INTERLEUKIN GENETICS INC, S-3, 2001-01-11

INTERLEUKIN GENETICS INC
S-3, 2001-01-11
MEDICAL LABORATORIES

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<PAGE> 1
As filed with the Securities and Exchange Commission on January 11, 2001

REGISTRATION NO. 333-____
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933

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

INTERLEUKIN GENETICS, INC.
(Exact name of registrant as specified in its charter)

DELAWARE 94-3123681
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

135 BEAVER STREET, 2ND FLOOR
WALTHAM, MASSACHUSETTS 02452
(781) 398-0700
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)

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

FENEL M. ELOI
CHIEF FINANCIAL OFFICER, SECRETARY AND TREASURER
INTERLEUKIN GENETICS, INC.
135 BEAVER STREET, 2ND FLOOR
WALTHAM, MASSACHUSETTS 02452
(781) 398-0700
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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

Copies of all communications, including all communications sent to the
agent for service, should be sent to:

DARYL L. LANSDALE, JR., ESQ.
FULBRIGHT & JAWORSKI L.L.P.
300 CONVENT STREET, SUITE 2200
SAN ANTONIO, TEXAS 78205
(210) 270-9367

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.

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

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box:
[ ]

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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]

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

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

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

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
TITLE OF EACH CLASS OF AMOUNT OF SHARES PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE(1) AGGREGATE OFFERING PRICE(1) REGISTRATION FEE
-------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
COMMON STOCK, NO PAR VALUE PER
SHARE........................... 677,966(2)(3) $2.78125 $1,885,593 $472
TOTAL........................... 677,966(2)(3) -- $1,885,593 $472
===============================================================================================================================
</TABLE>

(1) Pursuant to Rule 457(c), the proposed maximum offering price per share and
proposed maximum aggregate offering price have been calculated on the basis
of the average of the bid and ask prices of the Common Stock as reported on
the Nasdaq SmallCap Market on January 10, 2001.

(2) Includes 135,593 shares of Common Stock issuable pursuant to a warrant.

(3) Pursuant to Rule 416(a), this Registration Statement shall also cover any
additional shares of Common Stock which become issuable by reason of any
stock dividend, stock split, recapitalization or other similar transactions
effected without the receipt of consideration which results in an increase
in the number of the outstanding shares of Common Stock.

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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.

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

<PAGE> 2
P R O S P E C T U S

677,966 SHARES

INTERLEUKIN GENETICS, INC.

COMMON STOCK

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

This prospectus relates to the public offering, which is not being
underwritten, of up to 677,966 shares (the "Shares") of our common stock, $0.001
par value per share ("Common Stock"), of which 135,593 are issuable to the
holder of a warrant to purchase Common Stock (the "Warrant").

The prices at which our shareholders may sell the Shares will be determined
by the prevailing market price for the Shares or in negotiated transactions.
While we will not receive any of the proceeds from the sale of the Shares, we
may receive up to $654,915 upon exercise of the Warrant.

Our Common Stock is traded on The NASDAQ SmallCap Market (the "Nasdaq
Market") and The Boston Stock Exchange under the symbol "ILGN." On January 10,
2001, the last reported sale price for our Common Stock on the Nasdaq SmallCap
Market was $2.75 per share.

We completed a private placement in December 2000 pursuant to which the
selling shareholder acquired 542,373 shares of our Common Stock and a warrant to
purchase 135,593 shares of our Common Stock.

This Prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.

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

INVESTING IN THE COMMON STOCK INVOLVES RISKS. YOU SHOULD READ THE "RISK
FACTORS" BEGINNING ON PAGE 3.

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

NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.

The date of this Prospectus is _________, 2001.

<PAGE> 3

AVAILABLE INFORMATION

We have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), related to the Shares. This Prospectus
is part of that Registration Statement and does not contain all of the
information set forth in the Registration Statement and its exhibits. You may
obtain further information with respect to the Company and the Shares by
reviewing the Registration Statement and the attached exhibits, which you may
read and copy at the following locations of the Commission:

<TABLE>
<S> <C> <C>
Public Reference Room New York Regional Office Chicago Regional Office
Judiciary Plaza Seven World Trade Center Citicorp Center
450 Fifth Street, N.W., Rm. 1024 13th Floor 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511

</TABLE>

We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"). Accordingly, we file reports,
proxy statements and other information with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the locations
described above. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. You may obtain information on the Public Reference
Room of the Commission by calling the Commission at 1-800-SEC-0330. The
Commission maintains a Web site that contains the Registration Statement,
reports, proxy statements and other information regarding the Company at
http://www.sec.gov.

We furnish our shareholders with annual reports containing audited
financial statements with a report thereon by our independent public
accountants.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The Commission allows us to "incorporate by reference" certain information
into this Prospectus. This means that we can disclose important information to
you by referring you to another document we have filed separately with the
Commission. The information incorporated by reference is considered to be a part
of this Prospectus, except for any information that is superseded by other
information that is set forth directly in this document.

The following documents that we have previously filed with the Commission
pursuant to the Exchange Act are hereby incorporated by reference into the
Prospectus:

(1) Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999.

(2) Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30, and September 30, 2000.

(3) The description of our Common Stock contained in Item 1 of our
Registration Statement on Form 8-A dated December 15, 1997.

We also incorporate by reference additional documents that may be filed
with the Commission between the date of this Prospectus and the date of
completion of the offering of the shares of Common Stock by the selling
shareholder. These documents include periodic reports, such as Annual Reports on
Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, as
well as proxy statements.

Documents incorporated by reference are available from us without charge,
excluding all exhibits, except that if we have specifically incorporated by
reference an exhibit in this Prospectus, the exhibit also will be available
without charge. Shareholders may obtain documents incorporated by reference in
this Prospectus by requesting them in writing or by telephone from Interleukin
Genetics at the following address:

Interleukin Genetics, Inc.
135 Beaver Street, 2nd Floor
Waltham, Massachusetts 02452

Attention: Investor Relations
Telephone: 781/398-0700

You should rely only on the information contained or incorporated by reference
in this Prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this Prospectus. This
Prospectus is dated January 11, 2001. You should not assume that the information
contained in this Prospectus is

<PAGE> 4
accurate as of any date other than that date. In this Prospectus, the "Company,"
"Interleukin Genetics," "ILGN," "we" and "our" refer to Interleukin Genetics,
Inc.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus and the documents incorporated by reference contain certain
forward-looking statements including, without limitation, statements concerning
our expectations of future sales, gross profits, research and development
expenses, selling, general and administrative expenses, product introductions
and cash requirements. Forward-looking statements often, although not always,
include words or phrases such as "will likely result," "expect," "will
continue," "anticipate," "estimate," "intend," "plan," "project," "outlook" or
similar expressions. Actual results may vary materially from those expressed in
such forward-looking statements. Factors that could cause actual results to
differ from expectations include those set forth under "Risk Factors." We cannot
be certain that our results of operations will not be adversely affected by one
or more of these factors.

