VIMRX PHARMACEUTICALS INC, DEF 14A, 1998-05-26

VIMRX PHARMACEUTICALS INC
DEF 14A, 1998-05-26
PHARMACEUTICAL PREPARATIONS

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SCHEDULE 14A INFORMATION

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

Filed by the Registrant [X]

Filed by a Party other than the Registrant [_]

Check the appropriate box:

[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement

[_] Definitive Additional Materials

[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

VIMRX Pharmaceuticals Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

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

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(2) Aggregate number of securities to which transaction applies:

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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):

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(4) Proposed maximum aggregate value of transaction:

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(5) Total fee paid:

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[_] Fee paid previously with preliminary materials.

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

(1) Amount Previously Paid:

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

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(3) Filing Party:

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(4) Date Filed:

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Notes:
<PAGE>

DRAFT 5/12/98

[VIMRX Letterhead]

May 26, 1998

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
VIMRX Pharmaceuticals Inc., which will be held at The Equitable Companies, Inc.,
787 Seventh Avenue, 50th Floor, New York, New York on June 23, 1998. The
meeting will begin promptly at 9:30 a.m. Eastern Daylight Time.

The accompanying Proxy Statement, which you are urged to read carefully,
provides important information regarding matters that will be considered and
voted upon at the Annual Meeting. In addition to electing directors of the
Company and ratifying the appointment of the independent auditors, stockholders
will consider and vote upon (i) an amendment to the Company's 1997 Incentive and
Non-Incentive Stock Option Plan making an additional 1,000,000 shares available
for issuance thereunder, and (ii) approving the adoption of the 1998 Non-
Incentive Stock Option Plan of VIMRX Pharmaceuticals Inc. for Directors,
Employees and Consultants of Nexell Therapeutics Inc.

You are requested to complete, date and sign the enclosed proxy card and
promptly return it in the enclosed envelope, whether or not you plan to attend
the Annual Meeting. If you do attend the Annual Meeting, you may vote in person
even if you have submitted a proxy card. Due to space limitations, attendance
at the Annual Meeting will be limited to stockholders of record, their proxies,
beneficial owners of Common Stock who have presented to the Company satisfactory
evidence of such ownership, and brokers.

On behalf of the Board of Directors, I look forward to seeing you on June
23rd.

Sincerely,

Donald G. Drapkin, Chairman
<PAGE>

VIMRX PHARMACEUTICALS INC.
2751 Centerville Road
Suite 210, Little Falls II
Wilmington, Delaware 19808
(302) 998-1734

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 23, 1998

To the Stockholders of

VIMRX PHARMACEUTICALS INC.

NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders ("Annual
Meeting") of VIMRX Pharmaceuticals Inc. (the "Company") will be held at The
Equitable Companies, Inc., 787 Seventh Avenue, 50th Floor, New York, New York on
Tuesday, June 23, 1998 at 9:30 a.m., Eastern Daylight Time, to consider and act
upon the following proposals:

1. To elect a Board of nine directors.

2. To approve an amendment to the Company's 1997 Incentive and Non-Incentive
Stock Option Plan making an additional 1,000,000 shares available for issuance
thereunder.

3. To approve the 1998 Non-Incentive Stock Option Plan of VIMRX Pharmaceuticals
Inc. for Directors, Employees and Consultants of Nexell Therapeutics Inc.

4. To ratify the appointment of KPMG Peat Marwick LLP as independent auditors
of the Company for the year ending December 31, 1998.

5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.

A proxy statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only holders of record of the Company's
Common Stock at the close of business on May 21, 1998, the Record Date for the
Annual Meeting, are entitled to notice of and to vote at the Annual Meeting.
Due to space limitations, attendance at the Annual Meeting will be limited to
stockholders of record, their proxies, beneficial owners who have presented
evidence of such ownership satisfactory to the Company, and brokers.

By Order of the Board of Directors,
Lowell S. Lifschultz, Secretary

Wilmington, Delaware
May 26, 1998

STOCKHOLDERS WHO DO NOT EXPECT TO ATTEND THE ANNUAL MEETING ARE REQUESTED TO
DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE-
PREPAID ENVELOPE.
<PAGE>

VIMRX Pharmaceuticals Inc.
2751 Centerville Road
Suite 210, Little Falls II
Wilmington, Delaware 19808
(302) 998-1734

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 23, 1998

INTRODUCTION
General

This Proxy Statement is being furnished to holders of Common Stock, par
value $.001 per share (the "Common Stock"), of VIMRX Pharmaceuticals Inc., a
Delaware corporation (the "Company" or "VIMRX), in connection with the
solicitation of proxies by the Board of Directors of the Company for use at its
Annual Meeting of Stockholders to be held at The Equitable Companies, Inc., 787
Seventh Avenue, 50th Floor, New York, New York on Tuesday, June 23, 1998 at 9:30
a.m., Eastern Daylight Time, and any and all adjournments or postponements
thereof (the "Meeting"). The cost of the solicitation will be borne by the
Company. This Proxy Statement is being first mailed to holders of the Common
Stock on or about May 26, 1998.

Matters to be Considered at the Meeting

At the Meeting, the stockholders will be asked to consider and vote upon
the following proposals:

1. To elect a Board of nine directors;

2. To approve the adoption of an amendment to VIMRX's 1997 Incentive and Non-
Incentive Stock Option Plan (the "1997 Plan") making an additional 1,000,000
shares available for issuance thereunder;

3. To approve the adoption of the 1998 Non-Incentive Stock Option Plan of VIMRX
Pharmaceuticals Inc. for Directors, Employees and Consultants of Nexell
Therapeutics Inc. (the "Nexell Plan"). A copy of the Nexell Plan is attached
hereto as Exhibit A;

4. To ratify the appointment of KPMG Peat Marwick LLP as independent auditors
of the Company for the year ending December 31, 1998; and

5. To transact such other business as may properly come before the Annual
Meeting or any adjournment or postponement thereof.
<PAGE>

Voting at the Meeting

Only holders of record of Common Stock at the close of business on May 21,
1998 (the "Record Date") are entitled to notice of and to vote at the Meeting,
each such holder of record being entitled to one vote per share of Common Stock
on each matter to be considered at the Meeting. On the Record Date, there were
66,902,796 shares of Common Stock issued and outstanding.

The presence, in person or by properly executed proxy, of the holders of a
majority of the outstanding shares of Common Stock entitled to vote at the
Meeting (33,451,399 shares of the 66,902,796 shares outstanding) is necessary to
constitute a quorum at the Meeting. The election of each of the nine nominees
identified in this Proxy will require the affirmative vote of a plurality of the
shares of Common Stock present in person or represented by proxy at the Meeting
and entitled to vote. The approval of the amendment to the 1997 Plan and the
adoption of the Nexell Plan and the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors of the Company for the year ending December
31, 1998 will require the affirmative vote of the holders of a majority of the
shares of Common Stock present in person or represented by proxy at the Meeting
and entitled to vote.

If the enclosed proxy card is properly executed and returned to the Company
prior to voting at the Meeting, the shares represented thereby will be voted in
accordance with the instructions marked thereon, subject to the following
conditions:

Election of Directors. Shares represented by a proxy which is marked
---------------------
"WITHHOLD AUTHORITY" to vote for (i) all nine nominees or (ii) any individual
nominee(s) for election as directors and are not otherwise marked "FOR" the
other nominees will not be counted in determining whether a plurality vote has
been received for the election of directors. In the absence of instructions,
shares represented by a proxy will be voted FOR all of the nine nominees. In
instances where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not returned proxies ("broker non-votes"), those
shares will be disregarded and therefore will have no effect on the outcome of
the vote.

Other Proposals. Shares represented by a proxy which is marked "ABSTAIN"
---------------
on any other proposal will not be counted in determining whether the requisite
vote has been received for such proposal. In the absence of instructions,
shares represented by a proxy will be voted FOR all of the proposals set forth
in the Notice of Annual Meeting and at the discretion of the proxies on any
other matters that may properly come before the Meeting. In instances where
brokers are prohibited from exercising discretionary authority for beneficial
owners who have not returned proxies ("broker non-votes"), those shares will not
be included in the vote totals, and therefore will have no effect on the
approval of the proposed amendment to the 1997 Plan, the approval of the
adoption of the Nexell Plan, or the ratification of the appointment of the
independent auditors.

At any time prior to its exercise, a proxy may be revoked by the holder of
the Common Stock granting it by delivering written notice of revocation or a
duly executed proxy bearing a later date to the Secretary of the Company at the
address of the Company set forth on the first page of this Proxy Statement or by
attending the Meeting and voting in person.

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TABLE OF CONTENTS
-----------------

Page
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT........................................... 4
ELECTION OF DIRECTORS................................ 6
EXECUTIVE COMPENSATION............................... 8
CERTAIN TRANSACTIONS................................. 15
STOCK PRICE PERFORMANCE COMPARISON................... 17
APPROVAL OF AMENDMENT TO 1997 PLAN................... 18
APPROVAL OF ADOPTION OF NEXELL PLAN.................. 20
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS.. 24
OTHER BUSINESS....................................... 25
STOCKHOLDER PROPOSALS................................ 25

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth, as of the Record Date, information
with respect to the beneficial ownership of the Common Stock by (i) each person
known by the Company to own beneficially five percent or more of the outstanding
Common Stock, together with their respective addresses, (ii) each director and
nominee for election as director, (iii) each executive officer named in the
Summary Compensation Table under "Executive Compensation - Summary Compensation"
on page 9 of this Proxy Statement and (iv) all executive officers and directors
as a group:

<TABLE>
<CAPTION>
NAME Shares Beneficially Owned Percent Outstanding
- ------------------------------------- ----------------------------- --------------------
<S> <C> <C> <C>
Richard L. Dunning 471,901 (1) *
Francis M. O'Connell 75,000 (2) *
Alfonso J. Tobia, Ph.D. 112,500 (2) *
David A. Jackson, Ph.D. 106,038 (2) *
L. William McIntosh 110,000 (3) *
Donald G. Drapkin 725,000 (4)(5) 1.1%
Laurence D. Fink 550,000 (4)(6) *
Jerome Groopman, M.D. 50,000 (4) *
Linda G. Robinson 250,000 (4)(7) *
Eric A. Rose, M.D. 797,400 (8) 1.2%
Lindsay A. Rosenwald, M.D. 6,014,999 (4)(9) 8.8%
Victor W. Schmitt 0 0
Michael Weiner, M.D. 62,410 (4) *
Paramount Capital Asset Management, 4,049,999 (10) 6.1%
Inc. 787 Seventh Avenue, NY 10019
Baxter Healthcare Corporation, One 11,000,000 16.4%
Baxter Parkway, Deerfield, Illinois
60015
All directors and executive officers 9,300,248 (11) 13.1%
as a group (13 persons)
</TABLE>

____________________
* Less than one percent.

4
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1. Consists of currently exercisable options to purchase 468,306 shares owned
by Mr. Dunning, 2,095 shares owned by a daughter of Mr. Dunning, and 500 shares
owned by each of Mr. Dunning's spouse, son and another daughter, respectively.
Mr. Dunning disclaims beneficial ownership of the shares held by his spouse, son
and daughters.

