TEXAS BIOTECHNOLOGY CORP /DE/, S-3/A, 1997-05-22

TEXAS BIOTECHNOLOGY CORP /DE/
S-3/A, 1997-05-22
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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As filed with the Securities and Exchange Commission on May 22, 1997.
REGISTRATION NO. 333-25043

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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TEXAS BIOTECHNOLOGY CORPORATION
(Exact name of registrant as specified in its charter)

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DELAWARE 2834 13-3532643
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
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7000 FANNIN, SUITE 1920
HOUSTON, TEXAS 77030
(713) 796-8822
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)

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STEPHEN L. MUELLER With copies to:
VICE PRESIDENT OF ADMINISTRATION PORTER & HEDGES, L.L.P.
SECRETARY AND TREASURER 700 LOUISIANA, 35TH FLOOR
TEXAS BIOTECHNOLOGY CORPORATION HOUSTON, TEXAS 77002-2764
7000 FANNIN, SUITE 1920 ATTN: ROBERT G. REEDY
HOUSTON, TEXAS 77030 (713) 226-0600
(713) 796-8822

(Name and address, including zip code, and telephone
number, including area code, of agent for service)

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

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with a dividend or
interest reinvestment plan, please check the following box. [x]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______________

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]______________

If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.

CALCULATION OF REGISTRATION FEE

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TITLE OF EACH CLASS OF AMOUNT TO PROPOSED MAXIMUM PROPOSED AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED OFFERING MAXIMUM AGGREGATE REGISTRATION FEE
PRICE PER SHARE OFFERING PRICE
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Common Stock, par value $.005 per share(1)....... 3,000,000 $4.6875 $14,062,500 $4,850(3)
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Common Stock, par value $.005 per share(2)....... 47,936 $4.8125 $ 230,692 $ 80(4)
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Common Stock, par value $.005 per share(2)....... 113,636 $4.8125 $ 546,874 $ 189(4)
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TOTAL.............................. $5,119(5)
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(1) Issuable upon conversion of 6,000 shares of 5% Cumulative Convertible
Preferred Stock (the "5% Preferred"). For the purpose of estimating the
number of shares of Common Stock to be included in the Registration
Statement of which this Prospectus is a part, the Company calculated the
number of shares of Common Stock issuable in connection with the
conversion of the Company's 5% Preferred using a conversion price of the
5% Preferred at the time of such conversion of $2.00 which price is below
the closing sale price of the Common Stock as of May 20, 1997 ($4.75 per
share) and was arbitrarily selected. In addition to the estimated number
of shares set forth in the table, the amount to be registered includes a
presently indeterminate number of shares issuable upon conversion of or
otherwise in respect of the 5% Preferred as such number may be adjusted
as a result of stock splits, stock dividend and antidilution provisions
(including floating rate conversion prices) in accordance with Rule 416.

(2) Issuable upon exercise of warrants evidencing the right to purchase
shares of Common Stock, par value $.005 per share (the "Warrants"). In
addition to the estimated number of shares set forth in the table, the
amount to be registered includes a presently indeterminate number of
shares issuable upon exercise of or otherwise in respect of the warrants

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as such number may be adjusted as a result of stock splits, stock
dividend and antidilution provisions in accordance with Rule 416.

(3) Pursuant to Rule 457(c), the registration fee is calculated based on the
average of the high and low prices for the Common Stock, as reported by
the American Stock Exchange on April 9, 1997 or $4.6875 per share.

(4) Pursuant to Rule 457(c), the registration fee is calculated based on the
average of the high and low prices for the Common Stock, as reported by
the American Stock Exchange on May 20, 1997 or $4.8125 per share.

(5) $4,850 has previously been paid.

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.
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PROSPECTUS
TEXAS BIOTECHNOLOGY CORPORATION

3,161,572 SHARES
COMMON STOCK

This Prospectus relates to 3,161,572 shares (the "Shares") of Common
Stock, par value $.005 per share (the "Common Stock"), of Texas Biotechnology
Corporation, a Delaware corporation (the "Company"), which Shares will be
offered for resale from time to time by certain stockholders of the Company
(the "Selling Stockholders"). Of the Shares, 3,000,000 relate to the Company's
private placement of 5% Cumulative Convertible Preferred Stock, par value
$.005, (the "Preferred Stock") that was completed on March 14, 1997. The
Preferred Stock (together with accrued or required dividends thereon) is
convertible into Common Stock at discounts ranging from 6% to 17% from the
average of the daily low trading price of the Common Stock for the ten
consecutive trading days immediately preceding the conversion date. A total of
6,000 shares of Preferred Stock was sold at a price of $1,000.00 per share to
two accredited institutional investors who are the selling stockholders. In
connection with the private placement of the Preferred Stock, the Company
agreed to register the resale of the Common Stock into which the Preferred
Stock is convertible.

The Shares also include: (i) 47,936 shares of Common Stock underlying
warrants issued in connection with the Company's private placement of Common
Stock completed in October, 1991. The warrants are exercisable at $3.50 per
share and expire between August 1, 1998 and October 25, 1998; and (ii) 113,636
shares of Common Stock underlying warrants issued in connection with the
Company's private placement of Common Stock completed in October 1996. The
warrants are exercisable at $4.40 per share and expire on October 10, 2001.

Pursuant to this Prospectus, the Shares may be offered by the Selling
Stockholders, or by certain pledgees, donees, transferees or other successors
in interest, from time to time in transactions on the American Stock Exchange,
Inc. ("AMEX"), in privately negotiated transactions, or by a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions
or commissions from the Selling Stockholders or the purchasers of the Shares
for whom such broker-dealers may act as agent or to whom they sell as principal
or both (which compensation to a particular broker-dealer might be in excess of
customary commissions). See "Selling Stockholders" and "Plan of Distribution."

Other methods by which the Shares may be sold include, without
limitation: (i) transactions which involve cross or block trades or any other
transaction permitted by the AMEX, (ii) "at the market" to or through market
makers or into an existing market for the Common Stock, (iii) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents, (iv) through transactions in
options or swaps or other derivatives (whether exchange-listed or otherwise),
(v) through short sales, as to which the Selling Stockholders have agreed to
certain restrictions, or (vi) any combination of any such methods of sale. The
Selling Stockholders may also enter into option or other transactions with
broker-dealers which require the delivery to such broker dealers of the Common
Stock offered hereby, which Common Stock such broker-dealers may resell
pursuant to this Prospectus.

None of the proceeds from the sale of the Shares by the Selling
Stockholders will be received by the Company. The Company has agreed to bear
certain expenses (other than any underwriting discounts and selling commissions
and any fees and disbursements of counsel for the selling stockholders not
specifically provided for by the parties), estimated to be approximately
$15,120, in connection with the registration and sale of the Shares being
offered by the Selling Stockholders. Pursuant to a Registration Rights
Agreement with certain Selling Stockholders, the Company has agreed to
indemnify certain of the Selling Stockholders and each underwriter against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended, or will contribute to payments such Selling Stockholders or
underwriters may be required to make in respect of certain losses, claims,
damages or liabilities.

