ANTEX BIOLOGICS INC, POS AM, 1998-04-29

ANTEX BIOLOGICS INC
POS AM, 1998-04-29
BIOLOGICAL PRODUCTS, (NO DIAGNOSTIC SUBSTANCES)

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 1998
Registration No. 333-26353
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM SB-2

Post-Effective Amendment No. 1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

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ANTEX BIOLOGICS INC.
(Exact name of small business issuer in its charter)

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

<TABLE>
<S> <C> <C>
DELAWARE 2830 52-1563899
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification Number)
</TABLE>

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

300 PROFESSIONAL DRIVE
GAITHERSBURG, MARYLAND 20879
(301) 590-0129
(Address and telephone number of principal executive offices)

V.M. ESPOSITO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
300 PROFESSIONAL DRIVE
GAITHERSBURG, MARYLAND 20879
(301) 590-0129
(Name, address, including zip code, telephone number, including area code, of
agent for service)

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

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

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. [ ]

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, check the following box: [x]

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<PAGE> 2

ANTEX BIOLOGICS INC.

Cross-Reference Between Prospectus and Items of Form SB-2

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Registration Statement Item Number and Heading Location in Prospectus
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<S> <C>
1. Front of Registration Statement and Outside Front Cover Front Cover
of Prospectus

2. Inside Front and Outside Back Cover Pages of Prospectus Inside Front Cover

3. Summary Information and Risk Factors PROSPECTUS SUMMARY AND RISK FACTORS

4. Use of Proceeds USE OF PROCEEDS

5. Determination of Offering Price Not Applicable

6. Dilution Not Applicable

7. Selling Security Holders SELLING SECURITY HOLDERS

8. Plan of Distribution PLAN OF DISTRIBUTION

9. Legal Proceedings LEGAL PROCEEDINGS

10. Directors, Executive Officers, Promoters and MANAGEMENT
Control Persons

11. Security Ownership of Certain Beneficial Owners PRINCIPAL STOCKHOLDERS
and Management

12. Description of Securities DESCRIPTION OF SECURITIES

13. Interest of Named Experts and Counsel None

14. Disclosure of Commission Position on MANAGEMENT
Indemnification for Securities Act Liability

15. Organization Within Last Five Years None

16. Description of Business BUSINESS

17. Management's Discussion and Analysis or Plan of MANAGEMENT'S DISCUSSION AND ANALYSIS
Operation OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

18. Description of Property DESCRIPTION OF PROPERTY

19. Certain Relationships and Related Transactions None

20. Market for Common Equity and Related Stockholder MARKET FOR COMMON EQUITY AND RELATED
Matters STOCKHOLDER MATTERS

21. Executive Compensation EXECUTIVE COMPENSATION

22. Financial Statements FINANCIAL STATEMENTS

23. Changes in and Disagreements With Accountants on None
Accounting and Financial Disclosure
</TABLE>

<PAGE> 3

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

PROSPECTUS Subject to Completion
April 29, 1998

ANTEX BIOLOGICS INC.

20,214,690 Shares
of
Common Stock

This Prospectus relates to the resale by the purchasers from Antex Biologics
Inc., a Delaware corporation (the "Company" or "Antex") or their transferees
(the "Selling Security Holders") of (i) up to 10,071,630 outstanding shares of
the Company's common stock, par value $0.01 per share (the "Common Stock"),
issued by the Company as components of Units that were sold by the Company in a
private placement completed in April 1995 (the "Private Placement") and (ii) up
to 10,143,060 outstanding shares of Common Stock that have been issued by the
Company upon the exercise during 1996 of Class B Warrants that also were a
component of the Units. The Common Stock currently trades on the OTC Bulletin
Board under the symbol "ANTX". The quotation for the Common Stock as of March
31, 1998, on the OTC Bulletin Board was a bid of $1.01 and an asked of $1.03.

The Company has been advised by the Selling Security Holders that they may
offer and sell the shares of Common Stock from time to time through or to
securities brokers or dealers in the over-the-counter market or in negotiated
transactions. In accordance with the Securities Act of 1933, as amended (the
"Securities Act"), any confirmation of such sale of the Common Stock by the
Selling Security Holders, and any delivery of the Common Stock following a
sale, must be accompanied or preceded by this Prospectus, unless the
transaction is exempted from registration. The Selling Security Holders and
any broker, dealer, or agent that participates with the Selling Security
Holders in the sale of the Shares offered hereby may be deemed "underwriters"
within the meaning of the Securities Act, and any commissions or discounts
received by them and any profit on the resale of the Shares purchased by them
may be deemed to be underwriting commissions under the Securities Act. See
"SELLING SECURITY HOLDERS" and "PLAN OF DISTRIBUTION."

The Company will not receive any proceeds from the resale of the Common Stock
by the Selling Security Holders.

THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. POTENTIAL INVESTORS
SHOULD NOT PURCHASE THESE SECURITIES UNLESS THEY CAN
AFFORD A LOSS OF THEIR ENTIRE INVESTMENT HEREIN.
SEE "RISK FACTORS" ON PAGE 8.

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 ON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS MAY ___, 1998

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TABLE OF CONTENTS

PAGE
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PROSPECTUS SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
DESCRIPTION OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
PRINCIPAL STOCKHOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
DESCRIPTION OF SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SELLING SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
INDEX TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
</TABLE>

NO DEALER, SALES PERSON OR ANY OTHER 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. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF ANY OFFER TO BUY BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER TO SELL OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE
PERSON MAKING SUCH OFFER IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT
IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN A 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.

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<PAGE> 5

PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is
qualified in its entirety by, the detailed information and financial statements
appearing elsewhere in this Prospectus.

THE COMPANY

Antex Biologics Inc. ("Antex" or the "Company") is a biopharmaceutical
company committed to improving human health by developing new products to
prevent and treat infectious diseases and related disorders. The Company
concentrates its efforts in the discovery and research of technologies for the
development of products for mucosal infections. The Company's focus has been the
development of vaccines for respiratory, gastrointestinal and urogenital
bacterial diseases. At its inception in August 1991, the Company was focused on
researching a proprietary platform ART(TM) (Adhesin-Receptor Technology) for
vaccine development. In 1993, the Company broadened its technology base by
developing its second platform technology called NST(TM) (Nutriment Signal
Transduction). The combination of these two platform technologies provides the
tools and reagents to develop new products to prevent, treat and diagnose
infectious diseases and their related disorders. The Company's principal
executive offices are located at 300 Professional Drive, Gaithersburg, Maryland
20879. The Company's telephone number is (301) 590-0129. See "BUSINESS."

TECHNOLOGIES

General

Proteins and nucleic acids, two groups of naturally occurring
molecules, and their respective roles in the development and treatment of
diseases, have been the subject of numerous studies by the scientific community.
The roles of complex carbohydrates and lipids in disease causation and
prevention, on the other hand, were largely ignored in the past because of the
chemical complexity of these molecules and the difficulty of analyzing them.
Their roles in biological functions such as infection, inflammation and other
disease processes are now being evaluated more frequently. Advances in molecular
biology, bacterial physiology and analytical techniques have enabled scientists
to characterize and begin to elucidate the roles of these bioactive molecules in
the infectious disease process.

Complex carbohydrates are associated with mammalian cells in several
forms and have been shown to serve as receptors on cell surfaces to which
viruses, bacteria and toxins (collectively, "microbes") can adhere, thereby
causing infection or disease in the host. Lipids have a variety of functions
within the body. Certain types of lipids are reservoirs of nutritional energy;
others function in cell-cell adhesion and in communication with other cells; and
some make up the architecture of the plasma membranes of individual cells of the
body. These particular cell membrane lipids were once thought to function only
to maintain the shape and integrity of cells and to serve as a barrier between
extracellular and intracellular environments. However, discoveries by the
Company's scientists and collaborators have revealed that certain lipids (i.e.,
glycolipids and phospholipids) overlaying certain cells in the body may play a
major role in the pathogenesis of infection by serving as receptors and
nutrients for growth of bacteria.

Adhesin-Receptor Technology

Generally, the first step in the process of microbial infection is the
attachment of microbes to the surface of host cells through a binding process
known as adhesion. The Company has developed a proprietary platform technology,
ART, to study the precise molecular events that underlie microbial adhesion to
host cell receptors. Much like a lock and key, adhesins (the "key"), which are
surface proteins on the outer membrane or cell wall of microbes recognize only
particular molecular conformations and bind to specific, complementary receptors
(the "lock") on the host cell surface. Using ART, the Company has identified
host cell receptors and their corresponding microbial adhesins for a number of
microbes. The Company believes that certain microbial adhesins may be critical
elements in providing a microbe access to the host cell by attaching to the
corresponding protein, carbohydrate or lipid receptor, thereby facilitating the
colonization (i.e., growth) and subsequent infection of the microbes.

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<PAGE> 6

One means of preventing disease and death from infectious microbes has
been immunization by vaccination. Immunization is the act of inducing immunity
by active or passive means. Antigens are substances of foreign agents, such as
microbes, which signal to the immune system the presence of those particular
agents. Once the human immune system identifies these foreign agents (antigens),
it produces an immune response through a substance called antibodies, specific
proteins that recognize and react with the particular antigen. The presence of
the particular antigen on the cell surface of the microbe elicits the
corresponding antibody to bind to those cells but not to others. These
antibodies are generally effective in neutralizing microbes. Therefore, exposure
to the antigen in the form of a vaccine containing the antigen can stimulate the
immune system to produce antibodies, thereby inducing immunity against a
disease. This process is referred to as "active immunization." However, in some
cases, the immune system on its own may not produce the antibodies in sufficient
quantity to eliminate the undesirable agents or may not have been stimulated
prior to the infection. In such instances, it may then be possible to provide
immunity by injecting antibodies directly (rather than inducing their
production) that have been produced in another host, either naturally or through
vaccination. This process is referred to as "passive immunization."

One of the most difficult problems inherent in vaccine development is
that microbes of the same species often exhibit strain-to-strain diversity with
respect to the types of antigens on their surfaces. With such diversity in the
composition of microbes of the same species, the effect of some vaccines
targeted to a single strain of the microbe may be limited. The Company believes
its proprietary ART may aid in circumventing the problems posed by strain
diversity and antigen variations within strains. The Company has discovered that
some adhesins that occur on the outer membrane or cell wall of certain species
of microbes are the same throughout various strains within a given species. In
effect, the adhesions are "conserved". Based on data from animal models, the
Company believes that the development of human vaccines aimed at stimulating the
production of antibodies against these highly conserved proteins (adhesins)
should be effective in providing immunity to a wide variety of strains of a
given species.

The first step in the process of developing adhesin vaccines is to
identify the host cell receptor and its molecular structure. To date, the
Company's scientists have identified the molecular structure of host cell
receptors for more than 60 genera of microbes or microbial toxins. Once the
receptor is identified, the Company then uses it as a probe to identify and
purify the corresponding adhesin for further analysis and vaccine development.
Monoclonal or polyclonal antibodies and DNA probes can be used to identify the
gene responsible for the adhesin. Sufficient quantities of the protein can be
produced for preclinical and clinical testing either by isolating the "native"
protein from the original microbe or by producing a "recombinant" protein in
another microbe from a genetic clone of the protein.

Nutriment Signal Transduction

Microbes require a specific environment and nutrients to survive and
reproduce. Not only does the mucosal surface, where more than ninety (90)
percent of infections start, serve as a barrier to infection, but it can serve
as an environment for bacteria to survive and grow using substances found in the
mucus as a nutriment source. NST is the regulation of cell growth through the
stimulation or suppression of cellular activities by substances or conditions
that nourish/promote or inhibit growth. For upregulation, the application of NST
includes the use of physiologically logical signals to permit growth and
stimulate the production of clinically relevant microbial antigens. These
physiological signals are the growth components and other conditions in the
body, such as temperature and oxygen content, used by the microbes to grow. By
identifying these growth components and conditions, Antex can duplicate in the
laboratory the specific environment found in the body (host).

