BIO TECHNOLOGY GENERAL CORP, DEF 14A, 1996-05-15

BIO TECHNOLOGY GENERAL CORP
DEF 14A, 1996-05-15
MEDICINAL CHEMICALS & BOTANICAL PRODUCTS

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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the Securities Act of 1934
(Amendment No. )

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

BIO-TECHNOLOGY GENERAL CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

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

2) Aggregate number of securities to which transaction applies:

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

3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:(1)

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

4) Proposed maximum aggregate value of transaction:

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

5) Total fee paid:

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

[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:
-------------------------------------------------------

2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------

3) Filing Party:
-------------------------------------------------------

4) Date Filed:
-------------------------------------------------------

<PAGE>

BIO-TECHNOLOGY GENERAL CORP.
70 WOOD AVENUE SOUTH
ISELIN, NEW JERSEY 08830
(908) 632-8800

May 15, 1996

Dear Fellow Stockholder:

You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 11:00 a.m. on Thursday, June 27, 1996, at The
Metropolitan Club, 1 East 60th Street, New York, New York.

This year, you are being asked only to elect nine directors to the
Company's Board of Directors. In addition, I will be pleased to report on the
affairs of the Company and a discussion period will be provided for questions
and comments of general interest to stockholders.

We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.

Thank you for your cooperation.

Very truly yours,

/s/ SIM FASS
------------------------
Sim Fass
President and
Chief Executive Officer

<PAGE>

BIO-TECHNOLOGY GENERAL CORP.

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

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

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

New York, New York
May 15, 1996

Notice is hereby given that the Annual Meeting of Stockholders of
Bio-Technology General Corp. will be held on Thursday, June 27, 1996, at 11:00
a.m., at The Metropolitan Club, 1 East 60th Street, New York, New York for the
following purposes:

(1) To elect nine directors to serve for the ensuing year; and

(2) To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.

Stockholders of record at the close of business on May 1, 1996 will be
entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.

All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.

ROY L. GOLDMAN
Secretary

<PAGE>

BIO-TECHNOLOGY GENERAL CORP.
70 WOOD AVENUE SOUTH
ISELIN, NEW JERSEY 08830

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

PROXY STATEMENT

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

GENERAL INFORMATION

PROXY SOLICITATION

This Proxy Statement is furnished to the holders of Common Stock, par value
$.01 per share (the "Common Stock"), of Bio-Technology General Corp. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Thursday, June 27, 1996, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.

Proxies for use at the meeting are being solicited by the Board of
Directors of the Company. Proxies will be mailed to stockholders on or about May
15, 1996 and will be solicited chiefly by mail. The Company will make
arrangements with brokerage houses and other custodians, nominees and
fiduciaries to send proxies and proxy material to the beneficial owners of the
shares and will reimburse them for their expenses in so doing. Should it appear
desirable to do so in order to ensure adequate representation of shares at the
meeting, officers, agents and employees of the Company may communicate with
stockholders, banks, brokerage houses and others by telephone, facsimile or in
person to request that proxies be furnished. All expenses incurred in connection
with this solicitation will be borne by the Company. The Company has no present
plans to hire special employees or paid solicitors to assist in obtaining
proxies, but reserves the option of doing so if it should appear that a quorum
otherwise might not be obtained.

REVOCABILITY AND VOTING OF PROXY

A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby for all listed nominees for director and in
accordance with their best judgment on any other matters which may properly come
before the meeting.

RECORD DATE AND VOTING RIGHTS

Only stockholders of record at the close of business on May 1, 1996 are
entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On May 1, 1996 there were 43,729,877 shares of Common
Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to

<PAGE>

vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker non-votes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. With respect to the proposal to elect directors,
abstentions, broker non-votes and instructions on the accompanying proxy card to
withhold authority to vote for one or more nominees will result in the
respective nominees receiving fewer votes. However, the number of votes
otherwise received by the nominee will not be reduced by such action.

BENEFICIAL OWNERSHIP OF COMMON STOCK

The following table sets forth information as of April 30, 1996 (except as
otherwise noted in the footnotes) regarding the beneficial ownership (as defined
by the Securities and Exchange Commission (the "SEC")) of the Company's Common
Stock of: (i) each person known by the Company to own beneficially more than
five percent of the Company's outstanding Common Stock; (ii) each director and
nominee for election as a director of the Company; (iii) each executive officer
named in the Summary Compensation Table (see "Executive Compensation"); and (iv)
all directors and executive officers of the Company as a group. Except as
otherwise specified, the named beneficial owner has the sole voting and
investment power over the shares listed.

Elliott Associates, L.P. ...... 3,685,462 (2) 8.4%
712 Fifth Avenue, 36th Floor
New York, New York 10019

Momar Corporation ............. 2,650,390 (3) 6.1%
160 Broadway
New York, New York 10038

Herbert J. Conrad ............. 22,332 (4) *
Sim Fass ...................... 716,250 (5) 1.6%
Marian Gorecki ................ 376,250 (6) *
Fred Holubow .................. 94,605 (7) *
David Haselkorn ............... 505,000 (8) *
Hoffer Kaback ................. 1,760 *
Nadim Kassem .................. 145,500 (9) *
Charles MacDonald ............. 13,625 (10) *
Moses Marx .................... 2,664,015 (3)(10) 6.1%
Ronald J. Simko ............... 10,000 (11) *
David Tendler ................. 20,809 (12) *

<PAGE>

AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP OF PERCENTAGE OF
NAME OF BENEFICIAL OWNER COMMON STOCK COMMON STOCK
- ------------------------ ----------------------- -------------
Virgil Thompson ............... 15,000 (12) *
Dan Tolkowsky ................. 68,508 *
Bradford T. Whitmore .......... 3,871,925 (13) 8.9%
All directors and executive
officers as a group
(17 persons) ................. 8,585,579 (2)(13)(14) 18.9%

- -------------
* Represents less than one percent of the Company's Common Stock.

(1) Includes 1,530,614 shares of Common Stock held of record by Grace Brothers,
Ltd. and 408,686 shares of Common Stock held of record by Grace Brothers
International, Ltd. Both Grace Holdings, L.P. and Grace Brothers
International, Ltd. are substantially wholly owned affiliates of Grace
Brothers, Ltd. See note 13.

