BIORELIANCE CORP, S-1/A, 1997-07-28

BIORELIANCE CORP
S-1/A, 1997-07-28
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 28, 1997

REGISTRATION NO. 333-25071
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------

AMENDMENT NO. 6

FORM S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
------------------

BIORELIANCE CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)

8731
(PRIMARY STANDARD INDUSTRIAL
CLASSIFICATION CODE NUMBER)

52-1541583
(I.R.S. EMPLOYER
IDENTIFICATION NUMBER)

9900 BLACKWELL ROAD
ROCKVILLE, MARYLAND 20850
(301) 738-1000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

CAPERS W. MCDONALD, PRESIDENT
9900 BLACKWELL ROAD
ROCKVILLE, MARYLAND 20850
(301) 738-1000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S AGENT FOR SERVICE)

PLEASE SEND COPIES OF ALL COMMUNICATIONS TO:

ANDREW P. VARNEY, ESQ.
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON
1001 PENNSYLVANIA AVENUE, N.W., SUITE 800
WASHINGTON, D.C. 20004-2505
(202) 639-7000
ALAN DEAN, ESQ.
DAVIS POLK & WARDWELL
450 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017
(212) 450-4000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
As soon as practicable 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. [ ]

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. [ ]
------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===============================================================================================================
PROPOSED
TITLE OF EACH CLASS MAXIMUM PROPOSED
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE MAXIMUM AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE(1) REGISTRATION FEE(2)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01
per share................... 2,715,302 $14.00 $ 38,014,228.00 $ 11,519.46
===============================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to rule 457(a) under the Securities Act of 1933. Includes shares
that may be purchased by the Underwriters to cover over-allotments, if any.

(2) Paid in connection with Registration Statement on Form S-1, Registration No.
333-25071, filed on April 11, 1997.

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 WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

INFORMATION CONTAINED 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 MAY 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)

Issued July 28, 1997

2,400,000 Shares

BioReliance
COMMON STOCK
------------------------
OF THE 2,400,000 SHARES OF COMMON STOCK BEING OFFERED HEREBY, 2,102,014 SHARES
ARE BEING SOLD BY THE COMPANY AND 297,986 SHARES ARE BEING SOLD BY A STOCKHOLDER
OF THE COMPANY (THE "SELLING STOCKHOLDER"). SEE "PRINCIPAL AND SELLING
STOCKHOLDERS." THE COMPANY WILL NOT RECEIVE ANY OF THE PROCEEDS FROM THE SALE OF
THE SHARES OF COMMON STOCK BY THE SELLING STOCKHOLDER. PRIOR TO THE OFFERING,
THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK OF THE COMPANY. IT IS
CURRENTLY ESTIMATED THAT THE INITIAL PUBLIC OFFERING PRICE PER SHARE WILL BE
BETWEEN $12 AND $14. SEE "UNDERWRITERS" FOR A DISCUSSION OF THE FACTORS
CONSIDERED IN DETERMINING THE INITIAL PUBLIC OFFERING PRICE.
------------------------

THE COMMON STOCK HAS BEEN APPROVED FOR QUOTATION ON THE NASDAQ NATIONAL MARKET,
SUBJECT TO OFFICIAL NOTICE OF ISSUANCE, UNDER THE SYMBOL "BREL."
------------------------

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 8 OF THIS PROSPECTUS.
------------------------

THESE SECURITIES HAVE 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.
------------------------
PRICE $ A SHARE
------------------------

<TABLE>
<CAPTION>
UNDERWRITING
DISCOUNTS AND PROCEEDS TO PROCEEDS TO
PRICE TO PUBLIC COMMISSIONS(1) COMPANY(2) SELLING STOCKHOLDER(3)
---------------- ----------------------- ----------- -----------------------------
<S> <C> <C> <C> <C>
Per Share..................... $ $ $ $
Total(4)...................... $ $ $ $
</TABLE>

- ------------
(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933, as amended.

(2) Before deducting expenses payable by the Company estimated at
$1,200,000.

(3) Before deducting expenses payable by the Selling Stockholder estimated
at $10,000.

(4) The Company has granted to the Underwriters an option, exercisable
within 30 days of the date hereof, to purchase up to an aggregate of
315,302 additional Shares at the price to public less underwriting
discounts and commissions for the purpose of covering over-allotments,
if any. If the Underwriters exercise such option in full, the total
price to public, underwriting discounts and commissions, proceeds to
Company and proceeds to Selling Stockholder will be $ , $ ,
$ and $ , respectively. See "Underwriters."
------------------------

The Shares are offered, subject to prior sale, when, as and if accepted by
the Underwriters named herein and subject to approval of certain legal matters
by Davis Polk & Wardwell, counsel for the Underwriters. It is expected that
delivery of the Shares will be made on or about , 1997 at the office of
Morgan Stanley & Co. Incorporated, New York, N.Y., against payment therefor in
immediately available funds.
------------------------

MORGAN STANLEY DEAN WITTER HAMBRECHT & QUIST
, 1997
<PAGE> 3

Advanced techniques, such as
LC-electrospray mass spectrometry, are
employed in the Company's
BioAnalytical Services to characterize
the structures of biologic products.

This picture is a
"microscope-like" view showing
the "budding" of retrovirus
particles from the surface of a
living cell.

This picture shows an employee
programming a laboratory instrument
used to perform LC-electrospray mass
spectrometry.

This electron micrograph shows
the "budding" of retrovirus
particles from the surface of a
cell; an important technique
employed in the Company's
BioSafety Testing Services to
detect viral contaminants in
cells used to produce biologics.

For
BioReliance's
final product
testing assays,
Class 1,000
clean rooms are
employed to
detect
contaminants in
biologic
products.
This is a picture of the
interior of a Class 1,000 clean
room. Three assistants are also
shown.

This picture shows a room at BIOMEVA
containing a 1,000 liter bioreactor
employed in microbial fermentation
and a person operating a smaller
bioreactor.

At BioReliance's BIOMEVA subsidiary
in Germany, large scale microbial
fermentation is used to produce
licensed biologics. This is a picture of one of the
rooms at the Company's MAGENTA
subsidiary where viral production
is conducted. Two lab assistants
are visible.
The Company's
MAGENTA subsidiary
currently offers
viral production
services for
companies
developing gene
therapies, viral
vaccines and
cancer oncolytics.

2
<PAGE> 4

NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR BY ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE 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 IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO
SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER OR SALE MADE
HEREBY SHALL UNDER ANY CIRCUMSTANCE IMPLY THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
------------------------

UNTIL , 1997 (25 DAYS AFTER THE COMMENCEMENT OF THE OFFERING),
ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
------------------------

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................... 4
Risk Factors.......................... 8
Use of Proceeds....................... 13
Dividend Policy....................... 13
Capitalization........................ 14
Dilution.............................. 15
Selected Consolidated Financial
Data................................ 16
Management's Discussion and Analysis
of Financial Condition and Results
of Operations....................... 17
Business.............................. 27

<CAPTION>
PAGE
----
<S> <C>
Management............................ 43
Certain Transactions.................. 50
Principal and Selling Stockholders.... 51
Description of Capital Stock.......... 53
Shares Eligible for Future Sale....... 55
Underwriters.......................... 57
Legal Matters......................... 59
Experts............................... 59
Additional Information................ 59
Index to Consolidated Financial
Statements.......................... F-1
</TABLE>

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

The Company intends to furnish to its stockholders annual reports
containing audited financial statements and an opinion thereon expressed by
independent accountants and quarterly reports for the first three quarters of
each fiscal year containing interim financial information.
------------------------

In this Prospectus, the term the "Company" or "BioReliance" includes
BioReliance Corporation and its subsidiaries. The Company's corporate
headquarters are located at 9900 Blackwell Road, Rockville, Maryland 20850, and
its telephone number is (301) 762-5260.
------------------------

Certain persons participating in the Offering may engage in transactions
that stabilize, maintain, or otherwise affect the price of the Common Stock.
Specifically, the Underwriters may overallot in connection with the Offering,
and may bid for, and purchase, shares of the Common Stock in the open market.
For a description of these activities, see "Underwriters."

3
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements and notes thereto appearing
elsewhere in this Prospectus. Unless otherwise indicated, all share and per
share data in this Prospectus have been adjusted to reflect (i) a
recapitalization effective prior to the Offering pursuant to which a reverse
stock split was effected (the "Recapitalization") and (ii) the conversion upon
the closing of the Offering of all outstanding shares of the Company's
Convertible Preferred Stock into 4,778,072 shares of Common Stock (the
"Automatic Conversion"). The information in this Prospectus assumes no exercise
of the Underwriters' over-allotment option.

THE COMPANY

BioReliance is a leading contract research organization ("CRO") providing
nonclinical testing and contract manufacturing services for biologics to
biotechnology and pharmaceutical companies worldwide. The Company, founded in
1947 as Microbiological Associates, Inc., believes that it is the largest
provider of outsourcing services focused on the rapidly growing biologics sector
of the pharmaceutical industry. In 1996, the Company provided services to over
600 clients, including 22 of the 25 largest pharmaceutical companies in the
world as measured by revenue and 18 of the 25 largest public biopharmaceutical
companies in the United States as measured by market capitalization. The
Company's revenue has increased in each of the last four years, growing from
$16.4 million in 1992 to $37.7 million in 1996. Revenue in 1996 included $1.8
million earned by BIOMEVA GmbH, a contract manufacturer of microbial products
located in Heidelberg, Germany ("BIOMEVA"), subsequent to its acquisition on
July 8, 1996.

The Company believes, based on an industry report, that approximately $8
billion was spent on research and development for biotechnology products in the
United States in 1996. BioReliance estimates that approximately $5 billion was
spent specifically on development activities of the types conducted by CROs. Of
this $5 billion potentially available to CROs, the Company estimates that
approximately $1 billion actually was outsourced for development of
biotechnology products. BioReliance believes that the need to outsource is
greater among biotechnology companies and the biologics divisions of
pharmaceutical companies than generally in the pharmaceutical industry. This
need is due both to the sophistication of the technologies and skills required
to test and manufacture biologics and to the complexity and relative newness of
the regulatory environment. Every stage of the biologics development process is
more challenging than that for chemical drugs. Biologics are larger molecules
with significantly more complicated structures. The unpurified material used to
produce a biologic is a highly complex mixture, and the active ingredient is
present in a minute amount. In addition, the United States Food and Drug
Administration ("FDA") and international authorities regulate biologics
differently from traditional chemical drugs.

Established biotechnology and pharmaceutical companies outsource to CROs to
streamline product development and reduce time to market. Early stage companies
outsource for the same reasons and also may lack the staff, expertise and
financial resources to conduct many aspects of product development in-house.
BioReliance's services and broad experience provide all of its clients with a
variable cost alternative to the fixed costs associated with internal biologic
development and manufacture.

The Company provides two types of contract services, BioTesting Services
and BioManufacturing Services, each of which spans the product cycle from early
preclinical development through licensed production. BioTesting Services and
BioManufacturing Services accounted for 86% and 14%, respectively, of the
Company's revenue in 1996. On a pro forma basis, assuming that the acquisition
of BIOMEVA occurred on January 1, 1996, BioTesting Services and BioManufacturing
Services accounted for 83% and 17%, respectively, of the Company's revenue in
1996.

BioReliance's extensive scientific and regulatory expertise have enabled it
to establish a leading market position in biotesting. The Company provides three
biotesting services: (i) BioSafety Testing, for assessing cell banks used to
manufacture biologics, validating purification processes for clearance of
adventitious agents such as viruses, and testing in-process and final products;
(ii) BioAnalytical Services, for assessing the structure and stability of
biologics; and (iii) preclinical BioTrials, for conducting both in vitro ("test
tube") and short-term

4
<PAGE> 6

in vivo ("animal") studies. The Company is a leading provider of BioSafety
Testing services and expects that growth will continue in this area,
particularly for in-process and final product testing, as an increasing number
of products reach later stage clinical trials and commercialization. The
Company's BioAnalytical Services division was formed in 1995 in response to
clients' expressed needs for development of analytical techniques to
characterize products better in anticipation of new FDA regulations and
guidelines published during 1996 that permit the development and manufacturing
processes to be streamlined for certain specified biologics for which
bioanalytical techniques have been developed, validated and accepted by the FDA
("well-characterized" biologics). The Company expects significant growth in the
demand for BioAnalytical Services, and currently the Company is one of only a
few CROs capable of providing these services. The Company's BioTrials division
is engaged in a contract sponsored by the National Institute of Environmental
Health Sciences ("NIEHS") designed to evaluate the feasibility of shortening the
"in-life" portion of long-term carcinogenicity studies from two years to six
months. The Company believes that by combining molecular detection assays with
this approach, short-term molecular carcinogenicity studies could be designed to
replace the need for long-term carcinogenicity studies in the future. This
molecular approach could become an alternative to the over $1 billion annual
market for long-term carcinogenicity studies due to its higher predictive value,
lower cost and shorter duration.

The Company has been providing biomanufacturing services in viral
production since 1993 when it formed MAGENTA Corporation ("MAGENTA"). The rapid
progress of gene therapy products into Phase I/II human clinical trials and the
emergence of cancer oncolytics have fueled the significant growth of the
Company's biomanufacturing revenue from 1993 to 1996. The Company entered into
the biomanufacturing of microbial products with its acquisition of BIOMEVA in
July 1996. As biologics currently in development move to later stage human
clinical trials and eventually to commercialization, the Company expects
increased demand for biomanufacturing services.

BioReliance believes it is well positioned to benefit from the biologics
CRO opportunity. The Company has a strong reputation for providing high quality
biologics development services, and has a decades-long record of supporting
successful regulatory submissions with hundreds of clients worldwide. It has
introduced numerous innovations in biotesting and biomanufacturing under strict
regulatory guidelines, earning a reputation for quality and dependability with
both clients and regulatory authorities that cannot be duplicated with technical
and financial resources alone. Unlike many of its competitors, the Company has
an international presence, including European facilities for both BioTesting and
BioManufacturing.

BioReliance's strategy is to extend its leadership position in biologics
development and manufacturing services on a worldwide basis. To accomplish this,
the Company will continue to (i) focus its resources on providing needed
services to the biologics sector, the most rapidly growing sector of the global
pharmaceutical industry; (ii) provide a broad range of biologics development and
manufacturing services to support the outsourcing needs of its clients; (iii)
enhance its leadership position in biotesting services; (iv) expand its
biomanufacturing capabilities; (v) maintain its leadership in regulatory
expertise; and (vi) expand through selected acquisitions.

5
<PAGE> 7

THE OFFERING

Common Stock offered by
The Company.............. 2,102,014 shares

The Selling
Stockholder................ 297,986 shares

Total................. 2,400,000 shares

Common Stock to be
outstanding after the
Offering................. 7,267,242 shares(1)

Use of Proceeds............ Capital expenditures, expansion of viral
manufacturing capabilities, working capital and
other general corporate purposes, including
potential acquisitions

Proposed Nasdaq National
Market symbol............ BREL
- ---------------
(1) Based on 5,165,228 shares of Common Stock outstanding on June 30, 1997.
Excludes 828,191 shares of Common Stock reserved for issuance upon the
exercise of stock options outstanding on June 30, 1997, at a weighted
average exercise price of $2.47 per share.

6
<PAGE> 8

SUMMARY CONSOLIDATED FINANCIAL DATA

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1992 1993 1994 1995 1996(1) 1996 1997
------- ------- ------- ------- ------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Revenue......................... $16,422 $22,207 $28,094 $30,078 $37,682 $7,599 $11,781
Cost of sales................... 13,093 15,248 19,094 20,570 24,860 5,397 7,442
Selling, general and
administrative expenses....... 4,577 4,704 5,947 7,071 7,852 1,764 2,635
Research and development
expenses...................... 308 236 354 1,012 1,110 272 303
Nonrecurring charge............. -- -- -- -- 696(2) -- --
------- ------- ------- ------- ------- ------ -------
Total expenses......... 17,978 20,188 25,395 28,653 34,518 7,433 10,380
------- ------- ------- ------- ------- ------ -------
Income (loss) from operations... (1,556) 2,019 2,699 1,425(3) 3,164 166 1,401
Interest and other expenses,
net........................... 398 297 439 524 816 158 200
------- ------- ------- ------- ------- ------ -------
Income (loss) before income
taxes......................... (1,954) 1,722 2,260 901 2,348 8 1,201
Benefit from (provision for)
income taxes.................. -- (62) 2,192(4) (243) (846) (3) (511)
------- ------- ------- ------- ------- ------ -------
Net income (loss)............... (1,954) 1,660 4,452 658 1,502(5) 5 690
Preferred stock dividends(6).... (139) -- -- (139) -- (35) --
------- ------- ------- ------- ------- ------ -------
Net income (loss) available to
common stockholders........... $(2,093) $ 1,660 $ 4,452 $ 519 $ 1,502 $ (30) $ 690
======= ======= ======= ======= ======= ====== =======
Net income (loss) per common and
common equivalent share....... $ (5.35) $ 0.42 $ 0.86 $ 0.11 $ 0.26(5) $(0.07) $ 0.12
======= ======= ======= ======= ======= ====== =======
Weighted average common and
common equivalent shares
outstanding(6)................ 391 3,981 5,200 4,767 5,802 412 5,875
======= ======= ======= ======= ======= ====== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF MARCH 31, 1997
-------------------------
ACTUAL AS ADJUSTED(7)
------- --------------
(IN THOUSANDS)
<S> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents....................................................... $ 3,571 $ 27,784
Working capital................................................................. 4,146 28,359
Total assets.................................................................... 35,748 59,961
Long-term debt.................................................................. 6,702 6,702
Stockholders' equity............................................................ 14,459 38,672
</TABLE>

- ---------------
(1) In July 1996, the Company acquired all of the shares of common stock of
BIOMEVA. The acquisition has been accounted for by the purchase method and,
accordingly, BIOMEVA's results of operations have been included in the
consolidated financial statements since the date of acquisition. See Note 2
of Notes to Consolidated Financial Statements.

(2) Nonrecurring charge represents a charge of $0.7 million ($0.4 million after
income taxes) in connection with the settlement of a dispute with a landlord
relating to the termination of a lease. See Note 8 of Notes to Consolidated
Financial Statements.

(3) Income from operations includes the effect of $1.3 million of first-year
expenses for BioAnalytical Services. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

(4) The benefit from income taxes in 1994 includes the effect of a tax benefit
of approximately $2.2 million, which primarily is attributable to a decrease
in the valuation allowance for deferred tax assets. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

(5) On a pro forma basis, assuming that the acquisition of BIOMEVA occurred on
January 1, 1996, and excluding the effect of the nonrecurring charge, net
income and net income per common and common equivalent share in 1996 would
have been $1.8 million and $0.31, respectively.

(6) In each period where the conversion of outstanding Convertible Preferred
Stock would have been anti-dilutive, such stock has been excluded from the
weighted average common and common equivalent shares outstanding and
accumulated dividends on such stock have been deducted from net income for
purposes of calculating net income (loss) per common and common share
equivalent.

(7) As adjusted to reflect the sale by the Company of 2,102,014 shares of Common
Stock in the Offering at an assumed initial public offering price of $13.00
per share (the midpoint of the range set forth on the cover of this
Prospectus) after deducting underwriting discounts and commissions and
estimated expenses, and application of the estimated net proceeds thereof.
Assumes the Underwriters' over-allotment option is not exercised. See
"Underwriters."

7
<PAGE> 9

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should consider carefully the following
risk factors, in addition to the other information contained in this Prospectus,
in evaluating an investment in the shares of Common Stock offered hereby.

DEPENDENCE ON OUTSOURCING FOR DEVELOPMENT OF BIOLOGICS

The Company's revenues are highly dependent on research, development and
manufacturing expenditures by biotechnology and pharmaceutical companies for the
development of biologics. The Company has benefited to date from the growing
tendency of biotechnology and pharmaceutical companies to outsource product
development projects to CROs. A decline in the development of biologics, a
general decline in research and development expenditures by these companies, or
a reduction in the outsourcing to CROs of research and development expenditures
due to pharmaceutical industry consolidation or other factors could have a
material adverse effect on the Company's business and results of operations. See
"Business -- CRO Industry Overview;" and " -- Trends Affecting BioTesting and
BioManufacturing Outsourcing."

DEPENDENCE ON AND EFFECT OF GOVERNMENT REGULATION

The design, development, testing, manufacturing and marketing of
biotechnology and pharmaceutical products are subject to regulation by
governmental authorities, including the FDA and comparable regulatory
authorities in other countries. The Company's business depends in part on strict
government regulation of the drug development process, especially in the United
States. Legislation may be introduced and enacted from time to time to modify
regulations administered by the FDA governing the drug approval process. Any
significant reduction in the scope of regulatory requirements or the
introduction of simplified drug approval procedures could have a material
adverse effect on the Company's business and results of operations.

All of the Company's testing assays are performed in conformity with either
Good Laboratory Practices ("GLP") regulations or current Good Manufacturing
Practices ("GMP") regulations. GLPs and GMPs are parts of the FDA regulations
and guidelines governing the development and production of biologic and
pharmaceutical products. Failure by the Company to comply with applicable
requirements could result in the disqualification of data for client submissions
to regulatory authorities and could have a material adverse effect on the
Company's business and results of operations.

All facilities and manufacturing techniques used for manufacturing of
products for clinical use or for sale in the United States must be operated in
conformity with current GMP regulations. The Company's facilities are subject to
scheduled periodic regulatory inspections to ensure compliance with GMP
requirements. A finding that the Company had materially violated GMP
requirements could result in regulatory sanctions, the disqualification of data
for client submissions to regulatory authorities and a mandated closing of the
Company's facilities. Any such sanctions would have a material adverse effect on
the Company's business and results of operations. See "Business -- Government
Regulation."

RISKS ASSOCIATED WITH THE NATURE OF CONTRACTS

Most of the Company's contracts are short-term in duration. As a result,
the Company must continually replace its contracts with new contracts to sustain
its revenue. In addition, many of the Company's long-term contracts may be
cancelled or delayed by clients upon notice. Contracts may be terminated for a
variety of reasons, including termination of product development, failure of
products to satisfy safety requirements, unexpected or undesired results from
use of the product or the client's decision to forego a particular study. In
addition, the federal government may modify or terminate its contracts at any
time for the convenience of the government. The failure to obtain new contracts
or the cancellation or delay of existing contracts could have a material adverse
effect on the Company's business and results of operations.

8
<PAGE> 10

MANAGEMENT OF GROWTH

The Company has experienced rapid growth over the past five years in both
its domestic and international operations. The Company believes that sustained
growth places a strain on operational, human and financial resources. In order
to manage its growth, the Company must continue to improve its operating and
administrative systems and to attract and retain qualified management and
professional, scientific and technical operating personnel. To manage the growth
of its operations outside the United States, the Company must assimilate
differences in international business practices and overcome language
differences. There can be no assurance that the Company will be able to manage
its growth effectively. Failure to manage growth effectively could have a
material adverse effect on the Company's business and results of operations.

DEVELOPMENT OF MANUFACTURING CAPABILITIES

As part of its business strategy, the Company intends to expand its
manufacturing capabilities to allow for large-scale production of biologics.
There can be no assurance that the Company will be able to develop these
expanded capabilities on acceptable terms, find clients for any new
manufacturing capacity it may develop or operate any expanded manufacturing
capabilities on a profitable basis.

The establishment of additional manufacturing facilities will require
substantial additional funds and personnel and will require compliance with
extensive regulations applicable to such facilities. There can be no assurance
that such funds and personnel will be available on acceptable terms, if at all,
or that the Company will be able to comply with such regulations at acceptable
cost, if at all. In addition, in managing this expansion the Company may
encounter unforeseen regulatory, logistical or management problems or incur
unexpected operating costs. Failure or delays in establishing these facilities,
failure of market demand for these services to develop, or the incurrence of
unexpected operating costs could have a material adverse effect on the Company's
ability to meet its strategic objective of providing a broad range of product
development services and its business and results of operations. See
"Business -- Business Strategy."

VARIATION IN QUARTERLY OPERATING RESULTS

The Company's results of operations historically have fluctuated on a
quarterly basis and can be expected to continue to be subject to quarterly
fluctuations. Quarterly operating results can fluctuate as a result of a number
of factors, including the commencement, delay, cancellation or completion of
contracts; the mix of services provided; seasonal slowdowns in Europe during the
summer months; the timing of start-up expenses for new services and facilities;
the timing and integration of acquisitions; and changes in regulations related
to biologics. The Company believes that quarterly comparisons of its financial
results are not necessarily meaningful and should not be relied upon as an
indication of future performance. In addition, fluctuations in quarterly results
could affect the market price of the Common Stock in a manner unrelated to the
longer term operating performance of the Company. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations -- Quarterly
Results."

ACQUISITION RISKS

As part of its business strategy, the Company continually evaluates new
acquisition opportunities. Acquisitions involve numerous risks, including
difficulties in the assimilation of the operations and products or services of
the acquired companies, the expenses incurred in connection with the acquisition
and subsequent assimilation of operations and products or services, the
diversion of management's attention from other business concerns, and the
potential loss of key employees of the acquired company. Acquisitions of
companies outside the United States also may involve the additional risks of
assimilating differences in international business practices and overcoming
language differences. There can be no assurance that the Company will complete
any future acquisitions, nor that acquisitions, if completed, will contribute
favorably to the Company's operations and future financial condition or be
integrated successfully. See "Use of Proceeds" and "Business -- Business
Strategy."

9
<PAGE> 11

COMPETITION; INDUSTRY CONSOLIDATION

The CRO industry is highly fragmented, with several hundred providers
ranging in size from one person consulting firms to full-service global drug
development corporations. The Company primarily competes with in-house research
departments of biotechnology and pharmaceutical companies, universities and
medical centers, and other CROs, some of which possess substantially greater
capital, technical and other resources than the Company. As a result of
competitive pressures, the industry is consolidating. This trend is likely to
produce increased competition among the larger CROs for both clients and
acquisition candidates and increased competitive pressures on smaller providers.
In addition, the CRO industry has attracted the attention of the investment
community, which could lead to heightened competition by increasing the
availability of financial resources for CROs. Increased competition may lead to
price and other forms of competition that may have a material adverse effect on
the Company's business and results of operations. See "Business -- Competition."

CONTROL BY EXISTING STOCKHOLDERS

Following the Offering, assuming the Underwriters' over-allotment option is
not exercised, Sidney R. Knafel, Chairman of the Board of Directors of the
Company, and related persons will beneficially own an aggregate of approximately
43.0% of the outstanding Common Stock (excluding shares issuable upon the
exercise of options). In addition, certain of the Company's executive officers,
directors and related persons will beneficially own an aggregate of
approximately 45.2% of the outstanding Common Stock (excluding shares issuable
upon the exercise of options). As a result, the Company's directors and
executive officers and related persons will exercise a controlling influence
over the outcome of matters submitted to the Company's stockholders for approval
and will have the power to delay, defer or prevent a change in control of the
Company. See "Principal and Selling Stockholders."

POTENTIAL LIABILITY

The Company formulates, tests and manufactures products intended for use by
the public. In addition, the Company's services include the manufacture of
biologic products to be tested in human clinical trials. Such activities could
expose the Company to risk of liability for personal injury or death to persons
using such products, although the Company does not commercially market or sell
the products to end users. The Company seeks to reduce its potential liability
through measures such as contractual indemnification provisions with clients
(the scope of which may vary from client-to-client, and the performances of
which are not secured) and insurance maintained by clients. The Company could be
materially and adversely affected if it were required to pay damages or incur
defense costs in connection with a claim that is outside the scope of the
indemnification agreements, if the indemnity, although applicable, is not
performed in accordance with its terms or if the Company's liability exceeds the
amount of applicable insurance or indemnity. In addition, the Company could be
held liable for errors and omissions in connection with the services it
performs. The Company currently maintains product liability and errors and
omissions insurance with respect to these risks. There can be no assurance that
the Company will be able to maintain such insurance coverage on terms acceptable
to the Company. See "Business -- Potential Liability and Insurance."

HAZARDOUS MATERIALS

The Company's activities involve the controlled use of etiologic agents,
hazardous chemicals and various radioactive materials. The Company is subject to
foreign, federal, state and local laws and regulations governing the use,
manufacture, storage, handling and disposal of such materials and certain waste
products. In the event of any contamination or injury from these materials, the
Company could be held liable for any damages that result, including joint and
several liability under certain statutes such as the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), and any such liability
could exceed the resources of the Company. Furthermore, the failure to comply
with current or future regulations could result in the imposition of substantial
fines against the Company, suspension of production, alteration of its
manufacturing processes or cessation of operations. There can be no assurance
that the Company will not be required to incur significant costs to comply with
any such laws and regulations in the future, or that such laws

10
<PAGE> 12

or regulations or liability thereunder will not have a material adverse effect
on the Company's business and results of operations.