2. Consists of currently exercisable options.

3. Includes currently exercisable options to purchase 100,000 shares.

4. Includes 100,000 shares for Mr. Drapkin and 50,000 shares for each of Mr.
Fink, Dr. Groopman, Ms. Robinson, Dr. Rosenwald and Dr. Weiner of restricted
stock which vests at the rate of 25% per year commencing June 20, 1997, provided
the respective individual continues to serve as a director of the Company, and
subject to a non-lapsing right of first refusal by the Company.

5. Includes currently exercisable options to purchase 525,000 shares.

6. Includes warrants to purchase 133,333 shares owned directly by Mr. Fink and
6,666 shares and warrants to purchase 33,333 shares owned by a family trust for
the benefit of Mr. Fink's children. Mr. Fink disclaims beneficial ownership of
the shares and warrants held by the family trust.

7. Includes warrants to purchase 66,666 shares.

8. Includes currently exercisable options to purchase 425,000 shares.

9. Includes currently exercisable options to purchase 1,915,000 shares owned
Dr. Rosenwald, and the 4,049,999 shares beneficially owned by Paramount Capital
Asset Management, Inc. ("PCAM") (see note (10) below). Dr. Rosenwald serves as
President and is sole shareholder of PCAM. Dr. Rosenwald disclaims beneficial
ownership of the shares beneficially owned by PCAM except to the extent of his
pecuniary interest, if any.

10. Information is from a Schedule 13D dated December 23, 1996 filed by PCAM
which is the investment manager of The Aries Fund, a Cayman Islands Trust, (the
"Aries Trust") and the general partner of Aries Domestic Fund, L.P. (the "Aries
Limited Partnership"), and reports shared voting and dispositive power of
5,964,999 shares and 2,750,000 shares, respectively, by the Aries Trust and the
Aries Limited Partnership.

11. See notes (1) - (10).

5
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ELECTION OF DIRECTORS

At the Meeting, the entire Board of Directors is to be elected, to hold
office until the next Annual Meeting of Stockholders and until their successors
are duly elected and qualified. Unless otherwise specifically directed by
stockholders executing proxies, it is intended that all proxies in the
accompanying form received in time for the Meeting will be voted FOR the
election of the nine nominees named below. All nominees are currently directors
of the Company.

In the event any nominee should become unavailable for election for any
presently unforeseen reason, it is intended that the proxies will be voted for
such substitute nominee as may be designated by the present Board of Directors.

The election of each of the nine nominees identified in the Proxy will
require the affirmative vote of a plurality vote of the shares of Common Stock
present or represented by proxy at the Meeting and entitled to vote. In
instances where brokers are prohibited from exercising discretionary authority
for beneficial owners who have not returned proxies ("broker non-votes"), those
shares will be disregarded and therefore will have no effect on the outcome of
the vote. THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR EACH OF
THE NINE NOMINEES.

Each nominee's name, age, office with the Company, if any, the year first
elected as a director, if currently a director, and certain biographical
information are set forth below:

<TABLE>
<CAPTION>
Name Age POSITION
- ---------------------------- ------------------ -----------------------------------------
<S> <C> <C>
Donald G. Drapkin 50 Chairman
Richard L. Dunning 52 President, Chief Executive Officer and
Director
Laurence D. Fink 45 Director
Jerome Groopman, M.D. 46 Director
Linda G. Robinson 45 Director
Eric A. Rose, M.D. 47 Director
Lindsay A. Rosenwald, M.D. 43 Director
Victor W. Schmitt 49 Director
Michael Weiner, M.D. 52 Director
</TABLE>

DONALD G. DRAPKIN was elected Chairman of the Board of Directors in March,
1996 and has served as a director of the Company on November 17, 1995. Mr.
Drapkin has been a Director and Vice Chairman of MacAndrews & Forbes Holdings
Inc. and various of its affiliates since March 1987. Mr. Drapkin was a partner
in the law firm of Skadden, Arps, Slate, Meagher & Flom in New York City for
more than five years prior thereto. Mr. Drapkin also serves as a director of the
following corporations which file reports pursuant to the Securities Exchange
Act

6
<PAGE>

of 1934: Algos Pharmaceutical Corporation, Anthracite Capital, Inc.
BlackRock Asset Investors, Cardio Technologies, Inc. The Cosmetic Center, Inc.,
Playboy Enterprises, Inc., Revlon, Inc., Revlon Consumer Products Corporation,
and Weider Nutrition International, Inc.

RICHARD L. DUNNING has been President and Chief Executive Officer of the
Company since April 1996. Prior to joining the Company, Mr. Dunning served as
Executive Vice President and Chief Financial Officer of the DuPont Merck
Pharmaceutical Company since 1991. Mr. Dunning also serves as a director of the
following corporations which file reports pursuant to the Exchange Act: Innovir
Laboratories, Inc. (a subsidiary of VIMRX); Epoch Pharmaceuticals, Inc.; Endorex
Corp.

LAURENCE D. FINK was elected a director of the Company in June 1996. Mr.
Fink has been Chairman and Chief Executive Officer and Director of BlackRock
Financial Management (investment advisor) since 1988. Mr. Fink also serves as a
director of Innovir Laboratories, Inc. and of the closed end funds for which
BlackRock serves as investment advisor.

JEROME GROOPMAN, M.D. was elected a director of the Company in June 1996.
Dr. Groopman has been a professor of Medicine at Harvard Medical School since
1993. Dr. Groopman is, and has since 1989 been, an attending physician of Beth
Israel New England Deaconess Medical Center. Dr. Groopman also serves as a
director of the following corporations which file reports pursuant to the
Exchange Act: Advance Tissue Sciences.

LINDA G. ROBINSON was elected a director of the Company in June 1996. Ms.
Robinson has been Chairman and Chief Executive Officer of Robinson, Lerer &
Montgomery, LLC, a strategic communications consulting firm that serves major
corporations in the United States and abroad, since May 1996. For more than
five years prior to that she was Chairman and Chief Executive Officer of
Robinson Lerer Sawyer Miller Group, or its predecessors. Ms. Robinson also
serves as a director of the following corporation which files reports pursuant
to the Exchange Act: Revlon, Inc.

ERIC A. ROSE, M.D. was elected a director of the Company in November 1995.
Dr. Rose is Surgeon-In-Chief at Columbia Presbyterian Medical Center in New
York, a position he has held since August 1994. Dr. Rose is a past president of
the International Society for Heart and Lung Transplantation.

LINDSAY A. ROSENWALD, M.D. was elected a director of the Company in June
1996. Dr. Rosenwald has been the Chairman and Chief Executive Officer of
Paramount Capital, Incorporated (investment bank) since 1992. Dr. Rosenwald is
also chairman of Paramount Capital Investments, LLC, Paramount Capital Asset
Mgt., and The Castle Group. Dr. Rosenwald has founded and serves on the Board
of Directors of several emerging biotechnology corporations. He also serves as
a director of the following corporations which file reports pursuant to the
Securities Exchange Act of 1934, as amended (the "Exchange Act"): Ansan, Inc.,
Avigen, Inc., Atlantic Pharmaceuticals, Inc., BioCryst Pharmaceuticals, Inc.,
Interneuron Pharmaceuticals, Inc., Neose Technologies, Inc., Sparta
Pharmaceuticals, Inc., Titan Pharmaceuticals, Inc. and Xenometrix, Inc.

7
<PAGE>

VICTOR W. SCHMITT was elected a director of the Company in December, 1997,
pursuant to an agreement between the Company and Baxter Healthcare Corporation
(see "Certain Transactions"). Mr. Schmitt has been President, Venture
Management, Baxter Healthcare Corporation since 1994. Prior to this position, he
held the operating position of President, Baxter Biotech Europe. Mr. Schmitt
joined Baxter after a 16-year career with the American Red Cross Blood Services
where he held positions in marketing and operations. He also serves as a
director of a number of development-stage biotech companies.

MICHAEL WEINER, M.D. was elected a director of the Company in June 1996.
Dr. Weiner has been the Hettinger Professor of Clinical Pediatrics at Columbia
University College of Physicians and Surgeons since January 1996. He has been an
attending pediatrician at Columbia -Presbyterian Medical Center since January
1996. Dr. Weiner has served as Associate Director of Pediatrics
Hematology/Oncology and Associate Attending Physician of Hackensack Medical
Center and an Associate Attending Pediatrician UMDNJ Division of Pediatric
Hematology/Oncology, since 1987, and Chief of the Division of Pediatric
Oncology, Babies and Children's Hospital of New York.

MEETINGS AND COMMITTEES

During 1997, there were six meetings of the Board of Directors which were
attended by all directors, except for Dr. Jerome Groopman and Dr. Eric A. Rose,
who were absent from two meetings, and Ms. Linda G. Robinson, who was absent
from one meeting. Additionally, the Board took action by unanimous written
consent without a meeting on one occasion in 1997.

The Compensation Committee, which also acts as the Stock Option Committee,
currently consists of Mr. Donald G. Drapkin, Mr. Richard L. Dunning, Dr. Eric A.
Rose and Dr. Lindsay A. Rosenwald. The Compensation Committee met one time and
took action by unanimous written consent without a meeting on two occasions
during 1997. The Compensation Committee sets and recommends to the Board yearly
executive compensation and conditions of employment and administers the
Company's stock option plans.

The Audit Committee, which consists of Mr. Richard L. Dunning, Mr. Laurence
D. Fink, Ms. Linda G. Robinson and Dr. Michael Weiner, met once and took action
by unanimous written consent without a meeting on one occasion during 1997. The
Audit Committee reviews the audit and financial procedures of the Company and
recommends any changes with respect thereto to the Board of Directors.

The Company does not have a standing nominating committee.