(2) Information included herein concerning the shares of Common Stock owned
beneficially by Elliott Associates, L.P. is as of April 29, 1996 and was
taken from a Schedule 13D that was filed with the Securities and Exchange
Commission by a group including Elliott Associates, L.P. on May 1, 1996.

(3) Includes 1,000,000 shares of Common Stock owned by Momar Corp., a Maryland
corporation of which Mr. Marx, a director of the Company, is the President
and sole director, and 1,650,390 shares of Common Stock owned by United
Equities (Commodities) Company, a partnership of which Mr. Marx owns a
majority interest. Mr. Moses Marx, United Equities (Commodities) Company
and Momar Corp. filed a joint Schedule 13D because they may be deemed to
constitute a "group" within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). See note
10.

(4) Includes 15,000 shares which may be acquired through the exercise of stock
options. Does not include 5,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(5) Includes 696,250 shares which may be acquired through exercise of stock
options. Does not include 211,250 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(6) Includes 316,250 shares which may be acquired through the exercise of stock
options. Does not include 106,250 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(7) Includes 1,000 shares of Common Stock owned by a trust of which Mr. Holubow
is a trustee, which shares Mr. Holubow is deemed to beneficially own.
Includes 15,000 shares which may be acquired through exercise of stock
options. Does not include 5,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996. Mr. Holubow is not standing for reelection at the Annual Meeting of
Stockholders.

(8) Includes 442,500 shares which may be acquired through the exercise of stock
options. Does not include 127,500 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(9) Includes 142,500 shares which may be acquired through the exercise of stock
options. Does not include 57,500 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

<PAGE>

(10) Includes 10,000 shares which may be acquired through exercise of stock
options. Does not include 10,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(11) Consists of shares which may be acquired upon the exercise of stock
options. Does not include 30,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(12) Includes 15,000 shares which may be acquired through exercise of stock
options. Does not include 5,000 shares of Common Stock issuable upon the
exercise of options which are not exercisable within 60 days of April 30,
1996.

(13) Includes 1,914,000 shares of Common Stock held of record by Grace Holdings,
L.P., 1,530,614 shares of Common Stock held of record by Grace Brothers,
Ltd. and 408,686 shares of Common Stock held of record by Grace Brothers
International, Ltd. Both Grace Holdings, L.P. and Grace Brothers
International, Ltd. are substantially wholly owned affiliates of Grace
Brothers, Ltd. Mr. Bradford T. Whitmore may be deemed the beneficial owner
of the 3,853,300 shares owned by such entities due to the fact that he is a
general partner of Grace Brothers, Ltd. and the sole shareholder of a
general partner of Grace Holdings, L.P. Includes 15,000 shares which may be
acquired through the exercise of options. Does not include 5,000 shares of
Common Stock issuable upon the exercise of options which are not
exercisable within 60 days of April 30, 1996.

(14) Includes 3,853,300 shares beneficially owned by Grace Holdings L.P. (see
Note 13), 2,650,390 shares beneficially owned by Momar Corporation (see
Note 2) and 1,782,500 shares of Common Stock which may be acquired upon the
exercise of stock options.

PROPOSAL--ELECTION OF DIRECTORS

Nine directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.

The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:

YEAR FIRST
DIRECTOR AGE BECAME DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- -------- --- --------------- -----------------------------------------------
<S> <C> <C> <C>
Herbert J. Conrad .. 63 1993 Retired; President of Roche Pharmaceuticals
Division, Hoffmann-La Roche from December 1981
until September 1993. (1)

Sim Fass ........... 54 1983 President/CEO of the Company and President
of Bio-Technology General (Israel) Ltd.,the
Company's wholly-owned subsidiary ("BTG Israel"),
since May 1984; Treasurer of the Company since
August 1983; Chief Operating Officer of BTG Israel
between August 1983 and May 1987. (1)(2)

</TABLE>

<PAGE>

<TABLE>
<CAPTION>
YEAR FIRST
DIRECTOR AGE BECAME DIRECTOR PRINCIPAL OCCUPATION DURING THE PAST FIVE YEARS
- -------- --- --------------- -----------------------------------------------
<S> <C> <C> <C>
Hoffer Kaback ...... 46 1989 President of Gloucester Capital Corporation
since 1980; General Partner of Bosworth
Partners, an investment partnership, since
1986. (3)(4)

Charles MacDonald .. 38 1994 Individual investor since July 1995; Portfolio
Manager at Elliott Associates, L.P. from
November 1987 to July 1995. (1)

Moses Marx ......... 60 1994 Partner of United Equities Company since
June 1954 and partner of United Equities
(Commodities) Company since January 1972. (1)(5)

David Tendler ...... 58 1994 Chairman of Tendler Beretz Associates Ltd.
since January 1985; Chairman of Melville
BioLogics Inc. since February 1995;
Co-Chairman and Chief Executive Officer of
Phibro-Salomon, Inc. (now Salomon, Inc.) from
May 1982 until October 1984. (1)(3)(5)

Virgil Thompson .... 56 1994 President and Chief Executive Officer of
Cytel Corporation since January 1996; President
and Chief Executive Officer of CIBUS
Pharmaceutical, Inc. from July 1994 until January
1996; President from August 1991 to August 1993
and Executive Vice President from March 1986 to
August 1991 of Syntex Laboratories, Inc. (3)(5)

Dan Tolkowsky ...... 75 1985 Partner at Adler & Tolkowsky Management
Associates, the general partner of Athena Venture
Partners L.P., a venture capital partnership,
since May 1985; prior thereto, Vice Chairman and
Managing Director of Discount Investment
Corporation (Tel-Aviv); Chairman of the Executive
Committee of BTG Israel from 1983 through October
1989. (5)

Bradford T. Whitmore 38 1994 General Partner of Grace Brothers, Ltd. since
January 1986. (1)

</TABLE>
- --------------

(1) Member of the Executive Committee of the Board of Directors.

(2) Pursuant to Dr. Fass' employment agreement with the Company, the Company
has agreed to nominate Dr. Fass for election as a director during all
periods when Dr. Fass serves as President and Chief Executive Officer of
the Company. See "Executive Compensation-Employment Agreements."

(3) Member of the Audit Committee of the Board of Directors.