The shares of Common Stock are quoted on the AMEX under the symbol
"TXB." On May 20, 1997, the last reported sale price of the Common Stock was
$4.75 per share.

SEE "RISK FACTORS" ON PAGES 4-12 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
__________________

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 May ___, 1997.

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TABLE OF CONTENTS

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Page
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Available Information................................................. 3

Incorporation of Certain Documents by Reference....................... 3

The Company........................................................... 4

Risk Factors.......................................................... 4

Selling Stockholders.................................................. 13

Plan of Distribution.................................................. 15

Legal Matters......................................................... 15

Experts............................................................... 15
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AVAILABLE INFORMATION

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 Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. and at the Commission's regional
offices at the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such material may also be obtained from the Public Reference
Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Such materials also can be
inspected at the offices of the AMEX, 86 Trinity Place, New York, New York
10006, on which the Common Stock is listed. In addition, the Commission
maintains a World Wide Web site at http://www.sec.gov that contains reports,
proxy and information statements, and other information regarding registrants
that file electronically with the Commission.

The Company has filed with the Commission a Registration Statement on
Form S-3 (including any amendments thereto, the "Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
the shares of Common Stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules thereto. For further information with respect to the Company and
the Common Stock, reference is made to the Registration Statement and the
exhibits and schedules thereto. Statements made in this Prospectus regarding
the contents of any contract or document filed as an exhibit to the
Registration Statement are not necessarily complete and, in each instance,
reference is hereby made to the copy of such contract or document so filed.
Each such statement is qualified in its entirety by such reference.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following are hereby incorporated by reference in this Prospectus:

(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.

(2) A description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A effective December
15, 1993 (Commission File No. 1-12574), including any amendments
or reports filed for the purpose of updating such description.

(3) The Company's Current Report on Form 8-K dated March 14, 1997.

(4) The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997.

All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and before
the termination of the offering covered hereby will be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this Prospectus shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained in this Prospectus or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference modifies or replaces such statement.

The Company will provide, without charge and on oral or written
request, to each person to whom this Prospectus is delivered, a copy of any or
all of the documents incorporated by reference in this Prospectus other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference into the information that this Prospectus incorporates. In
addition, a copy of the Company's most recent annual report to stockholders will
be promptly furnished, without charge and on oral or written request, to such
persons. All such requests should be directed to Texas Biotechnology
Corporation, 7000 Fannin, Suite 1920, Houston, Texas 77030, Attention: Stephen
L. Mueller, Vice President of Administration, Secretary and Treasurer
(telephone (713) 796-8822).

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THE COMPANY

Texas Biotechnology Corporation ("TBC" or the "Company"), a
biopharmaceutical company, applies innovative drug discovery techniques and its
specialized knowledge of the role of vascular cell biology in cardiovascular
disease to the design and development of novel pharmaceutical compounds. The
Company was incorporated in Delaware in August 1989 under the name Cardiology
Institute of Texas, Ltd., and its name was changed to Texas Biotechnology
Corporation in October 1990. As of December 31, 1996, the Company had 73
employees, 60 of whom were engaged in research and development. References to
TBC or the Company include its subsidiary ImmunoPharmaceutics, Inc. ("IPI")
unless otherwise indicated. The Company's principal executive offices are
located at 7000 Fannin Street, Suite 1920, Houston, Texas 77030, and its
telephone number is (713) 796-8822. References to TBC or the Company include
its subsidiary, IPI, unless otherwise indicated.

RISK FACTORS

In evaluating the Company and its business, prospective investors
should carefully consider all of the information set forth in this Prospectus
and should give particular attention to the following risk factors.

DEVELOPMENT STAGE; TECHNOLOGICAL UNCERTAINTY

The Company is in a development stage. Except for the activities of
its recently acquired subsidiary, IPI, the Company has not produced or marketed
any products and, accordingly, has not begun to generate revenues from the
commercialization of its product candidates. IPI sold primarily monoclonal
anti-body products and services through its business unit, QED, which was
divested in October of 1995. To date, the Company's resources have been
dedicated to the research and development of small-molecule drugs that prevent
blood clot formation (thrombosis), the proliferation of smooth muscle cells at
sites of vessel injury (vascular proliferative disease), inflammatory responses
to vessel injury (vascular inflammation) and constriction of blood vessels
(vasospasm/hypertension). The Company has developed a number of advanced
technologies in the areas of computer-assisted small-molecule drug design for
peptidomimetics and glycomimetics. Since initiating its research programs in
January 1991, the Company has developed lead compounds in its vascular
proliferation disease, vascular inflammation and vasospasm/hypertension
programs. The commercial applications of the Company's product candidates will
require further investment, research, development, preclinical and clinical
testing and regulatory approvals, both foreign and domestic. There can be no
assurance that the Company will be able to develop, produce at reasonable cost,
or market successfully, any of its product candidates. Further, these product
candidates may prove to have undesirable and unintended side effects and, in
some cases, may require complex delivery systems that may prevent or limit
their commercial use. All of the Company's products will require regulatory
approval before they may be commercialized. Products, if any, resulting from
the Company's research and development programs are not expected to be
commercially available for a number of years, and there can be no assurance
that any successfully developed products will generate substantial revenues or
that the Company will ever be profitable.

NEED FOR ADDITIONAL FUNDS; HISTORY OF OPERATING LOSSES

Because the Company has been unprofitable to date and expects to incur
losses for the next several years as the Company invests in product research
and development, preclinical and clinical testing and regulatory compliance,
the Company will require substantial additional funds to complete the research
and development of its product candidates, to establish commercial-scale
manufacturing facilities and to market its products. The Company has
accumulated approximately $68.7 million in net losses through March 31, 1997.
Estimates of the Company's future capital requirements will depend on many
factors, including: continued scientific progress in its drug discovery
programs; the magnitude of these programs; progress with preclinical testing
and clinical trials; the time and costs involved in obtaining regulatory
approvals; the costs involved in filing, prosecuting and enforcing patent
claims; competing technological and market developments; changes in its
existing research relationships; the ability of the Company to maintain and
establish additional collaborative arrangements; and effective
commercialization activities and arrangements. The Company anticipates its
existing capital resources of approximately $14.2 million as of March 31, 1997,
together with its other revenue sources, should be sufficient to

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fund its cash requirements into the fourth quarter of 1997. However, the
Company's existing capital resources will not be sufficient to fund the
Company's operations through commercialization of its first product. The
Company expects that additional expenditures will be required if additional
product candidates enter clinical trials which may require additional
expenditures for laboratory space and scientific and administrative personnel.
As a result, additional funds will need to be raised before any of the
Company's product candidates achieves regulatory approval. Notwithstanding
revenues which may be produced through sales of potential future products if
approved, the Company anticipates that additional funds will need to be secured
to continue the required levels of research and development to reach its long
term goals. The Company intends to seek such additional funding either through
collaborative arrangements or through public or private financings. There can
be no assurance that additional financing will be available, or, if available,
that it will be available on acceptable terms. If additional funds are raised
by issuing securities, further dilution of the equity ownership of existing
stockholders will result. If adequate funds are not available, the Company may
be required to delay, scale back or eliminate one or more of its drug discovery
or development programs or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, product candidates or products that the Company would not
otherwise relinquish.