EXECUTIVE COMPENSATION

Compensation Committee Report

The Compensation Committee is responsible for setting the Company's policy
regarding the compensation of the Company's senior executive officers, including
the Chief Executive Officer, and administering the Company's stock option plans.
The Company's policy is to establish a compensation program that will attract,
retain and motivate qualified members of

8
<PAGE>

senior management in a manner that is competitive with other companies in the
biotechnology industry. The key elements in this policy are salary, stock
options, and availability of a cash bonus. As the Company is still in the
development stage, revenues and profits are presently inapplicable as factors in
determining compensation of the Chief Executive Officer and other executives of
the Company. Rather, the Compensation Committee looks to qualitative factors,
including the officers' efforts to build the organization, to expand the
Company's potential product line (through acquiring new technologies or
otherwise), to expand the range of applications therefor, and to intensify the
Company's research and development efforts for its potential products. In
determining the cash bonus for 1997 for Richard L. Dunning, the Company's Chief
Executive Officer, the Compensation Committee considered a number of significant
positive developments including, among other factors, the acquisition of a
controlling interest in Nexell Therapeutics and establishing a relationship with
Columbia University.

THE COMPENSATION COMMITTEE
Donald G. Drapkin
Richard L. Dunning
Eric A. Rose, M.D.
Lindsay A. Rosenwald, M.D.

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

Summary Compensation

The following table sets forth a summary of the compensation for the year
ended December 31, 1997 earned by the Company's Principal Executive Officer and
each other executive officer whose compensation exceeded $100,000 during 1997:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------- --------------------------------------
Name and Other
Principal Position Year Salary Bonus Options Compensation
- ---------------------- ----------- ----------------- ----------------- ------------------ -----------------

<S> <C> <C> <C> <C> <C>
Richard L. Dunning 1997 $200,000 $95,000 $6,000 (2)
President and Chief 1996 $133,833 $40,000 800,000 (1) $4,500 (2)
Executive Officer

Francis M. O'Connell 1997 $139,000 $45,000
Vice President, Finance 1996 $123,800 $35,000
and Controller 1995 $ 96,125 100,000 (3)

David A. Jackson, Ph.D 1997 $175,000 $70,000
Vice President, Research 1996 $ 48,000 $40,000 500,000 (4)
& Development, Chief
Scientific Officer
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
------------------------------------------------- --------------------------------------
Name and Other
Principal Position Year Salary Bonus Options Compensation
- ---------------------- ----------- ----------------- ----------------- ------------------ -----------------

<S> <C> <C> <C> <C> <C>
Alfonso J. Tobia, Ph.D 1997 $150,000 $55,000
Senior Vice President 1996 $147,272 $50,000
1995 130,000 $12,500

L. William McIntosh 1997 $ 99,487 $40,000 400,000 (5)
Senior Vice President,
Business Development
and Finance, Chief
Financial Officer
</TABLE>

(1) Number of shares of Common Stock purchasable. See Option Grant Table
below for exercise price and vesting terms.

(2) Reimbursement of personal medical and health care insurance.

(3) Number of shares of Common Stock purchasable at $.44 per share. In
1997, 75,000 Innovir options were granted at $ 1.30 per share.

(4) Number of shares of Common Stock purchasable at $3.31 per share.

(5) 34,900 shares of Common Stock purchasable at $1.91 per share; 162,000
shares of Common Stock purchasable at $2.47 per share; and 203,100 shares of
Common Stock purchasable at $1.91 per share.

Option Grant Table

The following table sets forth certain information concerning options
granted in 1997 to the individuals named in the Summary Compensation Table:

OPTION GRANTS IN THE LAST FISCAL YEAR
-------------------------------------

<TABLE>
<CAPTION>
NUMBER OF % OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED IN
OPTIONS EMPLOYEES IN EXERCISE PRICE
NAME GRANTED FISCAL YEAR PER SHARE EXPIRATION DATE
- --------------------- --------------------- --------------------- --------------------- ----------------------
<S> <C> <C> <C> <C>
L. William McIntosh 34,900 6% $1.906 5/02/02
162,000 26% $2.469 5/19/02
203,100 22% $1.906 5/19/02
</TABLE>

10
<PAGE>

Option Exercises and Value Table

The following table sets forth certain information concerning options
exercised during 1997, and the number of unexercised options as at December 31,
1997, held by the individuals named in the Summary Compensation Table.

OPTION EXERCISES AND VALUES AT DECEMBER 31, 1997
------------------------------------------------

<TABLE>
<CAPTION>
Value of
Number of Unexercised Unexercised In-the
Shares Options at December 31, Money Options at
acquired on Value 1997 Exercisable (E) / December 31,
Name exercise realized (1) Unexercisable (U) 1997(1)
- --------------------- ------------- ---------------- ------------------------ ------------------------
<S> <C> <C> <C> <C>
Richard L. Dunning 292,678 (U)
507,322 (E)
David A. Jackson, Ph.D. 106,037 (E)
393,963 (U)

L. William McIntosh 162,000 (U)
203,100 (U) $ 6,093
34,900 (U) $ 1,047
Francis M. O'Connell 50,000 (E) $ 75,000
50,000 (U) $ 75,000
Alfonso J. Tobia, Ph.D 112,500 (E) $140,625
37,500 (U) $ 46,875

</TABLE>

(1) Based upon the $1.938 closing sale price of the Common Stock on The
Nasdaq Stock Market on December 31, 1997.

Employment Arrangements

In October 1996, the Company entered into a restated employment agreement
with Richard L. Dunning, effective March 27, 1996, pursuant to which Mr. Dunning
serves as President and Chief Executive Officer of the Company. The agreement
provides for a base annual salary of $200,000, which may be increased at the
discretion of the Board of Directors or the Compensation Committee, and an
annual cash bonus based on performance criteria, with an initial cash bonus
targeted to be at least 33% of Mr. Dunning's base compensation. Mr. Dunning is
entitled to four weeks' vacation and to participate in the Company's medical,
dental, life and long-term disability insurance and other benefit programs.
Pursuant to the restated agreement, Mr. Dunning was granted stock options to
purchase an aggregate of 800,000 shares of Common Stock at an exercise price of
$2.56 per share, 156,064 of which are exercisable cumulatively at the rate of
25% per annum commencing March 28, 1997 (one year from the date of grant), and

11
<PAGE>

643,936 of which are exercisable cumulatively at the rate of 33-1/3% per annum
commencing March 28, 1997 (one year from the date of grant). Mr. Dunning's
employment may be terminated by the Company for cause, or without cause upon 60
days' notice by either the Company or Mr. Dunning. In the event Mr. Dunning's
employment is terminated by the Company without cause, or in the event Mr.
Dunning terminates his employment following certain actions by the Company
(including a material reduction in Mr. Dunning's duties or a relocation of the
Company's principal executive offices), Mr. Dunning is entitled to a severance
payment equal to six months' of his base salary, payable in monthly
installments. The agreement contains certain non-competition and
confidentiality provisions, and provides that the Company may obtain "key man"
life insurance on the life of Mr. Dunning for the Company's benefit. Mr. Dunning
received a $40,000 signing bonus upon execution of the agreement.

In August 1996, the Company entered into an employment agreement with David
A. Jackson, Ph.D., pursuant to which Dr. Jackson serves as Vice President -
Research and Development and Chief Scientific Officer of the Company. The
agreement provides for a base annual salary of $175,000, which may be increased
at the discretion of the Board of Directors or the Compensation Committee, and
an annual cash bonus based on performance criteria, with an initial cash bonus
targeted to be at least 33% of Dr. Jackson's base compensation. Dr. Jackson is
entitled to four weeks' vacation and to participate in the Company's medical,
dental, life and long-term disability insurance and other benefit programs.
Pursuant to the agreement, Dr. Jackson was granted stock options to purchase an
aggregate of 500,000 shares of Common Stock at an exercise price of $3.3125 per
share, 120,752 of which are exercisable cumulatively at the rate of 25% per
annum commencing August 26, 1997 (one year from the date of grant), and 379,248
of which are exercisable cumulatively at the rate of 20% per annum commencing
August 26, 1997 (one year from the date of grant). Dr. Jackson's employment may
be terminated by the Company for cause, or without cause upon 60 days' notice by
either the Company or Dr. Jackson. In the event Dr. Jackson's employment is
terminated by the Company without cause, or in the event Dr. Jackson terminates
his employment following certain actions by the Company (including a material
reduction in Dr. Jackson's duties or a relocation of the Company's principal
executive offices), Dr. Jackson is entitled to a severance payment equal to
twelve months' of his base salary, payable in monthly installments. The
agreement contains certain non-competition and confidentiality provisions, and
provides that the Company may obtain "key man" life insurance on the life of Dr.
Jackson for the Company's benefit. Dr. Jackson received a $40,000 signing bonus
upon execution of the agreement.

In June 1994, the Company entered into an employment agreement with Alfonso
J. Tobia, Executive Vice President of the Company, effective July 1, 1994,
providing for a base annual salary of $125,000, to be increased to $150,000 upon
the redemption by the Company of its outstanding Class A Warrants (which
occurred in 1996), and eligibility for a discretionary bonus up to $25,000. The
agreement provides that Dr. Tobia is eligible to receive options to purchase
150,000 shares of Common Stock (which were granted on August 24, 1994), and is
eligible to participate in the Company's benefit programs, which currently
include a medical program, dental/vision insurance and group life insurance.

12
<PAGE>

In May, 1997, the Company entered into an employment agreement with L.
William McIntosh pursuant to which Mr. McIntosh served as Senior Vice President,
Business Development and Finance and Chief Financial Officer. The agreement
provides for a base annual salary of $160,000 which may be increased at the
discretion of the Board of Directors or

13
<PAGE>

the Compensation Committee, and an annual cash bonus based on performance
criteria, with an initial cash bonus targeted to be at least 33% of Mr.
McIntosh's base compensation (with a minimum bonus of $42,000 the first year).
Mr. McIntosh is entitled to four weeks' vacation and to participate in the
Company's medical, dental, life and long-term disability insurance and other
benefit programs. Pursuant to the agreement, Mr. McIntosh was granted stock
options to purchase an aggregate of 238,000 shares of Common Stock at an
exercise price of $1.906 per share and 162,000 sales exercisable at $2.469,
exercisable in four equal increments of 100,000 shares each on the first, second
and third and fourth anniversaries of the date of his employment contract. Mr.
McIntosh's employment contract may be terminated by the Company for cause, or
without cause upon 60 days' notice by either the Company or Mr. McIntosh. In the
event Mr. McIntosh's employment is terminated by the Company without cause, or
in the event Mr. McIntosh terminates his employment following certain actions by
the Company (including a material reduction in Mr. McIntosh's duties), Mr.
McIntosh is entitled to a severance payment equal to twelve months of his base
salary, payable in monthly installments. The agreement contains certain non-
competition and confidentiality provisions, and provides that the Company may
obtain "key man" life insurance on the life of Mr. McIntosh for the Company's
benefit. Mr. McIntosh received a $40,000 signing bonus upon execution of the
agreement.

