51%
John K.A. Prendergast, Ph.D. (7) Common Stock 73,707 1.51%
Edson D. de Castro (8) Common Stock 38,790 *
Michael S. Weiss, Esq. (9) Common Stock 109,507 2.24%
David L. Tousley, C.P.A. (10) Common Stock 58,125 1.18%
Ernest W. Yankee, Ph.D. (10) Common Stock 58,125 1.18%
All officers and directors as a Common Stock 608,897 11.61%
group (7 persons) Series B Preferred -0- *
</TABLE>

- --------------------------------------------------------------------------------
*Represents less than 1%.

(1) Beneficial ownership is determined in accordance with rules promulgated by
the Securities and Exchange Commission, and include voting and investment power
with respect to shares of Common Stock. Shares of Common Stock subject to
options or warrants currently exercisable or exercisable within 60 days of the
date of this Prospectus, are deemed outstanding for computing the percentage
ownership of the person holding such options or warrants, but are not deemed
outstanding for purposes of computing the percentage ownership of any other
person.

(2) Includes 199,314 shares of Common Stock owned by Dr. Rosenwald's wife and
trusts in favor of his minor children. Dr. Rosenwald disclaims beneficial
ownership of such shares. Excludes (i) 17,000 shares of Common Stock issuable
upon exercise of Bridge Placement Warrants and (ii) approximately 320,949 shares
of Common Stock issuable upon conversion of shares of Series B Preferred Stock
issuable upon exercise of Series B Placement Warrants. Includes 61,250 shares of
Common Stock owned by The Aries Fund, A Cayman Island Trust and The Aries
Domestic Fund, L.P. (collectively, the "Funds"), two private investment funds
that are managed by a company of which Dr. Rosenwald is President, but excludes
an aggregate of 298,211 shares of Common Stock issuable upon conversion of
shares of Series B Preferred Stock held directly by such entities or issuable
upon exercise of Series B Placement Warrants and Bridge Placement Warrants held
by such entities. Dr. Rosenwald disclaims beneficial ownership of such shares
owned by the Funds, except to the extent of his pecuniary interest, if any.

47
<PAGE>

(3) Represents shares of Series B Preferred Stock owned by the Funds. Dr.
Rosenwald disclaims beneficial ownership of such shares owned by the Funds,
except to the extent of his pecuniary interest, if any.

(4) Includes 25,050 shares of Common Stock owned directly by Hilal Capital, LP,
77,340 shares of Common Stock owned directly by Hilal Capital, QP, LP, and
178,110 shares of Common Stock managed by Hilal Capital Management, LLC and
owned directly by Hilal Capital International, Ltd. and a third party account of
Hilal Capital Management, LLC, based solely upon the Company's review of a
Schedule 13G as filed with the Securities and Exchange Commission on April 6,
1998.

(5) Represents shares that Dr. Jonas may acquire within 60 days of the date of
this Prospectus, upon the exercise of options granted pursuant to his letter of
employment. Excludes 271,936 shares of Common Stock issuable upon exercise of
options granted pursuant to his letter of employment which are not exercisable
within 60 days of the date of this Prospectus.

(6) Includes 8,790 shares of Common Stock that Dr. Spana may acquire within 60
days of the date of this Prospectus upon the exercise of options granted as
board compensation. Excludes 36,371 shares of Common Stock issuable to Dr. Spana
upon exercise of options granted as board compensation which are not exercisable
within 60 days of the date of this Prospectus.

(7) Includes 8,790 shares of Common Stock that Dr. Prendergast may acquire
within 60 days of the date of this Prospectus upon the exercise of options
granted as board compensation. Excludes 36,371 shares of Common Stock issuable
to Dr. Prendergast upon exercise of options granted as board compensation which
are not exercisable within 60 days of the date of this Prospectus.

(8) Represents shares of Common Stock that Mr. de Castro may acquire within 60
days of the date of this Prospectus, including 8,790 shares of Common Stock that
Mr. de Castro may acquire within 60 days of the date of this Prospectus upon the
exercise of options granted as board compensation. Excludes 36,371 shares of
Common Stock issuable Mr. de Castro upon exercise of options granted as board
compensation which are not exercisable within 60 days of April 7, 1998.

(9) Excludes (i) 1,500 shares of Common Stock issuable upon exercise of Bridge
Placement Warrants and (ii) approximately 45,180 shares of Common Stock issuable
upon conversion of shares of Series B Preferred Stock issuable upon exercise of
Series B Placement Warrants. Includes 8,790 shares of Common Stock that Mr.
Weiss may acquire within 60 days of April 7, 1998 upon the exercise of options
granted as board compensation. Excludes 36,371 shares of Common Stock issuable
to Mr. Weiss upon exercise of options granted as board compensation which are
not exercisable within 60 days of April 7, 1998.

(10) Represents shares that Mr. Tousley and Dr. Yankee each may acquire within
60 days of the date of this Prospectus and excludes 126,875 shares issuable to
each of Mr. Tousley and Dr. Yankee not exercisable within 60 days of the date of
this Prospectus upon exercise of options granted pursuant to their respective
letters of employment.

48
<PAGE>

DESCRIPTION OF SECURITIES

The Company is authorized to issue up to 50,000,000 shares of Common Stock, par
value $.004 per share, and 5,000,000 shares of preferred stock, par value, $.01
per share, of the Company. As of April 8, 1998, 4,897,483 shares of Common Stock
and 192,077 shares of Series B Preferred Stock were issued and outstanding.

COMMON STOCK

Each holder of Common Stock of the Company is entitled to one vote for each
share held of record. There is no right to cumulative voting of shares for the
election of directors. The shares of Common Stock are not entitled to preemptive
rights and are not subject to redemption or assessment. Each share of Common
Stock is entitled to share ratably in distributions to shareholders and to
receive ratably such dividends as may be declared by the Board of Directors out
of funds legally available therefor. Upon liquidation, dissolution or winding up
of the Company, the holders of Common Stock are entitled to receive, pro-rata,
the assets of the Company which are legally available for distribution to
shareholders. The issued and outstanding shares of Common Stock are validly
issued, fully paid and non-assessable.

PREFERRED STOCK

The Company is authorized to issue up to 5,000,000 shares of preferred stock,
par value $.01 per share (of which 300,000 are designated as Series B Preferred
Stock and 192,077 of which are issued and outstanding). The preferred stock of
the Company can be issued in one or more series as may be determined from
time-to-time by the Board of Directors. In establishing a series the Board of
Directors shall give to it a distinctive designation so as to distinguish it
from the shares of all other series and classes, shall fix the number of shares
in such series, and the preferences, rights and restrictions thereof. All shares
of any one series shall be alike in every particular. The Board of Directors has
the authority, without shareholder approval, to fix the rights, preferences,
privileges and restrictions of any series of preferred stock including, without
limitation: (a) the rate of distribution, (b) the price at and the terms and
conditions on which shares shall be redeemed, (c) the amount payable upon shares
for distributions of any kind, (d) the terms and conditions on which shares may
be converted if the shares of any series are issued with the privilege of
conversion and (e) voting rights except as limited by law.

Although the Company currently does not have any plans to issue additional
shares of preferred stock or to designate a new series of preferred stock, there
can be no assurance that the Company will not do so in the future. As a result,
the Company could authorize the issuance of a series of preferred stock which
would grant to holders preferred rights to the assets of the Company upon
liquidation, the right to receive dividend coupons before dividends would be
declared to holders of Common Stock, and the right to the redemption of such
shares, together with a premium, prior to the redemption to Common Stock. The
current shareholders of the Company have no redemption rights. In addition, the
Board could issue large blocks of voting stock to fend off unwanted tender
offers or hostile takeovers without further shareholder approval.

SERIES B PREFERRED STOCK

The Board of Directors of the Company has authorized the issuance of up to
300,000, of which 192,077 are outstanding, shares of Series B Preferred Stock,
par value $.01 per share, the rights, preferences and characteristics of which
are as follows:

Dividends

The holders of Series B Preferred Stock are entitled to receive dividends as,
when and if declared by the Board of Directors of the Company out of funds
legally available therefor. No dividend or distribution, as the case may be,
will be declared or paid on any junior stock unless the dividend also is paid to
holders of the Series B Preferred Stock. The Company does not intend to pay cash
dividends on the Series B Preferred Stock or the underlying Common Stock for the
foreseeable future.

49
<PAGE>

Conversion

Each share of Series B Preferred Stock initially was convertible, in whole or
part, at the option of the holder at any time after the initial issuance date
into 25 shares of Common Stock based upon an initial conversion price of $4.00
per share of Common Stock (the "Initial Conversion Price"). As of June 11, 1997,
13,250 shares of Series B Preferred Stock had been converted into shares of
Common Stock. The Initial Conversion Price was adjusted effective June 11, 1997
(the "Reset Date"), because the average closing bid price of the Common Stock
for the 30 consecutive trading days immediately preceding such date was less
than $5.40. The average was, in fact, $5.175 per share. Accordingly, the
conversion price was adjusted to $3.83 per share, which corresponds to a new
conversion rate of 26.0875 shares of Common Stock per share of Series B
Preferred Stock. The conversion price is subject to further adjustment upon the
occurrence of certain mergers, reorganizations, consolidations,
reclassifications, stock dividends or stock splits which will result in an
increase or decrease in the number of shares of Common Stock outstanding.

Mandatory Conversion

The Company has the right at any time after the Reset Date to cause the
Preferred Stock to be converted in whole or in part, on a pro rata basis, into
shares of Common Stock if the closing price of the Common Stock exceeds 150% of
the then applicable Preferred Conversion Price for at least 20 trading days in
any 30 consecutive trading day period.

Liquidation

Upon (i) a liquidation, dissolution or winding up of the Company, whether
voluntary or involuntary, (ii) a sale or other disposition of all or
substantially all of the assets of the Company or (iii) merger or consolidation
(a "Merger Transaction") in which the Company is not the surviving entity and
shares of Common Stock consisting in excess of 50% of the voting power of the
Company are exchanged (subparagraphs (i), (ii), and (iii) being collectively
referred to as a "Liquidation Event"), after payment or provision for payment of
the debts and other liabilities of the Company, the holders of the Preferred
Stock then outstanding will first be entitled to receive, pro rata (on the basis
of the number of shares of the preferred stock then outstanding), and in
preference to the holders of the Common Stock and any other series of Preferred
Stock of the Company, an amount per share equal to $135.00 plus accrued but
unpaid dividends, if any; provided, however, that in the case of a Merger
Transaction, such $135.00 per share may be paid in cash and/or securities of the
surviving entity in such Merger Transaction.

Voting Rights

The holders of the Series B Preferred Stock have the right at all meetings of
stockholders to the number of votes equal to the number of shares of Common
Stock issuable upon conversion of the Series B Preferred Stock at the record
date for determination of the stockholders entitled to vote. So long as 50% of
the shares of Series B Preferred Stock remain outstanding, the holders of 66.67%
of the Series B Preferred Stock are entitled to approve (i) the issuance of any
securities of the Company senior to or on parity with the Series B Preferred
Stock, (ii) any alteration or change in the rights or preferences or privileges
of the Series B Preferred Stock and (iii) the declaration or payment of any
dividend on any junior stock or the repurchase of any securities of the Company.
Except as provided above or as required by applicable law, the holders of the
Series B Preferred Stock will be entitled to vote together with the holders of
the Common Stock and not as a separate class.

LOCK-UP AGREEMENTS

The holders of shares of Common Stock issuable upon conversion of shares of
Series B Preferred Stock (the "Conversion Shares") agreed pursuant to their
subscription agreements with the Company not to offer, pledge, sell, contract to
sell, grant any option for the sale of, or otherwise dispose of, directly or
indirectly, 75% of the Conversion Shares, without the prior written consent of
the placement agent in the Series B Offering (the "Lock-Up"). Such restrictions
were effective as follows: (i) with respect to 75% of the Conversion Shares
until September 12, 1996 (three months after the completion of the Series B
Offering); with respect to the 50% of the Conversion Shares until December 12,
1996 (six months after the completion of the Series B Offering); and with
respect to the remaining 25% of the Conversion Shares until March 11,

50
<PAGE>

1997 (nine months after the completion of the Series B Offering). Accordingly,
25% of each of the holders' Conversion Shares were never subject to the Lock-Up,
and as of March 11, 1997, the Lock-Ups expired.

However, holders of approximately 94% of the shares of Series B Preferred Stock
agreed to amend their subscription agreements with the Company to extend the
Lock-Up period. Pursuant to this amendment, the Lock-Up for such holders' shares
of Series B Preferred Stock has been extended for the period following the later
of the effectiveness under the Securities Act of 1933 (the "Act") of the
Registration Statement ("Effectiveness") and the listing of the Conversion
Shares on a national securities exchange or initial quotation on the Nasdaq
SmallCap Market ("Listing"), which occurred on July 10, 1997, as follows: (i)
three months following the later of Effectiveness and Listing with respect to
75% of the Conversion Shares; (ii) six months following the later of
Effectiveness and Listing with respect to 50% of the Conversion Shares and (iii)
nine months following the later of Effectiveness and Listing with respect to the
remaining 25% of the Conversion Shares. Accordingly, 25% of such holders'
Conversion Shares continue to have never been subject to the Lock-Up. The
Conversion Shares of holders that did not agree to amend their subscription
agreement are not subject to any Lock-Up.

In consideration of the agreement with the Company to extend the Lock-Up period
for their Conversion Shares, holders of shares of Series B Preferred Stock that
agreed to such extended Lock-Up have the right as of July 10, 1998 (i.e., one
year after the later of Effectiveness and Listing), to have the Company issue
such number of additional shares of Common Stock as shall be necessary to effect
the principles of the original reset provisions contained in the Certificate of
Designations for the Series B Preferred Stock taking into account any
adjustments which may have been previously made at the time of the Reset Date.
Accordingly, the Company will become obligated to issue additional shares of
Common Stock to such holders if the average closing bid price of the Common
Stock for the 30 consecutive trading days immediately preceding July 10, 1998 is
less than $5.175 per share.

The holders of shares of Series B Preferred Stock issuable upon exercise of
Series B Placement Warrants and the Common Stock issuable upon conversion
thereof (collectively, the "Placement Conversion Shares") are bound, pursuant to
the terms of such Series B Placement Warrants, not to offer, pledge, sell,
contract to sell, grant any option for the sale of, or otherwise dispose of,
directly or indirectly, any of the Placement Conversion Shares prior to December
11, 1997.

In addition, in connection with the Company's application for listing and
quotation of the Common Stock on the Nasdaq SmallCap Market, pursuant to the
request of Nasdaq, the Company obtained from the officers and directors of the
Company, and certain employees of Paramount and its affiliates, agreements
locking-up all securities and derivative securities of the Company held by such
individuals for a period of two years through July 10, 1999. Such agreements may
be waived in whole or in part at the option of the Company.

1992 STOCK OPTION PLAN

A total of 437,500 shares of Common Stock has been reserved for issuance under
the Company's 1992 Stock Option Plan (the "AVAX Option Plan"). The AVAX Option
Plan was adopted by the Board of Directors in April 1992 and approved by
stockholders of the Company in April 1992. The AVAX Option Plan expires by its
own terms in 2002. It is anticipate that the Company will put forth a proposal
to increase the amount of shares issuable pursuant to the AVAX Option Plan to
2,000,000 shares of Common Stock at its 1998 Annual Meeting which is currently
scheduled for June 3, 1998.

The AVAX Option Plan provides for the grant of "incentive stock options" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
nonqualified stock options to employees, directors and consultants of the
Company. Incentive stock options may be granted only to employees. The AVAX
Option Plan is administered by the Board of Directors of the Company (or a
Committee thereof) which determines the terms of the options granted, including
the exercise price, the number of shares subject to the option, and the schedule
on which the option becomes exercisable.

The AVAX Option Plan requires that the exercise price of incentive stock options
granted to employees of the Company who at the time of the grant of such
incentive stock option own stock representing more than 10% of the voting power
of all classes of stock of the Company or any parent or subsidiary, must be at
least equal to 110% of the fair market value of such shares on the date of
grant. The AVAX Option Plan also requires that the exercise price of incentive
stock options granted to any other employee of the Company must be at least
equal to the fair market value of such shares on the date of

51
<PAGE>

grant, and that the exercise price of nonqualified stock options granted by the
Company must be equal to 85% of the fair market value per share on the date of
grant. The maximum terms of options granted under the AVAX Option Plan is 10
years. With respect to any participant who owns stock possessing more than 10%
of the voting rights of outstanding capital stock, the exercise price of any
option must be at least equal to 110% of fair market value on the date of grant
and the term may be no longer than five years. No incentive stock option may be
granted under the AVAX Option Plan to any individual if the aggregate fair
market value of the shares (determined as of the time of the option is granted)
which would become exercisable during any calendar year, under all incentive
stock options held by such individual, exceeds $100,000, unless such excess
options shall be treated as nonstatutory stock options.

Generally, any option held by an individual who ceases to be employed or
retained by the Company may be exercised by such individual within three months
after such individual ceases to be employed or retained by the Company or within
one year after such individual ceases to be employed or retained in the case of
disability. Generally, any option held by an individual who dies while still
employed or retained by the Company or dies within three months after the date
he or she is no longer employed or retained by the Company may be exercised by
such individual's representative within six months following the date of death.

Pursuant to the AVAX Option Plan, as of April 8, 1998, options to purchase
30,000 shares of Common Stock were outstanding and fully vested at a weighted
average price of $1.20 per share, and no options had been exercised.

Such options do not confer upon holders thereof any voting or any other rights
of a stockholder of the Company. The shares of Common Stock issuable upon
exercise of the options and warrants in accordance with the terms thereof, will
be fully paid and nonassessable.

OTHER OPTIONS

Pursuant to their letters of employment with the Company, Dr. Jonas, Mr. Tousley
and Dr. Yankee received share options to acquire 318,872, 125,000 and 125,000
shares of Common Stock, respectively, at an exercise price of $1.00 per share.
In connection with her letter of employment entered into on August 23, 1996,
another employee of the Company received share options to acquire 2,500 shares
of Common Stock at an exercise price of $1.00 per share. All the foregoing share
options will vest at a rate of 1/16 per quarter over the four-year period
following the effective date of the applicable letters of employment and are
exercisable for a period of seven years.