The Company has been identified by the U.S. Environmental Protection Agency
("EPA") as one of several hundred potentially responsible parties ("PRPs") under
CERCLA with respect to the Ramp Industries, Inc. site in Denver, Colorado.
Although the Company believes that it sent only a small quantity of waste to
this site, liability under CERCLA can exceed a PRP's pro rata share of cleanup
costs. The EPA has incurred approximately $5 million to date to remove wastes
from this site and expects to incur approximately an additional $1.3 million to
remove the remaining wastes. However, the estimated total cleanup costs have not
been determined. The Company does not have sufficient information to evaluate
the financial ability of other PRPs to pay costs apportioned to them, or their
impact on the Company's liability. Consequently, at this time the Company does
not have sufficient information to determine whether it will be offered a de
minimis buyout or what its ultimate share of cleanup costs will be, but, because
of the small quantity of waste the Company sent to the site, the Company
believes that the outcome of this matter will not have a material adverse effect
on the Company's financial position or results of operations.

DEPENDENCE ON PERSONNEL

The Company depends on a number of key executives, including Capers W.
McDonald, its President and Chief Executive Officer. The loss of the services of
any of the Company's key executives could have a material adverse effect on the
Company's business. The Company also depends on its ability to attract and
retain qualified professional, scientific and technical operating staff. There
can be no assurance the Company will be able to continue to attract and retain
qualified staff. The Company's inability to attract and retain a qualified
operating staff would have a material adverse effect on the Company's business
and results of operations.

EXCHANGE RATE FLUCTUATIONS

The accounts of the Company's international subsidiaries are measured using
local currency as the functional currency. Assets and liabilities of these
subsidiaries are translated into United States dollars at period-end exchange
rates, and revenue and expense accounts are translated at average monthly
exchange rates. Net exchange gains and losses resulting from such translations
are excluded from net income and are accumulated in a separate component of
stockholders' equity.

Since the revenue and expenses of the Company's international operations
generally are denominated in local currencies, exchange rate fluctuations
between such local currencies and the United States dollar will subject the
Company to currency translation risk with respect to the reported results of its
foreign operations as well as to risks sometimes associated with international
operations. The Company derived 15% of its revenue for 1996 from services
performed outside of the United States. On a pro forma basis assuming the
acquisition of BIOMEVA had been consummated on January 1, 1996, 19% of the
Company's revenue for 1996 was derived from services performed outside of the
United States. In addition, the Company may be subject to currency risk when the
Company's service contracts are denominated in a currency other than the
currency in which the Company incurs expenses related to such contracts. There
can be no assurance that the Company will not experience fluctuations in
financial results from the Company's operations outside the United States, and
there can be no assurance the Company will be able to contractually or otherwise
favorably reduce the currency risks associated with its operations.

NO PRIOR TRADING MARKET; POTENTIAL VOLATILITY OF STOCK PRICE

Prior to the Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active trading market for the
Common Stock will develop or, if one does develop, that it will be maintained.
The initial public offering price, which will be established by negotiations
between the Company and the representatives of the Underwriters, may not be
indicative of prices that will prevail in the trading market for the Common
Stock. The market price of the Company's Common Stock could be subject to wide
fluctuations in response to variations in operating results from quarter to
quarter, changes in earnings estimates by analysts, market conditions in the
industry and general economic conditions. Furthermore, the

11
<PAGE> 13

stock market has experienced significant price and volume fluctuations unrelated
to the operating performance of particular companies. These market fluctuations
may have an adverse effect on the market price of the Company's Common Stock.
See "Underwriters."

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial amounts of the Common Stock of the Company in the
public market, or the prospect of such sales, could have a material adverse
effect on the market price of the Common Stock. Immediately following the
Offering, the Company will have outstanding 7,267,242 shares of Common Stock
(excluding 828,191 shares reserved for issuance upon the exercise of outstanding
stock options). The 2,400,000 shares of Common Stock offered hereby (2,715,302
if the Underwriters' over-allotment option is exercised in full) will be
eligible for public sale without restriction under the Securities Act by persons
other than Affiliates (as that term is defined in Rule 144 under the Securities
Act) of the Company. All of the remaining 4,867,242 shares of Common Stock
outstanding will be "restricted securities" within the meaning of Rule 144 and
may not be resold in the absence of registration under the Securities Act or
pursuant to exemptions from such registration including, among others, the
exemption provided by Rule 144 under the Securities Act. Taking into
consideration the effect of the 180-day "lock-up" agreements described herein
covering an aggregate of 4,809,742 shares and options to purchase an additional
686,625 shares held by the executive officers, directors and certain existing
stockholders, approximately 30,778 restricted shares will be eligible for sale
in the public market immediately after the Offering, 26,722 restricted shares
(excluding 82,768 shares reserved for issuance upon the exercise of outstanding
stock options) will be eligible for sale beginning 90 days after the date of
this Prospectus, and the remaining restricted shares will be eligible for sale
upon the expiration of the lock-up agreements 180 days after the date of this
Prospectus, subject to the provisions of Rule 144 under the Securities Act or
Rule 701 under the Securities Act.

The Company intends to register on Form S-8 under the Securities Act as
soon as practicable after the effective date of the Offering, 1,116,666 shares
of Common Stock issued or reserved for issuance under the Company's 1997
Incentive Plan. These registrations will be effective upon filing. As of June
30, 1997, there were outstanding options for the purchase of 828,191 shares of
Common Stock. See "Management -- 1997 Incentive Plan." Shares registered and
issued pursuant to such registration statement will be freely tradable except to
the extent that the holders thereof are deemed to be Affiliates of the Company,
in which case the transferability of such shares will be subject to the volume
limitations set forth in Rule 144 under the Securities Act. See "Description of
Capital Stock" and "Shares Eligible for Future Sale."

IMMEDIATE AND SUBSTANTIAL DILUTION

The purchasers of shares of Common Stock pursuant to the Offering will
experience immediate and substantial dilution of the net tangible book value per
share of Common Stock from the initial offering price. At an assumed initial
public offering price of $13.00 per share, purchasers in the Offering will incur
dilution of $7.72 per share. See "Dilution."

ANTI-TAKEOVER EFFECTS OF CERTAIN CHARTER, BYLAW AND OTHER PROVISIONS

Certain provisions of the Company's Amended and Restated Certificate of
Incorporation (the "Certificate") and Bylaws, including the classification of
the Board of Directors into three classes, could have the effect of making it
more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of the Company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of the Company's Common Stock. Certain of such provisions allow the
Company to issue preferred stock with rights senior to those of the Common Stock
and impose various procedural and other requirements which could make it more
difficult for stockholders to effect certain corporate actions. In addition, the
Company is subject to the provisions of Section 203 of the Delaware General
Corporation Law ("DGCL"), which restricts certain business combinations with any
"interested stockholder" and may delay, defer or prevent a change in control of
the Company. See "Description of Capital Stock."

12
<PAGE> 14

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,102,014 shares of
Common Stock offered by the Company hereby are estimated to be $24.2 million
($28.0 million if the Underwriters' over-allotment option is exercised in full),
assuming an initial public offering price of $13.00 per share (the midpoint of
the range set forth on the cover page of this Prospectus) and after deducting
the underwriting discounts and commissions and estimated offering expenses
payable by the Company. The Company will not receive any of the proceeds from
the sale of the 297,986 shares of Common Stock offered by the Selling
Stockholder. During the next two years, the Company intends to spend between
$5.5 million and $8.0 million on laboratory equipment and between $1.0 million
and $1.5 million on information systems. These expenditures primarily will
supplement and expand capabilities for existing services offered to clients. In
addition, the Company intends to extend its BioTesting capacity in the United
States, Scotland and Germany through expansion of existing facilities and lease
and build out of new facilities and to expand its viral manufacturing capacity.
The Company anticipates that these expansions will require cash outlays between
$2.0 million and $3.0 million, depending on the amount of build out required for
new facilities. The Company also intends to pursue further expansion of its
viral manufacturing capabilities through the construction, purchase or lease of
additional facilities. At the present time, the Company is not able to estimate
the amount required for this purpose. The Company will use the remainder of the
proceeds for working capital and other general corporate purposes, including
potential acquisitions. Pending such uses, the Company intends to invest the net
proceeds from the Offering in short-term United States government securities.

As part of its business strategy, the Company reviews many acquisition
candidates in the ordinary course of business, although the Company has no
agreements or arrangements in place with respect to any future acquisition.
There can be no assurance that the Company will complete any acquisitions. See
"Risk Factors -- Acquisition Risks."

DIVIDEND POLICY

The Company has never declared or paid any cash dividends on its Common
Stock, and the Company's existing credit facility prohibits the payment of
dividends without the prior consent of the lender. The Company does not
anticipate paying any cash dividends in the foreseeable future and intends to
retain future earnings for the development and expansion of its business.

13
<PAGE> 15

CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at March 31, 1997 and as adjusted to reflect (i) the sale by the Company
of 2,102,014 shares of Common Stock in the Offering at an assumed initial public
offering price of $13.00 per share, after deducting underwriting discounts and
commissions and estimated expenses, and application of the estimated net
proceeds thereof; and (ii) the Recapitalization and the Automatic Conversion of
Convertible Preferred Stock into 4,778,072 shares of Common Stock. This table
should be read in conjunction with the Company's audited consolidated financial
statements, including the notes thereto, which appear elsewhere in this
Prospectus.

<TABLE>
<CAPTION>
AS OF
MARCH 31, 1997
---------------------
ACTUAL AS ADJUSTED
------- -----------
(IN THOUSANDS)
(UNAUDITED)
<S> <C> <C>
Short-term debt:
Short-term debt..................................................... $ 900 $ 900
Current portion of bank debt........................................ 719 719
Current portion of capital lease obligations........................ 819 819
------- ---------
Total short-term debt.......................................... $ 2,438 $ 2,438
======= =========
Long-term debt:
Bank debt, less current portion..................................... $ 4,304 $ 4,304
Capital lease obligations, less current portion..................... 2,398 2,398
------- ---------
Total long-term debt........................................... 6,702 6,702
------- ---------
Stockholders' equity:
Convertible Preferred Stock, $0.01 par value; 6,900,000 shares
authorized; 6,470,121 shares issued and outstanding actual, and no
shares issued and outstanding as adjusted.......................... 65 --
Common Stock, $0.01 par value; 15,000,000 shares authorized; 364,655
shares issued and outstanding actual, and 7,244,741 shares issued
and outstanding as adjusted........................................ 4 72
Additional paid-in capital.......................................... 20,109 44,319
Accumulated deficit................................................. (5,521) (5,521)
Equity adjustment from foreign currency translation................. (198) (198)
------- ---------
Total stockholders' equity..................................... 14,459 38,672
------- ---------
Total capitalization........................................... $21,161 $45,374
======= =========
</TABLE>

14
<PAGE> 16

DILUTION

At March 31, 1997, the net tangible book value of the Company was $14.1
million, and the pro forma net tangible book value per share of Common Stock,
assuming the Automatic Conversion, was $2.74. After giving effect to the sale by
the Company of 2,102,014 shares of Common Stock in the Offering at an assumed
initial public offering price of $13.00 per share and after deducting
underwriting discounts and commissions and estimated offering expenses payable
by the Company, the pro forma net tangible book value of the Company at March
31, 1997 would have been $38.3 million or $5.28 per share, representing an
immediate $7.72 per share dilution of new investors purchasing shares in the
Offering.

The following table illustrates such per share dilution.

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share.............. $13.00
Pro forma net tangible book value per share before the
Offering(1)........................................... $2.74
Increase per share attributable to new investors........ 2.54
-----
Pro forma net tangible book value per share after the
Offering................................................... 5.28
------
Dilution per share to new investors(2)....................... $ 7.72
======
</TABLE>

- ---------------
(1) Pro forma net tangible book value per share of Common Stock is determined by
dividing the Company's net tangible book value at March 31, 1997 of $14.1
million by the pro forma number of shares of Common Stock outstanding,
assuming the Automatic Conversion.

(2) Dilution per share to new investors is determined by subtracting pro forma
net tangible book value per share after the Offering from the assumed
initial public offering price per share.

The following table sets forth, on a pro forma basis as of March 31, 1997,
the number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price per share paid by existing stockholders
and by new investors, based on an assumed initial public offering price of
$13.00 per share and before deduction of underwriting discounts and commissions
and offering expenses:

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- ------- ----------- ------- ---------
<S> <C> <C> <C> <C> <C>
Existing stockholders............... 5,142,727 71.0% $20,178,000 42.5% $ 3.92
New investors....................... 2,102,014 29.0% 27,326,182 57.5% $ 13.00
--------- ----- ----------- -----
Total..................... 7,244,741 100.0% $47,504,182 100.0%
========= ===== =========== =====
</TABLE>

The foregoing tables assume no exercise of any outstanding stock options.
At June 30, 1997, there were outstanding options to purchase 828,191 shares of
Common Stock at a weighted average exercise price of $2.47 per share. To the
extent such options are exercised, there will be further dilution to the new
investors.

The sale of shares by the Selling Stockholder in the Offering will reduce
the number of shares held by existing stockholders to 4,867,242 shares, or
approximately 67.0% of the total number of shares of Common Stock outstanding
immediately after the Offering (64.2% if the Underwriters' over-allotment option
is exercised in full), and will increase the number of shares held by new
investors to 2,400,000 shares, or 33.0% of the total number of shares of Common
Stock outstanding immediately after the Offering (35.8% if the Underwriters'
over-allotment option is exercised in full). See "Principal and Selling
Stockholders."

15
<PAGE> 17

SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data set forth below for the five years
ended December 31, 1996 has been derived from the Company's consolidated
financial statements, audited by Price Waterhouse LLP, independent accountants.
Consolidated balance sheets at December 31, 1995 and 1996 and the related
consolidated statements of income, of stockholders' equity and of cash flows for
the three years ended December 31, 1996 and notes thereto appear elsewhere in
this Prospectus. The selected consolidated financial data at March 31, 1997 and
for the three months ended March 31, 1996 and 1997 have been derived from the
Company's unaudited consolidated financial statements and include, in the
opinion of management, all normal recurring adjustments necessary for a fair
presentation of the data for such periods. The operating results for the three
months ended March 31, 1997 are not necessarily indicative of the results that
may be expected for the full year ending December 31, 1997. The selected
consolidated financial data for the years ended December 31, 1992 and 1993 and
as of December 31, 1994 have been derived from the Company's audited
consolidated financial statements which have not been included in this
Prospectus. The selected consolidated financial data set forth below should be
read in conjunction with, and are qualified by reference to, "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the Company's audited consolidated financial statements and related notes
appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------------------------------- -----------------
1992 1993 1994 1995 1996(1) 1996 1997
------- ------- ------- ------- ------- ------ -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue...................................... $16,422 $22,207 $28,094 $30,078 $37,682 $7,599 $11,781

Cost of sales................................ 13,093 15,248 19,094 20,570 24,860 5,397 7,442
Selling, general and administrative
expenses................................... 4,577 4,704 5,947 7,071 7,852 1,764 2,635
Research and development expenses............ 308 236 354 1,012 1,110 272 303
Nonrecurring charge.......................... -- -- -- -- 696(2) -- --
------- ------- ------- ------- ------- ------ -------
Total expenses...................... 17,978 20,188 25,395 28,653 34,518 7,433 10,380
------- ------- ------- ------- ------- ------ -------
Income (loss) from operations................ (1,556) 2,019 2,699 1,425(3) 3,164 166 1,401
Interest and other expenses, net............. 398 297 439 524 816 158 200
------- ------- ------- ------- ------- ------ -------
Income (loss) before income taxes............ (1,954) 1,722 2,260 901 2,348 8 1,201
Benefit from (provision for) income taxes.... -- (62) 2,192(4) (243) (846) (3) (511)
------- ------- ------- ------- ------- ------ -------
Net income (loss)............................ (1,954) 1,660 4,452 658 1,502(5) 5 690
Preferred stock dividends(6)................. (139) -- -- (139) -- (35) --
------- ------- ------- ------- ------- ------ -------
Net income (loss) available to common
stockholders............................... $(2,093) $ 1,660 $ 4,452 $ 519 $ 1,502 $ (30) $ 690
======= ======= ======= ======= ======= ====== =======
Net income (loss) per common and common
equivalent share........................... $ (5.35) $ 0.42 $ 0.86 $ 0.11 $ 0.26(5) $(0.07) $ 0.12
======= ======= ======= ======= ======= ====== =======
Weighted average common and common equivalent
shares outstanding(6)...................... 391 3,981 5,200 4,767 5,802 412 5,875
======= ======= ======= ======= ======= ====== =======
</TABLE>

<TABLE>
<CAPTION>
AS OF
AS OF DECEMBER 31, MARCH 31,
------------------------------------------------------- ---------
1992 1993 1994 1995 1996 1997
------- ------- ------- ------- ------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.......................... $ 489 $ 570 $ 1,676 $ 693 $ 2,965 $ 3,571
Working capital (deficit).......................... (2,270) (76) 5,326 4,963 5,415 4,146
Total assets....................................... 12,267 14,110 23,551 24,938 35,827 35,748
Long-term debt..................................... 2,484 810 4,694 6,189 8,982 6,702
Stockholders' equity............................... 3,597 6,928 11,452 12,121 14,091 14,459
</TABLE>

16
<PAGE> 18

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

The Company recently has made significant investments to broaden the
services it offers. In 1995, to augment its BioTesting Services and in
anticipation of new FDA regulations relating to biologics, the Company invested
in equipment and in marketing, sales, research and development to begin offering
BioAnalytical Services. In 1996, to complement its existing viral manufacturing
capabilities and to strengthen its European presence, the Company added the
capability to manufacture microbial fermentation products by acquiring BIOMEVA,
an established contract manufacturer located in Heidelberg, Germany. The Company
purchased BIOMEVA for an aggregate of $3.3 million, including $3.1 million paid
in cash and the issuance of 23,333 shares of Common Stock, and accounted for the
acquisition as a purchase. BioTesting Services and BioManufacturing Services
accounted for 86% and 14%, respectively, of the Company's revenue in 1996. On a
pro forma basis, assuming that the acquisition of BIOMEVA took place on January
1, 1996, BioTesting Services and BioManufacturing Services accounted for 83% and
17%, respectively, of the Company's revenue in 1996.

The Company's revenue has grown from $16.4 million in 1992 to $37.7 million
in 1996. In 1996 the Company realized record revenue and income from operations.
Revenue also increased in 1995; however, operating income was affected adversely
by $1.3 million of first-year expenses for BioAnalytical Services, which
generated only minimal revenue.

The Company derived 90% and 87% of its revenue from commercial contracts in
1996 and 1995, respectively. Commercial contracts are either fixed price or
fixed rate, and their terms range from under a week to three or more years. In
1996 and 1995, 87% and 91%, respectively, of the Company's revenue from
commercial contracts was derived from contracts accounted for using the
percentage-of-completion method, and the remainder was derived from contracts
accounted for using the completed-contract method. On a pro forma basis,
assuming that the acquisition of BIOMEVA occurred on January 1, 1996, 83% of the
Company's revenue from commercial contracts would have been derived from
contracts accounted for using the percentage-of-completion method. The choice of
the method depends on the nature and duration of the contract. BioTesting
services are accounted for using the percentage-of-completion method, except for
those services that are generally completed within three days which are
accounted for using the completed-contract method. BioManufacturing services
providing for the delivery of products are accounted for using the
completed-contract method, while all other BioManufacturing services are
accounted for using the percentage-of-completion method. Management believes
that the use of the completed-contract method of accounting has not to date had
a material effect on the Company's earnings trends.

Clients generally are invoiced either as work is completed or, for
contracts in excess of $30,000, with a payment at the commencement of the
services and progress payments based on defined milestones. Contracts may be
terminated for a variety of reasons, including the client's decision to forego a
particular study or to cancel a particular product development program, the
failure of a clinical trial, or unexpected or undesired results of product
testing. Generally, service contracts may be canceled by the client upon notice,
with a partial charge commensurate with the percentage of work completed at the
time of cancellation. The Company has a diversified commercial client base,
providing services to over 600 clients during 1996. The Company's ten largest
commercial clients by contract revenue accounted for 27% of the Company's
revenue during 1996. On a pro forma basis assuming that the acquisition of
BIOMEVA occurred on January 1, 1996, the Company's ten largest commercial
clients by contract revenues accounted for 30% of the Company's consolidated
revenue during 1996. With respect to eight of these clients, the Company's
revenues were derived from multiple contracts. No commercial client accounted
for more than 5% of the Company's consolidated revenue in 1996.

17
<PAGE> 19

The Company derived 10% and 13% of its consolidated revenue from government
contracts in 1996 and 1995, respectively, with one government contract
accounting for 5% of consolidated revenue in 1996. Government contracts
generally are cost-plus-fixed-fee and have terms of three to five years. Revenue
from government contracts is recognized in an amount equal to reimbursable costs
plus a pro rata portion of the contract fee.

For both BioTesting and BioManufacturing Services, the major components of
cost of sales are labor and related fringe benefits; facilities, primarily rent
or depreciation, utilities and maintenance; direct materials; overhead costs,
such as travel, office expenses and employee-related expenses; and subcontracted
costs. Cost of sales includes these expenses for laboratories directly providing
the services and for supporting services departments, principally regulatory
affairs, quality assurance and quality control. As a portion of the total cost
of sales, labor and materials costs are greater and facilities costs are less
for BioTesting Services than for BioManufacturing Services. Increased revenue
from quarter to quarter will tend to improve gross margin more for
BioManufacturing Services than for BioTesting Services due to the leverage
achieved from the relatively fixed nature of facilities costs. In order to
provide new services from time to time, the Company may be required to expend
amounts for labor and equipment that may have an adverse impact on margins.

Selling, general and administrative expense and research and development
expense consist primarily of labor and related fringe benefits, indirect
materials and travel.

RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, certain income
statement data as a percentage of revenue. The trends illustrated in this table
may not be indicative of future results.

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------- --------------
1994 1995 1996 1996 1997
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Revenue.......................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales.................................... 68.0 68.4 66.0 71.0 63.2
Selling, general and administrative.............. 21.2 23.5 20.8 23.2 22.4
Research and development......................... 1.2 3.4 2.9 3.6 2.5
Nonrecurring charge.............................. -- -- 1.9 -- --
----- ----- ----- ----- -----
Total expenses.............................. 90.4 95.3 91.6 97.8 88.1
----- ----- ----- ----- -----
Income from operations........................... 9.6 4.7 8.4 2.2 11.9
Interest and other expense, net.................. 1.6 1.7 2.2 2.1 1.7
----- ----- ----- ----- -----
Income before income taxes....................... 8.0 3.0 6.2 0.1 10.2
Benefit from (provision for) income taxes........ 7.8 (0.8) (2.2) 0.0 (4.6)
----- ----- ----- ----- -----
Net income....................................... 15.8% 2.2% 4.0% 0.1% 5.6%
===== ===== ===== ===== =====
</TABLE>

QUARTER ENDED MARCH 31, 1997 COMPARED WITH QUARTER ENDED MARCH 31, 1996

Revenue was $11.8 million in the quarter ended March 31, 1997, an increase
of 55.0% over revenue of $7.6 million in the quarter ended March 31, 1996,
reflecting growth in both BioTesting and BioManufacturing Services. The increase
in BioTesting Services was attributable to volume growth in BioSafety Testing
and BioTrials Services and, to a lesser extent, BioAnalytical Services. The
growth in BioManufacturing Services was due to the inclusion of $1.1 million of
revenue derived from BIOMEVA in the quarter ended March 31, 1997 with no
corresponding BIOMEVA revenue in the quarter ended March 31, 1996, reflecting
the timing of BIOMEVA's acquisition in July 1996, and to volume increases in the
MAGENTA viral production business. BioTesting Services and BioManufacturing
Services accounted for 82% and 18%, respectively, of the Company's revenue in
the quarter ended March 31, 1997.

18
<PAGE> 20

Cost of sales was $7.4 million in the quarter ended March 31, 1997, an
increase of 37.9% over the cost of sales of $5.4 million in the quarter ended
March 31, 1996. As a percentage of revenue, cost of sales decreased to 63.2%
from 71.0% and gross margin increased to 36.8% from 29.0% in the quarter ended
March 31, 1997 compared to the quarter ended March 31, 1996, respectively. The
resulting improvement in gross margin primarily was due to high incremental
margins for BioTrials and the MAGENTA viral production business and to the
inclusion of BIOMEVA in the quarter ended March 31, 1997, with no corresponding
amounts in the prior year period.

Selling, general and administrative expense was $2.6 million in the quarter
ended March 31, 1997, an increase of 49.4% over expense of $1.8 million in the
quarter ended March 31, 1996. The increase was due to additional sales and
administrative personnel, additional software and depreciation expenses for
information systems, increased commissions on international sales and the
inclusion of administrative expense for BIOMEVA in the quarter ended March 31,
1997, with no corresponding expense in the quarter ended March 31, 1996. As a
percentage of revenue, selling, general and administrative expense declined in
the quarter ended March 31, 1997 from the quarter ended March 31, 1996.

Research and development expense was $303,000 in the quarter ended March
31, 1997, an increase of 11.4% over research and development expense of $272,000
in the quarter ended March 31, 1996. The increase primarily was due to charges
for laboratory facilities and materials, particularly for MAGENTA development.

Operating income was $1.4 million in the quarter ended March 31, 1997, an
increase of 744.0% over operating income of $0.2 million in the quarter ended
March 31, 1996. The increase primarily was due to improvements in gross margins
and, to a lesser extent increases in selling, general and administrative and
research and development expenses at a rate lower than the increase in revenue.

Net interest and other expense was $200,000 in the quarter ended March 31,
1997, an increase of 26.6% over net interest and other expense of $158,000 in
the quarter ended March 31, 1996. The increase primarily was related to new
borrowings to finance the acquisition of BIOMEVA in 1996, a portion of which was
repaid on March 28, 1997.

The provision for income taxes was $511,000 in the quarter ended March 31,
1997, compared to the provision of $3,000 in the quarter ended March 31, 1996.
The effective tax rate was 42.5% in the quarter ended March 31, 1997 and 37.5%
in the quarter ended March 31, 1996. The higher effective tax rate in the
quarter ended March 31, 1997 was attributable primarily to income generated by
BIOMEVA, which was taxed at German rates that are higher than the United States
rates, and to nondeductible depreciation associated with the BIOMEVA
acquisition.

Net income was $690,000 in the quarter ended March 31, 1997, compared to
net income of $5,000 in the quarter ended March 31, 1996. The improvement was
due to increased revenue, improved gross margins and growth in other expenses at
a rate less than the growth in revenue.

YEAR ENDED DECEMBER 31, 1996 COMPARED WITH YEAR ENDED DECEMBER 31, 1995

Revenue was $37.7 million in 1996, an increase of 25.3% over revenue of
$30.1 million in 1995, reflecting increases in both BioTesting and
BioManufacturing Services. The growth in revenue for BioTesting Services
primarily was due to volume growth in BioSafety Testing and BioAnalytical
Services. The growth in revenue for BioManufacturing Services was due to volume
and price increases in new viral production business for MAGENTA and the
inclusion of $1.8 million of revenue derived from BIOMEVA's results since its
acquisition in July 1996. BioTesting Services and BioManufacturing Services
accounted for 86% and 14%, respectively, of the Company's revenue in 1996. On a
pro forma basis, assuming the acquisition of BIOMEVA took place on January 1,
1996, BioTesting Services and BioManufacturing Services accounted for 83% and
17%, respectively, of the Company's revenue in 1996.

Cost of sales was $24.9 million in 1996, an increase of 20.9% over cost of
sales of $20.6 million in 1995. As a percentage of revenue, cost of sales
decreased to 66.0% from 68.4% and gross margin increased to 34.0% from 31.6% in
1996 compared to 1995. This improvement in gross margin primarily was
attributable to the

19
<PAGE> 21

high incremental margins contributed by growth in revenues from BioAnalytical
and BioManufacturing Services.

Selling, general and administrative expense was $7.9 million in 1996, an
increase of 11.0% over expense of $7.1 million in 1995. The increase was due to
additional administrative employees and increases in legal and consulting fees,
depreciation on information systems, and administrative expense for BIOMEVA, for
which there was no corresponding expense in 1995. As a percentage of revenue,
selling, general and administrative expense declined in 1996 from 1995.

Research and development expense was $1.1 million in 1996, an increase of
9.7% over expense of $1.0 million in 1995. The increase primarily was
attributable to development of new techniques for BioManufacturing Services.

In 1996, the Company incurred a nonrecurring charge against operations of
$696,000 in connection with the Company's settlement of a dispute with a
landlord relating to the termination of a lease.

Operating income was $3.2 million in 1996, an increase of 122.0% over
operating income of $1.4 million in 1995. This increase was due to both an
improvement in gross margin and a reduction, as a percentage of revenue, in
selling, general and administrative and research and development expenses.

Net interest and other expense was $0.8 million, an increase of 55.7% over
expense of $0.5 million in 1995. The increase was primarily related to new
borrowings to finance the acquisition of BIOMEVA.