On March 1, 1998, Mr. McIntosh was named the President and CEO of the
Company's majority-owned subsidiary, Nexell Therapeutics, Inc. ("Nexell"). In
light of his new position, Mr. McIntosh, the Company and Nexell are, at the time
of printing of this proxy statement, renegotiating Mr. McIntosh's employment
arrangement. The renegotiated agreement, which will be effective as of March 1,
1998, is expected to provide for a base annual salary of $225,000 which may be
increased at the discretion of Nexell's Board of Directors, and an annual cash
bonus based on performance criteria, with an initial cash bonus targeted to be
at least 25% of Mr. McIntosh's base compensation. The renegotiated agreement is
also expected to provide for a $25,000 signing bonus and reimbursement of
relocation expenses. Mr. McIntosh will be entitled to four weeks' vacation and
to participate in Nexell's medical, dental, life and long-term disability
insurance and other benefit programs. Pursuant to the renegotiated agreement,
Mr. McIntosh will surrender options to purchase 190,000 shares of VIMRX Common
Stock previously granted to him under VIMRX's 1990 Incentive and Non-Incentive
Stock Option Plan ("1990 Plan") consisting of non-incentive options to purchase
28,000 shares of VIMRX Common Stock at $1.91 per share and incentive options to
purchase 162,000 shares of VIMRX Common Stock at $2.47 per share, and will
retain non-incentive options to purchase 300,000 shares of VIMRX Common Stock
consisting of 210,000 shares of Common Stock purchasable at $1.91 per share
granted in 1997 under the 1990 Plan and the 1997 Plan, and options to purchase
an additional 90,000 shares of Common Stock at a purchase price of $1.625 per
share granted to him in 1998 under the 1997 Plan. Additionally, he will be
granted stock options to purchase an aggregate of 125,000 shares of Nexell
common stock under the Nexell Plan at an exercise price of $5.00, exercisable in
four equal increments of 31,250 shares each on the first, second and third and
fourth anniversaries of the effective date of his renegotiated employment
contract. Additionally, if an event occurs which would cause options issued
under the Nexell Plan to become exercisable for VIMRX Common Stock (See
"Approval of Adoption of 1998 Non-Incentive Stock Option Plan for Directors,
Employees and Consultants of Nexell Therapeutics Inc. General Shares Subject to
the Nexell Plan"), Mr. McIntosh will also be granted additional options to
purchase 60,000 shares of VIMRX Common Stock at $.001 per share, which will

14
<PAGE>

become exercisable on the four-year vesting schedule described above. Mr.
McIntosh's renegotiated employment contract may be terminated by Nexell for
cause, or without cause upon 60 days' notice by either Nexell or Mr. McIntosh.
In the event Mr. McIntosh's employment is terminated by Nexell without cause, or
in the event Mr. McIntosh terminates his employment following certain actions by
Nexell (including a material reduction in his duties), (i) Mr. McIntosh will be
entitled to a severance payment equal to twelve months of his base salary,
payable in monthly installments, (ii) his exercisable (giving effect to the
four-year vesting schedule described above but without giving effect to the
other restrictions on exercisability set forth in the Nexell Plan) options to
purchase Nexell common stock will be converted into options to purchase VIMRX
Common Stock at the rate of 3 shares of VIMRX Common Stock for each share of
Nexell common stock purchasable under the options, at an exercise price per
share of VIMRX Common Stock equal to one-third of the exercise price per share
of Nexell common stock. and (iii) Mr. McIntosh will be issued out-of-plan
options to purchase up to 60,000 shares of VIMRX Common Stock at $.001 per
share. The agreement contains certain non-competition and confidentiality
provisions, and provides that Nexell may obtain "key man" life insurance on the
life of Mr. McIntosh for Nexell's benefit.

Section 16 Proxy Statement Disclosure

Section 16 of the Securities Exchange Act of 1934, as amended, requires
that officers, directors and holders of more than 10% of the Common Stock
(collectively, "Reporting Persons") file reports of their trading in Company
equity securities with the Securities and Exchange Commission. Based on a
review of Section 16 forms filed by the Reporting Persons during the last fiscal
year, the Company believes that the Reporting Persons timely complied with all
applicable Section 16 filing requirements.

CERTAIN TRANSACTIONS

In August, 1995, the Company entered into a consulting agreement with
Lindsay A. Rosenwald, M.D., who was elected a director of the Company in June,
1996, pursuant to which Dr. Rosenwald has agreed to act as a financial
consultant to the Company pursuant to the terms thereof and the Company granted
Dr. Rosenwald an option to purchase 2,000,000 shares of Common Stock at $.53125
per share (the closing bid price of the Common Stock on The NASDAQ Stock Market
on the date preceding the date of grant), exercisable through August 6, 1998.
In June 1996, Dr. Rosenwald transferred 85,000 of the underlying option shares
to other persons.

In November 1995, the Company entered into an arrangement with Donald G.
Drapkin, a director of the Company, pursuant to which Mr. Drapkin agreed to make
available to the Company his business and financial acumen for a five-year
period, and the Company granted Mr. Drapkin an option to purchase 650,000 shares
at $.9375 per share (the closing bid price of the Common Stock on The NASDAQ
Small Cap Market on the date preceding the date of grant), exercisable at the
rate of 25% of the aggregate number of underlying shares per annum commencing
one year from the date of grant. Concurrently, the Company entered into a five-

15
<PAGE>

year consulting arrangement with Eric A. Rose, M.D., a director of the Company,
pursuant to which Dr. Rose agreed to provide scientific consulting services to
the Company, and the Company granted Dr. Rose an option to purchase 650,000
shares at $.9375 per share, exercisable at the rate of 25% of the aggregate
number of underlying shares per annum commencing one year from the date of
grant.

On June 21, 1996, the Company completed a private placement pursuant to a
subscription agreement dated March 21, 1996 to a group of investors, including
the following directors or persons or entities affiliated with such directors:
(i) Laurence D. Fink, a director of the Company, purchased 266,667 shares of
Common Stock and 133,333 Common Stock Purchase Warrants for $400,000, and a
family trust of Mr. Fink purchased 66,666 shares of Common Stock and 33,333
Common Stock Purchase Warrants for $100,000; (ii) Linda G. Robinson, a director
of the Company, purchased 133,333 shares of Common Stock and 66,666 Common Stock
Subscription Warrants for $200,000; and (iii) The Aries Trust Fund, a Cayman
Island trust (the "Aries Trust"), and The Aries Domestic Fund, L.P., a Delaware
limited partnership ("The Aries Limited Partnership" and, together with the
Aries Trust, the "Aries Funds"), purchased an aggregate of 666,666 shares of
Common Stock and 333,333 Common Stock Subscription Warrants for an aggregate of
$1,000,000. Lindsay A. Rosenwald, M.D., a director of the Company, serves as
President and is the sole shareholder of the investment manager of the Aries
Trust, and serves as President and is the sole shareholder of the general
partner of the Aries Limited Partnership. Jerome Groopman, M.D., a director of
the Company, is a member of the Scientific Advisory Board of the Aries Funds.

In March 1997, VIMRX entered into a research agreement relating to the
discovery, mapping, sequencing and validation of disease-related genes with
Columbia University. The agreement provides for VIMRX Genomics, Inc. ("VGI"), a
majority-owned subsidiary of VIMRX, to provide $30 million in funding to the
Columbia Genome Center over a 5-year period and for VGI to receive an exclusive
license to develop, manufacture, use, sell or market products resulting from any
invention research information and biological materials developed by the Center
and funded under the agreement. The agreement is terminable by either Columbia
or VGI during the initial five-year term upon six months' notice, but in no
event earlier than September 7, 1999. Under the agreement, VIMRX issued 200,000
shares of Common Stock to Columbia, which shares have subsequently been
registered under the Securities Act of 1933, as amended, pursuant to
registration rights granted to Columbia and granted Columbia a 10% ownership
interest in VGI. VGI has paid Columbia $4.7 million in funding in quarterly
installments in respect of its obligations for 1997 under the Agreement. VGI has
sought technology collaborations with pharmaceutical and/or diagnostic companies
and has solicited equity investments in VGI from potential technology partners
and other investors, but has been unable to consummate any such transactions on
reasonable terms. As a result, VGI is engaged in discussions with Columbia with
a view to restructuring its relationship with Columbia. Eric A. Rose, M.D., a
director of the Company, is a Surgeon-In-Chief at Columbia Presbyterian Medical
Center in New York, an affiliate of Columbia, and has served as Chairman of the
Department of Surgery at the College of Physicians and Surgeons of Columbia.
Michael Weiner, M.D., a director of the Company, is the Hellinger Professor of
Clinical Pediatrics at Columbia's College

16
<PAGE>

of Physicians and Surgeons, Director of Pediatric Oncology, and is an attending
physician at Columbia Presbyterian Medical Center.

VIMRX acquired the intellectual property and intangible assets, other than
trademarks, of the Immunology Division (the "Division") of the Biotech Business
Group of Baxter Healthcare Corporation ("Baxter"), in December 1997, for
11,000,000 shares of the Company's Common Stock and 66,304 shares of the
Company's Class A Preferred Stock, and immediately transferred such intangible
assets to Nexell in exchange for 80.5% of Nexell's common stock. Concurrently,
Nexell acquired the tangible assets, business, trademarks and certain
obligations of the Division in exchange for the issuance to Baxter of 19.5% of
Nexell's common stock and a warrant entitling Baxter to purchase an additional
6% of Nexell's common stock for $6,000,000. In addition, the Company purchased
$10,000,000 principal amount of Nexell's 6.5% convertible subordinated
debentures for $10,000,000, to be paid out of available cash on hand, and Baxter
purchased $30,000,000 principal amount of such debentures for $30,000,000.

In connection with the acquisition, Nexell entered into several agreements
with Baxter; pursuant to one of such agreements, Nexell may pay up to
$21,000,000 to Baxter as and when certain product development and regulatory
milestones are achieved. As a result of the transaction, Baxter owns in excess
of 5% of the Common Stock of the Company. Victor W. Schmitt, a director of the
Company, is an employee of Baxter.

