ENDOREX CORP, S-2, 1998-01-21

ENDOREX CORP
S-2, 1998-01-21
PHARMACEUTICAL PREPARATIONS

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-2
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
-----------------
ENDOREX CORP.
(Exact name of small business issuer as specified in its charter)
-----------------
DELAWARE 41-1505029
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

900 NORTH SHORE DRIVE
LAKE BLUFF, ILLINOIS 60044
(847) 604-7555
(Address, including zip code, and telephone number,
including area code, of small business issuer's principal executive offices)
-----------------
DAVID G. FRANCKOWIAK
CONTROLLER/TREASURER
ENDOREX CORP.
900 North Shore Drive
Lake Bluff, Illinois 60044
(847) 604-7555
(Name, address, including zip code, and
telephone number, including area code,
of agent for service of process)
-----------------
COPIES TO:
RICHARD R. PLUMRIDGE, ESQ.
JOHN A. CALVO, ESQ.
BROBECK, PHLEGER & HARRISON LLP
1633 Broadway
New York, New York 10019

Approximate date of commencement of proposed sale to the public: As
soon as practicable after this Registration Statement becomes effective.

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 the registrant elects to deliver its latest annual report to
security holders or a complete and legible facsimile thereof, pursuant to
Item 11(a)(1) of this form, check the following box. X
---
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering.
---
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering.
---
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
---

CALCULATION OF REGISTRATION FEE
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Title of each Class of Proposed Maximum Offering Proposed Maximum Amount of
Security being registered Amount being Registered Price Per Share(1) Aggregate Offering Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock,
$.001 par value 8,648,716 Shares $6.3125 $54,595,020 $16,106
Common Stock,
$.001 par value, 2,162,162 Shares $6.3125 $13,648,648 $ 4,026
underlying warrants
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</TABLE>

(1) Estimated pursuant to Rule 457(c) solely for the purpose of computing
the registration fee based upon the average of the bid and asked
prices of the Common Stock, as reported on the OTC Bulletin Board on
January 14, 1998.
---------------
The Small Business Issuer hereby amends this Registration Statement on such
date or dates as may be necessary to delay its effective date until the
Small Business Issuer shall file a further amendment which specifically
states that this Registration Statement shall thereafter become effective
in accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said section 8(a), may determine.
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<PAGE>

PROSPECTUS
10,810,879 Shares
ENDOREX CORP.
Common Stock

This Prospectus relates to the public offering (the "Offering") by
certain Selling Shareholders (as hereinafter defined), which is not being
underwritten, of up to 10,810,879 shares of Common Stock, par value $.001
per share (the "Common Stock"), of Endorex Corp. ("Endorex Corp." or the
"Company"). Of the shares being registered for resale by the Selling
Stockholders, 8,648,716 shares of Common Stock (the "Private Placement
Shares") have been issued to certain Selling Stockholders under an
exemption from registration under the Securities Act of 1933, as amended
(the "Securities Act"), and 2,162,162 shares of Common Stock (the "Warrant
Shares") are issuable by the Company to certain Selling Stockholders under
an exemption from registration under the Securities Act upon the exercise
of outstanding warrants (each, a "Warrant"). The Private Placement Shares
and the Warrant Shares (collectively, the "Shares") may be offered by the
holders of the Private Placement Shares and by current holders of the
Warrants who subsequently exercise such warrants (collectively, the
"Selling Stockholders").

Sales of the Shares by the Selling Stockholders may be made from time
to time, pursuant to this Prospectus or Rule 144 under the Securities Act
(or any other applicable exemption from registration under the Securities
Act), in one or more transactions, including block transactions, in the
over-the-counter market, on any exchange or quotation system on which the
Common Stock may be admitted for trading (collectively, "Exchanges"),
pursuant to and in accordance with the applicable rules of the Exchanges,
in negotiated transactions or in a combination of any such methods of sale,
at fixed prices that may be changed, at market prices prevailing at the
time of sale, at prices related to such prevailing market prices or at
negotiated prices. The Shares may be offered directly, to or though agents
designated from time to time, or to or through brokers or dealers, or
through any combination of such methods of sale. Such agents, brokers or
dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Stockholders and/or the purchasers of the
Shares for whom such broker-dealers may act as agents or to whom they sell
as principals, or both (which compensation as to a particular broker-dealer
might be in excess of customary commissions). A member firm of an Exchange
may be engaged to act as a Selling Stockholder's agent in the sale of
Shares by such Selling Stockholder. To the extent required, specific
information regarding the Shares will be set forth in an accompanying
Prospectus Supplement. See "Selling Stockholders" and "Plan of
Distribution."

None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. Upon the issuance to the
Selling Stockholders under an exemption from registration under the
Securities Act of all of the Warrant Shares, the Company could receive
aggregate proceeds of up to $5,500,000 (assuming an exercise price of
$2.54375, which is subject to adjustment under certain circumstances). See
"Issuance of the Warrant Shares and Use of Proceeds." The Company has
agreed to bear the expenses (other than selling commissions and fees and
expenses of certain advisors to the Selling Stockholders) in connection
with the registration of the Shares. The Company has agreed to indemnify
certain of the Selling Stockholders and their affiliates against certain
liabilities, including liabilities under the Securities Act. Certain of the
Selling Stockholders have agreed to indemnify the Company and its
affiliates against certain liabilities, including liabilities under the
Securities Act under certain circumstances.

AN INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 4.

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

The Common Stock of the Company is traded on the OTC Bulletin Board
under the symbol "ENDR." The last reported bid and asked prices of the
Company's Common Stock on the OTC Bulletin Board on January 14, 1998 were
$6.00 and $6.625 per share, respectively.

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

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.

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

THE DATE OF THIS PROSPECTUS IS JANUARY 21, 1998

<PAGE>

No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection
with the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the
Company, any Selling Stockholder or by any other person. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is
correct as of any time subsequent to the date hereof. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy the
Shares to any person or by anyone in any jurisdiction in which such offer
or solicitation may not lawfully be made.

AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-2 under the Securities Act
(the "Registration Statement") with respect to the Common Stock offered
hereby. This Prospectus does not contain all of the information set forth
in the Registration Statement and the exhibits and the schedules thereto.
For further information with respect to the Company and such Common Stock,
reference is made to the Registration Statement and exhibits and schedules
thereto. Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and,
with respect to any contract or other document filed as an exhibit to the
Registration Statement, each such statement is qualified in all respects by
reference to such exhibit. Copies of the Registration Statement and the
exhibits thereto are on file at the offices of the Commission and may be
obtained upon payment of the prescribed fee or may be examined without
charge at the public reference facilities of the Commission described
below.

The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files annual and quarterly reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected, and copies of such material may be obtained
upon payment of the prescribed fees, at the Commission's Public Reference
Section , Room 1024, 450 Fifth Street, N.W., Washington D.C. 20549, as well
as at the Commission's Regional Offices at Seven World Trade Center, New
York, New York 10048, and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material can be obtained
in person from the Public Reference Section of the Commission at its
principal office located at 450 Fifth Avenue, N.W., Washington, D.C. 20549,
upon payment of the prescribed fees. In addition, the Commission has a Web
site on the World Wide Web at http://www.sec.gov, containing registration
statements, reports, proxy and information statements, and other
information that registrants, such as the Company, file electronically with
the Commission.

The Common Stock of the Company is traded on the OTC Bulletin Board.
Reports, proxy statements and other information concerning the Company may
be inspected at the National Association of Securities Dealers, Inc. at
1735 K Street, N.W., Washington, D.C. 20006.

INFORMATION INCORPORATED BY REFERENCE

The following documents filed with the Commission are incorporated by
reference in their entirety in this Prospectus and shall be deemed to be
part hereof: the Annual Report of the Company on Form 10-KSB for the
transition period from February 1, 1996 to December 31, 1996, as amended by
Amendments No. 1 and No. 2 (as amended, the "1996 Form 10-KSB"), the
Quarterly Report of the Company on Form 10-QSB for the fiscal quarter ended
March 31, 1997, the Quarterly Report of the Company on Form 10-QSB for the
fiscal quarter ended June 30, 1997, the Quarterly Report of the Company on
Form 10-QSB for the fiscal quarter ended September 30, 1997, as amended by
Amendment No. 1, the Current Report of the Company on Form 8-K as filed
January 27, 1997, as amended on February 10, 1997 and February 21, 1997,
the Current Report of the Company on Form 8-K as filed on February 26,
1997, as amended on March 5, 1997, and the Current Report of the Company on
Form 8-K as filed on January 6, 1998. No other report has been filed by
the Company since the end of the transition period ended December 31, 1996.