RISK FACTORS

You should carefully examine this entire Prospectus and should give
particular attention to the risk factors set forth below in conjunction with the
other information contained or incorporated by reference in this Prospectus in
evaluating an investment in the Shares.

WE HAVE NO ASSURANCE WE CAN RAISE ADDITIONAL NECESSARY CAPITAL

The Company anticipates that its current financial resources will be
adequate to maintain its current and planned operations through January 2002.
There can be no assurances that the Company will be able to raise any additional
capital. If additional amounts cannot be raised prior to January 2002, the
Company would suffer material adverse consequences to its business, financial
condition and results of operations and would likely be required to seek
protection under the United States Bankruptcy laws.

The Company's future capital requirements will depend on many factors.
Additional capital may be needed for the commercial launch of additional genetic
tests, continued marketing and sales efforts, continued research and development
efforts, the protection of the our intellectual property rights (including
preparing and filing of patent applications), as well as operational,
administrative, legal and accounting expenses. The Company's research and
development activities will require substantial additional capital from private
or public sources. There is no assurance that such capital will be available to
the Company on acceptable terms, if at all. The competition for equity capital
from public and private sources has intensified among the over 1,000
biotechnology companies in the United States that are dependent on infusions of
capital to fund their operations. The Company is also engaged from time to time
in discussions with several companies concerning the licensing of certain of the
Company's proprietary technologies or forming strategic alliances, which could
provide additional sources of funding to the Company as well as a possible
source of equity capital. The Company is unable to predict the likelihood of
completing any such arrangements. There can be no assurance that the Company
will be successful in obtaining additional capital in amounts sufficient to
continue to fund its operations and product development.

WE HAVE A HISTORY OF OPERATING LOSSES, ACCUMULATED DEFICIT AND WE ARE UNCERTAIN
OF FUTURE PROFITABILITY

We incurred net operating losses of $0.8 million in fiscal year 1996, $4.5
million in 1997, $9.5 million in 1998, $6.1 million in 1999 and $3.7 million in
the nine months ended September 30, 2000. As of September 30, 2000, our
accumulated deficit was $24.7 million. Our losses have resulted principally from
expenses incurred for research and development and selling, general and
administrative activities. These expenses have exceeded our revenues. We have
yet to generate any significant revenues from the sale of our genetic
susceptibility testing services and there can be no assurance that we will be
able to generate significant revenues in the future. We expect our operating
losses to continue for the near future as our research and development, sales
and marketing activities and operations continue. Our ability to achieve
profitability depends on our ability to develop new products and our ability to
successfully market and sell our products and services. It is uncertain when, or
if, we will become profitable.

WE MAY BE CONSIDERED A NEW BUSINESS VENTURE

The securities being offered hereby are subject to the risks inherent in
any new business venture. Although we have operated as a contract research firm
since 1986, we have limited experience and a short history of operations with

<PAGE> 5
respect to marketing and selling susceptibility tests or therapeutics. We have
had only minimal revenues related to the sale of our genetic susceptibility
testing services. With the exception of our periodontal susceptibility test, the
genetic susceptibility tests anticipated to be sold by us have not yet been
finally designed, developed, tested or marketed. Therefore, there can be no
assurance that we will be able to complete development of these genetic
susceptibility tests, that those tests will be accepted in the marketplace, or
that the tests can be sold at a profit. Our business may also be affected
significantly by economic and market conditions over which we have no control.
Consequently, an investment in the Shares is highly speculative. We do not
guarantee any return on an investment in the Shares.

RELIANCE ON COLLABORATIVE PARTNERS

In July 1999, we entered into a new contractual arrangement with the
University of Sheffield ("Sheffield") replacing the research and development
agreement that had been in place since 1996. Under this new arrangement, we will
undertake the development and commercialization of certain discoveries resulting
from Sheffield's research. The agreement is non-cancellable for discoveries on
which the parties have reached a specific agreement, but may be terminated with
or without cause by either party upon six-months notice with respect to new
discoveries on which the parties have not yet reached agreement. If Sheffield
University terminated the agreement, such termination could make the discovery
and commercial introduction of new products more difficult or unlikely. This
agreement with Sheffield has a five-year term with an automatic yearly renewal.
Pursuant to this new arrangement, we issued an aggregate of 475,000 shares of
Common Stock to Sheffield and its investigators in exchange for the transfer of
certain patent rights and the relinquishment of proceeds interests held by
Sheffield and its investigators under all project agreements. We also entered
into a research and development services agreement with Sheffield which
automatically renews in one-year increments. In connection with this new
arrangement, we entered into a five-year consulting agreement with Sheffield's
key collaborator. We anticipate entering into additional collaborative
arrangements with Sheffield and other parties in the future.

In the future we may, in order to facilitate the sale of testing services
and/or products, enter into collaborative selling arrangements with one or more
other persons. It is uncertain whether we will be able to negotiate acceptable
collaborative arrangements in the future or that such collaborative arrangements
will be successful. If we are unable to identify collaborative partners to sell
certain of our services and/or products, we may be forced to develop an internal
sales force to market and sell our services and/or products in markets where we
are not intending on developing a direct selling presence. Such a process would
take more time and potentially cost more. As a result, revenues and earnings
would be reduced. If we enter into collaborative selling arrangements, our
success will depend upon the efforts of others and may be beyond our control.
Failure of any collaborative selling arrangement could result in limited or
delayed revenues and possible losses.

