MAGAININ PHARMACEUTICALS INC, S-3, 1996-10-21

MAGAININ PHARMACEUTICALS INC
S-3, 1996-10-21
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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<PAGE> 1

As filed with the Securities and Exchange Commission on October 21, 1996
Registration No.
----------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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

--------------------------
MAGAININ PHARMACEUTICALS INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
Delaware 2834 13-3445668
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification No.)
incorporation or organization) Classification No.)
</TABLE>

5110 CAMPUS DRIVE
PLYMOUTH MEETING, PA 19462
(610) 941-4020
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

---------------------------
JAY MOORIN
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
MAGAININ PHARMACEUTICALS INC.
5110 CAMPUS DRIVE
PLYMOUTH MEETING, PA 19462
(610) 941-4020
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

---------------------------
Copies of all communications to:

DAVID R. KING
MORGAN, LEWIS & BOCKIUS LLP
2000 ONE LOGAN SQUARE
PHILADELPHIA, PA 19103-6993
(215) 963-5371

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box./ /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. / x /
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for
the same offering. / / __________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / __________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
=========================================================================================================================
Title of each class Proposed maximum Proposed maximum
of securities to be Amount to be offering price per aggregate offering Amount of
registered registered share price registration fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 550,000 shares $10.08(1) $5,533,000(1) $1908.00(2)
$.002 par value
=========================================================================================================================
</TABLE>

(1) Based on the average of the reported high and low sales of the Common
Stock reported on the Nasdaq National Market on October 18, 1996,
estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
(2) The registration fee represents one-twenty-ninth of one percent of the
proposed maximum aggregate offering price.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

SUBJECT TO COMPLETION, DATED OCTOBER 21, 1996

PROSPECTUS

550,000 SHARES

MAGAININ PHARMACEUTICALS INC.

COMMON STOCK

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

The shares offered hereby (the "Shares") consist of 550,000 shares of
common stock, $.002 par value per share ("Common Stock"), of Magainin
Pharmaceuticals Inc., a Delaware corporation ("Magainin" or the "Company"),
which are being offered by the selling stockholders listed herein under
"Selling Stockholders" (collectively, the "Selling Stockholders"). The shares
may be offered from time to time by the Selling Stockholders. All expenses of
registration incurred in connection herewith are being borne by the Company,
but all selling and other expenses incurred by a Selling Stockholder will be
borne by the Selling Stockholder. The Company will not receive any of the
proceeds from the sale of the Shares by the Selling Stockholders.

The Selling Stockholders have not advised the Company of any specific
plans for the distribution of the Shares covered by this Prospectus, but it is
anticipated that the Shares will be sold from time to time primarily in
transactions (which may include block transactions) on the Nasdaq National
Market of the Nasdaq Stock Market at the market price then prevailing, although
sales may also be made in negotiated transactions or otherwise. The Selling
Stockholders and the brokers and dealers through whom sale of the Shares may be
made may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and their commissions or
discounts and other compensation may be regarded as underwriters' compensation.
See "Plan of Distribution."

The Company's Common Stock is quoted on the Nasdaq National Market of
The Nasdaq Stock Market under the symbol "MAGN." On October 18, 1996, the last
reported closing price of the Common Stock was $10.00 per share.

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

AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" ON PAGES 4 TO 9 OF THIS PROSPECTUS.

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

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

The date of this Prospectus is October __, 1996
<PAGE> 3
AVAILABLE INFORMATION

This Prospectus, which constitutes a part of a Registration Statement
on Form S-3 (the "Registration Statement") filed by the Company with the
Securities and Exchange Commission (the "Commission") under the Securities Act,
omits certain of the information set forth in the Registration Statement.
Reference is hereby made to the Registration Statement and to the exhibits
thereto for further information with respect to the Company and the securities
offered hereby. Copies of the Registration Statement and the exhibits thereto
are on file at the offices of the Commission and may be obtained upon payment
of the prescribed fee or may be examined without charge at the public reference
facilities of the Commission described below.

Statements contained herein concerning the provisions of documents are
necessarily summaries of such documents, and each statement is qualified in its
entirety by references to the copy of the applicable document filed with the
Commission.

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information
with the Commission. Such reports, proxy statements and other information can
be inspected and copied at the public reference facility maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at
the Commission's regional offices located at Seven World Trade Center, New
York, New York 10048 and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. Copies of such material can be obtained
in person from the Public Reference Section of the Commission at its principal
office located at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Reports and proxy statements concerning the Company also may be
inspected at the offices of the National Association of Securities Dealers,
Inc., 1735 K Street, N.W., Washington, D.C. 20006.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents or portions of documents filed by the Company
(File No. 0-19651) with the Commission are incorporated herein by reference:

(a) The Company's Annual Report on Form 10-K for the year ended
December 31, 1995.

(b) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31 and June 30, 1996.

(c) The description of the Company's Common Stock which is
contained in the Company's Registration Statement on Form 8-A filed under the
Exchange Act on November 7, 1991 and as amended on January 15, 1993, including
any amendment or reports filed for the purpose of updating such description.

All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment which indicates that all securities
offered hereby have been sold or which deregisters all securities remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of the filing of such reports and documents. Any
statement contained in a document, all or a portion of which is incorporated by
reference herein, shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained or incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus.

Upon request, the Company will provide without charge to each person
to whom this Prospectus is delivered a copy of any or all of such documents
which are incorporated herein by reference (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference into
the documents that this Prospectus incorporates). Written or oral requests for
copies should be directed to Michael R. Dougherty, Executive Vice President and
Chief Financial Officer, Magainin Pharmaceuticals Inc., 5110 Campus Drive,
Plymouth Meeting, PA 19462, (610) 941-5228.

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<PAGE> 4
THE COMPANY

Magainin Pharmaceuticals Inc. ("Magainin" or the "Company") is a
biopharmaceutical company engaged in the development of breakthrough medicines
for serious diseases. The Company isolates and develops compounds from the
host-defense systems of animals and uses molecular techniques such as gene
identification to understand the pathogenesis of disease. The Company's
development efforts are focused on anti-infectives, oncology and, pulmonary and
allergic disorders.

The Company's most advanced class of products under development are
"magainins," which are peptides that kill certain pathogens by selectively
perturbing the membrane of the cell. The most advanced magainin under
development by the Company is MSI-78, a topical anti-infective. In August
1994, the Company initiated the initial, pivotal Phase III clinical trial of
MSI-78 for the treatment of infection in diabetic foot ulcers and in August
1995, following interim analysis of this initial trial, a second pivotal Phase
III clinical trial in the same indication was commenced. These studies were
designed as equivalence trials with the goal of demonstrating that topically
applied MSI-78 is as effective as orally administered ofloxacin, a quinolone
antibiotic frequently used in the treatment of infection in diabetic foot
ulcers. In September, 1996, the Company announced successful results of the
initial, pivotal trial. Company analysis of the study showed statistical
equivalence between MSI-78 and orally administered ofloxacin, with respect to
the study's primary end point of clinical response of infection at day 10 of
treatment, and at subsequent time points through day 28, and at follow-up. The
Company expects to announce the results of the second pivotal trial in the
first quarter of 1997.

The Company is engaged in pre-clinical development of an inhalation
product for the treatment of pseudomonas infections in patients with cystic
fibrosis. A magainin peptide has demonstrated in vitro activity against
clinical isolates of pseudomonas from cystic fibrosis patients which were
resistant to currently available antibiotics, and has also demonstrated binding
to lipopolysaccharide, which is thought to be adverse to lung function. The
Company has begun to explore the feasibility of a more convenient, dry powder
inhalation formulation for this product.

The Company is also conducting research on an aminosterol class of
compounds, discovered in the dogfish shark. Certain of these compounds have
demonstrated anti-angiogenic activity in vitro and in vivo. The Company is
evaluating one such compound, squalamine, in cancer and another such compound,
MSI-1436, in viral infections.

The Company's newest research efforts are in the understanding of the
pathogenesis of disease using molecular techniques. The Company's initial
disease focus in this area is asthma.

The Company currently has no marketable products, and it may be
several years, if ever, until marketable products are developed and approved.

In November 1993, the Company changed its fiscal year end to December
31.

Magainin was incorporated in Delaware in June 1987. The Company's
executive offices and research facility are located at 5110 Campus Drive,
Plymouth Meeting, PA 19462, and its telephone number is (610) 941-4020.

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

This Prospectus contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
"Risk Factors."

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<PAGE> 5
RISK FACTORS

In addition to the other information in this Prospectus, prospective
investors should consider the following factors in evaluating the Company and
its business before purchasing any Shares offered hereby.

Status of MSI-78. Although the Company believes its initial pivotal
trial of MSI-78 yielded successful results, there can be no assurance that the
FDA will concur with the Company's analysis in this regard. The Company is
currently conducting a second required pivotal trial of MSI-78 for the
treatment of infection in diabetic foot ulcers. There can be no assurance that
this trial will be successful. Success in both pivotal trials will be required
for the submission of MSI-78 for review and approval by the FDA. Failure of
MSI-78 to show efficacy in human clinical trials will have a material adverse
effect on the Company.