<PAGE>

(4) In connection with the Company's offer to exchange (a) $250 principal
amount of the Company's Series A 7 1/2% Senior Secured Convertible Notes
due January 15, 1995 and 200 shares of the Company's Common Stock for each
$1,000 principal amount of its 7 1/2% Convertible Senior Subordinated
Notes due April 15, 1997 and (b) $250 principal amount of the Company's
Series B 11% Senior Secured Convertible Notes due October 15, 1998 and 200
shares of Common Stock for each $1,000 principal amount of its 11%
Convertible Senior Subordinated Debentures due 2006, the Company reached an
agreement with Elliott Associates, L.P., Grace Brothers, Ltd. and Wechsler
& Krumholz, Inc. (the "Group") to appoint as a director a person designated
by the Group and to nominate as a director and solicit proxies for the
Group's nominee. The Company and the Group have terminated this agreement.
Mr. Kaback was the representative designated by the Group to serve as a
director of the Company.

(5) Member of the Compensation and Stock Option Committee of the Board of
Directors.

Mr. Conrad is a director of Bradley Pharmaceuticals, Inc., Gensia, Inc. and
Dura Pharmaceuticals, Inc. Mr. Holubow, a director of the Company who is not
standing for reelection at the Annual Meeting of Stockholders, is a director of
Jefferson State Bank, Thermo Remediation Inc. and Unimed Pharmaceuticals, Inc.
Mr. Kaback is a director of Lewis Galoob Toys, Inc. and Sunshine Mining and
Refining Co. Mr. Marx is a director of The Cooper Companies, Inc. and Cooper
Life Sciences, Inc. Mr. Tendler is a director of Ryan, Beck & Co. Mr. Thompson
is a director of Cytel Corporation and Cypros Pharmaceuticals Corp. Mr. Whitmore
is a director of Patten Corp.

On December 6, 1994 the Board reestablished the Executive Committee to
exercise, to the extent authorized by law, all of the powers and authority of
the Board in the management of the business and affairs of the Company. Messrs.
Herbert Conrad, Sim Fass, Charles MacDonald, Moses Marx, David Tendler and
Bradford Whitmore are the current members of the Executive Committee. During the
fiscal year ended December 31, 1995 the Executive Committee held four meetings.

In November 1989, the Board formed an Audit Committee to review the
internal accounting procedures of the Company and to consult with and review the
Company's independent auditors and the services provided by such auditors.
Messrs. Fred Holubow, Hoffer Kaback, David Tendler and Virgil Thompson are the
current members of the Audit Committee. During the fiscal year ended December
31, 1995, the Audit Committee held one meeting.

In January 1990, the Board formed a Compensation Committee. In May 1990,
the Board combined the Compensation Committee and the Stock Option Plan
Committee to form the Compensation and Stock Option Committee to review
compensation practices, to recommend compensation for executives and key
employees, and to administer the Company's stock option plans. Messrs. Moses
Marx, David Tendler, Virgil Thompson and Dan Tolkowsky are the current members
of the Compensation and Stock Option Committee. During the fiscal year ended
December 31, 1995, the Compensation and Stock Option Committee acted by
unanimous written consent in lieu of a meeting one time and held one meeting.

During the fiscal year ended December 31, 1995, the Board of Directors held
five meetings. Each director attended at least 75% of the meetings of the Board
of Directors held when he was a Director and of all committees of the Board of
Directors on which he served.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers, directors and greater
than ten percent beneficial owners are required by the SEC to furnish the
Company with copies of all Section 16(a) forms they file.

6
<PAGE>

Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1995 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with, except that Herbert Conrad
failed to file a Form 4 on a timely basis and Marian Gorecki failed to file two
Form 4s on a timely basis.

VOTE REQUIRED

The nine nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as directors. Only votes cast for a nominee will
be counted, except that the accompanying proxy will be voted for all nominees in
the absence of instruction to the contrary. Abstentions, broker non-votes and
instructions on the accompanying proxy card to withhold authority to vote for
one or more nominees will result in the respective nominees receiving fewer
votes. However, the number of votes otherwise received by the nominee will not
be reduced by such action.

THE BOARD OF DIRECTORS DEEMS "PROPOSAL-ELECTION OF DIRECTORS" TO BE IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
EACH NOMINEE.

EXECUTIVE COMPENSATION

The following table shows all the cash compensation paid or to be paid by
the Company or its subsidiaries as well as certain other compensation paid or
accrued during the fiscal years indicated to the Chief Executive Officer of the
Company and each of the four other most highly compensated executive officers of
the Company for such period in all capacities in which they served.

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION(1)
FISCAL ------------------------- ------------- ---------------
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS($)(2) OPTIONS(#)
- --------------------------- ---- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Sim Fass (3) ....................... 1995 $282,500 $100,000 60,000 $4,620(4)
President and Chief 1994 264,583 115,000 120,000 4,620(4)
Executive Officer 1993 243,039 105,000 157,500

David Haselkorn (3) ................ 1995 177,102 70,000 50,000
Senior Vice President and 1994 163,750 60,000 80,000
Chief Operating Officer; 1993 149,267 50,000 100,000
General Manager of BTG-Israel

Marian Gorecki (3) ................. 1995 163,102 55,000 35,000
Senior Vice President-- 1994 148,750 40,000 70,000
Chief Technical Officer 1993 134,267 40,000 82,500

Nadim Kassem (3) ................... 1995 190,500 25,000 20,000 4,620(4)
Senior Vice President-- 1994 178,750 30,000 60,000 4,620(4)
Chief Medical Officer 1993 173,696 15,000 25,000 40,000(5)

Ronald J. Simko (6) ................ 1995 128,333 15,000 10,000 4,620(4)
Vice President-Manufacturing 1994 43,109 -- 30,000 600(4)

</TABLE>
- -------------
(1) Pursuant to the SEC's rules on executive compensation disclosure, "All
Other Compensation" does not include perquisites because the aggregate
amount of such compensation for each of the persons listed did not exceed
the lesser of (i) $50,000 or (ii) 10 percent of the combined salary and
bonus for such person in each such year.

<PAGE>

(2) Bonuses paid during a fiscal year are for the prior fiscal year.

(3) Each of Drs. Fass, Haselkorn, Kassem and Gorecki is a party to an
employment agreement with the Company. See "--Employment Agreements."

(4) Represents the Company's matching contribution pursuant to its 401(k)
defined contribution plan.

(5) Pursuant to his employment agreement, the Company loaned Dr. Kassem $40,000
which was forgiven in full on June 1, 1993. See "--Employment Agreements."

(6) Mr. Simko joined the Company in August 1994.

The following table sets forth information with respect to option grants in
1995 to the persons named in the Summary Compensation Table.

OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>

NUMBER OF % OF TOTAL POTENTIAL REALIZED VALUE AT
SECURITIES OPTIONS ASSUMED ANNUAL RATES OF
UNDERLYING GRANTED TO EXERCISE MARKET STOCK PRICE APPRECIATION
OPTIONS EMPLOYEES OR BASE PRICE ON FOR OPTION TERM (3)
GRANTED IN FISCAL PRICE DATE OF EXPIRATION -----------------------
NAME (#)(1) YEAR(2) ($/SH) GRANT DATE 5%($) 10%($)
- ----- ------ ------- ------ ----- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Sim Fass 60,000 4.81% $3.50 $3.50 06/13/05 $132,068 $334,686

David Haselkorn 50,000 4.01 3.50 3.50 06/13/05 110,057 278,905

Marian Gorecki 35,000 2.81 3.50 3.50 06/13/05 77,040 195,254

Nadim Kassem 20,000 1.60 3.50 3.50 06/13/05 44,023 111,562

Ronald Simko 10,000 0.80 3.50 3.50 06/13/05 22,012 55,781
- -------------------
</TABLE>

(1) Options vest ratably over four years on the anniversary date of the grant
unless otherwise indicated; however, options granted under the Company's
1992 Stock Option Plan and certain other options become immediately
exercisable upon a change in control of the Company. See "--Employment
Agreements."

(2) Based upon options to purchase 1,247,734 shares granted to all employees in
1995.

(3) These amounts represent assumed rates of appreciation in the price of the
Company's Common Stock during the terms of the options in accordance with
rates specified in applicable federal securities regulations. Actual gains,
if any, on stock option exercises will depend on the future price of the
Common Stock and overall stock market conditions. The 5% rate of
appreciation over the 10 year option term of the $3.50 stock price on the
date of grant would result in a stock price of $5.70. The 10% rate of
appreciation over the 10 year option term of the $3.50 stock price on the
date of grant would result in a stock price of $9.08. There is no
representation that the rates of appreciation reflected in this table will
be achieved.

The following table sets forth information with respect to (i) stock
options exercised in 1995 by the persons named in the Summary Compensation Table
and (ii) unexercised stock options held by such individuals at December 31,
1995.

AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR END FISCAL YEAR END ($)(1)
ACQUIRED ON VALUE ------------------------- -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Sim Fass -- -- 771,250 256,250 $388,544 $0

David Haselkorn -- -- 397,500 172,500 131,100 0

Marian Gorecki (2) 24,500 47,405 290,000 132,500 8,075 0

Nadim Kassem -- -- 102,500 102,500 0 0

Ronald Simko -- -- 7,500 32,500 0 0
- -------------------
</TABLE>

(1) Based on a closing stock price of the Company's Common Stock on December
29, 1995 of $2.40625.

(2) On March 7, 1995, September 11, 1995 and December 12, 1995 Marian Gorecki
exercised options to acquire 5,000, 12,000 and 7,500 shares, respectively,
of the Company's Common Stock at a price of $1.06 per share. The closing
price of the Company's Common Stock on March 7, 1995, September 11, 1995
and December 12, 1995 was $2.375, $2.9375 and $3.50, respectively.

8
<PAGE>

EMPLOYMENT AGREEMENTS

The Company and Sim Fass entered into an employment agreement dated as of
January 1, 1990 (the "Fass Agreement") pursuant to which Dr. Fass serves as
President and Chief Executive Officer of the Company. At January 1, 1996, the
Fass Agreement was automatically renewed for another two year period, and will
automatically be renewed for successive two year periods thereafter unless
either party gives the other notice of nonrenewal. The Fass Agreement also
provides that the Company will nominate Dr. Fass for election as a director
during all periods when he serves as President and Chief Executive Officer of
the Company. For his services, Dr. Fass is currently entitled to an annual
salary of $290,000, with bonuses to be determined at the discretion of the
Company's Board. In the event Dr. Fass' employment is terminated by the Company
at any time for any reason other than justifiable cause, disability or death, or
the Company shall fail to renew the Fass Agreement at any time within two years
following a "Change of Control of the Company," the Company shall pay Dr. Fass,
for a period equal to the longer of (1) the remaining term of the Fass Agreement
or (2) one year (such period being hereinafter referred to as the "Fass
Severance Period") a monthly payment equal to $20,000, which amount shall be in
lieu of any and all other payments due and owing to Dr. Fass under the terms of
the Fass Agreement. During the Fass Severance Period, the Company shall continue
to provide Dr. Fass with health, life and disability insurance. In the event the
Company elects not to renew the Fass Agreement other than within two years
following a "Change in Control of the Company," the Company is obligated to pay
Dr. Fass a severance payment equal to the sum of one month's salary plus 1/12 of
his most recently declared bonus for each year Dr. Fass has been employed by the
Company.

Pursuant to the Fass Agreement, all options granted or to be granted to Dr.
Fass under any Company stock option plan shall become immediately exercisable
and all restrictions against disposition, if any, which have not otherwise
lapsed shall immediately lapse if (i) Dr. Fass' employment with the Company is
terminated upon a determination by the Company's Board that the performance of
his duties has not been fully satisfactory for any reason that would not
constitute "justifiable cause" (as defined in the Fass Agreement), (ii) Dr. Fass
dies or is disabled (as defined in the Fass Agreement) while employed by the
Company, (iii) Dr. Fass is not nominated by the Company for re-election to the
Company's Board, other than for justifiable cause, (iv) there shall occur a
material reduction in Dr. Fass' duties, other than for justifiable cause, or (v)
any event constituting a Change in Control of the Company shall occur while Dr.
Fass is employed by the Company.

For purposes of the Fass Agreement, the Haselkorn Agreement (as described
below) and the Gorecki Agreement (as described below), a "Change in Control of
the Company" shall be deemed to occur if (i) there shall be consummated (x) any
consolidation or merger of the Company in which the Company is not the
continuing or surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other property, other
than a merger of the Company in which the holders of the Company's Common Stock
immediately prior to the merger have the same proportionate ownership of common
stock of the surviving corporation immediately after the merger, or (y) any
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of the
Company, or (ii) the stockholders of the Company shall approve any plan or
proposal for liquidation or dissolution of the Company, or (iii) any person (as
such term is used in Sections 13(d) and 14(d)(2) of the Exchange Act) shall
become the beneficial owner (within the meaning of Rule 13d-3 under the Exchange
Act) of 40% or more of the Company's outstanding Common Stock other than
pursuant to a plan or arrangement entered into by such person and the Company,
or (iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire Board shall cease for any reason
to constitute a majority thereof unless the election, or the nomination for
election by the Company's stockholders, of each new director was approved by a
vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period.

