EMISPHERE TECHNOLOGIES INC, S-3/A, 1997-05-23

EMISPHERE TECHNOLOGIES INC
S-3/A, 1997-05-23
PHARMACEUTICAL PREPARATIONS

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 23, 1997
REGISTRATION NO. 333-23423
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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EMISPHERE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<CAPTION>
DELAWARE 13-3306985
<S> <C>
(State or other jurisdiction of incorporation or (I.R.S. Employer Identification No.)
organization)
</TABLE>

15 SKYLINE DRIVE HAWTHORNE, NEW YORK 10532 (914) 347-2220
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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MICHAEL M. GOLDBERG, M.D.
c/o EMISPHERE TECHNOLOGIES, INC.
15 SKYLINE DRIVE
HAWTHORNE, NEW YORK 10532
(914) 347-2220
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

With a copy to:
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<S> <C> <C>
EDWIN S. MAYNARD, ESQ. M. WARREN BROWNE, ESQ. C. DAVID GOLDMAN, ESQ.
PAUL,WEISS, RIFKIND, WHARTON & GARRISON 25 FIVE PONDS DRIVE McDERMOTT, WILL & EMERY
1285 AVENUE OF THE AMERICAS WACCABUC, NEW YORK 10597 50 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10019-6064 NEW YORK, NEW YORK 10020-1605
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please 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: [_]
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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 THE 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.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

SUBJECT TO COMPLETION, DATED MAY 23, 1997

2,500,000 SHARES

[LOGO]

EMISPHERE TECHNOLOGIES, INC.

COMMON STOCK
(PAR VALUE $.01 PER SHARE)

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Emisphere Technologies, Inc. (the "Company" or "Emisphere") may offer from
time to time shares (the "Shares") of common stock (the "Common Stock") par
value $.01 per share. This Prospectus will be supplemented by one or more
accompanying Prospectus Supplements, which will set forth the number of Shares
of Common Stock and the terms of the offering thereof.

SEE "RISK FACTORS" BEGINNING ON PAGE 6 HEREOF FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.

The Company's Common Stock is quoted on the Nasdaq National Market under the
symbol "EMIS". On May 21, 1997, the last reported bid price of Emisphere's
Common Stock on the Nasdaq National Market was $18.00 per share.

The Company may sell Shares to or through one or more underwriters, and may
also sell Shares directly to other purchasers or through agents. See "Plan of
Distribution." Each Prospectus Supplement will set forth the names of any
underwriters, dealers or agents involved in the sale of the Shares in respect
of which this Prospectus is being delivered, the principal amount, if any, to
be purchased by any such Underwriters, and any applicable fee, commission or
discount arrangements with them.

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

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This Prospectus may not be used to consummate sales of Shares unless
accompanied by a Prospectus Supplement.

The date of this Prospectus is , 1997.
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No dealer, salesman, or other person has been authorized to give any
information or to make any representations other than those contained in or
incorporated by reference in this Prospectus or in the Prospectus Supplement
and, if given or made, such information or representation must not be relied
upon as having been authorized by the Company or any underwriter, agent or
dealer. Neither the delivery of this Prospectus or the accompanying Prospectus
Supplement nor any sale made hereunder shall create, under any circumstances,
an implication that there has been no change in the facts set forth in this
Prospectus or the accompanying Prospectus Supplement, or in the affairs of the
Company since such date. Neither this Prospectus nor the accompanying
Prospectus Supplement constitutes an offer to sell or a solicitation of an
offer to buy securities other than the securities offered hereby, nor do they
constitute an offer to sell or solicitation of an offer to buy any of the
securities offered hereby in any jurisdiction in which such offer or sale is
unlawful or not authorized or in any jurisdiction in which the person making
such offer or solicitation is not qualified to do so.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange Act
and in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information filed by the Company can
be inspected and copied at the public reference facilities maintained by the
Commission at its office at Room 1024, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices located at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of this
material can also be obtained from the Commission's web site at
"http://www.sec.gov" and at prescribed rates from the Public Reference Section
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.

The Company has filed with the Commission a Registration Statement on Form
S-3 (herein, together with all amendments and exhibits referred to as the
"Registration Statement") under the Securities Act of 1993, as amended (the
"Securities Act") with respect to the Shares offered hereby. This Prospectus
does not contain all the information set forth in the Registration Statement
and the exhibits and schedules thereto. For further information with respect
to the Company and the Shares offered hereby, reference is made to the
Registration Statement, exhibits, schedules thereto, and the financial
statements and notes thereto filed or incorporated by reference as a part
thereof, which are on file at the offices of the Commission and may be
obtained upon payment of the fee prescribed by the Commission, or may be
examined without charge at the offices of the Commission. Statements made in
this Prospectus concerning the contents of any document referred to herein are
not necessarily complete and, in each such instance, are qualified in all
respects by reference to the applicable documents filed with the Commission.
The Registration Statement and the exhibits thereto filed by the Company with
the Commission may be inspected and copied at the locations described above.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents heretofore filed by the Company with the Commission
pursuant to the Exchange Act are incorporated by reference in this Prospectus:

(1) Annual Report on Form 10-K for the fiscal year ended July 31, 1996;

(2) Quarterly Report on Form 10-Q for the quarter ended October 31, 1996;

(3) Quarterly Report on Form 10-Q for the quarter ended January 31, 1997,
as amended by Amendment No. 1 thereto on Form 10-Q/A;

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(4) The description of the Company's preferred stock purchase rights
contained in its Registration Statement on Form 8-A, dated March 5,
1996; and

(5) The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A, dated September 11, 1990.

All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock hereunder shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date of the filing of such reports and documents. The Company will provide a
copy of any or all of such documents (exclusive of exhibits unless such
exhibits are specifically incorporated by reference therein), without charge,
to each person to whom this Prospectus is delivered, including any beneficial
owner, upon written or oral request to: Emisphere Technologies, Inc., 15
Skyline Drive, Hawthorne, New York 10532, Attention: Secretary, telephone
(914) 347-2220.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for the purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in or incorporated by reference into this
Prospectus constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company to be materially different from any future results,
performance, or achievements expressed or implied by such forward-looking
statements. Such factors include, among others, the following: uncertainties
related to future test results and viability of the Company's product
candidates, which are in the early stages of development; the need to obtain
regulatory approval for the Company's product candidates; the Company's
dependence on partnerships with pharmaceutical companies to develop,
manufacture and commercialize products using the Company's drug delivery
technologies; the Company's dependence on the success of the Elan Joint
Venture for the development and commercialization of an oral heparin product
and the Lilly Strategic Alliance for the development and commercialization of
certain of Lilly's therapeutic proteins; the risk of technological
obsolescence and risks associated with the Company's highly competitive
industry; the Company's dependence on patents and proprietary rights; the
Company's absence of profitable operations and need for additional capital;
the Company's dependence on others to manufacture the Company's chemical
compounds; the risk of product liability and policy limits of product
liability insurance; potential liability for human clinical trials; the
Company's dependence on key personnel; the quality, judgment and strategic
decisions of management and other personnel; uncertain availability of third-
party reimbursement for commercial medical products; general business and
economic conditions; and other factors referenced in this Prospectus.

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THE COMPANY

OVERVIEW

Emisphere is a drug delivery company focused on the discovery and
application of proprietary synthetic chemical compounds ("carriers") that
enable the oral delivery of therapeutic macromolecules and other compounds
that are not currently deliverable by oral means. To date, the biotechnology
industry has developed therapeutic macromolecules, including proteins, that
are administered by injection. It is expected that research efforts in the
genomics field will accelerate the discovery of new therapeutic proteins. The
Company's carriers enable the transport of therapeutic macromolecules and
other compounds through biological membranes, including intestinal, nasal,
buccal, sublingual, subcutaneous and intraocular membranes.

Emisphere has designed and synthesized a library of potential carriers and
evaluated them for their ability to enable the oral delivery of therapeutic
compounds. The Company has used its carriers to deliver heparin, an
antithrombotic/anticoagulant, orally in humans and to deliver a variety of
compounds, including heparin, insulin, human growth hormone, calcitonin, human
parathyroid hormone, cromolyn and deferoxamine, orally in animals. The Company
believes that total 1995 worldwide sales of the injectable formulations of
these compounds were over $5.0 billion and that the market for these compounds
will expand if they are available in oral form.

RECENT COLLABORATIONS

The Company's strategy is to facilitate the development of products
utilizing its drug delivery technologies by entering into collaboration
agreements with pharmaceutical companies. The Company has entered into a 50/50
joint venture with Elan Corporation plc ("Elan") to develop oral formulations
of heparin products (the "Elan Joint Venture") and has entered into a
strategic alliance with Eli Lilly and Company ("Lilly") for the delivery of
several proteins with a focus in the area of endocrinology (the "Lilly
Strategic Alliance").

The Elan Joint Venture intends to combine Elan's drug delivery and
formulation capabilities with the Company's carrier technologies to research,
develop and market oral formulations of heparin products. Phase I clinical
trial data indicate that the formulation for heparin was tolerated and no
unexpected adverse drug reactions were experienced. The heparin Phase I
clinical trial evidenced the delivery by oral gavage of heparin at clinically
relevant levels. Moreover, the heparin activity in this trial occurred at a
substantially lower relative dose of administered heparin than predicted by
previous animal testing. As of January 31, 1997, Elan has provided $7.5
million to the project of which $4.5 million has been paid in cash to the
Company (including $3.0 million paid by Elan to the Company prior to the
creation of the Elan Joint Venture). In addition, an affiliate of Elan
purchased 600,000 shares of Common Stock of the Company and warrants to
purchase 250,000 additional shares of Common Stock at an exercise price of
$16.25 per share for total consideration of $7.5 million.

The Lilly Strategic Alliance is intended to utilize Emisphere's technologies
for the improved delivery of certain Lilly therapeutic proteins with a focus
on oral delivery. The major therapeutic focus of the collaboration is in the
area of endocrinology, including growth disorders. Initially, Lilly is
committing limited funds to the Company for research on delivery of two
proteins. The Lilly Strategic Alliance contemplates that Lilly may ultimately
exercise options to license the applicable carriers and market the products
utilizing the combined technologies. If the options are exercised, the Company
may receive from Lilly milestone and other payments aggregating, together with
initial funding, up to $60 million, as well as future royalty payments. The
Lilly Strategic Alliance also contemplates that the Company could receive
further payments for other delivery applications if the focus of the Lilly
Strategic Alliance is expanded beyond the two specified therapeutic proteins
or to non-oral applications.

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KEY CHARACTERISTICS OF THE COMPANY'S TECHNOLOGIES

The Company believes that its oral delivery approach may have potential
competitive advantages, including:

. Broad applicability: The Company's carriers are applicable across a
diverse group of molecules (proteins, carbohydrates, peptides and
other poorly absorbed compounds).

. Stand-alone delivery approach: Oral drug delivery using the
Company's carriers does not rely upon the addition of other agents
that can have adverse effects on the intestinal membranes or
digestion process.

. Versatility of formulation: The Company believes that various types
of oral formulations, including suspensions, tablets and capsules,
can be created.

. Ease of manufacture: The technology and manufacturing equipment
required to produce the Company's carrier material in commercial
quantities are readily available.

BUSINESS STRATEGY

The Company's objective is to become a leader in providing orally
administered therapeutic compounds that are not currently deliverable by oral
means. The Company's strategy to achieve its objective incorporates the
following principal elements:

.Identify appropriate therapeutic compounds that address large markets.

.Discover and design improved carriers for the oral delivery of
therapeutic compounds.