The behavior of a microbe during entry and invasion of the host is a
balancing act between the microbe and the host. Bacteria grown in an NST
environment express antigens that more closely resemble the antigens produced
within the body; these antigens may not be expressed in bacteria grown using
traditional laboratory conditions. Therefore, these newly expressed antigens or
antigenically enhanced microbes should result in more potent and better targeted
vaccines for inducing immunity against an infectious agent.

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VACCINES

Effective March 1, 1996, the Company entered into a joint venture with
SmithKline Beecham Corporation ("SBB"), and SmithKline Beecham Biologicals
Manufacturing s.a., a Belgian affiliate of SBB that is engaged in the
development, commercialization and marketing of human vaccines ("SKB")
(collectively "SmithKline"). The joint venture, MicroCarb Human Vaccines Inc.
(the "Joint Venture"), is a Delaware corporation that is 73.75% owned by the
Company and 26.25% owned by SKB. The Joint Venture acquired a worldwide,
royalty-free and perpetual license to use certain proprietary technology
previously held by the Company. The Joint Venture will engage in research and
development involving the application of this proprietary technology with the
goal of developing human bacterial vaccine products for commercial sale. The
research and development activities of the Joint Venture will be conducted with
research support services and facilities provided by the Company and with the
financial support of SmithKline.

The technology that has been acquired by the Joint Venture consists of
the application of the Company's ART and NST technologies for use in the
development and sale of prophylactic and/or therapeutic human bacterial
vaccines, but excluding development of commercial products for use in passive
immunization (the "Field"). The Joint Venture has granted to SKB an exclusive,
worldwide license to market human infectious disease vaccine products in the
Field based on the proprietary technology. In connection with the formation of
the Joint Venture, SKB has made a cash payment of $3 million to the Company and
SBB has agreed to make research and development payments to the Company, which
have included $2.4 million and $2.6 million during the first and second years,
respectively, of the Joint Venture. Thereafter, research and development
payments are at the option of SmithKline. For the third year, SmithKline has
agreed to pay approximately $3.2 million.

On December 1, 1994, the Company entered into a licensing agreement
with Pasteur Merieux Connaught ("PMC"), a wholly-owned subsidiary of Rhone
Poulenc Rorer, under which the Company granted to PMC an exclusive license to an
otitis media vaccine for nontypeable Haemophilus influenzae. The license is
worldwide, with the exception of the Pacific Basin. In exchange for the license,
PMC has paid to the Company a license fee and has agreed to pay the Company
certain milestone payments and royalties based on commercial sales. PMC will be
responsible for the clinical development of the vaccine.

All of the Company's activities related to the development of human
bacterial vaccine products, except for the activity covered by the license
agreement with PMC, will be conducted through the Joint Venture. The Company
will continue to pursue the development of animal vaccine products as warranted
by available resources.

THE OFFERING

In April 1995, the Company completed the Private Placement in which it
sold 70.5 Units, each Unit consisting of 142,860 shares of Common Stock and an
equal number of Class B Warrants, each exercisable to purchase one share of
Common Stock, to 122 Selling Security Holders in consideration of gross cash
proceeds to the Company of $3,525,000. All of the Class B Warrants issued in the
Private Placement, plus Class B Warrants exercisable to purchase an additional
71,430 shares of Common Stock issued as the result of an inadvertent
over-issuance, were exercised in 1996, resulting in additional gross proceeds to
the Company of approximately $5,072,000 before related costs of $215,000. The
Private Placement was conducted and the exercise of the Class B Warrants
occurred pursuant to exemptions from the registration requirements of the
Securities Act. Accordingly, the shares of Common Stock issued in the Private
Placement and upon exercise of the Class B Warrants are "restricted securities"
within the meaning of Rule 144 under the Securities Act and the shares may not
be resold or otherwise transferred except pursuant to an effective registration
statement under the Securities Act or an exemption from registration. See "PLAN
OF DISTRIBUTION."

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The Company has registered under the Securities Act shares of Common
Stock for offer and sale pursuant to this Prospectus as described below.

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Securities offered by the Selling Security Holders: 20,214,690 shares of Common Stock

Common Stock outstanding 22,480,304 shares (1)

Use of Proceeds The Company will not receive any proceeds from the
resale of the shares of Common Stock by the Selling
Security Holders. See "USE OF PROCEEDS."

OTC Bulletin Board Symbol Common Stock -- ANTX

Risk Factors Investment in the Common Stock is highly
speculative and involves a high degree of risk.
Prospective purchasers should carefully review the
factors set forth under "RISK FACTORS."
</TABLE>

(1) Does not include shares of Common Stock issuable upon the exercise of
(i) outstanding stock options held by directors and employees to purchase
4,334,863 shares of Common Stock at exercise prices ranging from $0.37 to $6.00
per share; (ii) a Unit Purchase Option issued in connection with the Private
Placement (the "Private Placement Unit Purchase Option") to purchase 24.67
Units, each Unit consisting of 142,860 shares of Common Stock and an equal
number of Class B Warrants, at an exercise price of $50,000 per Unit (nor the
shares of Common Stock issuable upon exercise of such Class B Warrants); (iii)
the right of SKB to convert its interest in the Joint Venture into a maximum of
4,793,685 shares of Common Stock; or (iv) a warrant issued to SKB entitling it
to purchase additional shares of Common Stock at an exercise price of $0.37 per
share to the extent that additional shares of Common Stock are issued pursuant
to the exercise of certain of the instruments identified in clause (i) above,
all of the instruments identified in clause (ii) above and substantially all of
the Class B Warrants.. See "PRINCIPAL STOCKHOLDERS" and "DESCRIPTION OF
SECURITIES."

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SUMMARY FINANCIAL DATA

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<CAPTION>
August 3, 1991
(inception)
Year Ended Year Ended to
December 31, December 31, December 31,
1996 1997 1997
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RESULTS OF
OPERATIONS DATA:

Revenues . . . . . $ 3,827,111 $ 4,755,712 $ 9,454,898

Net income (loss) $ 535,435 $ (442,676) $ (12,161,102)

Earnings (loss)
per share:
Basic . . . . $ 0.03 $ (0.02)
Diluted . . . $ 0.02 $ (0.02)

Weighted average
shares outstanding:
Basic . . . . 16,745,540 22,188,172
Diluted . . . 26,100,006 22,188,172
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1996 1997
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BALANCE SHEET DATA:

Working capital . . . . . . . . . . . . . . . . . . . $ 5,744,635 $ 5,597,482

Total assets . . . . . . . . . . . . . . . . . . . . 8,442,190 7,359,245

Long-term liabilities . . . . . . . . . . . . . . . . 365,817 457,208

Total liabilities . . . . . . . . . . . . . . . . . . 2,183,403 1,542,705

Deficit accumulated during the development stage . . (11,718,426) (12,161,102)

Total stockholders' equity . . . . . . . . . . . . . 6,258,787 5,816,540

</TABLE>

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements in this Prospectus under the captions "Risk
Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "The Company" constitute "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act of 1995 (the
"Reform Act"). Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performance
or activities of the Company, or industry results, to be materially different
from any future results, performance or activities expressed or implied by such
forward-looking statements. Such factors include: general economic and business
conditions, the financial condition of the Company, competition, the Company's
dependence on other companies to commercialize, manufacture and sell products
using the Company's technologies, the uncertainty of results of preclinical and
clinical testing, the risk of product liability and liability for human clinical
trials, the Company's dependence on patents and other proprietary rights,
dependence on key management officials, the availability and cost of capital,
the availability of qualified personnel, changes in, or the failure to comply
with, governmental regulations, the failure to obtain regulatory approvals of
the Company's products and other factors discussed in this Prospectus.

RISK FACTORS

The securities offered hereby involve a high degree of risk, including,
but not necessarily limited to, the risk factors described below. Prospective
investors, prior to making an investment in the Company should carefully
consider the risks and speculative factors inherent in and affecting the
business of the Company and the securities offered hereby, including the
following:

DEVELOPMENT STAGE COMPANY; CUMULATIVE NET LOSS. The predecessor of the
Company was founded in March 1988. Following a management buy-out (see
"BUSINESS"), the Company began operations as a development stage company in
August 1991. None of the Company's proposed vaccine and therapeutic products has
yet been commercially developed or sold and only research revenue has been
generated. Pursuant to a collaborative arrangement with SmithKline effective
March 1996, the Company's human bacterial vaccine product development business
is now conducted through the Joint Venture. None of the Joint Venture's proposed
human bacterial vaccine products has yet been commercially developed or sold,
and no revenue has been generated or is expected to be generated for a number of
years, assuming that the product development activities of the Joint Venture are
successful. The Company had a net loss from August 3, 1991 (inception), through
December 31, 1997, of $12,161,102, and expects to incur losses during the next
several years. Prospective investors should be aware of the problems, delays,
expenses and difficulties encountered by any development stage company, many of
which may be beyond the Company's control. There can be no assurance that the
Company will successfully complete the transition from a development stage
company to profitability. Furthermore, there is no assurance that, if any
vaccine or therapeutic products are developed from the Company's technology and
the required regulatory approvals are obtained, any such products can be
successfully manufactured or marketed or that the Company will ever achieve
profitable operations.

EARLY STAGE OF RESEARCH AND DEVELOPMENT AND UNPROVEN PRODUCTS;
UNCERTAINTY OF PRODUCT REVENUE. The Company's proposed vaccine and therapeutic
products and the Joint Venture's proposed vaccine products are in the research
stages and will require further research and development, preclinical and
clinical testing and investment prior to commercialization in the United States
and abroad. There can be no assurance that any of the Company's proposed vaccine
and therapeutic products or any of the Joint Venture's proposed vaccine products
will be successfully developed, prove to be safe and efficacious in clinical
trials, meet applicable regulatory standards, demonstrate substantial protective
or therapeutic benefits in the prevention or treatment of any disease, be
capable of being produced in commercial quantities at reasonable costs or be
successfully marketed. It is not anticipated that any of the Company's proposed
vaccine and therapeutic products or any of the Joint Venture's proposed vaccine
products will receive the requisite regulatory approval for commercialization in
the United States for a number of years, if at all, and there can be no
assurance that any of the Company's or the Joint Venture's proposed products
will ever generate significant product revenue. Because the Company does not
receive a royalty on the license of its technology to the Joint Venture, the
ability of the Company to realize revenue from any product sales by the Joint
Venture will depend upon distributions from the Joint Venture. See "BUSINESS."

- 8 -
<PAGE> 11

NEED FOR ADDITIONAL FUNDING; LACK OF FINANCING COMMITMENTS OR
ARRANGEMENTS. The Company currently does not have sufficient resources to
complete the commercialization of its proposed products. The Company may seek
the additional funding it requires through joint ventures or other arrangements.
There can be no assurance that additional funding will be available to the
Company on acceptable terms, if at all. The absence of such additional funding
will materially and adversely affect the Company's financial condition and its
ability to continue its operations. With respect to the Joint Venture's proposed
human bacterial vaccine products, SmithKline was required to make research and
development payments to the Company during the first two years of the Joint
Venture, which included payments of $2.4 million and $2.6 million during the
first and second years, respectively. Thereafter, research and development
payments are at the option of SmithKline. For the third year, SmithKline has
agreed to pay approximately $3.2 million. There can be no assurance that funding
will be available to the Joint Venture after the third year to complete
development or commercialization of any of its proposed human bacterial vaccine
products. The absence of such funding will have a material and adverse effect on
the Company. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS -- Liquidity and Capital Resources."