The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by
reference (other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such document). Requests for
such documents should be submitted in writing to the Secretary, Endorex
Corp., 900 North Shore Drive, Lake Bluff, Illinois 60044.

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<PAGE>

This Prospectus is accompanied by a copy of the Company's 1996 Form
10-KSB. This Prospectus shall be accompanied by a copy of the Company's
Form 10-KSB, together with any amendments thereto, filed with the
Commission for each subsequent fiscal year of the Company during the
duration of this Offering and by a copy of the Company's Proxy Statement
used for the solicitation of stockholders for each subsequent annual
meeting of stockholders held during the duration of this Offering.

The Company shall deliver without charge to each person to whom this
Prospectus is delivered a copy of the Company's latest Form 10-QSB filed
with the Commission with respect to the most recent fiscal quarter which
ends after the end of the latest fiscal year of the Company for which the
Company has delivered the 1996 Form 10-KSB as described above. The Company
shall also provide without charge a copy of each Form 8-K, if any, filed
with the Commission since the end of the latest fiscal year of the Company
for which the audited financial statements were included in the latest Form
10-KSB filed with the Commission.

THE COMPANY

The Company was incorporated in Delaware in 1987 and originally named
ImmunoTherapeutics, Inc.; its predecessor, Biological Therapeutics, Inc.,
was founded in 1984. The Company's principal offices are located at 900
North Shore Drive, Lake Bluff, Illinois 60044 and its telephone number is
(847) 604-7555.

SUBSEQUENT EVENTS

Reverse Stock Split. On June 11, 1997, the Company effected a
one-for-fifteen reverse stock split of the Company's Common Stock. As a
result of such reverse stock split, the Company changed the trading symbol
of its Common Stock from "ENDU" to "ENDR."

New Subsidiary. On July 29, 1997, the Company formed a new
majority-owned subsidiary, Wisconsin Genetics, Inc. ("WGI"). On August 1,
1997, WGI signed an exclusive worldwide license agreement with the
Wisconsin Alumni Research Foundation for the development and
commercialization of a new cancer drug. The new drug, perillyl alcohol, is
currently undergoing Phase I human trials sponsored by the National Cancer
Institute at several centers including the University of Wisconsin, Yale
University, Fox Chase Cancer Center and Memorial Sloan Kettering Cancer
Center.

Private Placement. Pursuant to a private placement (the "Private
Placement") of Common Stock, the Company issued and sold an aggregate of
8,648,716 shares of Common Stock to certain accredited investors on July
16, October 10 and October 16, 1997, in consideration of an aggregate
amount of $20,000,000. The net proceeds to the Company after deducting
commissions and expenses of Paramount Capital, Inc., which acted as the
placement agent for the Private Placement (the "Placement Agent"), were
$17,400,000.

Pursuant to the Placement Agency Agreement (the "Placement Agency
Agreement"), dated July 1, 1997, between the Company and the Placement
Agent, the Company and the Placement Agent entered into a financial
advisory agreement (the "Financial Advisory Agreement"), dated October 16,
1997, whereby the Placement Agent will act as the Company's non-exclusive
financial advisor for a minimum period of 24 months in return for a monthly
retainer of $4,000, out-of-pocket expenses and cash and certain equity
success fees in the event the Placement Agent assists the Company in
connection with certain financing, acquisition and strategic transactions.

In connection with the Private Placement, the Company issued and sold
to the Placement Agent and/or its designees warrants (the "Placement
Warrants") to purchase up to an aggregate of 864,865 shares of Common Stock
and, in connection with the execution of the Financial Advisory Agreement,
the Company issued and sold to the Placement Agent warrants (the "Advisory
Warrants") to purchase up to an aggregate of 1,297,297 shares of Common
Stock. The Placement Warrants and the Advisory Warrants are exercisable
beginning on April 16, 1998 until April 16, 2003, at an exercise price of
$2.54375 per share, subject to adjustment under certain circumstances. The
Placement Warrants and the Advisory Warrants constitute the Warrants and
the shares of Common Stock issuable upon exercise of the Placement Warrants
and the Advisory Warrants constitute the Warrants Shares.

Joint Venture with Elan Corporation. On January 5, 1998, the Company
announced that it had signed a binding letter of intent to establish a
joint venture with Elan Corporation ("Elan") for the exclusive research,
development and commercialization of oral and mucosal prophylactic and
therapeutic vaccines. The joint venture

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will initially be 80.1% owned by the Company and 19.9% owned by Elan. The
new entity will license on an exclusive basis Elan's drug delivery
inventions, intellectual property and existing and future patents relating
to oral and mucosal delivery technologies for the therapeutic and
prophylactic vaccines for human and animals. The entity will pay an
initial license fee to Elan, plus future milestones and royalties.

In connection with the license agreement and joint venture, the
Company and Elan will enter into an agreement that will result in
the Company issuing convertible preferred stock to Elan.

As part of the transaction, Elan will make a $2,000,000 initial
investment in the Company through purchasing 307,692 shares of Common Stock
and warrants to acquire 230,770 shares of Common Stock at an exercise price
of $10.00 per share with a term of 6 years. In addition, both the Company and
Elan will fund an additional $1,500,000
of research and development activities during the first year of the joint
venture and will continue to fund activities of the joint venture
thereafter in proportion to their ownership interest.

The joint venture is subject to the execution of definitive agreements
and regulatory clearance and is expected to close in the first quarter of
1998.

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<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a
high degree of risk and should not be made by any investors who cannot
afford the loss of their entire investment. In addition, this Prospectus
contains certain statements of a forward-looking nature relating to future
events or the future financial performance of the Company. Prospective
investors are cautioned that such statements are only predictions and that
actual events or results may differ materially. In evaluating such
statements and in making any investment decisions, prospective investors
should specifically consider the various factors identified in this
Prospectus, including the matters set forth in this "Risk Factors" section,
which could cause actual results to differ materially from those indicated
by such forward-looking statements.

Need for Substantial Additional Funds, Risk of Insolvency. The
Company had approximately 15,600,000 of cash, cash equivalents and marketable
securities at December 31, 1997. The Company may be required to seek
additional financing in the future to continue operations during such
period in the event of cost overruns, unanticipated expenses, a
determination to pursue additional research projects, or the failure to
receive funds anticipated from other sources. In addition to the net
proceeds from the Private Placement, the Company will require substantial
additional funds to finance its business activities on an ongoing basis.
The Company's actual future capital requirements will depend on numerous
factors, including, but not limited to, costs associated with technologies
and products which it may license from third parties, progress in its
research and development programs, including preclinical and clinical
trials, costs of filing and prosecuting patent applications and, if
necessary, enforcing issued patents or obtaining additional licenses to
patents, competing technological and market developments, the cost and
timing of regulatory approvals, the ability of the Company to establish
collaborative relationships, and the cost of establishing manufacturing,
sales and marketing capabilities. The Company has no current commitment to
obtain other additional funds and is unable to state the amount or
potential source of any other additional funds.

Because of the Company's potential long-term capital requirements, it
may undertake additional equity offerings whenever conditions are
favorable, even if it does not have an immediate need for additional
capital at that time. There can be no assurance that the Company will be
able to obtain additional funding when needed, or that such funding, if
available, will be obtainable on reasonable terms. Any such additional
funding may result in significant dilution to existing stockholders. If
adequate funds are not available, the Company may be required to accept
unfavorable alternatives, including (i) the delay, reduction or elimination
of research and development programs, capital expenditures, and marketing
and other operating expenses, (ii) arrangements with collaborative partners
that may require the Company to relinquish material rights to its products
that it would not otherwise relinquish, or (iii) a merger of the Company or
a sale of the Company or its assets.

Early Stage of Development. The Company is a development state
enterprise and expects no significant revenue from the sale of products in
the near future. The Company's proprietary immunomodulator, ImmTher, has
completed some Phase II clinical trials for cancer with limited response in
gross metastatic disease and its immuno-adjuvant, Theramide, has completed
a Phase I clinical trial for cancer. The Company plans to initiate new
Phase II clinical trials for ImmTher in treating micro-metastasis in
pediatric sarcomas with two major cancer centers and new preclinical
programs as an anti-infective agent in immuno-compromised patients. For
Theramide, the Company is completing preclinical data for new phase I
trials as an adjuvant for a vaccine program. Additionally, perillyl
alcohol is completing several Phase I trials as an anti-cancer drug. The
Company's oral delivery technology is in the preclinical evaluation stage.
As a result, the Company be evaluated in light of the problems, delays,
uncertainties and complications encountered in connection with early-stage
biopharmaceutical development. The risks include, but are not limited to,
the possibilities that any or all of the Company's potential products will
be found to be ineffective or toxic, or fail to receive necessary
regulatory clearances in the United States or abroad. To achieve
profitable operations, the Company must successfully develop, obtain
regulatory approval for, introduce and successfully market through a larger
pharmaceutical partner at a profit products that are currently in the
research and development phase. The Company is currently not profitable,
and no assurance can be given that the Company's research and development
efforts will be successful, that required regulatory approvals will be
obtained, that any of the Company's proposed products will be safe and
effective, that any such products, if developed and introduced, will be
successfully marketed or achieve market acceptance, or that such products
can be marketed at prices that will allow profitability to be achieved or
sustained. Failure of the Company to successfully develop, obtain
regulatory approval for, introduce and market its products under
development would have a material adverse effect on the business, financial
condition and results of operations of the Company.