DEPENDENCE ON STRATEGIC RELATIONSHIPS; POTENTIAL NEED FOR ADDITIONAL PARTNERS;
LIMITATIONS ON MARKETS AND APPLICATIONS

The Company will rely on strategic relationships with corporate
partners to provide the financing and technical support necessary to develop
and commercialize certain of its product candidates. TBC has entered into an
agreement with Mitsubishi Chemical Corporation ("Mitsubishi")to license
Mitsubishi's rights and technology relating to NOVASTAN(R) (argatroban) and to
license Mitsubishi's own proprietary technology developed with respect to
NOVASTAN(R) (the "NOVASTAN(R) Agreement"). Under the NOVASTAN(R) Agreement,
the Company has an exclusive license to use and sell NOVASTAN(R) in the United
States and Canada for specified human cardiovascular indications, not including
cerebral thromboembolism (stroke). The Company is required to pay Mitsubishi
specified royalties on net sales of NOVASTAN(R) by the Company and its
sublicensees after its commercial introduction in the United States and Canada.
Mitsubishi has the right to terminate the agreement or to cause the license to
become non-exclusive if the Company fails to exercise due diligence in
performing its obligations under the agreement for a period of 60 days after
receiving written notice from Mitsubishi or fails to maintain a minimum
consolidated tangible net worth of $5.0 million. The NOVASTAN(R) Agreement, as
amended, provides that Mitsubishi may terminate the NOVASTAN(R) Agreement if
TBC does not file an NDA for NOVASTAN(R) with the FDA on or before June 30,
1997, subject to certain additional goals being met by TBC. As of December 31,
1995, TBC had not met certain of those goals. However, Mitsubishi has agreed
to withhold its rights to terminate the NOVASTAN(R) Agreement if the NDA is
filed by June 30, 1997, and if TBC accomplishes the following milestones: (i)
on or before December 31, 1996, TBC shall have met certain enrollment
guidelines for certain NOVASTAN(R) clinical trials; (ii) on or before March 31,
1997, TBC shall complete, report and analyze certain other NOVASTAN(R) clinical
trials; (iii) on or before September 30, 1997, TBC shall have agreed to proceed
with the Phase III trial in AMI, and (iv) TBC shall comply with certain
reporting and informational requirements. If these milestones are not met,
Mitsubishi will retain the rights to terminate the NOVASTAN(R) Agreement;
provided, that if such termination results from TBC's violation of the
milestone described in (iii) above, TBC will receive a license from Mitsubishi
in the field of HIT/HITTS on the same terms, as presently included in the
NOVASTAN(R) Agreement. As of December 31, 1996, TBC had not met certain of
these goals and to date, Mitsubishi has not asserted its rights to terminate
the license arising out of this default. Either party may terminate the
NOVASTAN(R) Agreement on 60 days notice if the other party defaults in its
material obligations under the agreement, declares bankruptcy or is insolvent,
or if a substantial portion of its property is subject to attachment. Unless
terminated sooner pursuant to the above described termination provisions, the
NOVASTAN(R) Agreement is expected to expire in June 2007. Under the
NOVASTAN(R) Agreement, TBC has access to an improved formulation patent granted
in 1993 which expires in 2010 and a use patent which expires in 2009.

On October 11, 1994, the Company signed a collaborative agreement with
Synthelabo, a French pharmaceutical group, to develop and market compounds for
vascular proliferative disease derived from the Company's research programs.
Upon consummation of the transaction, Synthelabo purchased 1,428,571 shares of

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Common Stock for $3.50 per share for a total of $5 million and paid the Company
a non-refundable licensing fee of $3 million. In addition, Synthelabo
committed to pay $3 million annually in research payments (payable in quarterly
installments of $750,000). Beginning October 31, 1996, the parties to the
agreement have agreed to revise the payment for the third year to be $750,000,
which has already been paid. Synthelabo has agreed, upon the achievement of
certain milestones, to make further payments of up to $3 million per year for
up to $18 million in total. Synthelabo has the right to terminate the
agreement any time on or after October 15, 1997 for any reason and either party
has the right to terminate the contract for breach of any material obligation.
If Synthelabo exercises this termination right, the license granted to
Synthelabo will terminate and TBC will pay Synthelabo a royalty on net sales
of any products sold in a certain territory (Europe, Middle East, Africa and
countries of the former Soviet Union) for a period of time. In addition,
Synthelabo may, at its option, require that the technology be transferred to
and the development program be conducted by a joint venture owned by TBC and
Synthelabo should "net worth", as defined in the agreement, be less than $5
million as of the end of any calendar quarter during the term of the agreement.
For the years ended December 31, 1995 and December 31, 1996, TBC received $3
million related to the Synthelabo agreement. No such payments will be made in
1997. Synthelabo will pay royalties to TBC based on the net sales in those
areas covered in the agreement. In exchange for the above consideration,
Synthelabo will receive an exclusive license to manufacture, use, and sell any
products generated from the research, in Europe, the Middle East, Africa and
the countries of the former Soviet Union.

During 1996, the Company signed two agreements with Synthelabo with
respect to the supply of information related to certain clinical studies
regarding NOVASTAN(R). Over the term of the agreements as certain milestones
are met, Synthelabo has committed to pay TBC up to $2,920,000 of which
$1,895,000 has been received as of March 31, 1997. These payments are
dependent on rate of enrollment in certain clinical studies, the completion of
certain clinical studies and date of completion of certain clinical studies.
Synthelabo is the licensee for NOVASTAN(R) in certain territories other than
those which were sublicensed to TBC.

On October 10, 1996, the Company signed a strategic alliance agreement
with LG Chemical, Ltd. ("LG Chem"), a Korean corporation, to develop and market
compounds derived from the Company's Endothelin Receptor and Selectin
Antagonist for certain disease indications. Upon consummation of the
transaction, LG Chem purchased 1,250,000 shares of common stock for $4.00 per
share for a total of $5 million. In addition, LG Chem has committed to pay
$10.7 million in research payments. Of this amount, $100,000 was paid by
December 31, 1996 and $1.0 million will be paid on each of June 30 and December
31 of 1997, 1998, 1999 and 2000, and $1.3 million will be paid on June 30 and
December 31, 2001. LG Chem has the right to terminate future research payments
if TBC fails to meet certain agreement milestones, which milestones will be
established by the parties in accordance with the agreement. LG Chem will pay
royalties to TBC, based on net sales, in those geographic areas covered by the
agreement, which include Korea, China, India and certain other Asian countries,
excluding Japan. The Company will pay its agents in the contract negotiations
a commission on all future research payments as well as a royalty on net sales.