GOVERNMENT REGULATION. The production and marketing of the Company's
and the Joint Venture's proposed products and their respective research and
development activities are subject to regulation by numerous governmental
authorities in the United States and, to the extent that the Company or the
Joint Venture may be engaged in activities outside of the United States, in
other countries. In the United States, vaccines, drugs and certain diagnostic
products are subject to rigorous review of safety and efficacy by the Food and
Drug Administration ("FDA"). The Federal Food, Drug, and Cosmetic Act, the
Public Health Service Act and other federal statutes and regulations govern or
influence the testing, manufacture, safety, labeling, storage, record keeping,
approval, advertising and promotion of such products. Noncompliance with
applicable requirements can result in criminal prosecution and fines, recall or
seizure of products, total or partial suspension of production, refusal of the
government to approve product license applications or refusal to allow the
Company or the Joint Venture to enter into supply contracts. The FDA also has
the authority to revoke product licenses and establishment licenses previously
granted. The regulatory process for pharmaceutical products, including required
preclinical testing, can take a number of years and require the expenditure of
substantial resources. There can be no assurance that any vaccine or therapeutic
products made by the Company or the Joint Venture will be determined to be safe
and efficacious in clinical trials or meet other applicable regulatory standards
to receive the necessary approvals for manufacture and marketing. Delays
incurred by the Company or the Joint Venture in obtaining requisite U.S. or
foreign approvals would materially and adversely affect the Company's financial
condition and prospects. See "BUSINESS -- Government Regulation."

NO ASSURANCE OF PROTECTION OF IMPORTANT PROPRIETARY TECHNOLOGY; LACK OF
PATENTS. The Company's success depends, in large part, on its ability to obtain
patents, maintain trade secret protection and operate without infringing on the
proprietary rights of third parties. The Company has forty-four allowed or
issued U.S. and international patents. Currently there are ten pending patent
applications in the United States, with corresponding international patent
applications. Two of the issued patents and one of the U.S. patent applications,
and the corresponding foreign patent applications, are co-owned with other
entities. These rights relating to the Company's ART and NST technologies have
been licensed to the Joint Venture on an exclusive basis in the Field (subject
to certain third party license agreements). There can be no assurance that any
of the claims in the pending patent applications will issue as patents, that the
Company will develop additional proprietary products that are patentable, that
any patents issued to the Company or its licensors will provide the Company with
competitive advantages or will not be challenged by third parties, or that the
patents of others will not have an adverse effect on the ability of the Company
or the Joint Venture to do business. Furthermore, there can be no assurance that
others will not independently develop similar products, duplicate any of the
Company's or the Joint Venture's products or, if patents are issued to the
Company or its licensors, design around the patented aspects of the products
developed by the Company or the Joint Venture. In addition, the Company or the
Joint Venture may be required to obtain licenses to patents or other proprietary
rights of third parties. No assurance can be given that any licenses that may be
required would be available, if at all, on terms acceptable to the Company or
the Joint Venture. If the Company or the Joint Venture does not obtain such
licenses, it could encounter delays in product introductions, or could find that
the development, manufacture or sale of products requiring such licenses is
foreclosed. The Company or the Joint Venture could incur substantial costs in
defending itself in suits brought against it on such patents or in bringing
suits against other parties to enforce its rights. See "BUSINESS -- Patents and
Other Rights."

INTENSE COMPETITION AND POSSIBLE TECHNOLOGICAL OBSOLESCENCE. The
Company and the Joint Venture are engaged in rapidly evolving and highly
competitive fields. Competition from biotechnology and pharmaceutical

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<PAGE> 12

companies is intense. Many of these companies have capital resources, research
and development staffs, facilities and experience in obtaining regulatory
approvals (as well as in the manufacturing, marketing and distribution of
products) substantially greater than those of the Company and the Joint Venture.
Academic institutions, hospitals, governmental agencies and other public and
private research organizations are also conducting research and seeking patent
protection and may develop competing products or technologies on their own or
through joint ventures. In addition, recently developed technologies or
technologies that may be developed in the future are, or may be, the basis for
competitive products. There can be no assurance that the Company's and the Joint
Venture's competitors will not succeed in developing technologies and products
that are more effective and/or less costly than any that may be developed by the
Company or the Joint Venture or which could render the Company's or the Joint
Venture's technologies obsolete. See "BUSINESS -- Competition."

LACK OF MANUFACTURING AND MARKETING EXPERIENCE; DEPENDENCE ON OUTSIDE
PARTIES FOR THE COMMERCIAL DEVELOPMENT OF PRODUCTS. Neither the Company nor the
Joint Venture owns or leases any commercial manufacturing facilities. If any of
the Company's or the Joint Venture's proposed products are successfully
developed and/or approved by applicable regulatory agencies, the Company will
seek to manufacture, market or distribute such products through others pursuant
to licensing, distribution or similar collaborative arrangements, such as the
license granted by the Joint Venture to SmithKline. The Company may, in certain
instances, seek to manufacture, market or sell a product directly. The Company
has no experience with the commercial development of products and to the extent
the Company determines to manufacture or directly market and sell any products,
it will, among other things, have to attract and retain experienced personnel.
There can be no assurance that the Company will be able to attract and retain
qualified or experienced personnel for such purposes or that any efforts
undertaken by such personnel will be successful. See "BUSINESS -- Strategy for
Commercial Development."

DEPENDENCE UPON, ATTRACTION AND RETENTION OF KEY PERSONNEL. Both the
Company and the Joint Venture are highly dependent on the principal members of
the Company's management and scientific staff, particularly, V.M. Esposito, its
President and Chief Executive Officer. Although the Company has entered into an
employment contract with, and maintains key-man insurance in the amount of
$2,000,000 on the life of, Dr. Esposito, the loss of Dr. Esposito could have a
material adverse effect on the Company's and the Joint Venture's business. The
success of the Company and the Joint Venture will depend, in large part, on the
ability of the Company to attract and retain highly qualified scientific and
business personnel. The Company faces competition for such personnel from other
companies, research and academic institutions, government entities and other
organizations. There can be no assurance that the Company will be successful in
hiring or retaining the personnel it requires for the commercial development of
the products of the Company and the Joint Venture. See "BUSINESS -- Competition"
and "MANAGEMENT."

POTENTIAL PRODUCT LIABILITY; LACK OF INSURANCE. The Company's business
will expose it to product liability risks that are inherent in the testing,
manufacturing, marketing and sale of vaccine and therapeutic products. If
available, product liability insurance generally is expensive for such products.
The Company does not currently have any product liability insurance and there
can be no assurance that it will be able to obtain or maintain such insurance on
acceptable terms or that any insurance maintained will provide adequate
protection against potential liabilities. In the case of the Joint Venture,
SmithKline is obligated to indemnify the Company for any liability or losses
relating to products developed by Antex on behalf of the Joint Venture and/or
SKB, including commercial sales, except that the Company is obligated to
indemnify SmithKline for any such liabilities or losses that result from the
gross negligence or willful misconduct of the Company or the Joint Venture. In
addition, SmithKline is required to maintain product liability and clinical
trial insurance against such liability. In the event of a successful product
liability suit against the Company or the Joint Venture, a lack or insufficiency
of insurance coverage could have a material adverse effect on the Company.

POTENTIAL FOR CONFLICTS OF INTEREST. Certain stockholders of GalaGen,
an entity to which the Company has licensed a portion of its technology, own an
interest in another entity that is engaged in areas competitive with the
Company. GalaGen could sublicense a portion of the Company's technology to such
entity, among others. See "BUSINESS -- Strategy for Commercial Development."

POSSIBLE DELAY OR LIMITATION ON UTILIZATION OF EXISTING NET OPERATING
LOSSES. Due to certain changes in ownership, as determined under the Internal
Revenue Code of 1986, as amended, the Company's ability to utilize tax net
operating loss carryforwards prior to April 1995 is limited. A further
substantial change in ownership of the Common Stock could further delay or limit
the utilization of the Company's existing net operating loss carryforwards

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<PAGE> 13

and credits. As of December 31, 1997, the Company had net operating loss
carryforwards of approximately $11,884,000 for federal and state tax reporting
purposes which will expire substantially in years 2006 to 2012.

DIVIDENDS. The Company has not paid any cash dividends on the Common
Stock since its inception and does not anticipate paying cash dividends in the
foreseeable future. See "MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS -- Dividend Policy."

ANTI-TAKEOVER PROVISIONS; POSSIBLE ADVERSE EFFECTS OF AUTHORIZATION OF
PREFERRED STOCK. The Company's Certificate of Incorporation authorizes, without
further stockholder action, the issuance of up to 5,000,000 shares of preferred
stock on terms that may be fixed from time to time by the Company's Board of
Directors. The terms of any series of preferred stock, which may include
priority claims to assets and dividends, and special voting rights, could
adversely affect the rights of holders of the Common Stock. The Certificate of
Incorporation also provides for the Board of Directors to be divided into three
classes which serve for staggered three-year terms. These provisions could make
the possible takeover of the Company or the removal of management of the Company
more difficult, discourage hostile bids for control of the Company in which
stockholders may receive premiums for their shares of Common Stock, or otherwise
dilute the rights of holders of Common Stock and the market price of the Common
Stock. See "MANAGEMENT" and "DESCRIPTION OF SECURITIES."

DELAWARE ANTI-TAKEOVER LAW. The Company is subject to the General
Corporation Law of the State of Delaware, including Section 203, an
anti-takeover law enacted in 1988. In general, the law prohibits a public
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the time of the
transaction in which the person became an interested stockholder unless: (i)
prior to such time, the board of directors approved the business combination or
the transaction which resulted in the stockholder becoming an interested
stockholder; or (ii) upon becoming an interested stockholder, the stockholder
then owns at least 85% of the voting securities, as defined in Section 203; or
(iii) subsequent to such time, the business combination is approved by both the
board of directors and the stockholders. "Business combination" generally is
defined to include mergers, asset sales and certain other transactions with an
"interested stockholder." An "interested stockholder" generally is defined as a
person who, together with affiliates and associates, owns (or, within the prior
three years, did own) 15% or more of a corporation's voting stock. Although
Section 203 permits the Company to elect not to be governed by its provisions,
the Company to date has not made this election. As a result of the application
of Section 203, potential acquirors of the Company may be discouraged from
attempting to effect an acquisition transaction with the Company, thereby
possibly depriving holders of the Company's securities of certain opportunities
to sell or otherwise dispose of such securities at above-market prices pursuant
to such transactions.

LIMITATION ON MARKETABILITY OF COMPANY SECURITIES. Based on current
qualification requirements, the Common Stock is not eligible for inclusion in
the National Association of Securities Dealers, Inc. Automated Quotation
("Nasdaq") system, which consists of the Nasdaq National Market and the Nasdaq
Small-Cap Market. In order for the Common Stock to qualify for inclusion in the
Nasdaq Small-Cap Market, among other requirements, the Company must have total
assets of at least $4.0 million, capital and surplus of at least $2.0 million
and a minimum bid price of at least $4.00 per share. The qualification
requirements for the Nasdaq National Market are more rigorous. Currently, the
Common Stock is quoted on the OTC Bulletin Board, an electronic medium for stock
not eligible for inclusion in Nasdaq, through which participating broker-dealers
display bid and asked quotations. Quotations on the OTC Bulletin Board are not
available directly to the public. Accordingly, a purchaser of the Common Stock
may find it difficult to obtain accurate quotations as to the market value of
the securities and may experience greater difficulties in attempting to sell the
securities than if these were listed on a stock exchange or quoted on Nasdaq.

Because the market price of the Common Stock is less than $5.00, the
Common Stock is classified as a "penny stock." As such the Common Stock will be
subject to Rule 15g-9 under the Exchange Act, which imposes additional sales
practice requirements on broker-dealers that recommend the purchase or sale of
such securities to persons other than a person who qualifies as an "established
customer" or an "accredited investor." Among other requirements, a broker-dealer
must make a determination that investments in penny stocks are suitable for the
customer and make certain special disclosures to the customer concerning the
risks of penny stocks. Because of the application of the penny stock rules to
the Common Stock, the market liquidity for such securities could be adversely
affected, which in turn may affect the ability of the purchasers of the Common
Stock to resell the securities.

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<PAGE> 14
USE OF PROCEEDS

The Company will not receive any proceeds from the resale of the shares
of Common Stock offered hereby by the Selling Security Holders.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

PRICE RANGE OF COMMON STOCK

The Common Stock traded on the Nasdaq Small-Cap Market until January
11, 1995, at which time it was deleted. The Common Stock is currently quoted on
the OTC Bulletin Board under its symbol "ANTX". The range of high and low
closing bid prices for the Common Stock for the years ended December 31, 1996
and 1997 and the first quarter of 1998, as reported by Nasdaq, is presented
below. Such quotations reflect interdealer prices, without retail mark-up,
mark-down, or commission, and may not represent actual transactions.