MSI-78 was previously tested in a pivotal trial for the treatment of
impetigo, a skin infection which usually occurs in children. In this trial,
completed in early 1994, MSI-78 did not demonstrate a statistically significant
advantage over the placebo control vehicle. Clinical responses in the range of
80% were achieved by MSI-78, however, similar responses were observed in the
placebo control vehicle.

Development Stage Company; Accumulated Deficit; Continuing Losses.
The Company is in the development stage, has been engaged to date primarily in
research and development activities and, through June 30, 1996, had generated
no revenue from product sales. At June 30, 1996, the Company had an
accumulated deficit of approximately $77 million, and losses are continuing and
are expected to increase. The Company's operations are subject to numerous
risks associated with establishing a new business, including a competitive and
regulatory environment in an industry characterized by numerous
well-established and well-capitalized companies and by exhaustive and expensive
regulatory scrutiny. The Company will be required to conduct significant
research, development and testing activities which, together with projected
general and administrative expenses, are expected to result in continued and
increasing losses for the foreseeable future, particularly due to the extended
time period before the Company expects to commercialize any products.

Technological Uncertainty and Early Stage of Product Development.
There can be no assurance that the Company's research and development
activities will be successful, that any products under development will be
approved or commercially viable and successfully marketed or that the Company
will ever achieve significant levels of revenue or profits. In addition, the
Company may encounter unanticipated problems, including development,
regulatory, manufacturing and marketing difficulties, some of which may be
beyond the Company's ability to resolve.

There has been only limited research in the area of the use of
naturally occurring host-defense compounds for the treatment of infectious and
other diseases, and results obtained in research conducted to date are not
conclusive as to whether pharmaceutical compounds being investigated by the
Company will be safe or effective. While the Company has demonstrated certain
utility of its technology in model systems in the laboratory and in animals and
has identified a number of compounds for additional testing, the Company has
submitted an Investigational New Drug ("IND") application to the FDA, to obtain
authorization for human testing, for only one compound, MSI-78. The Company's
research activities in asthma have only recently been initiated, and there can
be no assurance that any product candidates will result from these efforts.
There can be no assurance that results obtained in preclinical studies will be
indicative of results that will be obtained in human clinical testing.

The Company's proposed products are in the developmental stage,
require significant further research, development, testing and regulatory
approvals and are subject to the risks of failure inherent in the development
of all pharmaceutical products. These risks include the possibilities that any
or all of the proposed products are found to be ineffective or toxic, or
otherwise fail to receive necessary regulatory approvals, that the proposed
products, although effective, are uneconomical to market, that third parties
hold proprietary rights that preclude the Company from marketing them, or that
third parties market superior or equivalent products. Due to the extended
testing and regulatory review process required before marketing clearance can
be obtained, the Company does not expect to be able to commercialize any drugs
for several years, if at all.

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<PAGE> 6
Need for Substantial Additional Funds. The Company will require
substantial additional funds to continue its research and development programs
and to commercialize any potential products. The Company may not have
sufficient funds to complete clinical studies or manufacturing scale-up on any
of its proposed products, including MSI-78. In addition, the Company may not
have sufficient funds to prepare a New Drug Application ("NDA") with the FDA
for any proposed products or to pay the user fees associated with filing NDAs.
The Company intends to seek additional funding through a combination of future
offerings of securities and collaborative arrangements with third parties and
regularly explores alternatives in this regard. The Company does not have any
commitments or arrangements to obtain any additional funds and has no
established banking arrangements through which it can obtain debt financing,
and there can be no assurance that required funds will be available to the
Company. Furthermore, to develop and commercialize its products, it will be
necessary to seek arrangements under which the Company conveys marketing,
distribution, manufacturing, development or other rights to its proposed
products to pharmaceutical companies in order to receive financial or other
assistance. This will result in lower consideration to the Company upon
commercialization than if no arrangements were entered into or if such
arrangements were entered into at later stages in the product development
process. There can be no assurance that the Company will be able to enter into
such additional ventures on favorable terms, if at all.

If the Company does not enter into appropriate collaborations, or is
not able to raise sufficient funds from the periodic sale of securities, the
Company will be required to delay or eliminate expenditures for certain of its
potential products, including MSI-78, or to license third parties to
commercialize potential products or technologies that the Company would
otherwise seek to develop itself, or to seek other arrangements.

Dependence on Third Parties; Manufacturing Uncertainties. The Company
does not have the resources, facilities or capabilities to manufacture any of
its proposed products. The Company has no current plans to establish a
manufacturing facility. The Company expects that it will be dependent to a
significant extent on contract manufacturers for commercial scale manufacturing
of its proposed products in accordance with regulatory standards. The
Company's dependence on third parties for manufacturing may adversely affect
operating results as well as the Company's ability to develop and deliver
products on a timely and competitive basis. There can be no assurance that the
Company will be able to enter into any arrangements for the manufacturing of
any of its proposed products, or that the costs of any such arrangements would
be acceptable to the Company.

The Company is currently dependent upon a single contract
manufacturer, Abbott Laboratories ("Abbott"), for the development of a chemical
process to manufacture bulk MSI-78 on a commercial scale, and for the actual
production of bulk MSI-78. The Company has entered into an agreement with
Abbott which provides for cash payments by the Company aggregating
approximately $11,000,000, as well as the issuance by the Company to Abbott of
up to 500,000 shares of its Common Stock and the obligation to pay a royalty on
future sales of MSI-78. Under this Agreement, Abbott will continue scale-up
activities for MSI-78, and perform other activities necessary to submit a Drug
Master File to the FDA in support of any filing for marketing approval of
MSI-78. Substantial additional funds will also be required to continue
manufacturing development efforts beyond the term of this current arrangement.
The Company and Abbott have agreed that, upon completion of such activities,
they will negotiate in good faith a supply agreement for the Company's
worldwide supply needs of MSI-78. In the event that this agreement is not
entered into or Abbott does not otherwise continue to manufacture MSI-78, the
Company's timeline to commercialize MSI-78 would be adversely affected.
Additionally, the Company would need to spend substantial funds on building a
manufacturing infrastructure or securing alternative contract manufacturing
arrangements, and for the licensing of applicable manufacturing related
technology from its current contract manufacturer. Any such facility would
require substantial funds, and the Company would be required to hire and retain
significant additional personnel and comply with extensive regulations
applicable to such a facility and such manufacturing operations.

Production of peptides (such as magainins) is expensive relative to
production of traditional antibiotics. Peptides, such as magainins, can be
synthesized chemically or produced by recombinant expression systems. The
Company's contract manufacturer is focused on a solution phase chemical
process. While progress has been made in reducing the cost of chemically
synthesizing peptides, further significant progress will be required to enable
the Company to manufacture and sell MSI-78 on a profitable basis. No assurance
can be given that a cost-effective manufacturing process can be developed, or
that any such process would be approved by the FDA, or that the Company, Abbott
or others will

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be able to manufacture MSI-78 or any of the Company's other proposed products
on a commercially viable basis, or that raw materials for synthesis in
commercial quantities will be available.

The Company is currently evaluating outside contractors for the
production of its aminosterol compounds. The Company is currently producing
limited quantities of these compounds internally through a natural extraction
process. The Company expects to expend significant resources in the chemical
synthesis of these compounds, and there can be no assurance that these efforts
will be successful.

Marketing Uncertainties. In order to successfully develop and market
its products, it will be necessary for the Company to enter into marketing,
distribution, development or other arrangements with third parties, granting
marketing rights, which may be exclusive, to potential products, including
MSI-78. Such arrangements may also involve delegating to the Company's partner
the responsibility for all or a significant portion of the development and
regulatory approval process. In the event that partners do not develop an
approvable or marketable product or do not market a product successfully, the
Company's business will be adversely affected. There can be no assurance that
the Company will be able to successfully enter into any such arrangements.

For certain products under development, the Company may conduct its
own marketing activities through its own sales force. The Company has no
marketing and sales staff and, although certain members of management have
experience in the marketing of pharmaceutical products, the Company has no
experience with respect to marketing its proposed products. Significant
additional expenditures, management resources and time will be required to
develop a sales force, and there can be no assurance that the Company will be
successful either in developing a sales force or penetrating the markets for
any proposed products it may develop.

Government Regulation. Products such as those proposed to be
developed or commercialized by the Company are subject to an extensive
regulatory approval process by the FDA and comparable agencies in other
countries. In order to obtain FDA approval of a new product, the Company must
submit proof of safety, purity, potency and efficacy. Such proof entails
extensive and time consuming pre-clinical and clinical testing. Detailed
manufacturing documentation is also required, and with respect to MSI-78, even
if clinical testing is successful, the submission of any application for
product approval and the review by FDA of such application, will require
additional time to complete manufacturing activities and stability studies,
which additional time may be significant.