In July 1997, Dr. Jonas, Mr. Tousley, Dr. Yankee and the other employee referred
to above received additional share options to acquire 150,000, 60,000, 60,000
and 10,000 shares of Common Stock, respectively, at an exercise price of $4.50
per share. All such share options will vest at a rate of 1/16 per quarter over
the four-year period and are exercisable for a period of seven years; provided,
however, that the additional options granted to Dr. Jonas will vest at a rate of
1/12 per quarter over a three-year period.

In connection with his letter of employment, effective February 10, 1997,
another employee of the Company received share options to purchase 52,500 shares
of Common Stock at an exercise price equal to $6.00 per share. In July 1997, to
reward and incent such employee, the Company withdrew such share options and
replaced them with share options to acquire 90,000 shares of Common Stock at an
exercise price of $4.50. The share options issued to such employee will vest as
follows: 5,000 of such options shall vest on September 1, 1997, 30,000 shall
vest at a rate of 1/6 every six months over a three-year period thereafter, and
the remaining 55,000 shares will vest upon the occurrence of certain milestone
events relating to the Company's manufacturing program.

In connection with her letter of employment, effective March 23, 1998, one other
employee of the Company received share options to acquire 10,000 shares of
Common Stock at an exercise price of $4.00 per share.

In July 1997, in consideration for scientific consulting services, the Company
issued options to purchase 30,000 shares of Common Stock, exercisable for seven
years at an exercise price equal to $4.50 per share. Such options shall vest at
a rate of 1/3 per year over a period of three years.

52
<PAGE>

In December 1997, all directors of the Company eligible for compensation elected
to be compensated for their 1998 services with options to purchase shares of
Common Stock, and, accordingly, were each issued options to purchase 5,161
shares of Common Stock at an exercise price of $3.875 per share of Common Stock;
which options shall vest at a rate of 1/4 per quarter over a one-year period and
shall be exercisable for a period of seven years. See "Board Compensation".

In March 1998, in consideration for consulting services, the Company issued
options to purchase 50,000 shares of Common Stock, exercisable for seven years
at an exercise price equal to $4.00 per share. Such options shall vest at a rate
of 1/12 per month over a period of one year.

As of March 31, 1998, options to purchase 304,980 shares of Common Stock were
vested with respect to such officers, directors and employees with a weighted
average price of $2.48 per share and no such options had been exercised.

WARRANTS

The following summaries are qualified in their entirety by the text of the
warrants, copies of which have been filed as exhibits to the Registration
Statement.

In connection with services rendered by Paramount, as placement agent in the
Series B Offering, and pursuant to a placement agency agreement entered into by
the Company and Paramount, the Company granted Paramount and/or its designees
placement warrants ("Series B Placement Warrants") to acquire approximately
25,820 shares of Series B Preferred Stock, exercisable until June 11, 2006 at an
exercise price of $110 per share of Series B Preferred Stock. The Series B
Placement Warrants may be exercised, in whole or in part and may be exercised
pursuant to a cashless exercise provision. The Series B Placement Warrants are
subject to certain lock-up restrictions. See "Lock-up Agreements."

An aggregate of 37,979 shares of Common Stock issuable upon conversion of the
shares of Series B Preferred Stock issuable upon exercise of the Series B
Placement Warrants held by non-Paramount registered representatives are being
registered pursuant to the Registration Statement for this Offering. An
aggregate of 635,585 shares issuable upon conversion of the shares of Series B
Preferred Stock issuable upon exercise of the Series B Placement Warrants held
by Paramount registered representatives are not being so registered.

In connection with services rendered by Paramount, as bridge financing agent in
a certain bridge financing loan availed of by the Company from August 1995 to
February 1996, the Company granted Paramount and/or its designees warrants
("Bridge Placement Warrants") to acquire 11,250 newly issued shares of Common
Stock. Each Bridge Placement Warrant entitles the registered holder thereof to
purchase Common Stock at a price of $.04 per share, at any time until five years
from the date of this Prospectus. The Bridge Placement Warrants may be
exercised, in whole or in part and may be exercised pursuant to a cashless
exercise provision.

In connection with services rendered by Castelli Associates, Inc. and
Shear/Kershman Laboratories, Inc., the Company granted Castelli Associates, Inc.
and Shear/Kershman Laboratories, Inc. and/or their designees warrants ("Castelli
and Shear/Kershman Warrants") to acquire 7,750 newly issued shares of Common
Stock. Each Castelli and Shear/Kershman Warrant entitles the registered holder
thereof to purchase Common Stock at a price of $11.00 per share, at any time
until April 30, 1998. The Castelli and Shear/Kershman Warrants may be exercised
in whole or in part.

In connection with services rendered by Ladenberg, Thalmann & Co., Inc.
("Ladenberg"), and D. H. Blair Investment Banking Corp. ("D. H. Blair"), as
placement agents in the offering of Series A Preferred Stock conducted from June
1992 to September 1992, the Company granted Ladenberg and D. H. Blair and/or
their respective designees certain warrants ("Series A Placement Warrants") to
purchase Common Stock at any time until June 26, 1997. In April and June 1997,

53
<PAGE>

Ladenberg and D.H. Blair and/or their respective designees were issued
approximately 49,770 shares of Common Stock pursuant to the cashless exercise
provisions of the Series A Placement Warrants.

In consideration for certain investment banking and financial advisory services
that may be rendered on a non-exclusive basis by Hill, Thompson, Magid & Co.
("HTM"), the Company granted HTM warrants (the "HTM Warrants") to acquire 50,000
shares of Common Stock, which warrants shall vest from time to time through
April 17, 1998. The HTM Warrants entitle the registered holder to purchase
Common Stock at a price of $8.00 per share, at any time from July 17, 1997 until
July 17, 2002. The HTM Warrants may be exercised in whole or in part.

In consideration for certain investment banking and financial advisory services
to have been rendered on a non-exclusive basis by M.H. Meyerson & Co., Inc.
("Meyerson"), the Company granted Meyerson warrants (the "Meyerson Warrants") to
acquire 50,000 shares of Common Stock on October 24, 1996. The Company
terminated the agreement with Meyerson on April 17, 1997, and, accordingly, the
Meyerson Warrants vested with respect to the right to purchase up to 25,000
shares. Pursuant to the Meyerson Warrants, the registered holder is entitled to
purchase up to 25,000 shares of Common Stock at a price of $6.00 per share, at
any time from December 24, 1996 until October 24, 2001. Meyerson was also paid a
fee of $15,000 at the time of its execution of the investment banking agreement.

Pursuant to Section 2710(c)(7)(A) of the NASD Corporate Financing Rules, the HTM
Warrants and the Meyerson Warrants were issued to HTM and Meyerson and certain
of their respective bona fide officers and employees only and may not be sold,
transferred, assigned or pledged or hypothecated by any person for a period of
one year from the date of issuance. Accordingly, the HTM Warrants and the
Meyerson Warrants contain an appropriate legend describing the restriction set
forth above for the period in which such restriction is operative.

In connection with the Rutgers License, the Company granted Rutgers warrants
(the "Rutgers Warrants") to purchase 125,000 shares of Common Stock at $8.24 per
share, which warrants vest from time to time until October 31, 2011, subject to
the achievement of certain milestones. The Rutgers Warrants may be exercised, in
whole or in part and may be exercised pursuant to a cashless exercise provision.

In consideration of services rendered on behalf of the Company in connection
with the acquisition and negotiation of the Rutgers License, on February 13,
1997, the Company agreed to issue to each of Samuel P. Wertheimer, Ph.D. and
Carl Spana, Ph.D., warrants to purchase 6,375 shares of Common Stock at a price
of $6.00 per share. Such warrants may be exercised in whole or in part over a
seven-year period. In consideration of services rendered on behalf of the
Company in connection with the acquisition and negotiation of the Texas A&M
License, on February 13, 1997, the Company agreed to issue to Fred Mermelstein,
Ph.D., warrants to purchase 12,750 shares of Common Stock at a price of $6.00
per share. Such warrants may be exercised in whole or in part over a seven-year
period.

In July 1997, the Company issued warrants to purchase 45,000 shares of Common
Stock at an exercise price of $4.50 per share. Such warrants were issued in
consideration of services being rendered by the Company's real estate advisor
who is representing it in connection with the identification and negotiation of
potential biopharmaceutical clinical manufacturing sites throughout the country.
Such warrants were to vest upon the occurrence of certain milestones relating to
the establishment of clinical manufacturing sites, and were exercisable in
whole, or in part, over a five-year period. In December 1997, these warrants
were canceled and new warrants to purchase 115,000 shares of common stock at
$3.50 were issued to the real estate advisor. Such warrants will vest and are
exercisable on the same terms as the original warrants.

In December 1997, the Company issued warrants to purchase 200,000 shares of
Common Stock at an exercise price of $3.75 per share. Such warrants were issued
in consideration of services being rendered by the Company's investment
relations advisor. Such warrants will vest upon the achievement of certain
performance-based milestones relating to the Company's stock price and trading
volume and are exercisable in whole, or in part, over a five-year period.

Each of the foregoing warrants contain provisions that generally provide the
holders thereof certain antidilution protection in certain events (such as, but
not limited to, the occurrence of stock dividends, stock splits, mergers, sales
of all or substantially all of the Company's assets and sales of other preferred
stock at below market price) by adjustment of the applicable exercise price
and/or the number of shares issuable upon exercise of such warrants.

54
<PAGE>

The Company is not required to issue fractional shares of Common Stock upon
exercise of any such warrants. In lieu thereof, an amount of cash equal to the
same fraction of the then current market value of a share of Common Stock will
be paid. No adjustment as to dividends will be made upon any exercise of any
such warrants. The holder of any such warrant will not have any rights as a
holder of Common Stock unless and until the applicable warrant is exercised.

REGISTRATION RIGHTS

The Company has agreed under certain circumstances to register the shares of
Common Stock owned by TJU, Dr. Berd, VentureTek, L.P., Dr. Rosenwald and certain
designees of Dr. Rosenwald. Under terms of the agreements between the Company
and the holders of such registrable securities, generally, if the Company
proposes to register any of its securities under the Act, either for its own
account or for the account of other securityholders exercising registration
rights, such holders are entitled to notice of such registration and are
entitled to include such shares of Common Stock therein. Holders of an aggregate
of 50% of the shares of Common Stock issuable upon exercise of the Series A
Placement Warrants are entitled to exercise their right to have the shares of
Common Stock issuable upon exercise thereof registered under the Act at any time
180 days after the Company's initial public offering until August 31, 1999.
Holders of the Castelli and Shear/Kershman Warrants are entitled under certain
circumstances 18 months after the Company's initial public offering also to
require the Company to file a registration statement under the Act at the
Company's expense with respect to their shares of Common Stock and the Company
is required to use its reasonable best efforts to effect such registration. Such
rights are subject to certain conditions and limitations, including the right of
the underwriter of an offering of the Common Stock to limit the number of shares
included in such registration in certain circumstances. The holders of the
Meyerson Warrants and holders of any shares of Common Stock issued upon exercise
of the Meyerson Warrants ("Meyerson Shares") are entitled, during the period
commencing October 24, 1998, and ending October 24, 2001, upon the request of at
least 51% of the collective holders of the unexercised Meyerson Warrants and the
Meyerson Shares, to require the Company to file a registration statement under
the Act at the Company's expense with respect to the shares of Common Stock
issuable upon exercise of the Meyerson Warrants. Holders of the Meyerson
Warrants and Meyerson Shares are also entitled to certain piggyback registration
rights during the same period. Holders of the Rutgers Warrants are entitled to
piggyback registration rights in any registrations subsequent to the first
public offering by the Company.

Registered representatives of Paramount that may have had registration rights
with respect to their ownership of shares of Common Stock (including shares of
Common Stock issuable upon conversion of shares of Series B Preferred Stock,
including shares of Series B Preferred Stock issuable upon exercise of any
Placement Warrants), have waived their rights to have such Common Stock included
in the Registration Statement at this time and are not participating in the
Offering.

TRANSFER AGENT

The Transfer Agent for the shares of Common Stock is UMB Bank of Missouri.

55
<PAGE>

SELLING SECURITYHOLDERS

The following table sets forth as of April 8, 1998, (i) the name of each
Selling Securityholder, (ii) the amount of shares of Common Stock owned, whether
outstanding or issuable, by such holder, (iii) the amount of shares of Common
Stock which may be offered by each Selling Securityholder and (iv) the amount
and percentage of shares of Common Stock to be owned by each such holder
following the completion of the Offering. The amounts of Common Stock set forth
below, under the caption "Amount to be Offered," represent the aggregate number
of shares of (A) Common Stock owned by each Selling Stockholder, (B) Common
Stock issuable upon conversion of the Series B Preferred Stock owned by each
Selling Securityholder, (C) Common Stock issuable upon conversion of the Series
B Placement Warrants and (D) Common Stock issuable upon exercise of conversion
of the Bridge Placement Warrants (assuming for (B)-(D) the initial
conversion/exercise rates under the terms of the Series B Preferred Stock, the
Series B Placement Warrants and the Bridge Placement Warrants, respectively), in
each case as of April 8, 1998.

<TABLE>
<CAPTION>
Shares Percentage
Shares Currently Amount to Owned after Owned after
Selling Securityholder (1) Owned be Offered Offering Offering
- ---------------------- ------ ---------- -------- --------
<S> <C> <C> <C> <C>
The 1992 Houston Partnership, L.P. 13,293 13,293 0 *
The A.M. Group L.L.C. 24,457 24,457 0 *
Todd D. Aaron, M.D. 6,646 6,646 0 *
Leonard J. Adams 13,587 13,587 0 *
Ross D. Ain 2,658 2,658 0 *
Kenneth G. Alberstadt 1,747 1,747 0 *
Meir Aliakim 52,359 52,359 0 *
Amram Kass P.C. Defined Benefit
Pension Plan 9,783 9,783 0 *
George Anagnos 6,646 6,646 0 *
Josephine G. Anagnos 6,646 6,646 0 *
Steven Anagnos 6,646 6,646 0 *
Ansec Corp. 53,175 53,175 0 *
The Aries Domestic Fund, L.P. (2) 125,088 125,088 0 *
The Aries Fund, A Cayman Island Trust (2) 234,373 234,373 0 *
Rajiv Bahl 6,646 6,646 0 *
BAM of NY, Inc. Defined Benefit
Pension Plan 24,457 24,457 0 *
Martin Bandier 13,293 13,293 0 *
Banque SCS Alliance (2) 13,815 13,815 0 *
Banque Franck S.A. 26,587 26,587 0 *
Banque Unigestion 41,210 41,210 0 *
Amnon Barness & Caren H. Barness,
JTWROS 6,646 6,646 0 *
Alan R. Batkin 13,293 13,293 0 *
Laurie and Steven Beane 6,646 6,646 0 *
Mark Berg 66,468 66,468 0 *
David J. Bershad 53,175 53,175 0 *
Biowave Investment Partners 13,293 13,293 0 *
John V. Bivona 2,937 2,937 0 *
Marcy Blender, Alan Blender
JTWROS 3,988 3,988 0 *
Blair Foster & Co., Inc. (2) 965 965 0 *
Elliott Broidy 26,587 26,587 0 *
Patrick J. Callahan 6,646 6,646 0 *
M. Rafael Gonzalez Calvillo 2,658 2,658 0 *
Carlos Plancarte Garcia N., Leonor P.
De Morian, JTWROS 1,631 1,631 0 *
Gabriel M. Cerrone 51,000 51,000 0 *
Chana Sasha Foundation 6,522 6,522 0 *
Andrew and Barbara Cichelli 6,646 6,646 0 *
</TABLE>

56
<PAGE>

<TABLE>
<CAPTION>
Shares Percentage
Shares Currently Amount to Owned after Owned after
Selling Securityholder (1) Owned be Offered Offering Offering
- ---------------------- ------ ---------- -------- --------
<S> <C> <C> <C> <C>
Cinco de Mayo, Ltd. 13,293 13,293 0 *
Roger and Margaret Coleman 6,646 6,646 0 *
Colony Partners, A California General
Partnership 13,293 13,293 0 *
Robert J. Conrads 13,293 13,293 0 *
Cook & CIE SA 106,350 106,350 0 *
Lilia Cordero de Adame, Lilia M.A.
Olvera, JTWROS 13,293 13,293 0 *
Archibald Cox, Jr. 53,175 53,175 0 *
Credit Lyonnais Suisse (SA) 53,675 53,675 0 *
David Trust 2,658 2,658 0 *
DBRN Securities Inc. 26,587 26,587 0 *
Elke R. de Ramirez 2,658 2,658 0 *
Nathan P. Diamond 6,646 6,646 0 *
Donald G. Drapkin 66,468 66,468 0 *
M. Robert Dussler 1,329 1,329 0 *
Eastside Investment Partners 13,293 13,293 0 *
Elena Edelstein and Marcus Edelstein 6,646 6,646 0 *
Edgewater Private Equity Fund, LP 97,718 66,468 31,250 *
EDN Equities 53,175 53,175 0 *
Ariel Elia 6,646 6,646 0 *
Howard Ellis 2,658 2,658 0 *
Etablissement Occramis 13,293 13,293 0 *
Europa International, Inc. 13,293 13,293 0 *
Joseph A. Fabiani, M.D. 26,190 19,940 6,250 *
Faisal Finance 53,174 53,174 0 *
Laurence D. Fink 53,175 53,175 0 *
Steven B. Fink 6,646 6,646 0 *
Finterbank Zuerich 26,587 26,587 0 *
Firebird Overseas, Ltd. 3,750 3,750 0 *
Alan Fisher 11,964 11,964 0 *
Norman J. Fisher 12,750 12,750 0 *
Joseph H. Flom 10,032 10,032 0 *
Hans-Wolfgang Frick 26,587 26,587 0 *
James P. Frickleton and James R. Bartimus 26,587 26,587 0 *
Michael J. Garnick 50,750 38,250 12,500 *
Marc Gelman 76,500 76,500 0 *
Joseph Giamanco 53,173 53,173 0 *
Richard Goldberg 3,262 3,262 0 *
Harold S. Goldstein 6,646 6,646 0 *
Ofelia Anton Gomez 5,317 5,317 0 *
Michael J. Gordon 3,250 3,250 0 *
Robert P. Gordon 13,000 13,000 0 *
Peter Grabler 814 814 0 *
Robert J. Granovsky 13,293 13,293 0 *
Greenwood Partners 66,468 66,468 0 *
James & Nancy Grosfeld, tenants by
entireties 53,175 53,175 0 *
Peter Grossman 6,646 6,646 0 *
Stuart Gruber 26,587 26,587 0 *
Erez & Elyse Halevah 13,293 13,293 0 *
Yonah J. Hamlet, MD, Trustee FBO Yonah
J. Hamlet, MD Profit Sharing Plan Dtd.
1/1/86 9,771 9,771 0 *
Harpel Family Partnership 18,468 18,468 0 *
Thomas O. Hecht 13,293 13,293 0 *
Chaim Herman and Denise Herman 2,658 2,658 0 *
Gary Herman 13,292 13,292 0 *
</TABLE>