<TABLE>
<CAPTION>
High Low
---- ---

1996
----
<S> <C> <C>

1st Quarter 23/32 1/4

2nd Quarter 1-15/16 11/32

3rd Quarter 1-7/16 13/16

4th Quarter 1-1/16 17/32

1997
----

1st Quarter 1 17/32

2nd Quarter 13/16 17/32

3rd Quarter 1-1/4 9/16

4th Quarter 1-19/32 23/32

1998
----

1st Quarter 1-1/4 27/32
</TABLE>

As of April 10, 1998, there were approximately 150 holders of record of
the Common Stock.

DIVIDEND POLICY

The Company has not in the past paid dividends on its Common Stock and
does not anticipate that any cash dividends will be paid in the foreseeable
future.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The Company commenced operations in August 1991.

- 12 -
<PAGE> 15

Effective March 1, 1996, the Company executed definitive agreements
with SmithKline which established the Joint Venture to develop and commercialize
human bacterial vaccines utilizing the Company's proprietary technologies (see
Note 6 to the financial statements).

The strategic alliance with SmithKline is consistent with one aspect of
the Company's overall strategy which, since its inception, has been to establish
strategic partnerships and to focus on researching technologies with the goal of
developing new products to prevent and treat infectious diseases and related
disorders. The Company is operating as a development stage enterprise.

RESULTS OF OPERATIONS

Revenues for 1997 totalled $4,755,712 consisting of human bacterial
vaccine research and development support of $2,820,612 and reimbursable expenses
incurred of $1,275,726 pursuant to the strategic alliance with SmithKline,
$509,374 from Small Business Innovation Research grants, and a $150,000
milestone payment from Pasteur Merieux Connaught.

Revenues for 1996 totalled $3,827,111 consisting of $1,669,752 from the
sale of the equity interest in the joint venture to SmithKline, human bacterial
vaccine research and development support of $1,655,802, reimbursable expenses
incurred of $241,649, a milestone payment to the Joint Venture of $150,000, and
grant revenue of $109,908.

Research and development expenses in 1997 increased 79.2% to $3,859,116
in comparison to $2,154,047 in 1996 due to increased efforts and expenditures
for additional personnel resulting directly from the increase in activities
attributable to the strategic alliance with SmithKline, and to the production of
vaccine materials and the costs incurred in the conducting of clinical trials.

General and administrative expenses in 1997 increased 31.3% to
$1,643,189 in comparison to $1,251,556 in 1996. The increase was attributable
primarily to the fees incurred in connection with overseas patent application
filings, such fees being reimbursable to the Company pursuant to the provisions
of the strategic alliance with SmithKline, and to increases in legal fees and
public relations activities. These increases were offset in part by the decrease
in bonuses awarded to executive officers in 1997.

The increase in interest income for 1997 of $85,074 reflects the
improved cash position of the Company in comparison to 1996.

In February 1997, the Company paid off the remaining balance of the
obligation arising from the sale/leaseback agreement, thereby eliminating the
related future interest payments.

LIQUIDITY AND CAPITAL RESOURCES

In connection with the Company's strategic alliance with SmithKline,
the Company received $2,600,000 of funding for research and development of human
bacterial vaccines in 1997. In addition, the Company is reimbursed by SmithKline
on an ongoing basis for expenses that the Company incurs in connection with the
agreed upon production of vaccine material for clinical trials, the conduct of
agreed upon clinical trials, and the agreed upon prosecution and maintenance of
the Company's patents and patent applications.

The Joint Venture continues to assess to which human bacterial vaccine
research projects resources will be allocated. The Company anticipates that its
research and development expenses related to human bacterial vaccines will
continue to be substantial for the foreseeable future and anticipates that
substantial funding will be provided through the strategic alliance with
SmithKline. The Company also plans to utilize a portion of its available
resources to pursue other research and development activities in the field of
therapeutics. To fund these research and development activities and general and
administrative expenses, the Company will be required to rely on its current
assets and future financings.

For 1998, the Company currently anticipates that it will increase its
total employees and contract personnel by approximately three from a 1997 year
end total of 30.

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<PAGE> 16

As a development stage company, the Company's operating activities have
been limited primarily to research and development involving its proprietary
technologies, and accordingly, have generated limited revenues. The Company is
scheduled to receive approximately $3,200,000 in 1998 in research and
development payments from SmithKline covering the period March 1, 1998 to
February 28, 1999. Additionally, the costs incurred by the Company associated
with the conduct of an ongoing Phase I clinical trial for Helicobacter pylori
and agreed upon clinical trials for Campylobacter jejuni, the agreed upon
production of vaccine material, and the agreed upon prosecution of the Company's
patents and patent applications are reimbursable by SmithKline. SmithKline's
second option to increase its ownership in the Joint Venture, at a cost of
$1,000,000, expires on October 1, 1998. Research currently being performed by
the Company under a Phase II Small Business Innovation Research grant from The
National Institutes of Health pertaining to the Company's vaccine for Chlamydia
trachomatis, and which expires in 1998, is anticipated to generate approximately
$160,000 in payments. The Company is also scheduled to receive a milestone
payment from Pasteur Merieux Connaught of $500,000 in December 1998.

With respect to the Company's negotiations to extend its facility lease
and expand its existing space, financing for the expansion and any related
renovations would be provided by the landlord. It is anticipated that any funds
required in excess of the amount provided by the landlord will be obtained
through equipment financing and/or by utilizing the current assets of the
Company.

In order to fully fund its operations over the longer term, the Company
will continue to seek additional financing. The Company has no lines of credit.
In seeking additional funding, the Company continues to examine a range of
possible transactions, including: additional strategic alliances; the exercise
of the unit purchase option issued to the Placement Agent in connection with the
1995 private placement; possible increases in research and development funding
by SmithKline; and the exercise by SmithKline of its warrant to the extent that
it becomes exercisable. Additional public offerings and private placements, and
the filing of additional applications for Small Business Innovation Research
grants are also possible sources of funds. However, there is no assurance that
additional funds will be available from these or any other sources or, if
available, that the terms on which such funds can be obtained will be acceptable
to the Company.

ENVIRONMENTAL MATTERS

The Company has been identified as one of approximately 800 potentially
responsible parties by the United States Environmental Protection Agency ("EPA")
for a site cleanup in Denver, Colorado, where the Company sent hazardous
materials for disposal. Under the provisions of a proposed settlement developed
by independent mediators, the Company's share of the total cleanup costs has
been calculated to be less than $6,500.

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued two new standards
which become effective for reporting periods beginning after December 15, 1997.
Statement of Financial Accounting Standards No. 130 ("SFAS 130"), Reporting
Comprehensive Income, requires additional disclosures with respect to certain
changes in assets and liabilities that previously were not required to be
reported as results of operations for the period. The Company will begin making
the additional disclosures required by SFAS 130 in the first quarter of 1998.
SFAS 131, Disclosures about Segments of an Enterprise and Related Information,
requires financial and descriptive information with respect to "operating
segments" of an entity based on the way management disaggregates the entity for
making internal operating decisions. The Company will begin making the
disclosures required by SFAS 131 with financial statements for the year ending
December 31, 1998.

YEAR 2000 DISCLOSURE

The Company has analyzed its computer systems and related applications
to assess the expected impact of the Year 2000 date recognition issue on these
systems and applications. Management does not anticipate that the costs
associated with the Year 2000 issue will have a material adverse affect on the
financial condition or results of operations of the Company.

REVERSE STOCK SPLIT

On March 26, 1998, the Board of Directors approved resolutions to
amend the Certificate of Incorporation to effect a reverse stock split, subject
to shareholder approval. If effected, the reverse stock split would be in the
range of one-for-four to one-for-ten.

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<PAGE> 17
BUSINESS

The Company is a biopharmaceutical company committed to improving human
health by developing new products to prevent and treat infectious diseases and
related disorders. The Company concentrates its efforts in the discovery and
research of technologies for the development of products for mucosal infections.
The Company's focus has been the development of vaccines for respiratory,
gastrointestinal and urogenital bacterial diseases. At its inception in August
1991, the Company was focused on researching a proprietary platform ART
(Adhesin-Receptor Technology) for vaccine development. In 1993, the Company
broadened its technology base by developing its second platform technology
called NST (Nutriment Signal Transduction). The combination of these two
platform technologies provides the tools and reagents to develop new products to
prevent, treat and diagnose infectious diseases and their related disorders.

BUSINESS

TECHNOLOGY OVERVIEW

General

Adhesin-Receptor Technology

- 15 -
<PAGE> 18

against a disease. This process is referred to as "active immunization."
However, in some cases, the immune system on its own may not produce the
antibodies in sufficient quantity to eliminate the undesirable agents or may not
have been stimulated prior to the infection. In such instances, it may then be
possible to provide immunity by injecting antibodies directly (rather than
inducing their production) that have been produced in another host, either
naturally or through vaccination. This process is referred to as "passive
immunization."

Nutriment Signal Transduction

PRODUCTS UNDER RESEARCH AND DEVELOPMENT

The Company is currently conducting research and development activities
with respect to several product areas which are based on its ART and NST
technologies.

ENTERIC DISORDERS

Peptic Ulcers and Stomach Cancers

Discovered in 1983, Helicobacter ("H.") pylori is now recognized as the
predominant cause of ulcers. Scientists estimate that this spiral-shaped
bacterium leads to 90 percent of duodenal ulcers and 80 percent of gastric
ulcers. This organism is present in all parts of the world. The prevalence of
infection increases with age, with greater than 90 percent of people by age 20
in developing countries and 50-60 percent of people over 60 in developed
countries infected with this bacteria. The CDC estimates that two-thirds of the
world's population is

- 16 -
<PAGE> 19

infected with H. pylori, including about 25 million Americans. More recently,
this bacteria has been associated with stomach cancer. No single agent therapy
has been found to wipe out this infection, and antibiotic resistance is
increasing.

The Company is engaged in ongoing efforts aimed at developing a vaccine
for H. pylori. Using NST technology, the Company has produced H. pylori bacteria
that are antigenically enhanced when compared to conventionally grown H. pylori.
These cells have been inactivated (killed) and combined with a proprietary
mucosal adjuvant for use as a vaccine. A clinical trial is in progress under a
U.S. Food and Drug Administration ("FDA") Investigational New Drug Application
("IND") to assess the safety and immunogenicity of this H. pylori vaccine
preparation. This randomized double-blinded Phase I clinical trial is being
conducted in volunteers with and without subclinical gastric infection.
Preclinical models indicate that the vaccine has both prophylactic and
therapeutic applications.

In addition, Company scientists and collaborators have identified host
cell receptors and have purified adhesins from H. pylori. The Company has cloned
the genes, produced the recombinant proteins and produced quantities of the
adhesins for preclinical animal testing. See "Production Facility". Further, the
Company is evaluating other surface proteins and acellular antigens as potential
vaccine candidates.

These potential vaccine products for use in humans have been licensed
to SmithKline (See "Strategy for Commercial Development.") through the Joint
Venture for further development and possible commercialization. The Company may
enter into other collaborations regarding these and other potential products for
uses other than as human vaccines. (See "Strategy for Commercial Development.")

Diarrheal and Contaminated Food and Water Disorders

Currently, in the U.S. the leading cause of contaminated food-borne
illness, including severe diarrhea and gastritis, is Campylobacter jejuni
("Campylobacter"). The Centers for Disease Control and Prevention ("CDC")
reports that four million Campylobacter infections occur in the U.S. each year.
International public health officials estimate that Campylobacter annually
causes 400 to 500 million cases of diarrhea worldwide. Seemingly mild, diarrheal
diseases are responsible for 200 to 800 deaths a year in the U.S. and more in
other countries. Using NST technology, the Company has produced Campylobacter
bacteria that are antigenically enhanced compared to conventionally grown
Campylobacter.