Although certain members of management have had experience in
conducting and supervising preclinical testing and human clinical trials for
pharmaceutical products, the Company has very limited experience designing
clinical protocols on its own behalf and has not prepared an NDA submission.
The process of obtaining required regulatory approvals from the FDA and other
regulatory authorities often takes many years and can vary substantially based
on the type, complexity and novelty of the product. As with any new drug,
additional governmental regulations may be promulgated which could impose
additional costly testing procedures necessary to obtain regulatory approval
and delay regulatory approval of the Company's products. There can be no
assurance that, even after investment of time and expenditures, regulatory
approval will be obtained for any of the Company's proposed products. Even if
regulatory approval is obtained, a marketed product is subject to continual
post-market review, and later discovery of previously unknown problems or
failure to comply with the applicable regulatory requirements may result in
restrictions on a product's marketing or withdrawal of the product from the
market as well as possible civil or criminal sanctions. Adverse governmental
regulation which might arise from future legislative or administrative action
cannot be predicted.

Clinical Testing. Before obtaining required regulatory approvals for
the commercial sale of products, the Company must demonstrate through
preclinical and clinical testing that such products are safe and efficacious
for use in each target indication. The results of preclinical and initial
clinical testing of products under development by the Company are not
necessarily predictive of results that will be obtained from large-scale
clinical testing. Even after any approval by the FDA and foreign regulatory
authorities, products may later exhibit adverse effects that prevent their
widespread use or necessitate their withdrawal from the market. There can be
no assurance that any products developed by the Company will be safe and
efficacious when administered to patients.

Competition. The pharmaceutical industry is characterized by intense
competition. Many companies, research institutions and universities are
working in a number of pharmaceutical or biotechnology disciplines similar to
the

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Company's field of interest. In addition, many companies are engaged in the
development and sale of products, such as traditional antibiotics, which may be
or are competitive with the Company's proposed products. Most of these
entities have substantially greater financial, technical, manufacturing,
marketing, distribution and other resources than the Company. The Company is
aware that research is being conducted by others in connection with
anti-infective and anti-cancer compounds from the host-defense systems of
various animals, and many companies are working in the genomics field, and in
the area of asthma. In addition, the Company's proposed products will be
subject to competition from products using techniques other than those used by
the Company or based on advances that may render the Company's products
obsolete. The field of biotechnology is subject to rapid and significant
technological changes, and the Company's future success will depend in large
part on its ability to maintain a competitive position with respect to this
technology. Compounds, products or processes developed by the Company may
become obsolete before the Company is able to recover a significant portion of
its research and development expenses. The Company will be competing with
respect to its proposed products with companies that have significantly more
experience in undertaking preclinical testing and human clinical trials of new
or improved therapeutic products and obtaining FDA and other regulatory
approvals of such products. Some of these companies may be in advanced phases
of clinical testing of various drugs that may be competitive with the Company's
proposed products.

As to the Company's lead product candidate, even if MSI-78 is shown in
clinical testing to be statistically equivalent to ofloxacin, there can be no
assurance that it will be successfully marketed against oral antibiotics.
There also can be no assurance that MSI-78 can be manufactured at a cost which
will allow it to be sold at a competitive price relative to oral antibiotics.

Patents and Proprietary Rights. The Company's success will depend in
part upon its ability to obtain patent protection of compounds, combinations or
processes, as well as the drug or therapeutic use of the compound. The patent
position of biotechnology firms generally is highly uncertain and involves
complex legal and factual questions. Anti-infective and anti-cancer compounds
can be isolated from a wide variety of sources, and it is not possible for the
Company or any other entity to have proprietary rights to all such compounds.
In the genomics area, a number of companies are attempting to rapidly identify
and patent genes whose functions have not been characterized. Additional
companies are seeking to patent fully characterized genes. The current
criteria for obtaining patent protection for genes is unclear and the impact of
this uncertainty on the Company's business cannot be determined.

There can be no assurance that any patent applications now pending or
filed in the future will result in patents being issued or that any patents now
held by or licensed to the Company, or issued or licensed to the Company in the
future, will afford any competitive advantages for the Company, will not be
challenged by third parties or cannot be designed around by others. The cost
of litigation to uphold the validity and prevent infringement of patents and to
enforce licensing rights can be substantial. Furthermore, there can be no
assurance that others will not independently develop similar technologies or
duplicate the technology owned by or licensed to the Company or design around
the patented aspects of such technology. There can be no assurance that the
products and technologies the Company will seek to market will not infringe
patents or other rights owned by others, licenses to which may not be available
to the Company.

Pursuant to the terms of the Uruguay Round Agreements Act, patents
filed after June 8, 1995 will have a term of twenty years from the date of such
filing, irrespective of the period of time it may take for such patents to
ultimately issue. As compared to the prior law which established a patent term
of seventeen years from the date of issuance, this may shorten the period of
patent protection afforded to the Company's products as patent applications in
the biopharmaceutical sector often take considerable time to issue.

The Company also relies upon unpatented proprietary technology, and
may determine in appropriate circumstances that its interest would be better
served by reliance on trade secrets or confidentiality agreements rather than
patents. No assurance can be made that others will not independently develop
substantially equivalent proprietary information and techniques or otherwise
gain access to such proprietary technology or that the Company can meaningfully
protect its rights in such unpatented proprietary technology. If the Company
is unable to obtain strong proprietary rights protection of its products after
obtaining regulatory clearance, competitors may be able to market competing
products by obtaining regulatory clearance, through showing equivalency to the
Company's product, without being required to conduct the lengthy, clinical
tests required to be conducted by the Company.

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To the extent that consultants, key employees or other third parties
apply technological information independently developed by them or by others to
the Company's proposed products, disputes may arise as to the proprietary
rights to such information, which may not be resolved in favor of the Company.
Members of the Company's Scientific Advisory Board and other consultants are
employed by or have consulting agreements with third parties, and any
inventions discovered by such individuals are not likely to become the property
of the Company.

The Company owns, or has rights under licenses to, several patents
and patent applications filed worldwide. The Company may owe royalties on
sales of certain of its proposed products under these licenses. Additionally,
certain of these agreements provide that if the Company elects not to pursue
the commercial development of any licensed technology, or does not adhere to an
acceptable schedule of commercialization, then the Company's exclusive rights
to such technology would terminate.

Dependence on Key Personnel. The Company depends to a considerable
degree on a limited number of key personnel. Due to the Company's limited
number of employees, many key responsibilities within the Company have been
assigned to a relatively small number of individuals. The Company does not
maintain "key man" insurance on any of its employees. The loss of certain
senior management could adversely affect the business of the Company. The
success of the Company will depend, among other factors, upon the successful
recruitment and retention of qualified personnel.

Reimbursement. Successful commercialization of the Company's
potential products will be dependent in part on the availability of
reimbursement of the costs of such products from third-party payors, such as
government authorities, private health insurers and other organizations, such
as health maintenance organizations. There can be no assurance that such
reimbursement will be available or, if available, will be in adequate amounts.

Risk of Product Liability. Before obtaining required regulatory
approvals for the commercial sale of products, the Company must demonstrate
through human clinical testing that such products are safe and efficacious for
use in each target indication. The administration of any product being
developed by the Company could produce undesirable side effects in humans.
Although the Company carries limited clinical trial insurance, there can be no
assurance that such coverage is adequate.

In addition, in the event the Company successfully develops any
products, the marketing of such products could expose the Company to product
liability claims. Certain of the Company's agreements require the Company to
maintain insurance coverage naming third parties as additional insureds at such
time as any related products may be marketed. There can be no assurance that
the Company will be able to obtain any product liability insurance or that such
insurance can be maintained in sufficient amounts to protect the Company
against such liabilities or at a reasonable cost.

In the event of an uninsured or inadequately insured claim, the
Company's business and financial condition could be materially adversely
affected.

Health Care Reform. Various proposals have been put forth to reform
the current health care system in the United States. Additionally, several
states have enacted modifications to the current health care system to both
improve access and control costs. Such reform measures could adversely affect
the amount of reimbursement available from governmental agencies or third party
insurers, or could affect the ability to set prices for newly approved
therapeutic products. Similar proposals are being considered by governmental
officials in other significant pharmaceutical markets, including Europe.
Governmental or private payors for health care goods and services can be
expected to continue to undertake cost reduction efforts.

The Company cannot predict if such reforms will be implemented or the
effect any such reforms might have on the Company's business, and no assurance
can be given that any such reforms will not have a material adverse effect on
the Company's business. In particular, it is possible that any such reform
could impact the manner in which drugs or therapies are marketed and could
include restrictions on the ability of pharmaceutical and biotechnology
companies to price drugs or therapies, which in turn could impact the ability
of biotechnology companies such as the Company to obtain financing for the
continued development of potential products. Furthermore, any such reform
could also impose limits

8
<PAGE> 10
on the overall growth of health care spending, as well as limits on the growth
of Medicare and Medicaid spending, all which could have a material adverse
effect on the Company.

Possible Volatility of Stock Price. The market prices for securities
of emerging and biotechnology companies, including the Company, have
historically been highly volatile. Future announcements concerning the Company
or its competitors, including the results of testing, technological innovations
or new commercial products, government regulations, developments concerning
proprietary rights, litigation or public concern as to safety of products
developed by the Company or others, may have a significant impact on the market
price of the Common Stock.