The provision for income taxes was $0.8 million in 1996, an increase of
248.1% over a provision of $0.2 million in 1995. The effective tax rate was
36.0% in 1996 and 27.0% in 1995. The increase in the effective tax rate from
1995 to 1996 primarily was attributable to 1996 income generated by BIOMEVA,
which was taxed at German rates which were higher than the United States federal
tax rate, and a lower effective tax rate in 1995 due to a decrease in the
valuation allowance for deferred tax assets as a result of improved
profitability of the Company's operations in the United Kingdom.

Net income was $1.5 million in 1996 (including the $0.4 million after-tax
effect of the nonrecurring charge), an increase of 128.3% over net income of
$0.7 million in 1995. This increase was due to improvement in operating margin,
which more than offset increases in interest and other expenses and in income
taxes.

YEAR ENDED DECEMBER 31, 1995 COMPARED WITH YEAR ENDED DECEMBER 31, 1994

Revenue was $30.1 million in 1995, an increase of 7.1% over revenue of
$28.1 million in 1994. This increase was attributable to volume growth and price
increases in BioSafety Testing, offset in part by reductions in revenue for
BioTrials as a result of the loss of certain of the Company's clients following
their acquisition by third parties, delays in funding of government contracts
and interruptions in ongoing contract work due to unexpected delays in the
construction of a new BioTesting facility.

Cost of sales was $20.6 million in 1995, an increase of 7.7% over cost of
sales of $19.1 million in 1994. As a percentage of revenue, cost of sales
increased to 68.4% from 68.0% and gross margin decreased to 31.6% from 32.0% in
1995 as compared to 1994, due primarily to the start-up of BioAnalytical
Services and a reduction in revenue for BioTrials.

Selling, general and administrative expense was $7.1 million in 1995, an
increase of 18.9% over expense of $5.9 million in 1994. The increase primarily
was attributable to expanded sales and marketing programs.

Research and development expense was $1.0 million in 1995, an increase of
185.9% over expense of $0.4 million in 1994. The increase in expense was for the
development of new assays for BioSafety Testing and BioTrials.

Operating income was $1.4 million in 1995, a decrease of 47.2% from
operating income of $2.7 million in 1994. This decrease primarily was due to the
reduction in revenue in BioTrials and the first-year expenses of $1.3 million
for BioAnalytical Services. On a pro forma basis without these first-year
expenses, operating income would have been $2.7 million in 1995 compared to $2.7
million in 1994.

20
<PAGE> 22

Net interest and other expense was $0.5 million in 1995, an increase of
19.4% over expense of $0.4 million in 1994. The increase primarily was due to
higher borrowing levels to finance expansion of the Company's operations.

The provision for income taxes was $0.2 million in 1995 compared to a tax
benefit of $2.2 million in 1994. The 1994 tax benefit of $2.2 million resulted
primarily from the recognition of tax benefits of net operating loss and tax
credit carryforwards based upon improved profitability of operations in the
United States and management's determination that it was more likely than not
that the related tax benefits would be realized.

Net income was $0.7 million in 1995, a decrease of 85.2% from net income of
$4.5 million in 1994. This decrease primarily was due to an increase in income
taxes, reflecting the significant impact of an income tax benefit in 1994, and
the previously discussed reduction in operating margin.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its business through cash flows from operating
activities, private placements of debt and equity securities, long-term bank
loans and capital leases. At March 31, 1997, the Company had cash and cash
equivalents of $3.6 million, compared to cash and cash equivalents of $3.0
million and $0.7 million at December 31, 1996 and 1995, respectively.

The Company generated cash flows from operations of $2.3 million during the
three months ended March 31, 1997, compared to cash flows from operations of
$0.1 million for the three months ended March 31, 1996. Net income, as adjusted
for depreciation and amortization and deferred income taxes provided $2.0
million and $0.4 million in the quarter ended March 31, 1997 and the quarter
ended March 31, 1996, respectively. Changes in other assets and liabilities
provided additional cash flows from operations in the quarter ended March 31,
1997, but used cash in the quarter ended March 31, 1996. The increase in
depreciation and amortization from the quarter ended March 31, 1996 to the
quarter ended March 31, 1997 was due to the addition of BIOMEVA and the
expansion of the Company's laboratory facilities throughout 1996. Working
capital decreased to $4.2 million at March 31, 1997, compared to $5.4 million at
December 31, 1996. The decrease in the quarter ended March 31, 1997 was due
primarily to an increase in accounts payable (principally amounts payable in
connection with the Offering) and a reduction in prepaid expenses for BIOMEVA.

During 1996, 1995 and 1994, the Company generated cash flows from
operations of $4.5 million, $1.6 million and $1.6 million, respectively. Net
income, as adjusted for the non-cash components of depreciation and amortization
and deferred income taxes, was the primary contributor to the cash flows in each
of these years. The increase in depreciation and amortization from 1994 to 1996
reflects the expansion of the Company's laboratory facilities and the related
equipment, including the opening of a new 49,000 square foot BioTesting facility
in November 1995. Working capital increased to $5.4 million in 1996, compared to
$5.0 million in 1995. The increase in 1996 primarily was due to growth in
accounts receivable offset in part by customer advances.

The Company invested $0.2 million in capital expenditures in the three
months ended March 31, 1997, compared to $0.6 million in the three months ended
March 31, 1996. The reduction in 1997 was a matter of timing of expenditures
rather than a trend to lower amounts.

The Company invested $2.8 million, $4.6 million and $2.9 million in capital
expenditures (including expenditures financed through capital leases) during
1996, 1995 and 1994, respectively. Major facility expansions were made in 1995
to build out BioTesting Services laboratories.

The Company financed the acquisition of BIOMEVA in July 1996 and obtained
additional funds for working capital and expansion of its business through a
loan with NationsBank, N.A. ("NationsBank") in the amount of $1.8 million and a
subordinated note from Sidney R. Knafel, the Company's majority stockholder, in
the amount of $1.9 million, which was repaid on March 28, 1997. The NationsBank
loan requires monthly principal payments of $30,000.

21
<PAGE> 23

In December 1993, the Company entered into a loan agreement with
NationsBank to refinance $1.6 million of outstanding indebtedness and to fund
the expansion of the Company's business. In December 1994, this loan agreement
was modified to provide for term loan financing in the amount of $4.3 million
with a maturity date of November 30, 1999 (the "Mortgage Loan"). The Mortgage
Loan is secured by a deed of trust on the Company's facility in Rockville,
Maryland and a first security interest in all of its tangible and intangible
assets, exclusive of certain leasing activities. It requires monthly principal
payments of $30,000 and bears interest, at the Company's election, at either (a)
the bank's prime rate plus 0.25% or (b) the London Inter-Bank Offering Rate
(LIBOR) plus 2.5%. In May 1995, the Company entered into an interest rate swap
agreement whereby the variable interest rate on the Mortgage Loan was converted
into a fixed rate of 9.05% per annum. Amounts to be paid or received under the
interest rate swap agreement are recognized as interest income or expense in the
periods in which they accrue. At June 30, 1997, $3.4 million was outstanding
under the Mortgage Loan.

In addition to the Mortgage Loan, to meet its short-term liquidity needs,
the Company has a revolving loan agreement with NationsBank with a maximum
available balance, based on a percentage of eligible billed receivables as
defined in the loan agreement, not to exceed $1.0 million. The Company is
required to pay a quarterly commitment fee equal to 0.25% of the average unused
portion of the revolving bank loan during the previous quarter. Borrowings under
this revolving loan agreement bear interest at the bank's prime rate plus 0.5%
per annum. At July 24, 1997, there were borrowings of $1,000,000 outstanding
under the revolving loan agreement. This revolving loan agreement expires in
August 1997, and the Company intends to complete renegotiation of the agreement
before that date.

The Company's loan agreements are cross collateralized and are secured by
all of the Company's assets, excluding certain leased assets. The loan
agreements require the Company to meet certain covenants and provide
restrictions on certain leasing activities and the payment of dividends.

At May 20, 1997, the Company had commitments to spend $0.5 million for
expansion of BioTesting and BioManufacturing facilities in Germany and an
additional $0.4 million for computer equipment. During the next two years, the
Company intends to spend between $5.5 million and $8.0 million on laboratory
equipment and between $1.0 million and $1.5 million on information systems.
These expenditures primarily will supplement and expand capabilities for
existing services offered to clients. In addition, the Company intends to extend
its BioTesting capacity in the United States, Scotland and Germany through
expansion of existing facilities and lease and build out of new facilities and
to expand its viral manufacturing capacity. The Company anticipates that these
expansions will require cash outlays between $2.0 million and $3.0 million,
depending on the amount of build out required for new facilities. The Company
also intends to pursue further expansion of its viral manufacturing capabilities
through the construction, purchase or lease of additional facilities. At the
present time, the Company is not able to estimate the amount required for this
purpose.

The Company expects to continue expanding its operations through internal
growth, geographic expansion and possibly strategic acquisitions. The Company
expects that such activities will be funded from existing cash and cash
equivalents, cash flows from operations, bank borrowing, lease financing and the
net proceeds from the Offering. Although the Company has no agreements or
arrangements in place with respect to any future acquisition, there may be
acquisition or other growth opportunities that require additional external
financing, and the Company may, from time to time, seek to obtain funds from
public or private issuances of equity or debt securities. There can be no
assurances that such financing will be available on terms acceptable to the
Company.

Based on its current operating plan, the Company believes that available
cash, together with cash flows from operations and borrowings under its credit
agreement, will be sufficient to meet its foreseeable cash needs. The net
proceeds from the Offering will be used for additional long-term growth and
expansion.

22
<PAGE> 24

RECENT OPERATING RESULTS

Revenue was $12.6 million in the quarter ended June 30, 1997, an increase
of 45.7% over revenue of $8.6 million in the quarter ended June 30, 1996,
reflecting growth in both BioTesting and BioManufacturing Services. The increase
in BioTesting Services was attributable to volume growth in BioSafety Testing
and, to a lesser extent, BioTrials and BioAnalytical Services. The growth in
BioManufacturing Services primarily was due to the inclusion of $1.0 million of
revenue derived from BIOMEVA in the quarter ended June 30, 1997 with no
corresponding revenue in the quarter ended June 30, 1996, reflecting the timing
of BIOMEVA's acquisition in July 1996, and to volume increases in MAGENTA
Corporation.

Operating income was $2.0 million in the quarter ended June 30, 1997, an
increase of 250.0% over operating income of $566,000 in the quarter ended June
30, 1996. The increase primarily was due to the significant revenue growth,
margin improvement for BioSafety Testing Services and the acquisition of
BIOMEVA.

Net income was $1.1 million and earnings per share were $0.18 in the
quarter ended June 30, 1997, an increase of 379.3% and 350.0%, respectively,
over net income of $227,000 and earnings per share of $0.04 in the quarter ended
June 30, 1996.

23
<PAGE> 25

QUARTERLY RESULTS

The following table sets forth unaudited quarterly operating results for
the nine quarters ended March 31, 1997. The Company believes that all necessary
adjustments, consisting only of normal, recurring adjustments, have been
included in the amounts below to present fairly the quarterly results when read
in conjunction with the Company's consolidated financial statements and notes
thereto included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
QUARTERS ENDED
--------------------------------------------------------------------------------------------------------
MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31, JUNE 30, SEP. 30, DEC. 31, MAR. 31,
1995 1995 1995 1995 1996 1996 1996 1996 1997
-------- -------- -------- -------- -------- -------- -------- -------- --------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenue................ $7,866 $7,602 $7,616 $6,994 $7,599 $8,635 $9,228 $ 12,220 $11,781
Cost of sales.......... 5,183 5,178 5,206 5,003 5,397 5,714 6,158 7,591 7,442
Selling, general and
administrative
expense.............. 1,817 1,689 1,774 1,791 1,764 1,787 1,953 2,348 2,635
Research and
development expense.. 186 252 297 277 272 307 248 283 303
Nonrecurring charge.... -- -- -- -- -- 261 160 275 --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Total
expenses..... 7,186 7,119 7,277 7,071 7,433 8,069 8,519 10,497 10,380
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) from
operations........... 680 483 339 (77) 166 566 709 1,723 1,401
Interest and other
expense, net......... 102 139 77 206 158 174 249 235 200
-------- -------- -------- -------- -------- -------- -------- -------- --------
Income (loss) before
income taxes......... 578 344 262 (283) 8 392 460 1,488 1,201
Benefit from (provision
for) income taxes.... (229) (136) (104) 226 (3) (165) (205) (473) (511)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)...... 349 208 158 (57) 5 227 255 1,015 690
Preferred stock
dividends(1)......... -- (35) (35) (35) (35) (35) (35) -- --
-------- -------- -------- -------- -------- -------- -------- -------- --------
Net income (loss)
available to common
stockholders(2)...... $ 349 $ 173 $ 123 $ (92) $ (30) $ 192 $ 220 $ 1,015 $ 690
======= ======= ====== ====== ======= ======= ====== ======= =======
Net income (loss) per
common and common
equivalent
share(2)............. $ 0.07 $ 0.04 $ 0.03 $(0.22) $(0.07) $ 0.04 $ 0.04 $ 0.17 $ 0.12
======= ======= ====== ====== ======= ======= ====== ======= =======
Weighted average common
and common equivalent
shares
outstanding(1)(2).... 5,343 4,763 4,767 412 412 5,156 5,180 5,838 5,875
======= ======= ====== ====== ======= ======= ====== ======= =======
</TABLE>

- ---------------
(1) The significant fluctuations in weighted average common and common
equivalent shares outstanding for the four quarters ended March 31, 1996 are
not attributable to changes in the capitalization of the Company in those
periods. However, as required by generally accepted accounting principles,
outstanding shares of the Company's Convertible Preferred Stock have been
excluded from weighted average common and common equivalent shares in each
period where the effect of including such common equivalent shares would
have been anti-dilutive (i.e., would have increased net income or decreased
net loss per common and common equivalent share). In addition, although no
dividends have been or will be paid by the Company prior to the completion
of the Offering, accumulated dividends on the Series B Convertible Preferred
Stock have been deducted from net income (loss) for the purpose of computing
net income (loss) available to common stockholders for those periods in
which the assumed conversion of such Convertible Preferred Stock is
anti-dilutive.

(2) Upon the closing of the Offering, all outstanding shares of the Company's
Convertible Preferred Stock will convert automatically into shares of Common
Stock. On a pro forma basis, assuming the Convertible Preferred Stock was
converted into shares of Common Stock as of January 1, 1995 and excluding
the effect of the nonrecurring charge, the earnings per share data for the
periods indicated above would have been as follows:

24
<PAGE> 26

The Company's quarterly revenues in 1995 were adversely affected by
reductions in revenue for BioTrials beginning in the second quarter as a result
of the loss of certain of the Company's clients following their acquisition by
third parties. Quarterly revenues in the third and fourth quarters of 1995 also
were adversely affected by delays in funding of government contracts and
interruptions in ongoing contract work due to unexpected delays in the
construction of a new BioTesting facility.

The Company's revenue, income from operations and net income historically
have fluctuated on a quarterly basis and can be expected to continue to be
subject to quarterly fluctuations. Quarterly operating results can fluctuate as
a result of a number of factors, including the commencement, delay, cancellation
or completion of contracts; the mix of BioTesting and BioManufacturing Services;
the timing of start-up expenses for new laboratories; the timing and integration
of acquisitions; changes in regulations related to biologics and seasonal
slowdowns in Europe during the summer months. The Company believes that
comparisons of its quarterly financial results are not necessarily meaningful
and should not be relied upon as an indication of future performance. See "Risk
Factors -- Variation in Quarterly Operating Results."

FOREIGN CURRENCY

Since the revenues and expenses of the Company's international operations
generally are denominated in local currencies, exchange rate fluctuations
between such local currencies and the United States dollar will subject the
Company to currency translation risk with respect to the reported results of its
international operations as well as to risks sometimes associated with
international operations. The Company derived 15% of its revenue for 1996 from
services performed outside of the United States. On a pro forma basis assuming
the acquisition of BIOMEVA had been consummated on January 1, 1996, 19% of the
Company's revenue for 1996 was derived from services performed outside of the
United States. In addition, the Company may be subject to currency risk when the
Company's service contracts are denominated in a currency other than the
currency in which the Company incurs expenses related to such contracts. There
can be no assurance that the Company will not experience fluctuations in
financial results from the Company's operations outside the United States, and
there can be no assurance the Company will be able, contractually or otherwise,
to reduce the currency risks associated with its operations. Although, at the
present time, the Company does not use derivative financial instruments to
manage or control foreign currency risk, there can be no assurance that the
Company will not use such financial instruments in the future or that any such
use will be successful in managing or controlling foreign currency risk.

The revenue and identifiable assets attributable to the Company's
geographic segments are reported in Note 11 of Notes to Consolidated Financial
Statements.

INFLATION

The Company believes the effects of inflation generally do not have a
material impact on its operations or financial condition.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

25
<PAGE> 27

period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the entity. SFAS 128 requires restatement of all prior period
earnings per share data presented, and is effective for financial statements
issued for periods ending after December 15, 1997, including interim periods.
Earlier application is not permitted.

The Company will adopt this statement during the fourth quarter of 1997, as
required. Accordingly, all prior period EPS data will be restated. To illustrate
the effect of adoption, the Company has elected to disclose pro forma basic and
diluted EPS amounts computed using SFAS 128, as permitted by the standard. The
pro forma basic EPS and diluted EPS for each of the five years in the period
ended December 31, 1996 are set forth below:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------
1992 1993 1994 1995 1996
------ ----- ------ ----- -----
<S> <C> <C> <C> <C> <C>
Basic earnings per share................. $(5.35) $3.89 $10.96 $1.29 $3.22
------ ----- ------ ----- -----
Diluted earnings per share............... $(5.35) $0.42 $ 0.86 $0.11 $0.26
====== ===== ====== ===== =====
</TABLE>

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BUSINESS

GENERAL

BioReliance is a leading CRO providing nonclinical testing and contract
manufacturing services for biologics to biotechnology and pharmaceutical
companies worldwide. The Company, founded in 1947 as Microbiological Associates,
Inc., believes that it is the largest provider of outsourcing services focused
on the rapidly growing biologics sector of the pharmaceutical industry. In 1996,
the Company provided services to over 600 clients, including 22 of the 25
largest pharmaceutical companies in the world by revenue and 18 of the 25
largest public biopharmaceutical companies in the United States by market
capitalization. The Company's revenue has increased in each of the last four
years, growing from $16.4 million in 1992 to $37.7 million in 1996, including
$1.8 million attributable to the acquisition of BIOMEVA in July 1996.

BioReliance believes that it is well positioned to benefit from the
biologics CRO opportunity. The Company has a strong reputation for providing
high quality biologics development services, and has a decades-long record of
supporting successful regulatory submissions with hundreds of clients worldwide.
It has introduced numerous innovations in biotesting and biomanufacturing under
strict regulatory guidelines, earning a reputation for quality and dependability
with both clients and regulatory authorities that cannot be duplicated with
technical and financial resources alone. Unlike many of its competitors, the
Company has an international presence with European facilities in both
BioTesting and BioManufacturing.

COMPANY BACKGROUND

The Company has been a leader for almost 50 years in working with companies
and government agencies to support the development of safe and effective
products. In the 1950s, the Company supported development and production of the
first polio vaccines by the United States government and the National Foundation
for Infantile Paralysis. In the 1960s, the Company supported the National
Aeronautics and Space Administration (NASA) in development of safety testing
protocols for samples brought from the lunar surface. The Company's early work
and recognized expertise in virus detection techniques led to a collaboration
during the early 1980s with Genentech, Inc. to establish the original biosafety
testing program for the first licensed therapeutic product derived from
mammalian cells (Activase(R)). The Company leveraged its cutting-edge
technologies into developing biotesting programs for other companies developing
biologics, including the first licensed therapeutic monoclonal antibody (Ortho
Pharmaceutical's Orthomune OKT(R)3). The Company also tested the first
genetically engineered microbial pesticide approved by the EPA for field trials
(Bacillus thuringiensis). During the 1990s, the Company developed testing
protocols and evaluated the first gene therapy products allowed into human
clinical trials by the FDA. It was the first among United States biosafety
testing companies to establish international laboratories with the opening of
its facilities in the United Kingdom. In 1993, MAGENTA became the first contract
manufacturing company to support developers of gene therapies and has produced
more than 60 lots of clinical trial materials through 1996. The Company also was
the first CRO to validate new bioanalytical methods supporting
"well-characterized" biologics under GMPs. In 1996, the Company acquired
BIOMEVA, in Germany, to expand its biomanufacturing services and anchor its
business development in continental Europe.

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CRO INDUSTRY OVERVIEW

The CRO industry provides outsourced product development and licensed
product support services on a contract basis to pharmaceutical and biotechnology
companies. The CRO industry has evolved from providing primarily preclinical
services in the 1970s to a full service industry today consisting of several
hundred small, limited-service providers and a handful of larger companies in
four broad service sectors. These sectors are (i) nonclinical laboratory testing
focused on product characterization and identification of potential
contaminants; (ii) contract manufacturing for clinical trials and commercial
purposes; (iii) animal-based chronic toxicology studies; and (iv) human clinical
trials management. BioReliance provides services in the first two of these
categories, primarily for biologics.

Generally, CROs derive substantially all of their revenue from the research
and development expenditures of client companies. Based on industry sources, in
1996 biotechnology and pharmaceutical companies worldwide spent an estimated $36
billion on research and development, of which an estimated $8 billion was spent
on research and development for biotechnology products in the United States.
BioReliance estimates that approximately $5 billion was spent specifically on
development activities for biotechnology products of the types conducted by
CROs. Of this $5 billion potentially available to CROs, the Company estimates
that approximately $1 billion actually was outsourced.

GENERAL TRENDS AFFECTING THE CRO INDUSTRY

BioReliance believes that the following general factors will cause client
outsourcing to CROs to increase:

COST CONTAINMENT PRESSURES AND ACCELERATED TIME TO MARKET

Cost containment pressure on pharmaceutical and biotechnology companies
have spurred the development of a pipeline of new, cost-effective products and
increased the need for timely testing and manufacturing of these many new
products, often simultaneously. Recently, pharmaceutical companies also have
been focusing on more efficient ways of conducting business because of margin
pressures stemming from patent expirations, market acceptance of generic drugs,
and political and regulatory pressures to reduce drug prices. By specializing in
nonclinical testing, contract manufacturing or clinical trials management, a CRO
often is able to perform these activities with a higher level of expertise or
specialization, more quickly, and at a lower cost than the client could achieve
internally. Many pharmaceutical and biotechnology companies are attempting to
lower fixed costs and shorten the development cycle for new products by
increasingly using the expertise and flexibility of CROs.

INCREASINGLY STRINGENT REGULATION

Increasingly stringent regulatory requirements throughout the world have
increased the quality and timeliness of information required for regulatory
filings and escalated the demands on testing and manufacturing during the drug
development process. CROs provide technical services that satisfy these rigorous
regulatory guidelines. In addition, the Company believes that the absence of
globally harmonized regulatory standards increases the importance of
international capabilities among competing CROs.

GLOBALIZATION OF THE MARKETPLACE

Pharmaceutical and biotechnology companies increasingly are outsourcing to
CROs that are deployed in key geographical markets worldwide. BioReliance
believes that CROs with market-specific technical and regulatory approaches,
well developed project management capabilities and local presence will benefit
from these trends. Providing testing specialized for the needs of local clients
and their regulating bodies in major markets is an important aspect of
successful competition. Also, certain services require clients to travel to the
CRO's laboratories for several days at a time, and the convenience of nearby
facilities is a competitive advantage.

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COMPLEXITY OF BIOLOGICS DEVELOPMENT

Virtually every stage of the biologics development process is more
challenging than that for chemical drugs. Producing a chemical drug is a
relatively straightforward process carried out in a reaction vessel that results
in a mixture composed primarily of the active drug ingredient, with any
impurities present in small amounts. By comparison, biologics are produced by
biological synthesis within genetically engineered cells or by isolation from
living tissues, because only living cells or tissues have the molecular
machinery necessary to produce such complex, naturally occurring biologics.
Since the biologic is produced by a living cell or tissue, cells must be
cultured in bioreactors (large, self-contained mixing vessels), specially
designed to keep large numbers of cells living and productive for extended
periods. The resultant unpurified material, in contrast to a chemical drug, is a
highly complex mixture of large and small molecules where the active ingredient
is present in a minute amount and impurities comprise the bulk of the material.
Biologics also may be coupled with other biologically active molecules, such as
toxins or radioactive labels, to alter or enhance their biological activity.
Thus, the process required to purify biologics to final dosage form is much more
complicated than that for chemical drugs.

The structure of a biologic is determined by its amino acid sequence,
overall size and shape, and the biochemical relationships among various parts of
the molecule. Because of the structural complexity of a biologic, the analytical
techniques used to ensure product integrity on a lot-by-lot basis must be
sensitive enough to detect trace quantities of slightly altered (and perhaps
inactive) forms of the product. Although sophisticated protein analysis
techniques have been available for some time, it has been only within the past
few years that sufficient expertise has been gained for their use with regulated
biologics. In 1996, the FDA introduced the Biologics License Application
("BLA"), among other regulatory changes, which may be substituted for the
previous Establishment License Application and the Product License Application.
Approval under a BLA, which can be obtained only if a biologic is properly
characterized using validated tests, permits a company to streamline its
development and manufacturing processes significantly. See "-- Trends Affecting
BioTesting and BioManufacturing Outsourcing -- New FDA Principles for
Biologics;" and "-- Government Regulation."

Demonstrating the safety of a biologic is critical for proceeding into
human clinical trials and ultimately obtaining regulatory approval to market the
product. There are significant and unique contaminant safety issues related to
the nature of a biologic product and the elaborate manufacturing techniques
employed. For example, the genetically altered cells used to produce the
biologic also may contain the genetic potential to make other, unwanted agents
such as viruses. Therefore, the cells used for manufacturing must be carefully
tested using advanced virology and molecular biology techniques to demonstrate a
low risk of the cell creating unwanted agents. Furthermore, the cells might
become infected during the culture process with contaminants from outside the
process, for example, bacteria. Thus, samples of bioreactor material also must
be taken at various points during the production process and tested by validated
techniques to verify that the bioreactor is not contaminated. To ensure safety
further, the product manufacturer also must demonstrate that the process used to
purify the bioreactor material to final product form is capable of removing
contaminants that may have escaped detection earlier in the production process.

Product formulation and stability also are major challenges to the
successful development of a biologic. Relative to chemical drugs, biologics are
extremely sensitive to their immediate environment, and the process of
developing a suitable, stable formulation is difficult. A poor formulation can
be responsible for a reduced therapeutic effect during human clinical trials.
Likewise, the stability of a biologic is influenced by the formulation, and,
since many biologics are formulated as liquids, the stability issue is critical
to the development of a marketable product. Typically, a biologic will require
stability testing of several candidate formulations. The product's structural
integrity during the stability study (which may last for several years) is
measured by the same validated bioanalytical techniques that are used to assess
the product's integrity on a lot-by-lot basis. Furthermore, the formulation must
maintain structural integrity through final packaging, inventory storage,
distribution to clinical sites and administration to patients.

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COMPETITIVE BARRIERS TO ENTRY IN BIOLOGICS

There are several significant barriers to entry for companies attempting to
establish themselves as CROs focused on biologics development. Foremost among
these is technical expertise, which can take years to develop because of the
breadth of scientific knowledge that is required to deal with the complexity of
biologics. Elaborate, technology-based systems are necessary, requiring
organization of relatively large teams of scientists and technicians. Another
significant barrier is regulatory expertise, which also can take years to
develop. To be successful in biologics development, a CRO must develop the
knowledge, reputation and experience to navigate the regulatory process not only
in the United States, but also in various other countries with different
regulations. Significant amounts of capital also are required to become a CRO
with broad service capabilities in biotesting and biomanufacturing.

TRENDS AFFECTING BIOTESTING AND BIOMANUFACTURING OUTSOURCING

In addition to the trends of cost containment, increasingly stringent
regulations, and globalization, which are affecting the CRO industry generally,
there are a number of trends specifically driving increased outsourcing for
biotesting and biomanufacturing. These factors are:

BIOLOGICS INCREASING IN IMPORTANCE

Companies engaged in the development and manufacture of biologics have
grown rapidly in number and size over the past ten years and now are introducing
significant numbers of new biologics that require regulatory approval. During
the past five years, the number of biotechnology products in Phase I, II or III
clinical trials in the United States has risen steadily, from slightly over 100
in 1991 to over 250 in 1996. During this same period, the number of licensed new
biologics has increased over 150% (from 23 to 58). Also, from 1991 through 1996,
BioReliance believes, based on industry sources, that the market sales of
licensed biologic products have more than doubled, to over $6
billion -- outstripping the rate of growth for chemical drugs. The Company
believes that these trends will continue as an increasing number of biologics
are approved in the United States and the growth of the biologics sector
accelerates in Europe and Japan.