In 1994, the Company entered into a Cooperative Research and
Development Agreement ("CRADA") with the United States Navy to clinically test
the Company's vaccine to prevent diarrhea caused by enteropathogenic
Campylobacter (See "Strategy for Commercial Development."). Two successful Phase
I clinical trials have been completed and a Phase II trial is ongoing. The first
trial completed was a Phase I clinical study which demonstrated the safety and
immunogenicity of the inactivated Campylobacter whole cell vaccine preparation.
The second Phase I clinical study demonstrated the safety and immunogenicity of
a vaccine preparation consisting of the inactivated Campylobacter whole cells in
combination with a mucosal adjuvant.

Shigella is another leading cause of diarrheal disease worldwide with
over 1 billion cases reported worldwide. Infection is most common in children 1
to 4 years old. There is no vaccine available. NST is being used to produce
antigenically enhanced Shigella. A Shigella vaccine is in preclinical testing
that may provide efficacy against this diarrheal disease.

These potential vaccine products for use in humans have been licensed
to SmithKline through the Joint Venture for further development and possible
commercialization. The Company may enter into other collaborations regarding
these and other potential products for uses other than as human vaccines. See
"Strategy for Commercial Development."

RESPIRATORY DISEASES

Otitis Media

Middle ear infections, known as otitis media, are the most frequent
reason children visit doctors, and the most common cause of hearing loss in
children. Eighty percent of all children will have at least one episode of
otitis

- 17 -
<PAGE> 20

media and over $2 billion is spent annually for the care of otitis media in the
U.S. Otitis media is caused primarily by bacterial infections. Two of these
bacteria are Haemophilus influenzae (nontypeable) and Moraxella ("M.")
catarrhalis. The current treatment of choice for otitis media is antibiotic
therapy. However, because of the increase in the incidence of antibiotic
resistant strains of these bacteria and the costs associated with the treatment
of this disease, the Company believes that an otitis media vaccine would be a
preferable alternative for addressing this disease.

The Pittsburgh Otitis Media Research Center estimates that H.
influenzae nontypeable is present in over 25% of otitis media infections. The
Company has identified an adhesin, Hin47, of H. influenzae and has successfully
cloned the gene for production of the recombinant adhesin. This adhesin is
extremely conserved in H. influenzae. The recombinant form of the adhesin has
been shown in animal studies to elicit an immune response.

In December 1994, the Company entered into a license agreement with
Pasteur Merieux Connaught, a wholly-owned subsidiary of Rhone Poulenc Rorer,
under which the Company granted to PMC an exclusive license to develop,
manufacture and sell one or more vaccines based on the Company's proprietary H.
influenzae Hin47 protein. See "Strategy for Commercial Development". The Company
continues to collaborate with PMC in evaluation of this technology and has
received the first and second milestone payments according to the agreement.

In addition, the Company continues to identify other novel proteins
from H. influenzae using both NST and ART technologies. The Company has also
identified novel outer membrane proteins from Moraxella catarrhalis, another
primary cause of otitis media. The Company is producing two proprietary outer
membrane proteins for potential subunit vaccines, which are at the preclinical
development stage.

The H. influenzae Hin47 vaccine preparation for use in humans, in the
territory of Asia Pacific, and the M. catarrhalis vaccine preparations for use
in humans have been licensed to SmithKline through the Joint Venture for further
development and possible commercialization. The Company may enter into other
collaborations regarding the Moraxella catarrhalis proteins and other potential
products for uses other than as human vaccines. See "Strategy for Commercial
Development."

Pneumonia and Meningitis

Pneumonia is the fifth leading cause of death in the U.S., with
approximately 2.5 million cases occurring in the U.S. annually. H. influenzae
nontypeable and M. catarrhalis are causative agents for acute pneumonia in
adults, particularly the elderly. The Company believes that the technology
utilized to develop vaccines for H. influenzae nontypeable and M. catarrhalis
described in "Respiratory Diseases - Otitis Media" above may have application
against acute pneumonia.

Bacterial meningitis is a rapidly evolving upper respiratory tract
infection where onset of early symptoms is very fast (0 to 4 days) and
complications can be serious, including brain damage and a high incidence of
death (greater than 15% even with antibiotic therapy). Three of the most common
infectious agents include H. influenzae (Type B and nontypeable), M. catarrhalis
and Neisseria ("N.") meningitidis. N. meningitidis is a respiratory pathogen
that causes invasive meningococcal infections primarily in children younger than
5 years of age and travelers to countries recognized to have epidemic disease.
The only vaccine currently available is one comprising bacterial capsular
polysaccharides which have been shown to cross-react with neural cells,
potentially causing severe side effects. The Company is using both ART and NST
to identify novel adhesins or other surface proteins to develop a subunit
vaccine that may avoid the drawbacks of the vaccine currently being used.

UROGENITAL DISEASES

In the U.S., almost 12 million cases of sexually transmitted urogenital
diseases occur annually. By age 21, approximately 1 out of every 5 young people
has required treatment for a sexually transmitted disease. The most

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<PAGE> 21

prevalent sexually transmitted diseases in the world are caused by a bacteria
called Chlamydia ("C.") trachomatis. Millions of people suffer from cervicitis,
pelvic inflammatory disease, sterility, ectopic pregnancies and symptomatic
urethritis caused by C. trachomatis. In the U.S. during 1995, 477,638 new cases
were reported to the CDC, more than any other infectious disease. The CDC
estimates there are more than 3.5 million additional cases undiagnosed and
unreported in the U.S. each year.

Globally, the World Health Organization ("WHO") estimates 89 million
new cases of urogenital diseases caused by C. trachomatis emerge each year.
Because C. trachomatis also causes trachoma, the world's most common form of
preventable blindness, the WHO estimates Chlamydia is responsible for at least
15 percent of the world's blindness.

The Company believes that through its proprietary ART it is possible
that an effective anti-Chlamydial vaccine could be developed. The Company has
identified and purified an outer membrane protein from C. trachomatis and is
completing the cloning of the protein's gene. The Company is conducting
preclinical animal testing.

In August 1996, based on the successful completion of a Phase I Small
Business Innovation Research grant ("SBIR"), the Company was awarded a $600,000
Phase II SBIR from the National Institutes of Health ("NIH") to further develop
this antigen as a potential subunit vaccine. This potential vaccine product for
use in humans has been licensed to SmithKline through the Joint Venture for
further development and possible commercialization. The Company may enter into
other collaborations regarding these and other potential products for uses other
than as human vaccines. See "Strategy for Commercial Development."

PRODUCTION FACILITY

The Company established a contract for the services of a FDA-approved
pilot plant. This facility initially has been used for the production of the
Company's Campylobacter and H. pylori whole cell vaccines for clinical trial
purposes and for the Company's M. catarrhalis subunit vaccine. The pilot plant
was established and operates in compliance with the FDA's Good Manufacturing
Practices. See "Government Regulation." The Company anticipates that it will
produce pilot and clinical trial lots of its other proposed vaccines in this
pilot facility.

STRATEGY FOR COMMERCIAL DEVELOPMENT

All of the Company's proposed products are in research, preclinical or
clinical development. The Campylobacter vaccine is currently in a Phase II
clinical trial, with two Phase I clinical trials successfully completed. A
vaccine for H. pylori is currently in a Phase I clinical trial. All vaccine
products will require substantial additional research and development,
preclinical testing, clinical trials and/or regulatory approvals from the
appropriate governmental agencies prior to commercialization. See "Government
Regulation." The process from research to marketing could require significant
expenditures over a number of years.

In December 1994, the Company entered into a technology license
agreement with PMC, whereby the Company granted an exclusive license to develop,
produce and market any product using the Company's H. influenzae nontypeable
Hin47 protein in all countries other than those in the Asia-Pacific region.
Under the license agreement, PMC must use commercially reasonable efforts to
develop a marketable product. However, at its option and for good cause, PMC may
cease development upon 6 months' prior written notice to the Company and upon
payment of all amounts due to the Company through the termination date, at which
time the licensed technology reverts to the Company. The Company earned a
license fee of $250,000 in 1994. The Company is entitled to milestone payments
based on the licensee's performance or the passage of time and earned the first
milestone payment of $150,000 in December 1995 and the second milestone payment
of $150,000 in December 1997. Additionally, upon commercialization, the licensee
is obligated to pay a minimum annual royalty to the Company on sales of any
product incorporating the Company's technology. The licensee completed a Phase
IA clinical trial in adults in the first quarter of 1997 and commenced a Phase
IB clinical trial in children in the third quarter of 1997 to determine the
safety and immunogenicity of the vaccine.

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<PAGE> 22

On May 7, 1996, the Company executed definitive agreements with
SmithKline Beecham Corporation and SmithKline Beecham Biologicals Manufacturing
s.a. ("SmithKline"), effective March 1, 1996, which established the Joint
Venture, to develop and commercialize human bacterial vaccines utilizing the
Company's proprietary technologies. The agreements provide for the following: a
payment of $3,000,000 to the Company in connection with SmithKline's acquisition
of a 26.25% equity interest in the Joint Venture; payments totalling $2,400,000
and $2,600,000 to the Company to fund research and development for the first
year and second year, with SmithKline having the option to fund future years;
two separate options granted to SmithKline expiring October 1, 1997 and 1998,
respectively, to acquire from the Company additional equity interests in the
Joint Venture; an exchange option granted by the Company to SmithKline enabling
SmithKline to convert its equity interest in the Joint Venture for up to
4,793,685 shares of the Company's common stock, under specified conditions; and
a warrant granted by the Company to SmithKline enabling SmithKline to acquire up
to 7,682,637 shares of the Company's common stock, under specified conditions,
and only to the extent that certain options and warrants previously granted and
outstanding as of the date of the establishment of the strategic alliance are
exercised. The agreements also provide for SmithKline to make milestone payments
and pay royalties to the Joint Venture; and for SmithKline to reimburse the
Company for expenses the Company incurs for agreed upon production lots of
vaccines for clinical trials, the conduct of agreed upon clinical trials, and
the agreed upon prosecution and maintenance of the Company's patents and patent
applications. As further stipulated in the agreements, SmithKline will be
responsible for conducting additional clinical trials, manufacturing, and sales
and distribution. On October 1, 1997, SmithKline's first option to acquire from
the Company an additional equity interest in the Joint Venture expired
unexercised. SmithKline has committed to fund research and development for the
third fiscal year, ending February 28, 1999, in the amount of approximately
$3,000,000. Effective November 1, 1997, in accordance with the provisions of the
SmithKline warrant, the maximum number of warrants exercisable was reduced to
5,761,978.

In August 1994, the Company entered into a CRADA with the United States
Navy, whereby the Company granted Government Purpose License Rights to its
Campylobacter vaccine technology. In exchange for the rights granted, the United
States Navy agreed to conduct and fund the costs involved in Phase I, II and III
clinical trials for the vaccine, subject to the availability of required funds.
Two Phase I trials have been successfully completed and a Phase II trial is
ongoing. The Company retained all commercial rights to develop, produce and
market any product involving its proprietary Campylobacter technology. Either
party may terminate the CRADA upon thirty days written notice.

In October 1992, the Company entered into a license agreement with
Galagen Inc., pursuant to which Galagen paid the Company a license fee for the
exclusive rights to use Company technology, including certain vaccines, to make,
have made and sell non-parenteral passive immunity antibodies and to use the
Company's carbohydrate receptor technology for certain therapeutic purposes.
Under the license, Galagen also has exclusive rights to use the Company's
carbohydrate receptor technology for certain purposes relating to the diagnosis
and treatment of cancer. Galagen is obligated to pay royalties on sales of
certain products derived from such technology. Galagen Inc., and other entities
to which it may sublicense certain of the technologies pursuant to this
agreement, may be competitors of the Company in that they may be targeting the
same infectious disease states as the Company through alternative methods of
treatment.