Effect of Exercise of Options and Warrants, and Other Issuance of
Shares. The Company grants stock options to employees, directors and
consultants. As of June 30, 1996, the Company had 2,407,384 outstanding
options at prices ranging from $.002 per share to $16.75 per share, of which
approximately 1,070,783 were exercisable as of such date. Warrants to purchase
229,739 shares of the Company's Common Stock exercisable at $8 per share, and a
warrant to purchase 300,000 shares exercisable at $7.50, were also outstanding
as of June 30, 1996. In addition, warrants to purchase an aggregate of
1,011,896 shares of Common Stock were issued in a private placement on August
6, 1996. Exercise of options and warrants at prices below the market price of
the Company's Common Stock could adversely affect the price of the Company's
Common Stock. Additional dilution may result from the issuance of shares in
connection with collaborations or manufacturing arrangements, or in connection
with other financings. See "-Need for Substantial Additional Funds."

USE OF PROCEEDS

The Company will not receive any proceeds from the sale of the Shares
by the Selling Stockholders.

9
<PAGE> 11
SELLING STOCKHOLDERS

The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of each Selling Stockholder and as
adjusted to give effect to the sale of the Shares offered hereby. The Shares
are being registered to permit public secondary trading of the Shares, and the
Selling Stockholders may offer the Shares for resale from time to time. See
"Plan of Distribution."

In recognition of the fact that the Selling Stockholders may wish to
be legally permitted to sell their Shares when they deem appropriate, the
Company has filed with the Commission, under the Securities Act, a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time on the Nasdaq National Market of The
Nasdaq Stock Market or in privately-negotiated transactions and has agreed to
prepare and file such amendments and supplements to the Registration Statement
as may be necessary to keep the Registration Statement effective until the
Shares are no longer required to be registered for the sale thereof by the
Selling Stockholders.

The shares being offered hereby by the Selling Stockholders were
acquired by them from the Company in private placement transactions in
connection with certain amendments to license agreements relating to MSI-78.
In consideration for the issuance of the shares, the Selling Stockholders
agreed to amend such license agreements to provide that the Company's license
as it relates to MSI-78 will be fully-paid and royalty-free.

<TABLE>
<CAPTION>
Beneficial Ownership
Number of After Offering
Number of Shares Shares ---------------------------
Name of Beneficially Owned Being Number of
Selling Stockholder Prior to Offering Offered Shares Percent
- ----------------------------------- ----------------- -------------- ---------------- -------
<S> <C> <C> <C> <C>
Houghten Pharmaceuticals, Inc. 275,000 275,000 0 -

The Scripps Research Institute 275,000 275,000 0 -
</TABLE>

10
<PAGE> 12
PLAN OF DISTRIBUTION

The Shares offered hereby by the Selling Stockholders may be sold from
time to time by the Selling Stockholder, or by pledgees, donees, transferees or
other successors in interest. Such sales may be made on one or more exchanges
or in the over-the-counter market (including the Nasdaq National Market of The
Nasdaq Stock Market), or otherwise at prices and at terms then prevailing or at
prices related to the then-current market price, or in negotiated transactions.
The Shares may be sold by one or more of the following methods, including,
without limitation: (a) a block trade in which the broker-dealer so engaged
will attempt to sell the Shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between the Selling Stockholder and purchasers without a
broker-dealer. In effecting sales, brokers or dealers engaged by the Selling
Stockholder may arrange for other brokers or dealers to participate. Such
brokers or dealers may receive commissions or discounts from the Selling
Stockholder in amounts to be negotiated immediately prior to the sale. Such
brokers or dealers and any other participating brokers or dealers may be deemed
to be "underwriters" within the meaning of the Securities Act, in connection
with such sales. In addition, any securities covered by this Prospectus that
qualify for sale pursuant to Rule 144 might be sold under Rule 144 rather than
pursuant to this Prospectus.

Upon the Company being notified by a Selling Stockholder that any
material arrangement has been entered into with a broker or dealer for the sale
of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplemented
Prospectus will be filed, if required, pursuant to Rule 424(c) under the
Securities Act, disclosing (a) the name of each such broker-dealer, (b) the
number of shares involved, (c) the price at which such shares were sold, (d)
the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, as supplemented, and (f) other facts material to
the transaction.

The Company is bearing all costs relating to the registration of the
Shares (other than fees and expenses, if any, of counsel or other advisers to
the Selling Stockholders). Any commissions, discounts or other fees payable to
broker-dealers in connection with any sale of the Shares will be borne by the
Selling Stockholder selling such Shares.

The Company has agreed to indemnify the Selling Stockholders in
certain circumstances, against certain liabilities, including liabilities
arising under the Securities Act. Each Selling Stockholder has agreed to
indemnify the Company and its directors, and its officers who sign the
registration statement against certain liabilities, including liabilities
arising under the Securities Act.

LEGAL OPINION

The validity of the shares of Common Stock offered hereby will be
passed upon for the Company by Morgan, Lewis & Bockius LLP, Philadelphia,
Pennsylvania.

EXPERTS

The financial statements contained in the Company's Annual Report on
Form 10-K, incorporated by reference in this Prospectus, have been audited by
Richard A. Eisner & Company, LLP, independent auditors, as indicated in their
report with respect thereto, and are incorporated herein by reference in
reliance upon the authority of said firm as experts in accounting and auditing.

11
<PAGE> 13

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

No dealer, salesman or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or the Selling
Stockholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy to any person in any jurisdiction in which such
offer or solicitation would be unlawful or to any person to whom it is
unlawful. Neither the delivery of this Prospectus nor any offer or sale made
hereunder shall, under any circumstances, create any implication that there has
been no change in the affairs of the Company or that information contained
herein is correct as of any time subsequent to the date hereof.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 9
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . 10
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . 11
Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>

550,000 Shares

MAGAININ PHARMACEUTICALS INC.

Common Stock

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

PROSPECTUS

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

October __, 1996

================================================================================
<PAGE> 14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table shows the estimated expenses of the
issuance and distribution of the securities offered hereby.

<TABLE>
<S> <C>
SEC registration fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,908
Nasdaq listing fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,000
Legal fees and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $32,908
</TABLE>

All of the amounts shown are estimates except for the fees
payable to the Securities and Exchange Commission and the National Association
of Securities Dealers.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law ("Section
145") permits indemnification of directors, officers, agents and controlling
persons of a corporation under certain conditions and subject to certain
limitations. Article 9 of the Company's By-laws provides for the
indemnification of directors, officers, employees and agents of the Company to
the maximum extent permitted by the Delaware General Corporation Law. Section
145 empowers a corporation to indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
by reason of the fact that he is or was a director, officer or agent of the
corporation or another enterprise if serving at the request of the corporation.
Depending on the character of the proceeding, a corporation may indemnify
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with such action,
suit or proceeding if the person indemnified acted in good faith and in a
manner he reasonably believed to be in or not opposed to, the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. In the case of an action
by or in the right of the corporation, no indemnification may be made with
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine that despite the adjudication of liability such person is fairly and
reasonably entitled to indemnity for such expenses which the court shall deem
proper. Section 145 further provides that to the extent a director, officer,
employee or agent of a corporation has been successful in the defense of any
action, suit or proceeding referred to above or in the defense of any claim,
issue or matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith.

The Company's By-laws permit it to purchase insurance on
behalf of any such person against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the Company would have the power to indemnify him against such
liability under the foregoing provision of the By-laws.

II-1
<PAGE> 15
ITEM 16. LIST OF EXHIBITS

The exhibits filed as part of this registration statement are as
follows:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ----------------------------------------------------------------------------------------------------------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality of securities being registered.
10.1 Stock Issuance Agreement, dated as of October 1, 1996, between the Company and Houghten Pharmaceuticals,
Inc.
10.2 Stock Issuance Agreement, dated as of October 1, 1996, between the Company and The Scripps
Research Institute.
23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion filed as Exhibit 5.1).
23.2 Consent of Richard A. Eisner & Company, LLP.
24.1 Powers of Attorney (included on the signature page).
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to its Restated Certificate of
Incorporation, its By-laws, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against a public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this registration
statement:

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

(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;

(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;

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

II-2
<PAGE> 16
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.

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

II-3
<PAGE> 17
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Plymouth Meeting, Pennsylvania, on October 18, 1996.

MAGAININ PHARMACEUTICALS INC.

By: /s/Jay Moorin
---------------------------
Jay Moorin
Chairman, President and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by or on behalf of the following
persons in the capacities and on the dates indicated.

Each person, in so signing, also makes, constitutes and appoints Jay
Moorin, Chairman, President and Chief Executive Officer, and Michael R.
Dougherty, Executive Vice President and Chief Financial Officer, and each such
officer acting singly, his true and lawful attorney-in-fact, in his name, place
and stead to execute and cause to be filed with the Securities and Exchange
Commission any or all amendments to this registration statement, with all
exhibits and any and all documents required to be filed with respect thereto,
and to do and perform each and every act and thing necessary to effectuate the
same.

<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Jay Moorin Chairman, President, Chief Executive October 18, 1996
- --------------------------------------- Officer and Director (Principal Executive
Jay Moorin Officer)

/s/Michael R. Dougherty Executive Vice President and Chief October 18, 1996
- --------------------------------------- Financial Officer (Principal
Michael R. Dougherty Financial and Accounting Officer)

/s/Michael A. Zasloff, M.D., Ph.D. Vice Chairman, Executive Vice President October 18, 1996
- --------------------------------------- and Director
Michael A. Zasloff, M.D., Ph.D.