57
<PAGE>

<TABLE>
<CAPTION>
Shares Percentage
Shares Currently Amount to Owned after Owned after
Selling Securityholder (1) Owned be Offered Offering Offering
- ---------------------- ------ ---------- -------- --------
<S> <C> <C> <C> <C>
Jack Hirschfield 3,322 3,322 0 *
The Holding Company 26,587 26,587 0 *
Jeffrey C. Hoos 6,646 6,646 0 *
Irving Huber and Charlotte Huber 6,646 6,646 0 *
IASD Health Services Corp. 53,175 53,175 0 *
Mark & Rebecca Ingerman 13,293 13,293 0 *
J.F. Shea Co., Inc. as Nominee 1996-21 33,043 33,043 0 *
Jackson Hole Investments Acquisitions,
L.P. 25,500 25,500 0 *
Peter L. Jensen 6,782 6,782 0 *
John Osterweis TTEE Osterweis
Revocable Trust dtd 9-13-93 6,646 6,646 0 *
James D. Judd 16,418 13,293 3,125 *
Hyman R. Kahn 26,587 26,587 0 *
Patrick M. Kane 6,646 6,646 0 *
Robert S. Kapito 26,587 26,587 0 *
Donald R. Kendall, Jr. 7,976 7,976 0 *
Daniel Kessel, M.D. 29,712 26,587 3,125 *
Ida Kessel 9,771 6,646 3,125 *
Lawrence J. Kessel 26,587 26,587 0 *
Keys Foundation, Curacao, Netherlands,
Antilles 26,587 26,587 0 *
Robert Klein, M.D. 26,587 26,587 0 *
Robert Knox 13,293 13,293 0 *
Arthur or Sean Kohn 10,033 10,033 0 *
Charles Koppelman 26,587 26,587 0 *
Ira L. Kotel 8,880 8,880 0 *
Ted Koutsoubos 19,940 19,940 0 *
Michael and Nicole Kubin 13,587 13,587 0 *
Vincent P. Lambriola 6,646 6,646 0 *
Larich Associates 39,881 39,881 0 *
Legong Investments N.V. 26,174 26,174 0 *
Albert Lemer 6,646 6,646 0 *
Susan Tauber Lemor 6,646 6,646 0 *
Gregory Lenchner 16,885 10,635 6,250 *
Gregory S. Lenchner and Donna Lenchner,
Jointly 9,305 9,305 0 *
Harvey Lenchner 5,317 5,317 0 *
Michael Lenchner 1,329 1,329 0 *
Henry N. Lieberman 13,293 13,293 0 *
Frank T. Lincoln, Jr. 13,293 13,293 0 *
The Lincoln Tax Advantaged, L.P. 26,587 26,587 0 *
Armand A. Lindenbaum 6,646 6,646 0 *
Lion Tower Corporation 13,293 13,293 0 *
Beverly O. Lobell 12,750 12,750 0 *
J. Jay Lobell 5,875 5,875 0 *
John L. Loeb, Jr. 6,646 6,646 0 *
Luxembrella - All Around Int'l 53,175 53,175 0 *
Herbert M. Lyman 6,646 6,646 0 *
The M.L. Lawrence Trust 79,762 79,762 0 *
Marathon Agents Profit Sharing 6,646 6,646 0 *
Michael P. Marcus 26,588 26,588 0 *
Arden Merback 3,322 3,322 0 *
Joseph Merback (2) 3,860 3,860 0 *
Josef Mermelstein 26,587 26,587 0 *
Albert Milstein 13,293 13,293 0 *
Mary Y.Y. Mo 6,646 6,646 0 *
Michael Y.Q. Mo 6,646 6,646 0 *
</TABLE>

58
<PAGE>

<TABLE>
<CAPTION>
Shares Percentage
Shares Currently Amount to Owned after Owned after
Selling Securityholder (1) Owned be Offered Offering Offering
- ---------------------- ------ ---------- -------- --------
<S> <C> <C> <C> <C>
Zhong-Liang Mo 13,293 13,293 0 *
Richard Molinsky 12,750 12,750 0 *
The Monument Trust Company Limited 26,587 26,587 0 *
Roberto Gonzalez Moreno 26,587 26,587 0 *
Alfred D. Morgan, Trust Administrator
(Trustee) / Margaret Goldwater,
Trustee 6,646 6,646 0 *
Robert Mosberg 1,631 1,631 0 *
Eli Moshen 3,322 3,322 0 *
Mova Investments Limited 26,587 26,587 0 *
Arnold Mullen 13,293 13,293 0 *
Arthur J. Nagle 6,646 6,646 0 *
P. Sherrill Neff 6,646 6,646 0 *
New Jersey Wolfson Trust 345,637 345,637 0 *
Kevin P. Newman 3,322 3,322 0 *
Nikki Establishment For Fashion &
Marketing Research 3,293 3,293 0 *
Old Oly, J.V. 13,293 13,293 0 *
Paul D. and Rebecca L. Ostrovsky 6,646 6,646 0 *
Steven N. Ostrovsky 6,646 6,646 0 *
Palmetto Partners, Ltd. 39,881 39,881 0 *
John Pappajohn 53,175 53,175 0 *
Mark D. Pesonen 13,293 13,293 0 *
Maria Pierce 6,646 6,646 0 *
Charles Potter 6,646 6,646 0 *
Tis Prager 6,646 6,646 0 *
Privat Kredit Bank, Lugano 159,525 159,525 0 *
Propp & Company, Inc. (2) 6,802 6,802 0 *
Abel Quezada Rueda, Mercedes P. Quezada
JTWRS 3,988 3,988 0 *
Michael S. Resnick 4,904 4,904 0 *
Rick Steiner Productions, Inc. 7,976 7,976 0 *
Todd M. Roberts 8,853 8,853 0 *
Linda Gosden Robinson 39,881 39,881 0 *
Rosemary Cass Ltd. Pension Plan 5,317 5,317 0 *
J. Philip Rosen 13,293 13,293 0 *
Paul H. Rosen 2,658 2,658 0 *
Ervin Rosenfeld 6,523 6,523 0 *
Martine Rothblatt 6,646 6,646 0 *
Jeffrey Rothenberg DDS 7,976 7,976 0 *
David W. Ruttenberg 6,646 6,646 0 *
S&M Investments 6,646 6,646 0 *
Leeor Sabbah 79,762 79,762 0 *
M.D. Sabbah 132,937 132,937 0 *
Sagres Group Ltd. 212,700 212,700 0 *
Wayne Saker 13,587 13,587 0 *
Scott G. Sandler 19,940 19,940 0 *
Sarah Trust 2,658 2,658 0 *
Savenna Consultants, Inc. (2) 4,043 4,043 0 *
Roy and Marlena Schaeffer 13,293 13,293 0 *
Howard Schain 13,293 13,293 0 *
Carl M. Schechter 6,646 6,646 0 *
Robin Schlaff 6,646 6,646 0 *
Ralph Schlosstein 26,587 26,587 0 *
Andrew W. Schonzeit 6,646 6,646 0 *
Schwendiman Global Sector Fund L.P. 13,293 13,293 0 *
Roberto Segovia 5,317 5,317 0 *
Lori Shapero 13,293 13,293 0 *
Leonard P. Shaykin 13,293 13,293 0 *
</TABLE>

59
<PAGE>

<TABLE>
<CAPTION>
Shares Percentage
Shares Currently Amount to Owned after Owned after
Selling Securityholder (1) Owned be Offered Offering Offering
- ---------------------- ------ ---------- -------- --------
<S> <C> <C> <C> <C>
Sheila Davis Lawrence Revocable Trust 26,587 26,587 0 *
L. Kevin Sheridan, Jr. 7,105 7,105 0 *
Martin Sirotkin 16,418 13,293 3,125 *
Bruce Slovin 66,468 66,468 0 *
South Ferry #2, L.P. 303,375 303,375 0 *
Aaron Speisman 3,386 3,386 0 *
Aaron Speisman custodian for Jennifer
Speisman 6,375 6,375 0 *
Aaron Speisman custodian for Joshua
Speisman 6,375 6,375 0 *
William M. Spencer III 26,587 26,587 0 *
Neil and Laurie Spindel 13,293 13,293 0 *
John L. Steffens 26,587 26,587 0 *
Dr. Edward L. Steinberg 6,375 6,375 0 *
Catherine Steinmann 6,646 6,646 0 *
Gabriel Steinmann 6,646 6,646 0 *
Jennifer Steinmann 6,646 6,646 0 *
Joshua Steinmann 6,646 6,646 0 *
Gary J. Strauss 13,293 13,293 0 *
Strome Partners, L.P. 265,875 265,875 0 *
Kaveh Taleghani 125 125 0 *
Hindy H. Taub 6,646 6,646 0 *
Herman Tauber 39,087 39,087 0 *
Myron M. Teitelbaum, M.D. 16,021 16,021 0 *
Termtec, Ltd. 13,293 13,293 0 *
Patricia & Erich Theissen 2,658 2,658 0 *
Mitchell Troyetsky 6,646 6,646 0 *
Thomas R. Ulie (2) 875 875 0 *
Joseph A. Umbach 13,293 13,293 0 *
United Congregations Mesora 26,587 26,587 0 *
Dan Valahu 6,646 6,646 0 *
Valor Capital Management, L.P. 13,293 13,293 0 *
Andre Visser (2) 27,652 27,652 0 *
Vivaldi, Ltd. 39,881 39,881 0 *
W & P Bank & Trust Company Ltd. 26,587 26,587 0 *
Allan Warshawsky 6,646 6,646 0 *
Michael Weiner, M.D. 2,608 2,608 0 *
Mark E. Weiss 6,646 6,646 0 *
The M and B Weiss Family Limited
Partnership of 1996 53,175 53,175 0 *
Robert J. Whetten 26,587 26,587 0 *
Whitcome Family Trust 26,587 26,587 0 *
Tim Winans 6,646 6,646 0 *
Wisdom Tree Associates, LP 9,881 9,881 0 *
Alan Wise/Teri Wise, Jointly 6,646 6,646 0 *
Andrew B. Woldow 6,646 6,646 0 *
James D. Wolfensohn 25,000 25,000 0 *
Aaron Wolfson 26,587 26,587 0 *
Abraham Wolfson 26,587 26,587 0 *
Wolfson Descendents' 1983 Trust 132,937 132,937 0 *
Worldwide Consultants and Finance Ltd. 26,587 26,587 0 *
Richard A. Young 6,646 6,646 0 *
Robert J. Young 6,646 6,646 0 *
Zapco Holdings Settlement 6,646 6,646 0 *
Uzi Zucker 13,293 13,293 0 *
--------- --------- ------ -
TOTAL 6,170,847 6,102,097 68,750 *
========= ========= ====== =
</TABLE>

- --------------------------------------------------------------------------------
* Represents less than 1.0 %.

60
<PAGE>

(1) Unless otherwise indicated, includes all shares of Common Stock issuable
upon conversion of the Series B Preferred Stock at the reset conversion
rate of $3.83 per share. See "Description of Securities--Series B
Preferred Stock."

(2) Includes Common Stock issuable upon conversion of the shares of Series B
Preferred Stock issuable upon exercise of the Series B Placement Warrants.

Each Selling Securityholder may, but is not required to, sell all of the shares
of Common Stock shown in the column entitled "Amount of Shares to be Offered"
subject, in certain instances, to lock-up provisions. See "Description of
Securities --Lock-Up Agreements." The Selling Securityholders and any
broker-dealers that act in connection with the sale of the Common Stock as
principals may be deemed to be "underwriters" within the meaning of Section
2(11) of the Act and any commission received by them and any profit on the
resale of such securities as principals might be deemed to be underwriting
discounts and commissions under the Act. The Selling Securityholders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of such securities certain liabilities, including
liabilities arising under the Act. The Company will not receive any proceeds
from the sales of the Common Stock by the Selling Securityholders, although the
Company may receive proceeds from the exercise of the Placement Warrants. Sales
of the shares of Common Stock by the Selling Securityholders, or even the
potential sale of such shares, may have an adverse effect on the market price of
the Common Stock.

At the time a particular offer for Common Stock is made, as herein contemplated,
by or on behalf of the Selling Securityholder, to the extent required, a
Prospectus will be distributed by the Selling Securityholder which will set
forth the number of shares of Common Stock being offered and the terms of the
Offering, including the name or names of any underwriters, dealers or agents, if
any, and to the extent that an underwriter is involved, the purchase price paid
by any underwriter for shares purchased from the Selling Securityholder and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.

Except as noted below, none of the Selling Securityholders named in the
preceding table has had any position, office or other material relationship with
the Company or any of its predecessors or affiliates within the past three
years. The Aries Domestic Fund, L.P. and The Aries Fund, A Cayman Island Trust
are private investment funds managed by Dr. Lindsay A. Rosenwald, a substantial
shareholder and former director of the Company and the sole owner of Paramount.
See "Certain Transactions."

61
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALES

Upon completion of the Offering, the Company will have 12,830,746 shares of
Common Stock outstanding or issuable upon the conversion of the Series B
Preferred Stock, the exercise of all outstanding or issuable options and
warrants as of the date of this prospectus. As of April 8, 1998, 4,897,483
shares of Common Stock were issued and outstanding, of which the Company
believes that, other than those shares registered in this offering, only
1,487,822 shares of Common Stock are "restricted securities" and under certain
circumstances may, in the future, be sold in compliance with Rule 144 under the
Securities Act of 1933 (the "Act"), unless they are held by "affiliates" of the
Company as that term is used under the Act. In addition, the Company has issued
and outstanding, or issuable, warrants and options to purchase an aggregate of
2,873,351 shares of Common Stock (excluding 49,229 shares of Common Stock
underlying Series B Placement Warrants and Bridge Placement Warrants that are
being registered in this Offering) and 5,010,683 shares of Common Stock that are
issuable upon conversion of shares of Series B Preferred Stock. Also, as of
April 8, 1998, the Company believes that there are approximately 3,409,661
outstanding shares of Common Stock that are eligible for sale without
restriction or further registration under the Act, subject to certain
requirements. See "Risk Factors--Potential Adverse Effect of Shares Eligible For
Future Sales" and "Description of Securities".

SALES OF RESTRICTED SHARES

As of April 8, 1998, 4,897,483 shares of Common Stock were issued and
outstanding, of which the Company believes that, other than those shares
registered in this offering, only 1,487,822 shares of Common Stock are
"restricted securities" and under certain circumstances may, in the future, be
sold in compliance with Rule 144 under the Act, unless they are held by
"affiliates" of the Company as that term is used under the Act. In general,
under Rule 144 as currently in effect, subject to the satisfaction of certain
conditions and certain manner of sale and notice requirements, including the
requirement that there is adequate current public information with respect to
the Company as contemplated by Rule 144, a person (or persons whose shares are
aggregated), including persons who may be deemed an affiliate of the Company as
that term is defined under the Act, who beneficially owned restricted shares of
Common Stock for at least one year is entitled to sell, within any three-month
period, a number of shares that does not exceed (i) the greater of one percent
of the total number of outstanding shares of the same class, or (ii) the average
weekly trading volume during the four calendar weeks immediately preceding the
sale. A person who presently is not and who has not been an affiliate of the
Company for at least three months immediately preceding the sale and who has
beneficially owned the shares of Common Stock for at least two years is entitled
to sell such shares under Rule 144(k) without regard to the volume limitations
described above. Certain shares eligible for sale under Rule 144 remain subject
to certain lock-up restrictions. See "Lock-Up Agreements."

No predictions can be made of the effect, if any, that the sale or availability
for sale of restricted shares or locked-up shares will have on the market price
of the Common Stock on the Nasdaq SmallCap Market. Sales of substantial amounts
of such shares in the public market, or the perception that such sales could
occur, could adversely affect the market price of the Common Stock and could
impair the Company's future ability to raise capital through an offering of its
equity securities.

For a description of the Company's outstanding warrants and options, see
"Description of Securities--1992 Stock Option Plan," "Other Options," and
"Warrants."

62
<PAGE>

PLAN OF DISTRIBUTION

A total of 6,102,097 shares of Common Stock are being directly offered for sale
by the Selling Securityholders to the public. The Selling Securityholders may,
but are not required to, sell, directly or through brokers, the shares of Common
Stock in negotiated transactions or in one or more transactions in the market at
the price prevailing at the time of sale. (Certain of the shares of Common Stock
may be subject to lock-up agreements. See "Description of Securities--Lock-Up
Agreements"). In connection with such sales, the Selling Securityholders and any
participating broker may be deemed to be "underwriters" of the shares of Common
Stock within the meaning of the Act, although the offering of these securities
will not be underwritten by a broker-dealer firm. Sales in the market may be
made to broker-dealers making a market in the Common Stock or other
broker-dealers, and such broker-dealer, upon their resale of such securities,
may be deemed to be "Selling Securityholders" in this offering. The Company will
not receive any of the proceeds from the sale of the Common Stock by the Selling
Securityholders. Pursuant to the terms under which the Preferred Stock and
Placement Warrants were issued and sold, the Company has agreed to indemnify the
Selling Securityholders against such liabilities as they may incur as a result
of any untrue statement of a material fact in the Registration Statement of
which this Prospectus forms a part, or any omission herein or therein to state a
material fact necessary in order to make the statements made, in the light of
the circumstances under which they were made, not misleading. Such
indemnification includes liabilities that the Selling Securityholders may incur
under the Act.