WE MAY NOT BE ABLE TO DEVELOP COMMERCIAL ACCEPTABLE DEVELOPING GENETIC
SUSCEPTIBILITY TESTS

It is uncertain whether we will be successful in developing and bringing to
market our current portfolio or future tests based on the genetic discoveries
made by us and our collaborators. Even when we discover a genetic marker (i.e.,
a genetic variation or polymorphism associated with increased disease incidence
or severity), additional clinical trials need to be conducted to confirm the
initial scientific discovery and to support the scientific discovery's clinical
utility in the marketplace. The results of a clinical trial could delay, reduce
the test's acceptance or cause our company to cancel a program. Such delays,
reduced acceptance or cancellations would limit or delay revenues and may result
in losses.

WE HAVE NO ASSURANCE OF INSURANCE REIMBURSEMENT

Our ability to successfully commercialize existing genetic susceptibility
tests and others that we may develop depends in part on obtaining adequate
reimbursement for such testing services and related treatments from government
and private health care insurers (including health maintenance organizations)
and other third-party payors. Physicians' and dentists' decisions to recommend
genetic susceptibility tests, as well as patients' elections to pursue testing,
are likely to be heavily influenced by the scope and extent of reimbursement for
such tests by third-party payors. Government and private third-party payors are
increasingly attempting to contain health care costs by limiting both the extent
of coverage and the reimbursement rate for new testing and treatment products
and services. In particular, services which are determined to be investigational
in nature or which are not considered "reasonable and necessary" for diagnosis
or treatment may be denied reimbursement coverage. To date, few insurers or
third-party payors have agreed to reimburse patients for genetic susceptibility
tests.

It remains uncertain whether insurers or third-party payors will elect to
provide full reimbursement coverage for the genetic susceptibility tests in the
near future. If adequate reimbursement coverage is not available from insurers
or third-party payors, it is uncertain whether individuals will elect to
directly pay for the test. If both insurers or third-party payors and
individuals are unwilling to pay for the test, then the number of tests
performed will be significantly decreased. Such a scenario would result in
reduced revenues and possible losses.

<PAGE> 6

WE MAY NOT BE ABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY

Our success will partly depend on our ability to obtain patent protection,
both in the United States and in other countries, for our products and services.
In addition, our success will also depend upon our ability to preserve our trade
secrets and to operate without infringing the proprietary rights of third
parties.

We have sixteen (16) U.S. and/or foreign patent applications pending,
including applications covering certain of our anticipated genetic
susceptibility tests. There can be no assurance that our patent applications
will ever be issued as patents or that the claims of any issued patents will
afford meaningful protection for our technology or products. Further, others may
develop similar products which test for susceptibility related to some diseases
yet avoid infringing upon, or conflicting with, our anticipated patents. In
addition, there can be no assurance that any patents issued to us will not be
challenged, and subsequently narrowed, invalidated or circumvented.

Our testing services and/or products may also conflict with patents which
have been or may be granted to others. As the biotechnology industry expands and
more patents are filed and issued, the risk increases that our products may give
rise to a declaration of interference by the Patent and Trademark Office, or to
claims of patent infringement by other companies, institutions or individuals.
Such entities or persons could bring legal proceedings against us seeking
damages or seeking to enjoin us from testing, manufacturing or marketing our
products. Patent litigation is costly, and even if we prevail, the cost of such
litigation could have an adverse effect on us. If the other parties in any such
actions are successful, in addition to any liability for damages, we could be
required to cease the infringing activity or obtain a license. It is uncertain
whether any license required would be available to us on acceptable terms, if at
all. Failure by us to obtain a license to any technology that we may require to
commercialize our products could have a material adverse effect on our business,
financial condition, results of operations and cash flows. In addition, there is
considerable pressure on academic institutions and other entities to publish
discoveries in the genetic field. Such a publication by an academic institution
or other entity, prior to our filing of a patent application on such discovery,
may compromise our ability to obtain U.S. and foreign patent protection for the
discovery.

We also rely upon unpatented proprietary technologies. We rely on
confidentiality agreements with our employees, consultants and collaborative
partners to protect such proprietary technology. There can be no assurance that
we can adequately protect our rights in such unpatented proprietary
technologies, that others will not independently develop substantially
equivalent proprietary information or techniques, or otherwise gain access to
our proprietary technologies or disclose such technologies.

The United States Patent and Trademark Office issued new Utility Guidelines
in July 1995 that address the requirements for demonstrating utility,
particularly in inventions relating to human therapeutics. While the guidelines
do not require clinical efficacy data for issuance of patents for human
therapeutics, there can be no assurance that the Patent and Trademark Office's
interpretations of such guidelines, and any changes to such interpretations will
not delay or adversely affect our collaborators' ability to obtain patent
protection. The biotechnology patent situation outside the United States is even
more uncertain and is currently undergoing review and revision in many
countries.

TECHNOLOGICAL CHANGES MAY CAUSE OUR PRODUCTS TO BE OBSOLETE

Market acceptance and sales of our testing services could also be adversely
affected by technological change. It is uncertain whether our competitors will
succeed in developing genetic susceptibility tests that circumvent or are more
effective than our technologies or services. Further, it is uncertain whether
such developments would render our collaborators' technology or services less
competitive or obsolete. Further, our testing services could be rendered
obsolete as a result of future innovations in the treatment of gum disease,
osteoporosis, coronary artery disease, pulmonary fibrosis, asthma, diabetic
retinopathy or other disease areas in which we have developments. Such
innovations could have a significant negative impact on our company's ability to
market our services effectively.

WE HAVE LIMITED MARKETING OR SALES EXPERIENCE

Our business strategy is to provide genetic susceptibility testing services
aimed at common diseases that are treatable and preventable. The commercial
introduction of the periodontal susceptibility test at the beginning of October
1997 represented our first such effort. From its commercial inception through
1999, our periodontal susceptibility test has generated revenues of $866,726.
With respect to the periodontal susceptibility test, we have devoted substantial
human and financial resources to the establishment and staffing of a customer
service support facility and the building of a sales and marketing
infrastructure. However, we have limited experience in developing and
commercially marketing susceptibility testing services. It is uncertain whether
our customer service support facilities and sales and marketing program will
achieve efficient, effective or successful operations. Failure to successfully
market such tests could reduce our revenues and may result in losses.