The Company may continue to grant licenses to certain of its
proprietary technologies, reagents, and vaccine products other than for use in
humans, in exchange for license fees and/or royalty payments. The Company
anticipates seeking such arrangements with respect to technologies that it is
unwilling or unable to pursue on its own. In addition, the Company may seek
license arrangements when appropriate for the use of its technology for
therapeutic products.

GOVERNMENT REGULATION

The production and marketing of the Company's products and its research
and development activities are subject to regulation by numerous governmental
authorities in the United States and other countries. In the United States,
vaccines, drugs and certain diagnostic products are subject to FDA review of
safety and efficacy. The Federal Food, Drug and Cosmetic Act, the Public Health
Service Act and other federal statutes and regulations govern or influence the
testing, manufacture, safety, labeling, storage, record keeping, approval,
advertising and promotion of such products. Noncompliance with applicable
requirements can result in criminal prosecution and fines, recall or seizure of
products, total or partial suspension of production, refusal of the government
to approve Product License

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<PAGE> 23

Applications ("PLAs") or refusal to allow the Company to enter into supply
contracts. The FDA also has the authority to revoke product licenses and
establishment licenses previously granted.

In order to obtain FDA approval to market a new biological or
pharmaceutical product, the Company or its licensees must submit proof of
safety, purity, potency and efficacy, which will require the Company or its
licensees to conduct extensive laboratory, preclinical and clinical tests. This
testing, as well as preparation and processing of necessary applications, are
expensive, time-consuming and often take several years to complete. There is no
assurance that the FDA will act favorably in making such reviews. The Company or
its licensees may encounter significant difficulties or costs in their efforts
to obtain FDA approvals which could delay or preclude the Company or its
licensees from marketing any products that it may develop. The FDA may also
require postmarketing testing and surveillance to monitor the effects of
marketed products or place conditions on any approvals that could restrict the
commercial applications of such products. Product approvals may be withdrawn if
problems occur following initial marketing, such as, compliance with regulatory
standards is not maintained. With respect to patented products or technologies,
delays imposed by governmental marketing approval processes may materially
reduce the period during which the Company or its licensees will have the
exclusive right to exploit patented products or technologies. See "Patents and
Other Rights." Refusals or delays in the regulatory process in one country may
make it more difficult and time consuming for the Company or its licensees to
obtain marketing approvals in other countries.

The FDA approval process for a new biological drug involves completion
of preclinical studies and the submission of the results of these studies to the
FDA in an IND, which must be approved before human clinical trials may be
conducted. The results of preclinical and clinical studies on biological drugs
are submitted to the FDA in the form of a PLA for approval to commence
commercial sales. In responding to a PLA, the FDA may require additional testing
or information, or may deny the application. In addition to obtaining FDA
approval for each biological product, an Establishment License Application
("ELA") must be filed and the FDA must inspect and license the manufacturing
facilities for each product. Product sales may commence only when both PLA and
ELA are approved.

In certain instances in which a treatment for a rare disease or
condition is concerned, the manufacturer may request the FDA to grant the drug
product Orphan Drug status for a particular use. In this event, the developer of
the drug may request grants from the government to defray the costs of certain
expenses related to the clinical testing of such drug and be entitled to
marketing exclusivity and certain tax credits. The Company or its licensees may
seek Orphan Drug designation in the future for proposed products. If these
products are the first such products approved, the Company or its licensees may
be entitled to seven year marketing exclusivity for these products once
regulatory approval has been obtained. The seven year period of exclusivity
applies only to the particular drug for the rare disease or condition for which
the FDA has designated the product an Orphan Drug. Therefore, another
manufacturer could obtain approval of the same drug for an indication other than
the Company's or could seek Orphan Drug status for a different drug for the same
indication.

Sales of biological and pharmaceutical products and medical devices
outside the United States are subject to foreign regulatory requirements that
vary widely from country to country. Whether or not FDA approval has been
obtained, approval of a product or a device by a comparable regulatory authority
of a foreign country must generally be obtained prior to the commencement of
marketing in that country.

The Company is also subject to regulation by the Occupational Safety
and Health Administration ("OSHA") and the Environmental Protection Agency
("EPA") and to regulation under the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other regulatory statutes, and may in the
future be subject to other federal, state or local regulations. The Company
believes that it is in compliance with regulations regarding the disposal of its
biological, radioactive and chemical waste. The Company voluntarily complies
with NIH guidelines regarding research involving recombinant DNA molecules. Such
guidelines, among other things, restrict or prohibit certain recombinant DNA
experiments and establish levels of biological and physical containment that
must be met for various types of research.

The Company, either alone or in conjunction with its collaborators,
have filed INDs for Campylobacter and H. pylori vaccines. The applications were
accepted by the FDA. The Company has entered into, and anticipates that it may
in the future enter into, joint ventures, licensing or similar collaborative
arrangements with one or more companies that will assume the costs and
responsibility for clinical testing and for FDA and comparable foreign
regulatory approval of any product which the Company may have in development.
See "Strategy for Commercial

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<PAGE> 24

Development." To the extent that the Company is unable to enter into such
arrangements or to raise additional capital, it may not have the resources to
complete the regulatory approval process for such products.

PATENTS AND OTHER RIGHTS

The Company has forty-four allowed or issued U.S. and international
patents. Currently there are ten pending patent applications in the United
States, with corresponding international patent applications. Two of the issued
patents and one of the U.S. patent applications, and the corresponding foreign
patent applications, are co-owned with other entities. The majority of the
patent applications relate to the Company's ART and NST. Collectively, the
applications include composition claims for enhanced bacteria, receptors and
their corresponding adhesins or toxins, method of use claims for the use of
these compositions, for vaccines and for other antimicrobial products.

The Company holds licenses for exclusive rights to patents and related
technologies covering VeroTest(R) and certain H. pylori products. The Company
has made initial payments to the licensors and is obligated to timely pay
certain royalties or these licenses may be converted to non-exclusive licenses.
In addition, royalty payments must be made if the Company markets products or
services incorporating the licensed technologies.

There can be no assurance that the Company's pending patent
applications will result in issued patents, that any of its issued patents will
afford protection against a competitor, or that any patents issued or licensed
to the Company could not be challenged, invalidated or circumvented by others.
Further, the patent position worldwide of biotechnology firms generally is
highly uncertain, involving complex legal and factual questions. Since patent
applications in the United States are maintained in secrecy until patents issue,
and since publication of discoveries in the scientific or patent literature
tends to lag behind actual discoveries by several months or even years, the
Company cannot be certain that others have not filed patent applications
directed toward inventions covered by its pending patent applications or that it
was the first to file patent applications on such inventions. There can also be
no assurance that any application of the Company's technologies will not
infringe patents or proprietary rights of others or that licenses that might be
required for the Company's processes or products would be available on
reasonable terms. Furthermore, there can be no assurance that challenges will
not be instituted against the validity or enforceability of any patent owned or
licensed by the Company or, if instituted, that such challenges will not be
successful or that the Company will have the financial resources to defend
against any such challenge. The extent to which the Company or its licensees may
be required to obtain licenses under other proprietary rights, the cost and the
availability of such licenses are unknown.

Patent litigation is becoming more widespread in the biotechnology
industry. There can be no assurance that others could not bring legal actions
against the Company or its licensees for patent infringement. If the Company or
its licensees becomes involved in such litigation, it could consume a
substantial portion of the Company's resources. The Company also may lack the
financial resources to defend its patents against infringements by others.

The Company believes that obtaining foreign patents may be more
difficult than obtaining domestic patents because of differences in U.S. and
foreign patent laws. In addition, foreign patents, if obtained, may not provide
the level of protection provided by domestic patents.

The Company's success depends, in large part, on its ability to obtain
patents, maintain trade secrets and operate without infringing on the
proprietary rights of third parties. If patents do not issue from present or
future patent applications, the Company will likely be subject to greater
competition. The Company also relies upon unpatented proprietary technology, and
in the future may determine in some cases that its interest would be better
served by reliance on trade secrets or confidentiality agreements rather than
patents. In such circumstances, no assurance can be made that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to such proprietary technologies or disclose
such technologies or that the Company or its licensees can meaningfully protect
its rights in such unpatented proprietary technologies.

The Company requires each of its employees, consultants, and advisors
to execute a confidentiality agreement upon the commencement of an employment or
consulting relationship with the Company. The employee agreements generally
provide that all inventions conceived by the individual and all confidential or
proprietary technology, including information and materials, developed or made
known to the individual during the term of the

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<PAGE> 25

relationship shall be the exclusive property of the Company and shall be kept
confidential and not disclosed to third parties except under specified
circumstances. The term of ownership of inventions by consultants and advisors
varies depending primarily upon the policies of the academic and other
institutions with which the consultants and advisors are associated. The Company
has entered into non-disclosure agreements which are intended to protect its
confidential information delivered to third parties for research or other
purposes. There can be no assurance that these agreements will provide
meaningful protection of the Company's confidential or proprietary technology in
the case of unauthorized use or disclosure. Even if others do not gain
unauthorized access to the Company's confidential or proprietary technology,
there can be no assurance that others will not independently develop
substantially equivalent proprietary technology. In addition, to the extent that
strategic partners or consultants apply technological information developed
independently by them or others to Company projects or apply Company technology
to other projects, disputes may arise as to the ownership of proprietary rights
to such technology.

COMPETITION

Competition in the biotechnology and pharmaceutical industry is
intense. While the Company is only aware of a limited number of companies that
are pursuing the development of new bacterial vaccines and antimicrobial
products, competition from other biotechnology and pharmaceutical companies for
the development of products for prevention and/or treatment of the same
infectious diseases targeted by the Company is intense and expected to increase.
Many of the Company's competitors have substantially greater financial resources
and larger research and development staffs than the Company, as well as
substantially greater experience in developing products, in obtaining regulatory
approvals, and in manufacturing and marketing pharmaceutical products than the
Company. Competition with these companies involves not only product development,
but also acquisition of products and technologies from universities and other
research institutions. The Company also competes with universities and other
institutions in the development of products, technologies and processes.
Competitors have developed, or may be in the process of developing technologies
that are, or in the future may be, the basis for competitive products. There can
be no assurance that the Company's competitors will not succeed in developing
technologies and products that are more effective or affordable than those being
developed by the Company and its licensees. In addition, one or more of the
Company's competitors may achieve product commercialization or patent protection
earlier than the Company.

To the extent the Company has exclusively licensed to other parties
applications of the technology to address potential alternatives for treatment
of certain infectious diseases, such alternatives are no longer available to the
Company, thereby impacting the Company's ability to compete in the market for
certain therapies for infectious diseases.

The Company expects products approved for sale to compete primarily on
the basis of product efficacy, safety, reliability, and patent position. Certain
of the infectious diseases that the Company has chosen to target for its
research and development efforts are currently being treated with therapies that
have varying degrees of success. Accordingly, the success of the Company will be
dependent upon the acceptance of a developed product by the medical community as
a preferable method of treatment which in turn will depend upon the marketing
and education efforts made by or on behalf of the Company. In addition, the
first pharmaceutical product to reach the market in a therapeutic or preventive
area is often at a significant competitive advantage relative to later entrants
to the market. The Company's competitive position also will depend on its
ability to attract and retain qualified scientific and other personnel, develop
effective proprietary products, obtain patent protection and have its licensees
be successful at implementing production and marketing plans.

BACKGROUND

In March 1988, BioCarb Inc., the Company's predecessor, was established
as a wholly-owned subsidiary of BioCarb AB, a Swedish biotechnology company. In
August 1991, the Company was acquired by a then officer in a management buy-out
and began doing business as MicroCarb Inc. Subsequent to the management buy-out,
the Company has been operating as a development stage enterprise. In 1996, the
Company changed its name to Antex Biologics Inc.

EMPLOYEES

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<PAGE> 26

At December 31, 1997, the Company had 30 full-time employees and
contract personnel, of which twenty-six were in research and development. Of
these personnel, fifteen hold Ph.D. degrees. None of the employees is
represented by a labor union. The Company considers its employee relations to be
good.