The Company will depend, in part, on these strategic alliances to fund
its capital requirements. There can be no assurance that the Company will
satisfy the conditions required to obtain additional milestone payments under
these agreements or to prevent these agreements from being terminated, some of
which conditions will not be within the control of the Company.

LEGAL PROCEEDINGS

On November 21, 1994, a class action shareholders' suit was filed in
the United States District Court for the Southern District of Texas, Houston
Division seeking damages in the amount of $16 million. Plaintiffs are two
individuals who purchased shares of the Company on December 16, 1993 following
the Company's initial public offering. In their complaint, plaintiffs have
sued the Company, and certain members of the board of directors and certain
officers alleging violations of Sections 11, 12 and 15 of the Securities Act of
1933, as amended (the "Act"). Plaintiffs have also named David Blech, D. Blech
& Co., Incorporated and Isaac Blech as defendants. On January 23, 1995, the
Company and the members of the board of directors filed a motion to dismiss the
plaintiffs' complaint pursuant to Rule 9(b) and Rule 12b(6) of the Federal
Rules of Civil Procedure. In addition, defendant John

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Pietruski, Chairman of the Board of Directors, filed a motion to dismiss the
plaintiffs' complaint pursuant to Rule 12(b)(2) of the Federal Rules of Civil
Procedure. On February 7, 1995, the plaintiffs filed a motion for class
certification. The Court denied the motion by the Company and by John
Pietruski.

On March 28, 1995, a second class action shareholders' suit was filed
in the United States District Court for the Southern District of New York
seeking unspecified damages. Plaintiffs are eight individuals who purchased
shares in various companies for which D. Blech & Co. acted as an underwriter
(or co-underwriter) or marketmaker. In their complaint, the plaintiffs have
sued the Company alleging violations of Section 10(b) of the Securities
Exchange Act of 1934, as Amended (the "Exchange Act") and Rule 10b-5
promulgated thereunder by the Securities and Exchange Commission (the
"Commission"). Plaintiffs have named a number of defendants, including David
Blech and D. Blech & Co., four individuals, two brokerage firms, one investment
management company and ten other companies for which D. Blech & Co. acted as
underwriter or marketmaker.

On August 14, 1995, the Judicial Panel on The Multi-District Litigation
ordered that the action filed in the United States District Court for the
Southern District of Texas, Houston Division be transferred to the United
States District Court for the Southern District of New York for coordinated or
consolidated pretrial proceedings with the action pending there. In light of
the transfer and consolidation of the Texas case with similar cases against
other companies for which Blech acted as underwriter, the Company requested
that the Court in New York reconsider the Texas Court's denial of its motion to
dismiss as a part of the Court's consideration of similar motions to dismiss
filed by those companies. All of these motions were presented to the Court on
February 6, 1996. On June 6, 1996, the New York District Court entered two
memorandum opinions in the consolidated cases. In one of its opinions, the
Court dismissed all of the Exchange Act and common law fraud claims filed
against the Company and its officers and directors, but afforded those
plaintiffs the right to attempt to preserve those claims by repleading them.
The Court ordered that those claims be repleaded no later than July 26, 1996.
Plaintiffs did not replead those claims by the deadline, resulting in the
dismissal of all claims against the Company in that litigation. In its opinion
in the second case, i.e., the case filed on November 21, 1994, the Court
granted the Company's and its officers' and directors' motion for
reconsideration, but together with all other similar pending motions, denied
the requested relief. Pursuant to the court's order, the Company therefore
filed an answer in that case. The Company also filed a Motion seeking leave of
court to prosecute an immediate appeal of the Court's denial of the Company's
Motion to Dismiss. The Court heard argument on that Motion on October 10,
1996. The motion was denied on January 16, 1997. Given the early stage of
that case, which is the only remaining litigation against the Company, the
Company is unable to evaluate its potential outcome at this time. The Company
disputes these claims and intends to contest them vigorously. There can be no
assurance, however that the final disposition of this case will be favorable to
the Company.

NO ASSURANCE OF REGULATORY APPROVAL; NEED FOR EXTENSIVE CLINICAL TRIALS

The production and marketing of the Company's products, as well as its
ongoing research and development activities, are subject to regulation by
governmental agencies in the United States and other countries. Any drug
developed by the Company will be subject to rigorous preclinical testing and
approval pursuant to regulations administered by the FDA, comparable agencies
in other countries and, to a lesser extent, by state regulatory authorities.
The approval process for the Company's products and product candidates is
likely to take several years and will involve significant expenditures for
which additional financing will be required. The cost to the Company of
conducting human clinical trials for any potential product can vary
dramatically based on a number of factors, including the order and timing of
clinical indications pursued and the extent of development and financial
support, if any, from corporate partners. Because of the intense competition
in the cardiovascular market, the Company may have difficulty obtaining
sufficient patient populations or clinician support to conduct its clinical
trials as planned and may have to expend substantial additional funds to obtain
access to such resources, or delay or modify its plans significantly. There is
no assurance that the Company will have sufficient resources to complete the
required regulatory review process or that the Company could survive the
inability to obtain, or delays in obtaining, such approvals. There can be no
assurance that clinical testing of the Company's products will provide evidence
of safety and efficacy in humans, that regulatory approvals will be granted for
any of the Company's products or that it will be economically feasible to
commercialize any products for which regulatory approvals are granted.
Approvals

7
<PAGE> 10

that may be granted will be subject to continual review, and later discovery of
previously unknown problems may result in restrictions on a product's future
use or withdrawal of the product from the market.

Furthermore, health care policy in the United States is currently under
governmental review. Substantial changes in regulatory and reimbursement
policy may affect the Company's research and development expenditures and
regulatory approval of the Company's product candidates. The Company has
limited clinical testing or regulatory compliance experience. The Company will
need to hire additional personnel skilled in clinical testing and regulatory
compliance in order to bring any products to market. There can be no assurance
that the Company will be able to hire such personnel.

TECHNOLOGICAL CHANGE AND COMPETITION

The biopharmaceutical industry is undergoing rapid and significant
technological change and is highly competitive. The Company's success will
depend on its ability to develop and apply its technology and on its ability to
establish and maintain a market for its products. Potential competitors in the
United States and other countries include major pharmaceutical and chemical
companies, specialized biotechnology firms, universities and other research
institutions, many of which have substantially greater financial, technical,
manufacturing and marketing capabilities than the Company. Competitors may
develop products or other novel technologies that are more effective than any
that have been or are being developed by the Company or may obtain FDA approval
for products more rapidly than the Company. There can be no assurance that
technological development by others will not render the Company uncompetitive
or that the Company will be successful in establishing or maintaining its
technological competitiveness.