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History of Losses; Going Concern Reports; Uncertainty of Future
Financial Results. The Company has experienced significant operating
losses since its inception, and expects to incur losses for the next
several years. As of September 30, 1997, the Company's accumulated deficit
was $10,219,680. The Company's independent auditors have included an
explanatory paragraph in their report on the Company's financial statements
at December 31, 1996, which paragraph expresses substantial doubt
concerning the Company's ability to continue as a going concern. The
amount of net losses may vary significantly from year-to-year and
quarter-to-quarter and depend on, among other factors, the success of the
Company in securing collaborative partners and the progress of research and
preclinical and clinical development programs. The Company's ability to
attain profitability will depend, among other things, on its successfully
completing development of its product candidates, obtaining regulatory
approvals, establishing manufacturing, sales and marketing capabilities and
obtaining sufficient funds to finance its activities. There can be no
assurance that the Company will be able to achieve profitability or that
profitability, if achieved, can be sustained.

Dependence on Elan Joint Venture. As described more fully under
"Subsequent Events -- Joint Venture with Elan Corporation," the Company
recently announced that it had signed a binding letter of intent to establish
a joint venture with Elan for the exclusive research, development and
commercialization of oral and mucosal prophylactic and therapeutic vaccines.
Although this joint venture agreement is scheduled to close in the first
quarter of 1998, there can be no assurance that the parties will be able to
reach definitive agreement and any necessary regulatory clearances. In
addition, the Company will be obligated to fund the Elan joint venture's
research and development activities, in an amount of approximately $1,500,000
during the first year of the joint venture and in proportion to its ownership
interest in the joint venture thereafter. In the event that the Company is
unable to have sufficient resources to meet its obligations under the Elan
joint venture, or if by meeting those funding obligations, the Company is
therefore unable to have sufficient resources to fund its other research and
development activities, such funding obligations could have a material
adverse effect on the Company's business, financial condition or results of
operations.

Limited Experience and Dependence on Third Parties for Completion of
Clinical Trials, Manufacturing and Marketing. The Company has no
experience with receipt of government approvals or marketing pharmaceutical
products and has limited experience with clinical testing and
manufacturing. The Company may seek to form alliances with established
pharmaceutical companies for the testing, manufacturing and marketing of,
and pursuit of regulatory approval for, its products. There can be no
assurance that the Company will be successful in forming such alliances or
that the Company's partners would devote adequate resources to, and
successfully market, the Company's products. If the Company instead
performs such tasks itself, it will be required to develop expertise
internally or contract with third parties to perform these tasks. This
will place increased demands on the Company's resources, requiring the
addition of new management personnel and the development of additional
expertise by existing management personnel. The failure to acquire such
services or to develop such expertise could materially adversely affect
prospects for the Company's success. All of the Company's scientific and
clinical advisors are employed by others and may have commitments to or
consulting or advisory contracts with other entities that may limit their
availability to the Company.

Reliance on Patents and Other Proprietary Rights. The pharmaceutical
industry places considerable importance on obtaining patent and trade
secret protection for new technologies, products and processes. The
Company's success will depend, in part, on its ability to obtain protection
for its products and technologies under United States and foreign patent
laws and other intellectual property laws, to preserve its trade secrets
and to operate without infringing the proprietary rights of third parties.
There can be no assurance that the research conducted by or on behalf of
the Company will result in any patentable technology or products. Even if
patents are obtainable, the procedure for obtaining patents is expensive,
time consuming and can be subject to lengthy litigation. No assurance can
be given that patents issued to or licensed by the Company will not be
challenged, invalidated or circumvented, or that the rights granted
thereunder will provide competitive advantages to the Company. There can
be no assurance that the Company's patent applications will be approved,
that the Company will develop additional products that are patentable, that
any issued patent will provide the Company with any competitive advantage
or adequate protection for its inventions or will not be challenged by
others, or that the patents of others will not have an adverse effect on
the ability of the Company to do business. Competitors may have filed
applications, may have been issued patents or may obtain additional patents
and proprietary rights relating to products or processes competitive with
those of the Company. Furthermore, there can be no assurance that others
will not independently develop similar products, duplicate any of the
Company's products or design around any

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<PAGE>

patented products developed by the Company. Moreover, it is possible, with
respect to some patentable items, that the Company may conclude that better
protection would be afforded by not seeking patents. Although the Company
has endeavored, and will continue to endeavor, to prevent disclosure of any
confidential information by adopting a policy to bind its scientific
advisors and scientific and management employees and consultants by
confidentiality agreements. No assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets, or that
the Company can effectively protect its rights to its unpatented trade
secrets. Any such discovery or disclosure would likely have an adverse
effect on the Company. The Company currently has several patents issued
and patent applications pending in the United States and foreign countries.
Although the Company intends to apply for additional patents, there can be
no assurance that the Company will obtain patents either under the pending
applications or any future applications or that any of its existing or any
future patent will provide effective protection against competitive
products. If patent or other proprietary rights cannot be obtained and
maintained by the Company, its products may face significantly increased
competition.

The application of patent law to the area of biotechnology is
relatively new and has resulted in considerable litigation. The ability of
the Company to obtain patents, licenses and similar rights and the nature,
extent and enforceability of the intellectual property rights, if any, that
are obtained as a result of its research programs involve complex legal and
factual issues. For example, the Company is dependent upon its license of
oral delivery technology from M.I.T. and its license of perillyl alcohol
from the Wisconsin Alumni Research Foundation. No assurance can be given
that the technology underlying such license will be profitable, or that the
Company will retain its license for such technology or that the Company
will obtain patent protection outside the United States. The issues are
more significant with respect to any product based upon natural substances,
for which available patent protection may be limited due to the prior use
or reported utility of such products (or their natural sources) to treat
various disorders or diseases. There can be no assurance as to the degree
of protection that proprietary rights, when and if established, will afford
the Company. To the extent that the Company relies on trade secret
protection and confidentiality agreements to protect technology, there can
be no assurance that others will not independently develop similar
technology, or otherwise obtain access to the Company's findings or
research materials embodying those findings.

There is also a substantial risk in the rapidly developing
biotechnology industry that patents and other intellectual property rights
held by the Company could be infringed by others or that products developed
by the Company or their method of manufacture could be covered by patents
owned by other companies. To the extent that any infringement should occur
with respect to any patents issued to the Company or licenses granted to
the Company, or if the Company is alleged to have infringed on patents or
licenses held by others, the Company could be faced with the expensive
prospect of litigating such claims; if the Company were to have
insufficient funds on hand to finance its litigation, it might be forced to
negotiate a license with such other parties or to otherwise resolve such a
dispute on terms less favorable to the Company than could result from
successful litigation.

Uncertainty of Clinical Trials and Results. The results of clinical
trial and preclinical testing for the Company's products are subject to
varying interpretations. Furthermore, studies conducted with alternative
designs or on alternative populations could produce results that vary from
those expected. Therefore, there can be no assurance that the results or
the Company's interpretation of them will be accepted by governmental
regulators or the medical community. Even if the development of the
Company's products in the preclinical phase advances to the clinical stage,
there can be no assurance that they will prove to be safe and effective.
The products that are successfully developed, if any, will be subject to
requisite regulatory approval prior to their commercial sale, and the
approval, if obtainable, may take several years. Generally, only a very
small percentage of the number of new pharmaceutical products initially
developed is approved for sale. Even if new products are approved for
sale, there can be no assurance that they will be commercially successful.
The Company may encounter unanticipated problems relating to development,
manufacturing, distribution and marketing, some of which may be beyond the
Company's financial and technical capacity to solve. The failure to
address such problems adequately could have a material adverse effect on
the Company's business, financial condition or results of operations. No
assurance can be given that the Company will succeed in the development and
marketing of any new drug products, or that they will not be rendered
obsolete by products of competitors.