DESCRIPTION OF PROPERTY

The Company leases approximately 15,000 square feet of office and
laboratory space in Gaithersburg, Maryland, pursuant to a lease expiring in
January 1999. The lease provides for current annual rent of approximately
$265,000, with specified annual increases. In addition, the lease provides for
excess utility usage and administrative services of approximately $111,000 per
year. The physical plant is fully equipped as a state-of-the-art biotechnology
research facility. The Company is currently in negotiations to extend its lease
and to increase its total space to approximately 25,000 square feet. The Company
believes that these expanded facilities will be sufficient for the Company's
planned activities for at least the next twelve months, with the exception of
the need for a small animal facility and pilot plant. The Company currently
contracts for these services from existing facilities and intends to continue to
do so through the expiration of the current lease.

LEGAL PROCEEDINGS

There are no material legal proceedings to which the Company is
currently party.

MANAGEMENT

DIRECTORS AND OFFICERS

The names of each director and each executive officer, and each such
individual's age, positions and offices held with the Company, years of service
as a director, if applicable, principal occupation and business experience
during the past five years, and certain other directorships held is set forth
below. The following descriptions are based on information provided by such
persons.

V. M. ESPOSITO, PH.D., age 57, has served as President, Chief Executive
Officer and a director of the Company since May 1992. In July 1992, he was
elected Chairman of the Board of Directors. From April 1987 until joining the
Company, Dr. Esposito was the Founder and served as the President and Chief
Executive Officer of Theracel Corporation, a privately-owned biotechnology
company.

CHARLES J. COULTER, age 72, has been a director of the Company since
October 1992. Mr. Coulter was President of American Research and Development, a
venture capital organization, from 1973 until his retirement in June 1992.

BRUCE E. ELMBLAD, age 69, has been a director the Company since April
1995. Mr. Elmblad has been the President of Venture Investment Advisors, Inc., a
venture capital organization, since November 1994. From April 1990 to October
1994 he was a Partner with SED Partners and the President of SEC Management
Company, Inc., two venture capital organizations. Mr. Elmblad is currently a
director of two publicly-held companies, Martek Biosciences Corporation and PCD,
Inc.

DONALD G. STARK, age 71, has been a director of the Company since
October 1992. From September 1987 until his retirement in September 1992, Mr.
Stark served as the Vice Chairman of the Board of Nova Pharmaceutical
Corporation.

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<PAGE> 27

LARRY R. ELLINGSWORTH, PH.D., age 47, has served as Vice President,
Research and Development of the Company since December 8, 1997. From October
1996 to November 1997, he was Executive Vice President, Research and Chief
Scientific Officer of Metamorphix, Inc., a privately-held biopharmaceutical
company. Previously, from November 1995 to September 1996, he was Executive Vice
President, Chief Scientific Officer and a director of Cystar, Inc., a
privately-held biopharmaceutical company. From May 1991 to December 1994, he was
Vice President, Operations for Celtrix Pharmaceuticals, Inc., a publicly-held
biopharmaceutical company.

THERESA M. STEVENS, ESQ., age 37, has served as Vice President,
Corporate Development of the Company since September 1996. From January 1995 to
September 1996, Ms. Stevens served as a patent attorney for the law firm of
Armstrong, Westerman, Hattori, McLeland & Naughton. Previously, she was a patent
attorney with the law firm of Pennie & Edmonds from August 1993 to January 1995.
Prior to August 1993, she worked as a patent attorney in the legal department of
The DuPont Merck Pharmaceutical Company.

GREGORY C. ZAKARIAN, CPA, age 49, has served as Vice President,
Administration, Chief Financial Officer and Treasurer of the Company since
September 1992. He has served as Secretary of the Company since November 1993,
and was Assistant Secretary of the Company from September 1992 until October
1993. Prior to September 1992, Mr. Zakarian spent most of his career in the
field of public accounting.

The Board of Directors consists of four members and is subdivided into
three classes. One class is elected each year to hold office for a three-year
term and until their successors are elected and qualified. Currently, (i) the
Class I director, whose term expires at the 1999 Annual Meeting, is Bruce E.
Elmblad, (ii) the Class II director, whose term expires at the 2000 Annual
Meeting is Donald G. Stark and (iii) the Class III directors, whose terms expire
at the 1998 Annual Meeting are V.M. Esposito and Charles J. Coulter. Successors
to those directors whose terms have expired are required to be elected by
stockholder vote; vacancies in unexpired terms and any additional positions
created by board action may be filled by action of the existing Board of
Directors, until their successors are elected. There are no family relationships
among the executive officers and directors.

The Compensation Committee of the Board of Directors reviews and makes
recommendations to the Board on matters relating to employee compensation and
benefits, determines the compensation of the officers and other key employees,
and administers the Stock Option Plan. The current members are Charles J.
Coulter, Bruce E. Elmblad and Donald G. Stark (chair). The Audit Committee of
the Board of Directors reviews and monitors the Company's financial reporting
and accounting practices. The current members are Charles J. Coulter (chair),
Bruce E. Elmblad and Donald G. Stark. The Company does not have a nominating
committee.

INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by Section 102(b)(7) of the Delaware General Corporation
Law (the "DGCL"), Article Eighth of the Company's Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or to its stockholders for monetary damages for breach of fiduciary
duty as a director other than (i) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involved intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from
which the director derived an improper personal benefit.

Section 145 of the DGCL provides that a corporation may, under certain
circumstances, indemnify its directors and officers against expenses, judgments,
fines, and amounts paid in settlement, provided that such expenses have been
actually and reasonably incurred by the directors and officers by reason of
their capacity as such. Article Thirteenth of the Company's Certificate of
Incorporation requires the Company to indemnify, to the fullest extent permitted
by the DGCL, as amended from time to time, any person who is, was, or has agreed
to become a director or officer of the Company against expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
person.

The Company maintains, at its expense, a policy of insurance that
insures its directors and officers, subject to certain exclusions or deductions
that are usual in such insurance policies, against certain liabilities that may
be incurred in those capacities, including liabilities arising under the
Securities Act and the Exchange Act.

Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company pursuant to the foregoing provision, or otherwise, the Company

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<PAGE> 28

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.

EXECUTIVE COMPENSATION

The following table sets forth information for each of the Company's
last three fiscal years concerning the compensation earned by each of the
Company's executive officers whose compensation, consisting of salary and
bonuses, exceeded $100,000 for the year ended December 31, 1997 (the "named
executive officers").

SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

Long-Term Compensation
-------------------------------------
Annual
Compensation Awards Payouts
----------------------------------------------------------------------------------------
Securities All Other
Name and Other Restricted Underlying LTIP Compen-
Principal Annual Stock Options/ Pay- sation
Position Year Salary ($) Bonus ($) Compensat.($) Awards($) SARs(#) outs($) ($)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
V.M. 1997 300,000 50,000 -- -- -- -- 59,738(2)
Esposito, 1996 257,990 175,000 -- -- 1,000,000 -- 64,023
Ph.D., Chief 1995 230,000 -- -- -- 1,250,000 -- 88,674
Executive
Officer(1)

G.C. 1997 141,672 -- -- -- 50,000 -- 29,202(2)
Zakarian, 1996 127,212 30,000 -- -- 125,000 -- 26,739
Chief 1995 118,000 -- -- -- 325,000 -- 34,918
Financial
Officer(1)

T. M. 1997 122,005 -- -- -- 35,000 -- --
Stevens, 1996 30,000 -- -- -- 200,000 -- --
Vice
President,
Corporate
Development

</TABLE>

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

(1) Pursuant to the terms of the Company's private placement, the
compensation of these named executive officers of the Company (except
for options, warrants and similar equity incentives) could not be
increased for a period ending 13 months following the April 1995
termination date of the offering.

(2) Consists of premiums paid by the Company on a split dollar life
insurance policy held by the individual which has been assigned to the
Company. Upon cancellation of the policy, the Company will receive a
cash payment up to the cumulative amount of the total premiums paid.

The following table sets forth individual grants of stock options to
the named executive officers during the year ended December 31, 1997.

<TABLE>
<CAPTION>
OPTION GRANTS IN 1997

Number of Percent of
Securities Total Options
Underlying Granted Exercise
Options to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/Share) Date
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

G. C. Zakarian 50,000(1) 10.7% $0.69 06/02/07

T. M. Stevens 35,000(1) 7.7% $0.66 09/16/07
</TABLE>

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

(1) Options vest ratably on a monthly basis over the 48 months following
date of grant.

- 26 -
<PAGE> 29

The following table sets forth information concerning stock options
exercised during 1997 and the value of unexercised stock options held at
December 31, 1997 by the named executive officers.

<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997
AND YEAR-END OPTION VALUES

Number of Value of
Securities Unexercised
Underlying In-the-Money
Unexercised Options Options
at Year-End (#) at Year-End
Shares Acquired on Exercisable (E)/ Exercisable (E)/
Name Exercise (#) Value Realized ($) Unexercisable (U) Unexercisable (U)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>

V. M. Esposito, 0 -- 2,377,719(E)(1) $821,329(E)
Ph.D. 182,292(U) $57,422(U)

0 -- 551,250(E)(2) $186,199(E)
G. C. Zakarian 43,750(U) $8,203(U)

0 -- 64,687(E) $791(E)
T. M. Stevens 170,313(U) $7,865(U)

- -----------
</TABLE>

(1) Includes options to purchase 20,003 shares that are subject to an
escrow arrangement entered into by certain of the Company's
stockholders and optionholders in connection with the Company's
initial public offering under which such options will be forfeited on
May 11, 1998 (the "Escrow Arrangement").

(2) Includes options to purchase 6,666 shares which will be forfeited on
May 11, 1998 in accordance with the terms of the Escrow Arrangement.

COMPENSATION OF DIRECTORS

Only directors who are not employees of the Company are compensated
for their services as directors. Prior to May 1, 1997, each nonemployee
director was paid $1,000 for each meeting of the Board of Directors which he
attended. In addition, each nonemployee director received $500 for each
meeting of a committee of the Board attended in person and held separately.
Directors also are reimbursed for their expenses incurred in attending Board
and committee meetings. Effective May 1, 1997, each nonemployee director is
also paid an annual retainer of $10,000 as compensation for services.

The 1992 Directors' Stock Option Plan (the "Directors' Plan"), as
amended January 1997, provides for the grant by the Company of options to
purchase up to an aggregate of 1,700,000 shares of the Company's authorized but
unissued common stock (subject to adjustment, in certain cases, including stock
splits, recapitalizations and reorganizations). Each member of the Board of
Directors of the Company who is not an employee of the Company qualifies to
participate in the Directors' Plan. Upon initial election to the Board, a
director is granted an option to purchase the number of shares of common stock
equal to $20,000 ($10,000 if elected on or after the six-month anniversary of
the most recent annual stockholders meeting) divided by the greater of the
market price of the common stock on the date of grant or $0.50. At the time of
reelection to serve or upon continuing to hold office for the following year, a
director is granted an additional option to purchase the number of shares of
common stock equal to $20,000 divided by the greater of the market price of the
common stock on the date of the grant or $0.50. For directors who have served
for at least three years, this basic annual grant is supplemented every third
year by an additional grant of an option to purchase a number of shares of
common stock equal to 150% of the number of shares covered by the basic grant.
Vesting occurs quarterly in four equal installments over a period of one year
following the date of grant. All stock options granted under the Directors'
Plan have a five-year term. At December 31, 1997, options to purchase 202,352
shares of common stock were outstanding under the Directors' Plan.

- 27 -
<PAGE> 30
EMPLOYMENT CONTRACTS

Dr. Esposito entered into an agreement with the Company which commenced
January 1, 1996 and expires on December 31, 2000. The agreement requires Dr.
Esposito to devote his entire business time to the Company, not to compete with
the Company for a period of two years after termination of employment with the
Company and to assign to the Company all rights to technology discovered by him
during his employment. The agreement provides for an annual base salary of
$325,000 through December 31, 1998, and thereafter is subject to adjustment by
the Board, provided that it is not less than the prior year's base salary. Dr.
Esposito also is eligible to receive bonuses as determined by the Board. The
agreement provides for termination by the Company on thirty-six months' prior
notice or without notice upon payment of severance equal to thirty-six months'
salary and any bonus to which he would have been entitled.