BioReliance believes that the rapid growth of genomics technologies over
the past five years -- specifically molecular cloning, large-scale restriction
mapping, DNA sequencing and computational analysis, will significantly increase
the number of candidates for new biologics development and further fuel the
"conversion" of the pharmaceutical industry from chemical drugs to biologics.
BioReliance, with its focus on biologics, its involvement with clients at early
stages in product development, and its strong international presence, believes
it will be among the first CROs to benefit from these new developments.

BIOLOGICS REQUIRE SIGNIFICANT TECHNICAL AND REGULATORY EXPERTISE

BioReliance believes that the need for outsourcing to CROs is greater among
biotechnology and pharmaceutical companies developing biologics than generally
in the pharmaceutical industry. The principal reasons for this are the relative
sophistication of the technologies and skills required to test and manufacture
biologics, and the complexity and relative newness of the regulatory
environment. Start-up and so-called "virtual companies," which increasingly are
becoming players in biologics development, possess little or no infrastructure
to develop the technical or regulatory expertise required to bring a biologic to
market and must rely on CROs for most or all of their biologic development
needs. In addition, small and midsize companies often cannot afford to keep all
of the functions required for biologics development in house and, therefore,
must outsource biologics development to CROs. Even large companies may decide
that it is too expensive to establish or maintain the expertise necessary for
biologics development in house and may outsource to CROs to reduce fixed costs,
streamline biologics development and decrease time to market.

NEW FDA PRINCIPLES FOR BIOLOGICS

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products includes most of the biologics now under development by pharmaceutical
and biotechnology companies; namely, monoclonal antibodies, recombinant DNA
(protein) products, synthetic therapeutic peptides of less than 40 amino acids,
and synthetic plasmid nucleic acid therapeutics. The FDA recognizes that
reliable bioanalytical techniques now are available that enable accurate
characterization of these structurally complex products. Therefore, the FDA will
forego some of its strict adherence to manufacturing process standards for
biologics if certain validated, bioanalytical tests are performed on each lot of
final product. Specified biologics for which bioanalytical techniques have been
developed, validated and accepted by the FDA are termed "well-characterized"
products by the FDA.

The FDA will provide other important benefits and exemptions for
well-characterized products. Biologics developers now will have more flexibility
in engaging independent contract suppliers for each portion of the manufacturing
process, so long as they ensure that each contract manufacturer employed meets
manufacturing compliance requirements. In addition, the FDA no longer requires
an "Establishment License" for a facility designated for the production of a
specified, well-characterized product. Until recently, the large-scale facility
necessary for licensed production was needed prior to product approval. The new
approach enables the use of a smaller, pilot-scale facility owned by the
developer or a contract manufacturer for the production of clinical trials
materials, including those for pivotal Phase III trials, and of licensed
products. BioReliance believes that developers of biologics will pursue CROs
that understand these new guidelines and can provide the full range of services
to support the proper characterization and documentation for biologics. See
"-- Government Regulation."

BUSINESS STRATEGY

BioReliance believes a number of significant competitive advantages have
allowed it to become a leading biologics CRO, including the following:

- scientific and technological expertise in biologics development;

- proven regulatory expertise;

- a widely-known reputation for providing high-quality biologics
development services;

- a large and established client base; and

- an international presence supported by scientific, regulatory and
operating capabilities.

BioReliance's strategy is to leverage these competitive strengths with new
services and selected acquisitions and to expand further into the growing
biologics market. The principal elements of this strategy are outlined below.

FOCUS ON THE BIOLOGICS SECTOR

BioReliance targets its services to the rapidly growing biologics sector,
where the Company has proven it has the skills, experience and presence
necessary to compete successfully in a demanding market. BioReliance believes
that this sector provides significant opportunities for the following reasons:
(i) the methods, tools and specialties of biotechnology on which the services
are based are complex, changing rapidly and distinct from those of chemical drug
development and manufacture; (ii) different regulatory requirements,
administered by different government departments, must be met; and (iii) clients
can benefit from contract support in meeting the critical demands of product
development, improving time to market, meeting specialized international
regulatory requirements, building successful partnerships and developing
sustainable economics for their production businesses.

PROVIDE A BROAD RANGE OF SERVICES

BioReliance will continue to offer a broad range of product development and
manufacturing services to its clients. The Company recently has taken steps to
offer additional services by adding BioAnalytical Services in 1995, and intends
to continue providing additional services as required by clients. This strategy
will enable the Company to compete more effectively for business because: (i) a
full range of related services provides a

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<PAGE> 33

client with the choice of efficiently using just one provider from the service
sector; (ii) an integrated provider of these services can create cost-saving
economies of scale and operating efficiencies to accelerate the client product
through development; and (iii) conducting the earliest preclinical testing
services provides a CRO with early entry to the client's outsourcing needs and
promotes the client's use of later stage services, especially contract
manufacturing.

ENHANCE LEADERSHIP POSITION IN BIOTESTING

Over the years, BioReliance continuously has enhanced its leadership
position in biotesting services. The Company has developed successfully from
offering the earliest biosafety assays to providing expertise in gene therapy
product testing, molecular carcinogenicity studies, biodistribution studies for
DNA-based products, complete bioanalytical product characterizations and other
advanced biotesting services. The Company believes that it has a major share of
the current international market for these services and intends to continue to
increase its market share in this rapidly expanding field.

BioReliance intends to extend this leadership position to new areas in
biotesting. Specifically, the Company believes there will be significant new
opportunities in BioAnalytical and BioSafety Testing due to regulatory and
market pressures. In 1995, the Company established its BioAnalytical Services
division in response to clients' expressed needs for development of analytical
techniques to characterize their products more accurately and in anticipation of
new FDA guidelines published during 1996. Expansion is expected primarily from
the addition of formulation development and stability study capabilities
launched in early 1997. The Company will continue to focus on client and
regulatory needs to create and improve a multiplicity of biotesting
capabilities. To do so, the Company will employ its internal development team to
convert research-based laboratory techniques to more practical, reliable and
validated procedures.

EXPAND BIOMANUFACTURING CAPABILITIES

With the increasing number of biologics and the expertise required to
satisfy new regulations, outsourcing is growing rapidly for the manufacturing of
biologics. Based on the Company's reputation and large client base for
biotesting services, BioReliance successfully entered the biomanufacturing
sector in 1993. To develop further its biomanufacturing capabilities,
BioReliance plans to (i) expand its viral production capabilities, driven by
market demand, to scales required for larger Phase III and, eventually, licensed
product production; (ii) augment its microbial fermentation capacity with
additional large volume fermentation capacity; and (iii) pursue client driven
opportunities to provide additional formulation and filling capabilities. Each
of these activities will continue to be coordinated with enhanced biotesting
capabilities specifically fitted to manufacturing needs.

MAINTAIN LEADING REGULATORY EXPERTISE

BioReliance believes that it is the first biologics CRO to build an
effective, worldwide science and regulatory network and that this early position
will continue to provide a competitive advantage. The Company has a decades-long
record of supporting successful regulatory submissions with hundreds of clients
worldwide. It has introduced numerous innovations in biotesting and
biomanufacturing under strict regulatory guidelines, earning a reputation for
quality and dependability with both clients and regulatory authorities that
cannot be duplicated with technical and financial resources alone. This
reputation continuously brings BioReliance opportunities to serve its clients
with new or improved services, advancing the state-of-the-art in biotesting and
biomanufacturing.

EXPAND THROUGH SELECTED ACQUISITIONS

As part of its business strategy, and in a continuing effort to enhance its
capabilities to serve the global needs of its clients, BioReliance considers
strategic acquisitions on an ongoing basis. In addition to considering the
business of the acquisition candidate, the Company evaluates the ease with which
an acquisition candidate may be integrated into the Company's organizational
structure. The Company believes that its initial acquisitions, if any, most
likely would be of service providers within the sectors it already has
significant

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<PAGE> 34

experience. In the third quarter of 1996, BioReliance enhanced the breadth of
its BioManufacturing Services through the acquisition of BIOMEVA.

BIOLOGICS DEVELOPMENT PROCESS

Under the regulatory system of the United States, the product cycle for new
pharmaceuticals can be divided into three distinct stages: preclinical
development, clinical development and licensed product. The preclinical
development stage involves the discovery, characterization, product formulation
and biological trials necessary to prepare an Investigational New Drug ("IND")
exemption for submission to the FDA. The IND must be acceptable to the FDA
before either a biologic or chemical drug can be tested in humans. The second,
or clinical stage of development follows a successful IND submission and
involves the activities necessary to demonstrate the safety, tolerability,
efficacy and dosage of the active substance in humans, as well as the ability to
manufacture the substance in accordance with the FDA's GMP regulations. For
biologics, data from these activities are compiled in a Product License
Application or, if a specified biologic, in a Biologic License Application, and
submitted to the Center for Biologics Evaluation and Research (CBER) of the FDA
requesting approval to market the product. The third stage, or licensed product
(approved product) stage, follows FDA approval of the Product License
Application or Biologics License Application, and involves the manufacture,
distribution and clinical monitoring of the product. The licensed product stage,
during which the biologic can be marketed as a product, also involves the
development and regulatory approval of product modifications and line extensions
of the original product.

SERVICES

BioReliance provides two broad types of contract services, BioTesting
Services and BioManufacturing Services, each of which spans the product cycle
from early preclinical development through licensed production. The Company's
comprehensive BioTesting Services are organized into three divisions. These are
BioSafety Testing, BioAnalytical Services and preclinical BioTrials. The
Company's contract BioManufacturing Services currently include both viral
production and microbial fermentation. The only significant CRO services not
provided by BioReliance are chronic toxicology studies and human clinical trials
management.

Compared to CROs specializing in human clinical trials management,
BioReliance's involvement with clients begins at a much earlier stage of product
development, most often well before any clinical trials are initiated. In the
Company's experience, preclinical services lead to increased business for later
stage services, including manufacturing, by providing an entry at the earliest
stage of product development. The Company provides these services to clients at
every stage of product development and manufacture, including in-process and
final testing of licensed biologics.

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<PAGE> 35

The following figure illustrates the development process for biologics and
the component activities involved in each of the three stages. The figure also
illustrates the areas of BioReliance's service offerings (shaded areas).

CRO SERVICES FOR BIOLOGICS DEVELOPMENT

<TABLE>
<CAPTION>
PRODUCT STAGE PRECLINICAL CLINICAL LICENSED
DEVELOPMENT DEVELOPMENT PRODUCT
(2-4 YEARS) (4-6 YEARS)

ACTIVITIES: IND PLA OR BLA
\/ \/
<S> <C> <C> <C>
DISCOVERY Cell Engineering..............}
Screening & Selection.........}

BIOSAFETY Cell Bank Characterization*...} Purification Process Validation*}
In-Process Product Testing*................................................}
Final Product Testing*.....................................................}

BIOANALYSIS Product Characterization*........................................}
& Methods Validation*..............................................}
FORMULATION Formulation Development*.........................................}
Product Stability Testing*.................................................................................}
Product Consistency Testing*...............................................}

BIOMANUFACTURE Cell Banking*.................} Biorepository*.............................................................}
Production*................................................................................................}
Purification*..............................................................................................}
Final Formualation & Filling*..............................................}

BIOLOGICAL In Vitro Studies*.............}
TRIALS Short-Term In Vivo Studies*...} Chronic Toxicology...............}
Molecular Studies*............}

CLINICAL TRIALS Clinical Plan Development.....} Human Clinical Trials............} Adverse Reactions......................}
IND Preparation...............} PLA or BLA Preparation...........} Product Defects........................}
New Indications........................}

</TABLE>

* Services currently offered by BioReliance

BIOTESTING SERVICES

BioSafety Testing

BioSafety Testing includes assessments of cell banks used to manufacture
biologics, validation of purification processes for clearance of adventitious
agents such as viruses, and testing of in-process and final products. The
Company pioneered biosafety testing during the development of the first
biologics, including Genentech's Activase(R) and Ortho Pharmaceutical's
Orthomune OKT(R)3, in the early 1980s. The Company believes that it has a major
share of the current international market for these services and intends to
continue to increase its market share in this rapidly expanding field.

Cell Bank Characterization. The starting point for manufacture of a
biologic is a cell bank, consisting of a large number of vials of cryopreserved
cells. Each bank must be free of any detectable biologic contaminants.
BioReliance performs all the FDA-required tests to characterize cell banks with
respect to the presence of biologic agents such as viruses, mycoplasma and
bacteria. The Company also confirms the species and identity of cell lines. A
biologic may not proceed to human clinical trials without these tests.

Purification Process Validation. BioReliance conducts validation of client
purification processes to determine the process' capability for clearance
(removal or inactivation) of certain biological agents such as viruses,
mycoplasma and DNA. The client typically conducts a small-scale version of its
purification process at the Company's facilities. A biologic product will not be
licensed if these studies are not performed.

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<PAGE> 36

BioReliance has the capacity to perform large studies (for example, studies
involving multiple purification steps and simultaneous testing with multiple
biological agents), and the Company has dedicated laboratory suites for the
performance of these studies in the United States and the United Kingdom and
under development in Germany. Only one other CRO presently offers the
convenience to clients of having similar suites in both the United States and
Europe.

In-Process and Final Product Testing. The Company tests the biologic
during intermediate states of manufacture (i.e., prior to purification) and as a
final purified product. Each production lot must be tested for the presence of
specified biological agents both prior to and after the purification process. In
addition, the Company tests the final purified (and vialed) product, on a
lot-by-lot basis to detect the presence of microbial and other agents. This
FDA-required testing currently must be compliant with GLPs. The Company,
however, as a leader in ensuring the quality of biologics, holds itself to the
more stringent GMP requirements in its lot release testing, which are the same
requirements that must be met in manufacturing processes. Tests are performed on
each lot of a manufactured product throughout its clinical development and
commercial marketing.

BioAnalytical Services

The Company's BioAnalytical Services division was formed in 1995 in
response to clients' expressed needs for development of analytical techniques to
characterize biologics better in anticipation of new FDA regulations and
guidelines published during 1996 that permit the development and manufacturing
processes for well-characterized biologics to be streamlined. It is an outgrowth
of prior biotesting relationships with clients and regulators. Expansion is
expected primarily from the addition of formulation development and stability
study capabilities launched early in 1997.

Product Characterization and Methods Validation. The Company's
BioAnalytical Services focus on protein characterization to show that a
molecule's structure meets predefined criteria. Generally, identity, purity,
concentration and molecular weight are important defining parameters. Methods
based on SDS PAGE, isoelectric focusing, N-terminal sequencing, high performance
liquid chromatography (HPLC), peptide mapping, amino acid analysis,
LC-electrospray mass spectrometry (LC-MS), and matrix assisted laser
desorption/ionization time-of-flight (MALDI-TOF) mass spectrometry routinely are
validated for clients in a GMP environment by the Company.

Each biologic product presents a unique set of bioanalytical challenges.
The size, shape and internal structure of the molecule determine the methods
employed to fully characterize it in a manner suitable for regulatory
submission. Generally, several different methods are required to fully
characterize a biologic molecule. For a product license submission, it also is
necessary to develop and rigorously validate each analytical method. BioReliance
believes that it has the scientific experience and state-of-the-art analytical
instrumentation to make it one of the leading CROs committed to biologics
product development.

Formulation Development, Product Stability and Consistency Testing. The
Company's BioAnalytical Services provide the full spectrum of formulation
development, stability testing and consistency testing services to client
companies. Biologics are extremely sensitive to their immediate environment, and
a suitable, stable formulation must be developed so that the product can be
administered in active form to patients. The structural uniqueness of each
product demands its own formulation -- a poor formulation can be responsible for
a reduced therapeutic effect during clinical trials. The formulation also plays
a key role in the stability of the product. Typically, several candidate
formulations are developed and the relative product stability is compared for
each formulation over an extended period of time (usually months to years) under
a variety of conditions (temperature, humidity, etc.). The product's stability
is measured by the same validated bioanalytical techniques that are used to
assess the product's structural integrity on a lot-by-lot basis. The goal is a
formulation in which the product remains active through final packaging,
inventory storage, distribution to clinical sites and administration to
patients. One of the major impacts of a successful formulation will be to extend
the shelf-life of a biologic -- an extended shelf-life can have a significantly
positive economic impact for the client. Finally, the FDA requires that the
product maintain its structural identity and activity from lot-to-lot,
throughout the product's commercial lifetime.

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BioTrials

For over twenty years, BioReliance has provided in vitro and in vivo
testing services to assess the genetic safety of pharmaceutical and chemical
products. With the advent of biotechnology, BioReliance has developed
specialized assays to assess the safety of a variety of biologic products, from
genetically engineered proteins to DNA plasmids used in gene therapy clinical
trials. The greatest future growth in the BioTrials division is anticipated to
come from the application of molecular biological techniques to assess chemical
carcinogenicity as described below.

In Vitro Studies. BioReliance conducts a wide array of preclinical
biological trials employing primarily in vitro ("test tube") approaches to
assess toxicological effects of biologics and other substances. These studies
include genetic safety assays for the detection of gene mutations, chromosome
damage, primary DNA damage and cell transformation. The Company is well
positioned in providing these services with its experienced scientific staff and
new state-of-the-art laboratory facilities. BioReliance custom designs testing
batteries and protocols to comply with international guidelines (which are
different among the United States, Europe and Japan), and these are conducted in
full compliance with GLPs. An additional in vitro service provided by the
Company includes the detection of infectious agents, primarily viral, in
laboratory animals used for research purposes by clients worldwide.

In Vivo and Molecular Studies. BioReliance currently offers several types
of short-term in vivo ("animal") studies, primarily designed to refine dose
levels during the preclinical stage of product development. Motivating the
development of new in vivo services is a regulatory consensus forming in the
United States not only to reduce the duration and costs of expensive chronic
studies, but also to provide mechanistic data enabling earlier prediction of the
carcinogenic potential of a drug or chemical.

BioReliance is engaged in a contract sponsored by the National Institute of
Environmental Health Sciences (NIEHS) to determine whether tumor formation can
be induced by known carcinogens in certain strains of transgenic mice. The
advantage of such an approach would be to shorten the "in life" portion of
long-term carcinogenicity studies from two years to six months.

Utilizing its experience in molecular biology, the Company believes that it
can determine and measure the initial molecular and cellular events which
culminate in tumor formation, reducing the "in life" portion of the study
further, thereby lowering the per-study cost significantly. BioReliance expects
that combining molecular detection assays with this approach will provide a
compelling economic incentive for product developers to perform these new
molecular carcinogenicity studies. The worldwide annual expenditure for
traditional chronic toxicology studies currently exceeds $1 billion. The Company
believes that traditional chronic studies will be at first augmented by, and
then replaced with, this molecular approach if it proves to be successful. Among
CROs, BioReliance believes it has the early technological lead for commercial
development of these advanced molecular assays.

Employing its molecular biology expertise from the emerging gene therapy
sector, the Company has developed a unique assay system in which specialized
small animal models are coupled with advanced polymerase chain reaction (PCR)
techniques to detect the presence of therapeutic DNA distributed in tissues and
organs throughout the body. This specialized biodistribution study is important
for gene therapy and other DNA-based products because the "active ingredient" is
a genetic element that may have serious side effects if delivered to sites
outside the target area within the body. For developers of DNA-based products,
these studies now are required by the FDA prior to the first administration to
humans in clinical trials.

BIOMANUFACTURING SERVICES

BioReliance's contract BioManufacturing Services currently include both
viral production and microbial fermentation. The rapid progress of gene therapy
products into Phase I/II human clinical trials and the emergence of cancer
oncolytics have fueled the significant growth of biomanufacturing revenue for
the Company from viral production services from 1993 to 1996. The Company's
acquisition of BIOMEVA during 1996 has opened the opportunity for expansion of
microbial production services over the next few years. Cell banking and
biorepository services are parts of both manufacturing capabilities.

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<PAGE> 38

Cell Banking and Biorepository. A cell bank is a collection of
cryopreserved vials, usually several hundred in number, which is held in a
frozen state (at liquid nitrogen temperatures). Each vial contains genetically
altered cells that are used for production of the biologic product. Typically,
each biologic product will have both a Master Cell Bank ("MCB") and a Working
Cell Bank ("WCB"). As the name implies, the WCB is the bank from which frozen
vials are withdrawn, the cryopreserved cells are thawed, and the live cells are
used to seed a bioreactor vessel for culture and production of the biologic
product. The MCB is the bank from which additional WCBs are manufactured, if
needed. Since the MCB and WCB are parts of the manufacturing process, they must
be created in compliance with GMPs. BioReliance offers this capability in both
the United States and Europe. The long-term storage of such vials is called a
biorepository, which also must be maintained under strict GMP guidelines.

Production and Production Development. Generally, biologics are
manufactured either by genetically altered mammalian cells (if the molecular
structure is complex) or genetically altered microbial cells (if the molecular
structure is relatively less complex). BioReliance offers mammalian cell culture
services to developers of viral-based products, particularly gene therapies,
viral vaccines and cancer oncolytics. In 1988, the Company began pioneering
assays to support the development of gene therapy products. The Company has been
involved in testing materials for over 70% of all gene therapy human clinical
trial protocols that have been approved by regulatory bodies in the United
States, Europe and Japan. Building on this early testing capability, in 1993 the
Company established an independent contract manufacturing service for companies
and research institutes developing gene therapies, which it believes was the
first of its kind. Formed as a wholly owned subsidiary, MAGENTA drew upon the
Company's many years of experience in viral testing and small scale
manufacturing. BioReliance now has four GMP-compliant viral manufacturing suites
in its Rockville, Maryland headquarters and two additional suites in Stirling,
United Kingdom. Combined, these facilities have manufactured more than 60 lots
of human clinical trial material for gene therapy clinical trials in the United
States, Europe and Japan. The Company has specific experience in manufacturing
retroviruses, adenoviruses, adeno-associated viruses and cells as tumor
vaccines. The early-stage nature of these therapies demands that specific
production techniques are developed for each product, much the same as with
other biologic products. MAGENTA offers these production development services as
part of its manufacturing "package" to clients.

At the present time, the most advanced of MAGENTA's clients are engaged in
Phase II clinical trials. However, the Company's manufacturing capacities are at
the 100 liter per lot size -- more than sufficient for many Phase III viral
therapy trials. As more gene therapy and other viral products reach Phase III
and the market, and their manufacturing requires scales beyond 100 liters, the
Company plans to construct appropriate facilities according to market demand.

In 1996, the Company expanded its biomanufacturing capabilities by
acquiring BIOMEVA, an established contract manufacturing company located in
Heidelberg, Germany. BIOMEVA has been serving clients since 1989 and offers
GMP-compliant contract fermentation services for recombinant and natural
microorganisms, with bioreactor working volumes up to 1,000 liters. The
microbial fermentation capabilities of BIOMEVA allow BioReliance to provide
manufacturing services not only to viral vector gene therapy companies (through
MAGENTA), but also to gene therapy companies that are employing "naked" DNA or
plasmid DNA as a vector (rather than viruses). Besides manufacturing, BIOMEVA
offers scale-up and development for production processes and provides
bioanalytical testing of proteins and other biologics.

Purification and Purification Development. Both MAGENTA and BIOMEVA
provide purification services for production clients. Similar to production
services, purification techniques must be developed on a product-by-product
basis. At the present time, MAGENTA is developing GMP-compliant chromatographic-
based techniques for the large-scale purification of viruses. These techniques
will be necessary as emerging gene therapy and other viral products progress to
Phase III clinical trials.

Final Formulation and Filling. For its viral production clients, MAGENTA
offers final formulation and filling services. Filling involves dispensing the
final purified clinical product into individual containers suitable for shipment
to the client for further processing or into formulated, individual dosage forms
suitable for administration to individual patients in a human clinical trial.
For its microbial-based production clients, BIOMEVA does not currently offer
final filling services. The bulk of BIOMEVA's business is for large-scale

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<PAGE> 39

production of licensed biologics, and, hence, the filling needs are quite
substantial and would require an automated filling line. It is the intention of
BioReliance to develop large-scale automated filling capabilities for both its
gene therapy and other biologics clients. Such facilities likely will be located
both in the United States and Europe.

INFORMATION SYSTEMS

Although BioReliance is fundamentally a laboratory science based business,
digital information systems are an important component of the Company's
technological leadership. The Company believes that superior information systems
are essential to expanding its operations and to providing innovative services
to clients, for timely, accurate reporting and to enable clients to monitor
their projects better. The Company's customized laboratory information
management system (LIMS) is integral to daily BioTesting operations, and a new
version of the current system is in development, based on user requirements and
facilitated by new digital technologies. The Company relies upon an efficient
corporate order processing system (COPS) for management of client information,
beginning with sales inquiry information and tracking activities throughout the
client service cycle. This is linked to an accounting-based management
information system (MIS) that maintains progress billing and other client
account records. All systems are oriented to the support of timely, accurate
study information and client interactions.

The FDA has become increasingly sophisticated with respect to information
systems and the integrity of all forms of data incorporated into regulatory
submissions. Correspondingly, BioReliance strives to be at the forefront of
nonclinical testing laboratories in validation of hardware and software systems.
The Company's continuing commitment to technological innovations and meeting
changing client and regulatory requirements will drive continuous improvement of
its information systems technology, maintaining a competitive advantage.

CLIENTS

BioReliance provides its commercial services on a worldwide basis to
biotechnology and pharmaceutical companies. In 1996, BioReliance conducted
studies with over 600 clients, approximately 90% of whom are repeat clients of
the Company, including some of the largest United States, European and Japanese
pharmaceutical companies. BioReliance provided services during 1996 to 22 of the
25 largest pharmaceutical companies in the world, as ranked by 1995 health care
revenue, and 18 of the 25 largest public biopharmaceutical companies in the
United States, as ranked by market capitalization at December 12, 1996. The
Company's ten largest commercial clients by contract revenue accounted for 27%
of the Company's revenue during 1996. On a pro forma basis assuming that the
acquisition of BIOMEVA occurred on January 1, 1996, the Company's ten largest
commercial clients by contract revenue accounted for 30% of the Company's
revenue during 1996. The business for eight of these clients was made up of
multiple contracts.

MARKETING AND BUSINESS DEVELOPMENT

The Company's marketing and selling activities primarily are conducted by
its own marketing and sales staff. All of BioReliance's account managers have
technical or scientific backgrounds in virology, molecular biology, protein
purification, toxicology or regulatory affairs (or a combination of these
disciplines). Account managers are located in Rockville, Los Angeles and Boston
(United States); Stirling (United Kingdom) and Heidelberg (Germany). Direct
sales in Japan are handled by Kasho Company Ltd. (Tokyo), a large trading
company with business representing United States and European companies in the
life sciences area. Direct sales in Australia are handled by Scientific
Associates P/L (Sydney).

Individual BioTesting projects are managed in the United States by a
professional project management department, staffed entirely by individuals with
extensive laboratory experience, much of that gained in the Company's
laboratories. BioReliance coordinates its worldwide marketing, selling and
project management activities through a computerized lead management and
laboratory information management system that is integrated into each of the
Company's laboratory and sales locations.

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<PAGE> 40

CONTRACTUAL ARRANGEMENTS

BioReliance routinely enters into several different types of contractual
relationships with its commercial clients. BioTesting Services contracts can be
quotations, based upon established price lists for individual services, or work
proposals, most often for larger studies composed of a variety of services. A
majority of BioSafety Testing contracts range in length from a few weeks to
several months; however, certain stability testing and lot release testing
contracts may be one to two years in length. BioManufacturing contracts tend to
be relatively longer because of the length of time required to create and
characterize cell banks, perform pilot production runs, and produce and test the
products. These contracts require a formal statement of work and range in length
from six months to over two years. Government contracts, usually multi-year, are
in formats consistent with the particular granting agency.

Generally, service contracts are terminable by the client upon notice of 30
days or less. Although the contracts tend to be short in duration and typically
include payment of certain fees based upon project expenditures to date, the
loss of a large contract or the loss of multiple contracts could adversely
affect the Company's future revenue and profitability. Contracts may be
terminated for a variety of reasons, including the client's decision to forego a
particular study or to cancel a particular product development program, the
failure of a clinical trial, and unexpected or undesired results of the product
testing.

During 1996, 10% of the Company's revenue was derived from contracts with
various governmental agencies. Most of these contracts were for BioTesting
Services. The Company generally performs services under cost-plus-fixed-fee
contracts, where the government agency reimburses the Company for allowable
costs incurred and pays the Company a negotiated fixed fee, up to contract
funding amounts.

A federal government contract may be modified or terminated at any time for
the convenience of the government, including for changes in requirements or
reductions in budgetary resources. If a contract is modified, the price of the
contract would be adjusted equitably. If a contract is terminated for
convenience, the Company would be reimbursed for reasonable costs plus a
reasonable profit on work actually performed. In the event that the contract
would have resulted in a loss, the reimbursed amounts would be adjusted
proportionately to reflect the anticipated loss. State governments with which
the Company contracts have statutory or regulatory provisions relating to
government contracting that are generally comparable to those of the federal
government.