.Establish collaborative arrangements with leading pharmaceutical
companies.

.Enhance and protect the Company's proprietary technology base.

.Expand the Company's internal product development capabilities.

The Company's executive offices are located at 15 Skyline Drive, Hawthorne,
New York 10532, and its telephone number is (914) 347-2220.

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RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully before purchasing the
Common Stock offered hereby. This Prospectus contains forward-looking
statements within the meaning of the Securities Act and the Exchange Act. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of the Company, or industry results, to be materially different from any
future results, performance, or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the risk
factors set forth below.

EARLY STAGE OF PRODUCT DEVELOPMENT; UNCERTAINTIES RELATING TO CLINICAL TRIALS

The Company's research and development efforts have not resulted in any
commercial products to date. The Company is not aware of any oral formulation
of a therapeutic macromolecule for systemic delivery that has been approved by
the U.S. Food and Drug Administration (the "FDA"). There can be no assurance
that the Company will be able to develop commercially any product based on its
carrier technologies. All of the Company's product candidates are in the
research or development stage, and there have been no product sales to date.
Operations to date have been funded with the proceeds from collaborative
research agreements, financings and interest income earned on the investment
of these funds. There can be no assurance that product revenues can be
realized on a timely basis, if ever.

A number of companies in the drug delivery, biotechnology and pharmaceutical
industries have suffered significant setbacks in clinical trials, even after
showing promising results in earlier studies or trials. Although the Company
has conducted preclinical studies of certain carriers and carriers in
combination with various therapeutic compounds and has conducted a Phase I
clinical trial for the delivery by oral gavage of heparin, any favorable
results of these studies may not be predictive of results that will ultimately
be obtained in or throughout future clinical trials. There can be no assurance
that results of the Company's limited animal and human studies are indicative
of results which would be achieved in additional animal studies or human
clinical studies, all or some of which will be required with respect to
various of the Company's proposed products before regulatory approval can be
obtained, and there can be no assurance that such approval will be granted.
With the exception of its Phase I clinical trial for heparin, the Company has
not completed any other human clinical trials using its current carriers,
including any trials for the delivery of any therapeutic proteins. The Company
has not yet identified the optimum formulation of carrier for any drug nor has
the Company arrived at a final manufacturing process for a finished product.
Furthermore, it is possible that effective formulation with the Company's
carriers may not be possible for certain drugs. In that event, the Company
would most likely be unable to pursue commercialization arrangements with
respect to those drugs. There can be no assurance that the Company will not
encounter problems in its clinical trials that will cause the Company to delay
or suspend its clinical trials, that the clinical trials will be completed at
all, that such testing will ultimately demonstrate the efficacy of its product
candidates or that any product candidates will receive regulatory approval on
a timely basis, if at all. In addition, certain of the therapeutic compounds
being tested for delivery by the Company's carriers have not yet been
approved. If any such problems occur, the Company could be materially
adversely affected.

NEED FOR REGULATORY APPROVAL OF PRODUCTS

The Company's preclinical studies and clinical trials and the manufacturing
and marketing of its carriers and technologies are subject to extensive,
costly and rigorous regulation by various governmental authorities in the
United States and other countries. The process of obtaining required
regulatory approvals from the FDA and other regulatory authorities often takes
many years, is expensive and can vary significantly based on the type,
complexity and novelty of the product

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candidates. There can be no assurance that any technologies or carriers
developed by the Company, independently or in collaboration with others, will
meet applicable regulatory criteria to receive the required approvals for
manufacturing and marketing. Delays in obtaining United States or foreign
approvals could result in substantial additional costs to the Company and
adversely affect the Company's competitive position. In addition, delays in
obtaining regulatory approvals that may be encountered by corporate
collaborators or other licensees of the Company could adversely affect the
Company's business and prospects. See "Business--Government Regulation".

The Company has neither sought nor received regulatory approval for the sale
of any products in the United States or in any foreign country. The Company
has completed a Phase I clinical trial in the United States for one of its
drug delivery technologies for heparin but there can be no assurance that the
FDA will permit further testing in a timely fashion, if at all. See
"Business--Market Opportunity". Delays or rejections may be encountered for a
number of reasons, including changes in FDA policy during the period of
product development and FDA regulatory review. Similar delays may also be
encountered in other countries. There can be no assurance that even after such
time and expenditures, regulatory approval will be obtained for any products
developed by the Company. If regulatory approval of a product is granted, such
approval may entail limitations on the indicated uses for which the product
may be marketed. Further, even if regulatory approval is obtained, a marketed
product, its manufacturer, and its manufacturing facilities are subject to
continual review and periodic inspections, and later discovery of previously
unknown problems with a product, manufacturer, or facility may result in
restrictions on such product, manufacturer, or facility including withdrawal
of the product from the market. If the Company is unable to obtain regulatory
approvals for product candidates on a timely basis, or if the Company is
unable to continue to be in regulatory compliance, the Company's business and
prospects will be materially adversely affected. See "Business--Government
Regulation".

Any new dosage form of any drug is required to undergo rigorous preclinical
and clinical testing and an extensive review process mandated by the FDA and
equivalent foreign authorities prior to marketing. There can be no assurance
that the Company will develop commercially viable products, that the necessary
regulatory approvals for any of the Company's product candidates will be
obtainable or that, if such approvals are obtainable, they will be forthcoming
on a timely basis. These review and approval processes can take several years
and require the expenditure of substantial resources. See "Business--
Government Regulation".

DEPENDENCE UPON PARTNERSHIPS WITH PHARMACEUTICAL COMPANIES

Revenues from the Company's drug delivery technologies will be dependent
upon the production and sale of products utilizing the Company's technologies.
The Company does not currently possess the ability or resources necessary to
complete on its own the development, testing, regulatory approval process and
commercialization for pharmaceutical products utilizing its drug delivery
technologies and the Company does not currently intend independently to market
products incorporating its technologies in the foreseeable future. It is the
Company's strategy to seek to enter into agreements with pharmaceutical
companies which will assist the Company in developing, testing and obtaining
government approval for, and the marketing and commercialization of, the
various formulations of its drug delivery technologies. Other than the Lilly
Strategic Alliance and the Elan Joint Venture, no commitments or development
agreements are currently in effect. The Company has entered into several
feasibility and other preliminary arrangements with pharmaceutical companies
other than Lilly and Elan, certain of which were terminated due to the
inability of the Company's then-existing technology to meet satisfactory
performance levels and none of which resulted in the development of any
product or the creation of any long-term relationship. There can be no
assurance that the Company will be able to enter into additional collaborative
arrangements with respect to product development utilizing the Company's drug
delivery technologies, that any existing or future collaborative arrangements
will be successful, that milestones in such agreements will be met or that

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the terms of any future development agreements entered into will be favorable
to the Company. If the Company is unable to obtain development assistance and
funds from pharmaceutical companies to fund a portion of its product
development costs and to commercialize products, the Company may have to
delay, scale back or curtail one or more of its activities. In the event no
other pharmaceutical company enters into a development agreement with the
Company, the Company may not have the financial resources to undertake the
necessary research into, or the commercial development of, products.

The Lilly Strategic Alliance and the Elan Joint Venture each presents
certain particular risks to the Company. The Company's agreement with Lilly
provides for an initial research collaboration period of 18 to 24 months. If,
by the end of the research collaboration period, Lilly has not exercised any
of the licensing options set forth in the Lilly agreement, the Lilly Strategic
Alliance will terminate. In addition, because the agreement also provides
Lilly with a right of first refusal with respect to the use of the Company's
technologies for the delivery of certain specified therapeutic proteins and
contemplates the possibility of a continuing relationship for the development
of delivery systems for other therapeutic proteins, other potential
collaborators may be discouraged from negotiating collaboration agreements
with the Company. The Lilly Strategic Alliance does not require Lilly to use
the Company's technologies exclusively and the Company is aware of
collaborations between Lilly and others pursuing non-oral delivery of the same
proteins that are the subject of the Lilly Strategic Alliance. However, the
Lilly Strategic Alliance represents the exclusive vehicle through which the
Company may develop and market orally deliverable products based on the
subject proteins and the Company's carrier technologies.

With respect to the Elan Joint Venture, the Company may not have the
necessary resources to comply with its obligation to satisfy 50% of the Elan
Joint Venture's financial requirements (after exhaustion of the funds
committed by Elan) and the commercialization of the covered products could
likely require significant financial resources that ultimately may not be
available to the Elan Joint Venture. In addition, the failure of the Company
to satisfy its share of the financial requirements of the Elan Joint Venture,
a change of control of the Company or certain disagreements between Elan and
the Company could result in a forced sale by the Company to Elan of the
Company's interest in the joint venture vehicle ("the JV Company"). Further,
because the Elan Joint Venture also provides the JV Company with a right of
first refusal with respect to the use of the Company's technologies for the
delivery of anticoagulant compounds, other potential collaborators may be
discouraged from negotiating collaboration agreements with the Company.

In negotiating development agreements, the Company intends to seek funding
with respect to a portion of development costs necessary to commercialize the
product candidate or candidates to which a development agreement applies. The
Company expects that the parties to development agreements will want the legal
right to abandon a product candidate at any time for any reason without
significant penalty and there can be no assurance that such right will not be
exercised. Further, potential and existing development partners may have no
obligation to deal exclusively with the Company in developing new drug
delivery methods for their drugs and may pursue parallel development of oral
delivery or other drug delivery technologies, on their own or with other
collaborative partners, which may compete with the Company's oral drug
delivery technologies. Moreover, the terms of any future development
agreements, if any, with respect to a particular drug may preclude or restrict
the Company from entering into alternative arrangements with other
pharmaceutical companies for the same or competing drugs.

The Company has no control over the resources and attention devoted by its
partners to the development of a product candidate and, to the extent
resources devoted are limited, the Company may be adversely affected. If any
of the Company's collaborators breaches or terminates its agreement with the
Company or otherwise fails to conduct its collaborative activities in a timely
manner, the

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development or commercialization of the product candidate or research program
under such collaborative agreement may be delayed, and the Company may be
required to devote unforeseen additional resources to continue such
development or commercialization, or terminate such programs. The termination
of collaborative arrangements could have a material adverse effect on the
Company's business, financial condition and results of operations. There can
be no assurance that disputes will not arise in the future with respect to the
ownership of rights to any technology developed with third parties. These and
other possible disagreements between collaborators and the Company could lead
to delays in the collaborative research, development or commercialization of
certain product candidates, or could require or result in litigation or
arbitration, which would be time consuming and expensive and would have a
material adverse effect on the Company's business, financial condition and
results of operations. See "Business--Collaboration Agreements".

HIGHLY COMPETITIVE INDUSTRY AND RISK OF TECHNOLOGICAL OBSOLESCENCE

Drug delivery, biotechnology and pharmaceutical science are evolving fields
in which developments are expected to continue at a rapid pace. The Company's
success depends, in part, upon maintaining a competitive position in the
development of products and technologies in its areas of focus. The Company is
in competition with other drug delivery, biotechnology and pharmaceutical
companies, research organizations, individual scientists and non-profit
organizations engaged in the development of alternative drug delivery
technologies or new drug research and testing, as well as with entities
developing new drugs which may be orally active. The Company is aware that a
number of companies are seeking to develop new products and alternatives to
traditional injectable drug delivery, including, but not limited to,
intranasal delivery, pulmonary systems, transdermal systems, buccal and
sublingual systems, colonic absorption systems, as well as sustained-released
injectable systems. The Company also is aware of other companies currently
engaged in the development and commercialization of oral drug delivery
technologies and enhanced injectable systems. Many of these companies have
greater research and development capabilities, experience, and marketing,
financial and managerial resources than the Company, and represent significant
competition for the Company. Acquisitions of or investments in competing drug
delivery or biotechnology companies by large pharmaceutical companies could
enhance competitors' financial, marketing and other resources. In addition, a
number of these competing drug delivery and biotechnology companies have
entered into collaboration or other agreements with large pharmaceutical
companies which could similarly enhance these competitors' resources.
Accordingly, the Company's competitors may succeed in developing competing
technologies or obtaining regulatory approval for products more rapidly than
the Company. There can be no assurance that developments by others will not
render the Company's product candidates or the therapeutic compounds used in
combination with the Company's product candidates uncompetitive or obsolete.