Uncertainty of Health Care Reform Measures. Federal, state and local
officials and legislators (and certain foreign government officials and
legislators) have proposed or are reportedly considering proposing a
variety of reforms to the health care systems in the United States and
abroad. The Company cannot predict what health

-7-
<PAGE>

care reform legislation, if any, will be enacted in the United States or
elsewhere. Significant changes in the health care system in the United
States or elsewhere are likely to have a substantial impact over time on
the manner in which the Company conducts its business. Such proposals and
changes could have a material adverse effect on the Company's ability to
raise capital. Furthermore, the Company's ability to commercialize its
potential products may be adversely affected to the extent that such
proposals have a material adverse effect on the business, financial
condition and profitability of other companies that are prospective
corporate partners with respect to certain of the Company's proposed
products.

Uncertain Extent of Price Flexibility and Third-Party Reimbursement.
The Company's ability to commercialize its products successfully will
depend in part on the extent to which appropriate reimbursement levels for
the cost of such products and related treatment are obtained from
government authorities, private health insurers and other organizations,
such as health maintenance organizations ("HMOs"). Third party payers are
increasingly challenging the prices charged for medical products and
services. Also, the trend towards managed health care in the United States
and the concurrent growth of organizations such as HMOs, which could
control or significantly influence the purchase of health care services and
products, as well as legislative proposals to reduce government insurance
programs, may all result in lower prices for the Company's products. The
cost containment measures that health care providers are instituting could
affect the Company's ability to sell its products and may have a material
adverse effect on the Company.

Government Regulation; Need for FDA and Other Regulatory Approval.
Prior to marketing, each of the Company's products must undergo an
extensive regulatory approval process conducted by the U.S. Food and Drug
Administration (the "FDA") and applicable agencies in other countries. The
process, which focuses on safety and efficacy and includes a review by the
FDA of preclinical testing and clinical trials and investigating as to
whether good laboratory and clinical practices were maintained during
testing, takes many years and requires the expenditure of substantial
resources. The Company is, and will be dependent on the external
laboratories and medical institutions conducting its preclinical testing
and clinical trials to maintain both good laboratory practices established
by the FDA and good clinical practices. Data obtained from preclinical and
clinical testing are subject to varying interpretations which could delay,
limit or prevent regulatory approval. In addition, delays or rejection may
be encountered based upon changes in FDA policy for drug approval during
the period of development and by the requirement for regulatory review of
each submitted Product License Approval or New Drug Application. There can
be no assurance that, even after such time and expenditures, regulatory
approval will be obtained for any of the Company's product candidates.
Moreover, such approval may entail significant limitations on the indicated
uses for which a drug may be marketed. Even if such regulatory approval is
obtained, a marketed therapeutic product and its manufacturer are subject
to continual regulatory review, and later discovery of previously unknown
problems with a product or manufacturer may result in restrictions on such
product or manufacturing, including withdrawal of such product from the
market. Change in the manufacturing procedures used by the Company for any
of the Company's approved drugs are subject to FDA review, which could have
an adverse effect upon the Company's ability to continue the
commercialization or sale of a drug. The process of obtaining FDA and
foreign regulatory approval is costly and time consuming, and there can be
no assurance that any product that the Company may develop will be deemed
to be safe and effective by the FDA. The Company will not be permitted to
market any product it may develop in any jurisdiction in which the product
does not receive regulatory approval.

The Company is also subject to various foreign, federal, state and
local laws, regulations and recommendations (collectively "Governmental
Regulations") relating to safe working conditions, laboratory and
manufacturing practices, the experimental use of animals and the use,
manufacture, storage, handling and disposal of hazardous or potentially
hazardous substances, including radioactive compounds and infectious
disease agents, used in connection with the Company's research and
development work and manufacturing processes. Included in this area is
Good Manufacturing Practices ("GMP") compliance and its European
equivalent, ISO 9000. Currently, the Company's manufacturing activities
for preclinical and clinical supplies are not fully in GMP compliance,
although the Company expects to reach full compliance in the near future.
There can be no assurance that the Company will achieve such compliance.
Although the Company believes it is in compliance with all other
Governmental Regulations in all material respects there can be no assurance
that the Company will not be required to incur significant costs to comply
with Governmental Regulations in the future.

Competition; Technological Change. There is substantial competition
in the pharmaceutical field in general and in vaccine development and
lyposomal formulation in particular. The Company's competitors include
companies with financial resources, and licensing, research and development
staffs and facilities substantially greater

-8-
<PAGE>

than those of the Company. Competitors in the vaccine development field
include major pharmaceutical companies, specialized biotechnology firms,
universities and governmental agencies, including American Home Products,
the Merck Company, SmithKline Beecham, MedImmune, Aviron and Chiron.
Competitors in the liposomal formulation field include The Liposome
Company, NexStar and Sequus. A competitor in the field of the oral
delivery of drugs is Emisphere which is currently in Phase I trials for
oral heparin and in preclinical development with an oral human growth
hormone. Many competitors have greater experience than the Company in
undertaking preclinical testing and clinical trials and obtaining FDA and
other regulatory approvals. There can be no assurance that the Company's
competitors will not succeed in developing similar technologies and
products more rapidly than the Company and that these technologies and
products will not be more effective than any of those that are being or
will be developed by the Company, or that such competitors' technologies
and products will not render the Company's technologies and products
obsolete or noncompetitive.

Manufacturing and Marketing Capabilities. The Company does not now
have, and probably will not have in the foreseeable future, the resources
to manufacture or directly market on a large commercial scale any products
which it may develop. In connection with the Company's research and
development activities, it will seek to enter into collaborative
arrangements with pharmaceutical companies to assist in funding development
costs, including the costs of clinical testing necessary to obtain
regulatory approvals. It is expected that these entities will also be
responsible for commercial scale manufacturing which must be in compliance
with applicable FDA regulations. The Company anticipates that such
arrangements may involve the grant by the Company of the exclusive or
semi-exclusive right to sell specific products to specified market segments
in particular geographic territories in exchange for a royalty, joint
venture, future co-marketing or other financial interest. The Company
believes that these arrangements will be more effective in promoting and
distributing therapeutic products in the United States in view of the
Company's limited resources and the extensive marketing networks and large
advertising budgets of large pharmaceutical companies. To date, the
Company has not entered into any collaborative marketing agreements or
distributorship arrangements for any of its proposed products and there can
be no assurance that the Company will be able to enter into any such
arrangements on favorable terms or at all. The Company may ultimately
determine to establish its own manufacturing and/or marketing capability,
at least for certain products, in which case it will require substantial
additional funds and personnel.

Use of Hazardous Materials; Environmental Matters. The Company's
research and development involves the controlled use of small quantities of
hazardous materials, chemicals and various radioactive compounds. Although
the Company believes that its safety procedures for handling and disposing
of such materials comply with the standards prescribed by federal, state
and local regulations, the risk of accidental contamination or injury from
these materials cannot be eliminated. In the event of such an accident,
the Company could be held liable for any resulting damages, and any such
liability could exceed the resources of the Company. There can be no
assurance that the Company will not be required to incur significant costs
to comply with environmental laws and regulations in the future, nor that
the operations, business or assets of the Company will not be materially
adversely affected by current or future environmental laws or regulations.

Product Liability Exposure; Limited Insurance Coverage. The testing
and marketing of pharmaceutical products entails an inherent risk of
exposure to product liability claims from adverse effects of products. The
Company has obtained liability insurance with limits of liability of
$1,000,000 for each claim and $3,000,000 in the aggregate. There is no
assurance that current or future policy limits will be sufficient to cover
all possible liabilities. Further, there can be no assurance that adequate
product liability insurance will continue to be available in the future or
that it can be maintained at reasonable costs to the Company. In the event
of a successful product liability claim against the Company, lack or
insufficiency of insurance coverage could have an adverse effect on the
Company.

Dependence on Key Personnel and Scientific Advisors; Evolution of
Management. The Company is dependent on the principal members of its
management and scientific staff, the loss of whose services could impede
the achievement of development objectives. Furthermore, as the Company's
focus evolves, the Company's need for certain skills may diminish and the
need for other skills may arise. Thus, recruiting and retaining qualified
scientific personnel to perform research and development work in the future
will also be critical to the Company's success and may lead to further
evolution of the Company's management. Although the Company believes it
will be successful in attracting and retaining skilled and experienced
scientific personnel, there can be no assurance that the Company will be
able to attract and retain such personnel on acceptable terms given the
competition among

-9-
<PAGE>

numerous pharmaceutical and health care companies, universities and
non-profit research institutions for experienced scientists and managers.

The Company's scientific advisors are employed on a full-time basis by
unrelated employers and some have one or more consulting or other advisory
arrangements with other entities which at times may conflict with their
obligations to the Company. Inventions or processes discovered by such
persons, other than those to which the Company's licenses relate, or those
for which the Company is able to acquire licenses or those which were
invented while performing consulting services under contract to the
Company, will most likely not become the property of the Company, but will
remain the property of such persons or such persons' full-time employers.
Failure to obtain needed patents, licenses or proprietary information held
by others could have a material adverse effect on the Company's business,
financial condition or results of operations.