As a contractor, the Company believes that it has complied in all material
respects with applicable government requirements. In certain circumstances where
a contractor has not complied with the terms of a contract or with regulations
or statutes, the contractor may be debarred or suspended from obtaining future
contracts. Any such debarment or suspension could have a material adverse effect
upon the Company's business and results of operations.

Due to the short duration of most of the Company's contracts, BioReliance
does not believe that backlog is a meaningful indicator of its future results.

COMPETITION

The CRO industry is highly fragmented, with several hundred producers
ranging in size from one person consulting firms to full-service global drug
development corporations. The Company primarily competes with in-house research
departments of biotechnology and pharmaceutical companies, universities and
medical centers, and other CROs, some of which may possess substantially greater
capital, technical and other resources than the Company. The Company's primary
CRO competitors are different in each of its service areas. For BioSafety
Testing, its primary competitors are Inveresk Research International Ltd. and
Q-One Biotech Ltd.; for BioAnalytical Services, Tektagen, Inc. and Applied
Analytical Industries, Inc.; for BioTrials, Covance Laboratories, Inc., SRI
International, Inc. and Charles River Laboratories, Inc.; and for
BioManufacturing Services, Bio-Intermediair Europe b.v. and Q-One Biotech Ltd.
As a result of competitive pressures, the CRO industry is consolidating. This
trend is likely to produce increased competition among the larger CROs for both
clients and acquisition candidates. In addition, the CRO industry has attracted
the attention of the investment community, which could lead to heightened
competition by increasing the

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<PAGE> 41

availability of financial resources for CROs. Increased competition may lead to
price and other forms of competition that may affect the Company's margins. The
Company believes the principal competitive factors in its business are
scientific and technological expertise, reputation, regulatory experience, the
ability to offer a full range of biologics development services, international
presence and price.

POTENTIAL LIABILITY AND INSURANCE

BioReliance maintains product liability and professional errors and
omissions liability insurance, providing $13 million in coverage on a
claims-made basis. In addition, in certain circumstances the Company seeks to
manage its liability risk through contractual provisions with clients requiring
the Company to be indemnified by the client or covered by clients' product
liability insurance. In addition, in certain types of engagements, the Company
seeks to limit contractual liability to its clients to the amount of fees
received by the Company. The contractual arrangements are subject to negotiation
with clients and the terms and scope of such indemnification, liability
limitation and insurance coverage vary from client to client and from project to
project. Although many of the Company's clients are large, well-capitalized
companies, the financial performance of their indemnities is not secured.
Therefore, BioReliance bears the risk that the indemnifying party may not have
the financial ability to fulfill its indemnification obligations or that
liability would exceed the amount of applicable insurance. In addition, the
Company could be held liable for errors and omissions in connection with the
services it performs. There can be no assurance that the Company's insurance
coverage will be adequate or that insurance coverage will continue to be
available on terms acceptable to the Company. See "Risk Factors -- Potential
Liability."

GOVERNMENT REGULATION

The FDA recently introduced new approaches to the regulation of biologics
that benefit BioReliance and many of its clients. The FDA has published a list
of "specified" biologic products that are eligible for new guidelines reducing
the complexity of the product development and licensing process. The list of
specified products includes most of the biologics now under development by
pharmaceutical and biotechnology companies; namely, monoclonal antibodies,
recombinant DNA (protein) products, synthetic therapeutic peptides of less than
40 amino acids, and synthetic plasmid nucleic acid therapeutics. The FDA
recognizes that reliable bioanalytical techniques now are available that enable
accurate characterization of these structurally complex products. Therefore, the
FDA will forego some of its strict adherence to manufacturing process standards
for biologics if certain validated, bioanalytical tests are performed on each
lot of final product. Specified biologics for which bioanalytical techniques
have been developed, validated and accepted by the FDA are termed
"well-characterized" products by the FDA.

The services performed by BioReliance are subject to various regulatory
requirements designed to ensure the quality and integrity of pharmaceutical
products, primarily under the Federal Food, Drug and Cosmetic Act and associated
GMP regulations which are administered by the FDA in accordance with current
industry standards. These regulations apply to all phases of drug manufacture,
testing and record keeping, including personnel, facilities, equipment, control
of materials, processes and laboratories, packaging, labeling and distribution.
Noncompliance with GMPs by the Company in a project could result in
disqualification of data collected by the Company in the project. Material
violation of GMP requirements could result in additional

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<PAGE> 42

regulatory sanctions, and in severe cases could result in a mandated closing of
the Company's facilities, which would have a material adverse effect on the
Company's business and results of operations.

To help assure compliance with applicable regulations, BioReliance has
established quality assurance controls at its facilities that monitor ongoing
compliance by auditing test data and regularly inspecting facilities, procedures
and other GMP compliance parameters. In addition, FDA regulations and guidelines
serve as a basis for the Company's standard operating procedures. Certain of the
Company's development and testing activities are subject to the Controlled
Substances Act, administered by the Drug Enforcement Agency ("DEA"), which
regulates strictly all narcotic and habit-forming substances. The Company
maintains restricted-access facilities and heightened control procedures for
projects involving such substances due to the level of security and other
controls required by the DEA. In addition to FDA regulations, the Company is
subject to other federal and state regulations concerning such matters as
occupational safety and health and protection of the environment.

BioReliance's activities involve the controlled use of hazardous materials
and chemicals. The Company is subject to foreign, federal, state and local laws
and regulations governing the use, storage, handling and disposal of such
materials and certain waste products. The risk of accidental contamination or
injury from these materials cannot be completely eliminated. In the event of
such an accident, the Company could be held liable for any damages that result
which could have a material adverse effect on the Company's business and results
of operations.

EMPLOYEES

At December 31, 1996, the Company had 371 full-time equivalent employees,
of which 50 held Ph.D. or other doctoral degrees and 34 others held masters or
other post-graduate degrees. The Company believes that its relations with its
employees are good. None of the Company's employees is represented by a union.

The Company's performance depends on its ability to attract and retain
qualified professional, scientific and technical staff. The level of competition
among employers for such skilled personnel is high. The Company believes that
its employee benefit plans, including its health benefits, merit bonus and
employee stock option plans, enhance employee morale, professional commitment
and work productivity and provide an incentive for employees to remain with the
Company. While BioReliance has not experienced any significant problems in
attracting or retaining qualified staff, there can be no assurance that the
Company will be able to avoid these problems in the future. All employees enter
into confidentiality agreements protecting the Company's proprietary
information, as well as client-confidential material.

FACILITIES

BioReliance's principal administrative offices are located in Rockville,
Maryland in a 10,000 square foot leased facility. The Company currently leases
three laboratory facilities and owns a fourth facility in Rockville, Maryland,
totaling approximately 100,000 square feet of operational and administrative
space. In addition, the Company leases laboratory, manufacturing and
administrative facilities of approximately 11,000 square feet in Stirling,
United Kingdom and approximately 20,000 square feet in Heidelberg, Germany.
BioReliance maintains sales offices in Boston, Massachusetts, and Los Angeles,
California; and European sales offices in Stirling, United Kingdom, and
Heidelberg, Germany. BioReliance believes that its facilities are adequate for
the Company's operations and that suitable additional space will be available
when needed.

BioReliance is constructing a BioTesting facility near its Heidelberg
BioManufacturing facility, to be completed during 1997. The Company is expanding
its viral manufacturing capacity, with an additional production suite scheduled
to be validated throughout the second half of 1997 and the first half of 1998.

LEGAL PROCEEDINGS

The Company from time to time may be involved in various claims and legal
proceedings arising in the ordinary course of business. The Company does not
believe that any such claims or proceedings, individually

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or in the aggregate, would have a material adverse effect on the Company's
financial condition or results of operations.

The Company has been identified by the EPA as one of several hundred PRPs
under CERCLA with respect to the Ramp Industries, Inc. site in Denver, Colorado.
Although the Company believes that it sent only a small quantity of waste to
this site, liability under CERCLA can exceed a PRP's pro rata share of cleanup
costs. The EPA has incurred approximately $5 million to date to remove wastes
from this site and expects to incur approximately an additional $1.3 million to
remove the remaining wastes. However, the estimated total cleanup costs have not
been determined. The Company does not have sufficient information to evaluate
the financial ability of the other PRPs to pay costs apportioned to them, or
their impact on the Company's liability. Consequently, at this time the Company
does not have sufficient information to determine whether it will be offered a
de minimis buyout or what its ultimate share of cleanup costs will be, but,
because of the small quantity of waste the Company sent to the site, the Company
believes that the outcome of this matter will not have a material adverse effect
on the Company's financial position or results of operations.

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MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

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

<TABLE>
<CAPTION>
NAME AGE POSITION
- ---------------------------------- --- ---------------------------------------------------
<S> <C> <C>
Sidney R. Knafel(1)............... 66 Chairman of the Board of Directors and Secretary
Capers W. McDonald................ 45 President, Chief Executive Officer and Director
Carl C. Schwan.................... 60 Senior Vice President, Chief Financial Officer,
Treasurer and Assistant Secretary
John E. McEntire, Ph.D. .......... 51 Senior Vice President; MA BioServices, Inc.
Raymond F. Cosgrove, Ph.D. ....... 49 Vice President, European Operations; also Managing
Director, BioReliance Ltd.; and Director,
BioReliance Holding GmbH
Nona S. Karten.................... 61 Vice President, Regulatory Affairs and Quality
Assurance
Jeffrey M. Ostrove, Ph.D. ........ 43 Vice President, Scientific Development
Brandon J. Price, Ph.D. .......... 48 Vice President, Business Development; and Chief
Operating Officer, MAGENTA Corporation
William J. Gedale(2).............. 55 Director
Victoria Hamilton(1).............. 43 Director
Gordon J. Louttit(1).............. 50 Director
Leonard Scherlis, M.D.(2)......... 76 Director
</TABLE>

- ---------------
(1) Member of Audit Committee

(2) Member of Compensation Committee

Sidney R. Knafel has served as Chairman of the Board and Secretary of the
Company since 1982, and is the Company's principal stockholder. He also is the
managing partner of SRK Management Company, an investment and venture capital
concern. Mr. Knafel founded or provided start-up capital to Vision Cable
Communications, Inc.; Insight Communications Company; Insight Communications
Company U.K. (the predecessor of NTL Incorporated); and Cellular Communications,
Inc. In addition to the Company's board, he currently serves as a director of
Cellular Communications International, Inc., CoreComm Incorporated, General
American Investors Company, Inc., IGENE Biotechnology, Inc., NTL Incorporated
and a few private companies. Mr. Knafel holds an A.B. and M.B.A. from Harvard
University. Mr. Knafel is the brother-in-law of Dr. Scherlis, who also serves as
a Director of the Company.

Capers W. McDonald joined the Company as President and Chief Executive
Officer in June 1992 and has been a Director of the Company since August 1992.
From 1989 to 1992, he served as President of Spectroscopy Imaging Systems
Corporation, a joint-venture of Siemens Medical Systems, Inc. and Varian
Associates, Inc. in California. Prior to 1989, he held senior management
positions with Hewlett-Packard Company in the Analytical Products Group and with
HP Genenchem. Mr. McDonald is a co-founder and the Chair of the Maryland
Bioscience Alliance, a cooperative business association of over 100 bioscience
companies throughout the state, and is a member of the Board of Visitors to the
University of Maryland Biotechnology Institute. During 1996, he chaired the
Bioscience Industry Growth Sector Committee for the Maryland Department of
Business and Economic Development and is a Governor-appointed member of their
Partnership for Workforce Quality. He received an S.M. in Mechanical Engineering
from Massachusetts Institute of Technology and a M.B.A. from Harvard Business
School.

Carl C. Schwan joined the Company in June 1993 as Senior Vice President,
Treasurer and Chief Financial Officer. From April 1991 to June 1993, he served
as Senior Vice President, Finance and

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Administration of North American Vaccine, Inc., a producer of human vaccines.
Prior to that, he served for 12 years as Vice President, Treasurer and Chief
Financial Officer of Hazleton Corporation (now a division of Covance, Inc.), a
preclinical CRO. Mr. Schwan is a Certified Public Accountant and holds an M.B.A.
from Cornell University.

John E. McEntire, Ph.D. joined the Company in September 1994 as Vice
President of the Biotechnology Group, and became Senior Vice President, MA
BioServices, Inc. in January 1996. From September 1993 to July 1994, Dr.
McEntire served as Director of Business Development for Applied Analytical
Industries, Inc., a competing biotesting company. From 1988 to 1993, he worked
at Tektagen, Inc., a competing biosafety testing firm, where he became Executive
Vice President for Operations in 1992. From 1984 to 1988, he served as Vice
President, Operations and New Product Development of IMBIC Corporation, a
contract research and development services company, where he developed and
patented techniques for production, purification and synthesis of
immunotherapeutic agents. Dr. McEntire earned a M.S. in Microbiology and a Ph.D.
in Biochemistry from the University of Houston and served as a post-doctoral
fellow in cellular immunology at the University of Texas Medical Branch.

Raymond F. Cosgrove, Ph.D. joined the Company in February 1993 as Managing
Director of BioReliance Ltd. He has served as Vice President, European
Operations since 1994 and as Director, MA Holding GmbH since 1996. From 1989 to
1993, he was Director of Business Development of Shandon Scientific, Ltd., a
manufacturer and distributor of clinical laboratory equipment and diagnostic
reagents. Dr. Cosgrove holds a Ph.D. in Microbiology from London University.

Nona S. Karten joined the Company in 1976 and became Vice President,
Regulatory Affairs and Quality Assurance in 1989. She is an active member in
several United States and European quality assurance professional organizations,
including the Society of Quality Assurance, where she serves as a member of the
Board of Directors. Ms. Karten holds an M.A. in Biology from Hunter College.

Jeffrey M. Ostrove, Ph.D. joined the Company as Director of Molecular
Virology in the Biotechnology Group in 1990 and became Vice President,
Scientific Development in 1993. Dr. Ostrove also serves as chairperson of the
Company's internal Science Council. From 1983 to 1990, he was a Senior Staff
Fellow at the NIAID of the National Institutes of Health. From 1980 to 1983, he
was a Damon Runyon-Walter Winchell Fund Post-Doctoral Fellow in the Department
of Molecular Biology and Genetics, The Johns Hopkins University School of
Medicine. Dr. Ostrove holds a Ph.D. from the Department of Immunology and
Medical Microbiology at the University of Florida College of Medicine.

Brandon J. Price, Ph.D. has served as Vice President, Business Development
since joining the Company in May 1992 and as Chief Operating Officer of MAGENTA
since January 1997. In 1987, he co-founded Quality Biotech, a competing
biosafety testing firm. From 1982 to 1986, he held senior management positions
with Damon Biotech and Ortho Diagnostic Systems. From 1975 to 1982, he was an
Assistant Professor of Oncology at the University of Miami Medical School and a
staff member at the Los Alamos Scientific Laboratory. Dr. Price holds a Ph.D. in
Biophysics from the University of Michigan.

William J. Gedale has been a Director of the Company since 1991. Since
1996, he has served as President and Chief Executive Officer of Everest Capital
Advisors LLC., an investment counseling firm. From 1995 to 1996, he was Managing
Director with John W. Bristol and Co., an investment counseling firm. From 1989
to 1995, he served as President and Chief Executive Officer of General American
Investors Company, Inc., a closed-end investment fund. Mr. Gedale is a trustee
of Neuro Sciences Research Foundation, a director of the New York Hospital
Departmental Associates and a member of the New York Society of Security
Analysts. He holds a M.B.A. from New York University and a J.D. from Fordham
University.

Victoria Hamilton has been a Director of the Company since 1982. Since
August 1995, she has served as Executive Vice President and Chief Operating
Officer of General American Investors Company, Inc., a closed-end investment
fund, and has been a director since March 1996. From February 1992 to August
1995, she served as Vice President of General American Investors Company, Inc.
From 1982 to 1992, Ms. Hamilton was an Associate of SRK Management Company, an
investment and venture capital firm. She holds an A.B. and M.B.A. from Harvard
University.

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Gordon J. Louttit has been a Director of the Company since 1980. Since
August 1995, he has served as Vice President, General Counsel and Secretary of
The Aerospace Corporation, a non-profit organization that provides technical
support to government aerospace programs. From 1985 to 1995, he served as Vice
President, Assistant General Counsel and Secretary of Whittaker Corporation, an
electronic and aerospace manufacturer which is the former parent and a current
stockholder of the Company. Mr. Louttit holds a J.D. from UCLA Law School.

Leonard Scherlis, M.D. has been a Director of the Company since 1982. Dr.
Scherlis, Professor Emeritus of Medicine at the University of Maryland Medical
School, served as a research professor in the School's Department of
Epidemiology and Preventive Medicine from 1987 to 1996. He also is a member of
the boards of the Maryland Medical Research Institute, the Maryland Hospital
Association, and the Mid Atlantic Institute for Healthcare Delivery. He received
a B.A. and M.D. from The Johns Hopkins University. Dr. Scherlis is the
brother-in-law of Mr. Knafel, who serves as Chairman of the Board and Secretary
of the Company and is the Company's principal stockholder.

The Board of Directors of the Company is divided into three classes as
nearly equal in number as possible. Each year the stockholders will elect the
members of one of the three classes to a three year term of office. Messrs.
Gedale and Louttit serve in the class whose term expires in 1998; Ms. Hamilton
and Dr. Scherlis serve in the class whose term expires in 1999; and Messrs.
Knafel and McDonald serve in the class whose term expires in 2000.

The Board of Directors has an Audit Committee and a Compensation Committee.
The Audit Committee reviews the scope and results of the audit and other
services provided by the Company's independent accountants and internal controls
of the Company. The Compensation Committee is responsible for the approval of
compensation arrangements for officers of the Company and the review of the
Company's compensation plans and policies.

SCIENTIFIC ADVISORY BOARD

In 1995, the Company established a Scientific Advisory Board to assist the
Company in its research and development activities. The Scientific Advisory
Board is comprised of four distinguished scientists from outside the Company who
have significant accomplishments in areas of science and technology that are
important to the Company's future. The Scientific Advisory Board interacts with
the Company's scientific and management staff and collaborates on a regular
basis with the Company's internal Science Council, a formal group of six to
eight senior scientists and managers, all of whom hold doctorates. The following
individuals are the current members of the Scientific Advisory Board:

Richard J. Albertini, M.D., Ph.D. is Professor of Medicine in the Genetics
Laboratory and formerly was Director of the Vermont Cancer Center at the
University of Vermont, where he has served in several capacities since 1972.
Prior to that, he was an Instructor in Medicine at the University of Wisconsin.
Dr. Albertini is on the editorial boards of the journals Mutation Research and
Molecular Toxicology, and has been a consultant to numerous companies, including
Immune Response Corporation and The Upjohn Company and to the Chemical
Manufacturers Association. Dr. Albertini received his M.D. from the University
of Wisconsin Medical School in 1963 and his Ph.D. in Medical Genetics from the
University of Wisconsin in 1972.

Frances Gannon, Ph.D. is the Executive Director of the European Molecular
Biology Organization (EMBO) in Heidelberg, Germany. Prior to joining EMBO in
1994, he was associated with the University of Galway (Ireland) for twelve years
as a Lecturer and Associate Professor in the Department of Microbiology. From
1990 to 1993, he also was the Director of the National Diagnostics Centre at the
University. From 1977 to 1981, Dr. Gannon was Charge de Recherche de l'INSERM in
Strasbourg, France. Prior to that he held postdoctoral positions at the
University of Strasbourg and the University of Wisconsin. He received his Ph.D.
from the University of Leicester, England in 1973.

John E. Shively, Ph.D. has been Chairman of the Division of Immunology at
the Beckman Research Institute of the City of Hope in Duarte, California since
1987. From 1977 to 1986, he was Director of

45
<PAGE> 47

Immunochemistry, Division of Immunology, and, from 1975 to 1977, a Research
Scientist at the Beckman Research Institute. Dr. Shively received his Ph.D. in
Biochemistry from the University of Illinois in 1975.

Inder M. Verma, Ph.D. is Professor of Molecular Biology and Virology at the
Salk Institute, La Jolla, California where he has served in various capacities
since 1974. He also is Adjunct Professor in the Department of Biology at the
University of California, San Diego in La Jolla. Dr. Verma serves on the
editorial boards of numerous journals, including Virology, Analytical
Biochemistry, Journal of General Virology, Journal of Cellular Physiology,
Biochemistry Biophysics Acta, Journal of Genetics, Gene Expression and Journal
of Virology. He also is Founder and Chairman of the Scientific Advisory Board
for Somatix Therapy Corporation in Alameda, California. Dr. Verma received his
Ph.D. in Biochemistry from the Weizmann Institute of Science in Israel in 1971.
Dr. Verma is a member of the National Academy of Sciences.

Each of the Scientific Advisory Board members is employed by an employer
other than the Company and may have commitments to, or consulting or advisory
contracts with, other entities that may conflict or compete with his obligations
with the Company. Generally, members of the Scientific Advisory Board are not
expected to devote a substantial portion of their time to Company matters.

EXECUTIVE COMPENSATION

Summary Compensation. The following table presents certain information
concerning compensation paid or accrued for services rendered to the Company in
all capacities during the year ended December 31, 1996, for the chief executive
officer and the four other most highly compensated executive officers of the
Company (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
--------------------------------------- ------------
OTHER SHARES
ANNUAL UNDERLYING
NAME AND PRINCIPAL POSITION SALARY(1) BONUS COMPENSATION(2) OPTIONS
- ---------------------------------------------- --------- ------- --------------- ------------
<S> <C> <C> <C> <C>
Capers W. McDonald............................ $ 239,434 $50,000 $ 4,750 --
President and Chief Executive Officer
Carl C. Schwan................................ 145,138 19,826 4,642 10,000
Senior Vice President, Treasurer and
Chief Financial Officer
John E. McEntire, Ph.D. ...................... 140,337 15,020 4,577 11,666
Senior Vice President, MA BioServices,
Inc.
Brandon J. Price, Ph.D. ...................... 135,845 14,273 1,468 1,666
Vice President, Business Development; and
Chief Operating Officer, MAGENTA
Corporation
Jeffrey M. Ostrove, Ph.D. .................... 118,859 12,036 3,846 --
Vice President, Scientific Development
</TABLE>

- ---------------
(1) Includes amounts deferred pursuant to the Company's 401(k) Plan.

(2) Consists of the Company's contributions under its 401(k) Plan.

46
<PAGE> 48

Option Grants. The following table sets forth certain information
regarding options granted by the Company to the Named Executive Officers during
1996.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL
--------------------------------------------------------------- REALIZABLE VALUE
PERCENT AT ASSUMED
OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SHARES GRANTED TO APPRECIATION
UNDERLYING EMPLOYEES EXERCISE FOR OPTION TERM
OPTIONS IN FISCAL PRICE EXPIRATION ---------------------------
NAME GRANTED (#) YEAR ($/SHARE) DATE 5% ($) 10% ($)
- --------------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Capers W. McDonald......... -- -- -- -- -- --
Carl C. Schwan............. 10,000 7.6% $3.00 01/01/03 $12,213 $28,462
John E. McEntire, Ph.D. ... 10,000 7.6 3.00 01/01/03 12,213 28,462
1,666 1.3 7.50 11/13/03 5,090 11,861
Brandon J. Price, Ph.D. ... 1,666 1.3 7.50 11/13/03 5,090 11,861
Jeffrey M. Ostrove,
Ph.D..................... -- -- -- -- -- --
</TABLE>

Option Exercises and Year-End Option Values. The following table provides
information with respect to options exercised by the Named Executive Officers
during 1996 and the number and value of unexercised options held by the Named
Executive Officers as of December 31, 1996.

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

<TABLE>
<CAPTION>
NUMBER OF SHARES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS
YEAR-END (#) AT FISCAL YEAR-END ($)(1)
SHARES ACQUIRED VALUE --------------------------- ---------------------------
NAME ON EXERCISE (#) REALIZED ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------- --------------- --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Capers W. McDonald........ 16,666 $ 99,996 168,111 101,220 $ 1,011,465 $ 609,768
Carl C. Schwan............ -- -- 14,156 17,177 84,269 87,479
John E. McEntire,
Ph.D. .................. -- -- 7,333 24,333 38,498 111,502
Brandon J. Price,
Ph.D. .................. -- -- 31,267 5,065 188,268 20,977
Jeffrey M. Ostrove,
Ph.D. .................. -- -- 23,807 5,727 146,888 39,260
</TABLE>

- ---------------
(1) For the purposes of this calculation, value is based upon the difference
between the exercise price and $7.50 per share, the fair market value of the
Common Stock as determined by the Board of Directors in December 1996.

1997 INCENTIVE PLAN

On May 28, 1997, the Board of Directors of the Company approved the
BioReliance 1997 Incentive Plan (the "1997 Incentive Plan"). The purpose of the
1997 Incentive Plan is to strengthen the Company by providing an incentive to
its employees, officers, consultants and directors through the granting or
awarding of incentive and nonqualified stock options, stock appreciation and
dividend equivalent rights, restricted stock, performance units, and performance
shares to employees, officers, employee directors, consultants and advisors and
the granting of options to non-employee directors of the Company (collectively
or individually, "Awards"), thereby encouraging them to devote their abilities
and energies to the success of the Company.

The 1997 Incentive Plan is administered by the Compensation Committee,
which consists of non-employee directors. Under the 1997 Incentive Plan, the
Committee has the authority to, among other things: (i) select the employees to
whom Awards will be granted, (ii) determine the type, size and the terms and
conditions of Awards and (iii) establish the terms for treatment of Awards upon
a termination of employment.

47
<PAGE> 49

Under the 1995 Non Qualified Stock Option Plan, the 1994 MAGENTA Incentive
Stock Option Plan and the 1988 Incentive Stock Option Plan (the "Former Plans"),
the Company was authorized to grant options to purchase up to 1,116,666 shares
of Common Stock. As of June 30, 1997, 78,780 shares of Common Stock had been
issued pursuant to the exercise of options under the Former Plans, and 828,191
shares of Common Stock were reserved for issuance with respect to options
outstanding under the Former Plans. Substantially all of the incentive stock
options granted under the Former Plans vest over a 5-year period.

Under the 1997 Incentive Plan, 709,695 shares of authorized and unissued
Common Stock are presently available for the grant of Awards to eligible
individuals (subject to increase to the extent options under the Former Plans
are cancelled or terminated or otherwise expire unexercised). The 1997 Incentive
Plan also provides for the non-discretionary grant of options to each of its
non-employee directors ("Director Options") (i) with respect to 2,000 shares of
Common Stock of the Company to each non-employee director who becomes a member
of the Board after the 1997 Incentive Plan is in effect, upon election or
appointment and (ii) with respect to 1,000 shares of Common Stock of the Company
annually on the first business day on or after January 1 of each calendar year
that the 1997 Incentive Plan is in effect to all non-employee directors who are
members of the Board at that time; provided, however, that a director shall not
be entitled to receive an annual grant during the year in which such director is
appointed or elected. Director Options will be granted at an exercise price
equal to the fair market value of Common Stock of the Company on the date of
grant. Director Options vest with respect to 100% of the shares subject to such
Director Options on the date of grant; provided that the director remains in
service at that time. Director Options generally have ten-year terms, unless
earlier terminated in accordance with the provisions of the 1997 Incentive Plan.

The 1997 Incentive Plan will terminate on the day preceding the tenth
anniversary of the date of its adoption by the Board of Directors. The Board of
Directors may at any time and from time to time amend or terminate the 1997
Incentive Plan; provided, however, that, to the extent necessary under
applicable law, no such change will be effective without the requisite approval
of the Company's stockholders. In addition, no such change may alter or
adversely impair any rights or obligations under any Awards previously granted,
except with the written consent of the grantee.

401(K) PLAN

The Company maintains a retirement plan (the "401(k) Plan") intended to
qualify under Sections 401(a) and 401(k) of the Internal Revenue Code (the
"Code"). The 401(k) Plan is a defined contribution plan that covers employees of
the Company at least 21 years of age, who have been employed by the Company for
at least 90 days. Employees may contribute up to 15% of their annual wages
(subject to an annual limit prescribed by the Code) as pretax, salary deferral
contributions. The Company may, in its discretion, match employee contributions
up to a maximum of 6% of annual wages. The Company's contribution to the 401(k)
Plan for the year ended December 31, 1996 was $262,000.

COMPENSATION OF DIRECTORS AND SCIENTIFIC ADVISORS

Non-employee directors receive no directors' fees, but are eligible to
receive grants of stock options under the 1997 Incentive Plan. Under the 1997
Incentive Plan, current non-employee directors receive automatic grants of
options to purchase 1,000 shares of Common Stock at the beginning of each year,
and any newly elected non-employee directors will receive options to purchase
2,000 shares of Common Stock. Committee chairpersons will receive additional
automatic annual grants of options to purchase 500 shares of Common Stock. In
addition, non-employee directors are reimbursed for travel costs and other
out-of-pocket expenses incurred in attending each directors' meeting and
committee meeting. See "-- 1997 Incentive Plan" and "Certain Transactions."