The Company believes that the research agreement with Columbia and the
acquisition agreement and related agreements with Baxter were negotiated on an
arm's length basis.

STOCK PRICE PERFORMANCE COMPARISON

The Stock Price Performance Graph below compares cumulative total return of
the Company's Common Stock with the cumulative total return of (i) the Index for
the NASDAQ Stock Market (U.S. Companies) (the "NASDAQ Index") and (ii) an
industry peer group index consisting of the NASDAQ Pharmaceutical Index (the
"Peer Index"). The Graph assumes $100 was invested on January 1, 1993, in (i)
the Company's Common Stock, (ii) the stocks comprising the NASDAQ Index and (ii)
the stocks comprising the Peer Index, and the reinvestment of dividends.

17
<PAGE>

[GRAPH APPEARS HERE]

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

APPROVAL OF AMENDMENT TO 1997 INCENTIVE
AND NON-INCENTIVE STOCK OPTION PLAN
General

Under the VIMRX 1997 Incentive and Non-Incentive Stock Option Plan, as
amended, (the "1997 Plan"), which was approved by the Company's stockholders in
1997, an aggregate of 1,000,000 shares are reserved for issuance upon exercise
of options thereunder. Under the 1997 Plan, incentive stock options, as defined
in section 422 of the Internal Revenue Code (the "Code"), may be granted to
employees and non-incentive stock options may be granted to employees, directors
and other persons as the Stock Option Committee appointed by the Board of
Directors (the "Committee") determines will contribute to the Company's success,
at exercise prices equal to at least 100% (with respect to incentive stock
options) and at least 50% (with respect to non-incentive stock options) of the
fair market value of the Common Stock on the date of grant. In addition to
selecting the optionees, the Committee determines the number of shares of Common
Stock subject to each option, the term of each non-incentive stock option, the
time or times when the non-incentive stock option becomes exercisable, and
otherwise administers the 1997 Plan. Options are granted for a term determined
by the Committee not to exceed ten years, and are exercisable on terms and
conditions determined by the Committee. Generally, options granted under the
1997 Plan may not be exercised more than three months following termination of
employment or engagement, except terminations by reason of death or disability,
in which

18
<PAGE>

case such options may be exercised for one year following such event. However,
the Committee may in its discretion extend the time required to exercise non-
incentive options for up to ten years after the date of grant.

The purpose of the 1997 Plan is to further the growth and development of
the Company by encouraging selected employees, directors and other persons who
contribute and are expected to contribute materially to the Company's success to
obtain a proprietary interest in the Company through the ownership of its stock,
thereby providing such persons with an added incentive to promote the best
interests of the Company and affording the Company a means of attracting persons
of outstanding ability to its service. Approximately 12 employees of VIMRX and
an indeterminate number of consultants and others are eligible to participate in
the 1997 Plan.

As of the Record Date options to purchase an aggregate of 725,600 shares of
Common Stock had been granted and were outstanding, and a balance of 274,400
shares remain available for issuance under the 1997 Plan for options to be
subsequently granted thereunder. Management proposes to amend the 1997 Plan to
make an additional 1,000,000 shares available for issuance thereunder in order
to accommodate the Company's anticipated continuing growth.

Federal Income Tax Consequences

The following is based upon federal tax laws and regulations as presently
in effect and does not purport to be a complete description of the federal
income tax aspects of the 1997 Plan. Also, the specific state tax consequences
to each participant under the Plan may vary, depending upon the laws of the
various states and the individual circumstances of each participant.

Incentive Stock Options

No taxable income is recognized by the optionee upon the grant of an
incentive stock option under the 1997 Plan. Further, no taxable income will be
recognized by the optionee upon exercise of an incentive stock option granted
under the 1997 Plan and no expense deduction will be available to the Company,
if the optionee holds shares acquired upon the exercise of incentive stock
options for at least two (2) years from the date of grant of the option and for
at least one (1) year from the date of exercise. Any gain on a subsequent sale
of such shares will be considered as long-term capital gain as long as the
selling shareholder has held the shares for at least eighteen (18) months. The
gain recognized upon the sale of the shares is equal to the excess of the amount
realized upon the sale (usually the selling price of the shares) over the
exercise price. Therefore, the net federal income tax effect on the holders of
incentive stock options is to defer, until the shares are sold, taxation of any
increase in the value of the shares from the date of grant and to treat such
gain, at the time of sale, as capital gain rather than ordinary income. However,
in general, if the optionee sells the shares prior to expiration of two (2)
years from the date of the option grant or one (1) year from the date of
exercise (referred to as a "disqualifying disposition"), the optionee will
recognize taxable income at ordinary tax rates in an amount equal to the lesser
of (i) the value of the shares on the date of exercise, less the exercise price;
or (ii) the amount realized on the date of sale, less the exercise price, and
the Company will receive a corresponding business expense deduction. The balance
of any gain recognized on a
19
<PAGE>

disqualifying disposition will be long-term or short-term capital gain depending
upon the holding period of the optioned shares. The special two-year and one
year holding periods for incentive options do not apply to option shares which
are disposed of by the optionee's estate or a person who acquired such shares by
reason of the death of the optionee.

An employee may be subject to an alternative minimum tax upon exercise of
an incentive stock option since the excess of the fair market value of the
option stock at the date of exercise over the exercise price must be included in
alternative minimum taxable income, unless the acquired shares are disposed of
in the same year that the option was exercised.

Non-Incentive Stock Options

As in the case of incentive stock options, the grant of non-incentive stock
options will not result in any taxable income to the optionee. However, the tax
treatment upon exercise of non-incentive stock options is different. Generally,
the optionee will recognize ordinary income when the option is exercised in the
amount by which the fair market value of the purchased shares on the date of
exercise exceeds the exercise price.

The fair market value of the shares on the date of exercise will constitute
the tax basis of the shares for computing gain or loss on any subsequent sale.
Any gain or loss recognized by the optionee upon the subsequent disposition of
the shares will be treated as capital gain or loss and will qualify as long-term
capital gain or loss if the shares are held for more than eighteen months prior
to disposition.

Generally, the Company will be entitled to a business expense deduction
equal to the amount of ordinary income recognized by the optionee at the date of
exercise of a non-incentive option. The income recognized by the optionee will
be treated as compensation income and will be subject to income tax withholding
by the Company.

Section 162(m) of the Code

Under Section 162(m) of the Code, certain compensation payments in excess
of $1 million are subject to a limitation on deductibility for the Company. The
limitation on deductibility applies with respect to that portion of a
compensation payment for a taxable year in excess of $1 million to either the
Company's Chief Executive Officer or any one of the Company's other four most
highly compensated executive officers. Certain performance-based compensation is
not subject to the limitation on deductibility. Options can qualify for this
performance-based exception, but only if they are granted at fair market value,
the total number of shares that can be granted to an executive for a specified
period is stated, and shareholder and Board approval of the plan under which
they are granted is obtained. The 1997 Plan allows compliance with those
performance-based criteria except that non-qualified stock options granted with
an exercise price less than the fair market value of the Common Stock on the
date of grant will not meet such performance-based criteria and, accordingly,
the compensation attributable to such options will be subject to the
deductibility limitations contained in Section 162(m) of the Code.

20
<PAGE>

At the date of this Proxy Statement, long-term capital gain is taxed to
individuals at a maximum preferential rate of 20% (10% for individuals in the
15% bracket), while items of ordinary income are currently taxed to individuals
at a maximum rate of 39.6%.

Required Vote

Approval of the amendment to the 1997 Plan ("1997 Plan Amendment") will
require the affirmative vote of the holders of a majority of the outstanding
shares of Common Stock present in person or represented by proxy at the Meeting
and entitled to vote. In instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned proxies
("broker non-votes"), those shares will not be included in the vote totals, and
therefore will have no effect on the approval of the 1997 Plan Amendment. Unless
marked to the contrary, proxies received will be voted FOR approval of the 1997
Plan Amendment.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE 1997 PLAN AMENDMENT.

APPROVAL OF ADOPTION OF 1998
NON-INCENTIVE STOCK OPTION PLAN FOR
DIRECTORS, EMPLOYEES AND CONSULTANTS
OF NEXELL THERAPEUTICS INC.
General

On May 1, 1998, the Board of Directors adopted the Nexell Plan, subject to
stockholder approval. The purpose of the Nexell Plan is to further the growth
and development of the Company's subsidiary, Nexell, by encouraging selected
employees, directors and other persons who contribute and are expected to
contribute materially to Nexell's success to obtain a either a direct
proprietary interest in Nexell through the ownership of its stock, or an
indirect proprietary interest in Nexell through ownership of VIMRX stock,
thereby providing such persons with an added incentive to promote the best
interests of Nexell and affording Nexell a means of attracting persons of
outstanding ability to its service. Approximately 94 employees of Nexell and
an indeterminate number of consultants and others are eligible to participate in
the Nexell Plan.

As of the Record Date, options to purchase an aggregate of 990,350 shares
of Nexell Common Stock had been granted and were outstanding, and a balance of
9,650 shares of Nexell Common Stock remain available for issuance under the
Nexell Plan for options to be subsequently granted thereunder, all of which
grants are subject to stockholder approval of the Nexell Plan. As is described
below, under certain circumstances, each option to purchase one share of Nexell
Common Stock may become exercisable for three shares of VIMRX Common Stock.

Following is a summary of the provisions of the Nexell Plan:

1. Shares Subject to the Nexell Plan. The Nexell Plan provides for the
- -- ---------------------------------
reservation of 1,000,000 shares of Nexell common stock for the issuance of
options to participants in

21
<PAGE>

the Nexell Plan. At present, there are 9,000,000 shares of Common Stock of
Nexell issued and outstanding, 7,245,000 of which are owned by VIMRX and
1,755,000 of which are owned by Baxter Healthcare Corporation. The Nexell Plan
provides that in certain events, each option to purchase one share of Nexell
Common Stock shall be exercisable for three shares of VIMRX Common Stock. The
events that would cause the options to become exercisable for VIMRX Common Stock
are a merger of Nexell with VIMRX, the acquisition of all of the shares of
Nexell by VIMRX, or the continuation of Nexell as a majority owned subsidiary of
VIMRX beyond March 31, 2001 without an initial public offering of Nexell Common
Stock having occurred. Accordingly, 3,000,000 shares of VIMRX Common Stock have
also been reserved for issuance under the Nexell Plan.