DEPENDENCE ON PATENTS AND PROPRIETARY RIGHTS

The Company's success, competitive position and future revenues will depend,
in part, on the ability of the Company and its partners to obtain patent
protection in various jurisdictions related to their technologies, processes
and products and to preserve effectively their trade secrets. The Company has
filed, and expects to continue to file, patent applications seeking such
protection. The Company has been granted 12 patents on its drug delivery
technologies in the United States which will expire beginning in 2007, and has
certain patents issued or applications pending in various countries around the
world. Three U.S. patent applications were allowed by the U.S. Patent and
Trademark Office in 1997, including an application relating to the Company's
heparin carrier. The Company has 44 patent applications relating to its drug
delivery technologies pending in the United States, including the allowed
applications and the applications relating to the therapeutic proteins that
are the subject of the Lilly Strategic Alliance. In addition, the Company has
pending or expects to file patent applications corresponding to most of its
U.S. patents and patent applications in various countries around the world.

9
<PAGE>

The Company has applied to have one of its granted U.S. patents reissued in an
attempt to obtain certain broader claims to which the Company believes it was
entitled in the original patent grant. There is no guarantee that the reissue
application will be successful or that the United States Patent and Trademark
Office will not reject all of the patent claims, including those granted in
the original patent. There can be no assurance that any patent applications
existing or relating to the Company's potential products or processes will
result in patents being issued, or that resulting patents, if any, are valid,
enforceable or will provide protection against competitors who successfully
challenge the Company's patents, obtain patents that may have an adverse
effect on the Company's ability to conduct business, or are able to circumvent
the Company's patent position. The Company has conducted database searches to
discover the existence of previous patents and to determine the state of the
art in the field of certain inventions for which patent applications have been
or are to be filed. Database searches are not conclusive however and it is
possible that conflicting patents that were not located in such searches have
been issued and/or that other parties have conducted research or made
discoveries of compounds or processes that preceded the Company's discoveries
and which could prevent the Company from obtaining patent protection, or could
narrow the scope of any protection obtained. There can be no assurance that
the manufacture, use or sale of the Company's product candidates will not
infringe patent rights of others. The Company may be unable to avoid
infringement of those patents and may have to seek a license, defend an
infringement action, or challenge the validity of the patents in court. There
can be no assurance that a license will be available to the Company, if at
all, upon terms and conditions acceptable to the Company or that the Company
will prevail in any patent litigation. Patent litigation is costly and time
consuming, and there can be no assurance that the Company will have sufficient
resources to pursue such litigation. If the Company does not obtain a license
under such patents, is found liable for infringement, or is not able to have
such patents declared invalid, the Company may be liable for significant
monetary damages, may encounter significant delays in bringing products to
market, or may be precluded from participating in the manufacture, use or sale
of products or methods of treatment covered by such patents. There can be no
assurance that the Company has identified or will identify in the future,
United States and foreign patents that pose a risk of infringement.

The Company's strategy involves collaborative arrangements with other
pharmaceutical companies for the development of new formulations of drugs
developed by others and, ultimately, the receipt of royalties on sales of the
new formulations of the drugs. These drugs are generally the property of the
pharmaceutical companies and may be the subject of patents or patent
applications and other forms of protection owned by such pharmaceutical
companies. To the extent such patents or other forms of protection expire,
become invalid or otherwise ineffective or such drugs are covered by patents
or other forms of protection owned by third parties, sales of such drugs by
the collaborating pharmaceutical company may be restricted, limited or
enjoined, or may cease. Accordingly, the potential for royalty revenues to the
Company may be adversely affected.

To protect its proprietary technologies and processes, the Company also
relies in part on maintaining trade secrets protected by confidentiality
agreements with its partners, employees, consultants and certain contractors.
There can be no assurance that the Company's trade secrets are enforceable or
that its confidentiality agreements have not been or will not be breached,
that as a practical matter the Company will have adequate remedies for any
breach, or that the Company's trade secrets will not otherwise become
generally known or be independently discovered by competitors and thus cease
being protected.

ABSENCE OF PROFITABLE OPERATIONS; NEED FOR ADDITIONAL CAPITAL

Since its inception in April 1985, the Company has generated significant
losses from operations and for the foreseeable future the Company anticipates
that it will continue to generate significant losses from operations. At
January 31, 1997, the Company's accumulated deficit was approximately $46.2
million. Operations to date have been funded with the proceeds from
collaborative research

10
<PAGE>

agreements, financings and interest income earned on the investment of these
funds. The Company does not expect to achieve profitability in the foreseeable
future. Profitability in the long term will depend on the Company's ability to
gain regulatory approval for one or more products and to market such products
successfully. See "--Need for Regulatory Approval of Products". The Company
will require substantial additional funding in order to continue its research
and product development programs and preclinical testing and clinical trials
of its product candidates, for operating expenses, for the pursuit of
regulatory approvals of its product candidates, and for establishing
manufacturing and marketing capabilities. While the Company believes that
existing cash, cash equivalents and marketable securities will be sufficient
to satisfy the Company's operating needs for at least the next 12 months,
circumstances could arise which may result in a need to raise additional
capital in the future. The Company has in the past raised additional capital
through public offerings of its Common Stock and private equity financings.
There can be no assurance that additional equity capital will be available on
acceptable terms, or without severe dilution to the existing stockholders, if
at all. If adequate funds are not available, the Company will be required to
delay, scale back or eliminate some or all of its research or development
programs or relinquish rights to certain of its technologies, product
candidates or products that the Company would not otherwise relinquish.

DEPENDENCE ON OTHERS FOR MANUFACTURING OF THE COMPANY'S CHEMICAL COMPOUNDS

The Company currently has no manufacturing facilities for large-scale
clinical or commercial production of any compounds under consideration as
products. The Company is producing some material for research and preclinical
testing and has been supplied with larger lots of compound by contract
manufacturing companies. For the foreseeable future, the Company does not
intend to manufacture its carriers except for the foregoing limited purposes.
If the Company is unable to contract for manufacturing on acceptable terms or
if the Company cannot obtain compounds manufactured on a large scale and in
accordance with specifications on a timely basis or if the contract
manufacturer fails to comply with FDA regulations pertaining to current Good
Manufacturing Practices ("GMP"), the ability to conduct preclinical and human
clinical trials will be adversely affected, resulting in the delay of product
development and submission of products for regulatory approval, which in turn
could materially impair the Company's ability to achieve profitability.

Under the Elan Joint Venture, the Company is obligated to provide the JV
Company with a supply of carriers for the clinical testing program. Moreover,
under the Lilly Strategic Alliance, the Company is obligated to provide a
material portion of the supply of carrier necessary for the production of any
product manufactured pursuant to the Lilly Strategic Alliance. Should the
Company be unable to provide the specific amounts of carrier in the required
time periods, or if the contract manufacturer fails to comply with FDA's
current GMP regulations, delays to the development of any such products could
occur which could materially adversely affect the Company's results.

RISKS OF PRODUCT LIABILITY CLAIMS AND CURRENT LIMIT OF PRODUCT LIABILITY
INSURANCE; POTENTIAL LIABILITY FOR HUMAN CLINICAL TRIALS

The Company has product liability insurance with a policy limit of only $1.0
million per occurrence and $1.0 million for all occurrences and the JV Company
has agreed to maintain product liability insurance with a policy limit to be
determined. The testing, manufacturing and marketing of products for humans
utilizing the Company's drug delivery technologies may expose the Company to
potential product liability and other claims resulting from their use.
Liability may result from claims made directly by consumers or by
pharmaceutical companies or others selling products. Because the Company seeks
to structure future development programs with the intention of developing
commercially viable products for sale or license to pharmaceutical companies
which would complete the development, manufacturing and marketing of the
finished product, the Company intends to rely on indemnity

11
<PAGE>

undertakings by the pharmaceutical companies with regard to liability. There
can be no assurance that the Company will be able to negotiate appropriate
indemnity undertakings with pharmaceutical partners or that indemnity
undertakings will be effective to protect the Company from liability or the
costs of product liability litigation. While the Company may obtain additional
product liability insurance if management determines that such insurance is
desirable, there can be no assurance that the Company will apply for, or be
able to obtain, insurance on acceptable terms, or that insurance, if obtained,
would be adequate to fully protect the Company against any potential
liability. In the event of a successful suit against the Company, if the
Company does not have adequate product liability insurance coverage, the
Company will be materially adversely affected.

In addition to product liability risks associated with sales of products,
the Company may be liable for the claims of individuals who participate in
human clinical trials of its products. The Company intends to have human
clinical trials conducted by pharmaceutical partners, and the Company will
seek to have these partners indemnify the Company for claims arising out of
the trials. There can be no assurance that the Company will be able to
negotiate appropriate indemnity undertakings with pharmaceutical partners or
that indemnity undertakings will be effective to protect the Company from
liability or the costs of product liability litigation. While the Company has
obtained, and will seek, waivers of liability from all persons who
participated or may in the future participate in human clinical trials
conducted by or on behalf of the Company, there can be no assurance that
waivers will be effective to protect the Company from liability or the costs
of product liability litigation. In the event of a successful suit against the
Company, if the Company does not have adequate product liability insurance
coverage, the Company will be materially adversely affected.

DEPENDENCE ON KEY PERSONNEL

The Company's success depends upon the continued contributions of its
executive officers and scientific and technical personnel. During the
Company's operating history, many key responsibilities within the Company have
been assigned to a relatively small number of individuals. The competition for
qualified personnel is intense, and the loss of services of certain key
personnel could adversely affect the business of the Company. In particular,
the loss of the services of, among others, Michael M. Goldberg, M.D., the
Company's Chairman of the Board and Chief Executive Officer, or Sam J.
Milstein, Ph.D., the Company's President and Chief Scientific Officer, could
have a material adverse effect on the Company's operations. The Company has
employment agreements through July 31, 2000 with each of Drs. Goldberg and
Milstein and has obtained key man life insurance in the amount of $1.0 million
on the lives of each of Drs. Goldberg and Milstein.

UNCERTAIN AVAILABILITY OF THIRD-PARTY REIMBURSEMENT

The Company's commercial success could depend in part on the availability of
reimbursement from third-party payors such as government health administration
authorities, private health insurers and other organizations. Third-party
payors are increasingly challenging the price and cost-effectiveness of
medical products and services. Significant uncertainty exists as to the
reimbursement status of newly approved health care products. If the Company
succeeds in bringing products to market, there can be no assurance that the
Company's products will be considered by third-party payors to be cost
effective or outcome effective or that adequate third-party reimbursement will
be available to enable the Company to maintain price levels sufficient to
realize an appropriate return on its investment in product development.
Legislation and regulations affecting the pricing of pharmaceuticals may
change before the Company's proposed products are approved for marketing and
any such changes could further limit reimbursement for medical products.