<PAGE> 7
WE MAY FACE POSSIBLE NASDAQ DELISTING RESULTING IN A LIMITED PUBLIC MARKET FOR
OUR COMMON STOCK AND POSSIBLE VOLATILITY OF SECURITIES PRICES

Our common stock is currently listed on the NASDAQ SmallCap Market and the
Boston Stock Exchange. If we fail to maintain the qualification for our common
stock to trade on the NASDAQ SmallCap Market or the Boston Stock Exchange, our
common Stock could be subject to delisting. During 1999, we received several
notices from The Nasdaq Stock Market, Inc. ("NASDAQ") stating that the Company
was not in compliance with certain of the continued listing requirements of the
NASDAQ SmallCap Market. We believe that we currently comply with the continued
listing requirements of the NASDAQ SmallCap Market. However, there can be no
assurance that we will maintain the qualifications for continued listing on the
NASDAQ SmallCap Market.

If our shares are not listed on the NASDAQ SmallCap Market as intended,
trading, if any, would be conducted in the over-the-counter market in the
so-called "pink sheets" or the OTC Bulletin Board, which was established for
securities that do not meet the NASDAQ SmallCap Market's listing requirements.
Consequently, selling our common stock would be more difficult because smaller
quantities of shares could be bought and sold, transactions could be delayed,
and security analysts' and news media's coverage of the Company may be reduced.
These factors could result in lower prices and larger spreads in the bid and ask
prices for shares of common stock. Such NASDAQ delisting would also greatly
impair our ability to raise additional necessary capital through equity or debt
financing.

If our common stock is not listed on the NASDAQ SmallCap Market and/or the
Boston Stock Exchange, we may become subject to Rule 15g-9 under the Exchange
Act. That rule imposes additional sales practice requirements on broker-dealers
that sell low-priced securities to persons other than established customers and
institutional accredited investors. For transactions covered by this rule, a
broker-dealer must make a special suitability determination for the purchaser
and have received the purchaser's written consent to the transaction prior to
sale. Consequently, the rule may affect the ability of broker-dealers to sell
the common stock and affect the ability of holders to sell their shares of our
common stock in the secondary market.

The SEC's regulations define a "penny stock" to be any equity security that
has a market price less than $5.00 per share or with an exercise price of less
than $5.00 per share, subject to certain exceptions. The penny stock
restrictions will not apply to our shares if they are listed on the NASDAQ
SmallCap Market or the Boston Stock Exchange and we provide certain price and
volume information on a current and continuing basis, or meet required minimum
net tangible assets or average revenue criteria. There can be no assurance that
the shares of common stock of the Company will qualify for exemption from these
restrictions. If such shares were subject to the penny stock rules, the market
liquidity for the shares could be adversely affected.

Historically, our common stock has experienced low trading volumes. The
market price of our common stock also has been highly volatile and it may
continue to be highly volatile as has been the case with the securities of other
public biotechnology companies. Factors such as announcements by us or by our
competitors concerning technological innovations, new commercial products or
procedures, proposed government regulations and developments or disputes
relating to patents or proprietary rights may substantially affect the market
price of our securities. Changes in the market price of our common stock may
bear no relation to our actual operational or financial results.

WE MAY BE UNABLE TO FULLY USE NET OPERATING LOSS CARRYFORWARDS

As a result of the losses incurred in 1997, 1998 and 1999, the Company has
not recorded a Federal income tax provision for those years and has recorded a
valuation allowance against all future tax benefits. As of December 31, 1997,
the Company had net operating loss carryforwards of approximately $18,750,000
for Federal income tax purposes, expiring in varying amounts through the year
2019. The Company also had a research tax credit of approximately $187,000 at
December 31, 1998, that expires in varying amounts through the year 2019. The
Company's ability to use its NOL and credit carryforwards is subject to Section
382 of the Internal Revenue Code of 1986 (the "Code"). These restrictions
provide for limitations on the Company's utilization of its NOL and credit
carryforwards following a greater than 50% ownership change during the
prescribed testing period. The Company experienced a change in ownership
interest in June 1999. As a result, approximately $15,619,000 of the Company's
NOL carryforwards are limited in utilization to approximately $825,000 annually.
The annual limitation may result in the expiration of the carryforwards prior to
utilization.

WE HAVE NO ASSURANCE OF MARKET ACCEPTANCE FOR GENETIC SUSCEPTIBILITY TESTS

The commercial success of our genetic susceptibility tests and those that
we may develop will depend upon their acceptance as medically useful and
cost-effective by patients, physicians, dentists, other members of the medical
and dental community and insurers. Broad market acceptance can be achieved only
with substantial education about

<PAGE> 8
the benefits and limitations of such tests. It is uncertain whether current
genetic susceptibility tests or others that we may develop will gain market
acceptance on a timely basis. If patients, dentists and physicians do not accept
our tests, or take a longer time to accept than we anticipate, then our revenues
and profit margins may be reduced and may result in additional losses.

WE ARE SUBJECT TO COMPETITION FROM COMPANIES WITH GREATER RESOURCES THAN US

Research in the field of disease predisposing genes and genetic markers is
intense and highly competitive. Genetic research is characterized by rapid
technological change. Our competitors in the United States and abroad are
numerous and include, among others, major pharmaceutical and diagnostic
companies, specialized biotechnology firms, universities and other research
institutions (including those receiving funding from the Human Genome Project).
Many of our potential competitors have considerably greater financial,
technical, marketing and other resources than us. These greater resources may
allow our competitors to discover important genes or genetic markers before us.
If we, in conjunction with the Department of Molecular and Genetic Medicine at
the University of Sheffield, U.K., do not discover disease predisposing genes or
genetic markers associated with increased disease severity, characterize their
function, develop susceptibility tests and related information services based on
such discoveries, obtain regulatory and other approvals, if needed, and launch
such services or products before competitors, then our revenues and earnings
will be reduced or eliminated. In addition, any of the susceptibility tests that
we may develop, including our periodontal susceptibility test, could be made
obsolete by less expensive or more effective tests or methods which may be
developed in the future. We expect competition to intensify in our industry as
technical advances are made and become more widely known.