The Company will bear all costs and expenses of the registration under the Act
and certain state securities laws of the Common Stock and any discounts or
commissions payable with respect to sales of such securities.

From time to time, this Prospectus will be supplemented and amended as required
by the Act. During any time when a supplement or amendment is so required, after
notice from the Company, the Selling Securityholders are required to cease sales
until the Prospectus has been supplemented or amended.

The Selling Securityholders have advised the Company that they may sell,
directly or through brokers, all or a portion of the securities offered hereby
in negotiated transactions or in one or more transactions in the market at the
price prevailing at the time of sale. In connection with such sales, the Selling
Securityholders and any participating broker may be deemed to be "underwriters"
of the Common Stock within the meaning of the Act. It is anticipated that usual
and customary brokerage fees will be paid by the Selling Securityholders in all
open market transactions. The Company will pay all other expenses of this
Offering.

The Company has advised the Selling Securityholders that no NASD member
participating in the offering of the shares of Common Stock being offered hereby
by the Selling Securityholders may receive compensation in excess of 8% of the
proceeds of the sale of such shares. In addition, the terms and arrangements of
any underwritten offering must be filed with the NASD for its review pursuant to
Section 2710 of the NASD's Corporate Financing Rules.

The Company has informed the Selling Securityholders that the anti-manipulation
provisions of Regulation M promulgated under the Securities Exchange Act of 1934
may apply to the sales of their shares offered hereby. The Company has advised
the Selling Securityholders of the requirement for delivery of this Prospectus
in connection with any sale of the Common Stock offered hereby.

Certain Selling Securityholders may from time to time purchase shares of Common
Stock in the open market. These Selling Securityholders have been notified that
they should not commence any distribution of Common Stock unless they have
terminated their purchasing and bidding for Common Stock in the open market as
provided in applicable securities regulations, including, without limitation,
Regulation M.

63
<PAGE>

EXPERTS

The financial statements of AVAX Technologies, Inc. (formerly Walden
Laboratories, Inc.), at December 31, 1997 and for the years ended December 31,
1996 and 1997, appearing in this Prospectus and Registration Statement, have
been audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon appearing elsewhere herein, and are included in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.

LEGAL COUNSEL

Legal matters relating to the Offering will be passed upon for the Company by
Roberts, Sheridan & Kotel, a Professional Corporation, New York, New York,
counsel to the Company. Members of such firm beneficially own an aggregate of
26,585 shares of Common Stock assuming the conversion of all shares of Series B
Preferred Stock owned by them at the adjusted conversion price. All of such
shares of Common Stock owned directly or issuable upon conversion of shares of
Series B Preferred Stock are included in the Registration Statement.

64
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Financial Statements

Years ended December 31, 1996 and 1997

Contents

Report of Independent Auditors...............................................F-1

Audited Financial Statements

Balance Sheet as of December 31, 1997........................................F-2

Statements of Operations for the years ended December 31, 1996
and 1997 and the period from January 12, 1990 (incorporation)
to December 31, 1997......................................................F-3

Statements of Stockholders' Equity (Deficit) for the years ended
December 31, 1996 and 1997 and the period
from January 12, 1990 (incorporation) to December 31, 1997................F-4

Statements of Cash Flows for the years ended December 31, 1996
and 1997 and the period from January 12, 1990 (incorporation)
to December 31, 1997......................................................F-6

Notes to Financial Statements................................................F-8
<PAGE>

Report of Independent Auditors

The Board of Directors and Stockholders
AVAX Technologies, Inc.

We have audited the accompanying balance sheet of AVAX Technologies, Inc. (a
development stage company) as of December 31, 1997, and the related statements
of operations, stockholders' equity (deficit) and cash flows for the years ended
December 31, 1996 and 1997, and for the period from January 12, 1990
(incorporation) to December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards required that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of AVAX Technologies, Inc. at
December 31, 1997 and the results of its operations and its cash flows for the
years ended December 31, 1996 and 1997, and for the period from January 12, 1990
(incorporation) to December 31, 1997, in conformity with generally accepted
accounting principles.

Ernst & Young LLP

Kansas City, Missouri
January 16, 1998

F-1
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Balance Sheet
December 31,
1997
------------
Assets
Current assets:
Cash and cash equivalents $ 6,820,884
Marketable securities 9,102,028
Common stock receivable from a related party (Note 2) 1,200,000
Prepaid expenses and other current assets 154,929
------------
Total current assets 17,277,841

Furniture and equipment, at cost 91,959
Less accumulated depreciation 14,967
------------
Net furniture and equipment 76,992
------------
Total assets $ 17,354,833
============

Liabilities and stockholders' equity
Current liabilities:
Accounts payable and accrued liabilities (Note 5) $ 353,726
Amount payable to preferred stockholders (Note 2) 1,150,200
Amount payable to Former Officer (Note 2) 49,800
------------
Total current liabilities 1,553,726

Commitments and contingencies (Note 7)

Stockholders' equity (Notes 3, 4, 7 and 8):
Preferred stock, $.01 par value:
Authorized shares - 5,000,000, including Series B -
300,000 shares
Series B convertible preferred stock:
Issued and outstanding shares - 204,159
(liquidation preference - $27,561,465) 2,041
Common stock, $.004 par value:
Authorized shares - 50,000,000
Issued and outstanding shares - 4,582,305 18,329
Additional paid-in capital 23,995,640
Subscription receivable (432)
Deferred compensation (694,324)
Deficit accumulated during the development stage (7,520,147)
------------
Total stockholders' equity 15,801,107
------------
Total liabilities and stockholders' equity $ 17,354,833
============

See accompanying notes.

F-2
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Statements of Operations

<TABLE>
<CAPTION>
Period from
January 12, 1990
(Incorporation)
to
Year ended December 31 December 31,
1996 1997 1997
------------------------------------------------

<S> <C> <C> <C>
Gain from sale of the Product (Note 2) $ -- $ -- $ 1,951,000

Costs and expenses:
Research and development 738,991 2,448,976 4,801,285
Marketing and selling -- -- 543,646
General and administrative 1,253,395 2,724,007 5,562,144
------------------------------------------------
Total operating income (loss) (1,992,386) (5,172,983) (8,956,075)

Other income (expense):
Interest income 819,324 1,057,460 1,936,453
Interest expense (353,867) (150,602) (646,293)
Other, net (9,913) -- 145,768
------------------------------------------------
Total other income, net 455,544 906,858 1,435,928
------------------------------------------------

Net loss (1,536,842) (4,266,125) (7,520,147)

Amount payable for liquidation preference (1,131,744) -- (1,870,033)
------------------------------------------------
Net loss attributable to common
stockholders $(2,668,586) $(4,266,125) $(9,390,180)
================================================

Net loss per common share - basic $ (.84) $ (1.14)
==============================

Weighted average number of common shares
outstanding 3,182,058 3,750,440
==============================
</TABLE>

See accompanying notes.

F-3
<PAGE>
AVAX Technologies, Inc.
(a development stage company)

Statements of Stockholders' Equity (Deficit)

<TABLE>
<CAPTION>
Series A Series B
Convertible Convertible
Preferred Stock Preferred Stock Common Stock Additional
---------------------------------------------------------------- Paid-In Subscription
Shares Amount Shares Amount Shares Amount Capital Receivable
----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of common stock for
services in January 1990 - $ - - $- 582,500 $2,330 $920 $-
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1990 - - - - 582,500 2,330 920 -
Issuance of common stock for
services in August 1991 - - - - 230,000 920 5,830 -
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1991 - - - - 812,500 3,250 6,750 -
Conversion of note payable to
related party to common stock
in June 1992 - - - - 22,913 92 160,465 -
Issuance of common stock for
services in May and June 1992 - - - - 264,185 1,056 6,444 -
Issuance of Series A convertible
preferred stock, net of
issuance cost in June, July
and September 1992 1,287,500 12,875 - - - - 2,258,837 -
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1992 1,287,500 12,875 - - 1,099,598 4,398 2,432,496 -
Issuance of common stock for
services in July and November
1993 - - - - 8,717 35 24,965 -
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1993 1,287,500 12,875 - - 1,108,315 4,433 2,457,461 -
Issuance of common stock for
services in July 1994 - - - - 3,750 15 4,485 -
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1994 1,287,500 12,875 - - 1,112,065 4,448 2,461,946 -
Common stock returned and
canceled in April and May 1995 - - - - (307,948) (1,232) - -
Shares issued in September and
November 1995 - - - - 1,777,218 7,109 - (7,109)
Amount payable for liquidation
preference - - - - - - (738,289) -
Net income - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1995 1,287,500 12,875 - - 2,581,335 10,325 1,723,657 (7,109)
</TABLE>

<TABLE>
<CAPTION>
Deficit
Unrealized Accumulated Total
Loss on During the Stockholders'
Deferred Marketable Development Equity
Compensation Securities Stage (Deficit)
--------------------------------------------------
<S> <C> <C> <C> <C>
Issuance of common stock for
services in January 1990 $ - $- $- $ 3,250
Net loss - - (889) (889)
--------------------------------------------------
Balance at December 31, 1990 - - (889) 2,361
Issuance of common stock for
services in August 1991 - - - 6,750
Net loss - - (97,804) (97,804)
--------------------------------------------------
Balance at December 31, 1991 - - (98,693) (88,693)
Conversion of note payable to
related party to common stock
in June 1992 - - - 160,557
Issuance of common stock for
services in May and June 1992 - - - 7,500
Issuance of Series A convertible
preferred stock, net of
issuance cost in June, July
and September 1992 - - - 2,271,712
Net loss - - (607,683) (607,683)
--------------------------------------------------
Balance at December 31, 1992 - - (706,376) 1,743,393
Issuance of common stock for
services in July and November
1993 - - - 25,000
Net loss - - (1,610,154) (1,610,154)
--------------------------------------------------
Balance at December 31, 1993 - - (2,316,530) 158,239
Issuance of common stock for
services in July 1994 - - - 4,500
Net loss - - (781,221) (781,221)
--------------------------------------------------
Balance at December 31, 1994 - - (3,097,751) (618,482)
Common stock returned and
canceled in April and May 1995 - - - (1,232)
Shares issued in September and
November 1995 - - - -
Amount payable for liquidation
preference - - - (738,289)
Net income - - 1,380,571 1,380,571
--------------------------------------------------
Balance at December 31, 1995 - - (1,717,180) 22,568
</TABLE>

F-4
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Statements of Stockholders' Equity (Deficit) (continued)

Series A Series B
Convertible Convertible
Preferred Stock Preferred Stock Common Stock Additional
---------------------------------------------------------------- Paid-In Subscription
Shares Amount Shares Amount Shares Amount Capital Receivable
----------------------------------------------------------------------------------------

<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 1,287,500 $12,875 - $- 2,581,335 $10,325 $1,723,657 $(7,109)
Repurchase of common stock
in March 1996 - - - - (77,901) (312) - 312
Payment of subscription
receivable - - - - - - - 2,771
Conversion of Series A
preferred in June 1996 (1,287,500) (12,875) - - 321,875 1,288 11,587 -
Issuance of common stock and
Series B preferred stock in a
private placement in May and
June 1996 - - 258,198 2,582 129,099 516 22,217,397 -
Issuance of common stock
and Series B preferred
stock for services in
June 1996 - - 1,000 10 500 2 99,988 -
Exercise of warrants in June and
July 1996 - - - - 156,250 626 5,624 -
Amount payable for liquidation
preference - - - - - - (1,131,744) -
Compensation related to stock
options granted in May and
September 1996 - - - - - - 1,076,373 -
Amortization of deferred
compensation - - - - - - - -
Unrealized loss on marketable
securities - - - - - - - -
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1996 - - 259,198 2,592 3,111,158 12,445 24,002,882 (4,026)
Payment of subscription
receivable - - - - - - - 1,761
Write-off of subscription
receivable - - - - - - (1,833) 1,833
Exercise of warrants in
April and June 1997 - - - - 49,770 199 (199) -
Conversions of preferred to
common stock - - (55,039) (551) 1,421,403 5,685 (5,134) -
Repurchase of fractional shares - - - - (26) - (76) -
Realization of loss on marketable
securities - - - - - - - -
Amortization of deferred
compensation - - - - - - - -
Net loss - - - - - - - -
----------------------------------------------------------------------------------------
Balance at December 31, 1997 - $ - 204,159 $2,041 4,582,305 $18,329 $23,995,640 $ (432)
========================================================================================
</TABLE>

Deficit
Unrealized Accumulated Total
Loss on During the Stockholders'
Deferred Marketable Development Equity
Compensation Securities Stage (Deficit)
--------------------------------------------------

<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ - $- $(1,717,180) $22,568
Repurchase of common stock
in March 1996 - - - -
Payment of subscription
receivable - - - 2,771
Conversion of Series A
preferred in June 1996 - - - -
Issuance of common stock and
Series B preferred stock in a
private placement in May and
June 1996 - - - 22,220,495
Issuance of common stock
and Series B preferred
stock for services in
June 1996 - - - 100,000
Exercise of warrants in June and
July 1996 - - - 6,250
Amount payable for liquidation
preference - - - (1,131,744)
Compensation related to stock
options granted in May and
September 1996 (1,076,373) - - -
Amortization of deferred
compensation 112,949 - - 112,949
Unrealized loss on marketable
securities - (2,037) - (2,037)
Net loss - - (1,536,842) (1,536,842)
--------------------------------------------------
Balance at December 31, 1996 (963,424) (2,037) (3,254,022) 19,794,410
Payment of subscription
receivable - - - 1,761
Write-off of subscription
receivable - - - -
Exercise of warrants in
April and June 1997 - - - -
Conversions of preferred to
common stock - - - -
Repurchase of fractional shares - - - (76)
Realization of loss on marketable
securities - 2,037 - 2,037
Amortization of deferred
compensation 269,100 - - 269,100
Net loss - - (4,266,125) (4,266,125)
--------------------------------------------------
Balance at December 31, 1997 $(694,324) $- $(7,520,147) $15,801,107
==================================================
</TABLE>

See accompanying notes.

F-5
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Statements of Cash Flows

<TABLE>
<CAPTION>
Period from January
12, 1990
(Incorporation)
Year ended December 31 to December 31,
1996 1997 1997
--------------------------------------------------------
<S> <C> <C> <C>
Operating activities
Net loss $ (1,536,842) $ (4,266,125) $ (7,520,146)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 164,865 282,061 512,322
Gain from sale of the Product - - (1,951,000)
Gain on sale of intellectual property - - (787)
Accretion of interest on common stock
receivable (298,459) (150,541) (449,000)

Accretion of interest on amount payable to
preferred stockholders and Former Officer 298,459 150,541 449,000
Loss on sale or abandonment of furniture and
equipment 8,156 - 37,387
Issuance of common stock for services 100,000 - 147,000
Changes in operating assets and liabilities:
Prepaid expenses and other current
assets (61,285) (93,644) (154,929)
Accounts payable and accrued liabilities 2,933 76,048 353,724
Amount payable to Former Officer - - 80,522
--------------------------------------------------------
Net cash used in operating activities (1,322,173) (4,001,660) (8,495,907)

Investing activities
Purchase of marketable securities and short-term
investments (6,136,890) (9,102,028) (16,218,500)
Proceeds from sale of short-term investments - 6,136,890 7,116,472
Purchases of furniture and equipment (45,777) (46,182) (157,893)
Proceeds from sale of furniture and equipment - - 4,600
Organization costs incurred - - (1,358)
--------------------------------------------------------
Net cash used in investing activities (6,182,667) (3,011,320) (9,256,679)
</TABLE>

F-6
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Statements of Cash Flows (continued)

Proceeds from issuance of notes payable
to related party $ - $ - $ 957,557
Principal payments on notes payable to related
party (207,000) - (797,000)
Proceeds from loans payable 400,000 - 1,389,000
Principal payments on loans payable (1,050,000) - (1,389,000)
Payments for fractional shares from reverse splits
and preferred stock conversions - (76) (76)
Financing costs incurred (36,000) (90,000)
Payments received on subscription receivable 2,771 1,761 4,532

Proceeds received from exercise of stock warrants 6,250 - 6,250
Net proceeds received from issuance of
preferred and common stock 22,220,495 - 24,492,207
--------------------------------------------------------
Net cash provided by financing activities 21,336,516 1,685 24,573,470
--------------------------------------------------------

Net increase (decrease) in cash and cash
equivalents 13,831,676 (7,011,295) 6,820,884
Cash and cash equivalents at beginning
of period 503 13,832,179 -
--------------------------------------------------------
Cash and cash equivalents at end of period $13,832,179 $ 6,820,884 $ 6,820,884
========================================================

Supplemental disclosure of cash flow information

Interest paid $ 157,721 $ - $ 197,072
========================================================
</TABLE>

See accompanying notes.

F-7
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements

December 31, 1996 and 1997

1. Description of Business and Significant Accounting Policies

Description of Business

AVAX Technologies, Inc. (the Company) is a development stage biopharmaceutical
company.

In November 1995, the Company sold its leading product under development, an
over-the-counter nutritional, dietary, medicinal and/or elixorative food
supplement or drug and all of the related patents and other intellectual
property (the Product) (see Note 2).

Also in November 1995, the Company entered into a license agreement with the
Thomas Jefferson University (TJU) to develop, commercially manufacture and sell
products embodying immunotherapeutic vaccines for the treatment of malignant
melanoma and other cancers (the Invention) (see Note 3).

In December 1996, the Company entered into a license agreement with Rutgers
University (Rutgers) to develop, commercially manufacture and sell products
embodying a series of compounds for the treatment of cancer and infectious
diseases (the Compounds) (see Note 3).

In February 1997, the Company entered into a license agreement with Texas A&M to
develop, commercially manufacture and sell products embodying a series of
compounds for the treatment of cancer (the Texas A&M Compounds) (see Note 3).