Each member of the Scientific Advisory Board is paid an annual fee of
$2,000, plus a stipend and expenses for each meeting attended. In addition, each
member has received options to purchase 1,666 shares of the Common Stock. These
options were granted at an exercise price of $3.00 and all are currently
exercisable. Members of the Scientific Advisory Board may receive additional
option grants from time to time.

48
<PAGE> 50

LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION

The DGCL authorizes corporations to limit or eliminate the personal
liability of directors to corporations and their stockholders for monetary
damages for breach of directors' fiduciary duty of care. The Company's
Certificate limits the liability of directors of the Company to the Company or
its stockholders to the fullest extent permitted by Delaware law. See
"Description of Capital Stock -- Certain Provisions of the Company's Certificate
and Bylaws."

The Company's Certificate provides mandatory indemnification rights to any
officer or director of the Company who, by reason of the fact that he or she is
an officer or director of the Company, is involved in a legal proceeding of any
nature. Such indemnification rights include reimbursement for expenses incurred
by such officer or director in advance of the final disposition of such
proceeding in accordance with the applicable provisions of the DGCL.

There is no pending litigation or proceeding involving a director, officer,
employee or agent of the Company where indemnification by the Company will be
required or permitted. The Company is not aware of any threatened litigation or
proceeding which may result in a claim for such indemnification.

49
<PAGE> 51

CERTAIN TRANSACTIONS

In connection with its acquisition of BIOMEVA in July 1996, Sidney R.
Knafel, an officer, director and principal stockholder of the Company, loaned
the Company $1,900,000. The promissory note evidencing this loan bore an
interest rate of either (i) prime plus 1.25% per annum or (ii) the daily LIBOR
plus 3.5% per annum, at Mr. Knafel's option. The promissory note was repaid on
March 28, 1997.

As of June 30, 1997, certain executive officers and directors have been
granted aggregate options to purchase shares of Common Stock as follows: Sidney
R. Knafel -- 7,665 shares; Capers W. McDonald -- 285,997 shares (16,666
exercised); Carl C. Schwan -- 31,332; John E. McEntire, Ph.D. -- 31,666; Raymond
F. Cosgrove, Ph.D. -- 16,332 shares; Nona S. Karten -- 11,099 shares; Jeffrey M.
Ostrove, Ph.D. -- 29,532 shares (3,333 exercised); Brandon J. Price,
Ph.D. -- 36,332 shares; William J. Gedale -- 7,832 shares; Victoria
Hamilton -- 7,665 shares; Gordon J. Louttit -- 7,832 shares; and Leonard
Scherlis, M.D. -- 7,665 shares. These options have exercise prices ranging from
$0.56 to $7.50 per share.

50
<PAGE> 52

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information known to the Company
regarding the beneficial ownership of Common Stock as of June 30, 1997 and as
adjusted to reflect the sale of the shares offered hereby, by (i) each person
known to the Company to be the beneficial owner of more than 5% of its
outstanding shares of Common Stock, including the Selling Stockholder (ii) each
director of the Company, (iii) each executive officer named in the Summary
Compensation Table and (iv) all directors and executive officers of the Company
as a group. Except as otherwise indicated, the persons or entities listed below
have sole voting and investment power with respect to all shares of Common Stock
owned by them.

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED(1)
NUMBER OF ---------------------
NUMBER OF SHARES SHARES BEFORE AFTER
NAME BENEFICIALLY OWNED(1) BEING OFFERED OFFERING OFFERING
- ---------------------------------------------------------- --------------------- ------------- -------- ---------
<S> <C> <C> <C> <C>
Sidney R. Knafel(2)....................................... 2,851,142 -- 55.1% 39.2%
126 E. 56th Street
New York, NY 10022
Susan R. Knafel, Andrew G. Knafel, Joshua S. Rubenstein,
and William L. Scherlis, Trustees U/A 9/13/78 F/B/O
Douglas R. Knafel......................................... 459,976 -- 8.9% 6.3%
126 E. 56th Street
New York, NY 10022
Susan R. Knafel, Andrew G. Knafel, Joshua S. Rubenstein,
and William L. Scherlis, Trustees U/A 9/13/78 F/B/O Andrew
G. Knafel................................................. 459,976 -- 8.9% 6.3%
126 E. 56th Street
New York, NY 10022
General American Investors Company, Inc.(3)............... 317,259 -- 6.1% 4.4%
450 Lexington Avenue
New York, NY 10017
Steinhardt Family 1992 Trust.............................. 312,442 -- 6.0% 4.3%
Steinhardt Management Co.
605 3rd Avenue, 33rd Floor
New York, NY 10158-0170
Whittaker Corporation..................................... 297,986 297,986 5.8% 0%
1955 N. Surveyor Avenue
Simi Valley, CA 93063
Susan R. Knafel, Andrew G. Knafel, Joshua S. Rubenstein,
and William L. Scherlis, Trustees U/A 7/16/76 F/B/O
Douglas R. and Andrew G. Knafel........................... 281,290 -- 5.4% 3.9%
126 E. 56th Street
New York, NY 10022
Andrew G. Knafel.......................................... 280,811 -- 5.4% 3.9%
126 E. 56th Street
New York, NY 10022
Susan R. Knafel, Andrew G. Knafel, William L. Scherlis and
Joshua S. Rubenstein, Trustees U/A 11/6/83 F/B/O Douglas
R. Knafel................................................. 280,811 -- 5.4% 3.9%
126 E. 56th Street
New York, NY 10022
Capers W. McDonald........................................ 213,378 -- 4.0% 2.9%
Carl C. Schwan............................................ 19,121 -- * *
John E. McEntire, Ph.D. .................................. 12,166 -- * *
Brandon J. Price, Ph.D. .................................. 34,177 -- * *
Jeffrey M. Ostrove, Ph.D. ................................ 25,092 -- * *
William J. Gedale......................................... 7,832 -- * *
Victoria Hamilton......................................... 87,110 -- 1.7% 1.2%
Gordon J. Louttit......................................... 7,832 -- * *
Leonard Scherlis, M.D(4) ................................. 52,111 -- 1.0% *
All directors and executive officers as a group (12
persons)(2)(4)............................................ 3,336,306 -- 60.5% 43.8%
</TABLE>

- ---------------
* Less than 1%.

(Footnotes continued on following page)

51
<PAGE> 53

(Footnotes continued from preceding page)
(1) Pursuant to the rules of the Securities and Exchange Commission, shares of
the Company's Common Stock which a person has the right to acquire within 60
days of the date hereof pursuant to the exercise of stock options are deemed
to be outstanding for the purpose of computing the percentage ownership of
such person but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. Accordingly, the totals for the
following persons include the following shares represented by options
exercisable within 60 days: Mr. Knafel, 7,665 shares; Mr. McDonald, 196,712
shares; Mr. Schwan, 19,121 shares; Dr. McEntire, 12,166 shares; Dr. Price,
34,177 shares; Dr. Ostrove, 21,759 shares; Mr. Gedale, 7,832 shares; Ms.
Hamilton, 7,665 shares; Mr. Louttit, 7,832 shares; Dr. Scherlis, 7,665
shares; and all directors and executive officers as a group, 346,439 shares.

(2) Includes 59,012 shares owned by Mr. Knafel's spouse, Susan R. Knafel, and
1,482,053 shares owned by trusts for the benefit of Mr. Knafel's children,
as to which shares Mr. Knafel disclaims beneficial ownership. An additional
280,811 shares are held by Andrew G. Knafel, an adult child of Sidney R.
Knafel, as to which shares Mr. Knafel also disclaims beneficial ownership.

(3) Victoria Hamilton is an executive officer and director, and Sidney R. Knafel
is a director, of General American Investors Company, Inc.

(4) Excludes 13,050 shares owned by Dr. Scherlis' children and 1,482,053 shares
held by Susan R. Knafel, Andrew G. Knafel, Joshua S. Rubenstein, and William
L. Scherlis, as trustees, under trusts for the benefit of Douglas R. and
Andrew G. Knafel, as to which shares Dr. Leonard Scherlis disclaims
beneficial ownership. William L. Scherlis is the son of Dr. Leonard
Scherlis.

52
<PAGE> 54

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 15,000,000 shares of
Common Stock, par value of $.01 per share ("Common Stock"), and 6,900,000 shares
of preferred stock, par value of $.01 per share ("Preferred Stock"). Upon
completion of the Offering, there will be 7,267,242 shares of Common Stock
outstanding and no shares of Preferred Stock outstanding. As of June 30, 1997,
there were outstanding 5,165,228 shares of Common Stock and no shares of
Preferred Stock held of record by approximately 150 stockholders. In addition,
at June 30, 1997, there were outstanding options to purchase 828,191 shares of
Common Stock.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Subject to the
preferences that may be applicable to any outstanding Preferred Stock, the
holders of Common Stock are entitled to receive dividends as and when declared
by the Board of Directors out of funds legally available for dividends, and, in
the event of liquidation, dissolution or winding up of the Company, to share
ratably in all assets remaining after the payment of liabilities. The Common
Stock has no preemptive, conversion or other subscription rights. There are no
sinking fund provisions available to the Common Stock. All outstanding shares of
Common Stock are fully paid and nonassessable.

PREFERRED STOCK

The Board of Directors is authorized to issue the undesignated Preferred
Stock in one or more series, to determine the powers, preferences, and rights
and the qualifications, limitations, or restrictions granted to or imposed upon
any wholly unissued series of undesignated Preferred Stock, and to fix the
number of shares constituting any series and the designation of such series,
without any further vote or action by the stockholders. The issuance of
Preferred Stock may have the effect of delaying, deferring, or preventing a
change in control of the Company and may adversely affect the voting and other
rights of the holders of Common Stock.

CERTAIN PROVISIONS OF THE COMPANY'S CERTIFICATE AND BYLAWS

The Company's Certificate limits the liability of directors of the Company
to the fullest extent permitted under Section 102(b)(7) of the DGCL. To this
end, no director of the Company will be liable to the Company or to its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability for (i) any breach of the director's duty of loyalty to the
Company or its stockholders, (ii) acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of the law, (iii) any
willful or negligent payment of an unlawful dividend, stock purchase, or
redemption or (iv) any transaction from which the director derived an improper
personal benefit.

The Certificate provides that the Board of Directors consist of three
classes of directors serving for staggered three-year terms. As a result,
one-third of the Company's Board of Directors will be elected each year. In
accordance with the DGCL, directors serving on classified boards of directors
may only be removed from office for cause. The Certificate provides that
stockholders may take such action only by the affirmative vote of at least
66 2/3% of the voting stock outstanding. Any action to amend the Certificate
also requires the affirmative vote of at least 66 2/3% of the voting stock
outstanding.

The Company's Bylaws provide that only the Board of Directors may call a
special meeting of stockholders and that stockholders must follow an advance
notification procedure for certain stockholder nominations of candidates and for
certain other stockholder business to be conducted at the annual meeting. In the
Certificate, only the Board of Directors is authorized to amend the Bylaws.
These provisions could, under certain circumstances, operate to delay, deter or
prevent a change in control of the Company.

53
<PAGE> 55

SECTION 203 OF THE DGCL

As a corporation organized under the laws of the State of Delaware, the
Company is subject to Section 203 of the DGCL which restricts certain business
combinations between the Company and an "interested stockholder" (in general, a
stockholder owning 15% or more of the Company's outstanding voting stock) or its
affiliates or associates for a period of three years following the date on which
the stockholder becomes an "interested stockholder." The restrictions do not
apply if (i) prior to a person qualifying as an interested stockholder, the
Board of Directors approves either the business combination or transaction which
would cause such individual to become an interested stockholder, (ii) upon
consummation of the transaction in which any person becomes an interested
stockholder, such person owns at least 85% of the voting stock of the Company
outstanding at the time the transaction commences (excluding shares owned by
certain employee stock ownership plans and persons who are both directors and
officers of the Company) or (iii) on or subsequent to the date on which a person
becomes an interested stockholder, the business combination is both approved by
the Board of Directors and authorized at an annual or special meeting of the
Company's stockholders, without written consent, by the affirmative vote of at
least 66 2/3% of the outstanding voting stock not owned by the interested
stockholder.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Company's Common Stock is American
Stock Transfer & Trust Company.

54
<PAGE> 56

SHARES ELIGIBLE FOR FUTURE SALE

Prior to the offering there has been no market for the Common Stock of the
Company. The Company can make no prediction as to the effect, if any, that sales
of shares or the availability of shares for sale will have on the market price
prevailing from time to time. Nevertheless, sales of significant amounts of the
Common Stock in the public market, or the perception that such sales may occur,
could adversely affect prevailing market prices. See "Risk Factors -- Shares
Eligible for Future Sale."

Upon completion of the Offering, the Company expects to have 7,267,242
shares of Common Stock outstanding (excluding 828,191 shares reserved for
issuance upon the exercise of outstanding stock options) (7,582,544 shares of
Common Stock outstanding if the Underwriters' over-allotment option is exercised
in full). Of these shares, the 2,400,000 shares offered hereby will be freely
tradable without restrictions or further registration under the Act, except for
any shares purchased by "affiliates" of the Company, as that term is defined in
Rule 144 under the Act, which will be subject to the resale limitations imposed
by Rule 144, as described below.

All of the remaining 4,867,242 shares of Common Stock outstanding will be
"restricted securities" within the meaning of Rule 144 and may not be resold in
the absence of registration under the Securities Act or pursuant to exemptions
from such registration including, among others, the exemption provided by Rule
144 under the Securities Act. Of the restricted securities, 1,789,290 shares are
eligible for sale in the public market immediately after the Offering pursuant
to Rule 144(k) under the Act. A total of 3,077,952 additional restricted
securities will be eligible for sale in the public market in accordance with
Rule 144 or Rule 701 under the Act beginning 90 days after the date of this
Prospectus. Taking into consideration the effect of the lock-up agreements
described below and the provisions of Rules 144, 144(k) and 701, 30,778
restricted shares will be eligible for sale in the public market immediately
after the Offering, 26,722 restricted shares (excluding 82,768 shares issuable
upon the exercise of outstanding stock options) will be eligible for sale
beginning 90 days after the date of this Prospectus, and the remaining
restricted shares will be eligible for sale upon the expiration of the lock-up
agreements 180 days after the date of this Prospectus, subject to the provisions
of Rule 144 under the Securities Act or Rule 701 under the Securities Act.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are required to
be aggregated) whose restricted securities have been outstanding for at least
one year, including a person who may be deemed an "affiliate" of the Company,
may only sell a number of shares within any three-month period which does not
exceed the greater of (i) one percent of the then outstanding shares of the
Company's Common Stock (approximately 72,652 shares after the Offering) or (ii)
the average weekly trading volume in the Company's Common Stock in the four
calendar weeks immediately preceding such sale. Sales under Rule 144 are also
subject to certain requirements as to the manner of sale, notice and the
availability of current public information about the Company. A person who is
not an affiliate of the issuer, has not been an affiliate within three months
prior to the sale and has owned the restricted securities for at least two years
is entitled to sell such shares under Rule 144(k) without regard to any of the
limitations described above.

Beginning 90 days after the date of this Prospectus, certain shares issued
or issuable upon the exercise of options granted by the Company prior to the
date of this Prospectus will also be eligible for sale in the public market
pursuant to Rule 701 under the Act. In general, Rule 701 permits resales of
shares issued pursuant to certain compensatory benefit plans and contracts
commencing 90 days after the issuer becomes subject to the reporting
requirements of the Securities Exchange Act of 1934, as amended, in reliance
upon Rule 144, but without compliance with certain restrictions of Rule 144,
including the holding period requirements. As of June 30, 1997, the Company has
granted options covering 828,191 shares of Common Stock which have not been
exercised and which become exercisable at various times in the future. Any
shares of Common Stock issued upon the exercise of these options will be
eligible for sale pursuant to Rule 701.

55
<PAGE> 57

The executive officers and directors and certain other existing
stockholders of the Company, who beneficially own in the aggregate 5,107,728
shares of Common Stock and options to purchase 686,625 shares of Common Stock,
have agreed that they will not, without the prior written consent of Morgan
Stanley & Co. Incorporated (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, or otherwise transfer or dispose of,
directly or indirectly, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock or (ii) enter into any swap
or other arrangement that transfers to another, in whole or in part, any of the
economic consequences of ownership of the Common Stock, whether any such
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, for a period of
180 days after the date of the Prospectus. The restrictions described in this
paragraph do not apply to (A) the sale of shares of Common Stock to the
Underwriters, (B) the issuance by the Company of shares of Common Stock upon the
exercise of an option or warrant or the conversion of a security outstanding on
the date of the Offering of which the Underwriters have been advised in writing,
(C) grants of employee stock options pursuant to the terms of a plan disclosed
in the Registration Statement or in writing to the Underwriters prior to the
date hereof and the issuance of shares of Common Stock thereunder or (D) the
issuance by the Company of shares of Common Stock pursuant to any 401(k) Plan.

56
<PAGE> 58

UNDERWRITERS

Under the terms and subject to the conditions in the Underwriting Agreement
dated the date of this Prospectus (the "Underwriting Agreement"), the Company
and the Selling Stockholder have agreed to sell 2,102,014 and 297,986 shares,
respectively, of the Company's Common Stock and the Underwriters named below
have severally agreed to purchase from the Company and the Selling Stockholder
the respective number of shares of Common Stock set forth opposite the names of
such Underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
----------------------------------------------------------------- ---------
<S> <C>
Morgan Stanley & Co. Incorporated................................
Hambrecht & Quist LLC............................................

---------
Total.................................................. 2,400,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the shares of Common Stock
offered hereby are subject to the approval of certain legal matters by their
counsel and to certain other conditions. The Underwriters are obligated to take
and pay for all the shares of Common Stock offered hereby (other than those
covered by the over-allotment option described below) if any such shares are
taken.

The Underwriters initially propose to offer part of the shares of Common
Stock directly to the public at the public offering price set forth on the cover
page hereof and part to certain dealers at a price which represents a concession
not in excess of $ a share under the public offering price. Any
Underwriter may allow, and such dealers may reallow, a concession not in excess
of $ a share to other Underwriters or to certain other dealers. After the
initial offering of the shares of Common Stock, the offering price and other
selling terms may from time to time be varied by the Underwriters.

The Company has granted the Underwriters an option, exercisable for 30 days
from the date of the Prospectus, to purchase up to 315,302 additional shares of
Common Stock at the public offering price set forth on the cover page hereof,
less underwriting discounts and commissions. The Underwriters may exercise such
option to purchase solely for the purpose of covering over-allotments, if any,
made in connection with the offering of the shares of Common Stock offered
hereby. To the extent such option is exercised, each Underwriter will become
obligated, subject to certain conditions, to purchase approximately the same
percentage of such additional shares as the number set forth next to such
Underwriter's name in the preceding table bears to the total number of shares of
Common Stock offered by the Underwriters hereby.

The Company, all of the Company's executive officers and directors and
certain other existing stockholders who beneficially own in the aggregate
4,809,742 shares of Common Stock and options to purchase 686,625 shares of
Common Stock have agreed that, without the prior written consent of Morgan
Stanley & Co. Incorporated, they will not (i) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, or otherwise transfer
or dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common Stock or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise, for a period of 180 days after the date of the Prospectus. The
restrictions described in this paragraph do not apply to (A) the sale of shares
of Common Stock to the Underwriters, (B) the issuance by the Company of shares
of Common Stock upon the exercise of an option or warrant or the conversion of a
security outstanding on the date of the Offering of which the Underwriters have

57
<PAGE> 59

been advised in writing, (C) grants of employee stock options pursuant to the
terms of a plan disclosed in the Registration Statement or in writing to the
Underwriters prior to the date hereof and the issuance of shares of Common Stock
thereunder or (D) the issuance by the Company of shares of Common Stock pursuant
to any 401(k) Plan.

At the request of the Company, the Underwriters have reserved for sale at
the initial public offering price up to 105,100 shares offered hereby for
officers, directors, employees and certain other persons associated with the
Company. The number of shares available for sale to the general public will be
reduced to the extent such persons purchase such reserved shares. Any reserved
shares not so purchased will be offered by the Underwriters to the general
public on the same basis as the other shares offered hereby.

The Underwriters have informed the Company that they do not intend sales to
discretionary accounts to exceed five percent of the total number of shares of
Common Stock offered by them.

The Company and the Selling Stockholder have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the Act.

The Common Stock has been approved for quotation on the Nasdaq National
Market, subject to official notice of issuance, under the symbol "BREL."

In order to facilitate the offering of the Common Stock, the Underwriters
may engage in transactions that stabilize, maintain or otherwise affect the
price of the Common Stock. Specifically, the Underwriters may overallot in
connection with the offering, creating a short position in the Common Stock for
their own account. In addition, to cover overallotments or to stabilize the
price of the Common Stock, the Underwriters may bid for, and purchase, shares of
Common Stock in the open market. Finally, the underwriting syndicate may reclaim
selling concessions allowed to an underwriter or a dealer for distributing the
Common Stock in the offering, if the syndicate repurchases previously
distributed Common Stock in transactions to cover syndicate short positions, in
stabilization transactions or otherwise. Any of these activities may stabilize
or maintain the market price of the Common Stock above independent market
levels. The Underwriters are not required to engage in these activities, and may
end any of these activities at any time.

PRICING OF OFFERING

Prior to the Offering, there has been no public market for the Common
Stock. The initial public offering price for the Common Stock has been
determined by negotiations between the Company and the Representatives of the
Underwriters. Among the factors considered in determining the initial public
offering price were the future prospects of the Company and its industry in
general; net revenue, earnings and certain other financial and operating
information of the Company in recent periods; and the price-earnings ratios,
certain other ratios, market prices of securities and certain financial
operating information of companies engaged in activities similar to those of the
Company. The estimated initial public offering price range set forth on the
cover page of this Preliminary Prospectus is subject to change as a result of
market conditions or other factors.

58
<PAGE> 60

LEGAL MATTERS

The validity of the Common Stock offered hereby will be passed upon for the
Company by Fried, Frank, Harris, Shriver & Jacobson, (a partnership including
professional corporations), 1001 Pennsylvania Avenue, N.W., Suite 800,
Washington, D.C. 20004-2505 and for the Underwriters by Davis Polk & Wardwell,
450 Lexington Avenue, New York, New York 10017.

EXPERTS

The consolidated financial statements of BioReliance Corporation as of
December 31, 1996 and 1995 and for each of the three years in the period ended
December 31, 1996 included in this Prospectus have been so included in reliance
on the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-1 under the Securities Act,
with respect to the Common Stock offered hereby. As permitted by the rules and
regulations of the Commission, this Prospectus, which is part of the
Registration Statement, omits certain information, exhibits, schedules and
undertakings set forth in the Registration Statement. For further information
pertaining to the Company and the Common Stock, reference is made to such
Registration Statement and the exhibits and schedules thereto. Statements
contained in this Prospectus as to the contents or provisions of any documents
referred to herein are not necessarily complete, and in each instance where a
copy of the document has been filed as an exhibit to the Registration Statement
reference is made to the exhibit so filed. The Registration Statement may be
inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of the Registration Statement may be
obtained from the Commission at prescribed rates from the Public Reference
Section of the Commission at such address, and at the Commission's regional
offices located at 7 World Trade Center, 13th Floor, New York, New York 10048,
and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. In addition, registration statements and certain other filings
made with the Commission through its Electronic Data Gathering, Analysis and
Retrieval ("EDGAR") system are publicly available through the Commission's site
on the Internet's World Wide Web, located at http://www.sec.gov. The
Registration Statement, including all exhibits thereto and amendments thereof,
has been filed with the Commission through EDGAR.

59
<PAGE> 61

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1996 and March 31, 1997
(unaudited)......................................................................... F-3
Consolidated Statements of Income for the Years Ended December 31, 1994, 1995 and 1996
and the Three Months Ended March 31, 1996 and 1997 (unaudited)...................... F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994, 1995 and
1996 and the Three Months Ended March 31, 1996 and 1997 (unaudited)................. F-5
Consolidated Statements of Stockholders' Equity for the Years Ended December 31, 1994,
1995 and 1996 and the Three Months Ended March 31, 1997 (unaudited)................. F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE> 62

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and
Stockholders of BioReliance Corporation

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of stockholders' equity and of cash flows
present fairly, in all material respects, the financial position of BioReliance
Corporation and its subsidiaries at December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted accounting
principles. 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 of these statements in
accordance with generally accepted auditing standards which require 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP

Washington, D.C.
March 28, 1997, except for Note 14
which is as of May 8, 1997

F-2
<PAGE> 63

BIORELIANCE CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

<TABLE>
<CAPTION>
MARCH 31, 1997
-----------------------------
DECEMBER 31, PRO FORMA
------------------- STOCKHOLDERS'
1995 1996 ACTUAL EQUITY
------- ------- ----------- -------------
(UNAUDITED) (UNAUDITED)
(NOTE 1)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents.................... $ 693 $ 2,965 $ 3,571
Accounts receivable, net..................... 8,691 13,645 13,913
Other current assets......................... 944 1,204 891
Deferred income taxes........................ 1,263 355 358
------- ------- -------
Total current assets................. 11,591 18,169 18,733
Property and equipment, net.................... 12,473 14,945 14,062
Intangible assets, net......................... -- 468 392
Deposits and other assets...................... 119 246 858
Deferred income taxes.......................... 755 1,999 1,703
------- ------- -------
Total assets......................... $24,938 $35,827 $35,748
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt.............................. $ -- $ -- $ 900
Current portion of long-term debt............ 1,009 1,555 1,538
Accounts payable............................. 896 1,900 2,448
Accrued employee compensation and benefits... 1,805 2,213 2,028
Other accrued liabilities.................... 862 2,160 2,350
Customer advances............................ 2,056 4,067 4,326
Deferred income taxes........................ -- 859 997
------- ------- -------
Total current liabilities............ 6,628 12,754 14,587
Long-term debt................................. 6,189 7,082 6,702
Note payable to stockholder.................... -- 1,900 --
------- ------- -------
Total liabilities.................... 12,817 21,736 21,289
------- ------- -------
Commitments and contingencies (Note 10)
Stockholders' equity:
Convertible preferred stock, $.01 par value:
6,900,000 shares authorized; 6,470,121
shares issued and outstanding actual, and
no shares issued pro forma................ 65 65 65 $ --
Common stock, $.01 par value: 15,000,000
shares authorized; 297,002, 339,930 and
364,655 shares issued and outstanding
actual, and 5,142,727 shares issued and
outstanding pro forma..................... 3 3 4 5
Additional paid-in capital................... 19,822 20,073 20,109 20,173
Accumulated deficit.......................... (7,713) (6,211) (5,521) (5,521)
Equity adjustment from foreign currency
translation............................... (56) 161 (198) (198)
------- ------- ------- -------
Total stockholders' equity........... 12,121 14,091 14,459 $14,459
------- ------- ------- =======

Total liabilities and stockholders'
equity............................. $24,938 $35,827 $35,748
======= ======= =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-3
<PAGE> 64

BIORELIANCE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED MARCH 31,
----------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- ------ -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue......................................... $28,094 $30,078 $37,682 $7,599 $11,781
------- ------- ------- ------ -------
Expenses:
Cost of sales................................. 19,094 20,570 24,860 5,397 7,442
Selling, general and administrative........... 5,947 7,071 7,852 1,764 2,635
Research and development...................... 354 1,012 1,110 272 303
Nonrecurring charge........................... -- -- 696 -- --
------- ------- ------- ------ -------
25,395 28,653 34,518 7,433 10,380
------- ------- ------- ------ -------
Income from operations.......................... 2,699 1,425 3,164 166 1,401
------- ------- ------- ------ -------
Other income (expense):
Interest income............................... 9 93 18 1 30
Interest expense.............................. (298) (599) (844) (159) (229)
Other income (expense)........................ (150) (18) 10 -- (1)
------- ------- ------- ------ -------
(439) (524) (816) (158) (200)
------- ------- ------- ------ -------
Income before income taxes...................... 2,260 901 2,348 8 1,201
Benefit from (provision for) income taxes....... 2,192 (243) (846) (3) (511)
------- ------- ------- ------ -------
Net income...................................... 4,452 658 1,502 5 690
Preferred stock dividends....................... -- (139) -- (35) --
------- ------- ------- ------ -------
Net income (loss) available to common
stockholders.................................. $ 4,452 $ 519 $ 1,502 $ (30) $ 690
======= ======= ======= ====== =======
Net income (loss) per common and common
equivalent share.............................. $ 0.86 $ 0.11 $ 0.26 $(0.07) $ 0.12
======= ======= ======= ====== =======
Weighted average common and common equivalent
shares outstanding............................ 5,200 4,767 5,802 412 5,875
======= ======= ======= ====== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-4
<PAGE> 65