NO MANUFACTURING, MARKETING OR SALES ACTIVITIES

The Company has no manufacturing, marketing or product sales
experience. If the Company develops any commercially marketable products,
there can be no assurance that contract manufacturing services will be
available in sufficient capacity to supply the Company's product needs on a
timely basis. If the Company decides to build or acquire commercial-scale
manufacturing capabilities, the Company will require additional management and
technical personnel and additional capital. No assurance can be given that the
raw materials necessary for the manufacture of the Company's products will be
available in sufficient quantities or at a reasonable cost. Complications or
delays in obtaining raw materials or in product manufacturing could delay the
submission of products for regulatory approval and the initiation of new
development programs, each of which could materially impair the Company's
competitive position and potential profitability. There can be no assurance
that the Company will be able to enter into any other supply arrangements on
acceptable terms, if at all, and there can be no assurance that the Company's
sales staff will achieve success in its marketing efforts.

DEPENDENCE ON SUPPLIER

At present, Mitsubishi is the only manufacturer of NOVASTAN(R). Should
Mitsubishi discontinue manufacture of NOVASTAN(R), the agreement with
Mitsubishi provides for the transfer of the production technology to another
manufacturer. However, in the event Mitsubishi terminates manufacturing
NOVASTAN(R) or defaults in its supply commitment, there can be no assurance
that alternate sources of bulk will be available to the Company at reasonable
cost, or at all. If such alternate sources of supply are unavailable or
uneconomic, the Company's results of operations would be materially and
adversely affected.

UNCERTAINTY OF PHARMACEUTICAL PRICING AND RELATED MATTERS; NEED FOR
REIMBURSEMENT

The future revenues and profitability of, and availability of capital
for biotechnology companies may be affected by the continuing efforts of
governmental and third-party payers to contain or reduce the costs of health
care through various means. For example, in certain foreign markets, the
pricing and profitability of prescription pharmaceuticals is subject to
government control. There have been, and there may continue to be, a number of
federal and state proposals to implement similar government control in the
United States. It is uncertain what form

8
<PAGE> 11

any health care reform legislation may take or what actions the federal, state
and private payers may take in response to the suggested reforms. The Company
cannot predict when any reforms will be implemented, if ever, or the effect of
any implemented reform on the Company's business. There can be no assurance
that any implemented reform will not have a material adverse effect on the
Company's future results of operations. The Company's long-term ability to
market its products successfully may depend in part on the extent to which
reimbursement for the cost of such products and related treatment will be
available from public and private health insurers and other organizations.
Third-party payers are increasingly challenging the prices of medical products
and services. The reimbursement status of newly-approved health care products
is highly uncertain, and there can be no assurance that third-party coverage
will be available or that available third-party coverage will enable the
Company to maintain price levels sufficient to realize an appropriate return on
its investment in product development.

UNCERTAINTY REGARDING PATENTS AND PROPRIETARY INFORMATION

The Company actively seeks patent protection for its proprietary
technology, both in the United States and abroad. The Company's success will
depend, in part, on its ability to obtain patents and to operate without
infringing on the proprietary rights of others. There can be no assurance that
patents issued to or licensed by the Company will not be challenged,
invalidated or circumvented, or that the rights granted thereunder will provide
competitive advantages to the Company. There can be no assurance that the
Company's pending patent applications or patent applications presently in
preparation or in the future, if and when issued, will be valid and enforceable
and withstand litigation. There can be no assurance that others will not
independently develop substantially equivalent or superseding proprietary
technology or that an equivalent product will not be marketed in competition
with the Company's products, thereby substantially reducing the value of the
Company's proprietary rights. There is a substantial backlog of pharmaceutical
and biotechnology patent applications at the United States Patent and Trademark
Office ("PTO"). Because patent applications in the United States are
maintained in secrecy until patents issue, and because publication of
discoveries in the scientific or patent literature tend to lag behind actual
discoveries by several months, there can be no assurance that the Company will
obtain patent protection for its inventions. In addition, patent protection,
even if obtained, is affected by the limited period of time for which a patent
is effective. Furthermore, patent positions of pharmaceutical and
biotechnology companies, as well as those of academic and research
institutions, are highly uncertain and involve complex legal and factual
questions. This is an uncertain and developing area of the law that is
potentially subject to significant change. Therefore, the scope or
enforceability of claims allowed in the patents on which the Company will rely
cannot be predicted with any certainty.

The Company also relies on trade secrets, know-how and continuing
technological advancement to maintain its competitive position. Although the
Company has entered into confidentiality agreements with its employees and
consultants, which contain assignment of invention provisions, no assurance can
be given that others will not gain access to these trade secrets, that such
agreements will be honored or that the Company will be able to effectively
protect its rights to its unpatented trade secrets. Moreover, no assurance can
be given that others will not independently develop substantially equivalent
proprietary information and techniques or otherwise gain access to the
Company's trade secrets.

In addition to protecting its proprietary technology and trade secrets,
the Company may be required to obtain licenses to patents or other proprietary
rights from third parties. No assurance can be given that any licenses
required under any patents or proprietary rights would be made available on
acceptable terms, if at all. If the Company does not obtain required licenses,
it could encounter delays in product introductions while it attempts to design
around blocking patents, or it could find that the development, manufacture or
sale of products requiring such licenses could be foreclosed.

The Company could incur substantial costs in defending any patent
infringement suits or in asserting any patent rights, including those granted
by third parties, in a suit with another party. The PTO could institute
interference proceedings involving the Company in connection with one or more
of the Company's patents or patent applications, and such proceedings could
result in an adverse decision as to priority of invention. The PTO or
comparable agency of a foreign jurisdiction could also institute reexamination
or opposition proceedings against the

9
<PAGE> 12

Company in connection with one or more of the Company's patents or patent
applications and such proceedings could result in an adverse decision as to the
validity or scope of the patents.

PRODUCT LIABILITY EXPOSURE

Product liability risk is inherent in the testing, manufacture,
marketing and sale of the Company's products, and there can be no assurance
that the Company will be able to avoid significant product liability exposure.
Product liability insurance for the pharmaceutical industry, when available, is
expensive. The Company has obtained $2.0 million of product liability
insurance to cover its clinical trial program. Pursuant to its agreement with
Mitsubishi, the Company is obligated to acquire additional coverage as the
Company develops products. Existing coverage will not be adequate as the
Company further develops products and there can be no assurance that adequate
insurance coverage will be available at a reasonable cost in the future. A
future product liability claim may have a material adverse effect on the
business or financial condition of the Company.

POSSIBLE VOLATILITY OF STOCK PRICE

The stock market has from time to time experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
particular companies. In particular, the market price of the Company's
securities, like that of the securities of other biopharmaceutical companies,
may be highly volatile. Factors such as announcements by the Company or its
competitors concerning technological innovations, new commercial products or
procedures by the Company or its competitors, proposed governmental regulations
and developments in both the United States and foreign countries, disputes
relating to patents or proprietary rights, publicity regarding actual or
potential medical results relating to products under development by the Company
or its competitors, public concern as to the safety of biotechnology products,
and economic and other external factors, as well as period-to-period
fluctuations and financial results, may have a significant effect on the market
price of the Company's securities.