The Company's business is subject to significant risks consistent with
biotechnology companies that are developing products for human therapeutic use.
These risks include, but are not limited to, uncertainties regarding research
and development, access to capital, obtaining and enforcing patents, receiving
regulatory approval, and competition with other biotechnology and pharmaceutical
companies. The Company plans to continue to finance its operations with a
combination of equity and debt financing and, in the longer term, revenues from
product sales, if any. However, there can be no assurance that it will
successfully develop any product or, if it does, that the product will generate
any or sufficient revenues.

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reported period. Actual
results could differ from those estimates.

Cash Equivalents

The Company considers all highly liquid financial instruments with a maturity of
three months or less when purchased to be cash equivalents. At December 31,
1997, all cash and cash equivalents were held at two financial institutions.

Marketable Securities

Management determines the appropriate classification of debt securities at the
time of purchase and reevaluates such designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when the Company has the
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are

F-8
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

1. Description of Business and Significant Accounting Policies (continued)

stated at amortized cost, adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization and interest on securities classified
as held-to-maturity are included in interest income.

Equity securities are classified as available-for-sale. Available-for-sale
securities are carried at fair value, with any unrealized gains and losses, net
of tax, reported in a separate component of stockholders' equity. Interest and
dividends on securities classified as available-for-sale are included in
interest income.

The following is a summary of marketable securities:

<TABLE>
<CAPTION>
Unrealized Estimated
Description of Securities Cost Loss Fair Value
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
December 31, 1996
Held-to-maturity debt securities:
U.S. Treasury securities $2,126,462 $ - $2,126,462
Other U.S. government securities 2,000,000 - 2,000,000
--------------------------------------------------------
4,126,462 - 4,126,462
Available-for-sale:
Equity securities 2,010,428 (2,037) 2,008,391
--------------------------------------------------------
$6,136,890 $ (2,037) $6,134,853
========================================================
December 31, 1997
Held-to-maturity debt securities:
Commercial paper $9,024,625 $ - $9,024,625
U.S. Treasury securities 77,403 - 77,403
--------------------------------------------------------
$9,102,028 $ - $9,102,028
========================================================
</TABLE>

The Company's debt securities all mature in 1998.

Depreciation

Depreciation is computed using the straight-line method over the estimated
useful lives of the furniture and equipment, which range from three to 10 years.

Research and Development Costs

Research and development costs, including payments related to patents and
license agreements, are expensed when incurred.

Deferred Compensation

Certain compensation costs are deferred and amortized over the vesting period of
such compensation.

Share Information

Prior to the first closing of a private placement on May 15, 1996 (see Note 4),
the Company effected a 1-for-2 reverse stock split of the Company's common
stock. Pursuant to an amendment to the Company's Certificate of Incorporation
dated May 7, 1997, a second 1-for-2 reverse split of the Company's common stock
was effected as

F-9
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

1. Description of Business and Significant Accounting Policies (continued)

of the close of business on May 13, 1997. All outstanding share and per share
amounts included in the accompanying financial statements have been adjusted to
reflect both 1-for-2 reverse stock splits.

Earnings Per Share

In 1997, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share." SFAS No.
128 replaced the calculation of primary and fully diluted earnings per share
with basic and diluted earnings per share. Unlike primary earnings per share,
basic earnings per share exclude any dilutive effects of options, warrants and
convertible securities. Diluted earnings per share is very similar to the
previously required fully diluted earnings per share. All earnings per share
amounts for all periods have been presented, and where appropriate, restated to
conform to the SFAS No. 128 requirements.

Net loss per share is based on net loss divided by weighted average number of
shares of common stock outstanding during the respective periods, adjusted to
reflect the reverse stock splits. The weighted average number of common shares
outstanding has been calculated in accordance with Staff Accounting Bulletin 83
(SAB 83) of the Securities and Exchange Commission. SAB 83 requires that shares
of common stock, warrants and options issued one year prior to the initial
filing of a registration statement relating to an initial public offering at
amounts below the public offering price be considered outstanding for all
periods presented in the Company's registration statement. For purposes of
calculating the net loss per share, the private placement of Series B
convertible preferred stock (see Note 4) has been considered to be the
equivalent of an initial filing of a registration statement relating to an
initial public offering, and the initial public offering price was determined to
be $3.92 per share by assuming that the preferred stock issued was immediately
converted into common stock. Those shares of common stock, warrants and options
(see Note 4), considered as cheap stock in accordance with SAB 83, were
considered outstanding for all periods, prior to July 10, 1997, at which time
the Company's registration statement on Form SB-2 to register the shares sold in
the private placement was declared effective.

The following table sets forth the computation of the Company's basic earnings
per share information, adjusted for the SAB 83 requirements, as discussed above.
Diluted earnings per share information is not presented, as the effects of stock
options, warrants and other convertible securities would be antidilutive for the
periods presented.

<TABLE>
<CAPTION>
1996 1997
------------------------------------
<S> <C> <C>
Numerator (basic):
Net loss $(1,536,842) $(4,266,125)
Amount payable for liquidation preference (1,131,744) -
------------------------------------
Numerator - income available to common stockholders $(2,668,586) $(4,266,125)
====================================

Denominator (basic):
Weighted average shares 2,859,126 3,616,906

Effect of stock issuances, stock options and warrants
issued within one year prior to the initial public
offering (IPO) at prices below the IPO price 322,932 133,534
------------------------------------
Denominator 3,182,058 3,750,440
====================================
Net loss per share - basic $ (.84) $ (1.14)
====================================
</TABLE>

F-10
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

1. Description of Business and Significant Accounting Policies (continued)

Stock-Based Compensation

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." SFAS No. 123 is effective for fiscal years beginning after
December 31, 1995 and prescribes accounting and reporting standards for all
stock-based compensation plans, including employee stock options, restricted
stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123
requires compensation expense to be recorded (i) using the new fair value method
or (ii) using existing accounting rules prescribed by Accounting Principles
Board Opinion No. 25, "Accounting for Stock Issued to Employees," (APB 25) and
related interpretations, with pro forma disclosure of what net income and
earnings per share would have been had the Company adopted the new fair value
method. The Company has elected to continue to account for its stock-based
compensation plans in accordance with the provisions of APB 25. See Note 4 for
the pro forma effects of applying SFAS No. 123.

2. Sale of the Product

In December 1995, the Company entered into an agreement to sell the Product for
$2.4 million in shares of common stock of Interneuron Pharmaceuticals, Inc.
(IPI), a public company, the parent of the purchaser of the Product (the Stock).
Certain common stockholders of the Company are also common stockholders of IPI.
The purchase price, payable in two equal installments in December 1996 and 1997,
is fixed, and the number of shares of the Stock will vary depending on the
quoted market price of the Stock at such time.

The first installment was paid on January 3, 1997 in the form of a distribution
of IPI stock directly by IPI to the Series A convertible preferred stockholders,
who were holders of record on the closing date of the agreement for sale, and
the Company's former President and Chief Executive Officer (the Former Officer).
The final installment was received on January 14, 1998. Accordingly, the common
stock receivable and the payables to preferred stockholders and the Former
Officer related to this installment are reported as current assets and
liabilities, respectively, in the accompanying balance sheet.

The sale of the Product was approved by the Company's common and Series A
preferred stockholders subject to the following conditions:

o At approximately the same time each installment is received by the
Company, 95.85% of the Stock will be distributed by the Company, or
directly by IPI, to the Company's preferred stockholders of record
(referred to herein as the holders of Series A preferred stock) at
the time sale of the Product closed, on a pro rata basis, to reduce
their liquidation preference, provided, however, that if at the time
of each installment, any of the Company's indebtedness which had
been outstanding at the time of the closing of the agreement to sell
the Product (December 27, 1995) and is then due and payable, the
Company will cause such indebtedness to be paid or provided for,
whether by use of available cash, refinancing, redirecting a portion
of the Stock to satisfy such indebtedness, or otherwise, as the
Company shall determine in its best interest.

o The remaining 4.15% of the Stock (or a cash payment equal to the
value thereof) will be distributed to the Former Officer in partial
consideration for his resignation from the Company and the return to
the Company of all common stock of the Company and cancellation of
options to purchase 62,500 shares of common stock (see Note 8).

Other than for the Former Officer, none of the other common stockholders were
entitled to any of the Stock.

F-11
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

2. Sale of the Product (continued)

Because the Stock is receivable in two equal annual installments, the gain from
the sale of the Product, $1,951,000, was calculated by discounting the value of
the Stock receivable using a discount rate of 15%. In 1995, the Company also
recorded the difference between 95.85% of the discounted net present value of
the Stock to be received and the Company's indebtedness, $1,131,744 at December
31, 1995, as a payable to the preferred stockholders of $738,289 to reduce their
liquidation preference. The present value of the amount payable to the preferred
stockholders, including the accretion of interest thereon, was $2,156,106 at
December 31, 1996, since all of the Company's indebtedness outstanding as of the
date of the sale of the Product has been satisfied through sources other than
the Stock to be received. The present value of the amount payable to the
preferred stockholders, including accretion of interest thereon, is $1,150,200
at December 31, 1997, after being reduced by the payment of the first
installment in January 1997.

The discounted net present value of the Stock distributable to the Former
Officer as of the date of sale, amounting to $80,967, was allocated between
common stock ($445) and severance expense ($80,522) based on the fair value of
the Company's common stock ($.004 per share). The present value of the amount
payable to the Former Officer, including the accretion of interest thereon, is
$49,800 at December 31, 1997.

3. License and Research Agreements

In November 1995, the Company entered into an agreement with TJU for the
exclusive worldwide license to develop, manufacture and sell the Invention. In
consideration for the license agreement, the Company paid cash of $10,000 and
issued an aggregate of 458,243 shares of common stock to TJU and the scientific
founder (the Scientist). These shares had antidilution rights prior to the first
equity financing, as defined in the license agreement, in excess of $1,000,000
by the Company.

Under terms of the license agreement, the Company was required to raise a
minimum of $500,000 of net operating capital by December 1996. Also under the
terms of the license agreement, (i) the Company is obligated to pay certain
milestone payments as follows: $10,000 upon initiation of the first clinical
trial that is approved by the Food and Drug Administration (FDA) or comparable
international agency, $10,000 upon the first filing of a New Drug Application
(NDA) with the FDA or comparable international agency, and $25,000 upon receipt
by the Company of approval from the FDA or comparable international agency to
market products. In addition, the Company is obligated to pay royalties on its
worldwide net sales revenue derived from the Invention and a percentage of all
revenues received from sublicensees of the Invention.

The Company also entered into a research agreement with TJU to fund a study to
be performed by TJU for the development of the technology related to the
Invention (the Study) at approximately $220,000 per annum for the first three
years. The Company, at its discretion, may reduce the funding in the third year
to no less than $100,000. Following the third year, the Company is obligated to
spend a minimum of $500,000 per year on the development of the Invention until
commercialized in the United States. If following the third year, the Company
files for United States marketing approval through a Company sponsored NDA, the
Company may elect to spend less than $500,000 per year on the development of the
Invention during the period of time the NDA is under review by the FDA. The
research agreement will continue until completion of the Study, although it is
terminable, upon notice by either party to the other, at any time.

In December 1996, the Company entered into an agreement with Rutgers for the
exclusive worldwide license to develop, manufacture and sell products embodying
the Compounds. In consideration for the license agreement, the Company paid cash
of $15,000, has agreed to pay $15,000 in each subsequent year as a license
maintenance fee and has committed to the issuance of warrants to Rutgers to
purchase 125,000 shares of common stock at a price of $8.24 per share based on
the achievement of certain development milestones. The first 75,000 warrants

F-12
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

3. License and Research Agreements (continued)

will expire in 2006, and the final 50,000 warrants will expire in 2011. These
warrants, once issued, shall provide for cashless exercise, piggyback
registration rights and certain antidilution rights. The Company has agreed to
fund research in the amount of one hundred thousand dollars ($100,000) per year
for the next three years. In addition, the Company is obligated to spend an
aggregate of $200,000 in the first year, $300,000 in the second year and
$500,000 each year thereafter until the first year of commercial marketing of a
product derived from the Compounds. The license maintenance fee shall not be
payable in years where research funding is equal to or greater than $100,000.

Under the terms of the license agreement, the Company is obligated to pay
certain milestone payments as follows: $15,000 on the earlier of October 31,
1999 or the date of first filing of an Investigational New Drug (IND)
application with the FDA, or comparable international agency; $25,000 on the
earlier of October 31, 2001 or the date of initiation of Phase II trials in the
United States or another major market country; $45,000 on the earlier of October
31, 2005 or the date of first filing of an NDA application with the FDA, or
comparable international agency; and $150,000 on the earlier of October 31, 2008
or the date of receipt by the Company of approval from the FDA, or comparable
international agency, to market products.

In addition, the Company is obligated to pay royalties on its worldwide net
sales revenue derived from the Compounds and a percentage of all revenues
received from sublicensees of products derived from the Compounds. Such royalty
payments shall be no less than $100,000 in the first year of commercial
marketing, $200,000 in the second year, $250,000 in the third year, $300,000 in
the fourth year, and $350,000 in the fifth and all following years.

In February 1997, the Company entered into an agreement with Texas A&M for the
exclusive worldwide license to develop, manufacture and sell products embodying
the Texas A&M Compounds. Under the terms of the license agreement, the Company
has agreed to fund research in the amount of approximately $108,000 per year for
the next three years. The Company is also obligated to pay certain milestone
payments as follows: $24,000 upon initiation of certain toxicity evaluations;
$12,000 upon completion of toxicity evaluations demonstrating certain acceptable
toxicity levels; $12,000 upon the submission of an IND to the FDA, or comparable
international agency; $5,000 upon completion of the first Phase I clinical
investigation; and $15,000 upon receipt by the Company of NDA approval from the
FDA to market products.

In addition, the Company is obligated to pay royalties on its worldwide net
sales revenue derived from the Compounds and a percentage of all revenues
received from sublicensees of products derived from the Compounds. Such royalty
payments shall be no less than $50,000 in the first year of commercial
marketing, $100,000 in the second year, and $200,000 in the third year and all
following years.

4. Equity Transactions

Common and Preferred Stock

Common stock issued for services since 1990 has been recorded based on the value
of the services provided.

In April 1995, in accordance with the terms of his resignation and related
severance arrangements, the Former Officer returned 111,330 shares of common
stock and options to purchase 62,500 shares of common stock. The common stock
returned was valued at $.004 per share. The common stock and options returned
were canceled.

F-13
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

4. Equity Transactions (continued)

In May 1995, in accordance with the terms of a settlement agreement with a
former officer and director of the Company, the Company agreed to release and
relinquish any claim it may have on certain intellectual property, excluding the
Product, in exchange for 196,618 shares of the Company's common stock owned by
her and her family. The common stock was valued at $.004 per share and was
canceled.

On September 13, 1995, the Company issued 402,490 shares of common stock to
officers of the Company at $.004 per share.

On November 20, 1995, the Company issued an aggregate of 458,243 shares of
common stock to TJU and the Scientist (see Note 3). In addition, on November 20,
1995, the Company issued, in aggregate, an additional 916,485 shares to a
principal stockholder, a third party designated by the principal stockholder,
and an officer, at $.004 per share.

On March 24, 1996, the Company repurchased 77,901 shares of common stock
previously issued to an officer at $.004 per share. The repurchased shares were
canceled.

In May 1996, the Company's authorized capital was increased to 50,000,000 shares
of common stock, par value $.004, and 5,000,000 shares (of which 2,500,000
shares were designated as Series A preferred stock and 300,000 shares were
designated as Series B preferred stock) of preferred stock, par value $.01.

Pursuant to a private placement in May and June 1996, the Company issued 258,198
shares of Series B convertible preferred stock. The preferred stockholders also
received 129,099 shares of common stock. The total consideration was
$25,819,800. The per share price allocated to common stock and Series B
convertible preferred stock was $1 and $99, respectively. In connection with the
private placement, the Company paid $3,357,000 in commissions and nonaccountable
expenses to the placement agent, a related party, and issued 500 shares of
common stock and 1,000 shares of Series B convertible preferred stock as
consideration for legal services valued at $100,000. In addition, the placement
agent received warrants to purchase 25,819.8 shares of Series B convertible
preferred stock at an exercise price of $110 per share. Such warrants are
exercisable until June 11, 2006, contain certain antidilution provisions and may
be exercised pursuant to a cashless exercise feature. Other share issuance
expenses amounted to $142,000.

The Series B preferred stockholders are entitled to voting rights equivalent to
the number of common shares into which their preferred shares are convertible.
The Series B preferred stockholders are also entitled to receive, in preference
to the holders of common stock, an amount per preferred share of $135 plus any
declared but unpaid dividends.

Pursuant to the terms of the private placement, each share of Series B preferred
stock was convertible at any time, in whole or in part, at the discretion of the
holders, into common stock at $4 per share (the Initial Conversion Price), which
amounted to 6,479,950 shares at December 31, 1996. Twelve months after the final
closing date (the Reset Date), the Company could, at its option, cause
conversion of the preferred stock, in whole or in part, into common stock at the
Initial Conversion Price if the closing price of the common stock exceeded 150%
of the Initial Conversion Price for at least 20 trading days in any
30-consecutive-trading-day period.

At the second closing of the private placement on June 11, 1996, the 1,287,500
shares of Series A preferred stock were automatically converted to 321,875
shares of common stock. Notwithstanding such conversion, holders of the Series A
preferred stock have received pro rata 95.85% of shares of common stock of IPI
associated with the sale of the Product, as discussed in Note 2.

F-14
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

4. Equity Transactions (continued)

During 1997, Series B preferred stockholders converted 55,039 shares of
preferred stock into 1,421,392 shares common stock at the conversion price in
effect at the time. At December 31, 1997, the remaining 204,159 shares of Series
B preferred stock are convertible into 5,325,866 shares of common stock,
excluding the effect of any fractional shares.

Conversion Reset

In accordance with the terms of the placement, the Initial Conversion Price was
to be adjusted and reset effective as of the Reset Date if the average closing
bid price for the 30 consecutive trading days immediately preceding the Reset
Date (the 12-Month Trading Price) was less than 135% of the Initial Conversion
Price or $5.40. If such was the case, the Initial Conversion Price would be
reduced to be equal to the greater of the 12-Month Trading Price divided by 1.35
or 50% of the Initial Conversion Price.