POSSIBLE ADVERSE IMPACT ON HOLDERS OF COMMON STOCK; ANTITAKEOVER PROVISIONS

There exist a number of factors that could have the effect of delaying,
deferring or preventing a change in control of the Company, may discourage
bids for the Common Stock at a premium over the market price of the Common
Stock, and may, as a result, adversely effect the market price of the

12
<PAGE>

Common Stock. Such factors include: contractual provisions with Elan and Lilly
that prohibit (subject to certain exceptions) each from acquiring shares of
the Company's outstanding voting stock above certain specified levels; certain
antitakeover provisions contained in the Company's Certificate of
Incorporation and By-laws, certain provisions of Delaware law and the
Company's stockholder rights plan that are each designed to prevent any
unsolicited acquisitions; and the fact that a change in control of the Company
would constitute a default under the Elan Joint Venture Agreement with
potential adverse effects on the Company.

POTENTIAL VOLATILITY OF STOCK PRICE

The market prices for securities of drug delivery, biotechnology and
pharmaceutical companies, including the Company's Common Stock, have
historically been highly volatile and the market has from time to time
experienced significant price and volume fluctuations that are unrelated to
the operating performance of particular companies. Factors such as
fluctuations in the Company's operating results, announcements of
technological collaborations, innovations or new products by the Company or
its competitors, governmental regulation, developments in patent or other
proprietary rights, public concern as to the safety of drugs developed by the
Company or others and general market conditions may have a significant effect
on the market price of the Common Stock. The Company's securities are subject
to a high degree of risk and volatility. Investors should be aware that other
investment opportunities, such as interest-bearing obligations, may result in
a higher yield on investment and be less subject to fluctuation and risk of
loss than an investment in the Company's Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE; EFFECT OF OUTSTANDING OPTIONS AND WARRANTS

The issuance of freely tradeable Common Stock upon the exercise of stock
options and warrants, as well as future sales of Common Stock by existing
stockholders, or the perception that sales could occur, could adversely affect
the market price of the Common Stock.

As of May 16, 1997, the Company had outstanding options and warrants to
purchase up to 4,193,669 shares of Common Stock which are exercisable over the
next several years, giving the holders of such options and warrants an
opportunity to profit from a rise in the market price of the Company's Common
Stock with a resulting dilution in the interests of the other stockholders.
The terms on which the Company may obtain additional financing during the
period when such options and warrants are exercisable may be adversely
affected by the existence of such options and warrants.

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<PAGE>

USE OF PROCEEDS

SPECIAL NOTE: CERTAIN STATEMENTS UNDER THIS CAPTION "USE OF PROCEEDS",
CONSTITUTE "FORWARD-LOOKING STATEMENTS" UNDER THE SECURITIES ACT AND EXCHANGE
ACT. SEE "RISK FACTORS" AND "SPECIAL NOTE REGARDING FORWARD-LOOKING
STATEMENTS".

Unless a Prospectus Supplement indicates otherwise, the net proceeds to be
received by the Company from the issue and sale from time to time of the
Shares will be added to the general funds of the Company to be used to finance
the Company's operations and for other general corporate purposes. Pending
such application, such net proceeds may be invested in short-term investment
grade marketable securities. Each Prospectus Supplement will contain specific
information concerning the use of proceeds from the sale of Shares to which it
relates.

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<PAGE>

BUSINESS

SPECIAL NOTE: CERTAIN STATEMENTS UNDER THIS CAPTION "BUSINESS" CONSTITUTE
"FORWARD- LOOKING STATEMENTS" UNDER THE SECURITIES ACT AND THE EXCHANGE ACT.
SEE "RISK FACTORS" AND "SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS".

OVERVIEW

Emisphere is a drug delivery company focused on the discovery and
application of proprietary carriers that enable the oral delivery of
therapeutic macromolecules and other compounds that are not currently
deliverable by oral means. To date, the biotechnology industry has developed
therapeutic macromolecules, including proteins, that are administered by
injection. It is expected that research efforts in the genomics field will
accelerate the discovery of new therapeutic proteins. The Company's carriers
enable the transport of therapeutic macromolecules and other compounds through
biological membranes, including intestinal, nasal, sublingual, subcutaneous
and intraocular membranes.

RECENT COLLABORATIONS

The Company's strategy is to facilitate the development of products
utilizing its drug delivery technologies by entering into collaboration
agreements with pharmaceutical companies. The Company has entered into the
Elan Joint Venture to develop oral formulations of heparin products and has
entered into the Lilly Strategic Alliance for the delivery of several
proteins, with a focus in the area of endocrinology.

15
<PAGE>

BUSINESS STRATEGY

. Identify appropriate therapeutic compounds that address large
markets.

. Discover and design improved carriers for the oral delivery of
therapeutic compounds.

. Establish collaborative arrangements with leading pharmaceutical
companies.

. Enhance and protect the Company's proprietary technology base.

. Expand the Company's internal product development capabilities.

THE DRUG DELIVERY INDUSTRY

Companies involved in drug delivery are seeking to enhance the use of
therapeutic agents by expanding the available dosage forms. Traditional drug
delivery companies develop technologies that control the release of drugs.
Examples of products in this category include transdermal patches and tablets
for drugs that can be taken once-a-day versus multiple daily dosing.

There is an emerging group of drug delivery companies, including the
Company, developing novel technologies that offer alternatives to such dosage
forms. These companies are seeking technologies to increase the potential for
therapeutics that have not been commercially developed, used effectively or
successfully marketed because of limited practical means of administration.
For example, macromolecules such as proteins or other poorly absorbed
therapeutics currently are mainly administered by injection.

ORAL DRUG DELIVERY

The Company believes that the market for orally administered pharmaceuticals
represents the largest product segment of the pharmaceutical industry and that
the potential market for many drugs could be significantly expanded if novel
delivery systems are developed for therapeutics that are currently available
only as injectable drugs. The Company believes that oral administration would
represent the preferred modality of delivery for many pharmaceuticals,
including a broad range of biotechnology derived therapeutics and drugs that
require chronic dosing.

The three main barriers to effective oral drug delivery for humans are:

. Degradation of Drugs by Acid and Enzymes: The high acid content and
the enzyme activity of the digestive tract can degrade some drugs
well before they reach the site of absorption into the bloodstream.
All natural and recombinant peptides, as well as certain compounds
with carbohydrate and lipid components, are susceptible to this
degradation, limiting the commercial potential for these compounds.

. Poor Absorption of Drugs Through Epithelium Tissue: Many
macromolecules and polar compounds cannot effectively traverse the
cells of the epithelium in the small intestine to reach the
bloodstream. Thus, some drugs with beneficial medicinal properties
are often limited to injectable formulations, which may not be
commercially viable for the treatment of chronic disease because of
poor patient compliance. Development and commercialization of many
macromolecules and other poorly absorbed compounds may become
practical with an effective new delivery system.

. Transition of Drugs to Insoluble Form at Acidic pH: Many drugs
become insoluble at the low pH encountered in the digestive tract.
Since only the soluble form of the drug can be absorbed into the
bloodstream, the transition of the drug to the insoluble form can
significantly reduce the amount absorbed.

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<PAGE>

EMISPHERE'S DRUG DELIVERY TECHNOLOGIES

The core of the Company's delivery technology is the design and synthesis of
compounds that maximize the transport of drugs across biological membranes. The
Company's technologies exploit the properties of supramolecular complexes,
which are formed when two or more compounds are held together in a discrete
geometry by relatively weak molecular interactions. A supramolecular complex
will have a number of properties that are measurably different from its
constituent parts. Many of the drugs that are currently used to treat diseases
must be administered by injection due to their inability to survive the
environment of the gastrointestinal tract and/or to be transported from the
gastrointestinal tract. The Company believes that the supramolecular complexes
formed when its proprietary compounds are formulated with many injectable drugs
renders them transportable from the gastrointestinal tract to the blood in
quantities that are clinically useful and commercially attractive. The Company
believes that certain conformations of some drugs appear to render them
transportable across biological membranes. The Company believes that an
effective carrier significantly increases the population of naturally occurring
transportable conformations of the drug to be delivered. The Company has
identified characteristics of supramolecular complexes that it believes
correlate with in vivo performance.

The Company has synthesized a library of well-defined, proprietary carrier
compounds that are single molecular entities which can form supramolecular
complexes with a diverse array of injectable therapeutics. These "carrier"
molecules vary widely in their chemical structure, solubility, hydrophobicity,
electrostatic and other physical/chemical properties. The Company believes
that, in many cases, an individual therapeutic agent will require its own
unique carrier for optimal oral delivery. Based upon an individual
therapeutic's characteristics, the Company seeks to identify the optimal
carrier by in vitro and in vivo screening of the Company's expanding library of
carrier compounds. The Company believes that technologies are available that
could allow high throughput synthesis and in vitro screening of carrier
compounds, thereby reducing the time required for identifying the optimal
carrier for a given injectable therapeutic.

On the basis of the limited clinical and preclinical trials to date, the
Company believes that its oral drug delivery technologies have the potential to
achieve the key properties essential for effective and reproduceable effective
oral drug delivery, including: (i) absorption of the drug in an effective
manner, (ii) consistent release of the drug into the bloodstream, (iii) lack of
toxicity and (iv) maintenance of the biological effects of the drug.

The Company believes that the supramolecular complex formed by the Company's
carriers and certain therapeutic compounds may have applications in the
delivery of drugs through other biological membranes, including intestinal,
nasal, buccal, sublingual, subcutaneous and intraocular membranes.

Key Characteristics of the Company's Technologies

The Company believes that its oral delivery approach may have potential
competitive advantages, including:

. Broad applicability: The Company's carriers are applicable across a
diverse group of molecules (proteins, carbohydrates, and peptides and
other poorly absorbed compounds).

. Stand-alone delivery approach: Oral drug delivery using the Company's
carriers does not rely upon addition of other agents that can have
adverse effects on the intestinal membranes or digestion process.

. Versatility of formulation: The Company believes that various types
of oral formulations, including suspensions, tablets and capsules,
can be created.

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<PAGE>

. Ease of manufacture: The technology and manufacturing equipment
required to produce the Company's carrier material in commercial
quantities are readily available.

MARKET OPPORTUNITY

The table below lists a representative sample of product candidates for
which the Company has demonstrated oral delivery in mammals using its carrier
technologies.

<TABLE>
<CAPTION>
ESTIMATED 1995 PRIMARY
PRODUCT CANDIDATE WORLDWIDE SALES(/1/) INDICATIONS
----------------- -------------------- -----------
<S> <C> <C>
Heparins $900 million Clotting Disorders
Insulin $1.8 billion Diabetes
Human Growth Hormone $850 million Growth Disorders
Calcitonin $675 million Osteoporosis
Human Parathyroid Hormone (in clinical trials) Osteoporosis
(analogues)
Cromolyn $800 million Asthma/Allergy
Deferoxamine $ 35 million Iron Overload
</TABLE>

--------
(/1/) Based upon data from IMS Global Services.

Because the terms of the Lilly Strategic Alliance require the Company to
keep confidential the identity of the compounds that are the subject of the
Lilly Strategic Alliance, the information below is provided without giving
effect to the Lilly Strategic Alliance. For a description of the Lilly
Strategic Alliance, see "--Collaboration Agreements--Eli Lilly".

Therapeutic Macromolecules

Heparin. Heparin is a widely used anticoagulant/antithrombotic drug
prescribed primarily for cardiovascular conditions, including acute myocardial
infarction, coronary angioplasty, coronary artery bypass graft, pulmonary
embolus, stroke, unstable angina and deep vein thrombosis ("DVT").