<PAGE>

The Company and David Haselkorn entered into an employment agreement dated
as of September 5, 1990 (the "Haselkorn Agreement") pursuant to which Dr.
Haselkorn serves as Senior Vice President and Chief Operating Officer of the
Company and General Manager of BTG Israel. At September 5, 1994, the Haselkorn
Agreement was automatically renewed for an additional two year period, and will
automatically be renewed for successive two year periods unless either party
gives the other notice of nonrenewal. For his services, Dr. Haselkorn is
currently entitled to an annual salary of $183,000 and to bonuses to be
determined at the discretion of the Company's Board. In the event that Dr.
Haselkorn's employment is terminated by the Company at any time for any reason
other than justifiable cause, disability or death, or the Company shall fail to
renew the Haselkorn Agreement at any time within two years following a "Change
in Control of the Company," the Company is obligated to pay Dr. Haselkorn an
amount equal to the greater of (i) one year's salary plus Dr. Haselkorn's most
recent bonus, if any, or (ii) the product of one month's salary plus 1/12 of
Dr. Haselkorn's most recently declared bonus multiplied by the number of years
Dr. Haselkorn has been employed by the Company.

BTG Israel and Marian Gorecki entered into an employment agreement dated as
of September 5, 1990 (the "Gorecki Agreement") pursuant to which Dr. Gorecki
serves as Senior Vice President and Chief Technical Officer of BTG Israel. At
September 5, 1994, the Gorecki Agreement was automatically renewed for an
additional two year period, and the Gorecki Agreement provides that it
automatically will be renewed for successive two year periods unless either
party gives the other notice of nonrenewal. For his services, Dr. Gorecki is
currently entitled to an annual salary of $170,000 and to bonuses to be
determined at the discretion of the Company's Board. In the event that Dr.
Gorecki's employment is terminated by BTG Israel at any time for any reason
other than justifiable cause, disability or death, or BTG Israel shall fail to
renew the Gorecki Agreement at any time within two years following a "Change in
Control of the Company," BTG Israel is obligated to pay Dr. Gorecki an amount
equal to the greater of (i) one year's salary plus Dr. Gorecki's most recent
bonus, if any, or (ii) the product of one month's salary plus 1/12 of Dr.
Gorecki's most recently declared bonus multiplied by the number of years Dr.
Gorecki has been employed by BTG Israel.

The Company and Nadim Y. Kassem, M.D. entered into an employment agreement
dated as of June 1, 1992 (the "Kassem Agreement") pursuant to which Dr. Kassem
serves as Senior Vice President-Chief Medical Officer of the Company. At June 1,
1994, the Kassem Agreement was automatically renewed for an additional two year
period, and will be automatically renewed for successive two year periods unless
either party gives the other notice of nonrenewal. For his services, Dr. Kassem
is currently entitled to an annual salary of $196,000 and to bonuses to be
determined at the discretion of the Company's Board. In the event Dr. Kassem's
employment is terminated by the Company at any time for any reason other than
justifiable cause, disability or death, or the Company shall fail to renew the
Kassem Agreement, the Company is obligated to pay Dr. Kassem, for a period equal
to the longer of (1) the remaining term of the Kassem Agreement or (2) one year
(such period being hereinafter referred to as the "Kassem Severance Period") a
bi-monthly payment equal to 1/24th of his annual salary, which amount shall be
in lieu of any and all other payments due and owing to Dr. Kassem under the
terms of the Kassem Agreement. During the Kassem Severance Period, the Company
shall continue to provide Dr. Kassem with health and disability insurance until
the earlier of (1) one year or (2) such time as Dr. Kassem becomes eligible to
participate in another employer's health and disability insurance plan.

In connection with the commencement of his employment with the Company, Dr.
Kassem was granted options to purchase 100,000 shares of the Company's Common
Stock at an exercise price of $6.50 per share, which options were to become
exercisable in four annual installments of 25,000 shares each. On the date of
grant of the option, the fair market value of the Company's Common Stock was
$7.50. If (i) Dr. Kassem's employment with the Company is terminated upon a
determination by the Company's Board that the performance of his duties has not
been fully satisfactory for any reason that would not constitute "justifiable
cause" (as defined in the Kassem Agreement) or

<PAGE>

(ii) Dr. Kassem dies or is disabled (as defined in the Kassem Agreement) while
employed by the Company, these options shall become immediately exercisable. On
June 1, 1996 these options will become fully exercisable.

Pursuant to the Kassem Agreement, the Company loaned to Dr. Kassem $40,000.
The Company agreed to forgive repayment of the loan on June 1, 1993 if Dr.
Kassem was then still an employee of the Company and under certain other
circumstances. This loan was forgiven on June 1, 1993.

The Company and William Pursley entered into an employment agreement dated
as of April 24, 1995 (the "Pursley Agreement") pursuant to which Mr. Pursley
serves as Senior Vice President-Marketing, Sales and Commercial Development of
the Company. The initial term of the Pursley Agreement is two years, and the
Pursley Agreement provides that it shall automatically be renewed for successive
two year periods unless either party gives the other notice of nonrenewal. For
his services, Mr. Pursley is currently entitled to an annual salary of $175,000
and to bonuses to be determined at the discretion of the Company's Board. In
addition, pursuant to the Pursley Agreement the Company loaned $80,000 to Mr.
Pursley. The loans bear interest at a rate of 6.8 % per annum. Pursuant to the
terms of one of the loans, the repayment of $40,000 of indebtedness was forgiven
upon his relocation to New Jersey. The remaining $40,000 of indebtedness shall
become due on June 30, 1997 or sooner, if Mr. Pursley shall cease to be employed
by the Company. Furthermore, in connection with the Pursley Agreement, Mr.
Pursley was granted options to purchase 75,000 shares of the Company's Common
Stock at an exercise price of $2.3125 per share, the fair market value on the
date of grant. Such options become exercisable in four annual installments of
18,750 shares each. In the event that Mr. Pursley's employment is terminated by
the Company at any time for any reason other than justifiable cause, disability
or death, or the Company shall fail to renew the Pursley Agreement, the Company
is obligated to pay Mr. Pursley an amount equal to his then annual salary,
payable bi-weekly in equal installments.