2. Administration of the Nexell Plan. The Nexell--Plan is administered by
-- ---------------------------------
a committee of two or more members of VIMRX's Board of Directors (the
"Committee") and provides that in the event of an initial public offering of
Nexell common stock, or in the event VIMRX ceases to be a majority owner of
Nexell, the Committee shall be comprised of two or more directors of Nexell. Mr.
Drapkin, Mr. Dunning, Dr. Rose and Dr. Rosenwald currently constitute the
members of the Committee. The Nexell Plan provides that, to the extent
practicable, the Committee will be comprised of "non-employee directors" as
defined by Rule 16b-3 under the Securities Exchange Act, and "outside directors"
as defined in the Internal Revenue Code. The Board of Directors of VIMRX (or of
Nexell, in the event the Nexell Plan shall be administered by a committee of
Nexell directors) may take any action permitted to be taken by the Committee.
The Committee has complete authority to award options under the Nexell Plan, to
interpret the Nexell Plan, to establish any rules or regulations relating to the
Nexell Plan, and to make any other determination which it believes necessary or
advisable for the proper administration of the Nexell Plan. Its decisions in
matters relating to the Nexell Plan are final and conclusive on Nexell and the
participants in the Nexell Plan. The Nexell Plan is not subject to the
provisions of the Employee Retirement Income Security Act of 1974 and is not a
qualified plan under Section 401(a) of the Code.

3. Powers of the Committee. The Committee selects the optionees and
-- -----------------------
determines (i) the number of shares of Common Stock purchasable under an option,
which may not exceed 125,000 shares of Nexell Common Stock (or 375,000 shares of
VIMRX Common Stock) for any individual, (ii) the exercise price, (iii) the time
or times when the option becomes exercisable, and (iv) its duration, which may
not exceed ten years from the date of grant. The Committee also shall have the
power to accelerate exercisability, extend the term of exercisability (but not
beyond ten years), provide for transferability to family members and family
trusts of optionees and, subject to the provisions of the Nexell Plan, otherwise
amend the provisions of outstanding options.

4. Eligibility for Option Grants. Options under the Nexell Plan may be
-- -----------------------------
granted to employees, directors, consultants, agents, independent contractors
and such other persons as the Committee determines will assist Nexell's
endeavors.

5. Term of Options. Options under the Nexell Plan may be granted for a
-- ---------------
term of up to ten years, as determined by the Committee at the date of grant.

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<PAGE>

6. Early Termination of Options. The Nexell Plan provides that in the
-- ----------------------------
event the employment or engagement of an optionee by Nexell is terminated for
any reason, the optionee may exercise the option only during a three month
period following termination of employment or engagement; provided, however, in
the event of termination of employment by reason of death or disability, for one
year following the date of death or termination of employment, the optionee or
the optionee's legal representative or the person or persons to whom the
optionee's rights under the Option are transferred by will or the laws of
descent and distribution will have the same right to exercise the Option as the
optionee had on the date of death or termination of employment. Notwithstanding
the foregoing, the Committee may extend the term of an option otherwise
terminable for the foregoing reasons for a period not more than ten years from
the date of grant.

7. Exercisability of Options. The Committee will determine the
-- -------------------------
exercisability of each option, provided, however, no option may be exercised
prior to March 31, 2001, unless before that date (i) there has been an initial
public offering of Nexell Common Stock or (ii) Nexell has merged with VIMRX or
VIMRX has acquired all of the issued and outstanding capital stock of Nexell. As
described above, in the event that Nexell merges with VIMRX or VIMRX acquires
all of the issued and outstanding capital stock of Nexell, or the Committee
determines that it is necessary or desirable in order to comply with applicable
federal or Stock Securities laws, all issued and outstanding options will become
exercisable for VIMRX Common Stock, in lieu of Nexell Common Stock. Except as
described in the previous paragraph, or as otherwise determined by the committee
in the case of non-employees, no option shall be exercisable unless the holder
thereof shall have been an employee, director, consultant, agent, independent
contractor or other person employed by or engaged in performing services for
Nexell continuously from the date of grant to the date of exercise.

8. Cashless Exercises. The Plan permits, to the extent determined by the
-- ------------------
Committee for individual option grants, payment of the exercise price of options
by the delivery of shares of VIMRX or Nexell, as the case may be.

9. Acceleration upon a Change of Control. Upon the occurrence of a
-- -------------------------------------
"change in control" of Nexell (as defined below), all outstanding options shall
become immediately vested and fully exercisable. For purposes of the Nexell
Plan, a "change in control" of Nexell means:

(i) the acquisition at any time by a "person" or "group" (as such terms are
used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1944,
as amended (the "Exchange Act")) of beneficial ownership (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities
representing 50% or more of the combined voting power in the election of
directors of the then outstanding securities of Nexell or any successor of
Nexell;
(ii) the termination of service as directors, during any period of two
consecutive years or less, of individuals who at the beginning of such
period constituted a majority of the Board of Directors of Nexell or any
successor of Nexell, for any reason other than death, disability or
retirement, unless the election of or nomination for election of each new
director during such period

23
<PAGE>

was approved by a vote of at least two-thirds of the directors still in
office who were directors at the beginning of the period;

(iii)approval by the stockholders of Nexell or any successor of Nexell of any
merger, consolidation, or statutory share exchange as a result of which the
Nexell Common Stock shall be changed, converted or exchanged (other than a
merger, consolidation or share exchange with VIMRX or a wholly-owned
subsidiary of VIMRX) or liquidation of Nexell or any successor of Nexell,
or any sale or disposition of 80% or more of the assets or earning power of
Nexell or any successor of Nexell (except to VIMRX);

(iv) approval by the stockholders of Nexell of any merger, consolidation, or
statutory share exchange to which Nexell is a party as a result of which
the persons who were stockholders immediately prior to the effective date
of the merger, consolidation or share exchange shall have beneficial
ownership of less than 50% of the combined voting power in the election of
directors of the surviving corporation;

provided, however, that no change in control shall be deemed to have occurred
if, prior to such time as a change in control would otherwise be deemed to have
occurred, the Board of Directors of VIMRX or Nexell, as the case may be, deems
otherwise.

10. Option Adjustments. The Nexell Plan contains a customary anti-
--- ------------------
dilution provision which provides that in the event at any time after the date
of grant of an option, Nexell or VIMRX changes its shares of Common Stock into a
different number or kind or class of shares or other securities or property, by
reason of a stock dividend, split-up, combination, reclassification or exchange,
or through a merger or consolidation or otherwise (other than through the merger
of Nexell into VIMRX), then the number of shares of Nexell or VIMRX, as the case
may be, covered by such option and the price per share thereof shall be
proportionately adjusted for any such change by the Committee. The Committee's
determination of the amount of any such adjustment shall be conclusive.

11. Duration, Termination and Amendment of the Nexell Plan. No Options
--- ------------------------------------------------------
may be granted under the Plan after December 31, 2007. The Board of Directors of
VIMRX or Nexell, as the case may be, may amend or discontinue the Nexell Plan at
any time. However, no amendment or discontinuance may adversely affect the
rights of a holder of any option that was previously granted under the Nexell
Plan, unless such holder consents in writing. Furthermore, the approval of the
shareholders of Nexell (in the event that at such time options under the Nexell
Plan are exercisable only for shares of Nexell Common Stock) or VIMRX (in the
event that at such time options are exercisable only for shares of VIMRX Common
Stock) or both Nexell and VIMRX (in the event that at such time options may be
exercisable for shares of either Nexell Common Stock or VIMRX Common Stock) will
be required:

(i) to increase the number of shares reserved for issuance under the Nexell
Plan;

24
<PAGE>

(ii) to materially increase the benefits accruing to participants under the
Nexell Plan;

(iii)to materially modify the requirements of eligibility for participation in
the Nexell Plan; or

(iv) if otherwise required to comply with law or the listed company requirements
of the NASDAQ Stock Market or of a national securities exchange on which
the option stock is then traded.

12. Rights as a Stockholder. Before shares of common stock are issued
--- -----------------------
pursuant to the exercise of an option, an option holder has no rights as a
stockholder in either Nexell or VIMRx as a result of participation in the Nexell
Plan.

Initial Grants of Options under the Nexell Plan

In May 11, 1998, the Committee made grants of options to purchase an
aggregate of 990,350 shares of Nexell Common Stock to 94 employees of Nexell
under the Nexell Plan. Options issued to individuals who were employed by Nexell
on January 1, 1998, were issued as of January 1, 1998. Options issued to persons
who commenced employment with Nexell after January 1, 1998 and issued as of the
respective dates of commencement of employment. Each grant provided for an
exercise price of $5.00 per share of Nexell Common Stock (approximately $1.67
per share of VIMRX Common Stock in the event such options become exercisable for
VIMRX Common Stock). Subject to the provisions described above in "General
Exercisability of Options," all options issued will become exercisable in four
annual installments, each consisting of one-fourth of the total number of shares
subject to the option, commencing on the first anniversary of the date as of
which the grant was made.

NEW PLAN BENEFITS
1998 Non-Incentive Stock Option Plan
For Directors, Employees and
Consultants of Nexell Therapeutics, Inc.
----------------------------------------

<TABLE>
<CAPTION>
Dollar
Name and Position Value Number of Units
- ----------------------------------------- ----------------------- -----------------------------------------------
<S> <C> <C>
L. William McIntosh (1) 125,000 (2)
President and Chief
Executive Officer

Executive Group (1) 125,000 (2)

Non-Executive Officer (1) 865,350 (2)
Employee Group
</TABLE>

25
<PAGE>

(1) The dollar value of the options granted cannot reasonably be determined at
this time. Based on the closing price of VIMRX Common Stock on the NASDAQ
Stock Market on May 7, 1998 ($1.4375), in the event each option to purchase
one share of Nexell common stock becomes exercisable for an option to
purchase three shares of VIMRX Common Stock, the options would have no
value.

(2) Options to purchase the specified number of shares of Nexell Common Stock.
Under certain circumstances, such options may become exercisable for shares
of VIMRX Common Stock. See "Initial Grants of Options under the Nexell
Plan," above.

Required Vote

Approval of the adoption of the Nexell Plan will require the affirmative
vote of the holders of a majority of the outstanding shares of Common Stock
present in person or represented by proxy at the Meeting and entitled to vote.
In instances where brokers are prohibited from exercising discretionary
authority for beneficial owners who have not returned proxies ("broker non-
votes"), those shares will not be included in the vote totals, and therefore
will have no effect on the approval of adoption of the Nexell Plan. Unless
marked to the contrary, proxies received will be voted FOR approval of the
adoption of the Nexell Plan.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE APPROVAL
OF THE ADOPTION OF THE NEXELL PLAN.

RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

Subject to ratification by the stockholders, the Board of Directors has re-
appointed KPMG Peat Marwick LLP as independent auditors for the year ending
December 31, 1998. KPMG Peat Marwick audited the Company's financial statements
in fiscal 1997.

Prior to fiscal year 1997, the independent auditors of the Company had been
Richard A. Eisner & Company, LLP, who were replaced upon recommendation of the
Audit Committee on May 15, 1997. At no time did any report on the financial
statements of the Company by Richard A. Eisner & Company, LLP contain an adverse
opinion or a disclaimer of opinion, or a qualification or modification as to
uncertainty, audit scope or accounting principles. The decision to change
accountants was occasioned by the developments of the past year, and not by any
disagreement or advice given on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure. In
particular, in light of the acquisition by the Company of a controlling interest
in Innovir Laboratories, Inc., in 1997, the Audit Committee concluded that it
would be most efficient and in the best interests of both Innovir and the
Company for the same auditors to audit both companies. The Company solicited
proposals from four auditing firms, including Richard A. Eisner & Company, LLP.
KPMG Peat Marwick LLP was chosen as a result of this process, and was engaged by
the Company as its principal auditors on May 15, 1997.

26
<PAGE>

The ratification of the appointment of KPMG Peat Marwick LLP will require
the affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy at the Meeting and entitled to vote. In instances
where brokers are prohibited from exercising discretionary authority for
beneficial owners who have not returned proxies ("broker non-votes"), those
shares will not be included in the vote totals, and therefore will have no
effect of a vote on the appointment of the independent auditors.

It is anticipated that a representative of KPMG Peat Marwick LLP will be
present at the Meeting to answer questions within such firm's field of
expertise.

THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR THE
APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT AUDITORS FOR THE YEAR ENDING
DECEMBER 31, 1998.

OTHER BUSINESS

Management does not know of any matter to be brought before the Meeting
other than as described above. In the event any other matter properly comes
before the Meeting, the persons named in the accompanying form of proxy have
discretionary authority to vote on such matters.

STOCKHOLDER PROPOSALS

Any stockholder proposal to be considered for inclusion in the Company's
proxy soliciting material for the next Annual Meeting of Stockholders must be
received by the Company at its principal office by February 28, 1999.

Dated: May 26, 1998

27
<PAGE>

PROXY

VIMRX PHARMACEUTICALS INC.

THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Donald G. Drapkin and Eric A. Rose, M.D.,
and each of them, proxies, each with the power of substitution, to vote the
shares of the undersigned at the Annual Meeting of Stockholders of VIMRX
Pharmaceuticals Inc. on June 23, 1998, and any adjournments and postponements
thereof, upon all matters as may properly come before the Meeting. Without
otherwise limiting the foregoing general authorization, the proxies are
instructed to vote as indicated herein. Please complete, date and sign on the
reverse side and mail in the enclosed envelope.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR MATTERS (1), (2), (3), (4) AND
(5) LISTED BELOW, TO COME BEFORE THE MEETING:

(1) Election of nine (9) directors: Nominees: Donald G. Drapkin,
Richard L. Dunning,
Eric A. Rose, M.D.,
Lawrence D. Fink,
Jerome Groopman, M.D.,
Linda G. Robinson,
Lindsay A. Rosenwald, M.D.,
Victor W. Schmitt
Michael Weiner, M.D.

[ ] FOR [ ] WITHHELD

For, except withheld from the following nominees:

_____________________________________ ____________________________________
_____________________________________ ____________________________________
_____________________________________ ____________________________________
_____________________________________ ____________________________________

(2) To approve the an amendment to the Company's 1997 Incentive and Non-
Incentive Stock Option Plan making an additional 1,000,000 shares available
for issuance thereunder

[ ] FOR [ ] WITHHELD [ ] ABSTAIN

(3) To approve the 1998 Non-Incentive Stock Option Plan of VIMRX
Pharmaceuticals Inc. for Directors, Employees and Consultants of Nexell
Therapeutics Inc.

[ ] FOR [ ] WITHHELD [ ] ABSTAIN

(4) To ratify the appointment of KPMG Peat Marwick LLP as independent auditors
of the Company for the year ending December 31, 1997.
<PAGE>

[ ] FOR [ ] WITHHELD [ ] ABSTAIN

(5) Upon any and all other business that may come before the Meeting.

Check here if you plan to attend the Annual Meeting of Stockholders. [ ]

This Proxy, which is solicited on behalf of the Board of Directors, will be
voted FOR the matters described in paragraphs (1), (2), (3), and (4) unless the
stockholder specifies otherwise, in which case it will be voted as specified.

SIGNATURE(S): DATE:

Note: Executors, Administrations, Trustees, Etc. should give full title.

<PAGE>

1998 NON-INCENTIVE STOCK OPTION PLAN

VIMRX PHARMACEUTICALS INC.

FOR

DIRECTORS, EMPLOYEES AND CONSULTANTS

NEXELL THERAPEUTICS INC.

1. Purpose of Plan.
----------------

The purpose of this Non-Incentive Stock Option Plan ("Plan") is to
further the growth and development of Nexell Therapeutics Inc. (collectively
with its subsidiaries, "Nexell"), a majority owned subsidiary of VIMRX
Pharmaceuticals Inc. ("VIMRX"), by encouraging selected employees, directors,
consultants, agents, independent contractors and other persons who contribute
and are expected to contribute materially to Nexell's success to obtain a
proprietary interest in Nexell through the ownership of Nexell's common stock,
$.001 par value ("Nexell Common Stock") by granting them options to purchase
Nexell Common Stock, thereby providing such persons with an added incentive to
promote the best interests of Nexell and affording Nexell a means of attracting
to its service persons of outstanding ability. The Plan provides that, under
the circumstances specified herein, the options granted under the Plan shall be
exercisable for VIMRX's common stock, $.001 par value ("VIMRX Common Stock") in
lieu of Nexell Common Stock.

2. Stock Subject to the Plan.
-------------------------

(a) An aggregate of (i) 1,000,000 shares of Nexell Common Stock and
(ii) 3,000,000 shares of VIMRX Common Stock have been reserved for issuance upon
the exercise of options which may be granted from time to time in accordance
with the Plan ("Options" and the shares of Nexell Common Stock or VIMRX Common
Stock, as the case may be, issuable upon exercise of an Option, the "Option
Shares") subject, however, in each case, to adjustment or change pursuant to
paragraph 12 hereof.

(b) Shares issued upon exercise of Options, whether shares of Nexell
Common Stock or VIMRX Common Stock, may, in whole or in part as the Committee
shall from time to time determine, be authorized but unissued shares or issued
shares which have been reacquired by Nexell or VIMRX, as the case may be. If,
for any reason, an Option shall lapse, expire or terminate without having been
exercised in full, the unpurchased shares covered thereby shall again be
available for purposes of the Plan. Unless the context otherwise requires, the
term "Common Stock" shall refer to Nexell Common Stock or VIMRX Common Stock, as
the case may be, for which the Option shall then be exercisable.
<PAGE>

3. Administration.
--------------

(a) The Plan shall be administered by a committee appointed by the
Board of Directors of VIMRX from among its members or by the Board itself; upon
the occurrence of a Nexell IPO, or upon VIMRX ceasing to be a majority owner of
Nexell, the Plan shall be administered by a committee appointed by the Board of
Directors of Nexell from among its members or by the Board itself. As used
herein, the term "Committee" shall mean the committee actually administering the
Plan, which shall be composed of two or more Directors who, to the extent
practicable, shall be "outside directors" as defined in regulations under
Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and "non-employee directors" as defined by Regulation 240.16b-3 under the
Securities Exchange Act of 1934, as amended. Such Committee shall have and may
exercise any and all of the powers relating to the administration of the Plan
and the grant of Options thereunder as are set forth in subparagraph 3(b) hereof
as the Board of Directors of VIMRX or Nexell, as the case may be, shall confer
and delegate, which Board shall have the power at any time to fill vacancies in,
to change the membership of, or to discharge the Committee. The Committee shall
select one of its members as its chairman and shall hold its meetings at such
time and at such places as it shall deem advisable. A majority of the Committee
shall constitute a quorum and such majority shall determine its action. Any
action may be taken without a meeting by written consent of all the members of
the Committee. The Committee shall keep minutes of its proceedings and shall
report the same to the Board of Directors of VIMRX or Nexell, as the case may
be, at the meeting next succeeding.

(b) The Committee shall administer the Plan and, subject to the
provisions of the Plan, shall have sole authority in its discretion to determine
the persons to whom, and the time or times at which, Options shall be granted;
the number of shares to be subject to each such Option; the provisions regarding
exercisability of each Option; the expiration date of each Option; whether the
Option shall contain a "cashless exercise" provision; whether an Option shall
have limited transferability as permitted under the Plan; and whether an Option
granted to a non-employee shall terminate following the non-employee's
termination of engagement in performing services for Nexell pursuant to Section
9 of the Plan. In making such determinations, the Committee may take into
account the nature of the services rendered by such persons, their present and
potential contribution to Nexell's success and such other factors as the
Committee in its sole discretion may deem relevant. Subject to the express
provisions of the Plan, the Committee shall also have authority to interpret the
Plan; to prescribe, amend and rescind rules and regulations relating thereto; to
determine the terms and provisions of a stock option grant to an option holder,
which shall be evidenced by a Certificate delivered to such holder; to amend the
provisions of outstanding Options to provide for accelerated exercisability or
the extension of the expiration date of such Options; and to make all other
determinations necessary or advisable for the administration of the Plan, all of
which determinations shall be conclusive and not subject to review.

(c) The Board of Directors of VIMRX or Nexell, as the case may be, may
administer the Plan in lieu of and with the same powers as the Committee,
provided that such administration is consistent with the provisions of Section
162(m) of the Code.

2
<PAGE>

4. Eligibility for Receipt of Options.
----------------------------------

(a) Options may be granted to any employee, director, consultant,
agent, independent contractor and other person whom the Committee determines
will contribute to Nexell's success.

(b) The maximum number of shares of Nexell Common Stock subject to
Options which may be granted under the Plan during any calendar year to any
executive officer of Nexell is 125,000 shares.

5. Option Price.
------------

(a) The purchase price per share of Nexell Common Stock under each
Option shall be determined by the Committee, whose determination shall be
conclusive and not subject to review.