BIORELIANCE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------- ----------------
1994 1995 1996 1996 1997
------- ------- ------- ----- -------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income..................................... $ 4,452 $ 658 $ 1,502 $ 5 $ 690
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization............... 1,161 1,645 2,626 506 894
Compensation element of stock option
grants.................................... -- 3 22 -- --
Deferred income taxes, net.................. (2,192) 174 523 (70) 431
Changes in assets and liabilities:
Accounts receivable, net.................. (4,054) 674 (4,303) (740) (277)
Other current assets...................... (146) (358) 37 146 451
Deposits and other assets................. (96) 78 (111) -- (649)
Accounts payable.......................... (936) (200) 905 399 560
Accrued employee compensation and
benefits............................... 1,030 (65) 408 (338) (185)
Other accrued liabilities................. 222 (64) 1,031 (64) 131
Customer advances......................... 2,223 (954) 1,825 284 259
Other..................................... (19) (1) -- -- --
------- ------- ------- ----- -------
Net cash provided by operating
activities........................... 1,645 1,590 4,465 128 2,305
------- ------- ------- ----- -------
Cash flows from investing activities:
Purchases of property and equipment............ (2,766) (1,870) (1,850) (567) (170)
Acquisition of BIOMEVA GmbH, net of cash
acquired.................................... -- -- (2,752) -- --
------- ------- ------- ----- -------
Net cash used in investing
activities........................... (2,766) (1,870) (4,602) (567) (170)
------- ------- ------- ----- -------
Cash flows from financing activities:
Proceeds from debt............................. 4,300 -- 1,800 500 900
Proceeds from (payments on) note payable to
stockholder................................. -- -- 1,900 -- (1,900)
Payments on debt............................... (1,854) (361) (539) (89) (179)
Payments on capital lease obligations.......... (230) (382) (813) (171) (218)
Proceeds from exercise of stock options........ 9 41 34 5 37
Repurchase and cancellation of treasury
stock....................................... -- -- (3) -- --
------- ------- ------- ----- -------
Net cash provided by (used in)
financing activities................. 2,225 (702) 2,379 245 (1,360)
------- ------- ------- ----- -------
Effect of exchange rate changes on cash and cash
equivalents.................................... 2 (1) 30 (26) (169)
------- ------- ------- ----- -------
Net increase (decrease) in cash and cash
equivalents.................................... 1,106 (983) 2,272 (220) 606
Cash and cash equivalents, beginning of period... 570 1,676 693 693 2,965
------- ------- ------- ----- -------
Cash and cash equivalents, end of period......... $ 1,676 $ 693 $ 2,965 $ 473 $ 3,571
======= ======= ======= ===== =======
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-5
<PAGE> 66

BIORELIANCE CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
AND THE THREE MONTHS ENDED MARCH 31, 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
EQUITY
CONVERTIBLE ADJUSTMENT
PREFERRED STOCK COMMON STOCK ADDITIONAL FROM FOREIGN TOTAL
------------------ ---------------- PAID-IN ACCUMULATED CURRENCY STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TRANSLATION EQUITY
--------- ------ ------- ------ ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993........ 6,470,121 $ 65 276,660 $3 $ 19,769 $ (12,823) $ (86) $ 6,928
Exercise of stock options......... -- -- 3,858 -- 9 -- -- 9
Equity adjustment from foreign
currency translation............ -- -- -- -- -- -- 63 63
Net income........................ -- -- -- -- -- 4,452 -- 4,452
--------- ------ ------- -- --------- --------- ------ --------
BALANCE AT DECEMBER 31, 1994........ 6,470,121 65 280,518 3 19,778 (8,371) (23) 11,452
Exercise of stock options......... -- -- 16,484 -- 41 -- -- 41
Compensation element of stock
option grants................... -- -- -- -- 3 -- -- 3
Equity adjustment from foreign
currency translation............ -- -- -- -- -- -- (33) (33)
Net income........................ -- -- -- -- -- 658 -- 658
--------- ------ ------- -- --------- --------- ------ --------
BALANCE AT DECEMBER 31, 1995........ 6,470,121 65 297,002 3 19,822 (7,713) (56) 12,121
Issuance of common stock in
connection with acquisition..... -- -- 23,333 -- 198 -- -- 198
Exercise of stock options......... -- -- 20,647 -- 34 -- -- 34
Compensation element of stock
option grants................... -- -- -- -- 22 -- -- 22
Stock repurchase.................. -- -- (1,052) -- (3) -- -- (3)
Equity adjustment from foreign
currency translation............ -- -- -- -- -- -- 217 217
Net income........................ -- -- -- -- -- 1,502 -- 1,502
--------- ------ ------- -- --------- --------- ------ --------
BALANCE AT DECEMBER 31, 1996........ 6,470,121 65 339,930 3 20,073 (6,211) 161 14,091
Exercise of stock options
(unaudited)..................... -- -- 24,725 1 36 -- -- 37
Equity adjustment from foreign
currency translation
(unaudited)..................... -- -- -- -- -- -- (359) (359)
Net income (unaudited)............ -- -- -- -- -- 690 -- 690
--------- ------ ------- -- --------- --------- ------ --------
BALANCE AT MARCH 31, 1997
(UNAUDITED)....................... 6,470,121 $ 65 364,655 $4 $ 20,109 $ (5,521) $ (198) $ 14,459
========= ===== ======= == ======== ========= ====== ========
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.

F-6
<PAGE> 67

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF THE BUSINESS

BioReliance Corporation (the "Company") is a contract research organization
providing nonclinical testing and contract manufacturing services for biologics
to biotechnology and pharmaceutical companies worldwide.

BASIS OF ACCOUNTING

The accompanying financial statements have been prepared on the accrual
basis of accounting which is in accordance with generally accepted accounting
principles. The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company to make estimates and
assumptions that affect the amounts reported in the financial statements. Actual
results could differ from those estimates.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of BioReliance
Corporation and its subsidiaries. All significant intercompany transactions have
been eliminated.

REVENUE RECOGNITION

Revenue recognized from commercial contracts, which are principally
fixed-price or fixed-rate, is recorded using the percentage-of-completion or the
completed-contract method, depending on the nature and duration of the contract.
Nonclinical testing services are accounted for using the
percentage-of-completion method, except for those services that are generally
completed within three days which are accounted for using the completed-contract
method. Contract manufacturing services providing for the delivery of products
are accounted for using the completed-contract method, while all other contract
manufacturing services are accounted for using the percentage-of-completion
method. Percentage-of-completion is determined using total project costs as a
cost input measure. Revenue recognized from government contracts, which are
principally cost-plus-fixed-fee, is recognized in an amount equal to
reimbursable costs plus a pro-rata portion of the earned fee. Losses are
provided for at the time at which they become known.

RESEARCH AND DEVELOPMENT

Research and development is expensed in the period in which it is incurred.

CASH AND CASH EQUIVALENTS

The Company classifies as cash equivalents all highly liquid investments
with maturities of three months or less.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost, less accumulated depreciation
and amortization. Depreciation and amortization are computed using the
straight-line method over the estimated useful lives of the respective assets.
The building is depreciated over a 20-year period. Leasehold improvements are
depreciated or amortized over the shorter of the useful life or the lease term.
Other fixed assets are depreciated or amortized over periods ranging from three
to ten years. Significant additions and betterments are capitalized.
Expenditures for maintenance and repairs are charged to operations as incurred.

INTANGIBLE ASSETS

Intangible assets consist primarily of license rights acquired in
connection with the acquisition of BIOMEVA GmbH ("BIOMEVA") in 1996 and are
amortized on a straight-line basis over three years. Accumulated amortization at
December 31, 1996 and amortization expense for the year then ended totaled

F-7
<PAGE> 68

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

$92,000. The carrying values of intangible assets are reviewed utilizing
undiscounted cash flows and are adjusted, as appropriate, if the facts and
circumstances suggest impairment.

INCOME TAXES

Deferred income taxes are recognized for the expected future tax
consequences of temporary differences by applying enacted statutory tax rates to
differences between the financial statement carrying amounts and the tax basis
of existing assets and liabilities.

NET INCOME PER SHARE

Net income per share has been computed using the weighted average number of
common shares and common share equivalents outstanding during each period.
Common share equivalents include Convertible Preferred Stock and stock options.
Common share equivalents are excluded from the computation in periods in which
they have an anti-dilutive effect, and net income available to common
stockholders is adjusted accordingly for the effect of cumulative dividends on
Convertible Preferred Stock. Pursuant to the requirements of the Securities and
Exchange Commission, common shares and common share equivalents issued or
granted by the Company at prices below the public offering price during the 12
months immediately preceding the filing of this initial Registration Statement
and through the effective date of such Registration Statement have been
calculated using the treasury stock method based upon the estimated initial
public offering price, and have been included for all periods presented
regardless of whether they are dilutive.

All share and per-share data in the consolidated financial statements and
notes thereto have been retroactively adjusted to give effect to the reverse
stock split referred to in Note 14. The difference between primary and fully
diluted net income per share is not significant for all periods presented.

FAIR VALUES OF FINANCIAL INSTRUMENTS

The estimated fair values of the Company's cash and cash equivalents,
accounts receivable, other current assets, deposits and other assets, accounts
payable, accrued expenses, and customer advances approximate their carrying
values due to their short-term nature. Since the interest rates paid by the
Company approximate current market rates, the carrying value of its long-term
debt approximates fair value.

FOREIGN CURRENCY TRANSLATION

The accounts of foreign subsidiaries are measured using local currency as
the functional currency. Assets and liabilities of these subsidiaries are
translated into U.S. dollars at period-end exchange rates, and income and
expense accounts are translated at average monthly exchange rates. Net gains and
losses resulting from such translations are excluded from net income and are
accumulated in a separate component of stockholders' equity.

INTERIM FINANCIAL INFORMATION (UNAUDITED)

Interim financial information for the three months ended March 31, 1996 and
1997 included herein is unaudited. However, in the opinion of the Company, the
interim financial information includes all adjustments, consisting of only
normal recurring adjustments, necessary for a fair presentation of the results
for the interim periods. The results of operations for the three months ended
March 31, 1997 are not necessarily indicative of the results to be expected for
the full year ending December 31, 1997.

PRO FORMA STOCKHOLDERS' EQUITY (UNAUDITED)

If the offering contemplated by this Prospectus is consummated under the
terms presently anticipated, all of the Convertible Preferred Stock will convert
to shares of the Company's Common Stock. Pro forma

F-8
<PAGE> 69

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

stockholders' equity as of March 31, 1997 is adjusted for the conversion of the
Convertible Preferred Stock into Common Stock.

(2) ACQUISITION

In July 1996, the Company acquired all of the shares of BIOMEVA, a contract
manufacturer of microbial products located in Heidelberg, Germany. Total
consideration for the acquisition was negotiated by the parties to be $3.3
million, and consisted of $3.1 million paid in cash plus the issuance of 23,333
shares of
the Company's Common Stock. The acquisition of BIOMEVA has been accounted for by
the purchase method and, accordingly the purchase price was allocated based on
the fair values of the assets and liabilities acquired. BIOMEVA's operations
have been included in the consolidated financial statements since the date of
acquisition. Intangible assets of $0.6 million were recorded in connection with
the acquisition and are being amortized on a straight-line basis over three
years. The unaudited pro forma results of operations, assuming that the
acquisition had been consummated at January 1, 1995 are as follows for the years
ended December 31:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS,
EXCEPT PER SHARE
DATA)
<S> <C> <C>
Revenue................................................ $32,287 $39,165
Net income............................................. 377 1,386
Net income per share................................... $ 0.05 $ 0.24
</TABLE>

These unaudited pro forma results of operations include adjustments to
BIOMEVA's unaudited historical results of operations which provide for: (1)
additional amortization and depreciation expense relating to intangible assets
and an increase in the carrying value of property and equipment, which result
from application of purchase accounting as if the acquisition had been
consummated at January 1, 1995; and (2) a net increase in interest expense,
assuming that, as of January 1, 1995, the debt incurred by the Company to
finance the acquisition was outstanding and the pre-acquisition BIOMEVA debt was
repaid.

(3) ACCOUNTS RECEIVABLE

Accounts receivable consisted of the following amounts as of December 31:

<TABLE>
<CAPTION>
1995 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
Billed accounts receivable:
Commercial............................................ $6,189 $ 6,579
Government............................................ 140 380
------ -------
6,329 6,959
------ -------
Unbilled accounts receivable:
Commercial............................................ 1,742 6,272
Government............................................ 863 654
------ -------
2,605 6,926
------ -------
Less allowances for doubtful accounts and unallowable
contract costs........................................ (243) (240)
------ -------
Accounts receivable, net................................ $8,691 $13,645
====== =======
</TABLE>

Unbilled commercial receivables represent revenue from commercial contracts
(recorded using the percentage-of-completion method) which are not yet billable
to the client. Generally, these amounts become

F-9
<PAGE> 70

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

billable within the next one to three months upon the attainment of a milestone
or the completion of the contract.

Unbilled government receivables represent amounts which are billed on
government contracts shortly after the end of each month, based on costs
incurred and fees earned during the month, or revenues recognized in excess of
billings on government contracts which generally become billable upon final
determination of allowable costs by the United States Government. Government
contract costs for 1995 and 1996 are subject to final determination of allowable
costs by the United States Government. In the opinion of management, these
determinations will have no material effect on the Company's consolidated
financial position or results of operations.

(4) PROPERTY AND EQUIPMENT

Property and equipment consisted of the following amounts as of December
31:

<TABLE>
<CAPTION>
1995 1996
-------- --------
(IN THOUSANDS)
<S> <C> <C>
Land.................................................... $ 1,984 $ 1,984
Building................................................ 7,827 7,859
Machinery, equipment, furniture and fixtures............ 8,946 15,095
Leasehold improvements.................................. 2,123 2,288
Construction in progress................................ 1,751 255
-------- --------
Property and equipment, at cost......................... 22,631 27,481
Less accumulated depreciation and amortization.......... (10,158) (12,536)
-------- --------
Property and equipment, net............................. $ 12,473 $ 14,945
======== ========
</TABLE>

(5) DEBT

Debt consisted of the following amounts as of December 31:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Mortgage Loan............................................. $ 3,940 $ 3,581
Promissory Note........................................... -- 1,620
Note payable to stockholder............................... -- 1,900
Capital lease obligations................................. 3,258 3,436
------- -------
Total debt................................................ 7,198 10,537
Less current portion...................................... (1,009) (1,555)
------- -------
Long-term portion......................................... $ 6,189 $ 8,982
======= =======
</TABLE>

BANK DEBT

In December 1993, the Company entered into a loan agreement with a bank to
refinance $1.6 million of outstanding indebtedness and to fund the expansion of
the Company's business. In December 1994, this loan agreement was modified to
provide term loan financing in the amount of $4,300,000 with a maturity date of
November 30, 1999 (the "Mortgage Loan"). The Mortgage Loan is secured by a deed
of trust on the Company's facility in Rockville, Maryland and a first security
interest in all of its tangible and intangible assets, exclusive of certain
leasing activities. In addition to a principal payment of $30,000 per month, the
note bears interest at the Company's election at either (a) the bank's prime
rate plus 0.25% or (b) the three-month

F-10
<PAGE> 71

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

London Inter-Bank Offering Rate ("LIBOR") plus 2.5%. At December 31, 1996, the
three-month LIBOR rate plus 2.5% was 8.56%.

In May 1995, the Company entered into an interest rate swap agreement
whereby the variable interest rate of the Mortgage Loan was effectively
converted into debt with a fixed rate of 9.05% per annum. Amounts to be paid or
received under the interest rate swap agreement are recognized as interest
income or expense in the periods in which they accrue and are recorded in the
same category as that arising from the Mortgage Loan. The agreement is a
straight forward contract that has no imbedded options or other terms involving
a higher level of complexity or risk. This agreement expires on November 30,
1999. The effect of the interest rate swap agreement on interest expense was not
material in 1995 or 1996.

In addition to the Mortgage Loan, the Company has entered into a revolving
loan agreement with the same bank with a maximum available balance, based on a
percentage of eligible billed receivables, as defined in the loan agreement, not
to exceed $1,000,000. Also, effective March 1, 1995, the Company has agreed to
pay a quarterly commitment fee equaling 0.25% of the average unused portion of
the revolving bank loan. At December 31, 1996, no amounts were outstanding under
the facility. This line of credit expires in May 1997.

In June 1996, the Company entered into a promissory note with the same bank
for $1,800,000 with a maturity date of June 30, 1999 (the "Promissory Note") and
amended its loan agreement to provide for these borrowings. In addition to a
principal payment of $30,000 per month, the note bears interest at the Company's
election at either (a) the bank's prime rate plus 1.25% or (b) the daily LIBOR
plus 3.5%. At December 31, 1996, the daily LIBOR rate plus 3.5% was 9.16%.

In July 1996, the Company entered into a loan agreement with its majority
stockholder for $1,900,000. This note provides for the payment of interest on
the outstanding loan balance at the same rate as the Promissory Note. After July
1999, the note requires principal payments of $53,000 per month. At December 31,
1996, the daily LIBOR rate plus 3.5% was 9.16%. This note was repaid on March
28, 1997.

The long-term portion of the Company's debt, excluding capital lease
obligations (see below), is payable as follows (in thousands):

<TABLE>
<S> <C>
Years ending December 31:
1998.............................................................. $ 719
1999.............................................................. 4,081
2000.............................................................. 636
2001.............................................................. 636
Thereafter........................................................ 310
------
Total.......................................................... $6,382
======
</TABLE>

The bank agreements are cross collateralized and are secured by all of the
Company's assets, excluding certain leased assets. The agreements require the
Company to meet certain covenants and provide restrictions on certain leasing
activities and the payment of dividends. The Company was not in compliance with
certain of these covenants; however, the Company has obtained waivers for any
such instances of noncompliance which occurred between January 1, 1996 and March
28, 1997. The waivers obtained forever discharge the Company from any and all
claims that the Bank may have against the Company with respect to the past
violations of these covenants.

F-11
<PAGE> 72

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

CAPITAL LEASE OBLIGATIONS

The Company leases land and certain equipment under noncancelable lease
agreements accounted for as capital leases. The assets underlying such
capitalized leases are included with the Company's owned property and equipment,
and are summarized as follows as of December 31:

<TABLE>
<CAPTION>
1995 1996
------- -------
(IN THOUSANDS)
<S> <C> <C>
Land...................................................... $ 1,984 $ 1,984
Machinery and equipment................................... 3,672 4,575
------- -------
Total assets at cost...................................... 5,656 6,559
Less accumulated depreciation............................. (1,136) (1,921)
------- -------
Net capitalized assets.................................... $ 4,520 $ 4,638
======= =======
</TABLE>

The future minimum lease payments under capital lease obligations at
December 31, 1996 were as follows (in thousands):

<TABLE>
<S> <C>
Years ending December 31:
1997.............................................................. $1,090
1998.............................................................. 1,056
1999.............................................................. 809
2000.............................................................. 517
2001.............................................................. 154
Thereafter........................................................ 777
------
Total minimum lease payments........................................ 4,403
Less amount representing interest................................... (967)
------
Present value of minimum lease payments............................. 3,436
Less current portion................................................ (836)
------
Long-term portion................................................... $2,600
======
</TABLE>

(6) STOCKHOLDERS' EQUITY

CONVERTIBLE PREFERRED STOCK

Convertible Preferred Stock at December 31, 1995 and 1996 consisted of the
following:

Series A, $.01 par value, $100 liquidation value, 50,000 shares
authorized, and 20,698 issued and outstanding

Series B, $.01 par value, $3.00 liquidation value, 400,000 shares
authorized, and 385,723 shares issued and outstanding

Series C, $.01 par value, $5.00 liquidation value, 2,450,000 shares
authorized, and 2,425,438 shares issued and outstanding

Series D and E, $.01 par value, $1.89 liquidation value, 4,000,000
shares authorized, and 456,829 shares of Series D issued and
outstanding and 3,181,433 shares of Series E issued and outstanding

At December 31, 1996, each share of the preferred stock was convertible
into the following number of common shares: Series A 14.9366, Series B
(including adjustment for accumulated dividends of $1,162,000) 1.6947, Series C
1.0072, Series D 0.3772 and Series E 0.3772. Series A, B, C and D vote their
respective

F-12
<PAGE> 73

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

common share equivalents, and Series E is non-voting. Upon the closing of the
Company's anticipated offering, all Series of Convertible Preferred Stock
outstanding will automatically convert to Common Stock at the exchange ratios
indicated above.

No dividends accumulate on Series A, C, D and E preferred stock. Series B
earns cumulative annual dividends at the rate of $0.36 per share. At December
31, 1996, $1,162,000 of Series B dividends had accumulated. The Convertible
Preferred Stock is fully participating after certain defined dividends are paid
on all series of preferred stock and on the common stock.

STOCK OPTION PLANS

The Board of Directors has adopted incentive stock option ("ISO") plans and
a non-incentive stock option ("NSO") plan. The exercise price of all ISOs must
be equal to or greater than the fair market value of the stock on the date of
grant. All ISOs are exercisable as determined by the Company and expire no later
than ten years after the date of grant. During 1996, the Company assumed the
outstanding ISOs of the Company's subsidiary, MAGENTA Corporation, ISO plan. At
December 31, 1996, all ISOs are exercisable solely for the Company's Common
Stock. The MAGENTA Corporation ISO plan remains in existence, with terms exactly
the same as described above. There were no outstanding options issued at
December 31, 1996, and the Company does not plan to issue additional options
under this plan in the future. The Company is authorized to issue 1,033,333
shares under the ISO plans.

The exercise price of NSOs must be not less than 75% of the fair market
value of the stock on the date of grant. All options are exercisable as
determined by the Company and expire no later than ten years after the date of
grant. The Company is authorized to issue 83,333 shares of Common Stock under
the NSO plan.

Changes in options outstanding were as follows:

<TABLE>
<CAPTION>
NUMBER OF OPTION PRICE
SHARES PER SHARE
--------- ------------
<S> <C> <C>
Balance, December 31, 1993.......................... 645,573 $ 1.50-2.43
Granted........................................... 80,567 0.56-2.25
Exercised......................................... (3,858) 2.43
Canceled.......................................... (37,500) 1.50-2.43
-------
Balance, December 31, 1994.......................... 684,782 0.56-2.43
Granted........................................... 141,850 2.25-3.00
Exercised......................................... (16,484) 2.43
Canceled.......................................... (15,667) 1.50-2.43
-------
Balance, December 31, 1995.......................... 794,481 0.56-3.00
Granted........................................... 141,066 3.00-7.50
Exercised......................................... (20,647) 1.50-2.43
Canceled.......................................... (43,536) 1.50-3.00
-------
Balance, December 31, 1996.......................... 871,364 0.56-7.50
=======
</TABLE>

Between January 1, 1997 and June 30, 1997, the Company granted options to
purchase 16,232 shares of Common Stock with an exercise price of $9.00 and
options to purchase 11,633 shares of Common Stock with an exercise price equal
to the net initial public offering price. In addition, options to purchase
49,796 shares were exercised at exercise prices of $0.56 to $3.00 per share, and
21,242 options were canceled during that period.

Effective January 1, 1996, the Company adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). In accordance with the standard, the Company

F-13
<PAGE> 74

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

has elected to continue to measure compensation expense for its stock option
plans using the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees." No pro forma
disclosures of net income and net income per share using the SFAS 123 fair-value
based method to determine compensation expense have been provided since the
effect is not material. To determine fair value under SFAS 123, the Company used
the Black-Scholes option-pricing model and the following weighted-average
assumptions for 1995 and 1996: a risk-free interest rate of 6.35%, expected
lives of 6 years, expected volatility of 35%, and expected dividends of zero.

For options outstanding and exercisable at December 31, 1996, the following
number of options, range of exercise prices and weighted average exercise prices
were:

<TABLE>
<CAPTION>
NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- ----------------
<S> <C> <C>
Range of exercise prices for options outstanding:
$0.56-$2.43...................................... 680,964 $ 1.60
$3.00-$7.50...................................... 190,400 4.32
-------
871,364 2.19
=======
Range of exercise prices for options exercisable:
$0.56-$2.43...................................... 492,811 $ 1.59
$3.00-$7.50...................................... 25,187 3.30
-------
517,998 1.67
=======
</TABLE>

The weighted average remaining contractual life was 2.9 and 5.4 years for the
range of exercise prices of $0.56-$2.43 and $3.00-$7.50, respectively. At
December 31, 1996, 216,318 shares were available for grant.

(7) INCOME TAXES

INCOME TAX PROVISION

Income (loss) before income taxes consisted of the following amounts for
the years ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
------ ---- ------
(IN THOUSANDS)
<S> <C> <C> <C>
Domestic............................................. $2,464 $878 $1,632
Foreign.............................................. (204) 23 716
------ ---- ------
Income before income taxes........................... $2,260 $901 $2,348
====== ==== ======
</TABLE>

F-14
<PAGE> 75

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The benefit from (provision for) income taxes consisted of the following
amounts for the years ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
------ ----- -----
(IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal............................................ $ -- $ (64) $ --
Foreign............................................ -- (4) (323)
State.............................................. -- (1) --
------ ----- -----
Total current provision....................... -- (69) (323)
------ ----- -----
Deferred:
Federal............................................ 1,809 (280) (540)
Foreign............................................ -- 168 90
State.............................................. 383 (62) (73)
------ ----- -----
Total deferred benefit (provision)............ 2,192 (174) (523)
------ ----- -----
Total benefit from (provision for) income
taxes...................................... $2,192 $(243) $(846)
====== ===== =====
</TABLE>

The benefit from (provision for) income taxes differed from that which
would be computed by applying the U.S. Federal income tax rate to income before
income taxes for the years ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
----- ----- -----
<S> <C> <C> <C>
Federal tax at statutory rate....................... (34.0)% (34.0)% (34.0)%
Adjustment for foreign income taxes................. -- -- (4.4)
Change in valuation allowance....................... 139.5 16.8 (0.9)
Effect of tax loss carryforwards.................... -- (14.4) --
Nondeductible expenses.............................. (3.8) (0.3) (1.5)
Other............................................... (4.7) 4.9 4.8
----- ----- -----
Benefit from (provision for) income taxes........... 97.0% (27.0)% (36.0)%
===== ===== =====
</TABLE>

F-15
<PAGE> 76

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

DEFERRED INCOME TAXES

Deferred income taxes consisted of the following amounts as of December 31:

<TABLE>
<CAPTION>
1995 1996
------ -------
(IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards......................... $1,872 $ 2,371
Accrued expenses......................................... 378 518
Tax credit carryforwards................................. 489 467
Other.................................................... 64 61
------ -------
Gross deferred tax assets.................................. 2,803 3,417
Valuation allowance........................................ (350) (373)
------ -------
Net deferred tax assets.................................. 2,453 3,044
------ -------
Deferred tax liabilities:
Unbilled accounts receivable............................. -- (1,121)
Depreciation and amortization............................ (435) (422)
Other.................................................... -- (6)
------ -------
Deferred tax liabilities................................... (435) (1,549)
------ -------
Deferred taxes, net........................................ $2,018 $ 1,495
====== =======

Current taxes payable...................................... $ -- $ (859)
Current tax asset.......................................... 1,263 355
Noncurrent taxes, net...................................... 755 1,999
------ -------
Deferred taxes, net........................................ $2,018 $ 1,495
====== =======
</TABLE>

The Company records a valuation allowance for deferred tax assets when it
is management's judgment that it is more likely than not that all or a portion
of a deferred tax asset will not be realized.

TAX CARRYFORWARDS

At December 31, 1996, the Company had net operating loss carryforwards,
available to offset future taxable income of approximately $4.4 million and $1.6
million in the U.S. and U.K., respectively. Additionally, the Company had tax
credit carryforwards of approximately $0.5 million available to reduce future
U.S. income taxes, and state net operating loss carryforwards of approximately
$5.1 million. The Company's U.S. carryforwards will expire in varying amounts,
commencing in 1999 and ending in 2011. Approximately $0.4 million, $0.6 million,
and $1.0 million of the U.S. net operating loss carryforwards will expire in
1999, 2001, and 2002, respectively, with the remainder expiring after 2004. The
Company's U.K. loss carryforwards do not have an expiration period.

(8) NONRECURRING CHARGE

During 1996, the Company incurred a charge against operations of $696,000
in connection with the Company's settlement of a dispute with a landlord
relating to the termination of a lease. This liability was included in other
accrued liabilities at December 31, 1996.

(9) RETIREMENT PLAN

The Company sponsors a defined-contribution retirement 401(k) plan covering
substantially all of its employees. Contributions made by the Company in 1994,
1995 and 1996 equaled 50% of the voluntary

F-16
<PAGE> 77

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

employee contributions up to a maximum of 6% of a participant's annual
compensation. The Company's retirement plan contributions were $174,000,
$228,000 and $262,000 in 1994, 1995 and 1996, respectively.