LACK OF TRADING VOLUME AND RELATED MATTERS

From time to time, there has been limited trading volume with respect
to the Common Stock. In addition, there can be no assurance that a market will
continue to be made or that any analysts will provide coverage with respect to
the Common Stock. Accordingly, with respect to the Common Stock being offered
hereby, no assurances can be made that such factors will not affect the market
for the Common Stock or that the sale of a significant number of shares will
not have an adverse impact on the market price of the Common Stock.

ANTI-TAKEOVER PROVISIONS

The Company's Certificate of Incorporation and the Delaware General
Corporation Law contain certain provisions that may delay or prevent an attempt
by a third party to acquire control of the Company. In addition, the severance
provisions of employment agreements with certain members of management could
impede an attempted change of control of the Company.

DILUTION RESULTING FROM CONVERTIBLE PREFERRED STOCK

Each of the outstanding shares of the Company's 5% Cumulative
Convertible Stock (the "5% Preferred") is convertible at any time at the option
of the holder thereof into such number of shares of Common Stock as is
determined by dividing: (x) $1,000 (plus any accrued dividends or default
payments) by (y) the Conversion Price (defined below) in effect on the date the
election to convert is made. The "Conversion Price" is calculated by
determining the average of the daily low trading price of the Common stock
during the ten consecutive trading days immediately preceding the date of the
conversion election and then decreasing that average price by a discount factor
ranging from 6% to 17%. In addition, certain penalties related to the
Company's possible inability to register the resale of the Common Stock
underlying the 5% Preferred may have the effect of further decreasing the
Conversion Price, thereby increasing the number of shares of Common stock
issuable to the holders of the 5% Preferred upon conversion. Presently, the
outstanding shares of the 5% Preferred are convertible, in the aggregate,

10
<PAGE> 13

into approximately 1,408,000 shares of Common Stock (exclusive of shares of
Common Stock issuable upon conversion of the 5% Preferred dividends), but this
amount may prove to be significantly greater in light of the factors outlined
above including a decrease in the average market price for the Common Stock
described above. Purchasers of Common Stock may therefore experience
substantial dilution of their investment in the event that the holders of the
5% Preferred elect to convert their holdings of such stock into shares of
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Of the approximately 25.8 million shares of Common Stock presently
outstanding, and assuming registration of the Shares included hereby,
approximately 4.5 million shares are "restricted" securities as that term is
defined under Rule 144 promulgated under the Securities Act of 1933, as amended
(the "Securities Act"). Of these "restricted" securities, approximately 1.6
million shares are eligible for immediate resale under Rule 144 and an
additional 1.4 million shares are eligible for sale under Rule 144 with certain
volume restrictions. Moreover, the resale of approximately 326,000 restricted
shares issued in connection with the acquisition of IPI and approximately
3,397,000 restricted shares issued in connection with a private placement of
securities are covered by S-3 registration statements. In addition, in the
event that the number of shares issuable upon conversion of the 5% Cumulative
Convertible Preferred exceeds 3,000,000 due to periodic adjustments in the
conversion price, any excess shares shall also be covered by an S-3
registration statement. As part of the Company's initial public offering of
securities completed in 1993 (the "Initial Public Offering"), exercisable
warrants covering 4,082,500 shares (with an $8.44 exercise price) were also
issued and remain outstanding and the shares issuable upon exercise are covered
by an S-1 registration statement. In addition, as part of the Initial Public
Offering, the underwriters were issued 355,000 options to purchase units (each
unit consisting of one share of Common Stock and one warrant to purchase Common
Stock) at an exercise price of $11.14 each (the warrants are also exercisable
at $11.14 each). The resale of the Common Stock underlying the units is
covered by an S-1 registration statement. Furthermore, the resale of an
aggregate of 619,987 shares issuable upon warrant exercises are covered by
effective registration statements . Approximately 2.9 million shares of Common
Stock are issuable upon exercise of outstanding options and will become
eligible for sale in the public markets at prescribed times in the future under
S-8 registration statements. Such options were exercisable, or exercisable
within 60 days, to purchase approximately 1,476,000 shares of Common Stock.
The holders of approximately 1.7 million shares of Common Stock also hold
certain demand registration rights and the holders of 497,749 warrants have
piggyback registration rights. Sales of significant amounts of Common Stock in
the public market could adversely affect the prevailing market price of the
Company's Common Stock.

DEPENDENCE ON QUALIFIED PERSONNEL

The Company's success is highly dependent on its ability to attract and
retain qualified scientific and management personnel. The loss of the services
of the principal members of the Company's management and scientific staff may
impede the Company's ability to commercialize its products. In order to
commercialize its products, the Company must maintain and expand its personnel,
particularly in the areas of clinical trial management, manufacturing, sales
and marketing. The Company faces intense competition for such personnel from
other companies, academic institutions, government entities and other
organizations. There can be no assurance that the Company will be successful
in hiring or retaining qualified personnel. Managing the integration of new
personnel and company growth generally could pose significant risks to the
Company's development and progress.

The continued employment of David B. McWilliams, President and Chief
Executive Officer, Richard A. F. Dixon, Ph.D., Vice President of Research, and
Richard P. Schwarz, Jr., Ph.D., Vice President of Clinical and Regulatory
Affairs is key to the Company's success. Each of these employees has an
employment agreement with the Company. Mr. McWilliams' and Dr. Dixon's
agreements are effective through July 15, 1997 and provide for continuing
one-year extensions. Dr. Schwarz's agreement is "at will" with no specified
term.

The Company relies on consultants and advisors, including its
scientific advisors, to assist the Company in formulating its research and
development strategy. All of the Company's consultants and advisors are
employed by

11
<PAGE> 14

employers other than the Company and may have commitments to or consulting or
advisory contracts with other entities that may affect their ability to
contribute to the Company.

DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS

This Report includes "forward looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this Registration Statement are
forward looking statements. Such forward looking statements include, without
limitation, statements under "Risk Factors - Need for Additional Funds; History
of Operating Losses" - regarding TBC's estimate of sufficiency of existing
capital resources and ability to raise additional capital to fund cash
requirements for future operations. Although TBC believes that the
expectations reflected in such forward looking statements are reasonable, it
can give no assurance that such expectations reflected in such forward looking
statements will prove to have been correct. The ability to achieve TBC's
expectations is contingent upon a number of factors which include (i) ongoing
cost of research and development activities, (ii) cost of clinical development
of product candidates, (iii) attainment of research and clinical goals of
product candidates, (iv) timely approval of TBC's product candidates by
appropriate governmental and regulatory agencies, (v) effect of any current or
future competitive products, (vi) ability to manufacture and market products
commercially, (vii) retention of key personnel and (viii) obtaining and timing
of sufficient financing through capital raising or collaborative agreements to
fund operations.