The Initial Conversion Price was adjusted effective June 11, 1997, because the
average closing bid price of the common stock for the 30 consecutive trading
days immediately preceding such date was less than $5.40. The average was, in
fact, $5.175 per share. Accordingly, the conversion price was adjusted to $3.83
per share, which corresponds to a new conversion rate of 26.0875 shares of
common stock per share of Series B preferred stock.

Staggered Lock-up

Pursuant to the terms of the placement, 25% of each holder's shares of common
stock issuable upon conversion of the Series B preferred shares (the Conversion
Shares) were not subject to any restriction on resale (Lock-up). The remaining
75% of each holder's Conversion Shares were subject to a staggered Lock-up,
whereby 25% of the Conversion Shares were released from the Lock-up every three
months after the final closing, through and including March 11, 1997.

In March 1997, the Company completed a revision to the staggered Lock-up and
Conversion Reset provision of the private placement. Shareholders owning
approximately 94% of the Series B preferred shares agreed to a modification of
the original subscription agreement, such that the staggered Lock-up would
expire beginning three months after both listing and effectiveness under the
Securities Act of 1933 of the Company's Registration Statement for its common
stock (Effectiveness). As so modified, upon listing and Effectiveness, which
occurred on July 10, 1997, 25% of the Conversion Shares were not subject to any
Lock-up provisions.

The remaining 75% of the Conversion Shares were subject to a staggered Lock-up,
such that every three months after July 10, 1997, 25% of the Conversion Shares
are released from Lock-up until the ninth month, at which point, all Conversion
Shares will no longer be subject to any Lock-up.

In addition, for those shareholders who accepted the Lock-up modifications, the
Company agreed to provide additional reset protection, extending the Reset Date
to 12 months following the later of Effectiveness and listing. The terms of this
modified reset are the same as the original reset provision, except that the
Company will not adjust the conversion price, but will issue additional shares
of common stock to effect the principles of the reset provision.

F-15
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

4. Equity Transactions (continued)

Stock Options

In April 1992, the Board of Directors approved the 1992 Stock Option Plan (the
Plan), which, as amended, authorizes up to 437,500 shares of common stock for
granting both incentive and nonqualified stock options to employees, directors,
consultants and members of the scientific advisory board of the Company. The
exercise price and vesting period of the options are determined by the Board of
Directors at the date of grant. Options may be granted up to 10 years after the
Plan's adoption date and generally expire 10 years from the date of grant.

The following summarizes activity in the Plan:

Options
--------------

Balance at December 31, 1994 276,375
Canceled (246,375)
--------------
Balance at December 31, 1995, 1996 and 1997 30,000
==============

All outstanding options were issued at an exercise price of $1.20 per share. At
December 31, 1997, options to purchase 30,000 shares of common stock were
exercisable, and options to purchase 407,500 shares of common stock were
available for grant under the Plan.

Certain officers and employees were also granted stock options in 1996, as
authorized by the Board of Directors, apart from the Plan. In May 1996, the
Company's President and Chief Executive Officer (the President) received options
to purchase 318,873 shares of common stock at $1.00 per share. Such options vest
at a rate of 1/16 per quarter over four years and are exercisable for a period
of seven years. Because the fair value of the Company's common stock at the date
of grant was determined to be $2 per share, the Company recorded $318,873 as
deferred compensation. Such deferred compensation is being amortized over four
years.

In September 1996, certain officers and an employee also received options to
purchase 252,500 shares of common stock at $1.00 per share. Such options vest at
a rate of 1/16 per quarter over four years and are exercisable for a period of
seven years. Because the fair value of the Company's common stock at the date of
grant was determined to be $4 per share, the Company recorded $757,500 as
deferred compensation. Such deferred compensation is being amortized over four
years.

In March 1997, one other employee of the Company received options to purchase
52,500 shares of common stock at $6.00 per share, the closing market price on
the date of grant. In July 1997, the Company withdrew such options and replaced
them with options to purchase 90,000 shares of common stock at an exercise price
of $4.50, the closing market price on the date of grant. The options vest as
follows: 5,000 shares vest on September 1, 1997, 30,000 shares vest at a rate of
1/6 every six months over a three-year period, thereafter, and the remaining
55,000 shares will vest upon the occurrence of certain milestone events relating
to the Company's manufacturing program. Such options are exercisable for a
period of seven years.

In July 1997, the President, certain officers and an employee also received
options to purchase 280,000 shares of common stock at $4.50 per share. The
President's options, which represent 150,000 of these options, vest at a rate of
1/12 per quarter over a three-year period. The remaining options vest at a rate
of 1/16 per quarter over four years and all are exercisable for a period of
seven years.

F-16
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

4. Equity Transactions (continued)

In July 1997, options were issued to a scientific consultant to purchase 30,000
shares of common stock at $4.50 per share. Such options vest at a rate of 1/3
per year over three years and are exercisable for a period of seven years.

In September 1997, four directors of the Company each received a grant of 40,000
options to purchase common stock at $4.50 per share. Such options vest at a rate
of 1/16 per quarter over four years, commencing on December 1, 1997, and are
exercisable for a period of seven years.

In December 1997, four directors of the Company each received a grant of 5,161
options to purchase common stock at $3.88 per share. Such options vest at a rate
of 1/4 per quarter over one year, commencing on March 1, 1998, and are
exercisable for a period of seven years.

Warrants

In June, July and September 1992, the Company issued warrants to purchase 88,769
shares (adjusted to comply with antidilution provisions of the warrants) of the
Company's common stock at a price of $2.59. These warrants were exercised in
April and June 1997 under a cashless exercise provision, resulting in the
issuance of 49,770 shares of common stock.

The Company has issued warrants to purchase 7,750 (May 1993) and 90,000
(January, February and August 1995) shares of the Company's common stock at a
price of $11.00 and $.04 per share, respectively. These warrants are exercisable
at any time and expire in 1998 and 2006, respectively.

In January and February of 1996, the Company issued warrants to purchase 97,500
shares of the Company's common stock at a price of $.04 per share. Such warrants
are exercisable at any time and expire in 2007.

In October 1996, the Company issued warrants to purchase 50,000 shares of common
stock at $6 per share, 25,000 of which were subsequently canceled in April of
1997 (see Note 7). These warrants are exercisable at December 31, 1997 and
expire in 2001.

In December 1996, the Company committed to the future issuance of warrants to
purchase 125,000 shares of the Company's common stock at a price of $8.24 per
share (see Note 3).

In June and July of 1996, warrants to purchase 156,250 shares of common stock at
$.04 per share were exercised.

In February 1997, the Company issued warrants to three outside consultants to
purchase a total of 25,500 shares of common stock at $6.00 per share. These
warrants vested immediately upon issuance and expire in 2004.

In April 1997, the Company issued warrants to purchase 50,000 shares of common
stock at $8.00 per share (see Note 7). Such warrants vest on various dates
through April 1998 and expire in July 2002.

In July 1997, warrants were issued to a consultant to purchase 45,000 shares of
common stock at $4.50 per share. Such warrants were to vest upon the occurrence
of certain milestones and were exercisable for a period of five years. In
December 1997, these warrants were canceled and new warrants to purchase 115,000
shares of common stock at $3.50 per share were issued to the consultant. Such
warrants vest upon the occurrence of certain milestones and are exercisable for
a period of five years.

F-17
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

4. Equity Transactions (continued)

In December 1997, warrants were issued to a consultant to purchase 200,000
shares of common stock at $3.75 per share. Such warrants vest upon the
achievement of certain performance-based milestones and are exercisable for a
period of five years.

Authorized but unissued shares of common stock were reserved for issuance at
December 31, 1997 as follows:

Series B convertible preferred stock (Note 4) 5,325,866
Stock option plan 437,500
Non Plan options 1,152,016
Warrants to purchase common stock 579,500
Warrants to purchase Series B convertible preferred
stock (Note 4) 673,564
---------------
8,168,446
===============

SFAS No. 123 Disclosures

Pro forma information regarding net loss and net loss per share is required by
SFAS No. 123 and has been determined as if the Company had accounted for its
applicable stock options and warrants under the fair value method of the
statement.

The fair value for these options and warrants was estimated at the date of grant
using a Black-Scholes option pricing model with the following weighted-average
assumptions for 1997 and 1996, including a risk free interest rate of 5.50%, a
volatility factor of the expected market price of the Company's common stock of
.392 and a weighted-average expected life of the option or warrant of 44 months.

This model was developed for use in estimating the fair value of traded options
which have no vesting restrictions and are fully transferable. In addition,
option valuation models require the input of highly subjective assumption,
including the expected stock price volatility. Because the Company's stock
options and warrants have characteristics significantly different from those of
traded options and because changes in the subjective input assumptions can
materially affect the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of the fair value of
its employee stock options or warrants.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the option or warrant vesting period. The effects
of applying SFAS No. 123 for pro forma disclosures are not likely to be
representative of the effects on reported net income or losses for future years.
The Company's pro forma information follows:

1997 1996
------------------------------

Pro forma net loss attributable to common
stockholders $(2,707,135) $(4,392,301)

Pro forma net loss per share (.85) (1.17)

F-18
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

4. Equity Transactions (continued)

A summary of applicable stock option and warrant activity and related
information for the years ended December 31, 1996 and 1997 is as follows:

<TABLE>
<CAPTION>
1996 1997
------------------------------------ ------------------------------------
Weighted-Average Weighted-Average
Options and Exercise Options and Exercise
Warrants Price Warrants Price
------------------------------------ ------------------------------------
<S> <C> <C> <C> <C>
Outstanding at beginning of
year 203,362 $1.74 1,549,636 $3.21
Granted 1,502,524 3.08 999,213 4.43
Exercised 156,250 0.04 88,769 2.59
Forfeited - - 25,000 6.00
------------------ ------------------
Outstanding at end of year 1,549,636 3.21 2,435,080 3.70
================== ==================
Exercisable at end of year 862,168 $3.83 1,104,047 $3.82
</TABLE>

The weighted-average fair value of options and warrants granted during 1996 and
1997 was $1.41 and $1.39, respectively. Exercise prices for options and warrants
outstanding range from $.04 to $11.00.

5. Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities at December 31, 1997 consist of the
following:

Professional fees $104,750
Other 248,976
----------------
$353,726
================

6. Income Taxes

At December 31, 1997, the Company has net operating loss carryforwards of
approximately $8,000,000 for federal income tax purposes that expire in varying
amounts through the year 2012 if not utilized.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets and liabilities for federal income tax
purposes are as follows:

December 31,
1997
----------------
Deferred tax assets:
Net operating losses $3,094,000
Deferred compensation 147,000
Other 19,000
----------------
Total deferred tax assets 3,260,000

Deferred tax liabilities:
Gain on sale of the Product treated as an installment
sale for income tax purposes (377,000)
----------------
2,883,000

F-19
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

Valuation allowance (2,883,000)
================
Net deferred tax assets $ -
================

6. Income Taxes (continued)

The valuation allowance at December 31, 1996 was $1,234,000.

Under Section 382 of the Tax Reform Act of 1986, the Company's net operating
loss carryforward could be subject to an annual limitation if it should be
determined that a change in ownership of more than 50% of the value of the
Company's stock occurred over a three-year period.

The following summary reconciles the federal statutory rate with the actual
income tax provision (benefit):

December 31
1996 1997
---------------------------------

Income taxes (benefit) at statutory rate $(522,000) $(1,450,000)
State income taxes, net of federal benefit (71,000) (197,000)
Change in the valuation allowance 587,000 1,649,000
Other 6,000 (2,000)
---------------------------------
Provision for income taxes (benefit) $ - $ -
=================================

7. Commitments

Leases

In August 1996, the Company entered into a three-year lease for office
facilities. The lease commenced in October with a monthly rental of
approximately $5,400, beginning in the fourth month. This lease was amended in
December 1997 to add additional office space for the remainder of the original
lease term which increased the monthly rental by approximately $2,700. This
lease is secured by an irrevocable standby letter of credit of which the lessor
is the named beneficiary. This $107,000 letter of credit expires at the end of
the original lease term and is automatically reduced by an equal amount each
year.

In December 1997, the Company entered into a 10-year lease agreement for
manufacturing facility space which commences in February 1998 and contains an
option to terminate after five years. The monthly rental is approximately
$10,400. The first month's rent was payable upon signing of the lease along with
a security deposit equivalent to two months rental. The first five months rental
will be rebated at the end of the fifth month. This lease is secured by a
one-year irrevocable standby letter of credit of which the lessor is the named
beneficiary. This $379,530 letter of credit automatically renews each December
and will be reduced by the amortized reduction of the landlord investment each
year.

Rent expense under these agreements was approximately $79,000 for the year ended
December 31, 1997.

F-20
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

7. Commitments (continued)

Future minimum lease payments consisted of the following at December 31, 1997:

Year ending
December 31
---------------------

1998 $210,847
1999 196,908
2000 124,071
2001 140,318
2002 377,852

Employment and Consulting Agreements

In May 1996, the Company entered into a letter agreement with the President
pursuant to which the President will receive an annual salary of $200,000, a
minimum annual bonus of $25,000 and an additional discretionary bonus of up to
$175,000. The President was also granted options to purchase common stock (see
Note 4). In October 1997, such annual salary was increased to $225,000 and a
$100,000 bonus was paid.

Effective in June 1996, the Company entered into consulting agreements with the
Scientist, a director and a former officer. These agreements are for an initial
term of three years through June 1999. Annual consulting fees payable pursuant
to these agreements approximate $66,000.

In September 1996, the Company entered into letter agreements with its Chief
Financial Officer (the CFO) and Executive Vice President (the Executive V.P.)
pursuant to which these officers will receive annual salaries of $150,000 and
$145,000, respectively, minimum annual bonuses of $25,000 each and additional
discretionary bonuses of up to $125,000 and $83,750, respectively. These
officers were also granted options to purchase common stock (see Note 4). In
October 1997, these officers received salary increases bringing each of their
annual salaries to $168,000 and were each paid a $50,000 bonus.

In October 1996, the Company entered into an agreement with an investment banker
pursuant to which the investment banker may, at the Company's request, perform
certain investment banking services for the Company. In connection with this
agreement, the investment banker was granted warrants to purchase 50,000 shares
of common stock at $6 per share, 25,000 of which were subsequently canceled in
April 1997 (see Note 4).

In April 1997, the Company entered into an agreement with another investment
banker pursuant to which the investment banker may, at the Company's request,
perform certain investment banking services for the Company. In connection with
this agreement, the investment banker was granted warrants to purchase 50,000
shares of common stock at $8 per share (see Note 4).

In April, May and July 1997, the Company entered into agreements with four
members of the Scientific Advisory Board. These agreements are for initial terms
of two years and require compensation of $2,000 per person per meeting of the
Scientific Advisory Board. In July 1997, the Company entered into a consulting
agreement with a member of its Scientific Advisory Board. In connection with
this agreement, the Company granted options to acquire 30,000 shares of common
stock at $4.50 per share (see Note 4).

F-21
<PAGE>

AVAX Technologies, Inc.
(a development stage company)

Notes to Financial Statements (continued)

8. Loans Payable and Related-Party Transactions

On March 1, 1994, the Company entered into a line of credit agreement with a
major stockholder. During 1994, the Company received $397,000 and repaid
$190,000. There were no borrowings or repayments under the line of credit during
1995. Borrowings under this line of credit amounted to $207,000 at December 31,
1995, bore interest at 2% above the prime rate (10.5% at December 31, 1995) and
were repaid in full in June 1996.

On November 16, 1994, the Company entered into a term loan with a financial
institution and borrowed $389,000. The outstanding balance at December 31, 1995
was $50,000. The above major stockholder had assigned certain bank deposits as
collateral for this borrowing. This borrowing, which bore interest at the prime,
was repaid in June 1996.

In 1995, the Company obtained eight separate bridge loans totaling $600,000
($150,000 of which was obtained from related parties). The lenders also were
granted warrants to purchase 75,000 shares of common stock at $.04 per share. In
connection with these loans, the Company paid commissions totaling $54,000 and
issued warrants to purchase 15,000 shares of common stock at $.04 per share to
the placement agent (the Placement Agent), a related party. The warrants were
considered to have a de minimis value. These loans bore interest at 13% per
annum and were payable in 12 months. Loans totaling $200,000 were repaid in
January and February of 1996, and loans totaling $250,000 that were due in
February 1996 were rolled over for another year through February 1997. Warrants
to purchase 31,250 shares of common stock at $.04 per share were granted in
connection with the rollover of these loans. All bridge loans were payable in
full upon the closing of an initial public offering or private placement of the
Company's stock, with gross proceeds in excess of $2,500,000.

In addition, in January and February of 1996, the Company obtained additional
bridge loans totaling $400,000 ($300,000 of which was obtained from related
parties) with interest payable at 13% per annum and issued additional warrants
to purchase 50,000 shares of common stock at $.04 per share. Also, in connection
with these additional bridge loans, the Company paid commissions totaling
$36,000 and issued warrants to purchase 16,250 shares of common stock at $.04
per share to the Placement Agent, a related party. All bridge loans were repaid
in June 1996.

On June 11, 1996, the Company entered into a financial advisory agreement with
the Placement Agent, pursuant to which the Company will pay a monthly retainer
of $4,000 for a minimum of 24 months, plus expenses and success fees.

9. Employee Benefit Plan

During 1996, the Company established a 401(k) plan for all employees over the
age of 21. Employee contributions are subject to normal 401(k) plan limitations,
and the Company has made no matching contributions in 1996 or 1997, although
certain top heavy contributions may be required in the future.

F-22
<PAGE>

================================================================================

No dealer, salesman or any other person has been authorized to give
information or to make any representations not contained in this Prospectus and,
if given or made, such information or representations must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer of any securities other than those to which it relates or an offer to
sell, or a solicitation of an offer to sell or a solicitation of an offer to buy
any of the securities offered hereby to any person in any jurisdiction in which
such an offer or solicitation would be unlawful. Neither the delivery of this
Prospectus nor any sales made hereunder shall, under any circumstances, create
any implication that the information contained herein is correct as of any time
subsequent to the date hereof.