The Elan Joint Venture has completed a Phase I clinical trial with a liquid
oral heparin preparation and intends to pursue additional clinical trials with
an initial focus on prophylaxis and treatment of DVT patients. The Company
believes that its oral heparin product will ultimately be applicable for a
wide range of anticoagulant/antithrombotic uses and that an oral alternative
may significantly expand the overall heparin market, currently constrained by
injectable-only administration.

In March 1996, the Company submitted an investigational new drug ("IND")
application for an oral liquid formulation of heparin to the FDA for review.
In order to prepare the IND, the Company engaged in preclinical testing which
included, among other things, (i) maximum tolerated dosing experiments, (ii)
acute and subacute toxicity testing, (iii) a pharmacological screen, (iv)
mutagenicity testing, (v) dosing preparation stability analysis, and (vi)
absorption, distribution, metabolism, excretion (ADME) studies. The results of
these tests demonstrated, in part, that the carriers dosed at quantities
substantially greater than the quantities that the Company proposed to
administer to humans (i) caused no damage to intestinal tissue, (ii) produced
no pharmacological activity on its own, (iii) was not sequestered in any body
tissue, and (iv) caused no genetic alterations. The IND was prepared based on
the compilation of these preclinical testing results.

After the required thirty day waiting period had expired, the Company began
its double-blind, controlled Phase I clinical trial. The trial involved 30
human subjects and approximately 100 exposures

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<PAGE>

and consisted of three parts: (1) escalating doses of carrier only; (2)
escalating doses of carrier with a fixed dose of heparin; and (3) escalating
doses of heparin with a fixed dose of the carrier. Each dose was administered
by oral gavage because taste-masking had not yet been undertaken and because
it was desirable to control more precisely the dose delivered to the stomach.
Oral delivery was measured in all of the limited number of subjects who
participated in part 3 who received heparin by measuring blood clotting times
(activated partial thromboplastin time or APTT), serum levels of anti-factor
IIa and Xa, and lipoprotein-associated coagulation inhibitor (LACI) assays.
The heparin activity in this trial occurred at a substantially lower relative
dose of administered heparin than predicted by previous animal testing. A
summary of the study results was presented at the American Heart Association
meeting in November 1996 and a paper about the Phase I clinical trial has been
submitted to a peer reviewed publication. There can be no assurance that the
FDA will approve the intended additional trials or that the limited trial
results to date are predictive of future results. Substantial additional
trials will be required. No assurance can be given that the Company's
formulation of oral heparin, if approved, will be approved for all indications
of heparin or only certain indications.

Since completion of the Phase I clinical trial, taste-masking of the
Company's heparin carrier has been completed. In addition, the Company also
has initiated a conceptual design and site selection program to engineer a
manufacturing facility for the production of its carrier compound. Fluor
Daniel, Inc., a leading engineering design and construction company, has been
retained to conduct this program for the Company.

Therapeutic Protein and Peptide Products

Among the protein and peptide products to which the Company is seeking to
apply its carriers are insulin, calcitonin, human growth hormone and
parathyroid hormone analogues. All of these products, with the exception of
the parathyroid hormone analogues (in clinical development), are currently
being marketed as injectable products.

Insulin. Studies performed by groups such as the Diabetes Control and
Complications Trial Research Group (the DCCT Research Group) have shown that
the risk of degenerative complications can be greatly reduced if people with
Type I diabetes (insulin dependent diabetes) lower their average blood-glucose
toward the concentrations typical for non-diabetic individuals. However, a
patient needs to inject insulin several times per day in order properly to
regulate his glucose. This level of compliance is difficult to achieve with an
injectable formulation of insulin and the Company believes an oral formulation
would increase compliance. Emisphere has demonstrated that its lead carrier
for insulin is able to achieve therapeutic utility through oral delivery in a
diabetic rat model comparable to that obtained following subcutaneous
injection of the compound in the same model. However, there can be no
assurance that the results achieved in rodents are predictive of future test
results in humans. Substantial additional testing will be required.

Human Growth Hormone. While a number of new indications are being explored,
the majority of human growth hormone sold is used to treat children with
growth deficiencies. The current preferred dosing regimen in children entails
daily injections for up to 10 years or more.

The Company's lead carriers for recombinant human growth hormone have been
tested in rodents and non-human primates and the tests indicated oral delivery
of therapeutic drug levels was achieved in these animals. In addition, growth
studies conducted in animal models have demonstrated that the drug is active
after delivery to the blood when the drug is dosed with the Company's carrier
into the gastrointestinal tract when compared to subcutaneous delivery. There
can be no assurance that test results achieved in rodents and non-human
primates are predictive of future results in humans. Substantial additional
testing will be required.

Calcitonin. Osteoporosis is a disease that afflicts many post-menopausal
women and older men. Calcitonin is used to treat osteoporosis as an injectable
solution or nasal spray. The Company has

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<PAGE>

demonstrated the oral delivery of therapeutic drug levels of calcitonin in
non-human primates. There can be no assurance that test results achieved in
non-human primates are predictive of future results in humans. Substantial
additional testing will be required.

Human Parathyroid Hormone. Currently, a number of pharmaceutical companies
are in various stages of clinical testing to determine whether certain
analogues of human parathyroid hormone (hPTH) are effective in reducing the
bone fractures which are associated with osteoporosis. The Company has
demonstrated oral delivery of three different hPTH analogues in non-human
primates. There can be no assurance that the results of tests in non-human
primates are predictive of results in humans. Substantial additional testing
will be required.

Poorly Absorbed Organic Compounds

The majority of pharmaceutical products are small organic molecules.
Pharmaceutical companies often identify biologically active compounds that
cannot be delivered orally due to poor absorption. The Company believes that
its carriers may be useful for oral delivery of such compounds.

Cromolyn. Cromolyn is a mast cell stabilizer used in the treatment of asthma
and allergies. The Company demonstrated oral delivery of cromolyn in rodents.
There can be no assurance, however, that such results are predictive of
results in humans. Substantial additional testing will be required.

Deferoxamine. Deferoxamine ("DFO") is the only approved iron chelator for
use in treating iron overload resulting from frequent blood transfusions in
the treatment of illnesses such as beta thalassemia and sickle cell anemia.
Currently, dosing involves a 12-hour subcutaneous infusion 5 days per week.
The Company has demonstrated oral delivery of therapeutic levels of DFO in
non-human primates. There can be no assurance that test results achieved in
non-human primates are predictive of future results in humans. Substantial
additional testing will be required.

Vaccines

The Company is exploring the applicability of its carriers for humans and
animals in the field of vaccines. The Company has conducted experiments with a
number of antigens. The results of dosing rodents orally with antigens
combined with the Company's carriers were an increased secretory
Immunoglobulin A (sIgA) response, increased Immunoglobulin G (IgG) response
and CD4 T-cell proliferation. These results indicate that oral vaccination may
be possible using the Company's carriers. There can be no assurance that test
results achieved in rodents are predictive of future results in humans.
Substantial additional testing will be required.

COLLABORATION AGREEMENTS

The Company's strategy is to facilitate the development of products
utilizing its drug delivery technologies by entering into collaboration
agreements with pharmaceutical and biotechnology companies that have the
financial, scientific and marketing resources to fund development of specific
products through clinical trials, to obtain regulatory approval, to
manufacture the final products in commercially viable quantities and to market
the products through their sales and marketing organizations.

The Company is currently having discussions with a number of pharmaceutical
companies regarding potential applications of the Company's drug delivery
technologies for their proprietary drugs. There can be no assurance, however,
that any agreements will be consummated as a result of these discussions, that
any resulting agreements will yield revenues to the Company, that any such
companies will pursue product development until a commercial product is
achieved or that, once achieved, any such companies will continue to produce
and sell the product and pay royalties to the Company.

20
<PAGE>

Eli Lilly. In February 1997, the Company and Lilly entered into a Research
Collaboration and Option Agreement (the "Lilly Agreement") to combine Lilly's
therapeutic protein and formulation capabilities with the Company's carrier
technologies.

The Lilly Agreement provides initially for payments to the Company to fund a
research and development program (the "Program") to study the use of the
Company's technologies to develop oral and non-oral methods of delivering
formulations of two of Lilly's therapeutic proteins (the "Subject Proteins")
in the area of endocrinology, including growth disorders. The Lilly Agreement
represents the vehicle through which Lilly and the Company may together
develop and market orally deliverable products based on the Subject Proteins
and the Company's carrier technologies (the "Lilly Products"). The initial
term of the Program is 18 months, which term will be extended automatically
for an additional six months unless the Company and Lilly agree not to extend
the term. Any extensions beyond 24 months must be approved by the Company and
Lilly. If Lilly decides to expand the scope of the Program, payments will be
increased.

Pursuant to the Lilly Agreement, the Company has granted to Lilly a series
of options (the "Options"), each to acquire an exclusive, worldwide license to
use the Company's technologies to develop one of the Lilly Products. Options
relating to the two Subject Proteins expire from one to two years from the
date of the Lilly Agreement, subject to certain extensions. Lilly's exercise
of the Options as to one of the Subject Proteins is mandatory upon
satisfaction of specified conditions. During the respective option periods,
the Company has agreed not to license its technologies to anyone other than
Lilly for the purpose of delivering the Subject Proteins.

Upon exercise of an Option, the Company and Lilly will enter into a license
agreement (each a "License Agreement") granting Lilly a license to use the
Company's technologies to develop Lilly Products to deliver the Subject
Protein by a particular route of delivery. The Lilly Agreement and the License
Agreements will provide for payments of initial fees and milestone payments of
up to $60 million in the aggregate as well as royalty payments if a Lilly
Product to which the License Agreement relates is sold commercially. The
License Agreements will further provide that Lilly is obligated to seek to
market the Lilly Products and that the Company is obligated to provide a
material portion of the supply of carrier necessary for the production of any
such Lilly Products.

The Lilly Agreement further provides Lilly with a right of first refusal to
make an offer to enter into a license to use the Company's technologies for
the delivery of a limited number of other therapeutic proteins and peptides,
or, after the expiration of the option period, for the delivery of the Subject
Proteins (if not already licensed). The right of first refusal allows Lilly to
obtain the license if it exceeds a third party offer by a specified premium.
The right of first refusal expires on February 26, 1998, subject to certain
rights to extend. The Lilly Agreement also contemplates the possibility of a
continuing relationship for the development of delivery systems for other
therapeutic proteins.

Under the Lilly Agreement, the Company will own all patents, patent
applications, and other proprietary expertise relating to its technologies
that it develops as well as any material Lilly improvements or additions to
the Company's technologies, and Lilly will own all patents, patent
applications and other proprietary expertise relating to the therapeutic uses
of its proteins (to the extent invented during the Program). If Lilly makes
recommendations, suggestions or has discussions with the Company that result
in a material addition to or improvement of the Company's technologies, then
Lilly may, in certain circumstances, obtain limited preferences with respect
to licenses for Emisphere technology covering Lilly proteins or products not
included in the Lilly Products.

In addition, the Lilly Agreement includes a standstill provision pursuant to
which Lilly has agreed, with certain exceptions, not to acquire shares of the
Company's outstanding voting stock above a specified limit during a period
ending less than five years from the date of the Lilly Agreement. See "Risk
Factors--Dependence Upon Partnerships With Pharmaceutical Companies" and "--
Possible Adverse Impact on Holders of Common Stock; Antitakeover Provisions".