12
<PAGE> 15

SELLING STOCKHOLDERS

The following table sets forth certain information concerning each
Selling Stockholder. Assuming that the Selling Stockholders offer all of their
Shares, the Selling Stockholders will not have any beneficial ownership after
closing. 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."

SELLING STOCKHOLDERS NUMBER OF SHARES NUMBER OF
OWNED AND TO BE NUMBER OF SHARES PERCENTAGE OF
OWNED PRIOR TO SHARES OWNED AFTER SHARES OWNED
OFFERING (1) BEING OFFERED OFFERING (4) AFTER OFFERING
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Halifax Fund, L.P. 2,000,000(2) (3) 2,000,000(2) (3) -0- *

RGC International Investors, LDC 1,000,000(2) (3) 1,000,000(2) (3) -0- *

William E. Aaron. 143 (5) 143 (5) -0- *

James E. Cayne. 715 (5) 715 (5) -0- *

Judson Cooper. 24,231 (5) 24,231 (5) -0- *

GKN Securities Corporation. 4,543 (5) 4,543 (5) -0- *

Robert Gladstone. 2,272 (5) 2,272 (5) -0- *

Roger Gladstone. 2,272 (5) 2,272 (5) -0- *

Greenway Capital Corporation. 6,000 (5) 6,000 (5) -0- *

Benjamin Leifer. 4,108 (5) 4,108 (5) -0- *

Mitani & Co., LLC. 56,818 (6) 56,818 (6) -0- *

David Nussbaum. 2,272 (5) 2,272 (5) -0- *

Charles Potter.. 4,813(5) (7) 523 (5) 4,290 (8) *

Raymond James & Associates, Inc.. 56,818 (6) 56,818 (6) -0- *

Michael R. Stein. 143 (5) 143 (5) -0- *

Mark Theran. 714 (5) 714 (5) -0- *
--------- --------- ------ ---
Total 3,165,862 3,161,572 4,290 *

</TABLE>

- -------------
*Less than 1.0%

None of the Selling Stockholders has, or within the past three years has had,
any position, office, or other material relationship with the Company or any of
its predecessors and affiliates.

(1) The Selling Stockholders have sole voting and sole investment power
with respect to all shares owned.

(2) Assumes, arbitrarily, that the 5% Preferred is converted at a
conversion price of $2.00 (exclusive of shares issuable upon
conversion of the 5% Preferred dividends) and no limits or adjustments
are applicable. Pursuant to the terms of the 5% Preferred, if the 5%
Preferred were actually converted on May 14, 1997, the conversion
price would be $3.68 (91% of the average of the daily low trading
price of the Common Stock for the ten trading days immediately
preceding such date), at which price the number of shares owned by the
Selling Stockholders would be approximately 1,631,000 (exclusive of
shares issuable upon conversion of the 5% Preferred dividends). In
addition, pursuant to the terms of the 5% Preferred, the 5% Preferred
is convertible by the holders thereof only to the extent that the
number of shares of Common Stock thereby issuable, together with the
number of shares of Common Stock then held by such holder and its
affiliates (not including shares underlying unconverted shares of 5%
Preferred), would not exceed 4.9% of the then outstanding Common Stock
as determined in accordance

<PAGE> 16

with Section 13(d) of the Exchange Act. Accordingly, the number of
shares of Common Stock set forth for the Selling Stockholders exceeds
the actual number of shares of Common Stock that the Selling
Stockholders could own beneficially at any given time through their
ownership of the 5% Preferred. In that regard, beneficial ownership
of the Selling Stockholders set forth in the table is not determined
in accordance with Rule 13d-3 under the Exchange Act.

(3) Except as set forth in footnote 2, above, ownership is determined in
accordance with Rule 13d-3 under the Exchange Act. Subject to the
provisions of footnote 2 above, the actual number of shares of Common
Stock beneficially owned and offered for sale hereunder is subject to
adjustment and could be materially less or more than the estimated
amount indicated depending upon factors which cannot be predicted by
the Company at this time, including, among others, the market price of
the Common Stock prevailing, using the ten trading days preceding the
actual date of conversion of the 5% Preferred.

(4) Assumes the sale of all shares offered hereby to persons who are not
affiliates of the Selling Stockholders.

(5) Shares of Common Stock underlying warrants issued in connection with
the Company's private placement of Common Stock completed in October
1991. The warrants are exercisable at $3.50 per share and expire on
August 1, 1998.

(6) Shares of Common Stock underlying warrants issued in connection with
the Company's private placement of Common Stock completed in October
1996. The warrants have an exercise price of $4.40 per share and
expire on October 10, 2001.

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
AMEX 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 for a
period of three years after the registration statement is declared
effective. The Company's authorized capital stock consists of
75,000,000 shares of Common Stock, and 5,000,000 shares of preferred
stock, par value $.005 per share. As of May 14, 1997, there were
25,629,380 shares of Common Stock, and 6,000 shares of Preferred
Stock, outstanding.

(7) Includes 4,290 shares of registered Common Stock and 523 shares of
Common Stock underlying warrants as described in footnote (5).

(8) Assumes no sales are effected by the Selling Stockholder during the
offering period other than pursuant to this prospectus.

<PAGE> 17

PLAN OF DISTRIBUTION

Pursuant to this Prospectus, the Selling Stockholders, or by certain
pledgees, donees, transferees or other successors in interest, may sell Shares
from time to time in transactions on AMEX, in privately-negotiated transactions
or by a combination of such methods of sale, at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling
Stockholders may effect such transactions by selling the Shares to or through
broker-dealers, and such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders or the
purchasers of the Shares for whom such broker-dealers may act as agent or to
whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions).

The Selling Stockholders and any broker-dealers who act in connection
with the sale of Shares hereunder may be deemed to be "underwriters" as that
term is defined in the Securities Act, and any commissions received by them and
profit on any resale of the Shares as principal might be deemed to be
underwriting discounts and commissions under the Securities Act.

Pursuant to a Registration Rights Agreement with certain Selling
Stockholders, the Company has agreed to indemnify certain of the Selling
Stockholders and each underwriter against certain liabilities, including
certain liabilities under the Securities Act as amended, or will contribute to
payments such Selling Stockholders or underwriters may be required to make in
respect of certain losses, claims, damages or liabilities.

LEGAL MATTERS

The legality of the securities offered hereby will be passed on for
the Company by Porter & Hedges, L.L.P., Houston, Texas.

EXPERTS

The consolidated financial statements of Texas Biotechnology
Corporation as of December 31, 1996 and 1995, and for each of the years in the
three-year period ended December 31, 1996, and for the period from August 2,
1989 (date of incorporation) to December 31, 1996, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.