--------------------

TABLE OF CONTENTS

AVAILABLE INFORMATION ....................... 2

PROSPECTUS SUMMARY .......................... 3

COMPANY SUMMARY ............................. 3

OFFERING SUMMARY ............................ 5

SUMMARY OF FINANCIAL DATA ................... 6

RISK FACTORS ................................ 7

USE OF PROCEEDS ............................. 21

MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS ............. 21

DIVIDEND POLICY ............................. 21

CAPITALIZATION .............................. 22

MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS .................................. 23

BUSINESS .................................... 26

MANAGEMENT .................................. 38

CERTAIN TRANSACTIONS ........................ 45

PRINCIPAL STOCKHOLDERS ...................... 47

DESCRIPTION OF SECURITIES ................... 49

SELLING SECURITYHOLDERS ..................... 56

SHARES ELIGIBLE FOR FUTURE SALES ............ 62

PLAN OF DISTRIBUTION ........................ 63

EXPERTS ..................................... 64

LEGAL COUNSEL ............................... 64

================================================================================

---------

AVAX TECHNOLOGIES, INC.

Common Stock

--------------------

PROSPECTUS
, 1998

--------------------

================================================================================
<PAGE>

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

Item 24. Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law ("Section 145") authorizes a
court to award or a corporation's Board of Directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the "Act"). Article Seven of the Company's Certificate of
Incorporation provides that the Corporation shall indemnify and advance expenses
to its directors ands officers to the fullest extent permitted by Section 145 of
the Delaware General Corporation Law. Article Nine of the Company's Certificate
of Incorporation provides that the liability of its directors is eliminated to
the fullest extent permitted by Section 102(b)(7) of the Delaware General
Corporation Law. Article V, Section 1 of the Company's By-Laws provides for
mandatory indemnification of its directors to the fullest extent authorized by
the Delaware General Corporation Law. Article V, Section 2 of the Company's
By-Laws provides for prepayment of expenses incurred by its directors to the
fullest extent permitted by, and only in compliance with, the Delaware General
Corporate Law. Article V, Section 6 of the Company's By-Laws provides for
permissive indemnification of its officers, employees and agents if and to the
extent authorized by the Board of Directors in compliance with the Delaware
General Corporation Law. These provisions in the Certificate of Incorporation
and the By-Laws do not eliminate the directors' fiduciary duty, and in
appropriate circumstances equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Delaware law. In addition,
each director will continue to be subject to liability for breach of the
director's duty of loyalty to the Company for acts or omissions not in good
faith or involving intentional misconduct, for knowing violations of law, for
actions leading to improper personal benefit to the director, and for payment of
dividends or approval of stock repurchases or redemptions that are unlawful
under Delaware law. The provisions also do not affect a director's
responsibilities under any other law, such as the federal securities laws or
state or federal environmental laws. In addition, there are certain contractual
indemnification provisions contained in the Subscription Agreements of the
Series B Offering (Exhibit 4.6), the Series B Placement Warrants (Exhibit 4.12),
the Bridge Placement Warrants (Exhibit 4.7), the HTM Warrants (Exhibit 4.5), the
Meyerson Warrants (Exhibit 4.13), the Shear/Kershman and Castelli Warrants
(Exhibit 4.16), the Rutgers Warrants (Exhibit 4.17) and the warrants to be
issued to Drs. Wertheimer, Spana and Mermelstein (Exhibit 4.15) indemnifying
against certain liabilities the Company, its officers, directors, affiliates
and/or controlling person, including, in certain cases, Paramount Capital, Inc.,
a company wholly owned by a substantial shareholder of the Company, Lindsay A.
Rosenwald, M.D. In addition, the Company has obtained certain liability
insurance coverage for its directors and officers.

II-1
<PAGE>

Item 25. Other Expenses of Issuance and Distribution

The following table sets forth the costs and expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
securities being registered. The following table includes costs and expenses
relating to securities being registered for resale by certain securityholders,
all which amounts will be paid by the Company. All amounts are estimates except
the SEC registration fee and the Nasdaq filing fees.

SEC Registration fee $15,398.36
Nasdaq filing fee 10,000.00
NASD Corporate Financing Rule filing fee 4,966.00
Printing and engraving 100,000.00
Legal fees and expenses of the Company 350,000.00
Accounting fees and expenses 60,000.00
Blue sky fees and expenses 20,000.00
Transfer agent fees and expenses 20,000.00
Miscellaneous 39,635.64
-----------
Total $620,000.00
-----------

Item 26. Recent Sales of Unregistered Securities

In the last three years, the Company has issued and sold the following
securities (as adjusted to reflect two-for one reverse stock splits effected on
March 26, 1996 and May 13, 1997):

1. On May 11, 1996 and June 11, 1996 (the "Closing Dates"), the Company
consummated a private placement of an aggregate amount of approximately
$25,800,000 of shares ("Units") of Series B Preferred Stock and Common
Stock (the "Series B Offering"). The issuance of the above referenced
securities was deemed to be exempt from registration under the Act in
reliance on Section 4(2) thereof and Rule 506 of Regulation D promulgated
thereunder.

The offer and sale of Units were conducted through the Company's Placement
Agent (as defined below). In offering the Units, the Placement Agent
confined its actions to activities sanctioned by Regulation D and did not
engage in any form of general advertising or general solicitation in
offering the Units. All investors of the Units represented to the Company
that they were accredited investors and the Company believed that such
investors were accredited investors. The Closing Dates were the only dates
that the Company sold Units, and the Company timely filed a Form D (or
amended Form D, as the case may be) on each of the Closing Dates. Each of
the purchasers of the Units represented their intentions to acquire the
securities for investment only and not with a view to, or for sale in
connection with, any distribution thereof and appropriate legends were
affixed to the share certificates issued in such transactions. The
purchasers in such offering of Units were all the Selling Securityholders
listed as such in the Registration Statement except for James D.
Wolfensohn, Seymour Buehler and William J. Vanden Heuvel who are included
in the list of selling Shareholders because of their ownership of shares
of Common Stock issued upon exercise of Bridge Placements Warrants being
registered hereby, and, employees of Paramount that are not included in
the Registration Statement notwithstanding their purchase of units in the
Series B Offering.

2. In connection with services rendered by Paramount Capital, Inc., as
placement agent in the offering (the "Placement Agent"), the Company
issued to the Placement Agent or its designees warrants to purchase an
aggregate of approximately 25,820 shares of Series B Preferred Stock. The
issuance of the above referenced securities was deemed to be exempt from
registration under the Act in reliance on Section 4(2) thereof and Rule
506 of Regulation D promulgated thereunder. Each of such recipients had
the sophistication, knowledge and experience in financial matters as to be
capable of evaluating the merits and risks of its investment in the
Company, and had access to information, and the opportunity prior to its
investment to ask questions of and receive answers from representatives of
the Company, in each case concerning the finances, operations and

II-2
<PAGE>

business of the Company. In addition, the recipients of securities in each
such transaction represented their intentions to acquire the securities
for investment only and not with a view to or for sale in connection with
any distribution thereof and appropriate legends were affixed to the
certificates issued in such transactions.

3. On November 20, 1995, the Company entered into a License Agreement (the
"TJU License Agreement') with Thomas Jefferson University ("TJU") pursuant
to which TJU licensed to the Company certain patent and patent
applications relating to a process for the modification of a patient's own
tumor cells into a cancer vaccine (the "TJU License"). Pursuant to the TJU
License Agreement, the Company issued 229,121.5 shares of Common Stock to
each of TJU and Dr. David Berd, TJU's chief oncologist and the inventor of
its cancer vaccine. In the stock subscription agreements ("Subscription
Agreements") entered into by the Company, TJU and Dr. Berd on November 20,
1995, relating to the issuance of Common Stock to each of TJU and Dr.
Berd, each of TJU and Dr. Berd represented, among other things, to the
Company, and the Company believed, the following: that (i) it acquired the
Common Stock for investment purposes only and not for resale for an
indefinite period of time for its own account; (ii) it had such
sophistication, knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment in
the Company; (iii) it had the ability to bear the economic risks of its
investment for an indefinite period of time and could afford a complete
loss of its investment; and (iv) it had access to information, and the
opportunity prior to its purchase of the Common Stock to ask questions of
and receive answers from representatives of the Company, in each case
concerning the finances, operations and business of the Company. Also, as
stated in the Subscription Agreements, the share certificates issued in
connection with the above issuance of Common Stock had endorsed thereon
legends regarding restrictions on the transfer of the Common Stock.
Because of, among other things, the foregoing, the issuances of the above
referenced securities was deemed to be exempt from registration under the
Act in reliance on Section 4(2) thereof.

4. The Castle Group, LLC ("The Castle Group") which may be deemed an
affiliate of both the Company and the Placement Agent, identified,
negotiated and acquired for the Company the TJU License. In connection
therewith, The Castle Group and/or its designees were granted 916,485.5 of
Common Stock of the Company at a price of $.004 per share pursuant to an
Engagement & Technology Acquisition Agreement dated October 20, 1995
between The Castle Group and the Company. In the stock subscription
agreements ("Castle Subscription Agreements") entered into by the Company,
The Castle Group and its designees in September, 1995, relating to the
Common Shares issued to each of The Castle Group and its designees, each
of them represented, among other things, to the Company, and the Company
believed, the following: that (i) it acquired the Common Stock for
investment purposes only and not for resale for an indefinite period of
time for its own account; (ii) that each of The Castle Group and its
designees had such sophistication, knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks
of its investment in the Company; (iii) it had the ability to bear the
economic risks of its investment for an indefinite period of time and
could afford a complete loss of its investment; and (iv) it had access to
information, and the opportunity prior to its purchase of the Common Stock
to ask questions of and receive answers from representatives of the
Company, in each case concerning the finances, operations and business of
the Company. Also, as stated in the Subscription Agreements, the share
certificates issued in connection with the above issuance of Common Stock
had endorsed thereon legends regarding restrictions on the transfer of the
Common Stock. Because of the foregoing, the issuances of the above
referenced securities were deemed to be exempt from registration under the
Act in reliance on Section 4(2) thereof because such issuances did not
involve a public offering. In addition, each of the recipients of
securities in such transaction represented their intention to acquire the
securities for investment only and not with a view to or for sale in
connection with any distribution thereof and conform to appropriate
legends were affixed to the share certificates issued in such
transactions. All recipients had adequate access, through their
relationships with the Company, to information about the Company.

5. In 1995 and 1996, the Company, pursuant to certain bridge financing
transactions issued to nine persons or entities namely, The Aries Domestic
Fund, L.P., The Aries Fund, A Cayman Island Trust, Seymour Buehler, Yonah
J. Hamlet, M.D., Trustee FBO Yonah J. Hamlet, M.D. Profit Sharing Plan
Dtd. 1/1/86, South Ferry #2, L.P., Herman Tauber, Myron M. Teitelbaum,
M.D., William J. Vanden Heuvel and James D. Wolfensohn ("Warrant
Holders"), (i) bridge notes aggregating $1,000,000 and (ii) warrants to
purchase an aggregate of 156,250 shares of Common

II-3
<PAGE>

Stock at an exercise price of $.004 per share. In June 1996, such bridge
notes were paid by the Company and all the warrants were exercised by the
holders thereof. In connection with services rendered as the placement
agent of the bridge financing, Paramount Capital, Inc. ("Paramount") was
issued warrants to purchase 31,250 shares of Common Stock at an exercise
price of $.004 per share. In connection with the issuances of the Warrants
and the Placement Warrants, each of the Warrant Holders and Paramount
represented, and the Company believed, among other things, the following:
that (i) it acquired the Common Stock for investment only and not for
resale for an indefinite period for its own account; (ii) it had such
sophistication, knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of its investment in
the Company; (iii) it had the ability to bear the economic risks of its
investment for an indefinite period of time and could afford a complete
loss of its investment; and (iv) it had access to information, and the
opportunity prior to its purchase of the Common Stock to ask questions of
and receive answers from representatives of the Company, in each case
concerning the finances, operations and business of the Company. Also, as
stated in the Subscription Agreements, the share certificates issued in
connection with the above issuances of Common Stock had endorsed thereon
legends regarding restrictions on the transfer of the Common Stock. The
issuances of the above referenced securities were deemed to be exempt from
registration under the Act in reliance on Section 4(2) thereof because
such issuances did not involve a public offering.

6. On October 24, 1996, the Company entered into an agreement with M. H.
Meyerson & Co., Inc. ("Meyerson"), pursuant to which Meyerson performed
certain investment banking and financial advisory services on a
non-exclusive basis for the Company (the "Meyerson Investment Banking
Agreement"). Pursuant to the Meyerson Investment Banking Agreement, which
was terminated by the Company on April 17, 1997, Meyerson acquired
warrants to purchase an aggregate of 50,000 shares of Common Stock of the
Company at an exercise price of $6.00 per share. At the time of the
Company's termination, 25,000 of the Meyerson Warrants had vested. The
issuance of the Meyerson Warrants was deemed to be exempt from
registration under the Act in reliance on Section 4(2) thereof because
such issuance did not involve a public offering. In addition, Meyerson
represented its intention to acquire the securities for investment only
and not with a view to or for sale in connection with any distribution
thereof and appropriate legends are required to be affixed to the warrant
certificates issuable in such transactions. Meyerson had adequate access,
through its negotiations with the Company of the terms of the Investment
Banking Agreement, to information about the Company.

7. On December 10, 1996, the Company entered into a license agreement with
Rutgers, the State University of New Jersey and the University of Medicine
and Dentistry of New Jersey (collectively, "Rutgers") pursuant to which
Rutgers licensed to the Company certain patent applications relating to a
series of compounds for the potential treatment of cancer and infectious
diseases (the "Rutgers License"). Pursuant to the Rutgers License, the
Company issued warrants to purchase 125,000 shares of Common Stock at a
price of $8.24 per share to Rutgers (the "Rutgers Warrants"). The issuance
of the Rutgers Warrants was deemed to be exempt from registration under
the Act in reliance on Section 4(2) thereof because such issuance did not
involve a public offering. In addition, Rutgers represented its intention
to acquire the securities for investment only and not with a view to or
for sale in connection with any distribution thereof and appropriate
legends are required to be affixed to the warrant certificates issued in
such transactions. Rutgers had adequate access, through its negotiations
with the Company of the terms of the Rutgers License, to information about
the Company.

8. In consideration of services rendered on behalf of the Company in
connection with the acquisition and negotiation of the Rutgers License, in
February 1997, the Company agreed to pay Samuel P. Wertheimer, Ph.D.,
$25,000 and to issue to Dr. Wertheimer warrants to purchase 6,375 shares
of Common Stock at an exercise price of $6.00 per share, exercisable for
seven years (the "Wertheimer Warrants"). The issuance of the Wertheimer
Warrants was deemed to be exempt from registration under the Act in
reliance on Section 4(2) thereof because such issuance did not involve a
public offering. In addition, Dr. Wertheimer represented his intention to
acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends
are required to be affixed to the warrant certificates issued in such
transactions. Dr. Wertheimer had adequate access, through his negotiations
with the Company of the terms of the Rutgers License, to information about
the Company. Moreover, Dr. Wertheimer represented to the Company that he
was sophisticated and expert in financial matters.

II-4
<PAGE>

9. In consideration of services rendered on behalf of the Company in
connection with the acquisition and negotiation of the Rutgers License, in
February 1997, the Company agreed to pay Carl Spana, Ph.D., $15,000 and to
issue to Dr. Spana warrants to purchase 6,375 shares of Common Stock at an
exercise price of $6.00 per share, exercisable for seven years (the "Spana
Warrants"). The issuance of the Spana Warrants was deemed to be exempt
from registration under the Act in reliance on Section 4(2) thereof
because such issuance did not involve a public offering. In addition, Dr.
Spana represented his intention to acquire the securities for investment
only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends are required to be affixed to
the warrant certificates issued in such transactions. Dr. Spana had
adequate access to information about the Company through his negotiations
with the Company of the terms of the Rutgers License and through his
position as a Director of the Company.

10. In consideration of services rendered on behalf of the Company in
connection with the acquisition and negotiation of the Texas A&M License,
in February 1997, the Company agreed to pay Fred Mermelstein, Ph.D.,
$40,000 and to issue to Dr. Mermelstein warrants to purchase 12,750 shares
of Common Stock at an exercise price of $6.00 per share, exercisable for
seven years (the "Mermelstein Warrants"). The issuance of the Mermelstein
Warrants was deemed to be exempt from registration under the Act in
reliance on Section 4(2) thereof because such issuance did not involve a
public offering. In addition, Dr. Mermelstein represented his intention to
acquire the securities for investment only and not with a view to or for
sale in connection with any distribution thereof and appropriate legends
are required to be affixed to the warrant certificates issued in such
transactions. Dr. Mermelstein had adequate access, through his
negotiations with the Company of the terms of the Texas A&M License, to
information about the Company. Moreover, Dr. Mermelstein represented to
the Company, and the Company believed, that he was sophisticated and
expert in financial matters.

11. In connection with services rendered by Ladenberg, Thalmann & Co., Inc.
("Ladenberg"), and D. H. Blair Investment Banking Corp. ("D. H. Blair"),
as placement agents in the offering of Series A Preferred Stock conducted
from June 1992 to September 1992 (the "Series A Offering"), the Company
granted Ladenberg and D. H. Blair and/or their respective designees
certain warrants ("Series A Placement Warrants") to purchase Common Stock
at any time until June 26, 1997. In April and June 1997, Ladenberg and
D.H. Blair and/or their respective designees were issued approximately
49,770 shares of Common Stock pursuant to the cashless exercise provisions
of the Series A Placement Warrants. The issuance of (i) the Series A
Placement Warrants and (ii) the issuance of Common Stock upon the exercise
of the Series A Placement Warrants, were deemed to be exempt from
registration under the Act in reliance on Section 4(2) thereof because
such issuances did not involve a public offering. In addition, each of
Ladenberg and D. H. Blair and their respective designees represented its
intention to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and
appropriate legends were required to be affixed to the warrant
certificates. Ladenberg and D. H. Blair and/or their respective designees
each had adequate access, through their negotiations with the Company as
placement agents in the Series A Offering, to information about the
Company. The shares of Common Stock were issued without restrictive
legends pursuant to exemptions afforded by Rule 144(k).