Limited Personnel; Dependence on Contractors. The Company has
thirteen full-time and one part-time employees. With these exceptions, the
Company relies, and for the foreseeable future will rely, on certain
independent organizations, advisors and consultants to provide certain
services with regard to clinical research. There can be no assurance that
their services will continue to be available to the Company on a timely
basis when needed, or that the Company could find qualified replacements.
The Company's advisors and consultants generally sign agreements that
provide for confidentiality of the Company's proprietary information.
However, there can be no assurance that the Company will be able to
maintain the confidentiality of the Company's technology, the dissemination
of which could have a material adverse effect on the Company's business,
financial condition or results of operations.

Conducting Business Abroad. Although the Company currently does not
conduct business outside the United States, it is in discussions with
potential strategic partners for the in-licensing and out-licensing of
technology and the development and marketing of its products. No assurance
can be given that the Company will be able to establish arrangements
covering foreign countries, that the necessary foreign regulatory approvals
for its product candidates will be obtained, that foreign patent coverage
will be available or that the development and marketing of its products
through such licenses, joint ventures or other arrangements will be
commercially successful. The Company may also have greater difficulty
obtaining proprietary protection for its products and technologies outside
the United States rather than in it, and enforcing its rights in foreign
courts rather than in United States courts.

Limited Availability of Net Operating Loss Carry Forwards. For
Federal income tax purposes, net operating loss and tax credit
carryforwards as of December 31, 1996 are approximately $1,929,000 and
$260,000, respectively. These carryforwards will expire beginning in 2003
through 2010. The Tax Reform Act of 1986 provided for a limitation on the
use of net operating loss and tax credit carryforwards following certain
ownership changes. The Company believes that the Private Placement,
together with certain prior issuances of Common Stock, is likely to
restrict severely the Company's ability to utilize its net operating
losses and tax credits. Additionally, because U.S. tax laws limit the time
during which net operating loss and tax credit carryforwards may be applied
against future taxable income tax liabilities, the Company may not be able
to fully utilize its net operating loss and tax credits for federal income
tax purposes.

Potential Volatility of Price; Low Trading Volume. The market price
of the Common Stock, like that of many other development-stage public
pharmaceutical or biotechnology companies, has been highly volatile and may
continue to be in the future. Factors such as announcements of
technological innovations or new commercial products by the Company or its
competitors, disclosure of results of preclinical and clinical testing,
adverse reactions to products, governmental regulation and approvals,
developments in patent or other proprietary rights, public or regulatory
agency concerns as to the safety of products developed by the Company and
general market conditions may have a significant effect on the market price
of the Common Stock and its other equity securities. In addition, in
general, the Common Stock has been thinly traded on the OTC Bulletin Board,
which may affect the ability of the Company's stockholders to sell shares
of the Common Stock in the public market. There can be no assurance that a
more active trading market will develop in the future.

Risks of Low-Priced Stock; Possible Effect of "Penny Stock" Rules on
Liquidity for the Company's Securities. Since the Company's securities are
not listed on a national securities exchange nor listed on a qualified
automated quotation system, they are, under certain circumstances, subject
to Rule 15g-9 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), which imposes additional sales practice requirements on
broker-dealers that sell such securities to persons other than established
customers and "accredited investors"

-10-
<PAGE>

(generally, individuals with a net worth in excess of $1,000,000 or annual
incomes exceeding $200,000 or $300,000 together with their spouses). For
transactions covered by this Rule, a broker-dealer must make a special
suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale.
Consequently, such rule may affect the ability of broker-dealers to sell
the Company's securities and may materially adversely affect the ability of
purchasers in this Offering to sell any of the securities acquired hereby,
after subsequent registration, in the secondary market.

The SEC has adopted regulations that define a "penny stock" to be any
equity security that has a market price (as therein defined) of less than
$5.00 per share or with an exercise price of less than $5.00 per share,
subject to certain exceptions. For any transaction involving a penny
stock, unless exempt, the rules require delivery, prior to any transaction
in a penny stock, of a disclosure schedule prepared by the SEC relating to
the penny stock market. Disclosure is also required to be made about sales
commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements are required to be sent disclosing recent price information for
the penny stock held in the account and information on the limited market
in penny stock.

The foregoing required penny stock restrictions will not apply to the
Company's securities so long as the Company meets certain minimum net
tangible assets or average revenue criteria. Even while the Company's
securities are exempt from such restrictions, the Company would remain
subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the
authority to restrict any person from participating in a distribution of
penny stock, if the SEC finds that such a restriction would be in the
public interest.

Dividends. The Company has never paid cash dividends on its Common
Stock and does not anticipate paying any such dividends in the foreseeable
future. The Company currently intends to retain its earnings, if any, for
the development of its business.

Certain Interlocking Relationships; Potential Conflicts of Interest.
Steve H. Kanzer, C.P.A., Esq., a director of the Company, is a Senior
Managing Director of the Placement Agent. See "Subsequent Events --
Private Placement." Paramount Capital Asset Management, Inc. ("PCAM") is
the investment manager and general partner of The Aries Fund, a Cayman
Island Trust, and the Aries Domestic Fund, L.P., respectively. Lindsay A.
Rosenwald, M.D., the President and sole stockholder of PCAM, is also the
President and sole stockholder of the Placement Agent. Dr. Rosenwald is
also President and sole stockholder of Paramount Capital Investment LLC, a
merchant banking and venture capital firm specializing in biotechnology
companies ("PCI"). In addition, certain officers, employees and/or
associates of the Placement Agent and/or its affiliates own securities in
the Company's subsidiaries. In the regular course of its business, PCI
identifies, evaluates and pursues investment opportunities in biomedical
and pharmaceutical products, technologies and companies. Generally,
Delaware corporate law requires that any transactions between the Company
and any of its affiliates be on terms that, when taken as a whole, are
substantially as favorable to the Company as those then reasonably
obtainable from a person who is not an affiliate in an arms-length
transaction. Nevertheless, neither such affiliates nor PCI is obligated
pursuant to any agreement or understanding with the Company to make any
additional products or technologies available to the Company, nor can there
be any assurance, and the Company does not expect and purchasers of the
securities offered hereby should not expect, that any biomedical or
pharmaceutical product or technology identified by such affiliates or PCI
in the future will be made available to the Company. In addition, certain
of the current officers and directors of the Company or certain of any
officers or directors of the company hereafter appointed may from time to
time serve as officers or directors of other biopharmaceutical or
biotechnology companies. There can be no assurance that such other
companies will not have interests in conflict with those of the Company.

Concentration of Ownership and Control. The Company's directors,
executive officers and principal stockholders and certain of their
affiliates have the ability to influence the election of the Company's
directors and most other stockholder actions. In particular, pursuant to
the Placement Agency Agreement, so long as 50% of the Placement Shares
remain outstanding and subject contractual rights described in the
Subscription Agreement between the Company and each signatory thereto (the
"Subscription Agreements"), the Company may not do any of the following
without the Placement Agent's prior approval: (i) issue or increase the
authorized amount or alter the terms of any securities of the Company
senior to, or on parity with, the Placement Shares with respect to voting,
liquidation or dividends, (ii) alter the Company's charter documents in any
manner that would adversely affect the relative rights, preferences,
qualifications, limitations or restrictions of the Placement Shares or of
certain contractual rights described in the Subscription Agreements, (iii)
incur indebtedness in excess of $1,000,000, (iv)

-11-
<PAGE>

incorporate or acquire any subsidiaries and (v) enter any transactions with
affiliates of the Company. In addition, the Company's Board of Directors
cannot exceed seven persons without the prior written consent of the
Placement Agent. These arrangements may discourage or prevent any proposed
takeover of the Company, including transactions in which stockholders might
otherwise receive a premium for their shares over the then current market
prices. Such stockholders may influence corporate actions, including
influencing elections of directors and significant corporate events. See
also, "--Certain Interlocking Relationships; Potential Conflicts of
Interest."

-12-

<PAGE>

ISSUANCE OF THE WARRANT SHARES AND USE OF PROCEEDS

The Warrant Shares are issuable by the Company to certain Selling
Stockholders pursuant to an exemption from registration under the Securities
Act upon the exercise of outstanding Warrants. The aggregate gross proceeds
that the Company could receive on the exercise of all of the outstanding
Warrants is $5,500,000 (assuming an exercise price of $2.54375, the current
exercise price of the Warrants, which is subject to adjustment under certain
circumstances). The Company intends to use net proceeds, if any, from the
exercise of the Warrants for general corporate purposes, including working
capital. None of the proceeds from the sale of the Shares will be received by
the Company.