<PAGE> 18
================================================================================

NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
IN CONNECTION WITH THIS OFFERING 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. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO ITS DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH
SUCH OFFER OR SOLICITATION IS UNLAWFUL.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . 3
Incorporation of Certain
Documents by Reference . . . . . . . . 3
The Company . . . . . . . . . . . . . . . 4
Risk Factors . . . . . . . . . . . . . . 4
Selling Stockholders . . . . . . . . . . 13
Plan of Distribution . . . . . . . . . . 15
Legal Matters . . . . . . . . . . . . . . 15
Experts . . . . . . . . . . . . . . . . . 15
</TABLE>

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

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

Texas Biotechnology Corporation

3,161,572 Shares
of
Common Stock

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

P R O S P E C T U S

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

May ___, 1997

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

<PAGE> 19

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The estimated expenses payable by the Company in connection with the
offering of the shares of Common Stock to be registered and offered hereby are
as follows:

<TABLE>
<S> <C>
SEC registration fee $ 5,119
Legal fees and expenses 5,000
Blue Sky fees and expenses (including legal expenses) 1,000
Accounting fees and expenses 3,001
Miscellaneous 1,000
-------
Total $15,120
=======
</TABLE>

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the Delaware General Corporation Law permits 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, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action.

In an action brought to obtain a judgment in the corporation's favor,
whether by the corporation itself or derivatively by a stockholder, the
corporation may only indemnify for expenses, including attorney's fees,
actually and reasonably incurred in connection with the defense or settlement
of such action, and the corporation may not indemnify for amounts paid in
satisfaction of a judgment or in settlement of the claim. In any such action,
no indemnification may be paid in respect of any claim, issue or matter as to
which such person shall have been adjudged liable to the corporation except as
otherwise approved by the Delaware Court of Chancery or the court in which the
claim was brought. In any other type of proceeding, the indemnification may
extend to judgments, fines and amounts paid in settlement, actually and
reasonably incurred in connection with such other proceeding, as well as to
expenses (including attorneys' fees).

The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner be reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable
to criminal actions and to actions brought by or in the name of the
corporation. The determination as to whether a person seeking indemnification
has met the required standard of conduct is to be made (i) by a majority vote
of a quorum of disinterested members of the board of directors, (ii) by
independent legal counsel in a written opinion, if such a quorum does not exist
or if the disinterested directors so direct, or (iii) by the stockholders.

As permitted by the Delaware General Corporation Law, the Company's
Bylaws provide that it will indemnify the directors, officers, employees and
agents of the Company against certain liabilities that they may incur in their
capacities as directors, officers, employees and agents. Furthermore, the
Company's Certificate of Incorporation, as amended, indemnifies the directors,
officers, employees, and agents of the Company to the maximum extent permitted
by the Delaware General Corporation Law. The Company has entered into
indemnification agreements with its directors and officers and has director and
officer liability insurance policies that provide coverage of up to $5.0
million except that no current coverage is provided for David Blech, a former
Company director, nor for any liabilities arising from the Company's December
1993 initial public offering.

II-1
<PAGE> 20

ITEM 16. EXHIBITS.

The following exhibits are filed with this Registration Statement:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER IDENTIFICATION OF EXHIBIT
------ -------------------------
<S> <C> <C>
5.1* Opinion of Porter & Hedges, L.L.P.

23.1 Consent of KPMG Peat Marwick LLP

23.2* Consent of Porter & Hedges, L.L.P. (included in its Opinion filed as Exhibit
5.1 hereto).
</TABLE>

* Previously Filed

ITEM 17. UNDERTAKINGS.

The undersigned registrant hereby undertakes:

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

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

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

(iii) To include any material information with
respect to the plan of distribution nor previously
disclosed in the registration statement or any material change
to such information in the registration statement;

provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if 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 Exchange Act that are incorporated by
reference in the registration statement.

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

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

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

II-2
<PAGE> 21

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

II-3
<PAGE> 22

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 AMENDMENT NO. 1 TO
THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED,
THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON, STATE OF TEXAS, ON MAY 22,
1997.

TEXAS BIOTECHNOLOGY CORPORATION

By /S/ STEPHEN L. MUELLER
----------------------
STEPHEN L. MUELLER
VICE PRESIDENT OF ADMINISTRATION,
SECRETARY AND TREASURER (PRINCIPAL
FINANCIAL AND ACCOUNTING OFFICER)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING
PERSONS IN THE CAPACITIES INDICATED ON MAY 22, 1997.

SIGNATURE
TITLE

JOHN M. PIETRUSKI* Director, Chairman of the Board of Directors
------------------
JOHN M. PIETRUSKI

DAVID B. MCWILLIAMS* Director, President and Chief Executive
-------------------- Officer
DAVID B. MCWILLIAMS (Principal Executive Officer)

RICHARD A. F. DIXON, PH.D.* Director, Vice President of Research
---------------------------
RICHARD A. F. DIXON, PH.D.

STEPHEN L. MUELLER* Vice President of Administration, Secretary
------------------- Treasurer and (Principal Financial and
STEPHEN L. MUELLER Accounting Officer)

FRANK C. CARLUCCI * Director
-------------------
FRANK C. CARLUCCI

/S/ RITA R. COLWELL, PH.D., D.SC. Director
---------------------------------
RITA R. COLWELL, PH.D., D.SC.

ROBERT J. CRUIKSHANK* Director
---------------------
ROBERT J. CRUIKSHANK

II-4
<PAGE> 23

JAMES A. THOMSON, PH.D.* Director
------------------------
JAMES A. THOMSON, PH.D.

JAMES T. WILLERSON, M.D.* Director and Chairman of the
------------------------- Scientific Advisory Board
JAMES T. WILLERSON, M.D.

*By: /S/ STEPHEN L. MUELLER
----------------------
STEPHEN L. MUELLER
INDIVIDUALLY AND AS ATTORNEY-IN-FACT

II-5
<PAGE> 24

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER IDENTIFICATION OF EXHIBIT
------ -------------------------
<S> <C>
5.1* Opinion of Porter & Hedges, L.L.P.
23.1 Consent of KPMG Peat Marwick LLP
23.2* Consent of Porter & Hedges, L.L.P. (included
in its Opinion filed as Exhibit 5.1 hereto).

</TABLE>

* Previously Filed

II-6

<PAGE> 1

EXHIBIT 23.1

CONSENT OF INDEPENDENT AUDITORS'

The Board of Directors
Texas Biotechnology Corporation:

We hereby consent to the use of our report incorporated herein by reference
dated February 21, 1997, related to the consolidated financial statements of
Texas Biotechnology Corporation and subsidiary as of December 31, 1996 and
1997, for each of the years in the three-year period ended December 31, 1996,
and for the period from August 2, 1989 (date of incorporation) to December 31,
1996, and to the reference to our firm under the heading "Experts" in the
prospectus.

/s/ KPMG Peat Marwick LLP

Houston, Texas
May 22, 1997