21
<PAGE>

Elan Corporation plc. In September 1996, the Company entered into the Elan
Joint Venture to combine Elan's drug delivery and formulation capabilities
with the Company's carrier technologies to research, develop and market oral
formulations of heparin and heparinoids. The Company believes that there are
significant synergies between Emisphere's novel technologies and Elan's
development and formulation expertise. As of January 31, 1997, Elan has
provided $7.5 million to the project of which $4.5 million has been paid in
cash to Emisphere (excluding certain amounts due to the Company for work
performed to date).

The JV Company is an Irish corporation, the equity of which is owned 50% by
the Company and 50% by Elan. The Company and Elan have equal representation on
the Board of Directors of the JV Company.

The key provisions of the Elan Joint Venture structure include: (i) the
grant by the Company to the JV Company of an exclusive, worldwide license of
the Company's carrier technology for new dosage forms of heparin and
heparinoids (the "Field"); (ii) the grant by Elan to the JV Company of an
exclusive, worldwide license of its formulation technology for the Field;
(iii) the grant by the Company to the JV Company of a right of first refusal
to license the Company's carrier technology to commercialize additional
anticoagulant compounds other than heparin and heparinoids; (iv) the grant by
the Company and Elan to the JV Company of exclusive royalty-free licenses to
use their respective trademarks in connection with products in the Field; (v)
the requirement for the Company and Elan to make contributions in equal
portions to the extent needed to fund the JV Company's financial requirements;
and (vi) the sharing by the Company and Elan of the financial benefits and
expense obligations of the Elan Joint Venture on a 50/50 basis, although there
are certain limited circumstances under which Elan has a $4.5 million limited
preference over the Company in returns from the Elan Joint Venture.

Whenever commercially or technically feasible, the JV Company will contract
with the Company or Elan to perform research and development services on
behalf of the JV Company. The Company and Elan will be reimbursed by the JV
Company for all such research and development work at the conclusion of each
stage of the research and development program.

If the JV Company elects to proceed with commercialization of any product
candidate, the parties anticipate that the Company will enter into a supply
agreement pursuant to which it will sell carriers to the JV Company and that
Elan or one of its affiliates will enter into a supply agreement with the JV
Company for the commercial production of the product candidate by Elan on
behalf of the JV Company. Such supply agreements would be on customary
commercial terms and negotiated in good faith by the parties. The Company
shall also supply the JV Company with such carriers as are required by the JV
Company for its research and development programs. Unless otherwise agreed by
Elan and the Company, the supply of the carriers for the research and
development programs shall be at cost so long as the Company holds at least a
45% equity interest in the JV Company.

Upon the occurrence of an event of default in the Elan Joint Venture
agreement, the non-defaulting shareholder will be entitled to make an offer to
purchase the defaulting shareholder's interest in the JV Company. The
defaulting shareholder will then be obliged to sell its interest to the non-
defaulting shareholder at the offered price or to make a counteroffer to
purchase the non-defaulting shareholder's interest at a price that is at least
10% higher than the previous offer. Each side may make one additional
counteroffer provided its offer is at least 10% higher, as adjusted, than the
previous offer. The Elan Joint Venture also provides the JV Company with a
right of first refusal with respect to the use of the Company's technologies
for the delivery of anticoagulant compounds.

Pursuant to an agreement between the Company and Elan International Services
Ltd. ("Elan International"), the affiliate of Elan that purchased 600,000
shares of Common Stock and warrants to

22
<PAGE>

acquire 250,000 additional shares of Common Stock, Elan International and Elan
have agreed, subject to certain exceptions, not to acquire additional shares
of the Company's voting securities until September 26, 2001. During the term
of such agreement, Elan International and its affiliates have the opportunity,
in the event the Company issues and sells voting securities, to purchase newly
issued voting securities in an amount that would enable Elan International and
its affiliates to own the same percentage of the Company's voting securities
as it owned before such issuance and sale. Accordingly, Elan International and
its affiliates will have the opportunity to purchase an amount of shares of
Common Stock in this offering such that its percentage of Common Stock will
not be diluted by this offering. See "Risk Factors--Dependence Upon
Partnerships With Pharmaceutical Companies" and "--Possible Adverse Impact on
Holders of Common Stock; Antitakeover Provisions".

PATENTS

The Company's strategy is to apply for patent protection on all aspects of
its proprietary chemical and pharmaceutical delivery technologies, including
materials and compositions of matter for both the carrier and complexes of a
carrier with a pharmaceutical or chemical agent, processes for manufacturing
the carrier, new carriers, uses of the carriers and improvements on its core
technology that are important for the success of the Company's business.

The Company has patents or pending patent applications for carriers
currently used by the Company to deliver heparin, insulin, calcitonin, human
parathyroid hormone, human growth hormone, interferon alpha, deferoxamine and
cromolyn. The Company has been granted 12 patents on its drug delivery
technologies in the United States which will expire beginning in 2007, and has
certain patents issued or applications pending in various countries around the
world. Three U.S. patent applications were allowed by the U.S. Patent and
Trademark Office in 1997, including an application relating to the Company's
heparin carrier. The Company has 44 patent applications relating to its drug
delivery technologies pending in the United States, including the allowed
applications and the applications relating to the therapeutic proteins that
are the subject of the Lilly Strategic Alliance. In addition, the Company has
pending or expects to file patent applications corresponding to most of its
U.S. patents and patent applications in various countries around the world.
The Company has applied to have one of its granted U.S. patents reissued in an
attempt to obtain certain broader claims to which the Company believes it was
entitled in the original patent grant.

Although the Company has patents for some of its product candidates and has
applied for additional patents, there can be no assurance that patents applied
for will be granted, that patents granted to or acquired by the Company now or
in the future will be valid and enforceable and provide the Company with
meaningful protection from competition or that the Company will possess the
financial resources necessary to enforce any of its patents. There can also be
no assurance that any products developed by the Company (or a licensee) will
not infringe upon any patent or other intellectual property right of a third
party.

The Company also relies upon trade secrets, know-how and continuing
technological advances to develop and maintain its competitive position. To
maintain the confidentiality of trade secrets and proprietary information, the
Company maintains a policy of requiring employees, Science Advisory Board
members, consultants and collaborators to execute confidentiality and
invention assignment agreements upon commencement of a relationship with the
Company. These agreements are designed both to enable the Company to protect
its proprietary information by controlling the disclosure and use of
technology to which it has rights and to provide for ownership in the Company
of proprietary technology developed at the Company. There can be no assurance,
however, that these agreements will provide meaningful protection for the
Company's trade secrets in the event of unauthorized use or disclosure of such
information. See "Risk Factors--Dependence on Patents and Property Rights".

23
<PAGE>

MANUFACTURING

An important step in taking a pharmaceutical product from preclinical
research to the marketplace is scaling up the process required to produce
commercial quantities. This process frequently entails custom design and
engineering that can add significantly to the costs of goods.

The primary raw materials used in making the carriers currently under
consideration by the Company for its new formulations are non-alpha amino
acids and other organic compounds. The Company currently produces these
carriers in batch sizes of up to two hundred grams. The Company has no
internal capability for the production of any of these carriers in larger
batch sizes. A third-party manufacturer whose facility complies with the FDA's
GMP regulations was recently successful in scaling up production of the
Company's carrier for its heparin Phase I clinical trial. See "Risk Factors--
Dependence on Others for Manufacturing of the Company's Chemical Compounds"
and "--Collaboration Agreements".

The Company is conducting feasibility studies for engineering and location
of its own manufacturing facility. The Company believes that there are
multiple sources for the raw materials used to synthesize its carriers. The
Company has identified numerous commercial manufacturers meeting the FDA's GMP
regulations that have the capability of producing the Company's carriers. The
Company will continue to manufacture carriers on a small scale for research
purposes and contract out with third-party producers for clinical testing.
Once the engineering studies for the Company's production facility are
completed, the Company would be in a position to decide whether to make or buy
the carriers for future needs. See "Use of Proceeds".

COMPETITION

Based on the preliminary results obtained with Emisphere's proprietary
carriers in its oral heparin Phase I clinical trial, the Company believes that
it has developed a strong competitive position with respect to the development
of a new oral anticoagulant/antithrombotic. Drug delivery, biotechnology and
pharmaceutical science are evolving fields in which developments are expected
to continue at a rapid pace. The Company's success depends, in part, upon
maintaining a competitive position in the development of products and
technologies in its areas of focus. The Company is in competition with other
drug delivery, biotechnology and pharmaceutical companies, research
organizations, individual scientists and non-profit organizations engaged in
the development of alternative drug delivery technologies or new drug research
and testing, as well as with entities developing new drugs which may be orally
active. The Company is aware that a number of companies are seeking to develop
new products and alternatives to injectable drug delivery, including, but not
limited to, intranasal delivery, pulmonary systems, transdermal systems and
colonic absorption systems. The Company also is aware of other companies
currently engaged in the development and commercialization of oral drug
delivery technologies and enhanced injectable systems. Many of these companies
and entities have substantially greater research and development capabilities,
experience and marketing, financial and managerial resources, and represent
significant competition for the Company. Acquisitions of or investments in
competing biotechnology companies by large pharmaceutical companies could
enhance competitors' financial, marketing and other resources. In addition, a
number of these competing drug delivery and biotechnology companies have
entered into collaboration or other agreements with large pharmaceutical
companies which could similarly enhance these competitors' resources.
Accordingly, the Company's competitors may succeed in developing competing
technologies and obtaining governmental approval for products more rapidly
than the Company. There can be no assurance that developments by others will
not render the Company's product candidates or the therapeutic compounds used
in combination with the Company's product candidates noncompetitive or
obsolete.

24
<PAGE>

GOVERNMENT REGULATION

The Company's operations and products under development are subject to
extensive regulation by the FDA and other governmental authorities in the
United States and other governmental authorities in other countries.

The duration of the governmental approval process for marketing new
pharmaceutical substances, from the commencement of preclinical testing to the
receipt of a governmental final letter of approval for marketing a new
substance, varies with the nature of the product and with the country in which
such approval is sought. For entirely new drugs, the approval process could
take five years or more; however, for reformulations of existing drugs, the
process is typically shorter. In either case, the procedures required to
obtain governmental approval to market new drug products is a costly and time-
consuming process requiring rigorous testing of the new drug product. There
can be no assurance that even after such time and expenditures, regulatory
approval will be obtained for any products developed by the Company.

The steps required before a new human pharmaceutical product can be marketed
or shipped commercially in the United States include, in part, preclinical
testing, the filing of an IND, the conduct of clinical trials and the filing
with the FDA of either a New Drug Application ("NDA") for drugs or a Product
License Application ("PLA") for biologics.

In order to conduct the clinical investigations necessary to obtain eventual
regulatory approval, an applicant must file an IND with the FDA to permit the
shipment and use of the drug for investigational purposes. The IND sets forth,
in part, the results of preclinical (laboratory and animal) toxicology and
efficacy testing and the applicant's plans for clinical (human) testing. If
the FDA does not deny the exemption to ship or use the investigative drug or
place a "hold" on clinical testing within 30 days of the submission of the
IND, it becomes effective and clinical testing may begin.