Compensation of Directors

Directors of the Company do not receive any cash compensation for their
services as directors, except that beginning January 1, 1995 non-employee
members of the Executive Committee and beginning June 1, 1995 non-employee
members of the Audit Committee and Compensation and Stock Option Committee
receive $1,000 per Committee meeting attended. Upon becoming a director of the
Company, non-employee directors receive a one time only grant of options to
purchase 20,000 shares of the Company's Common Stock pursuant to the Company's
Stock Option Plan for Outside Directors. In addition, non-employee directors
receive quarterly grants of shares of Common Stock pursuant to the Company's
Stock Compensation Plan for Outside Directors. All directors are reimbursed for
their expenses in connection with attending meetings of the Company's Board. In
addition, on January 31, 1996, the Board of Directors engaged Mr. Conrad as a
consultant to the Company with respect to research and development strategic
planning and the Company's Oxandrin(r) product launch at a fee of $20,000 per
year.

Stock Option Plan For Outside Directors. Pursuant to the Company's Stock
Option Plan for Outside Directors (the "Option Plan"), each person who is
neither an officer nor employee of the Company or its subsidiaries and who is
elected or appointed a director of the Company (the "New Director")
automatically receives on the date of his initial election or appointment to the
Company's Board (the "Grant Date") an option to purchase 20,000 shares of the
Company's Common Stock (the "Option") at a per share exercise price equal to the
Fair Market Value (as defined in the Option Plan) of the Company's Common Stock
on the Grant Date.

Options may be exercised as to 5,000 shares on the date which is six months
and one day after the Grant Date and an additional 5,000 shares on each of the
three successive anniversaries of the Grant Date. In the event that a New
Director ceases to be a director of the Company, such person may exercise any
portion of the Option that is exercisable by him at the time he ceases to be a
director of the Company, but only to the extent such Option is exercisable as of
such

<PAGE>

date, within six months after the date he ceases to be a director of the
Company. However, in the event a "Change of Control of the Corporation" (as
defined in the Option Plan) shall occur, all options granted under the Option
Plan which are outstanding at the time a Change of Control of the Corporation
occurs shall immediately become exercisable. Options granted under the Option
Plan have a term of ten years from the Grant Date and are not "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code").

Mr. Hoffer Kaback, who was elected a director of the Company on November 1,
1989, was granted an Option at a per share exercise price of $1.09, the Fair
Market Value of the Company's Common Stock on January 29, 1990, the date of the
adoption of the Option Plan by the Company's Board. Mr. Herbert J. Conrad, who
was elected a director of the Company on October 14, 1993, was automatically
granted an Option at a per share price of $5.8125. Mr. Fred Holubow, who was
elected a director of the Company on April 6, 1994, was automatically granted on
such date an Option at a per share exercise price of $4.1875. Mr. David Tendler
and Mr. Virgil Thompson, who were elected as directors of the Company on June 2,
1994 were each automatically granted an Option at a per share exercise price of
$2.9375. Mr. Charles MacDonald, who was elected as a director of the Company on
October 24, 1994, was automatically granted an Option at a per share exercise
price of $2.15625. Mr. Moses Marx and Mr. Bradford Whitmore, who were elected as
directors of the Company on December 6, 1994, were each automatically granted an
Option at a per share exercise price of $2.375.

Stock Compensation Plan for Outside Directors. Pursuant to the Company's
Compensation Plan for Outside Directors (the "Compensation Plan"), each director
of the Company who is neither an officer nor employee of the Company or its
subsidiaries (an "Outside Director") is awarded automatically, in lieu of cash
compensation for services as a director, on the last business day of each full
fiscal quarter subsequent to his election or appointment as an Outside Director,
such number of shares of the Company's Common Stock as has an aggregate Fair
Market Value (as defined in the Compensation Plan) equal to $2,500, based on the
price of the Company's Common Stock on the date of issue (the "Shares"). The
Compensation Plan provides that each Outside Director will be awarded Shares
until such time as he is no longer an Outside Director. If an Outside Director
ceases to be an Outside Director for any reason, the number of Shares which he
will be awarded on the last business day of the Company's next fiscal quarter
will be equal to one-third of the number of Shares which he would have been
awarded on such date for each complete month that he was an Outside Director in
the fiscal quarter in which he ceased to be an Outside Director.

The Compensation Plan allows any Outside Director to defer the issuance and
delivery of the Company's Common Stock awarded under the Compensation Plan until
the termination of his services on the Company's Board or such other time as the
Company's Board may determine. Virgil Thompson and the Company entered into a
deferral agreement in June 1994 (the "Deferral Agreement") pursuant to which the
issuance and delivery of the Company's Common Stock to be awarded to Mr.
Thompson under the Compensation Plan has been deferred until after the date Mr.
Thompson ceases to be a member of the Company's Board; provided, however, that
any shares of the Company's Common Stock, the issuance of which was deferred,
will be issued to Mr. Thompson at the time of a change in ownership or effective
control of the Company or a change in ownership of a substantial portion of the
Company's assets, as defined in the Code, except that in determining whether
there is a change in effective control by reason of a stock acquisition, there
must be an acquisition of stock possessing at least 40% (as opposed to the 20%
requirement set forth in the Code), of the total voting power of the Company's
Common Stock.

During the 1995 fiscal year, each Outside Director eligible to receive
shares under the Compensation Plan received 1,111 shares of the Company's Common
Stock on March 31, 1995, 833 shares of the Company's Common Stock on June 30,
1995, 754 shares of the Company's Common Stock on September 30, 1995 and 547
shares of the Company's Common Stock on December 31, 1995. On March 31, 1995,
June 30, 1995, September 30, 1995 and December 31, 1995, the Fair Market Value
of the Company's Common Stock was $2.25, $3.00, $3.3125 and $4.5625,

<PAGE>

respectively. Each of Herbert Conrad, Fred Holubow, Hoffer Kaback, Charles
MacDonald, Moses Marx, David Tendler, Dan Tolkowsky and Bradford Whitmore
received an aggregate of 3,245 shares of the Company's Common Stock each under
the Compensation Plan for their services as director during the 1995 fiscal
year.