/s/Bernard Canavan, M.D. Director October 18, 1996
- ---------------------------------------
Bernard Canavan, M.D.

/s/James H. Cavanaugh, Ph.D. Director October 18, 1996
- ---------------------------------------
James H. Cavanaugh, Ph.D.

/s/Zola Horovitz, Ph.D. Director October 18, 1996
- ---------------------------------------
Zola Horovitz, Ph.D.

Director
- ---------------------------------------
Charles A. Sanders, M.D.

/s/Robert Shapiro Director October 18, 1996
- ---------------------------------------
Robert Shapiro

Director
- ---------------------------------------
James B. Wyngaarden, M.D.
</TABLE>

II-4
<PAGE> 18
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DOCUMENT PAGE NUMBER
- ------ ------------------------------------------------------------------------ -----------
<S> <C>
5.1 Opinion of Morgan, Lewis & Bockius LLP regarding legality
of securities being registered.

10.1 Stock Issuance Agreement, dated as of October 1, 1996, between
the Company and Houghten Pharmaceuticals, Inc.

10.2 Stock Issuance Agreement, dated as of October 1, 1996, between the
Company and The Scripps Research Institute

23.1 Consent of Morgan, Lewis & Bockius LLP (included in its opinion
filed as Exhibit 5.1).

23.2 Consent of Richard A. Eisner & Company, LLP.

24.1 Powers of Attorney (included on the signature page).
</TABLE>

<PAGE> 1
EXHIBIT 5.1

Morgan, Lewis & Bockius LLP
Counselors at Law
2000 One Logan Square
Philadelphia, Pennsylvania 19103-6993
Telephone: (215) 963-5000
Fax: (215) 963-5299

October 21, 1996

Magainin Pharmaceuticals Inc.
5110 Campus Drive
Plymouth Meeting, PA 19462

Re: Magainin Pharmaceuticals Inc.
Registration Statement on Form S-3

Ladies and Gentlemen:

We have acted as counsel to Magainin Pharmaceuticals Inc., a Delaware
corporation (the "Company"), in connection with the preparation of a
registration statement on Form S-3 (the "Registration Statement") filed with
the Securities and Exchange Commission under the Securities Act of 1933, as
amended (the "Act"), relating to the public offering of an aggregate of 550,000
shares (the "Shares") of the common stock, par value $.002 per share, of the
Company (the "Common Stock"), to be sold by the Selling Stockholders named in
the Registration Statement. The Shares were issued to the Selling Stockholders
pursuant to Stock Issuance Agreements, each dated as of October 1, 1996,
between the Company and the Selling Stockholders (the "Stock Issuance
Agreements").

In this connection, we have reviewed (a) the Registration Statement; (b) the
Company's Restated Certificate of Incorporation and Bylaws; (c) the Stock
Issuance Agreements; and (d) certain records of the Company's corporate
proceedings as reflected in its minute books. In our examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals and the conformity with the original of all
documents submitted to us as copies thereof.

Our opinion set forth below is limited to the General Corporation Law of the
State of Delaware.

In our opinion, the Shares are legally issued, fully paid and non-assessable.

We hereby consent to the use of this opinion as Exhibit 5.1 to the Registration
Statement and to all references to our firm in the Registration Statement. In
giving such consent, we do not thereby admit that we are acting within the
category of persons whose consent is required under Section 7 of the Act and
the rules and regulations of the Securities and Exchange Commission thereunder.

The opinion expressed herein is solely for your benefit and may be relied upon
only by you.

Very truly yours,

/s/ MORGAN, LEWIS & BOCKIUS LLP

<PAGE> 1
EXHIBIT 10.1

STOCK ISSUANCE AGREEMENT

THIS IS A STOCK ISSUANCE AGREEMENT entered into, effective as
of October 1, 1996, on this 24th day of September, 1996 between Magainin
Pharmaceuticals Inc., a Delaware corporation ("Magainin"), and Houghten
Pharmaceuticals, Inc., a Delaware corporation ("Houghten").

BACKGROUND

Simultaneously with the execution hereof, Magainin has entered
into a Second Amendment to License Agreement (the "Second Amendment") with
Multiple Peptide Systems, Inc. ("MPS"), a wholly owned subsidiary of Houghten,
to amend certain provisions of the License Agreement, dated as of November 4,
1988, between Magainin and MPS, as amended by the First Amendment to Agreement,
dated as of February 1, 1990. Houghten has joined in the execution and
delivery of the Second Amendment for the purpose of agreeing to be jointly and
severally liable for any breach of the representations and warranties of MPS
under the Second Amendment. This Agreement is entered into pursuant to the
Second Amendment.

TERMS

NOW THEREFORE, intending to be legally bound hereby, the
parties agree as follows:

1. ISSUANCE OF SHARES. Subject to the terms and conditions hereof, and
in consideration for the agreements and obligations of MPS and Houghten under
the Second Amendment, Magainin shall, at the Closing (as defined in Section 2
hereof), issue to Houghten 275,000 duly authorized, validly issued, fully-paid
and nonassessable shares (the "Shares") of Magainin's Common Stock, par value
$.002 per share.

2. THE CLOSING.

2.1 THE CLOSING DATE. The issuance of the Shares (the "Closing")
shall occur on October 4, 1996 or such other time as may be agreed upon in
writing by Magainin and Houghten (the "Closing Date"). At the Closing,
Magainin shall deliver to Houghten certificate(s) for the Shares registered in
the name specified in writing by Houghten to Magainin.

2.2 CONDITIONS TO CLOSING. Magainin's obligation to issue the
Shares and deliver such stock certificate(s) to Houghten at the Closing shall
be subject to the accuracy, as of the Closing Date, of (a) the representations
and warranties of Houghten set forth in this Agreement and in the Second
Amendment, (b) the representations and warranties of MPS set forth in the
Second

<PAGE> 2
Amendment and in the Second Amendment to License Agreement, dated as of the
date hereof, between MPS and The Scripps Research Institute ("Scripps") (the
"Scripps Amendment") and (c) the representations and warranties of Scripps set
forth in its Consent and Agreement to the Second Amendment and in the Scripps
Amendment. At the Closing, each of Houghten, MPS and Scripps shall deliver to
Magainin a certificate, executed by a duly authorized officer, as to the
matters set forth in clauses (a), (b) or (c), as the case may be.

3. RESTRICTIONS ON TRANSFER AND REGISTRATION RIGHTS.

3.1 RESTRICTIONS ON TRANSFERABILITY. The Shares shall not be
transferable in the absence of registration under the Securities Act of 1933,
as amended (the "Securities Act"), or any applicable state securities laws, or
applicable exemptions therefrom, or in the absence of compliance with any term
of this Agreement. Magainin shall be entitled to give stop transfer
instructions to the transfer agent with respect to the Shares in order to
enforce the foregoing restrictions.

3.2 RESTRICTIVE LEGENDS. Each certificate representing the Shares
shall bear substantially the following legends (in addition to any legends
required under applicable securities laws):

THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE
SECURITIES LAWS. THE SHARES MAY NOT BE SOLD OR TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION THEREFROM.

THE SHARES REPRESENTED BY THIS CERTIFICATE AND THE RIGHTS OF
HOLDERS THEREOF ARE SUBJECT TO CERTAIN RESTRICTIONS ON
TRANSFER AND OTHER RESTRICTIONS, AND THE HOLDER OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS BOUND BY THE TERMS OF THE
STOCK ISSUANCE AGREEMENT BETWEEN THE ORIGINAL PURCHASER AND
THE COMPANY (COPIES OF WHICH MAY BE OBTAINED FROM THE
COMPANY).

3.3 REGISTRATION OF SHARES.

2
<PAGE> 3
effective as soon as possible, and will keep the Registration Statement
effective until the earlier of (i) two years from the date hereof, or (ii) the
date as of which counsel for Magainin reasonably determines that the Shares may
be freely sold without restriction under the Securities Act, subject to such
periods of time when Magainin must suspend the use of the prospectus forming a
part of the Registration Statement until such time as an amendment is filed and
declared effective or an appropriate report is filed by Magainin with the SEC.

3.3.2 WITHHOLDING OF SHARES. If requested by the managing
underwriter of an underwritten public offering of securities by Magainin,
Houghten agrees to withhold the Shares from the market for a period, not to
exceed a period ending 90 days following the effective date of the registration
statement relating to such offering, which the managing underwriter reasonably
determines is necessary in order to effect the underwritten public offering, if
the same restriction is agreed to by the officers and directors of Magainin.

3.4 ABOUT REGISTRATION.

3.4.1 Magainin shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder, and Houghten shall pay all Selling Expenses (as defined below) and
other expenses that are not Registration Expenses relating to the Shares
("Registrable Securities") resold by Houghten. "Registration Expenses" shall
mean all expenses, except for Selling Expenses, incurred by Magainin in
complying with the registration provisions of this Agreement, including without
limitation all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for Magainin, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Registrable
Securities and all fees and disbursements of counsel for Houghten.