Under the FDA's regulations, the clinical testing program required for
marketing approval of a new drug typically involves a three-phase process. In
Phase I, safety studies are conducted on normal, healthy human volunteers to
determine the maximum dosages and side effects associated with increasing
doses of the substance being tested. In Phase II, studies are conducted on
small groups of patients afflicted with a specific disease to gain preliminary
evidence of efficacy and to determine the common short-term side effects and
risks associated with the substance being tested. Phase III involves large-
scale studies conducted on disease-afflicted patients to provide statistical
evidence of efficacy and safety and to provide an adequate basis for physician
labeling. Frequent reports are required in each phase and, if unwarranted
hazards to subjects are found, the FDA may request modification or
discontinuance of clinical testing until further preclinical work has been
done. Additional testing (Phase IV) may be conducted after FDA approval is
granted and would be designed to evaluate alternative utilizations of drug
products prior to their being marketed for such additional utilizations. Phase
IV testing is often similar to Phase II evaluation of efficacy testing using a
carefully selected clinical population.

Once clinical testing has been completed pursuant to an IND, the applicant
files an NDA or PLA with the FDA seeking approval for marketing the drug
product. The FDA reviews the NDA or PLA to determine if the drug is safe and
effective, and adequately labeled, and if the applicant can demonstrate proper
and consistent manufacture of the drug. The time required for FDA action on an
NDA or PLA varies considerably, depending on the characteristics of the drug,
whether the FDA needs more information than is originally provided in the NDA
or PLA and whether the FDA finds problems with the evidence submitted.

The facilities of each company involved in the manufacturing, processing,
testing, control and labeling must be registered with and approved by the FDA.
Continued registration requires compliance

25
<PAGE>

with GMP regulations. The FDA conducts periodic establishment inspections to
confirm continued compliance with its regulations.

The Company is subject to the regulation of the United States Department of
Labor, Occupational Safety and Health Administration ("OSHA"). In a June 1995
OSHA audit of the Company, the Company was cited for violations of OSHA
regulations involving storage of materials, training and documentation of
policies and procedures. In addition, numerous matters (not amounting to
violations) were noted which require additional attention by the Company. As a
result, the Company was fined a small amount which was not material to the
Company. The Company has since taken steps to ensure compliance with all
applicable OSHA regulations and believes that its current operations and
procedures comply in all material respects with OSHA regulations.

The Company is also subject to various federal, state and local laws,
regulations and recommendations relating to such matters as laboratory and
manufacturing practices and the use, handling and disposal of hazardous or
potentially hazardous substances used in connection with the Company's
research and development work. Although the Company believes it is in
compliance with these laws and regulations in all material respects, there can
be no assurance that the Company will not be required to incur significant
costs to comply with environmental and other laws or regulations in the
future.

EMPLOYEES

As of May 15, 1997, the Company had 54 employees, 40 engaged in scientific
research and technical functions and 14 performing administrative and clerical
functions. Of the 54 employees, 16 hold Ph.D. or M.D. degrees. The Company
believes that its relationship with its employees is good.

26
<PAGE>

MANAGEMENT

DIRECTORS AND OFFICERS

Set forth below is certain information regarding the officers and directors
of the Company. [UPDATE AGES]

<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
---- --- -------------------------
<C> <C> <S>
Michael M. Goldberg, M.D. 38 Chairman of the Board of Directors
and Chief Executive Officer
Sam J. Milstein, Ph.D. 48 Director, President, Chief
Scientific Officer and Secretary
Robert A. Baughman, Jr., Pharm D. Ph.D. 47 Senior Vice President and Director
of Development
Lewis H. Bender, M.B.A. 38 Senior Vice President of Business
Development
Joseph D. Poveromo, C.P.A. 33 Controller and Chief Accounting
Officer
John E. Smart, Ph.D. 53 Vice President, Director of
Research
Lilian S. Stern, Esq. 39 Vice President, Corporate Planning
and Investor Relations
Jere E. Goyan, Ph.D. 66 Director
Mark I. Greene, M.D., Ph.D. 48 Director and member of Scientific
Advisory Board
Peter Barton Hutt, Esq. 62 Director
Howard M. Pack 78 Director
Joseph R. Robinson, Ph.D. 58 Director and member of Scientific
Advisory Board
</TABLE>

MICHAEL M. GOLDBERG, M.D. has served as Chairman of the Board of Directors
since November 1991 and as Chief Executive Officer and a director of the
Company since August 1990. In addition, Dr. Goldberg served as President from
August 1990 to October 1995. Dr. Goldberg received a B.S. degree from
Rensselaer Polytechnic Institute and an M.D. from Albany Medical College of
Union University in 1982 and an M.B.A. from Columbia University Graduate
School of Business in 1985.

SAM J. MILSTEIN, PH.D. has been with the Company since September 1990, as a
director and Chief Scientific Officer since November 1991, as President since
October 1995, as Secretary since December 1990 and as a Co-Director of Science
and of Research and Development prior to November 1991. In addition, Dr.
Milstein served as Executive Vice President from November 1990 to October
1995. Dr. Milstein received a B.S. degree from The City College of New York in
1970, an M.S. in physical chemistry from the University of New Brunswick in
1975 and a Ph.D. in biochemistry from New York University in 1980.

ROBERT A. BAUGHMAN, JR., PHARM. D., PH.D. has been with the Company since
September 1991, as Senior Vice President since September 1993, Director of
Development since June 1994 and Vice President and Director, Research and
Development of the Company prior thereto. Dr. Baughman received a B.S. degree
from Loyola University in 1974, a Pharm.D. from the University of California,
San Francisco in 1978 and a Ph.D. in pharmaceutical chemistry from the
University of California, San Francisco in 1982.

LEWIS H. BENDER, M.B.A. has been with the Company since 1993, as Senior Vice
President of Business Development since April 1997, Vice President of Business
Development since October 1995 and as Director of Business Development prior
thereto. Mr. Bender received a B.S. degree in 1981 and an M.S. in chemical
engineering in 1982 from the Massachusetts Institute of Technology, an M.A. in
international studies from the University of Pennsylvania and an M.B.A. from
the University of Pennsylvania, Wharton School of Management in 1993.

27
<PAGE>

JOSEPH D. POVEROMO, C.P.A., Controller and Chief Accounting Officer of
Emisphere since July of 1994, and has been with the Company since 1993. Prior
thereto, he was Controller of a private pet food company and held senior
accounting positions with the public accounting firms of Marshall Granger &
Company and Rayfield & Licata. Mr. Poveromo received a B.B.A. degree in public
accounting from Pace University in 1987 and was awarded his C.P.A. in February
1991.

JOHN E. SMART, PH.D. joined the Company in 1996 as Vice President, Director
of Research. He received his Ph.D. in biochemistry and biophysics from the
California Institute of Technology and has over 20 years experience in
academia and the health care industry. He was most recently the Vice President
of Research at Creative Biomolecules, Inc. a biopharmaceutical company.

LILIAN S. STERN, ESQ. has been with the Company since July 1996. From
October 1990 to July 1996, she served as Director of Investor Relations at
Burns, McClellan, an investor relations firm specializing in biopharmaceutical
companies and from May 1995 through July 1996 served, in addition, as
Executive Vice President and Chief Operating Officer of such firm. Ms. Stern
received an A.B. in molecular biology from Cornell University in 1980 and a
J.D. from Harvard Law School in 1983.

JERE E. GOYAN, PH.D. is President, Chief Operating Officer, and a director
of Alteon, Inc., a development stage pharmaceutical company, where he started
as Senior Vice President Research and Development in January 1993. Prior
thereto he was a Professor of Pharmacy and Pharmaceutical Chemistry and the
Dean of the School of Pharmacy at the University of California, San Francisco,
and has served in various other academic, administrative and advisory
positions, including that of Commissioner of the FDA. He currently serves as a
director of the biopharmaceutical companies Atrix Laboratories Inc., SciClone
Pharmaceuticals and Boehringer Ingelheim.

MARK I. GREENE, M.D., PH.D. has served as a director of the Company since
October 1995 and has been Professor of Medicine, Department of Pathology,
School of Medicine at the University of Pennsylvania for more than the past
five years.

PETER BARTON HUTT, ESQ. has for more than the past five years been a partner
of the law firm of Covington & Burling in Washington, D.C., where he
specializes in the practice of food and drug law. He currently serves as a
director of the biopharmaceutical companies IDEC Pharmaceuticals, Inc., Cell
Genesys, Inc., Interneuron Pharmaceuticals, Inc., Vivus Inc. and Sparta
Pharmaceuticals, Inc.

HOWARD M. PACK has served as a director of the Company since its inception
in April 1985 and served as Executive Vice President of Finance from the
Company's inception until October 1988. For more than five years until
November 1992, Mr. Pack served as Chairman of the Board for Seatrain Lines,
Inc., a cargo company that filed a consent to an involuntary petition for
reorganization under the Federal Bankruptcy Code in February 1981 and a plan
of complete liquidation under Chapter 7 thereof in November 1992.

JOSEPH R. ROBINSON, PH.D. has been Professor of Pharmacy and Ophthalmology
at the University of Wisconsin for more than the past five years. He currently
serves as a director of Cima Laboratories, Inc., a pharmaceutical company.

28
<PAGE>

SCIENTIFIC ADVISORY BOARD

The Company's scientific advisors consult with the Company on developments
relating to current and future forms of drug delivery technology, chemistry,
gastro-intestinal physiology and protein structure. As a group, the scientific
advisors possess substantial experience in biomaterials, controlled release
and polymeric delivery systems, proteins, liposomes, microencapsulation,
pharmaceutics, analytical techniques and immunology. The scientific advisors
also consult with the Company on aspects of drug delivery product planning and
feasibility studies and assist Company scientists in establishing research
priorities, provide guidance for the Company's clinical evaluation programs,
advise Company scientists of new developments and alert the Company to
potential collaborators. In addition, the Company has funded various research
projects and collaborations with a number of its Scientific Advisory Board
members and it intends to continue to expand its scientific collaborations
with current and future Scientific Advisory Board members. None of the
scientific advisors are employees of the Company. Scientific advisors devote
only a small portion of their time to the affairs of the Company and have
other commitments to, or consulting or advisory contracts with, other
institutions which may compete with their obligations to the Company. The
Company requires each of its scientific advisors to execute a confidentiality
agreement upon the commencement of his or her relationship with the Company.
The agreements generally provide that all confidential information made known
to the individual during the term of the relationship shall be the exclusive
property of the Company and shall be kept confidential and not disclosed to
third parties except in specified circumstances. Scientific advisors receive
annual compensation, are reimbursed for their expenses for each meeting
attended and are granted stock options on a case-by-case basis. Drs. Greene
and Robinson also serve as directors of the Company. See "--Directors and
Officers".

Set forth below are the names, positions and areas of expertise of
individuals on the Company's Scientific Advisory Board.

<TABLE>
<CAPTION>
NAME AND POSITION AREA OF EXPERTISE
- ----------------- -----------------
<S> <C>
Raymond J. Bergeron, Ph.D. Drug design, polyamines and chemotherapeutics
Professor of Chemistry,
Department of Medicinal Chemistry,
College of Pharmacy
University of Florida
Mark I. Greene, M.D., Ph.D. Monoclonal antibodies, immunology
Professor of Medicine,
Department of Pathology,
School of Medicine
University of Pennsylvania
Raphael M. Ottenbrite, Ph.D. Synthesis and structure of polymers
Professor of Chemistry
Department of Chemistry and
High Technology Materials Division,
Virginia Commonwealth University
Joseph R. Robinson, Ph.D. Mucoadhesives, pharmaceutics and gastrointestinal
Professor, School of Pharmacy physiology
University of Wisconsin
Ernest Freire, Ph.D. Protein chemistry, analytical techniques and calorimetry
Professor
Johns Hopkins University
</TABLE>

29
<PAGE>

PLAN OF DISTRIBUTION

The Company may offer and sell the Shares to or through underwriters or
dealers, and also may offer and sell Shares directly to other purchasers or
through agents.