SELLING STOCKHOLDERS

The following table sets forth the names of the Selling Stockholders and
the number of shares being registered for sale hereby as of the date of the
Prospectus and sets forth the number of shares of Common Stock known by the
Company to be beneficially owned by each of the Selling Stockholders as of
December 31, 1997. Except as indicated, none of the Selling Stockholders has
had a material relationship with the Company within the past three years
other than as a result of the ownership of the Shares or other securities of
the Company. The Shares offered by this Prospectus may be offered from time
to time by the Selling Stockholders. See "Plan of Distribution."

<PAGE>

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AFTER OFFERING(1)
-------------------------
NUMBER OF SHARES NUMBER OF SHARES
BENEFICIALLY OWNED REGISTERED NUMBER
NAME OF SELLING SHAREHOLDER PRIOR TO OFFERING FOR SALE HEREBY OF SHARES PERCENT
- -------------------------------------------- --------------------------- ----------------- ---------- -------------
<S> <C> <C> <C> <C>
David Wilstein and Susan Wilstein, Ttee of
The Century Trust dated 12/18/94.......... 43,244 43,244 0 *
Donald E. and Virginia V. Vinson Trust...... 10,811 10,811 0 *
Doyle, J. William........................... 21,622 21,622 0 *
Drapkin, Donald G........................... 43,244 43,244 0 *
Drax Holdings, LP........................... 216,217 216,217 0 *
Elkon, Sheila J............................. 8,649 8,649 0 *
Evans, T. Cartter........................... 17,298 17,298 0 *
Evans, Todd................................. 25,946 25,946 0 *
Everett, Willis M. III...................... 17,298 17,298 0 *
Faisal Finance (Switzerland) S.A............ 129,730 129,730 0 *
Falk, Robert I.............................. 43,244 43,244 0 *
Frese Family Trust dated 4/1/96............. 10,811 10,811 0 *
Fried, Albert, Jr........................... 86,487 86,487 0 *
Frolich, Craig S............................ 10,811 10,811 0 *
Frolich, David J. and Terri A............... 10,811 10,811 0 *
Gerald and Gloria Frolich, JT Tenants....... 10,811 10,811 0 *
Giamanco, Joseph............................ 21,622 21,622 0 *
Giant Trading, Inc.......................... 43,244 43,244 0 *
Gilbert Goldstein, Paul Shapiro Trustees UIT
Howard Gittis, dated 12/23/88............. 54,055 54,055 0 *
Gittis, Howard.............................. 54,055 54,055 0 *
Gordon, Michael J........................... 5,406 5,406 0 *
Greenberg, Alan Neil and Joy M. JT.......... 21,622 21,622 0 *
Grody, Rachel K............................. 12,973 12,973 0 *
Harold Grossman, Ttee, The Grossman Family
Trust..................................... 10,811 10,811 0 *
Harrigan Family Trust....................... 10,811 10,811 0 *
Henry, Steven T. and Frances M.............. 10,811 10,811 0 *
Heritage Finance and Trust Co............... 216,217 216,217 0 *
Hikari Power................................ 43,244 43,244 0 *
Hilti Invest Limited (State Street Bank
GmbH)..................................... 108,109 108,109 0 *
HJK, LLC.................................... 86,487 86,487 0 *
Horowitz Family Trust, Richard M. Horowitz,
Trustee................................... 10,811 10,811 0 *
Hyman Lezell Rev. Trust..................... 21,622 21,622 0 *
IMS Global Investments X Ltd................ 345,946 345,946 0 *
Ivan Kaufman Grantor Retained Annuity
Trust..................................... 86,487 86,487 0 *
J.F. Shea Co., Inc. as Nominee 1997-50...... 216,217 216,217 0 *
Jackson Hole Investments Acquisitions LP.... 21,622 21,622 0 *
John S. Osterweis, Ttee, The Osterweis
Revocable Trust UA dated 9/13/93.......... 10,811 10,811 0 *
Joshua Black Trust.......................... 10,811 10,811 0 *
Kapito, Robert S............................ 21,622 21,622 0 *
Karen Cook IRA.............................. 8,649 8,649 0 *
Kash, Peter and Donna JTWROS (3)............ 10,811 10,811 0 *
Keesee, Thomas W. III and Angela O.B. de
Mello..................................... 10,811 10,811 0 *
Kehaya, Ery W............................... 21,622 21,622 0 *
Keio University............................. 432,433 432,433 0 *
Kendall, Donald R. Jr....................... 21,622 21,622 0 *
Kessel, Shirley S........................... 10,811 10,811 0 *
Keys Foundation Curacao, Netherland
Antilles.................................. 129,730 129,730 0 *
Kimtar Investments LLC...................... 172,973 172,973 0 *
</TABLE>
-14-
<PAGE>

Kohut, Richard.............................. 10,811 10,811 0 *
L and D Partnership......................... 10,811 10,811 0 *
Lebovitz, Stephen H......................... 10,811 10,811 0 *
Lenz Family Trust........................... 10,811 10,811 0 *
Leo A. Small and Shelle D. Small............ 10,811 10,811 0 *
LGT Bank in Liechtenstein AG................ 43,244 43,244 0 *
Lisenby, S. Alan............................ 10,811 10,811 0 *
Loeb, John L., Jr........................... 10,811 10,811 0 *
Lydecker, Richard A. and Gay C.............. 2,163 2,163 0 *
Maeda, Susumu............................... 43,244 43,244 0 *
Maidenhair NV............................... 43,244 43,244 0 *
MDBC Capital Corp........................... 21,622 21,622 0 *
Mega International Corp..................... 21,622 21,622 0 *
Metzger, William and Katharine.............. 10,811 10,811 0 *
Meyer, Maurice III.......................... 10,811 10,811 0 *
MHR Capital Partners L.P.................... 432,433 432,433 0 *
Michael G. Jesselson 12/18/80 Trust......... 86,487 86,487 0 *
Michael L. and Sherry R. Andrade, Co-Ttees
of MandS Andrade Rev. TR. For Comm. and
Sep. Property UA dtd 10-14-74, as
amended................................... 10,811 10,811 0 *
Michael L. Metter, SEP-IRA.................. 21,622 21,622 0 *
Moonlight International, Ltd................ 21,622 21,622 0 *
Moscati, Leonard F.......................... 86,487 86,487 0 *
Mullen, Michael A........................... 10,811 10,811 0 *
Nagle, Arthur J............................. 10,811 10,811 0 *
Negrin, Renato.............................. 21,622 21,622 0 *
Nomura Bank (Switzerland) Ltd............... 108,109 108,109 0 *
Oct 1983 Trust FBO Jesselson
Grandchildren............................. 216,217 216,217 0 *
Oretexga Ltd. Partnership................... 15,136 15,136 0 *
Ostrovsky, Paul D. and Rebecca L............ 6,487 6,487 0 *
Ostrovsky, Steven N......................... 10,811 10,811 0 *
Oxcal Venture Fund LP....................... 43,244 43,244 0 *
Palmetto Partners, Ltd...................... 86,487 86,487 0 *
Paramount Capital, Inc. (4)................. 1,297,297 1,297,297 0 *
Pellizzon, Gregory P. and Christine K.,
JTWROS.................................... 10,811 10,811 0 *
Pellizzon, Peter and Pamela................. 10,811 10,811 0 *
Pequot Scout Fund, L.P...................... 216,217 216,217 0 *
Prager, Tis................................. 21,622 21,622 0 *
Privat Kredit Bank.......................... 172,973 172,973 0 *
Richard B. Chanin, IRA...................... 17,298 17,298 0 *
Rick Steiner Productions, Inc............... 12,973 12,973 0 *
Robert and Evelyn Elliott Trust............. 10,811 10,811 0 *
Robert L. Spint, Ttee, Robert L. Spint
TR UD dated 10/19/89...................... 10,811 10,811 0 *
Robert, Stephen............................. 43,244 43,244 0 *
Ruttenberg, David W......................... 10,811 10,811 0 *
Sagres Group Ltd............................ 129,730 129,730 0 *
Sanger Investments.......................... 6,487 6,487 0 *
Schlotterbeck, Robert....................... 10,811 10,811 0 *
Schonzeit, Andrew........................... 21,622 21,622 0 *
Schwinger, Scott E.......................... 2,163 2,163 0 *
Silverman, Jeffrey S........................ 32,433 32,433 0 *
Slovin, Bruce............................... 43,244 43,244 0 *
Spear, Leeds and Kellogg.................... 108,109 108,109 0 *
</TABLE>
-15-

<PAGE>

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

(1) The figures for the number of shares and the percentage of shares
beneficially owned by the Selling Stockholders after the offering are
based on the assumption that all of the Selling Stockholders will sell
all of the shares registered for sale hereby. See "Plan of
Distribution."