COMPENSATION AND STOCK OPTION COMMITTEE REPORT TO STOCKHOLDERS

The report of the Compensation and Stock Option Committee (the
"Compensation Committee") shall not be deemed incorporated by reference by any
general statement incorporating by reference this proxy statement into any
filing under the Securities Act of 1933, as amended (the "Securities Act") or
under the Exchange Act, except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.

The Compensation Committee is currently comprised of four directors. As
members of the Compensation Committee, it is our responsibility to determine the
most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our specific duties entail
reviewing the Company's compensation practices, recommending compensation for
executives and key employees and administering the Company's stock option plans.

COMPENSATION PHILOSOPHY

The Company has been engaged in the research, development, manufacture and
marketing of genetically engineered and other products for human health care
since its inception in 1980. One of the Company's strengths contributing to its
success is the strong management team--many of whom have been with the Company
for a significant period of time. The central goal of the Compensation Committee
is to ensure that the Company's remuneration policy is such that the Company is
able to attract, retain and reward capable employees who can contribute, both
short- and longer-term, to the continued success of the Company. Equity
participation and a strong alignment to stockholders' interests are key elements
of the Company's compensation philosophy. The Company's executive compensation
program consists of three parts: base salary, annual bonus and stock options. In
awarding salary increases and bonuses, the Compensation Committee did not relate
each element of executive compensation to specific elements of corporate
performance. Rather, the Compensation Committee considered whether the
compensation package as a whole adequately compensated each executive for the
Company's performance during 1995 and executive's contribution to such
performance.

Under the Omnibus Budget Reconciliation Act ("OBRA") which was enacted in
1993, publicly held companies may be prohibited from deducting as an expense for
federal income tax purposes total remuneration in excess of $1 million paid to
certain executive officers in a single year. However, OBRA provides an exception
for "performance based" remuneration, including stock options. The Company
expects to keep "non-performance based" remuneration within the $1 million limit
in order that all executive compensation will be fully deductible. Nevertheless,
although the Committee considers the net cost to the Company in making all
compensation decisions (including, for this purpose, the potential limitation on
deductibility of executive compensation), there is no assurance that
compensation realized with respect to any particular award will qualify as
"performance based" remuneration.

BASE SALARY

Base salary represents the fixed component of the executive compensation
program. The Company's philosophy regarding base salaries is conservative,
maintaining salaries at approximately competitive industry average.
Determinations of base salary levels are established on an annual review of
marketplace competitiveness

<PAGE>

with similar biotechnology companies, and on internal relationships. Periodic
increases in base salary relate to individual contributions to the Company's
overall performance, relative marketplace competitiveness levels, length of
service and the industry's annual competitive pay practice movement. No specific
performance targets were established for fiscal year 1994, which was the base
year for determining the salary increases awarded in June 1995. In determining
appropriate levels of base salary, the Compensation Committee relied in part on
several biotechnology industry compensation surveys. In 1995, the Company, at
the direction of the executive committee, amended the employment agreements with
the executive officers to eliminate the specified annual minimum six
percent salary increase.

Bonus

Bonuses represent the variable component of the executive compensation
program that is tied to the Company's performance and individual achievement.
The Company's policy is to base a significant portion of its senior executives'
cash compensation on bonus. In determining bonuses, the Compensation Committee
considers factors such as relative performance of the Company during the year
and the individual's contribution to the Company's performance.

Stock Options

The Compensation Committee, which administers the Company's stock option
plans, believes that one important goal of the executive compensation program
should be to provide executives, key employees and consultants--who have
significant responsibility for the management, growth and future success of the
Company--with an opportunity to increase their ownership and potentially gain
financially from the Company's stock price increases. This approach ensures that
the best interests of the stockholders, executives and employees will be closely
aligned. Therefore, executive officers and other key employees of the Company
are granted stock options from time to time, giving them a right to purchase
shares of the Company's Common Stock at a specified price in the future. The
grant of options is based primarily on an employee's potential contribution to
the Company's growth and financial results. In determining the size of option
grants, the Compensation Committee considers the number of options owned by such
officer, the number of options previously granted and currently outstanding, and
the aggregate size of the current option grants. Options generally are granted
at the prevailing market value of the Company's Common Stock and will only have
value if the Company's stock price increases. Generally, grants of options vest
in equal amounts over four years and the individual must be employed by the
Company for such options to vest.

1995 Compensation to Chief Executive Officer

In reviewing and recommending Dr. Fass' salary and bonus and in awarding
him stock options for fiscal year 1995 and for his future services, the
Compensation Committee followed its compensation philosophy. Dr. Fass' annual
salary was increased to $290,000 in June 1995, a 5.5% increase over the prior
year, compared to a 10% increase in salary in June 1994 over the prior year. The
Compensation Committee recommended this increase in salary over the prior year
in recognition of Dr. Fass' achievements in establishing new commercial
relationships and advancing the commercialization of many of the Company's
products. The Compensation Committee noted that Dr. Fass is a party to an
employment agreement with the Company which provides for minimum annual salary
increases of 6%, and in connection with the Compensation Committee's
recommendation of Dr. Fass' salary, Dr. Fass agreed to waive such provision and
freeze his salary at the current level for a period of two years. For the 1994
fiscal year, Dr. Fass received approximately 27% of his cash compensation in
bonus, which bonus was paid in 1995. The Committee recommended the particular
dollar amount of Dr. Fass' bonus in recognition of Dr. Fass' efforts in
establishing new commercial relationships and advancing the commercialization of
many of the Company's products. In 1995, Dr. Fass was

<PAGE>

granted options to purchase 60,000 shares of the Company's Common Stock at an
exercise price of $3.50, the fair market value on the date of grant, under the
terms of the 1992 Stock Option Plan. The options become exercisable in equal
installments over four years on the anniversary date of the date of grant. The
Compensation Committee believes a grant of a stock option to purchase 60,000
shares of the Company's Common Stock is reasonable, based on marketplace
competitiveness, to secure the long-term services of the Company's chief
executive officer and to further align the chief executive officer's
compensation with stockholder interests.

COMPENSATION AND STOCK OPTION COMMITTEE

MOSES MARX, DAVID TENDLER, VIRGIL THOMPSON, DAN TOLKOWSKY

THE COMPANY'S PERFORMANCE

The following Stock Price Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act or under the
Exchange Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts.