3.4.2 In the case of any registration effected by Magainin
pursuant to these registration provisions, Magainin will (i) prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of the Registrable Securities; (ii) furnish such number of
prospectuses and other documents incident thereto, including any amendment of
or supplement to the prospectus, as Houghten from time to time may reasonably
request; and (iii) provide a transfer agent and registrar for all Registrable
Securities registered pursuant to the Registration Statement and a CUSIP number
for all such Registrable Securities;

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<PAGE> 4
required of Magainin and otherwise use its best efforts to maintain requisite
blue sky clearance in (A) all jurisdictions in which any of the Shares is
originally sold and (B) all other states specified in writing by a Holder,
provided as to clause (B), however, that Magainin shall not be required to
qualify to do business or consent to service of process in any state in which
it is not now so qualified or has not so consented.

3.4.4 Houghten shall furnish to Magainin such information
regarding it and the distribution proposed by such Holder as Magainin may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance described herein. Houghten
shall represent that such information is true and complete.

3.4.5 If Houghten shall propose to sell any Registrable
Securities pursuant to the Registration Statement, it shall notify Magainin of
its intent to do so at least three full business days prior to such sale, and
the provision of such notice to Magainin shall be deemed to establish an
agreement by Houghten to comply with the registration provisions contained
herein. Such notice shall be deemed to constitute a representation that any
information previously supplied by Houghten is accurate as of the date of such
notice. At any time within such three business day period, Magainin may refuse
to permit Houghten to resell any Registrable Securities pursuant to the
Registration Statement; provided that in order to exercise this right, Magainin
must deliver a certificate in writing to Houghten to the effect that a delay in
such sale is necessary because, in the good faith judgment of Magainin, a sale
pursuant to the Registration Statement in its then-current form could require
the public disclosure of information that would not otherwise be required to be
disclosed (which disclosure would be burdensome or could have a material
adverse effect on Magainin) or that would in other respects constitute a
violation of the federal securities laws. In such an event, Magainin shall use
its best efforts to amend the Registration Statement if necessary and take all
other actions necessary to allow such sale under the federal securities laws,
and shall notify Houghten promptly after it has determined that such
circumstances no longer exist. Notwithstanding the foregoing, Magainin shall
not under any circumstances be entitled to exercise its right to withdraw the
Registration Statement more than two times in any twelve (12) month period, and
the period during which such Registration Statement may be withdrawn shall not
exceed thirty (30) days. Houghten hereby covenants and agrees that it will not
sell any Registrable Securities pursuant to the Registration Statement during
the periods the Registration Statement is withdrawn as set forth in this
Section 3.4.5.
3.4.6 When Houghten is entitled to sell and gives notice of
its intent to sell pursuant to the Registration Statement, Magainin shall
furnish to Houghten a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include
an untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or incomplete in the light of the circumstances then existing.

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<PAGE> 5
3.5 INDEMNIFICATION AND CONTRIBUTION.

3.5.1 Magainin agrees to indemnify and hold harmless
Houghten and its directors, officers, employees and agents from and against any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) to which Houghten or any of them may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any claim by a third party asserting any untrue statement of a
material fact in the Registration Statement, or any omission of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(including any preliminary or final prospectus contained therein, and any
amendments or supplements thereto, and any filings and information incorporated
therein by reference), in each case on the effective date thereof, or arise out
of any failure by Magainin to fulfill any undertaking included in such
Registration Statement, and Magainin will reimburse Houghten and the other
indemnified parties hereunder for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that Magainin shall not be liable in
any such case to the extent that such loss, claim, damages or liability arises
out of, or is based upon (i) an untrue statement of a material fact made in
such Registration Statement, or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, made in reliance upon
and in conformity with written information furnished to Magainin by or on
behalf of Houghten specifically for use in preparation of such Registration
Statement or (ii) any untrue statement of a material fact, or any omission of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in any prospectus that is corrected in any subsequent prospectus
that was delivered to Houghten prior to the pertinent sale or sales by
Houghten.

3.5.2 Houghten agrees to indemnify and hold harmless
Magainin and its directors, officers, employees and agents from and against any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) to which Magainin or any of them may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon any claim by a third party asserting (i) an untrue statement made in
such Registration Statement, or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, made in reliance upon
and in conformity with written information furnished to Magainin by or on
behalf of Houghten specifically for use in preparation of such Registration
Statement, provided that Houghten shall not be liable in any such case for any
untrue statement included in any Prospectus which statement has been corrected,
in writing, by Houghten and delivered to Magainin before the sale from which
such loss occurred or (ii) any untrue statement in any prospectus of a material
fact, or any omission of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, that is corrected in any subsequent
prospectus that was delivered to the purchaser prior to the pertinent

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<PAGE> 6
sale or sales by Houghten, and Houghten will, as incurred, reimburse Magainin
and the other indemnified parties hereunder for any legal or other expenses
reasonably incurred in investigating, defending or preparing to defend any such
action, proceeding or claim.

3.5.3 Promptly after receipt by any indemnified person of a
notice of a claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this Section 3.5,
such indemnified person shall notify the indemnifying person in writing of such
claim or of the commencement of such action, and, subject to the provisions
hereinafter stated, in case any such action shall be brought against an
indemnified person and the indemnifying person shall have been notified
thereof, the indemnifying person shall be entitled to participate therein, and,
to the extent that it shall wish, to assume the defense thereof, with counsel
reasonably satisfactory to the indemnified person. After notice from the
indemnifying person to such indemnified person of the indemnifying person's
election to assume the defense thereof, the indemnifying person shall not be
liable to such indemnified person for any legal expenses subsequently incurred
by such indemnified person in connection with the defense thereof; provided
that if there exists or shall exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified person for the same
counsel to represent both the indemnified person and such indemnifying person
or any affiliate or associate thereof, the indemnified person shall be entitled
to retain its own counsel at the expense of such indemnifying person. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action, suit or
proceeding in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding.

3.5.4 If the indemnification provided for in this Section
3.5 is unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) referred to therein, then the indemnifying
party shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) based upon such party's relative fault, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by Magainin on the one hand or
Houghten on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this Section 3.5.4 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

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3.5.5 The obligations of Magainin and Houghten under this
Section 3.5 shall be in addition to any liability which Magainin and Houghten
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls Magainin or Houghten within the meaning of
the Securities Act.

3.6 TRANSFER OF REGISTRATION RIGHTS. The right to sell
Registrable Securities pursuant to the Registration Statement described herein
may not be assigned or transferred by Houghten, except to an Affiliate. For
the purpose of this Section, "Affiliate" shall mean any entity which controls,
is controlled or is under common control with Houghten.

4. REPRESENTATIONS AND WARRANTIES OF HOUGHTEN. Houghten hereby
represents and warrants to Magainin as of the date hereof as follows:

4.1 INVESTMENT EXPERIENCE. Houghten believes that it has received
all the information it considers necessary or appropriate to enable it to
decide whether to acquire the Shares pursuant to this Agreement. Houghten has
had an opportunity to become aware of Magainin's business affairs and financial
condition, has had an opportunity to ask questions and receive answers, review
documents and gather information about Magainin, and has acquired sufficient
information about Magainin to reach an informed and knowledgeable decision to
acquire the Shares. Houghten has such business and financial experience as is
required to give it the capacity to protect its own interests in connection
with the acquisition of the Shares and can bear the economic risk of its
investment. Houghten acknowledges receipt of Magainin's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and Quarterly Reports on Form
10-Q for the quarters ended March 31, 1996 and June 30, 1996. Without limiting
the foregoing, Houghten acknowledges that release of the results from pivotal
Phase III clinical testing of MSI-78 is imminent and that no assurances can be
given as to the nature or timing of such results.

4.2 INVESTMENT INTENT. Houghten is acquiring the Shares for
investment for its own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Houghten has no
present intention of selling, granting any participation in, or otherwise
distributing the Shares, except in compliance with the Securities Act or
pursuant to an available exemption thereunder.

4.3 RESTRICTED SECURITIES. Houghten understands that the Shares
have not been registered under the Securities Act or registered or qualified
under any state securities law in reliance on specific exemptions therefrom,
which exemptions may depend upon, among other things, the bona fide nature of
Houghten's investment intent as expressed herein. Houghten is familiar with
Rule 144 under the Securities Act, as presently in effect, and understands the
resale limitations imposed thereby and by the Securities Act.

4.4 NO LEGAL, TAX OR INVESTMENT ADVICE. Houghten understands that
nothing in this Agreement or any other materials presented to Houghten in
connection with the acquisition of the

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Shares constitutes legal, tax or investment advice. Houghten has consulted
such legal, tax and investment advisors as it, in its sole discretion, has
deemed necessary or appropriate in connection with its acquisition of the
Shares.

4.5 CORPORATE POWER; AUTHORITY. Houghten has all requisite legal
and corporate power and has taken all requisite corporate action to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly authorized, executed and delivered on behalf of Houghten and
constitutes the valid and binding agreement of Houghten, enforceable in
accordance with its terms.