(10) COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases certain facilities and equipment under noncancelable
operating leases that expire at various dates through 2017. Future minimum lease
payments under operating leases were as follows (in thousands):

<TABLE>
<S> <C>
Years ending December 31:
1997............................................................. $ 1,547
1998............................................................. 1,443
1999............................................................. 1,306
2000............................................................. 1,192
2001............................................................. 1,105
Thereafter....................................................... 6,512
-------
Total future minimum lease payments........................... $13,105
=======
</TABLE>

Total rent expense for all operating leases was $581,000, $945,000 and
$1,573,000 in 1994, 1995 and 1996, respectively.

LEGAL

The Company is involved in various claims and legal proceedings arising in
the ordinary course of business. The Company does not believe that such claims
or proceedings, individually or in the aggregate, will have a material adverse
effect on the Company's consolidated financial position or results of
operations.

The Company has been identified by the U.S. Environmental Protection Agency
("EPA") as one of several hundred potentially responsible parties ("PRPs") under
CERCLA with respect to the Ramp Industries, Inc. site in Denver, Colorado.
Although the Company believes that it sent only a small quantity of waste to
this site, liability under CERCLA can exceed a PRP's pro rata share of cleanup
costs. The EPA has incurred approximately $5 million to date to remove wastes
from this site and expects to incur approximately an additional $1.3 million to
remove the remaining wastes. However, the estimated total cleanup costs have not
been determined. The Company does not have sufficient information to evaluate
the financial ability of the other PRPs to pay costs apportioned to them, or
their impact on the Company's liability. Consequently, at this time the Company
does not have sufficient information to determine whether it will be offered a
de minimis buyout or what its ultimate share of cleanup costs will be, but,
because of the small quantity of waste the Company sent to the site, the Company
believes that the outcome of this matter will not have a material adverse effect
on the Company's financial position or results of operations.

F-17
<PAGE> 78

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(11) GEOGRAPHIC SEGMENTS AND SIGNIFICANT CUSTOMERS

GEOGRAPHIC SEGMENT

The Company operates in one business segment, but has operations located in
the United States and Europe. Transfers between geographic areas are not
material to the Company's operations. The following table outlines the Company's
revenues, income from operations and identifiable assets by geographic region
for the years ended December 31:

<TABLE>
<CAPTION>
1994 1995 1996
------- ------- -------
(IN THOUSANDS)
<S> <C> <C> <C>
Revenues
United States.................................. $25,853 $26,420 $31,896
Europe......................................... 2,241 3,658 5,786
------- ------- -------
Total....................................... $28,094 $30,078 $37,682
======= ======= =======
Income from operations
United States.................................. $ 2,908 $ 1,414 $ 2,333
Europe......................................... (209) 11 831
------- ------- -------
Total....................................... $ 2,699 $ 1,425 $ 3,164
======= ======= =======
Identifiable assets
United States.................................. $20,513 $21,038 $24,521
Europe......................................... 3,038 3,900 11,306
------- ------- -------
Total....................................... $23,551 $24,938 $35,827
======= ======= =======
</TABLE>

SIGNIFICANT CUSTOMERS

Sales to the U.S. Government represented 20%, 13% and 10% of consolidated
revenue in 1994, 1995 and 1996, respectively.

(12) SUPPLEMENTAL CASH FLOW INFORMATION

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
1994 1995 1996
---- ------ ------
<S> <C> <C> <C>
(IN THOUSANDS)
Cash paid during the year for:
Income tax payments................................ $165 $ 32 $ 4
Interest payments.................................. 236 563 844
Noncash investing and financing activities:
Equipment acquired under capital lease agreements
(Note 5)........................................ $172 $2,735 $ 903
Details of acquisition (Note 2):
Fair value of assets acquired...................... $3,857
Liabilities assumed................................ (595)
Stock issued....................................... (198)
------
Cash paid.......................................... 3,064
Less cash acquired................................. (312)
------
Net cash paid for acquisition........................ $2,752
======
</TABLE>

F-18
<PAGE> 79

BIORELIANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(13) EFFECT OF NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
This statement establishes standards for computing and presenting earnings per
share ("EPS"), simplifying previous standards for computing EPS and making them
comparable to international standards. It replaces the presentation of primary
EPS with a presentation of basic EPS, and requires dual presentation of basic
and diluted EPS on the face of the income statement for all entities with
complex capital structures. Basic EPS excludes dilution and is computed by
dividing income available to common shareholders by the weighted-average number
of common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock or resulted in the issuance of
common stock that then shared in the earnings of the entity. SFAS 128 requires
restatement of all prior period earnings per share data presented, and is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods. Earlier application is not permitted.

The Company will adopt this statement during the fourth quarter of 1997, as
required. Accordingly, all prior period EPS data will be restated. To illustrate
the effect of adoption, the Company has elected to disclose pro forma basic and
diluted EPS amounts computed using SFAS 128, as permitted by the standard. The
pro forma basic and diluted EPS for each of the three years in the period ended
December 31, 1996, and for the three months ended March 31, 1996 and 1997, are
set forth below:

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
-------------------------- ----------------
1994 1995 1996 1996 1997
------ ----- ----- ------ -----
<S> <C> <C> <C> <C> <C>
Basic earnings per share......... $10.96 $1.29 $3.22 $(0.07) $1.42
------ ----- ----- ------ -----
Diluted earnings per share....... $ 0.86 $0.11 $0.26 $(0.07) $0.12
====== ===== ===== ====== =====
</TABLE>

(14) RECAPITALIZATION

On May 8, 1997, the Company's stockholders approved (a) a change of the
name of the Company from Microbiological Associates, Inc. to BioReliance
Corporation; (b) a one-for-three reverse stock split of the Company's Common
Stock; (c) an increase in the authorized shares of Common Stock to 15,000,000
shares; and (d) a merger of the Company, then a Maryland corporation, with its
wholly owned subsidiary, BioReliance Corporation, a Delaware corporation, with
the Delaware corporation being the surviving corporation, and a concurrent
transfer of substantially all of the assets and liabilities (except for its
investment in subsidiaries, certain government contracts and bank obligations)
of the parent company to its wholly owned subsidiary, MA BioServices, Inc. The
impact of this last action was to change the parent company into a holding
company and to change its state of incorporation to Delaware.

The name change, the reverse stock split and the increase in authorized
shares of Common Stock have been retroactively reflected in the consolidated
financial statements. The merger of the Company with its wholly owned subsidiary
had no impact on the consolidated financial statements.

(15) SUBSEQUENT EVENT (UNAUDITED)

In May 1997, the Company extended the expiration date of its line of credit
to August 1997.

F-19
<PAGE> 80

[This page intentionally left blank.]
<PAGE> 81

[BIORELIANCE LOGO]
<PAGE> 82

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth all expenses, other than underwriting
discounts and commissions, payable by the Company in connection with the sale of
the Common Stock being registered. All amounts are estimates except the
registration fee.

<TABLE>
<S> <C>
Commission Registration Fee..................................... $ 11,519
NASD filing fee................................................. 4,203
Nasdaq National Market listing fee.............................. 35,000
Printing and engraving expenses................................. 200,000
Legal fees and expenses......................................... 550,000
Accounting fees and expenses.................................... 325,000
Blue sky fees and expenses (including legal fees)............... 3,000
Transfer agent and registrar fees and expenses.................. 2,500
Miscellaneous................................................... 68,778
----------
Total................................................. $1,200,000
=========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company's Certificate provides that the Company shall indemnify to the
fullest extent authorized by the DGCL, each person who is involved in any
litigation or other proceeding because such person is or was a director or
officer of the Company or is or was serving as an officer or director of another
entity at the request of the Company, against all expense, loss or liability
reasonably incurred or suffered in connection therewith. The Certificate
provides that the right to indemnification includes the right to be paid
expenses incurred in defending any proceeding in advance of its final
disposition; provided, however, that such advance payment will only be made upon
delivery to the Company of an undertaking, by or on behalf of the director or
officer, to repay all amounts so advanced if it is ultimately determined that
such director is not entitled to indemnification. If the Company does not pay a
proper claim for indemnification in full within 60 days after a written claim
for such indemnification is received by the Company, the Certificate of
Incorporation and Bylaws authorize the claimant to bring an action against the
Company and prescribe what constitutes a defense to such action.

Section 145 of the DGCL permits a corporation to indemnify any director or
officer of the corporation against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with any action, suit or proceeding brought by reason of the fact
that such person is or was a director or officer of the corporation, if such
person acted in good faith and in a manner that he reasonably believed to be in
or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, if he had no reason to believe his conduct
was unlawful. In a derivative action, (i.e., one brought by or on behalf of the
corporation), indemnification may be made only for expenses, actually and
reasonably incurred by any director or officer in connection with the defense or
settlement of such an action or suit, if such person acted in good faith and in
a manner that he reasonably believed to be or not opposed to the best interests
of the corporation, except that no indemnification shall be made if such person
shall have been adjudged to be liable to the corporation, unless and only to the
extent that the court in which the action or suit was brought shall determine
that the defendant is fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.

Pursuant to Section 102(b)(7) of the DGCL, Article EIGHT of the Company's
Certificate eliminates the liability of a director to the corporation or its
stockholders for monetary damages for such breach of

II-1
<PAGE> 83

fiduciary duty as a director, except for liabilities arising (i) from any breach
of the director's duty of loyalty to the corporation or its stockholders, (ii)
from acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) from
any transaction from which the director derived an improper personal benefit.

The Company has obtained primary and excess insurance policies insuring the
directors and officers of the Company against certain liabilities that they may
incur in their capacity as directors and officers. Under such policies, the
insurers, on behalf of the Company, may also pay amounts for which the Company
has granted indemnification to the directors or officers.

Additionally, reference is made to the Underwriting Agreement filed as
Exhibit 1.1 hereto, which provides for indemnification by the Underwriters of
the Company, its directors and officers who sign the Registration Statement and
persons who control the Company, under certain circumstances.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

In the three years preceding the filing of this registration statement, the
Company has issued shares of Common Stock in the following transactions, each of
which was intended to be exempt from the registration requirements of the
Securities Act of 1933, as amended, by virtue of Section 4(2) and Rule 701
thereunder. The shares in each of the following transactions are presented as
adjusted for two reverse stock splits which the Company effected prior to the
offering.

On July 16, 1994, the Company sold 166 shares of its Common Stock to
Constance J. Kepner at $2.43 per share in exchange for payment of $405.00 upon
the exercise of an option to purchase shares of Common Stock.

On July 27, 1994, the Company sold 166 shares of its Common Stock to John
W. Harbell at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On July 29, 1994, the Company sold 291 shares of its Common Stock to Nona
S. Karten at $2.43 per share in exchange for payment of $708.75 upon the
exercise of an option to purchase shares of Common Stock.

On July 29, 1994, the Company sold 150 shares of its Common Stock to Martin
L. Wenk at $2.43 per share in exchange for payment of $364.50 upon the exercise
of an option to purchase shares of Common Stock.

On August 1, 1994, the Company sold 41 shares of its Common Stock to David
R. Dansie at $2.43 per share in exchange for payment of $101.25 upon the
exercise of an option to purchase shares of Common Stock.

On August 3, 1994, the Company sold 566 shares of its Common Stock to
Donald L. Putman at $2.43 per share in exchange for payment of $1,377.00 upon
the exercise of an option to purchase shares of Common Stock.

On August 4, 1994, the Company sold 133 shares of its Common Stock to Mary
D. Whiteman at $2.43 per share in exchange for payment of $324.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 5, 1994, the Company sold 133 shares of its Common Stock to
William Alan Moore at $2.43 per share in exchange for payment of $324.00 upon
the exercise of an option to purchase shares of Common Stock.

On August 8, 1994, the Company sold 216 shares of its Common Stock to Janet
Williams Luczak at $2.43 per share in exchange for payment of $526.50 upon the
exercise of an option to purchase shares of Common Stock.

II-2
<PAGE> 84

On August 8, 1994, the Company sold 133 shares of its Common Stock to
Robert L. Peters at $2.43 per share in exchange for payment of $324.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 9, 1994, the Company sold 125 shares of its Common Stock to
Harold J. Paulin at $2.43 per share in exchange for payment of $303.75 upon the
exercise of an option to purchase shares of Common Stock.

On August 10, 1994, the Company sold 1,000 shares of its Common Stock to
William C. Coale at $2.43 per share in exchange for payment of $2,430.00 upon
the exercise of an option to purchase shares of Common Stock.

On, August 10, 1994, the Company sold 733 shares of its Common Stock to
Rodger D. Curren at $2.43 per share in exchange for payment of $1,782.00 upon
the exercise of an option to purchase shares of Common Stock.

On July 21, 1995, the Company sold 666 shares of its Common Stock to Anton
M. Allen at $2.43 per share in exchange for payment of $1,620.00 upon the
exercise of an option to purchase shares of Common Stock.

On July 24, 1995, the Company sold 2,166 shares of its Common Stock to Nona
S. Karten at $2.43 per share in exchange for payment of $5,265.00 upon the
exercise of an option to purchase shares of Common Stock.

On July 21, 1995, the Company sold 416 shares of its Common Stock to Janet
W. Luczak at $2.43 per share in exchange for payment of $1,012.50 upon the
exercise of an option to purchase shares of Common Stock.

On July 25, 1995, the Company sold 83 shares of its Common Stock to David
R. Dansie at $2.43 per share in exchange for payment of $202.50 upon the
exercise of an option to purchase shares of Common Stock.

On July 28, 1995, the Company sold 333 shares of its Common Stock to Martin
L. Wenk at $2.43 per share in exchange for payment of $810.00 upon the exercise
of an option to purchase shares of Common Stock.

On July 31, 1995, the Company sold 833 shares of its Common Stock to John
W. Harbell at $2.43 per share in exchange for payment of $2,025.00 upon the
exercise of an option to purchase shares of Common Stock.

On July 31, 1995, the Company sold 133 shares of its Common Stock to
Patricia M. Mulligan at $2.43 per share in exchange for payment of $324.00 upon
the exercise of an option to purchase shares of Common Stock.

On July 31, 1995, the Company sold 166 shares of its Common Stock to
Catherine Vignole at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 2, 1995, the Company sold 750 shares of its Common Stock to
Robert L. Peters at $2.43 per share in exchange for payment of $1,822.50 upon
the exercise of an option to purchase shares of Common Stock.

On August 2, 1995, the Company sold 666 shares of its Common Stock to
Donald Putman at $2.43 per share in exchange for payment of $1,620.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 2, 1995, the Company sold 500 shares of its Common Stock to
Constance J. Robinson at $2.43 per share in exchange for payment of $1,215.00
upon the exercise of an option to purchase shares of Common Stock.

II-3
<PAGE> 85

On August 2, 1995, the Company sold 166 shares of its Common Stock to Dana
Hamblen at $2.43 per share in exchange for payment of $405.00 upon the exercise
of an option to purchase shares of Common Stock.

On August 3, 1995, the Company sold 125 shares of its Common Stock to
Elizabeth von Kaenel at $2.43 per share in exchange for payment of $303.75 upon
the exercise of an option to purchase shares of Common Stock.

On August 3, 1995, the Company sold 125 shares of its Common Stock to
Kathleen M. Vincent at $2.43 per share in exchange for payment of $303.75 upon
the exercise of an option to purchase shares of Common Stock.

On August 3, 1995, the Company sold 166 shares of its Common Stock to
Cynthia I. Sigler at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 3, 1995, the Company sold 333 shares of its Common Stock to Mary
D. Whiteman at $2.43 per share in exchange for payment of $810.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 1,500 shares of its Common Stock to
William C. Coale at $2.43 per share in exchange for payment of $3,645.00 upon
the exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 854 shares of its Common Stock to
Rodger D. Curren at $2.43 per share in exchange for payment of $2,075.22 upon
the exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 1,646 shares of its Common Stock to
Rodger D. Curren at $2.43 per share in exchange for payment of $3,999.78 upon
the exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 166 shares of its Common Stock to James
Dubose, Jr. at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 833 shares of its Common Stock to
William Alan Moore at $2.43 per share in exchange for payment of $2,025.00 upon
the exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 250 shares of its Common Stock to
Harold J. Paulin at $2.43 per share in exchange for payment of $607.50 upon the
exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 100 shares of its Common Stock to
Pamela M. Smith at $2.43 per share in exchange for payment of $243.00 upon the
exercise of an option to purchase shares of Common Stock.

On August 4, 1995, the Company sold 166 shares of its Common Stock to
Valentine O. Wagner, III at $2.43 per share in exchange for payment of $405.00
upon the exercise of an option to purchase shares of Common Stock.

On September 8, 1995, the Company sold 3,333 shares of its Common Stock to
David Jacobson-Kram at $2.43 per share in exchange for payment of $8,100.00 upon
the exercise of an option to purchase shares of Common Stock.

On February 7, 1996, the Company sold 500 shares of its Common Stock to
Richard H.C. San at $2.43 per share in exchange for payment of $1,215.00 upon
the exercise of an option to purchase shares of Common Stock.

II-4
<PAGE> 86

On February 8, 1996, the Company sold 500 shares of its Common Stock to
Dominick A. Vacante at $2.43 per share in exchange for payment of $1,215.00 upon
the exercise of an option to purchase shares of Common Stock.

On June 12, 1996, the Company sold 333 shares of its Common Stock to Janet
W. Luczak at $2.43 per share in exchange for payment of $810.00 upon the
exercise of an option to purchase shares of Common Stock.

On July 8, 1996, in connection with the acquisition of BIOMEVA, the Company
paid $66,366 in cash and issued 23,333 shares of Common Stock at the equivalent
of $8.47 per share to Hans Peter Kneubuhl in exchange for 26% of the stated
capital of BIOMEVA.

On September 24, 1996, the Company sold 1,666 shares of its Common Stock to
David Jacobson-Kram at $2.43 per share in exchange for payment of $4,050.00 upon
the exercise of an option to purchase shares of Common Stock.

On November 21, 1996, the Company sold 980 shares of its Common Stock to
Christine E. Bentley at $2.25 per share in exchange for payment of $2,206.50
upon the exercise of an option to purchase shares of Common Stock.

On December 19, 1996, the Company sold 16,666 shares of its Common Stock to
Capers W. McDonald at $1.50 per share in exchange for payment of $25,000.00 upon
the exercise of an option to purchase shares of Common Stock.

On January 31, 1997, the Company sold 5,333 and 500 shares of its Common
Stock to Michael J. Seville at $1.50 and $2.43 per share, respectively, in
exchange for payment of $9,215.00 upon the exercise of an option to purchase
shares of Common Stock.

On March 10, 1997, the Company sold 3,333 shares of its Common Stock to
Jeffrey M. Ostrove at $0.56 per share in exchange for payment of $1,875.00 upon
the exercise of an option to purchase shares of Common Stock.

On March 10, 1997, the Company sold 333 shares of its Common Stock to
Constance J. Robinson at $2.43 per share in exchange for payment of $810.00 upon
the exercise of an option to purchase shares of Common Stock.

On March 19, 1997, the Company sold 8,417, 142 and 333 shares of its Common
Stock to E. Courtney Hoopes at $1.50, $0.56 and $3.00 per share, respectively,
in exchange for payment of $13,705.06 upon the exercise of an option to purchase
shares of Common Stock.

On March 19, 1997, the Company sold 1,666 shares of its Common Stock to
Ramnath Seetharam at $3.00 per share in exchange for payment of $5,000.00 upon
the exercise of an option to purchase shares of Common Stock.

On March 19, 1997, the Company sold 4,666 shares of its Common Stock to
Constance J. Robinson at $1.50 per share in exchange for payment of $7,000.00
upon the exercise of an option to purchase shares of Common Stock.

On April 2, 1997, the Company sold 1,666 shares of its Common Stock to
Martin Wisher at $2.43 per share in exchange for payment of $4,050.00 upon the
exercise of an option to purchase shares of Common Stock.

On April 3, 1997, the Company sold 333 shares of its Common Stock to Erin
H. Hill at $3.00 per share in exchange for payment of $999.00 upon the exercise
of an option to purchase shares of Common Stock.

On April 4, 1997, the Company sold 133 shares of its Common Stock to Retta
J. Horner at $1.50 per share in exchange for payment of $200.00 upon the
exercise of an option to purchase shares of Common Stock.

II-5
<PAGE> 87

On April 5, 1997, the Company sold 166 shares of its Common Stock to
Dorothy Lister at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On April 5, 1997, the Company sold 166 shares of its Common Stock to Sandra
(Hope) Robertson at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On April 24, 1997, the Company sold 166 shares of its Common Stock to Mary
D. Whiteman at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On April 25, 1997, the Company sold 166 shares of its Common Stock to
Dominick Vacante at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On April 25, 1997, the Company sold 166 shares of its Common Stock to
Richard San at $2.43 per share in exchange for payment of $405.00 upon the
exercise of an option to purchase shares of Common Stock.

On May 14, 1997, the Company sold 160 shares of its Common Stock to
Constance J. Robinson at $0.56 per share in exchange for payment of $90.00 upon
the exercise of an option to purchase shares of Common Stock.

On May 23, 1997, the Company sold 2,336 shares of its Common Stock to John
Harbell at $1.50 per share in exchange for payment of $3,504.00 upon the
exercise of an option to purchase shares of Common Stock.

On June 24, 1997, the Company sold 175 and 322 shares of its Common Stock
to Retta J. Horner at $1.50 and $2.25 per share, respectively, in exchange for
payment of $263.00 and $725.00 upon the exercise of options to purchase shares
of Common Stock.

On June 30, 1997, the Company sold 156, 16,666, 1,500 and 797 shares of its
Common Stock to Rodger D. Curren at $0.56, $1.50, $2.25, and $3.00 per share,
respectively, upon the exercise of options to purchase shares of Common Stock in
exchange for delivery of shares of Common Stock having an aggregate fair market
value of $30,854.17.

II-6
<PAGE> 88

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement.
3.1* Amended and Restated Certificate of Incorporation of BioReliance Corporation.
3.2* Bylaws of BioReliance Corporation.
4.1* Specimen Certificate representing the Common Stock.
5.1* Opinion of Fried, Frank, Harris, Shriver & Jacobson as to legality of the
securities registered hereunder.
10.1* BioReliance Corporation 1997 Incentive Plan.
10.2* Third Loan Modification Agreement, dated December 1, 1994, among NationsBank,
N.A. and Microbiological Associates, Inc., Microbiological Associates Limited,
MAGENTA Corporation and MAGENTA Services Ltd.
10.3* Security Agreement, dated as of December 17, 1993, by and between Maryland
National Bank, Microbiological Associates, Inc. and Microbiological Associates
Limited.
10.4* Modification Agreement -- Leasehold Deed of Trust and Security Agreement, dated
as of December 1, 1994, by and among Microbiological Associates, Inc., Kathleen
M. Malloy, Brent H. Donnell and NationsBank, N.A., dated as of December 1,
1994.
10.5* Leasehold Deed of Trust and Security Agreement, dated December 17, 1993, by and
between Microbiological Associates, Inc., Kathleen M. Malloy, Brent H. Donnell
and Maryland National Bank.
10.6* International Swap Dealers Association, Inc. Master Agreement by and among
NationsBank, N.A., Microbiological Associates, Inc. and MAGENTA Corporation,
dated as of May 10, 1995.
10.7* Promissory Note dated as of June 27, 1996, among NationsBank, N.A.,
Microbiological Associates, Inc., Microbiological Associates Limited, MAGENTA
Corporation and MAGENTA Services Ltd.
10.8* Lease Agreement dated as of December 1, 1983, by and between Montgomery County,
Maryland and Dynasciences Corp. n/k/a BioReliance Corporation.
10.9* Lease Agreement, dated as of October 31, 1994, as amended December 20, 1994,
between Redgate III Limited Partnership, as landlord, and Microbiological
Associates, Inc., as tenant.
10.10* Modification of Loan Agreement, dated as of May 31, 1996, among NationsBank,
N.A., Microbiological Associates, Inc., Microbiological Associates Limited,
MAGENTA Corporation and MAGENTA Services Ltd.
10.11* Note Modification and Extension Agreement, dated as of May 31, 1996, among
NationsBank, N.A., Microbiological Associates, Inc., Microbiological Associates
Limited, MAGENTA Corporation and MAGENTA Services, Ltd.
10.12* Second Modification of Loan Agreement, dated as of June 27, 1996, among
NationsBank, N.A., Microbiological Associates, Inc., Microbiological Associates
Limited, MAGENTA Corporation and MAGENTA Services, Ltd.
11 * Statement re computation of earnings per share.
21.1* Subsidiaries of the registrant.
23.1 Consent of Price Waterhouse LLP.
23.2* Consent of Fried, Frank, Harris, Shriver & Jacobson (included in Exhibit 5.1).
24.1* Power of Attorney.
27 * Financial Data Schedule.
</TABLE>

- ---------------
* Previously Filed

II-7
<PAGE> 89

(b) Financial Statement Schedules:

Schedule II, Valuation and Qualifying Accounts and Reserves

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes to provide to the Underwriters
at the closing specified in the underwriting agreements certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
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 Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant 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, the Registrant 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 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 undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, 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 registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) At the closing of the Offering, it will provide to the
Underwriters specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters
to permit prompt delivery to each purchaser.

II-8
<PAGE> 90

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1993, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF ROCKVILLE, MARYLAND, ON
THIS 28TH DAY OF JULY, 1997.

BIORELIANCE CORPORATION
(Registrant)

By: /s/ CAPERS W. MCDONALD
------------------------------------
Capers W. McDonald
President and Chief Executive
Officer

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES INDICATED ON THIS 28TH DAY OF JULY, 1997.

<TABLE>
<CAPTION>
SIGNATURE TITLE
- --------------------------------------------- --------------------------------------------
<C> <S>

* Chairman of the Board
- ---------------------------------------------
SIDNEY R. KNAFEL

/s/ CAPERS W. MCDONALD President, Chief Executive Officer and a
- --------------------------------------------- Director
CAPERS W. MCDONALD

* Senior Vice President and Chief Financial
- --------------------------------------------- Officer (Chief Accounting Officer)
CARL C. SCHWAN

* Director
- ---------------------------------------------
WILLIAM J. GEDALE

* Director
- ---------------------------------------------
VICTORIA HAMILTON

* Director
- ---------------------------------------------
GORDON J. LOUTTIT

* Director
- ---------------------------------------------
DR. LEONARD SCHERLIS

*By: /s/ CAPERS W. MCDONALD Attorney-in-Fact
----------------------------------------
CAPERS W. MCDONALD
</TABLE>

II-9
<PAGE> 91

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

<TABLE>
<CAPTION>
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
- -------------------------------------- ---------- ----------------------------- ----------- -----------
ADDITIONS
-----------------------------
CHARGED TO
BALANCE AT CHARGED TO OTHER
BEGINNING COSTS AND ACCOUNTS-- DEDUCTIONS-- BALANCE AT
DESCRIPTION OF YEAR EXPENSES DESCRIBE DESCRIBE END OF YEAR
- -------------------------------------- ---------- ---------- --------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Year Ended December 31, 1994
Allowance for doubtful accounts..... $ 387,000 $ -- $ -- $ 103,000 (1) $ 284,000
Deferred tax valuation allowance.... 4,225,000 -- -- 3,724,000 (2) 501,000
Year Ended December 31, 1995
Allowance for doubtful accounts..... 284,000 20,000 -- 61,000 (1) 243,000
Deferred tax valuation allowance.... 501,000 -- -- 151,000 (2) 350,000
Year Ended December 31, 1996
Allowance for doubtful accounts..... 243,000 32,000 -- 35,000 (1) 240,000
Deferred tax valuation allowance.... 350,000 23,000 -- -- 373,000
</TABLE>

- ---------------
(1) Amounts are write-offs of uncollectible accounts receivable.

(2) Amounts represent reductions in the valuation allowance attributable to the
realization of net operating loss carryforwards.
<PAGE> 92

EXHIBIT INDEX

- ---------------
* Previously Filed

<PAGE> 1
EXHIBIT 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Form S-1 of our report dated March 28, 1997, except as
to the stock split described in Note 14 which is as of May 8, 1997, relating to
the consolidated financial statements of BioReliance Corporation, which appears
in such Prospectus. We also consent to the application of such report to the
Financial Statement Schedule for the three years ended December 31, 1996 listed
under Item 16(b) of this Registration Statement when such schedule is read in
conjunction with the financial statements referred to in our report. The audits
referred to in such report also included this schedule. We also consent to the
references to us under the headings "Experts" and "Selected Consolidated
Financial Data" in such Prospectus. However, it should be noted that Price
Waterhouse LLP has not prepared or certified such "Selected Consolidated
Financial Data".

/s/ PRICE WATERHOUSE LLP
- --------------------------
PRICE WATERHOUSE LLP

Washington, D.C.
July 24, 1997