(b) For purposes of the Plan, unless the Committee determines
otherwise, the "fair market value" of a share of Nexell Common Stock as of a
certain date shall be the closing sale price of such Common Stock on The Nasdaq
Stock Market or, if such Common Stock is not then traded on The Nasdaq Stock
Market, such national securities exchange on which such Common Stock is then
traded, on the trading date immediately preceding the date the fair market value
is being determined. In the event such Common Stock is not publicly traded, the
Committee may make such determination of fair market value based on such factors
as it shall deem appropriate.

(c) For purposes of the Plan, the date of grant of an Option shall be
the date on which the Committee by resolution duly authorizes the grant of such
Option.

6. Term of Options.
---------------

The term of each Option shall be such number of years as the Committee
shall determine, subject to earlier termination as herein provided, but in no
event more than ten years from the date the Option is granted.

7. Exercise of Options.
-------------------

(a) Each Option shall be exercisable for Nexell Common Stock as set
forth in a Certificate delivered to the option holder; provided, however, that
in the event (i) Nexell is a majority owned subsidiary of VIMRX on March 31,
2001, and an initial public offering of Nexell Common Stock under the Securities
Act of 1933, as amended ("Nexell IPO"), shall not have been effected on or
before such date or (ii) prior to March 31, 2001, Nexell shall have merged with
VIMRX or VIMRX shall have acquired all of the issued and outstanding capital
stock of Nexell, or (iii) the Committee shall have determined that it is
necessary or desirable in order to comply with any applicable federal or state
securities law, then, upon any such occurrence, each Option shall be exercisable
for shares of VIMRX Common Stock in lieu of Nexell Common Stock at the rate of
three shares of VIMRX Common Stock for each share of Nexell Common Stock
purchasable under the Option at an exercise price per share of VIMRX

3
<PAGE>

Common Stock equal to one-third of the exercise price per share of Nexell Common
Stock set forth in the Certificate.

(b) An Option shall be exercisable to the extent and on the terms and
conditions determined by the Committee, but in no event shall an Option be
exercisable prior to March 31, 2001, unless prior thereto (i) a Nexell IPO shall
have been effected or (ii) Nexell shall have merged with VIMRX or VIMRX shall
have acquired all of the issued and outstanding capital stock of Nexell, in
which event VIMRX Common Stock, in lieu of Nexell Common Stock, shall thereupon
be issuable upon exercise of the Option.

(d) Except as provided in paragraphs 9, 10 and 11 hereof, and unless
determined otherwise by the Committee, no Option shall be exercisable unless the
holder thereof shall have been an employee, director, consultant, agent,
independent contractor or other person employed by or engaged in performing
services for Nexell continuously from the date of grant to the date of exercise.

(e) The exercise of an Option shall be contingent upon receipt from
the holder thereof of a written representation that at the time of such exercise
it is the holder's then present intention to acquire the Option Shares for
investment and not with a view to the distribution or resale thereof (unless a
Registration Statement covering the Option Shares shall have been declared
effective by the Securities and Exchange Commission) and payment for the full
purchase price of the Option Shares. The Committee may, in its discretion,
include a "cashless exercise" provision in the applicable Certificate, in which
event the holder will be permitted to deliver shares of Nexell Common Stock or
VIMRX Common Stock, as the case may be, with a fair market value equal to the
full purchase price of the Option Shares being exercised as payment therefor.

(f) The holder of an Option shall have none of the rights of a
stockholder with respect to the Option Shares purchasable upon exercise of the
Option until a certificate for such shares shall have been issued to the holder
upon due exercise of the Option.

(g) The proceeds received by Nexell or VIMRX, as the case may be, upon
exercise of an Option shall be added to the working capital of Nexell or VIMRX,
as the case may be, and be available for general corporate purposes.

8. Transferability of Options.
--------------------------

No Option granted pursuant to the Plan shall be transferable otherwise
than by will or the laws of descent or distribution and an Option may be
exercised during the lifetime of the holder only by such holder, provided,
however, that the Committee may provide for transferability of an Option to the
holder's family members or family trusts.

9. Termination of Employment or Engagement.
---------------------------------------

(a) Except as provided in paragraph (b) below, in the event the
employment of the holder of an Option shall be terminated for any reason other
than by reason of death or

4
<PAGE>

permanent and total disability, or the engagement of a non-employee holder of an
Option shall be terminated for any reason, such holder may, within three months
from the date of such termination, exercise such Option to the extent such
Option was exercisable by the holder at the date of such termination; provided,
however, the Committee, in its discretion, may establish other termination
provisions with respect to an Option granted to a non-employee. Notwithstanding
the foregoing, no Option may be exercised subsequent to the date of its
expiration. Absence on leave approved by the employer corporation shall not be
considered an interruption of employment for any purpose under the Plan. In
addition, at the discretion of the Committee, the exercisability of an
outstanding Option may be extended to a date determined by the Committee but not
beyond ten years from the date of grant.

(b) Nothing in the Plan or in any Certificate delivered to an option
holder pursuant hereto shall confer upon any holder any right to continue in the
employ of Nexell or obligate Nexell to continue the engagement of any holder or
interfere in any way with the right of Nexell to terminate such holder's
employment or engagement at any time.

10. Disability of Holder of Option.
------------------------------

If the employment of the holder of an Option shall be terminated by
reason of such holder's permanent and total disability, such holder may, within
twelve months from the date of such termination, exercise such option to the
extent such Option was exercisable by such holder at the date of such
termination. Notwithstanding the foregoing, no Option may be exercised
subsequent to the date of its expiration.

11. Death of Holder of Option.
-------------------------

If the holder of any Option shall die while in the employ of, or while
performing services for, Nexell (or within six months following termination of
employment due to permanent and total disability), the Option theretofore
granted to such person may be exercised, but only to the extent such Option was
exercisable by the holder at the date of death (or, with respect to employees,
the date of termination of employment due to permanent and total disability) by
the legatee or legatees of such person under such person's Last Will, or by such
person's personal representative or distributees, within twelve months from the
date of death, but in no event subsequent to the expiration date of the Option.

12. Adjustments Upon Changes in Capitalization.
------------------------------------------

If at any time after the date of grant of an Option, Nexell or VIMRX
shall by stock dividend, split-up, combination, reclassification or exchange, or
through merger or consolidation or otherwise (other than through the merger of
Nexell into VIMRX), change its shares of common stock into a different number or
kind or class of shares or other securities or property, then the number of
shares of Nexell or VIMRX, as the case may be, covered by such Option and the
price per share thereof shall be proportionately adjusted for any such change by
the Committee whose determination thereon shall be conclusive.

5
<PAGE>

13. Acceleration of Exercisability Upon Change in Control.
-----------------------------------------------------

Upon the occurrence of a "change in control" of Nexell (as defined
below), all outstanding Options shall become immediately fully exercisable. For
purposes of the Plan, a "change in control" of Nexell shall mean (i) the
acquisition at any time by a "person" or "group" (as such terms are used
Sections 13(d) and 14(d)(2) of the Exchange Act of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities representing 50% or more of the combined voting power in the election
of directors of the then outstanding securities of Nexell or any successor of
Nexell; (ii) the termination of service of directors, during any period of two
consecutive years or less, of individuals who at the beginning of such period
constituted a majority of the Board of Directors of Nexell or any successor of
Nexell, for any reason other than death, permanent and total disability or
retirement, unless the election of or nomination for election of each new
director during such period was approved by a vote of at least two-thirds of the
directors still in office who were directors at the beginning of the period;
(iii) approval by the stockholders of Nexell or any successor of Nexell of any
merger, consolidation, or statutory share exchange as a result of which the
Nexell Common Stock shall be changed, converted or exchanged (other than a
merger, consolidation or share exchange with VIMRX or a wholly-owned subsidiary
of VIMRX) or liquidation of Nexell or any successor of Nexell, or any sale or
disposition of 80% or more of the assets or earning power of Nexell or any
successor of Nexell, except to VIMRX; or (iv) approval by the stockholders of
Nexell of any merger, consolidation, or statutory share exchange to which Nexell
is a party as a result of which the persons who were stockholders immediately
prior to the effective date of the merger, consolidation or share exchange shall
have beneficial ownership of less than 50% of the combined voting power in the
election of directors of the surviving corporation; provided, however, that no
change in control shall be deemed to have occurred if, prior to such time as a
change in control would otherwise be deemed to have occurred, the Board of
Directors of VIMRX or Nexell, as the case may be, deems otherwise.

14. Issuance of Rights Under Options.
--------------------------------

Neither anything contained in the Plan nor in any resolution adopted
or to be adopted by the Committee, the Board of Directors of VIMRX or Nexell, as
the case may be, or the stockholders of VIMRX or Nexell, as the case may be,
shall constitute the issuance of any rights under any Option. The issuance of
such rights shall take place only upon the delivery of a written Certificate by
and on behalf of Nexell and/or VIMRX, as the case may be, to the person to whom
the Option shall be granted, setting forth the terms and provisions of the
option granted.

15. Withholding Taxes.
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Whenever under the Plan shares are to be issued in satisfaction of the
exercise of Options granted thereunder, Nexell or VIMRX, as the case may be,
shall have the right to require the recipient to remit an amount sufficient to
satisfy federal, state and local withholding tax requirements prior to the
delivery of any certificate or certificates for such shares.

16. Termination and Amendment.
-------------------------

This Plan is subject to approval by the stockholders of VIMRX, shall
terminate on December 31, 2007, and no Option shall be granted under the Plan
after such date. The Board of

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<PAGE>

Directors of VIMRX or Nexell, as the case may be, may at any time prior to such
date terminate the Plan or make such modifications or amendments thereto as it
shall deem advisable, provided, however, that approval of the shareholders of
Nexell (in the event that at such time options to purchase only shares of Nexell
Common Stock are issuable under this Plan) and/or VIMRX (in the event that at
such time options to purchase only shares of VIMRX Common Stock are issuable
under this Plan) or Nexell and VIMRX (in the event that at such time options to
purchase shares of Nexell Common Stock, or in the alternative, shares of VIMRX
Common Stock, are issuable under this Plan) shall be required:

(i) to increase the number of shares reserved for issuance
under the Plan;

(ii) to materially increase the benefits accruing to
participants under the Plan;

(iii) to materially modify the requirements of eligibility for
participation in the Plan; or

(iv) if otherwise required to comply with the incentive stock
option provisions of Section 162(m) of the Code or the
listed company requirements of The Nasdaq Stock Market or
of a national securities exchange on which the Option
Shares are then traded,

and, provided, further, that no modification or amendment shall adversely affect
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the rights of a holder of an Option previously granted under the Plan without
such holder's written consent.