(2) Includes 23,334 shares of Common Stock issuable upon exercise of a
warrant that is exercisable from April 16, 1997 until April 16, 2002
at $2.54375 per share, subject to adjustment under certain
circumstances. Lindsay A. Rosenwald, M.D. is the president and sole
shareholder of PCAM, the general partner of the Aries Domestic Fund,
L.P. Dr. Rosenwald and PCAM share the power to vote and/or dispose of
the shares of Common Stock held by the Aries Domestic Fund, L.P., but
disclaim beneficial ownership thereof except to the extent of their
pecuniary interest therein, if any. See "Risk Factors -- Certain
Interlocking Relationships; Potential Conflicts of Interest" "Risk
Factors -- Concentration of Ownership and Control" for a description
of certain material relationships between the Aries Domestic Fund,
L.P. and the Company. See also "Subsequent Events -- Private
Placement" and Notes 4 and 5.

(3) Peter Kash is a Senior Managing Director of the Placement Agent.

(4) Consists of 1,297,297 shares of Common Stock issuable upon exercise
of a Warrant held by such entity.

(5) Includes 43,334 shares of Common Stock issuable upon exercise of a
warrant that is exercisable from April 16, 1997 until April 16, 2002
at $2.54375 per share, subject to adjustment under certain
circumstances. Lindsay A. Rosenwald, M.D. is the president and sole
shareholder of PCAM, the investment manager of The Aries Fund, a
Cayman Island trust. Dr. Rosenwald and PCAM share the power to vote
and/or dispose of the shares of Common Stock held by The Aries Fund,
but disclaim beneficial ownership thereof except to the extent of
their pecuniary interest therein, if any. See "Risk Factors --
Certain Interlocking Relationships; Potential

-16-
<PAGE>

Conflicts of Interest" "Risk Factors -- Concentration of Ownership and
Control" for a description of certain material relationships between
The Aries Fund and the Company. See also "Subsequent Events --
Private Placement" and Notes 2 and 4.

Of the Shares being offered hereby, the Private Placement Shares were
acquired by the Selling Stockholders from the Company in the Private
Placement and the Warrant Shares were acquired by the Placement Agent in
connection with the Private Placement and the execution of the Financial
Advisory Agreement. See "Subsequent Events -- Private Placement."
Assuming the exercise of all the outstanding Warrants, the Warrant Shares
will be acquired by the Selling Stockholders at a purchase price per share
of $2.54375, subject to adjustment under certain circumstances. The Shares
are being included in this offering as a result of certain contractual
arrangements with the Selling Stockholders. The Company has agreed to bear
the expenses (other than selling commissions and fees and expenses of
certain advisors to the Selling Stockholders) in connection with the
registration of the Shares.

The sale of Shares by "affiliates" (as such term is defined in Rule
144(a) under the Securities Act) are subject to the volume and manner of
sale restrictions set forth in Rule 144. The Company has agreed to prepare
and file such amendments and supplements to the Registration Statement as
may be necessary to keep this Registration Statement effective until such
date as the holders of the Shares have completed the distribution described
herein or until such time that the Shares are no longer, by reason of Rule
144(k) under the Securities Act, required to be registered.

The Private Placement Shares to which this Prospectus relates are
subject to a partial, diminishing lock-up for a period of up to nine months
after the effective date (the "Effective Date") of the Registration
Statement of which this Prospectus forms a part. Without the prior written
consent of the Placement Agent, the holders of such shares may not directly
or indirectly sell or otherwise dispose of such according to the following
schedule: 75% of such shares are subject to lock-up until three months
after the Effective Date; 50% of such shares are subject to lock-up until
six months after the Effective Date; and 25% of such shares are subject to
lock-up until nine months after the Effective Date. The remaining 25% of
such shares are not subject to any lock-up restriction.

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<PAGE>

PLAN OF DISTRIBUTION

The Shares covered hereby may be offered and sold from time to time by
the Selling Stockholders, pursuant to this Prospectus or Rule 144 under the
Securities Act (or any other applicable exemption from registration under
the Securities Act). The Selling Stockholders will act independently of the
Company in making decisions with respect to the timing, manner and size of
each sale. The Selling Stockholders may sell the Shares being offered
hereby in one or more transactions, including block transactions, in the
over-the-counter market, on any Exchange pursuant to and in accordance with
the applicable rules of such Exchanges, in negotiated transactions or in a
combination of any such methods of sale, at fixed prices that may be
changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.

The Shares may be offered directly, to or through agents designated
from time to time or through brokers or dealers, or through any combination
of these methods of sale. Such agent, broker or dealer may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as principals, or
both (which compensation as to a particular broker-dealer might be in
excess of customary commissions). A member firm of an Exchange may be
engaged to act as the Selling Stockholder's agent in the sale of Shares by
the Selling Stockholder. Brokerage fees will be paid by the Selling
Stockholders.

At the time a particular offer of Shares is made, to the extent
required, a supplemental Prospectus will be distributed which will set
forth the number of Shares being offered and the terms of the offering
including the name or names of any underwriters, dealers or agents, the
purchase price paid by any underwriter for the Shares purchased from
Selling Stockholders, any discounts, commissions and other items
constituting compensation from the Selling Stockholders and any discounts,
commissions or concessions allowed or reallowed or paid to dealers.

In order to comply with the securities laws of the states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain of these
states the Shares may not be sold unless they have been registered or
qualified for sale in the applicable state or an exemption from the
registration or qualification requirement is available and is complied with
by the Selling Stockholders, the Company and the brokers or dealers.

The sale of Shares by affiliates are subject to the volume and manner
of sale restrictions set forth in Rule 144.

The Selling Stockholders and any broker-dealers, agents or
underwriters that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions
received by them and any profit on the resale of the Selling Stockholder
Shares purchased by them may be deemed to be underwriting commissions or
discounts under the Securities Act. The Company has agreed to indemnify
certain Selling Stockholders and their affiliates against certain
liabilities, including liabilities under the Securities Act. Certain
Selling Stockholders have agreed to indemnify the Company and its
affiliates against certain liabilities, including liabilities under the
Securities Act.

The Company has agreed to bear the expenses (other than selling
commissions and fees and expenses of certain advisors to the Selling
Stockholders) in connection with the registration of the Shares.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 50,000,000 shares
of Common Stock, par value $.001 per share, and 500,000 shares of Preferred
Stock, par value $.05 per share.

Common Stock

As of December 31, 1997, there were 9,736,641 shares of Common Stock
outstanding, which were held of record by approximately 1,123 stockholders.

The holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of Common

-18-
<PAGE>

Stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available therefor, subject to any
preferential dividend rights of outstanding preferred stock. Upon the
liquidation, dissolution or winding up of the Company, the holders of
Common Stock are entitled to receive ratably the net assets of the Company
available after the payment of all debts and other liabilities and subject
to the prior rights of any outstanding preferred stock. Holders of Common
Stock have no preemptive, subscription, redemption or conversion rights.
The outstanding shares of Common Stock are fully paid and non-assessable.
The rights, preferences and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of preferred stock.

LEGAL MATTERS

The validity of the Shares offered hereby will be passed upon for the
Company by Brobeck, Phleger & Harrison LLP, New York, New York.

EXPERTS

The consolidated balance sheet as of December 31, 1996 and the
consolidated statements of operations, stockholders' equity and cash flows
for the period from February 1, 1996 to December 31, 1996 incorporated in
this prospectus by reference, have been incorporated herein in reliance on
the report (which includes an explanatory paragraph which refers to the
Company's ability to continue as a going concern, as discussed in Note 9 to
the consolidated financial statements) of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.

INDEMNIFICATION

Article Thirteenth of the Company's Certificate of Incorporation, as
amended, and Article VII of the Company's By-Laws provide that the Company
may indemnify each current and former director, officer, and any employee
or agent of the corporation, his or her heirs, executors, and
administrators, against expenses reasonably incurred or any amounts paid by
him or her in connection with any action, suit, or proceeding to which he
or she may be made a party by reason of being or having been a director,
officer, employee or agent of the corporation to the fullest extent
permitted by the Delaware General Corporation Law.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.

Reference is made to Section 145 of the Delaware General Corporation
Law as such Sections pertain to indemnification matters.

-19-
<PAGE>

10,810,879 Shares

Endorex Corp.