WE ARE SUBJECT TO GOVERNMENT REGULATION

The sampling of blood, saliva or cheek scrapings from patients and
subsequent analysis in a clinical laboratory does not, at the present time,
require FDA or regulatory authority approval outside the U.S. for either the
sampling procedure or the analysis itself. The samples are taken in the
healthcare provider's office, using standard materials previously approved as
medical devices, such as sterile lancets and swabs. The testing procedure itself
is performed in one or more registered, certified clinical laboratories under
the auspices of the Clinical Laboratory Improvement Amendments of 1988 ("CLIA"),
administered by the Health Care Financing Administration. In general, the
federal regulations promulgated pursuant to CLIA governing the approval of
laboratory facilities and applicable state and local regulations governing the
operation of clinical laboratories apply to our subsidiary which operates a
laboratory but not to Interleukin Genetics, Inc. Currently our subsidiary
operates an approved CLIA laboratory. Additionally, changes in existing
regulations could require advance regulatory approval of genetic susceptibility
tests which may result in a substantial curtailment or even prohibition of our
activities without regulatory approval If our tests ever require regulatory
approval, the costs of introduction will increase and marketing and sales may be
significantly delayed.

Although our primary business is to develop genetic susceptibility testing
services, we may also develop or assist others to develop, drugs or other
treatments for the diseases related to our tests. The FDA and comparable
agencies in state and local jurisdictions and in foreign countries impose
substantial requirements upon the manufacturing and marketing of drug products
such as those potentially to be developed by our company or any partner. The
process of obtaining FDA and other required regulatory approvals is lengthy and
expensive. The time required for FDA approvals is uncertain and typically takes
a number of years, depending on the type, complexity and novelty of the product.
We may encounter significant delays or excessive costs in our efforts to secure
necessary approvals or licenses. Because certain of the products likely to
result from our research and development programs involve the application of new
technologies and will be based on new approaches, such products may be subject
to substantial additional review by various governmental regulatory authorities
and as a result, regulatory approvals may be obtained more slowly than for
products using more conventional technologies. There can be no assurance that
FDA approvals will be obtained in a timely manner, if at all. Any delay in
obtaining, or the failure to obtain, such approvals would adversely affect our
ability to generate product or product sales. Even if FDA approvals are
obtained, the marketing and manufacturing of drug products are subject to
continuing FDA and other regulatory review, and later discovery of previously
unknown problems with a product, manufacturer or facility may result in
restrictions on the product or manufacturer, including withdrawal of the product
from the market. Additional governmental regulations may be promulgated which
could delay regulatory approval of our potential products. We cannot predict the
impact of adverse governmental regulation which might arise from future
legislative or administrative action.

We intend to generate product revenues from sales outside of the United
States. Distribution of our testing services or products outside the United
States may be subject to extensive government regulation. These regulations,
including the requirements for approvals or clearance to market, the time
required for regulatory review and the sanctions imposed for violations, vary by
country. It is uncertain whether we will obtain regulatory approvals in such
countries or that we will be required to incur significant costs in obtaining or
maintaining our foreign regulatory approvals. Failure to obtain necessary
regulatory approvals or any other failure to comply with regulatory requirements
could result in reduced revenues and increased losses.

<PAGE> 9
WE FACE PRODUCT LIABILITY EXPOSURE

Our business exposes us to potential liability risks inherent in the
testing and marketing of medical and dental related services or products. It is
uncertain whether liability claims will be asserted against us. We have product
and professional liability insurance which we believe provides coverage for the
testing and commercial introduction of our genetic susceptibility tests. It is
uncertain whether we will be able to maintain such insurance on acceptable
terms. Any insurance obtained may not provide adequate coverage against
potential liabilities. A liability claim, even one without merit, could result
in significant legal defense costs thereby increasing our expenses, lowering our
earnings and even resulting in losses.

OUR INDUSTRY HAS ETHICAL, LEGAL AND SOCIAL IMPLICATIONS

The prospect of broadly available genetic testing has raised issues which
are currently being widely discussed by the medical and scientific communities,
as well as other interested groups and organizations, regarding the appropriate
utilization and the confidentiality of information provided by such testing. The
recent movement towards discovery and commercialization of susceptibility tests
for assessing a person's likelihood of developing a chronic disease has also
focused public and legislative attention on the need to protect the privacy of
genetic assessment medical information. With the progression towards more
comprehensive record keeping by health insurers and managed care firms, this
need has led to a number of legal initiatives. The recently enacted federal
health insurance reform law (Health Insurance Portability Act of 1996)
recognizes the comparability of information obtained by genetic means to other
types of personal medical information. The law prohibits insurance companies
from refusing health insurance coverage to individuals on the basis of their
medical history, including "genetic information." This legislation also
prohibits employees from discrimination in hiring practices on the same basis.
This legislation indicates a trend to protect the privacy of patients while
allowing them to be screened for conditions which, can be prevented, reduced in
severity or cured. In the most extreme scenario, governmental authorities could,
for social or other purposes, limit the use of genetic testing or prohibit
testing for genetic susceptibility to certain conditions. For these reasons, we
could experience a delay or reduction in test acceptance. Such a delay or
reduction could reduce our revenues or result in losses.

We are taking a proactive stance in the ethical arena. Dr. Philip Reilly,
our Chief Executive Officer, is both an M.D. (certified specialist in clinical
genetics) and an attorney. He will advise us in the area of genetic testing and
its ethical, legal and clinical utility ramifications. Additionally, we are
currently advising doctors who administer our genetic susceptibility tests to
take special efforts to maintain the confidentiality of the test results. Our
intent is to avoid information about test results being disclosed to insurers
until issues regarding insurability have been fully analyzed and acted upon by
the appropriate legislative bodies.

WE DEPEND ON KEY PERSONNEL AND CONSULTANTS

Because of the specialized scientific nature of our business, we are highly
dependent upon our ability to attract and retain qualified management,
scientific and technical personnel. Our company will also be dependent upon the
ability to hire qualified marketing and sales personnel. Competition for
scientific, marketing and sales personnel is intense. Loss of the services of
Dr. Reilly or Dr. Kornman could adversely affect our research and development
programs and susceptibility testing service business and could impede the
achievement of our business objectives. We do not maintain key man life
insurance on any of our personnel.