The following graph compares cumulative total return of the Company's
Common Stock with the cumulative total return of (i) the S&P 500 Index, (ii) an
industry peer group index (the "1996 Peer Index") and (iii) the industry peer
group index utilized in 1995 (the "1995 Peer Index"). The graph assumes (a) $100
was invested on December 31, 1990 in each of the Company's Common Stock, the
stocks comprising the S&P 500 Index, the stocks comprising the 1996 Peer Index
and the stocks comprising the 1995 Peer Index, and (b), the reinvestment of
dividends. The 1996 Peer Index consists of Advanced Magnetics, Inc., Alpha-Beta
Technology, Inc., Alteon Inc., AutoImmune, Inc., CellPro, Inc., CoCensys, Inc.,
Creative Biomolecules Inc., Cyanotech Corp., Cytogen Corp., DepoTech Corp.,
Epitope, Inc., Genelabs Technologies, Inc., Gensia, Inc., Genzyme Corp. (Tissue
Repair), ICOS Corp., Immunomedics, Inc., Incyte Pharmaceuticals Inc., Integra
Lifesciences Corp., Lifecorp Biomedical Inc., Magainin Pharmaceuticals Inc.,
Meridian Diagnostics, Inc., Metra Biosystems Inc., Neurex Corp., Noven
Pharmaceuticals, Inc., Oncogene Science, Inc., Organogenesis Inc., Scios Inc.,
Sugen, Inc., Systemix, Inc., Theratech, Inc. (UT), U.S. Bioscience, Inc. and
Vical, Inc. The 1995 Peer Index consists of Alpha-Beta Technology, Inc., Agouron
Pharmaceuticals, Inc., Alteon Inc., Amylin Pharmaceuticals, Inc., Applied Immune
Sciences, Inc., ARRJS Pharmaceutical Corp., Athena Neurosciences, Inc.,
AutoImmune Inc., Cell Genesys, Inc., CellPro, Inc., Cytel Corp., Cytogen Corp.,
Genetic Therapy, Inc., Gensia, Inc., Genta Inc., ICOS Corp., Immulogic
Pharmaceutical Corp., Immune Response Corp., Immunomedics, Inc., Incyte
Pharmaceuticals, Inc., Interneuron Pharmaceuticals, Inc., Isis Pharmaceuticals,
Inc., Matrix Pharmaceutical, Inc., NeoRx Corp., Neurogen Corp., Regeneron
Pharmaceuticals, Inc., RIBI Immunochem Research Inc., Sequus Pharmaceuticals,
Inc., Seragen, Inc., Shaman Pharmaceuticals, Inc., Somatogen, Inc., U.S.
Bioscience, Inc., Univax Biologics, Inc., Vical, Inc. and Xoma Corp. The 1996
Peer Index consists of biotechnology companies with a market capitalization at
December 31, 1995 of between $150 million and $250 million; at that date the
Company had a market capitalization of $197.4 million. The 1995 Peer Index
consists of those companies listed as Tier 2 companies by BioVenture Stock
Report (January/February 1995) which had a market capitalization at December 31,
1994 of between $50 million and $150 million; at that date the Company had a
market capitalization of $92.5 million according to the BioVenture Stock Report.
The Company changed the companies in the peer group index because of the change
in the Company's market capitalization between December 31, 1994 and December
31, 1995.

<PAGE>

STOCK PERFORMANCE GRAPH

12/31/90 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95
-------- -------- -------- -------- -------- --------
BTG 100 467.7 318.6 284.7 116.9 247.4

Peer
Group 1995 100 404.5 371.2 382.9 303.1 757.6

Peer
Group 1996 100 451.3 455.8 553.7 402.2 1033.9

S&P 500 100 126.3 131.9 141.2 139.0 186.5

<PAGE>

RELATIONSHIP WITH INDEPENDENT AUDITORS

Arthur Andersen LLP have been the independent auditors for the Company
since December 1990 and will serve in that capacity for the 1996 fiscal year. A
representative of Arthur Andersen LLP will be present at the Annual Meeting and
will have an opportunity to make a statement if he desires to do so, and will
respond to appropriate questions from stockholders.

STOCKHOLDER PROPOSALS

All stockholder proposals which are intended to be presented at the 1997
Annual Meeting of Stockholders of the Company must be received by the Company no
later than January 15, 1997 for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.

OTHER BUSINESS

The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.

The prompt return of your proxy will be appreciated and helpful in
obtaining the necessary vote. Therefore, whether or not you expect to attend the
Annual Meeting, please sign the proxy and return it in the enclosed envelope.

By Order of the Board of Directors

ROY L. GOLDMAN
Secretary

Dated: May 15, 1996

A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT WITHOUT
CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM: BIO-TECHNOLOGY GENERAL
CORP., ATTENTION: LEAH BERKOVITS, 70 WOOD AVENUE SOUTH, ISELIN, NEW JERSEY
08830.

<PAGE>

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

BIO-TECHNOLOGY GENERAL CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 1996.

Herbert Conrad, Sim Fass, and Dan Tolkowsky, and each of them, as the true
and lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
common Stock of Bio-Technology General Corp. held of record by the undersigned
on May 1, 1996, at the Annual Meeting of Stockholders to be held at 11:00 A.M.
on Thursday, June 27, 1996, at The Metropolitan Club, 1 East 60th Street, New
York, New York, and at any adjournment thereof. Any and all proxies heretofore
given are hereby revoked.

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WIL BE VOTED FOR
PROPOSAL--ELECTION OF DIRECTORS.

(Continued and to be signed on reverse side)

SEE REVERSE
SIDE

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/X/ Please mark your
votes as in this
example.

FOR WITHHOLD Nominees are:
Proposal-Election Herbert Conrad, Sim Fass, Hoffer Kaback
of Directors / / / / Charles MacDonald, Moses Marx, David
Tendler, Virgil Thompson, Dan Tolkowsky
and Bradford Whitmore.

Discretionary authority is hereby granted with respect to such other matters
as may properly come before the meeting.

FOR all listed nominees (except do not vote for the nominee(s)
whose name(s) appear(s) below:

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SIGNATURE(S) DATE
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IMPORTANT: Please sign exactly as name appears above. Each joint owner shall
sign. Executors, administrators, trustees, etc. should give full
title as such. If signer is a corporation, please give full
corporate name by duly authorized officer. If a partnership, please
sign in partnership name by authorized person. The above-signed
acknowledges receipt of the Notice of Annual Meeting of
Stockholders and the Proxy Statement furnished therewith. PLEASE
MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
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