Each Prospectus Supplement will set forth the terms of the offering of the
Shares to which the Prospectus Supplement relates, including the name or names
of any underwriters, dealers or agents, the purchase price or prices of the
Shares, the proceeds to the Company from the sale of such Shares, the use of
such proceeds, any initial public offering price or purchase price of such
Shares, any underwriting discount or commission, any discounts, concessions or
commissions allowed or reallowed or paid by any underwriters to other dealers,
any commissions paid to any agents and the securities exchanges, if any, on
which such Shares will be listed. Any initial public offering price or
purchase price and any discounts, concessions or commissions allowed or
reallowed or paid by any underwriter to other dealers may be changed from time
to time.

Sales of Shares offered pursuant to any Prospectus Supplement may be
effected from time to time in one or more transactions on the Nasdaq National
Market, or in negotiated transactions or any combination of such methods of
sale, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices, or at other negotiated prices.

In connection with the sale of Shares, underwriters or agents may receive
compensation from the Company or from purchasers of 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 and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of Shares may be deemed to be underwriters, and any discounts or
commissions received by them from the Company and any profit on the resale of
Shares by them may be deemed to be underwriting discounts and commissions
under the Securities Act. Any such underwriter or agent will be identified,
and any such compensation received from the Company will be described, in the
applicable Prospectus Supplement.

Under agreements which may be entered into by the Company, underwriters and
agents who participate in the distribution of Shares may be entitled to
indemnification by the Company against certain liabilities, including
liabilities under Canadian and United States securities legislation.

The Company may grant underwriters who participate in the distribution of
Shares an option to purchase additional Shares to cover over-allotments, if
any.

The place and date of delivery for the Shares in respect of which this
Prospectus is being delivered will be set forth in the applicable Prospectus
Supplement.

Certain of the underwriters and their affiliates may from time to time
perform various commercial banking and investment banking service for the
Company, for which customary compensation is received.

LEGAL MATTERS

Certain legal matters relating to the validity of the Common Stock offered
hereby will be passed upon for the Company by Paul, Weiss, Rifkind, Wharton &
Garrison, New York, New York. Certain legal matters will be passed upon for
the underwriters, if any, by McDermott, Will & Emery, New York, New York, or
by the counsel named in the Prospectus Supplement.

30
<PAGE>

EXPERTS

The financial statements and financial statement schedule, as of July 31,
1996 and 1995 and for each of the three years in the period ended July 31,
1996, included in the Company's Annual Report on Form 10-K for the year ended
July 31, 1996, incorporated by reference in this Prospectus, have been
incorporated herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

The statements included in this Prospectus under the captions "Risk
Factors--Dependence on Patents and Proprietary Rights" and "Business--
Patents," to the extent they relate to statements of law, description of
statutes, licenses, patents, patent applications, rules or regulations or
legal conclusions, have been reviewed and approved by Darby & Darby, P.C., New
York, New York, patent counsel for the Company, as experts on such matters,
and are included herein in reliance upon that review and approval.

31
<PAGE>

PART II

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the estimated expenses in connection with the
offering described in this Registration Statement. The Company has agreed to
pay all of the costs and expenses of this offering.

<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 17,915
National Association of Securities Dealers, Inc. Filing Fee...... 6,412
Nasdaq National Market Listing Fee............................... 17,500
Printing and Engraving Costs..................................... 75,000
Legal Fees and Expenses.......................................... 400,000
Accounting Fees and Expenses..................................... 100,000
Miscellaneous.................................................... 8,173
--------
Total............................................................ $625,000
========
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145(a) of the General Corporation Law of the State of Delaware
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 (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 or enterprise,
against expenses, 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 cause to believe his conduct was
unlawful.

Section 145(b) 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 or suit by or in the right of the corporation to
procure a judgment in its favor by reason of the fact that such person acted
in any of the capacities set forth above, against expenses actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted under similar standards, except that no
indemnification may be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the court in which such action or suit was
brought shall determine that despite the adjudication of liability, such
person is fairly and reasonably entitled to be indemnified for such expenses
which the court shall deem proper.

Section 145 further provides that to the extent a director or officer of a
corporation has been successful in the defense of any action, suit or
proceeding referred to in subsections (a) and (b) or in the defense of any
claim, issue, or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith, that
indemnification provided for by Section 145 shall not be deemed exclusive of
any other rights to which the indemnified party may be entitled; and that the
corporation may purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not the corporation would have the power to indemnify him against
such liabilities under such Section 145.

II-1
<PAGE>

Section 102(b)(7) of the General Corporation Law provides that a corporation
in its original certificate of incorporation or an amendment thereto validly
approved by stockholders may eliminate or limit personal liability of members
of its board of directors or governing body for breach of a director's
fiduciary duty. However, no such provision may eliminate or limit the
liability of a director for breaching his duty of loyalty, failing to act in
good faith, engaging in intentional misconduct or knowingly violating a law,
paying a dividend or approving a stock repurchase which was illegal, or
obtaining an improper personal benefit. A provision of this type has no effect
on the availability of equitable remedies, such as injunction or rescission,
for breach of fiduciary duty. The Company's Restated Certificate of
Incorporation contains such a provision.

The Company's Certificate of Incorporation and By-laws provide that the
Company shall indemnify officers, directors, employees and agents of the
Company, to the full extent permitted by and in the manner permissible under
the laws of the State of Delaware. The Certificate of Incorporation and By-
Laws also permit the Board of Directors to authorize the Company to purchase
and maintain insurance against any liability asserted against any director,
officer, employee or agent of the Company arising out of his capacity as such.
The Company has obtained such directors' and officers' insurance insuring,
subject to certain conditions, its directors and officers against certain
liabilities.

Any Underwriting Agreement will provide for indemnification by the
Underwriters of the Company, its directors and officers, and persons who
control the Company within the meaning of Section 15 of the Securities Act for
certain liabilities.

ITEM 16. EXHIBITS.

<TABLE>
<C> <S>
1.1*** Form of Underwriting Agreement.
4.1 Certificate of Incorporation of the Company, as amended (incorporated
by reference to Exhibit 3(i) and Exhibit 3(ii) of Registration
Statement on Form S-18, Registration No. 33-25759, Exhibit 3.1.2 of
Registration Statement on Form S-1, Registration No. 33-40061, and
Exhibit 3.1 of Registration Statement on Form S-3, Registration No.
33-53676).
4.2 By-laws of the Company (incorporated by reference to Exhibit 3.1 to
the Quarterly Report on Form 10-Q/A (Amendment No. 1) for the quarter
ended January 31, 1997 (File No. 1-10615).
4.3 Rights Agreement, dated as of February 23, 1996, by and between
Emisphere Technologies, Inc. and Continental Stock Transfer & Trust
Company, as Rights Agent (incorporated by reference to Exhibit 4 of
the Company's Current Report on Form 8-K dated March 5, 1996).
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
23.1* Consent of Paul, Weiss, Rifkind, Wharton & Garrison (contained in
Exhibit 5.1).
23.2* Consent of Darby & Darby, P.C.
23.3** Consent of Coopers & Lybrand L.L.P.
24.1* Power of Attorney.
</TABLE>
- --------
* Previously filed.

** Replaces previously filed exhibit.

*** Subsequent to the effective date of this Registration Statement, to be
filed by amendment or incorporated herein by reference.

II-2
<PAGE>

ITEM 17. UNDERTAKINGS.

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:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;

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

(iii) 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.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the registration statement is on Form S-3 or Form S-8 and the
information required to be included in a post- effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, 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.

(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.

The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended (the
"Securities Act") each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (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.

The undersigned registrant hereby undertakes that:

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

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

II-3
<PAGE>

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 Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
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-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, 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 Amendment No. 2
to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City and State of New York on the 22nd day
of May, 1997.

Emisphere Technologies, Inc.

/s/ Michael M. Goldberg
By___________________________________
Michael M. Goldberg, M.D. Chairman
of the Board and Chief Executive
Officer

Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 2 to the Registration Statement has been signed by the following persons
in the capacities and on May , 1997.

SIGNATURE TITLES DATE

/s/ Michael M. Goldberg Chairman of the
- ------------------------------------- Board and Chief May 22, 1997
MICHAEL M. GOLDBERG, M.D. Executive Officer
(Principal
Executive Officer)

Controller and Chief
Accounting Officer May 22, 1997
(Principal
* Financial and
- ------------------------------------- Accounting Officer)
JOSEPH D. POVEROMO

* President, Chief
- ------------------------------------- Scientific Officer May 22, 1997
SAM J. MILSTEIN, PH.D. and Director

* Director
- ------------------------------------- May 22, 1997
PETER BARTON HUTT, ESQ.

* Director
- ------------------------------------- May 22, 1997
JERE E. GOYAN, PH.D.

II-5
<PAGE>

SIGNATURE TITLES DATE

* Director
- ------------------------------------- May 22, 1997
MARK I. GREENE, M.D., PH.D.

* Director
- ------------------------------------- May 22, 1997
HOWARD M. PACK

* Director
- ------------------------------------- May 22, 1997
JOSEPH R. ROBINSON, PH.D.

* By /s/ Michael M. Goldberg
- -------------------------------------
MICHAEL M. GOLDBERG
ATTORNEY-IN-FACT

II-6
<PAGE>

EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. EXHIBIT
----------- -------
<C> <S>
1.1*** Form of Underwriting Agreement.
4.1 Certificate of Incorporation of the Company, as amended
(incorporated by reference to Exhibit 3(i) and Exhibit 3(ii) of
Registration Statement on Form S-18, Registration No. 33-25759,
Exhibit 3.1.2 of Registration Statement on Form S-1, Registration
No. 33-40061, and Exhibit 3.1 of Registration Statement on Form S-
3, Registration No. 33-53676).
4.2 By-laws of the Company (incorporated by reference to Exhibit 3.1
to the Quarterly Report on Form 10-Q/A (Amendment No. 1) for the
quarter ended January 31, 1997 (File No. 1-10615).
4.3 Rights Agreement, dated as of February 23, 1996, by and between
Emisphere Technologies, Inc. and Continental Stock Transfer &
Trust Company, as Rights Agent (incorporated by reference to
Exhibit 4 of the Company's Current Report on Form 8-K dated March
5, 1996).
5.1* Opinion of Paul, Weiss, Rifkind, Wharton & Garrison.
23.1* Consent of Paul, Weiss, Rifkind, Wharton & Garrison (contained in
Exhibit 5.1).
23.2* Consent of Darby & Darby, P.C.
23.3** Consent of Coopers & Lybrand L.L.P.
24.1* Power of Attorney.
</TABLE>
- --------
* Previously filed.

** Replaces previously filed exhibit.

*** Subsequent to the effective date of this Registration Statement, to be
filed by amendment or incorporated herein by reference.

<PAGE>

[COOPERS & LYBRAND LETTERHEAD]

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in the registration statement
of Emisphere Technologies, Inc. (the "Company") on Form S-3 (Amendment No. 2)
(File No. 333-23423) of our report dated October 4, 1996, on our audits of the
financial statements and financial statement schedule of the Company as of
July 31, 1996 and 1995, and for each of the three years in the period ended
July 31, 1996, which report is included in the Company's Annual Report on Form
10-K for the year ended July 31, 1996. We also consent to the reference to our
firm under the caption "Experts."

/s/ Coopers & Lybrand L.L.P.

New York, New York

May 22, 1997