12. On April 17, 1997, the Company entered into an agreement with Hill,
Thompson, Magid & Co. ("HTM"), pursuant to which HTM may perform certain
investment banking and financial advisory services on a non-exclusive
basis for the Company (the "HTM Investment Banking Agreement"). Among the
services that might be provided by HTM are general advice and guidance on
long-term strategic planning, assistance with debt and equity financings,
identification of potential strategic/corporate partners, financial and
transaction feasibility analysis, and mergers and acquisitions advisory
services. Pursuant to the Investment Banking Agreement, the Company
granted to HTM warrants to purchase an aggregate of 50,000 shares of
Common Stock of the Company at an exercise price of $8.00 per share. The
issuance of the HTM Warrants was deemed to be exempt from registration
under the Act in reliance on Section 4(2) thereof because such issuance
did not involve a public offering. In addition, HTM represented its
intention to acquire the securities for investment only and not with a
view to or for sale in connection with any distribution thereof and
appropriate legends are required to be affixed to the warrant certificates
issuable in such transactions. HTM had adequate access, through its
negotiations with the Company of the terms of the HTM Investment Banking
Agreement, to information about the Company.

II-5
<PAGE>

13. In July 1997, in consideration of services being rendered by the Company's
real estate advisor who is representing it in connection with the
identification and negotiation of potential biopharmaceutical clinical
manufacturing sites throughout the country, the Company issued warrants to
purchase 45,000 shares of Common Stock at an exercise price of $4.50 per
share. In December 1997, these warrants were canceled and new warrants to
purchase 115,000 shares of common stock at $3.50 were issued to the real
estate advisor. Such warrants will vest and are exercisable on the same
terms as the original warrants. The issuance of such warrants was deemed
to be exempt from registration under the Act in reliance on Section 4(2)
thereof because such issuance did not involve a public offering. In
addition, such real estate advisor represented his intention to acquire
the securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends are
required to be affixed to the warrant certificates issued in such
transactions. Such real estate advisor had adequate access, through his
negotiations with the Company in connection with potential
biopharmaceutical clinical manufacturing sites, to information about the
Company. Moreover, such real estate advisor represented to the Company,
and the Company believed, that he was sophisticated and expert in
financial matters.

14. In December 1997, the Company issued warrants to purchase 200,000 shares
of Common Stock at an exercise price of $3.75 per share. Such warrants
were issued in consideration of services being rendered by the Company's
investment relations advisor. Such warrants will vest upon the achievement
of certain performance-based milestones relating to the Company's stock
price and trading volume and are exercisable in whole, or in part, over a
five-year period. The issuance of such warrants was deemed to be exempt
from registration under the Act in reliance on Section 4(2) thereof
because such issuance did not involve a public offering. In addition, such
investment relations advisor represented his intention to acquire the
securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends are
required to be affixed to the warrant certificates issued in such
transactions. Such investment relations advisor had adequate access,
through his negotiations with the Company, to information about the
Company. Moreover, such investment relations advisor represented to the
Company, and the Company believed, that he was sophisticated and expert in
financial matters.

II-6
<PAGE>

Item 27. Exhibits and Financial Statement Schedules

Exhibit No. Description
----------- -----------
* 2.1 Asset Purchase Agreement dated December 27, 1995, by and between
the Registrant, InterNuria, Inc. and Interneuron Pharmaceuticals,
Inc.
# 3.1 Certificate of Incorporation of the Registrant, as amended to date.
* 3.2 By-laws of the Registrant, as amended to date.
* 4.1 Reference is made to Exhibits 3.1 and 3.2.
* 4.2 Specimen of Common Stock certificate.
* 4.3 Specimen of Series B Convertible Preferred Stock certificate.
* 4.4 Investors' Rights Agreement dated November 20, 1995, by and between
the Registrant and certain investors.
** 4.5 Form of Subscription Agreement, by and between the Registrant and
certain purchasers of Series B Preferred Stock and Common Stock.
* 4.6 Form of Placement Warrant Relating to Offering of Series B
Placement Warrants.
**** 4.7 Meyerson Investment Banking Agreement and Common Stock Warrants
dated October 24, 1996, by and between the Registrant and M.H.
Meyerson & Co., Inc.
***** 4.8 Form of Amendment to Subscription Agreement--Lock-Up Provisions.
5.1 Opinion of Roberts, Sheridan & Kotel, a Professional Corporation.
10.1 Reference is made to Exhibit 2.1.
##+ 10.2 Clinical Study and Research Agreement dated November 20, 1995, by
and between the Registrant and Thomas Jefferson University.
* 10.3 The Registrant's 1992 Stock Option Plan.
# 10.4 Letter of Employment dated May 17, 1996, between the Registrant and
Dr. Jeffrey M. Jonas.
* 10.5 Consulting Agreement dated February 22, 1996, between the
Registrant and Dr. Carl Spana.
* 10.6 Consulting Agreement dated May 9, 1996, between the Registrant and
Dr. David Berd.
* 10.7 Financial Advisory Agreement dated June 12, 1996, by and between
the Registrant and Paramount Capital, Inc.
##+ 10.8 License Agreement dated November 20, 1995, by and between the
Registrant and Thomas Jefferson University.
# 10.9 Letter of Employment dated September 13, 1996, between the
Registrant and David L. Tousley.
# 10.10 Letter of Employment dated September 13, 1996, between the
Registrant and Ernest W. Yankee, Ph.D.
##+ 10.11 License Agreement dated December 10, 1996, by and between the
Registrant and Rutgers,

II-7
<PAGE>

The State University of New Jersey and the University of Medicine and
Dentistry.
##+ 10.12 License Agreement dated February 17, 1997, by and between the
Registrant and The Texas A&M University System.
# 10.13 Investment Banking Services Agreement dated April 17, 1997, by and
between the Registrant and Hill, Thompson, Magid & Co.
###+ 10.14 Sponsored Research Agreement dated May 2, 1997, by and between the
Registrant and Rutgers, The State University of New Jersey and the
University of Medicine and Dentistry.
###+ 10.15 Sponsored Research Agreement dated May 12, 1997, by and between the
Registrant and The Texas A&M University System.
#### 10.16 Lease Agreement dated December 1, 1997 for Kansas City Facility, as
amended.
#### 10.17 Lease Agreement dated December 1, 1997 for Philadelphia Facility.
* 20.1 Stockholder Information Statement of the Registrant dated June 15,
1995.
23.1 Consent of Roberts, Sheridan & Kotel, a Professional Corporation.
Reference is made to Exhibit 5.1.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
27.1 Financial Data Schedule.

* Previously filed with the Registration Statement on Form SB-2 filed with
the Commission on August 1, 1996.
** Previously filed with Amendment No. 1 to the Registration Statement of
Form SB-2 filed with the Commission in September 23, 1996 and which
superseded such exhibit as previously filed with the Registration
Statement on Form SB-2 filed with the Commission on August 1, 1996.
**** Previously filed with Amendment No. 2 to the Registration Statement on
Form SB-2 filed with the Commission on November 6, 1996.
***** Previously filed with Amendment No. 4 to the Registration Statement on
Form SB-2 filed with the Commission on February 26, 1997.
# Previously filed with Amendment No. 6 to the Registration Statement on
Form SB-2 filed with the Commission on May 7, 1997.
## Previously filed with Amendment No. 9 to the Registration Statement on
Form SB-2 filed with the Commission on July 3, 1997.
### Previously filed with Post Effective Amendment No. 1 to the Registration
Statement on Form SB-2 filed with the Commission on August 14, 1997.
#### Previously filed with Post Effective Amendment No. 3 to the Registration
Statement on Form SB-2 filed with the Commission on March 16, 1998.
+ Confidential treatment requested as to certain portions of these exhibits.
Such portions have been redacted.

II-8
<PAGE>

Item 28. Undertakings

The Company hereby undertakes that it will:

(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by section 10(a)(3) of the Act;

(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the registration
statement; and notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in the volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;

(iii) Include any additional or changed material information on the plan
of distribution.

(2) For determining liability under the Act, treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.

(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.

Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the Delaware General Corporation Law, the Certificate of Incorporation or the
By-Laws of the Company, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Company of expenses incurred or paid by a director,
officer, or controlling person of the Company in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered hereunder, the Company
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The Company hereby undertakes that it will:

(1) For determining any liability under the Act, treat the information
omitted from the form of prospectus filed as part of this registration statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Company pursuant to Rule 424(b)(1), or (4) or 497(h) under the Act as part of
this registration statement as of the time it was declared effective.

(2) For determining any liability under the Act, treat each post-effective
amendment that contains a form of prospectus as a new registration statement for
the securities offered in the registration statement, and that offering of such
securities at that time as the initial bona fide offering of those securities.

II-9
<PAGE>

SIGNATURES

In accordance with the requirements of the Securities Act of 1933, as amended,
the Company certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form SB-2 and authorized this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of New York, State of New York, on this April 21, 1998.

AVAX TECHNOLOGIES, INC.

By: /s/ Michael S. Weiss
---------------------------
Michael S. Weiss
Secretary and Director

In accordance with the requirements of the Securities Act of 1933, as amended,
the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:

<TABLE>
<CAPTION>
Signature Name & Title Date
--------- ------------ ----
<S> <C> <C>

/s/ Jeffrey M. Jonas, M.D.* Jeffrey M. Jonas, M.D.
--------------------------- President, Chief Executive Officer April 21, 1998
and Director

/s/ David L. Tousley* David L. Tousley
--------------------- Chief Financial Officer
(Principal Financial Officer) April 21, 1998

/s/ Edson D. de Castro* Edson D. de Castro
----------------------- Director April 21, 1998

/s/ John K. A. Prendergast, Ph.D.* John K. A. Prendergast, Ph.D.
- ---------------------------------- Director April 21, 1998

Carl Spana, Ph.D.
/s/ Carl Spana, Ph.D.* Director
---------------------- April 21, 1998

/s/ Michael S. Weiss Michael S. Weiss
-------------------- Secretary and Director April 21, 1998

*By: /s/ Michael S. Weiss
-------------------------
Michael S. Weiss
Attorney-in-Fact
</TABLE>

II-10
<PAGE>

================================================================================

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

-----------

EXHIBITS
TO
POST-EFFECTIVE
AMENDMENT NO. 4
TO
FORM SB-2

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

-----------

AVAX TECHNOLOGIES, INC.

================================================================================
<PAGE>

EXHIBIT INDEX

<PAGE>

# 10.10 Letter of Employment dated September 13, 1996, between the
Registrant and Ernest W. Yankee, Ph.D.
##+ 10.11 License Agreement dated December 10, 1996, by and between the
Registrant and Rutgers, The State University of New Jersey and the
University of Medicine and Dentistry.
##+ 10.12 License Agreement dated February 17, 1997, by and between the
Registrant and The Texas A&M University System.
# 10.13 Investment Banking Services Agreement dated April 17, 1997, by and
between the Registrant and Hill, Thompson, Magid & Co.
###+ 10.14 Sponsored Research Agreement dated May 2, 1997, by and between the
Registrant and Rutgers, The State University of New Jersey and the
University of Medicine and Dentistry.
###+ 10.15 Sponsored Research Agreement dated May 12, 1997, by and between the
Registrant and The Texas A&M University System.
#### 10.16 Lease Agreement dated December 1, 1997 for Kansas City Facility, as
amended.
#### 10.17 Lease Agreement dated December 1, 1997 for Philadelphia Facility.
* 20.1 Stockholder Information Statement of the Registrant dated June 15,
1995.
23.1 Consent of Roberts, Sheridan & Kotel, a Professional Corporation.
Reference is made to Exhibit 5.1.
23.2 Consent of Ernst & Young LLP, Independent Auditors.
27.1 Financial Data Schedule.

EXHIBIT 5.1

[Letterhead of]
[Roberts, Sheridan & Kotel, P.C.]

April 21, 1998

AVAX Technologies, Inc.
4520 Main Street, Suite 930
Kansas City, MO 64111

AVAX Technologies, Inc.
Registration on Form SB-2

Dear Sirs:

We have acted as counsel for AVAX Technologies, Inc., a Delaware
corporation (the "Issuer"), in connection with the preparation of Post-Effective
Amendment No. 4 to the Registration Statement on Form SB-2 (the "Registration
Statement") filed with the Securities and Exchange Commission (the "Commission")
on April 20, 1998, Registration Number 333-09349, under the Securities Act of
1933 (the "Act") for the registration under the Act of the following securities
of the Issuer:

(i) 1,076,078 shares of common stock, par value $.004 per share ("Common
Stock");

(ii) 4,976,790 shares of Common Stock issuable upon conversion of
currently outstanding shares of Series B Convertible Preferred Stock, par
value of $.01 per share (the "Series B Preferred Stock"); and

(iii) up to 49,229 shares of Common Stock issuable upon (a) the conversion
of shares of Series B Preferred Stock issuable upon exercise of the
warrants issued to the placement agent and/or its designees relating to
the offering of the Series B Preferred Stock (the "Series B Placement
Warrants") and (b) exercise of warrants issued to the placement agent
and/or its designees for certain bridge financing transactions of the
Company (the "Bridge Placement Warrants," and together with the Series B
Placement Warrants, the "Placement Warrants").

In that connection, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of certificates of public officials
and corporate records, instruments and documents of or affecting the Issuer,
including, without limitation, (i) the Certificate of
<PAGE>

Incorporation of the Issuer, as amended to date; (ii) the Bylaws of the Issuer,
as amended to date; (iii) resolutions adopted by the Board of Directors and
Stockholders of the Issuer; (iv) the Certificate of Designations for the Series
B Preferred Stock; (v) a form of specimen stock certificate for the Common
Stock; (vi) a form of specimen stock certificate for the Series B Preferred
Stock; (vii) a form of the Series B Placement Warrant; and (viii) a form of the
Bridge Placement Warrant. We have also examined originals or copies, certified
or otherwise identified to our satisfaction, of certificates of officers of the
Issuer, and have reviewed such questions of law and made such other inquiries,
as we have deemed necessary or appropriate for the purpose of rendering this
opinion.

In rendering our opinion, we have relied, as to matters of fact, upon
representations and warranties of the Issuer and upon such certificates and
other instruments of officers of the Issuer and public officials as we have
deemed necessary or appropriate for the purpose of rendering this opinion, in
each case without independent investigation or verification. Additionally,
without any independent investigation or verification, we have assumed (i) the
genuineness of all signatures, (ii) the authenticity of all documents submitted
to us as originals and the conformity with the original documents of all
documents submitted to us as certified, conformed or photostatic copies, (iii)
the authority of all persons signing any document other than the officers of the
Issuer, where applicable, signing in their capacity as such, (iv) the
enforceability of all the agreements we have reviewed in accordance with their
respective terms against the parties thereto, and (v) the truth and accuracy of
all matters of fact set forth in all certificates and other instruments
furnished to us.

Based upon the foregoing, and subject to the limitations, qualifications
and assumptions set forth herein, we are of the opinion that:

1. The Issuer is a corporation duly incorporated and is in good standing
under the laws of the State of Delaware.

2. The 1,076,078 shares of Common Stock which may be sold in accordance
with the provisions of the Registration Statement have been legally issued and
are fully paid and nonassessable.

3. The 4,976,790 shares of Common Stock issuable upon conversion of
currently outstanding shares of Series B Preferred Stock have been duly
authorized for issuance, and when issued upon conversion of the Series B
Preferred Stock will be legally issued, fully paid and nonassessable.

4. The aggregate of up to 37,979 shares of Common Stock issuable upon
conversion of the Series B Preferred Stock after exercise of the Series B
Placement Warrants have been duly authorized for issuance, and when issued upon
conversion of the Series B Preferred Stock after exercise of the Series B
Placement Warrants, and the payment of the applicable exercise price thereof or
the use of the cashless exercise provision thereof will be legally issued, fully
paid and nonassessable.
<PAGE>

5. The aggregate of up to 11,250 shares of Common Stock issuable upon
exercise of the Bridge Placement Warrants have been duly authorized for
issuance, and when issued upon exercise of the Bridge Placement Warrants, and
the payment of the applicable exercise price thereof or the use of the cashless
exercise provision thereof will be legally issued, fully paid and
non-assessable.

Members of this Firm are admitted to practice law only in the State of New
York and do not purport to be experts on, and are not expressing any opinion
with respect to, any laws other than the laws of the State of New York, the
General Corporation Law of the State of Delaware and the Federal laws of the
United States of America.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and the reference to us under the heading "Legal Counsel"
in the Prospectus included in Part I of the Registration Statement. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.

Very truly yours,

/s/ Roberts, Sheridan & Kotel, P.C.

EXHIBIT 23.2

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated January 16, 1998 in Post-Effective Amendment No. 4 to
the Registration Statement (Form SB-2 No. 333-09349) and related Prospectus of
AVAX Technologies, Inc. (formerly Walden Laboratories, Inc.) for the
registration of 6,102,097 shares of common stock.

/s/ Ernst & Young LLP

Ernst & Young LLP

Kansas City, Missouri
April 21, 1998

<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE COMPANY'S
REGISTRATION STATEMENT ON FORM SB-2, FILED WITH WITH THE COMMISSION ON APRIL 21,
1998.
</LEGEND>
<CIK> 0001015441
<NAME> AVAX TECHNOLOGIES

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 6,820,884
<SECURITIES> 9,102,028
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,277,841
<PP&E> 91,959
<DEPRECIATION> 14,967
<TOTAL-ASSETS> 17,354,833
<CURRENT-LIABILITIES> 1,553,726
<BONDS> 0
0
2,041
<COMMON> 18,329
<OTHER-SE> 15,801,107
<TOTAL-LIABILITY-AND-EQUITY> 17,354,833
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (150,602)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,266,125)
<EPS-PRIMARY> (1.14)<F1>
<EPS-DILUTED> 0
<FN>
<F1> EPS-BASIC
</FN>

</TABLE>