WE ARE SUBJECT TO INFLUENCE BY PRINCIPAL SHAREHOLDERS, OFFICERS AND DIRECTORS

As of January 1, 2001, our directors, executive officers and certain of
their affiliates beneficially owned approximately 22% of our outstanding Common
Stock. Accordingly, these shareholders, individually and as a group, may be able
to influence the outcome of shareholder votes, including votes concerning the
election of directors, the adoption or amendment of provisions in our
Certificate of Incorporation or By-Laws and the approval of certain mergers and
other significant corporate transactions, including a sale of substantially all
of our assets. Such control by existing shareholders could have the effect of
delaying, deferring or preventing a change in control.

WE HAVE NEVER PAID DIVIDENDS

We have never paid dividends and do not intend to pay any dividends in the
foreseeable future.

WE ARE SUBJECT TO VARIOUS PROVISIONS THAT COULD DELAY OR PREVENT A CHANGE OF
CONTROL OF THE COMPANY

Our Board of Directors is authorized to issue up to 5,000,000 shares of
Preferred Stock and to determine the price, rights, preferences and privileges
of those shares without any further vote or action by our shareholders. The

<PAGE> 10
rights of the holders of Common Stock will be subject to, and may be adversely
affected by, the rights of the holders of any shares of Preferred Stock that may
be issued in the future. While we have no present intention to issue shares of
Preferred Stock, such issuance, while providing desirable flexibility in
connection with possible acquisitions and other corporate purposes, could have
the effect of making it more difficult for a third party to acquire a majority
of our outstanding voting stock. In addition, such Preferred Stock may have
other rights, including economic rights, senior to the Common Stock. As a
result, the issuance of Preferred Stock could decrease the market value of the
Common Stock.

Our Articles of Incorporation provide that members of the Board of
Directors may be removed only for cause upon the affirmative vote of holders of
at least a majority of the shares of our outstanding capital stock entitled to
vote. Certain other provisions of our Amended and Restated Articles of
Incorporation could also have the effect of delaying or preventing changes of
control or in management. Such a delay or preventive effect could adversely
affect the price of our Common Stock.

THE COMPANY

We develop and commercialize genetic diagnostic tests and medical research
tools. Our efforts are focused on genetic factors that regulate control points
in the inflammatory process of various diseases . Our first genetic test,
PST(R), a test predictive of risk for periodontal disease, is currently marketed
in the United States, Europe and Israel. Products under development include
tests predictive of risk for osteoporosis, coronary artery disease, diabetic
retinopathy, asthma, pulmonary fibrosis, and meningitis/sepsis.

We believe by combining genetic risk assessment with specific therapeutic
strategies, improved clinical outcomes and more cost-effective management of
these common diseases are achieved. We also develop and license our medical
research tools, including BioFusion(R), to pharmaceutical and biotech companies.
BioFusion, a proprietary enabling system for diagnostic and drug discovery and
development, is a computer modeling system that integrates genetic and other
sub-cellular behavior, system functions, and clinical symptoms to simulate
complex diseases. This system allows useful information to be derived from
rapidly increasing databases of gene expression being generated in companies and
academic centers worldwide.

We have followed a strategy of working with strategic partners at the
fundamental discovery stage. This strategy has given us access to discoveries
while reducing up-front research expenses. Since 1994, we have had a strategic
alliance with the Department of Molecular and Genetic Medicine at Sheffield
University in the United Kingdom. Under this alliance, Sheffield has provided us
with the fundamental discovery and genetic analysis from Sheffield's research
laboratories, and we have focused on product development, including clinical
trials, and the commercialization of these discoveries.

In August 2000, we entered into an agreement with Kenna Technologies, Inc.
whereby we granted Kenna a perpetual, non-exclusive license to certain disease
information system technology and to certain biological modeling technology. In
consideration for these license rights, Kenna paid us a non-refundable initial
licensing fee of $80,000 and has agreed to pay royalties ranging from 4% to 5%
of net sales from certain of the licensed technology, as defined, for periods
ranging from five to ten years. We are recognizing the initial licensing fee of
$80,000 ratably over the term of the agreement.

In June 2000, we terminated our arrangement with Dumex under which Dumex
had agreed to market and sell PST in nine European countries. We are currently
in discussions to enter into a similar marketing arrangement for PST with
another European distributor of oral health care products. However, there can be
no assurance that we will be able to reach a marketing arrangement for PST in
Europe.

In March 1999, we entered into an exclusive agreement with the Straumann
Company, a leading supplier of dental implants, to market and sell PST in the
United States and Puerto Rico. Straumann launched its PST promotional activities
in April 1999. In September 2000, we amended the Straumann agreement to be
non-exclusive and entered into an agreement with Kimball Genetics, Inc., who has
expertise in the processing and analysis of genetic tests and their results.
Under the terms of this agreement, Kimball has a co-marketing right with
Straumann and will process and analyze all PST tests in the United States and
Puerto Rico.

In December 1998, we signed an agreement with Washington Dental Service, a
member of the Delta Dental Plans Association, for the purchase of 1,200 PST
tests. The tests will be used in a study, sponsored by Washington Dental
Service, in collaboration with the University of Washington School of Dentistry
and Interleukin Genetics. This study is expected to provide scientific and
financial data regarding the use of PST as a treatment-planning tool to assess
risk before actual damage occurs. The data from the study may be available for
analysis in early 2001.

<PAGE> 11
In December 1997, we entered into an agreement with Medicadent, a French
corporation ("Medicadent"), to market and sell PST in France. In August 1998, we
entered into an agreement with H.A. Systems, Ltd. to market and sell PST in
Israel. Medicadent commenced offering PST in France in June 1998, and H.A.
Systems commenced offering PST in Israel in April 1999. No assurances can be
made regarding the commercial acceptance of PST.

The Company's executive offices are located at 135 Beaver Street, 2nd Floor
, Waltham, Massachusetts 02452, and its telephone number is 781/398-0700. The
Company was incorporated in Texas in 1986 and was re-incorporated in Delaware in
March 2000. We maintain a website at www.ilgenetics.com. On January 10, 2001,
the closing bid price of the Common Stock on The Nasdaq SmallCap Market was
$2.75 per share.

USE OF PROCEEDS

The Shares to be sold pursuant to the Prospectus are owned by a shareholder
of the Company. The Company will not receive any of the proceeds from the sale
of the Shares, although we may receive up to $654,915 upon exercise of the
Warrant. See "Selling Shareholder" and "Plan of Distribution."