5. NOTICES. All notices and other communications hereunder shall be in
writing (whether or not a writing is expressly required hereby), and shall be
deemed to have been given (i) if hand delivered or sent by an express mail
service or by courier, then if and when delivered to and received by the
respective parties at the below addresses (or at such other address as a party
may hereafter designate for itself by notice to the other party as required
hereby), or (ii) if mailed, then on the next business day following the date on
which such communication is deposited in the United States mails, by first
class certified mail, return receipt requested, postage prepaid, and addressed
to the respective parties at the below addresses (or at such other address as a
party may hereafter designate for itself by notice to the other party as
required hereby):

If to Magainin, to:

Magainin Pharmaceuticals Inc.
5110 Campus Drive
Plymouth Meeting, PA 19462
Attn: President

If to Houghten, to:

Houghten Pharmaceuticals Inc.
3550 General Atomics Court
San Diego, CA 92121
Attn: President

6. MISCELLANEOUS.

6.1 SURVIVAL OF WARRANTIES. The warranties and representations of
Magainin and Houghten contained in or made pursuant to this Agreement shall
survive for the period described in Section 3.3 during which Magainin is
obligated to keep the Registration Statement described therein effective.

6.2 SUPPLY OF REPORTS. As long as Houghten owns at least 10% of
the Shares, Magainin will, upon the reasonable request of Houghten, furnish to
Houghten (i) a copy of the

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most recent annual, quarterly or current report of Magainin filed with the SEC
under the Securities Exchange Act of 1934, as amended, and (ii) such other
information as may be reasonably required to enable Houghten to avail itself of
any applicable exemption from registration under the rules and regulations
under the Securities Act. In addition, if at any time the Company is not
required to file such reports with the SEC, it will, upon the request of
Houghten, use its best efforts to make publicly available other information so
long as is necessary to permit sales of the Shares pursuant to Rule 144 or Rule
144A under the Securities Act.

6.3 GOVERNING LAW; PARTIES IN INTEREST. This Agreement shall be
governed by the laws of the Commonwealth of Pennsylvania, without regard to the
conflicts of laws thereof, and shall bind and inure to the benefit of the
parties hereto and their respective successors and assigns.

6.4 COUNTERPARTS. This Agreement may be executed simultaneously
in two or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.

6.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Second
Amendment set forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as contained herein or therein. This Agreement may not be changed
orally but only by an agreement in writing, duly executed by or on behalf of
the party or parties against whom enforcement of any waiver, change,
modification, consent or discharge is sought.

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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

MAGAININ PHARMACEUTICALS INC.

By: /s/ Michael R. Dougherty
------------------------------------------
Name: Michael R. Dougherty
Title: Executive Vice President and
Chief Financial Officer

HOUGHTEN PHARMACEUTICALS, INC.

By: /s/ Robert S. Whitehead
-----------------------------------------
Name: Robert S. Whitehead
Title: President

<PAGE> 1

EXHIBIT 10.2

STOCK ISSUANCE AGREEMENT

BACKGROUND

Simultaneously with the execution hereof, Magainin has entered
into a Second Amendment to License Agreement (the "MPS Amendment") with
Multiple Peptide Systems, Inc. ("MPS"), to amend certain provisions of the
License Agreement, dated as of November 4, 1988, between Magainin and MPS, as
amended by the First Amendment to Agreement, dated as of February 1, 1990.
Scripps has executed a Consent and Agreement to the MPS Amendment (the "Consent
and Agreement").

Scripps and MPS have entered into a Second Amendment to
License Agreement, dated as of the date hereof, (the "Second Amendment"), to
make certain amendments to a License Agreement Regarding Magainin Peptides,
dated as of October 20, 1988, between Scripps and MPS, as amended by the First
Amendment to Agreement, dated as of March 1, 1990, to correspond with certain
of the amendments to the MPS/Magainin Agreement implemented by the MPS
Amendment. This Agreement is entered into pursuant to the Second Amendment.

TERMS

NOW THEREFORE, intending to be legally bound hereby, the
parties agree as follows:

1. ISSUANCE OF SHARES. Subject to the terms and conditions hereof, and
in consideration for the agreements and obligations of Scripps under the
Consent and Agreement and the Second Amendment, Magainin shall, at the Closing
(as defined in Section 2 hereof), issue to Scripps 275,000 duly authorized,
validly issued, fully-paid and nonassessable shares (the "Shares") of
Magainin's Common Stock, par value $.002 per share.

2. THE CLOSING.

2.1 THE CLOSING DATE. The issuance of the Shares (the "Closing")
shall occur on October 4, 1996 or such other time as may be agreed upon in
writing by Magainin and Scripps (the "Closing Date"). At the Closing, Magainin
shall deliver to Scripps certificate(s) for the Shares registered in the name
specified in writing by Scripps to Magainin.

<PAGE> 2
2.2 CONDITIONS TO CLOSING. Magainin's obligation to issue the
Shares and deliver such stock certificate(s) to Scripps at the Closing shall be
subject to the accuracy, as of the Closing Date, of (a) the representations and
warranties of Scripps set forth in this Agreement , the Consent and Agreement
and the Second Amendment, (b) the representations and warranties of MPS set
forth in the Second Amendment and in the MPS Amendment and (c) the
representations and warranties of Houghten set forth in the MPS Amendment. At
the Closing, each of Houghten, MPS and Scripps shall deliver to Magainin a
certificate, executed by a duly authorized officer, as to the matters set forth
in clauses (a), (b) or (c), as the case may be.

3. RESTRICTIONS ON TRANSFER AND REGISTRATION RIGHTS.

3.2 RESTRICTIVE LEGENDS. Each certificate representing the Shares
shall bear substantially the following legends (in addition to any legends
required under applicable securities laws):

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<PAGE> 3
3.3 REGISTRATION OF SHARES.

3.3.1 REGISTRATION. No later than 20 days after the date
hereof, unless not permitted under the then applicable rules and regulations of
the Securities and Exchange Commission ("SEC"), Magainin will file a
registration statement (the "Registration Statement") with the SEC under the
Securities Act to register the resale of the Shares in non-underwritten market
transactions. Magainin will use its best efforts to have the Registration
Statement declared effective as soon as possible, and will keep the
Registration Statement effective until the earlier of (i) two years from the
date hereof, or (ii) the date as of which counsel for Magainin reasonably
determines that the Shares may be freely sold without restriction under the
Securities Act, subject to such periods of time when Magainin must suspend the
use of the prospectus forming a part of the Registration Statement until such
time as an amendment is filed and declared effective or an appropriate report
is filed by Magainin with the SEC.

3.3.2 WITHHOLDING OF SHARES. If requested by the managing
underwriter of an underwritten public offering of securities by Magainin,
Scripps agrees to withhold the Shares from the market for a period, not to
exceed a period ending 90 days following the effective date of the registration
statement relating to such offering, which the managing underwriter reasonably
determines is necessary in order to effect the underwritten public offering, if
the same restriction is agreed to by the officers and directors of Magainin.

3.4 ABOUT REGISTRATION.

3.4.1 Magainin shall pay all Registration Expenses (as
defined below) in connection with any registration, qualification or compliance
hereunder, and Scripps shall pay all Selling Expenses (as defined below) and
other expenses that are not Registration Expenses relating to the Shares
("Registrable Securities") resold by Scripps. "Registration Expenses" shall
mean all expenses, except for Selling Expenses, incurred by Magainin in
complying with the registration provisions of this Agreement, including without
limitation all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel for Magainin, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Registrable
Securities and all fees and disbursements of counsel for Scripps.

3.4.2 In the case of any registration effected by Magainin
pursuant to these registration provisions, Magainin will (i) prepare and file
with the SEC such amendments and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of the Registrable Securities; (ii) furnish such number of
prospectuses and other documents incident thereto, including any amendment of
or supplement to the prospectus, as Scripps from time to time may reasonably
request; and (iii) provide a transfer

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agent and registrar for all Registrable Securities registered pursuant to the
Registration Statement and a CUSIP number for all such Registrable Securities;

3.4.3 In the case of any registration effected by
Magainin pursuant to these registration provisions, Magainin will use its best
efforts to (i) cause all such Registrable Securities registered as described
herein to be listed on each securities exchange and quoted on each quotation
service on which similar securities issued by Magainin are then listed or
quoted; (ii) comply with all applicable rules and regulations of the SEC; and
(iii) file the documents required of Magainin and otherwise use its best
efforts to maintain requisite blue sky clearance in (A) all jurisdictions in
which any of the Shares is originally sold and (B) all other states specified
in writing by a Holder, provided as to clause (B), however, that Magainin shall
not be required to qualify to do business or consent to service of process in
any state in which it is not now so qualified or has not so consented.

3.4.4 Scripps shall furnish to Magainin such information
regarding it and the distribution proposed by such Holder as Magainin may
reasonably request in writing and as shall be reasonably required in connection
with any registration, qualification or compliance described herein. Scripps
shall represent that such information is true and complete.