Common Stock

PROSPECTUS

JANUARY 21, 1998

<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 14. Other Expenses of Issuance and Distribution

The following table sets forth an estimate of the expenses to be
incurred by the Company in connection with the issuance and distribution of
the securities being registered:

Amount to
Be Paid
----------

Registration Fee -- SEC.................................... $20,132
Legal Fees and Expense..................................... 10,000
Accounting Fees and Expense................................ 2,500
Miscellaneous.............................................. 7,368
----------
Total...................................................... $ 40,000
----------

Item 15. Indemnification of Directors and Officers

Reference is made to Section 145 of the Delaware General Corporation
Law as such Sections pertain to indemnification matters.

Item 16. Exhibits

The following is a list of Exhibits filed as part of the Registration
Statement:

3.1 Certificate of Incorporation of Registrant. (1)
3.2 Certificate of Ownership and Merger filed March 30, 1987. (1)
3.3 Certificate of Amendment to Certificate of Incorporation filed
September 7, 1989. (2)
3.4 Certificate of Amendment to Certificate of Incorporation filed
November 13, 1990. (3)
3.5 Certificate of Amendement to Certificate of Incorporation filed May 29,
1991. (3)
3.6 Certificate of Amendement to Certificate of Incorporation filed
February 27, 1992. (3)
3.7 Certificate of Amendement to Certificate of Incorporation filed
February 27, 1992. (3)
3.8 Certificate of Amendement to Certificate of Incorporation filed June
29, 1993. (7)
3.9 Certificate of Amendment to Certificate of Incorporation filed
April 15, 1996. (7)
3.10 By-laws of Registrant. (1)
4.1 Specimen Common Stock Certificate. (1)
4.2 Form of Warrant Agreement between the Registrant and American Stock
Transfer & Trust Company. (1)
4.3 Warrant for the Purchase of 864,865 shares of Common Stock. (8)
4.4 Warrant for the Purchase of 1,297,297 shares of Common Stock. (8)
5 Opinion of Brobeck, Phleger & Harrison LLP.*
10.1 Patent License Agreement dated December 16, 1996 between the
Registrant and Massachusetts Institute of Technology. (7)
10.2 Consultation Agreement dated as of September 1, 1996 between the
Registrant and Kenneth Tempero, Ph.D., M.D.. (7)
10.3 Employment Agreement dated June 1, 1996 between the Registrant and
Gerald Vosika. (7)
10.4 Letter Agreement Amendment and Waiver dated June 25, 1996 to
Employment Agreement between Registrant and Gerald Vosika dated
June 1, 1996. (7)
10.5 Employment Agreement dated July 25, 1996 between the Registrant and
Michael S. Rosen. (5)
10.6 Employment Agreement dated December 1, 1996 between the Registrant
and Robert N. Brey. (7)
10.7 Purchase Agreement dated March 1, 1996 between the Registrant and
Dominion Resources, Inc. (4)
10.8 Purchase Agreement dated as of June 13, 1996 between the Registrant,
Dominion Resources, Inc. The Aries Fund and The Aries Domestic
Fund, L.P. (7)
10.9 Purchase Agreement dated as of June 26, 1996 between the Registrant,
The Aries Fund and The Aries Domestic Fund, L.P. (7)
10.10 Incentive Stock Option Plan. (1)
10.11 Lease dated April 28, 1993 between the Registrant and Landmark
Investors. (7)
10.12 Office Lease dated September 18, 1996 between the Registrant and
American National Bank & Trust Company of Chicago, as amended. (7)
10.13 Placement Agency Agreement between the Registrant and Paramount
Capital, Inc. dated July 1, 1997. (8)
10.14 Side Letter #1 to Placement Agency Agreement. (8)
10.15 Form of Subscription Agreement for the purchase of Common Stock. (8)
10.16 Financial Advisory Agreement between the Registrant and Paramount
Capital, Inc. dated October 16, 1997. (8)
11 Statement re: computation of per share earnings. (7)
16 Letter on change in certifying accounts. (6)
21 Subsidiaries of the Registrant. (7)
23.1 Consent of Coopers & Lybrand L.L.P., independent certified public
accountants.
23.2 Consent of Brobeck Phleger & Harrison LLP (included in the opinion
filed as Exhibit 5).
24. Powers of Attorney.

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

* To be filed by amendment.

(1) Incorporated by reference to the Registrant's Registration Statement
on Form S-1 (File No. 33-13492).
(2) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1989.
(3) Incorporated by reference to the Registrant's Annual Report on Form
10-K for the fiscal year ended January 31, 1992.
(4) Incorporated by reference to the Registrant's Annual Report on Form
10-KSB for the fiscal year ended January 31, 1996.
(5) Incorporated by reference to the Registrant's Quarterly Report on Form
10-QSB for the fiscal quarter ended July 31, 1996.
(6) Incorporated by reference to the Registrant's Report on Form 8-K/A
dated February 10, 1997.
(7) Incorporated by reference to the Registrant's Annual Report on Form
10-KSB, as amended, for the transition period ended December 31, 1996.
(8) Incorporated by reference to the Registrant's Quarterly Report on Form
10-QSB, as amended, for the fiscal quarter ended September 30, 1997.

Item 17. Undertakings

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act, and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than
payment by the Registrant of expenses incurred or paid by a

II-1
<PAGE>

director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(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 volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20 percent 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;

(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, each filing of
the Registrant's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 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 of 1933, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this Registration Statement as of the time it was declared
effective.

(2) For the purpose of determining any liability under the Securities
Act, 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-2
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as
amended, the Small Business Issuer certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-2 and
has duly caused this Registration Statement to be signed on its behalf by
the undersigned, thereunto duly authorized, in the Village of Lake Bluff,
State of Illinois, on January 21, 1998.

ENDOREX CORP.

By: /s/ Michael S. Rosen
-------------------------------
Michael S. Rosen
President and Chief Executive Officer, and Director

Pursuant to the requirements of the Securities Act of 1933, as
amended, this the Registration Statement has been signed by the following
persons in the capacities indicated on January 21, 1998.

By: /s/ Michael S. Rosen
--------------------------------
Michael S. Rosen President, Chief Executive Officer, and
Director

By: /s/ David G. Franckowiak
--------------------------------
David G. Franckowiak Controller/Treasurer
(Principal Financial and Accounting
Officer)

By: *
--------------------------------
Gerald J. Vosika Scientific Director, Chairman and
Director

By: *
--------------------------------
Richard Dunning Director

By:
--------------------------------
Steve H. Kanzer Director

By: *
--------------------------------
Paul D. Rubin Director

By: *
--------------------------------
H. Laurence Shaw Director

By: *
--------------------------------
Kenneth Tempero Director

*By: /s/ Michael S. Rosen
--------------------------------
Michael S. Rosen
Attorney-in-fact

II-3

<PAGE>

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the incorporation by reference in this registration
statement on Form S-2 of our report (which includes an explanatory
paragraph which refers to the ability of Endorex Corp. (the "Company") to
continue as a going concern, as discussed in Note 9 to the consolidated
financial statements) dated April 11, 1997, on our audit of the
consolidated balance sheet of the Company as of December 31, 1996 and the
related consolidated statements of operations, stockholders' equity, and
cash flows for the period from February 1, 1996 to December 31, 1996. We
also consent to the reference to our firm under the caption "Experts."

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

Chicago, Illinois
January 15, 1998

<PAGE>

Exhibit 24

POWER OF ATTORNEY

We the undersigned directors and/or officers of Endorex Corp. (the
"Company"), hereby severally constitute and appoint Michael S. Rosen,
President and Chief Executive Officer, and David G. Franckowiak,
Controller/Treasurer, and each of them individually, with full powers of
substitution and resubstitution, our true and lawful attorneys, with full
power to them and each of them to sign for us, in our names and in the
capacities indicated below, the Registration Statement on Form S-2 filed with
the Securities and Exchange Commission, and any and all amendments to said
Registration Statement (including post-effective amendments), in connection
with the registration under the Securities Act of 1933, as amended, of equity
securities of the Company, and to file or cause to be filed the same, with
all exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys, and each of
them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as each of them might or could do in person, and hereby
ratifying and confirming all that said attorneys, and each of them, or their
substitute or substitutes, shall do or cause to be done by virtue of this
Power of Attorney.

WITNESS our hands on this 15th day of January, 1998.

/s/ Michael S. Rosen /s/ David G. Franckowiak
- ---------------------------- -------------------------------------
Michael S. Rosen David G. Franckowiak

/s/ Richard Dunning
- ---------------------------- -------------------------------------
Richard Dunning Steve H. Kanzer

/s/ Paul D. Rubin /s/ H. Laurence Shaw
- ---------------------------- -------------------------------------
Paul D. Rubin H. Laurence Shaw

/s/ Kenneth Tempero /s/ Gerald J. Vosika
- ---------------------------- -------------------------------------
Kenneth Tempero Gerald J. Vosika