<PAGE> 12
SELLING SHAREHOLDER

The table below presents the following information about the number of
shares of the Common Stock of the Company which are owned by the Selling
Shareholder: (i) the number of shares the Selling Shareholder beneficially owns
as of December 5, 2000, (ii) the percentage of the Company's outstanding shares
of Common Stock that the Selling Shareholder beneficially owns prior to the
offering, (iii) the number of shares that the Selling Shareholder are offering
under this prospectus, (iv) the number of shares that the Selling Shareholder
will beneficially own after the completion of this offering and (v) the
percentage of the Company's outstanding shares of Common Stock that the Selling
Shareholder will beneficially own after the completion of the offering.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE THE OFFERING AFTER THE OFFERING(1)
----------------------- ----------------------
NUMBER PERCENTAGE SHARES TO NUMBER PERCENTAGE
NAME OF SHARES OF CLASS(2) BE SOLD OF SHARES OF CLASS
---- --------- ----------- --------- --------- ----------
<S> <C> <C> <C> <C> <C>

The Tailwind Fund, Ltd. 677,966(3) 3.67% 677,966(3) 677,966 3.5%

</TABLE>

----------

(1) Assumes all shares of Common Stock offered hereby are sold.

(2) Based on 18,487,765 shares of Common Stock of the Company outstanding as of
December 5, 2000.

(3) Includes 135,593 shares of Common Stock issuable upon exercise of a warrant
issued pursuant to the private placement.

In December 2000 the Company completed a private placement (the "Private
Placement") pursuant to which shares of Common Stock were issued to the Selling
Shareholder. In connection with the Private Placement, the Company issued a
warrant to purchase up to 135,593 shares of Common Stock to the Selling
Shareholder.

<PAGE> 13
PLAN OF DISTRIBUTION

All 677,966 shares of Common Stock being registered hereby are being
registered on behalf of the Selling Shareholder. We will receive no proceeds
from this offering, although we may receive up to $654,915 upon exercise of the
Warrant. As used herein, the term "Selling Shareholder" includes donees,
pledgees, transferees or other successors-in-interest selling Shares received
from a Selling Shareholder as a gift, pledge, partnership distribution or other
non-sale related transfer after the date of this Prospectus. In addition, upon
the company being notified by the Selling Shareholder that a donee, pledgee,
transferee or other successor-in-interest intends to sell more than 500 shares,
a supplement to this prospectus will be filed.

The Selling Shareholder will act independently of ILGN in making decisions
with respect to the timing, manner and size of each sale. Selling Shareholder
may choose to sell the Shares from time to time at market prices prevailing at
the time of the sale, at prices related to the then prevailing market prices or
in negotiated transactions, including pursuant to an underwritten offering or
pursuant to one or more of the following methods:

* a block trade in which the broker or dealer so engaged will attempt to
sell the Shares as agent but may position and resell a portion of the
block as principal in order to facilitate the transaction,

* purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus,

* an exchange distribution in accordance with the rules of an exchange,
and

* ordinary brokerage transactions and transactions in which the broker
solicits purchasers.

In connection with the sale of the Shares, the Selling Shareholders may
engage broker-dealers who in turn may arrange for other broker-dealers to
participate. Broker-dealers may receive commissions or discounts from the
Selling Shareholder in amounts to be negotiated immediately prior to the sale.
In addition, underwriters or agents may receive compensation from the Selling
Shareholder or from purchasers of the Shares for whom they may act as agents, in
the form of discounts, concessions or commissions. Underwriters may sell shares
to or through dealers, and such dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters or commissions from
the purchasers for whom they act as agents. The Selling Shareholder,
underwriters, brokers, dealers and agents that participate in the distribution
of the Shares may be deemed to be underwriters, and any discounts or commissions
received by them from the Selling Shareholder and any profit on the resale of
the Shares by them may be deemed to be underwriting discounts and commissions
under the Securities Act.

At the time a particular offer of Shares is made, to the extent required, a
supplement to this Prospectus will be distributed which will identify and set
forth the aggregate amount of Shares being offered and the terms of the
offering. Such supplement will also disclose the following information:

* the name or names of any underwriters, dealers or agents,

* the purchase price paid by any underwriter for Shares purchased from a
Selling Shareholder,

* any discounts, commissions and other items constituting compensation
from a Selling Shareholder and/or ILGN, and

* any discounts, commissions or concessions allowed or reallowed or paid
to dealers, including the proposed selling price to the public.

We have agreed to indemnify the Selling Shareholder in certain
circumstances against certain liabilities, including liabilities under the
Securities Act. The Selling Shareholder has agreed to indemnify ILGN in certain
circumstances against certain liabilities, including liabilities under the
Securities Act.

The Selling Shareholder also may resell all or a portion of the Shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided it meets the criteria and conforms to the requirements of such Rule.

The Selling Shareholder and any other persons participating in the sale or
distribution of the Shares being registered hereby will be subject to the
provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, to the extent applicable. The foregoing provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Shareholder or any other such person. This may affect the marketability of the

<PAGE> 14
Shares. The Selling Shareholder also will comply with the applicable prospectus
delivery requirements under the Securities Act in connection with the sale or
distribution of the Shares hereunder.

In order to comply with certain states' securities laws, if applicable, the
Shares will be sold in such jurisdictions only through registered or licensed
brokers or dealers. In certain states, the Shares may not be sold unless the
Shares have been registered or qualified for sale in such state, unless an
exemption from registration or qualification is available and is obtained.

ILGN will bear all out-of-pocket expenses incurred in connection with the
registration of the Shares, including, without limitation, all registration and
filing fees imposed by the Commission, The Nasdaq Stock Market, Inc. and blue
sky laws, printing expenses, transfer agents' and registrars' fees, and the fees
and disbursements of ILGN's outside counsel and independent public accountants.
The Selling Shareholder will bear all underwriting discounts and commissions and
transfer or other taxes.

DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES

Section 145 of the Delaware General Corporation Law (the "DGCL") provides
that a Delaware corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative (a
"proceeding") (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner 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, had no reasonable cause to believe his conduct was unlawful. A
Delaware corporation may indemnify any person under such Section in connection
with a proceeding by or in the right of the corporation to procure judgment in
its favor, as provided in the preceding sentence, against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action, except that no indemnification shall be
made in respect thereof unless, and then only to the extent that, a court of
competent jurisdiction shall determine upon application that such person is
fairly and reasonably entitled to indemnity for such expenses as the court shall
deem proper. A person is fairly and reasonably entitled to indemnity for such
expenses as the court shall deem proper. A Delaware corporation must indemnify
any person who was successful on the merits or otherwise in defense of any
action, suit or proceeding or in defense of any claim, issue or matter in any
proceeding, by reason of the fact that he is or was a director, officer,
employee or agent of the corporation or is or was serving at the request of the
corporation, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith. A Delaware corporation may
pay for the expenses (including attorneys' fees) incurred by an officer or
director in defending a proceeding in advance of the final disposition upon
receipt of an undertaking by or on behalf of such officer or director to repay
such amount if it shall ultimately be determined that he is not entitled to be
indemnified by the corporation.

Section 102(b)(7) of the DGCL permits a corporation to provide in its
certificate of incorporation that a director shall not be personally liable to
the corporation or its stockholders for monetary damages for a breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for any
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) in respect of certain unlawful dividend payments
or stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. Article Tenth of the Company's
Certificate of Incorporation, as amended, eliminates the liability of directors
to the fullest extent permitted by Section 102(b)(7) of the DGCL. The DGCL
permits the purchase of insurance on behalf of directors and officers against
any liability asserted against directors and officers and incurred by such
persons in such capacity, or arising out of their status as such, whether or not
the corporation would have the power to indemnify directors and officers against
such liability.

The Company also has a policy insuring its directors and officers against
certain liabilities, including liabilities under the Securities Act.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors and officers and controlling persons pursuant to
the foregoing provisions, the Company has been advised that, in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.

<PAGE> 15
LEGAL MATTERS

The validity of the securities offered hereby will be passed upon by
Fulbright & Jaworski L.L.P., counsel to the Company.

EXPERTS

The consolidated financial statements included in the Company's Annual
Report on Form 10-K for the years ended December 31, 1998, and 1999,
incorporated by reference in this prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicted in their reports with respect thereto, and are included
herein in reliance upon the authority of Arthur Andersen LLP as experts in
giving said reports. The consolidated Financial Statements for the year ended
December 31, 1997, incorporated by reference in this prospectus and elsewhere in
the registration statement, have been audited by Singer Lewak Greenbaum &
Goldstein, L.L.P., as indicated in their report with respect thereto, are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.

<PAGE> 16
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.

----------

TABLE OF CONTENTS
PAGE
----
Available Information .................................................. 2
Incorporation of Certain Documents by Reference ........................ 2
Special Note Regarding Forward-Looking Statements ...................... 3
Risk Factors ........................................................... 3
The Company ............................................................ 9
Use of Proceeds ........................................................ 10
Selling Shareholders ................................................... 11
Plan of Distribution.................................................... 12
Disclosure of Commission Position on Indemnification for Securities
Act Liabilities ...................................................... 13
Legal Matters .......................................................... 14
Experts ................................................................ 14

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

677,966 SHARES

INTERLEUKIN GENETICS, INC.

COMMON STOCK

----------

P R O S P E C T U S

__________, 2001

----------

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

<PAGE> 17
PART II

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses in connection with this offering are:

Commission registration fee $ 472.00
Legal fees and expenses* 5,000.00
Miscellaneous* 500.00
---------
Total $5,972.00
=========
--------------------
* Estimated

The Company has agreed to pay all the costs and expenses of this
offering.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Company also has a policy insuring its directors and officers against
certain liabilities, including liabilities under the Securities Act.

ITEM 16. EXHIBITS.

EXHIBIT NO. EXHIBIT
---------- -------

II-1

<PAGE> 18

5.1 Opinion of Fulbright & Jaworski L.L.P. regarding legality (filed
herewith)

23.1 Consent of Fulbright & Jaworski L.L.P. (contained in Exhibit 5.1)

23.2 Consent of Arthur Andersen LLP (filed herewith)

23.3 Consent of Singer Lewak Greenbaum & Goldstein L.L.P. (filed
herewith)

24.1 Power of Attorney (included on signature page).

ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment 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; and

(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the registration statement 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.

(c) The undersigned Registrant hereby undertakes that, insofar as
indemnification for liabilities arising under the Securities Act 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 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
Securities Act and will be governed by the final adjudication of such issue.

II-2

<PAGE> 19
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Waltham and Commonwealth of Massachusetts the 11th
day of January, 2001.

INTERLEUKIN GENETICS, INC.

By: /s/ Fenel M. Eloi
------------------------------------
Fenel M. Eloi
Chief Financial Officer, Secretary
and Treasurer

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Philip R. Reilly and Fenel M. Eloi, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same and all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting said attorney-in-fact and agent, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or either of them, or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
--------- ----- ----

/s/ Philip R. Reilly Chairman of the Board and January 11, 2001
---------------------------- Chief Executive Officer
Philip R. Reilly (Principal Executive Officer)

/s/ Kenneth S. Kornman President, Chief January 11, 2001
---------------------------- Scientific Officer
Kenneth S. Kornman and a Director

/s/ Fenel M. Eloi Chief Financial Officer, January 11, 2001
---------------------------- Secretary and Treasurer
Fenel M. Eloi (Principal Financial and
Accounting Officer)

/s/ Thomas A. Moore Director January 11, 2001
----------------------------
Thomas A. Moore

/s/ Edward M. Blair, Jr. Director January 11, 2001
----------------------------
Edward M. Blair, Jr.

/s/ John Garofalo Director January 11, 2001
----------------------------
John Garofalo

II-3

<PAGE> 20

EXHIBIT INDEX

EXHIBIT NO. EXHIBIT PAGE
---------- ------- ----

5.1 Opinion of Fulbright & Jaworski L.L.P.
(filed herewith) ............................................

23.1 Consent of Fulbright & Jaworski L.L.P. (contained
in Exhibit 5.1) .............................................

23.2 Consent of Arthur Andersen LLP (filed herewith)..............

23.3 Consent of Singer Lewak Greenbaum & Goldstein L.L.P.
(filed herewith) ............................................

24.1 Power of Attorney (included on signature page) ..............

II-4