3.4.5 If Scripps shall propose to sell any Registrable
Securities pursuant to the Registration Statement, it shall notify Magainin of
its intent to do so at least three full business days prior to such sale, and
the provision of such notice to Magainin shall be deemed to establish an
agreement by Scripps to comply with the registration provisions contained
herein. Such notice shall be deemed to constitute a representation that any
information previously supplied by Scripps is accurate as of the date of such
notice. At any time within such three business day period, Magainin may refuse
to permit Scripps to resell any Registrable Securities pursuant to the
Registration Statement; provided that in order to exercise this right, Magainin
must deliver a certificate in writing to Scripps to the effect that a delay in
such sale is necessary because, in the good faith judgment of Magainin, a sale
pursuant to the Registration Statement in its then-current form could require
the public disclosure of information that would not otherwise be required to be
disclosed (which disclosure would be burdensome or could have a material
adverse effect on Magainin) or that would in other respects constitute a
violation of the federal securities laws. In such an event, Magainin shall use
its best efforts to amend the Registration Statement if necessary and take all
other actions necessary to allow such sale under the federal securities laws,
and shall notify Scripps promptly after it has determined that such
circumstances no longer exist. Notwithstanding the foregoing, Magainin shall
not under any circumstances be entitled to exercise its right to withdraw the
Registration Statement more than two times in any twelve (12) month period, and
the period during which such Registration Statement may be withdrawn shall not
exceed thirty (30) days. Scripps hereby covenants and agrees that it will not
sell any Registrable Securities pursuant to the Registration Statement during
the periods the Registration Statement is withdrawn as set forth in this
Section 3.4.5.

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3.4.6 When Scripps is entitled to sell and gives notice of
its intent to sell pursuant to the Registration Statement, Magainin shall
furnish to Scripps a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include
an untrue statement of material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
or incomplete in the light of the circumstances then existing.

3.5 INDEMNIFICATION AND CONTRIBUTION.

3.5.1 Magainin agrees to indemnify and hold harmless
Scripps and its trustees, officers, employees and agents from and against any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) to which Scripps or any of them may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon, any claim by a third party asserting any untrue statement of a
material fact in the Registration Statement, or any omission of a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading
(including any preliminary or final prospectus contained therein, and any
amendments or supplements thereto, and any filings and information incorporated
therein by reference), in each case on the effective date thereof, or arise out
of any failure by Magainin to fulfill any undertaking included in such
Registration Statement, and Magainin will reimburse Scripps and the other
indemnified parties hereunder for any legal or other expenses reasonably
incurred in investigating, defending or preparing to defend any such action,
proceeding or claim; provided, however, that Magainin shall not be liable in
any such case to the extent that such loss, claim, damages or liability arises
out of, or is based upon (i) an untrue statement of a material fact made in
such Registration Statement, or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, made in reliance upon
and in conformity with written information furnished to Magainin by or on
behalf of Scripps specifically for use in preparation of such Registration
Statement or (ii) any untrue statement of a material fact, or any omission of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, in any prospectus that is corrected in any subsequent prospectus
that was delivered to Scripps prior to the pertinent sale or sales by Scripps.

3.5.2 Scripps agrees to indemnify and hold harmless
Magainin and its directors, officers, employees and agents from and against any
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) to which Magainin or any of them may become subject (under the
Securities Act or otherwise) insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of, or are
based upon any claim by a third party asserting (i) an untrue statement made in
such Registration Statement, or any omission of a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, made in reliance upon
and in conformity with written information furnished to Magainin by or on
behalf of Scripps specifically

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for use in preparation of such Registration Statement, provided that Scripps
shall not be liable in any such case for any untrue statement included in any
Prospectus which statement has been corrected, in writing, by Scripps and
delivered to Magainin before the sale from which such loss occurred or (ii) any
untrue statement in any prospectus of a material fact, or any omission of a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, that is corrected in any subsequent prospectus that was delivered
to the purchaser prior to the pertinent sale or sales by Scripps, and Scripps
will, as incurred, reimburse Magainin and the other indemnified parties
hereunder for any legal or other expenses reasonably incurred in investigating,
defending or preparing to defend any such action, proceeding or claim.

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omission. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this Section 3.5.4 shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.

3.5.5 The obligations of Magainin and Scripps under this
Section 3.5 shall be in addition to any liability which Magainin and Scripps
may otherwise have and shall extend, upon the same terms and conditions, to
each person, if any, who controls Magainin or Scripps within the meaning of the
Securities Act.

3.6 TRANSFER OF REGISTRATION RIGHTS. The right to sell
Registrable Securities pursuant to the Registration Statement described herein
may not be assigned or transferred by Scripps, except to an Affiliate. For the
purpose of this Section, "Affiliate" shall mean any entity which controls, is
controlled or is under common control with Scripps.

4. REPRESENTATIONS AND WARRANTIES OF SCRIPPS. Scripps hereby represents
and warrants to Magainin as of the date hereof as follows:

4.1 INVESTMENT EXPERIENCE. Scripps believes that it has received
all the information it considers necessary or appropriate to enable it to
decide whether to acquire the Shares pursuant to this Agreement. Scripps has
had an opportunity to become aware of Magainin's business affairs and financial
condition, has had an opportunity to ask questions and receive answers, review
documents and gather information about Magainin, and has acquired sufficient
information about Magainin to reach an informed and knowledgeable decision to
acquire the Shares. Scripps has such business and financial experience as is
required to give it the capacity to protect its own interests in connection
with the acquisition of the Shares and can bear the economic risk of its
investment. Scripps acknowledges receipt of Magainin's Annual Report on Form
10-K for the fiscal year ended December 31, 1995 and Quarterly Reports on Form
10-Q for the quarters ended March 31, 1996 and June 30, 1996. Without limiting
the foregoing, Scripps acknowledges that release of the results from pivotal
Phase III clinical testing of MSI-78 is imminent and that no assurances can be
given as to the nature or timing of such results.

4.2 INVESTMENT INTENT. Scripps is acquiring the Shares for
investment for its own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Scripps has no
present intention of selling, granting any participation in, or otherwise
distributing the Shares, except in compliance with the Securities Act or
pursuant to an available exemption thereunder.

4.3 RESTRICTED SECURITIES. Scripps understands that the Shares
have not been registered under the Securities Act or registered or qualified
under any state securities law in reliance on specific exemptions therefrom,
which exemptions may depend upon, among other things, the bona

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fide nature of Scripps's investment intent as expressed herein. Scripps is
familiar with Rule 144 under the Securities Act, as presently in effect, and
understands the resale limitations imposed thereby and by the Securities Act.

4.4 NO LEGAL, TAX OR INVESTMENT ADVICE. Scripps understands that
nothing in this Agreement or any other materials presented to Scripps in
connection with the acquisition of the Shares constitutes legal, tax or
investment advice. Scripps has consulted such legal, tax and investment
advisors as it, in its sole discretion, has deemed necessary or appropriate in
connection with its acquisition of the Shares.

4.5 CORPORATE POWER; AUTHORITY. Scripps has all requisite legal
and corporate power and has taken all requisite corporate action to execute,
deliver and perform its obligations under this Agreement. This Agreement has
been duly authorized, executed and delivered on behalf of Scripps and
constitutes the valid and binding agreement of Scripps, enforceable in
accordance with its terms.

If to Magainin, to:

Magainin Pharmaceuticals Inc.
5110 Campus Drive
Plymouth Meeting, PA 19462
Attn: President

If to Scripps, to:

The Scripps Research Institute
10550 North Torrey Pines Road
La Jolla, CA 92037
Attn: President

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6. MISCELLANEOUS.

6.1 SURVIVAL OF WARRANTIES. The warranties and representations of
Magainin and Scripps contained in or made pursuant to this Agreement shall
survive for the period described in Section 3.3 during which Magainin is
obligated to keep the Registration Statement described therein effective.

6.2 SUPPLY OF REPORTS. As long as Scripps owns at least 10% of
the Shares, Magainin will, upon the reasonable request of Scripps, furnish to
Scripps (i) a copy of the most recent annual, quarterly or current report of
Magainin filed with the SEC under the Securities Exchange Act of 1934, as
amended, and (ii) such other information as may be reasonably required to
enable Scripps to avail itself of any applicable exemption from registration
under the rules and regulations under the Securities Act. In addition, if at
any time the Company is not required to file such reports with the SEC, it
will, upon the request of Scripps, use its best efforts to make publicly
available other information so long as is necessary to permit sales of the
Shares pursuant to Rule 144 or Rule 144A under the Securities Act.

6.5 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the Consent
and Agreement set forth all of the promises, covenants, agreements, conditions
and undertakings between the parties hereto with respect to the subject matter
hereof, and supersede all prior and contemporaneous agreements and
understandings, inducements or conditions, express or implied, oral or written,
except as contained herein or therein. This Agreement may not be changed
orally but only by an agreement in writing, duly executed by or on behalf of
the party or parties against whom enforcement of any waiver, change,
modification, consent or discharge is sought.

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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.

MAGAININ PHARMACEUTICALS INC.

By: /s/ Michael R. Dougherty
---------------------------------------------
Name: Michael R. Dougherty
Title: Executive Vice President and
Chief Executive Officer

THE SCRIPPS RESEARCH INSTITUTE

By: /s/ Arnold LaGuardia
---------------------------------------------
Name: Arnold LaGuardia
Title: Senior Vice President, Treasurer

<PAGE> 1

EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the incorporation by reference in the
Registration Statement on Form S-3 of our report dated January 26, 1996 on the
financial statements included in the annual report of Magainin Pharmaceuticals
Inc. as at and for the year ended December 31, 1995.

/s/ RICHARD A. EISNER & COMPANY, LLP

Richard A. Eisner & Company, LLP

New York, New York
October 18, 1996