Gregory C. Zakarian is employed under an agreement with the Company
which commenced May 1, 1995 and expires on April 30, 1998. Like Dr. Esposito's
agreement, Mr. Zakarian's agreement requires him to devote his entire business
time to the Company, not to compete with the Company for a period of two years
after termination of employment with the Company and to assign to the Company
all rights to technology discovered by him during his employment. The agreement
provides for an annual base salary of $145,000 through April 30, 1998, and
thereafter is subject to adjustment by the Board, provided that it is not less
than the prior year's base salary. Mr. Zakarian also is eligible to receive
bonuses as determined by the Board. The agreement provides for termination by
the Company on twelve months' prior notice or without notice upon payment of
severance equal to twelve months' salary and any bonus to which he would have
been entitled.

Theresa M. Stevens is employed under an agreement with the Company
which commenced October 1, 1997 and expires on September 30, 2000. Like Dr.
Esposito's agreement, Ms. Stevens' agreement requires her to devote her entire
business time to the Company, not to compete with the Company for a period of
two years after termination of employment with the Company and to assign to the
Company all rights to technology discovered by her during her employment. The
agreement provides for an annual base salary of $128,000 through September 30,
1998, and thereafter is subject to adjustment by the Board, provided that it is
not less than the prior year's base salary. Ms. Stevens also is eligible to
receive bonuses as determined by the Board. The agreement provides for
termination by the Company on six months' prior notice or without notice upon
payment of severance equal to six months' salary and any bonus to which she
would have been entitled. The agreement also provides that if Ms. Stevens is
terminated within one(1) year of a "change in control", related to such change
in control, then she will receive salary and benefits for a period of twelve
months, net of any employment earnings she may receive from other sources during
the twelve-month period.

AMENDED AND RESTATED STOCK OPTION PLAN

The Antex Biologics Inc. Amended and Restated Stock Option Plan (the
"Stock Option Plan") provides for the grant of stock options to purchase up to
an aggregate of 7,500,000 shares of the Company's authorized but unissued Common
Stock (subject to adjustment, in certain cases, including stock splits,
recapitalizations and reorganizations) to employees (including officers and
directors who are employees), to members of advisory boards to the Company and
to consultants and advisors to the Company. The options may be either "incentive
stock options" within the meaning of Section 422 of the Code, or non-statutory
options. Incentive stock options may be granted only to salaried employees
(including officers and directors who are employees). Approximately 28 persons
currently are eligible to participate in the Stock Option Plan.

The Stock Option Plan is administered by the Compensation Committee of
the Board of Directors, each member of which is a "disinterested person" within
the meaning of Rule 16b-3 under the Exchange Act. The Committee is responsible
for determining the individuals to whom options will be granted, the time or
times at which options will be granted, the designation of an option as either
an incentive stock option or a non-statutory stock option, the option exercise
price, the term of each option, the date or dates on which each option will
become exercisable and any other terms of the options, all subject to the
provisions of the Stock Option Plan.

The exercise price of an option may not be less than 50%, in the case
of a non-statutory option, and 100%, in the case of an incentive stock option,
of the fair market value of a share of Common Stock on the date the option is
granted. The term of an option may not exceed ten years. Notwithstanding the
foregoing, in the case of an incentive stock option granted to a person who at
the time of grant owns, directly or by attribution, stock possessing more than
10% of the total combined voting power of all classes of stock of the Company
and its affiliates, the

- 28 -
<PAGE> 31

exercise price of an option may not be less than 110% of the fair market value
of a share of Common Stock on the date of grant and the term of the option may
not exceed five years. During the optionee's lifetime, an option is exercisable
only by the optionee and is not transferable except by will or by the laws of
descent and distribution.

The exercise price of an option may be paid (i) in cash, (ii) if
authorized by the Committee, by delivery to the Company of shares of Common
Stock owned by the optionee having a fair market value equal to the aggregate
exercise price or (iii) by any other means authorized by the Committee,
including the delivery of a promissory note. If delivery of shares of Common
Stock in payment of the exercise price is permitted, an optionee could, through
a series of virtually simultaneous exercises and tenders of the shares received
upon exercise, exercise all exercisable options with a minimum initial
commitment of previously-owned shares. If payment of the exercise price is made
through a tender of shares, the Company will receive no cash consideration for
the sale of shares.

Upon the occurrence of a "change in control" of the Company (which is
defined by the Stock Option Plan to include (i) the acquisition by any person or
group of 50% or more of the combined voting power of the Company's outstanding
securities, (ii) certain changes in the composition of the Board of Directors
within a two year period, (iii) certain mergers or (iv) a liquidation or sale of
all or substantially all of the assets of the Company), all outstanding options
become immediately exercisable in full without regard to any otherwise
applicable vesting restrictions.

The Board of Directors may amend or terminate the Stock Option Plan at
any time; provided that the approval of the stockholders of the Company is
required to the extent necessary (i) to comply with Section 422 of the Code or
any successor provision with respect to incentive stock options or (ii) to
maintain compliance with Rule 16b-3 under the Exchange Act, with respect to
options granted to executive officers and to directors who are employees of the
Company.

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information as of April 10,
1997, regarding the beneficial ownership of the Company's common stock by (i)
each person known to the Company to own beneficially more than 5% of the
outstanding shares of common stock, (ii) each director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table,
and (iv) all directors and executive officers of the Company as a group. The
persons named in the table below have advised the Company that they have sole
voting power and sole investment power with respect to all shares of common
stock shown as beneficially owned by them, except where otherwise indicated.

<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENTAGE
NAME AND ADDRESS(1) BENEFICIALLY OWNED(2) OF CLASS(2)
------------------- --------------------- -----------
<S> <C> <C>

SmithKline Beecham Biologicals Manufacturing s.a. 7,732,276(3) 25.84%
Rue de L'Institut 89
B-1330 Rixensart
Belgium

Ruki Renov 2,191,472(4) 8.99%
c/o Kalman Renov
44 Wall Street
New York, N.Y. 10005

Esther Stahler 2,191,472(4) 8.99%
c/o Alan Stahler
44 Wall Street
New York, N.Y. 10005

V. M. Esposito, Ph.D. 2,443,435(5)(6)(7) 9.94%
</TABLE>

- 29 -

<PAGE> 32

<TABLE>
<S> <C> <C>
Charles J. Coulter 70,309(8) *

Bruce E. Elmblad 52,234(8) *

Donald G. Stark 106,024(9) *

Gregory C. Zakarian 555,834(10) 2.44%

Theresa M. Stevens 80,833(8) *

All directors and executive officers
(7 persons in group) 3,308,669(11) 13.02%
</TABLE>

- ----------

* less than 1%

(1) The address for all of the named individuals is c/o Antex Biologics
Inc., 300 Professional Drive, Gaithersburg, MD 20879, unless otherwise
noted.

(2) Pursuant to the rules of the Securities and Exchange Commission, shares
of common stock which an individual or group has a right to acquire
within 60 days pursuant to the exercise of options or warrants are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of
any other person shown in the table.

(3) In accordance with an exchange option agreement, includes 3,595,264
shares issuable upon the exchange of an existing ownership interest in
the Joint Venture; and 1,198,421 shares issuable upon the exercise of a
$1.0 million option to increase ownership interest in the Joint Venture
and the subsequent exchange of such additional ownership interest.
Additionally, in accordance with a warrant agreement, includes
2,938,591 shares issuable upon the exercise of warrants.

(4) Consists solely of shares issuable upon the exercise of options and
warrants arising from option granted to private placement agent.

(5) Excludes 39,083 shares that will be forfeited on May 11, 1998 in
accordance with the terms of the Escrow Arrangement.

(6) Includes 2,405,270 shares issuable upon the exercise of options
(excluding 20,003 options which will be forfeited on May 11, 1998 in
accordance with the terms of the Escrow Arrangement).

(7) Includes 20,000 shares owned by a trust of which Dr. Esposito's wife is
sole trustee and as to which he disclaims beneficial ownership.

(8) Consists solely of shares issuable upon the exercise of options.

(9) Includes 70,309 shares issuable upon the exercise of options.

(10) Includes 550,834 shares issuable upon the exercise of options
(excluding 6,666 options which will be forfeited on May 11, 1998 in
accordance with the terms of the Escrow Arrangement).

(11) Excludes 39,083 shares which will be forfeited on May 11, 1998 in
accordance with the terms of the Escrow Arrangement. Includes 3,229,789
shares issuable upon the exercise of options (excluding 26,669 options
which will be forfeited on May 11, 1998 in accordance with the terms of
the Escrow Arrangement).

DESCRIPTION OF SECURITIES

GENERAL

The Company's authorized capital stock consists of 95,000,000 shares of
Common Stock, par value $.01 per share, and 5,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). As of April 10, 1998, there
were 22,480,304 shares of Common Stock issued and outstanding. No shares of
Preferred Stock are issued and outstanding.

- 30 -
<PAGE> 33

COMMON STOCK

Holders of Common Stock are entitled to one vote for each share held of
record. The holders of the Common Stock have no preemptive rights or rights to
subscribe for additional shares or any conversion right or right of redemption.
Holders of the Common Stock are (i) entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefor and (ii) upon liquidation, are entitled to participate pro
rata in the assets of the Company available for distribution to the holders of
the Common Stock. All of the outstanding shares of Common Stock are fully paid
and nonassessable.

The Company's Certificate of Incorporation provides that any action
required or permitted to be taken by the stockholders of the Company may be
taken only at a duly called annual or special meeting of the stockholders and
special meetings may be called only by the Board of Directors or the President.
These provisions could have the effect of delaying until the next stockholders
meeting stockholder actions which are favored by the holders of a majority of
the outstanding voting securities of the Company. These provisions may also
discourage another person or entity from making a tender offer for the Common
Stock, because such person or entity, even if it acquired a majority of the
outstanding voting securities of the Company, would be able to take action as a
stockholder (such as approving a merger) only at a duly called stockholders
meeting, and not by written consent.

PRIVATE PLACEMENT UNIT PURCHASE OPTION

In connection with the Private Placement, the Company issued to D.H.
Blair Investment Banking Corp., the placement agent for the Private Placement, a
Unit Purchase Option (the "Private Placement Unit Purchase Option"), to purchase
up to 24.67 Units (the "Private Placement Units"), each Private Placement Unit
consisting of 142,860 shares of Common Stock and an equal number of Class B
Warrants, at an exercise price of $50,000 per Private Placement Unit. The
Private Placement Unit Purchase Option is exercisable for the two year period
beginning on March 24, 1998, and is transferrable commencing as of the date of
issuance. Neither the Private Placement Unit Purchase Option nor the underlying
securities are being offered for sale pursuant to this Prospectus.

TRANSFER AND WARRANT AGENT

American Stock Transfer & Trust Company, New York, New York, serves as
the Transfer Agent for the Common Stock.

SELLING SECURITY HOLDERS

The following table sets forth certain information with respect to the
Selling Security Holders and the shares of Common Stock covered by this
Prospectus. The number of shares of Common Stock indicated as owned represent
(i) those shares purchased by the Selling Security Holder in the Private
Placement or directly or indirectly from a purchaser of the shares in the
Private Placement and (ii) those shares acquired by the Selling Security Holder
upon exercise of Class B Warrants. Some of the Selling Security Holders may
already have sold some or all of the shares of Common Stock shown as owned by
them.

With the exception of Donald G. Stark, who is a director of the
Company, none of the Selling Security Holders has been a director, officer or
employee of, or has had any material relationship with, the Company or its
predecessor. The Selling Security Holders may own additional shares of Common
Stock that are not covered by this Prospectus and, accordingly, the Company is
not aware of the extent to which a Selling Security Holder, upon the completion
of the sale of the shares of Common Stock covered by this Prospectus, may
continue to own other shares of Common Stock.
<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned To Be Sold
----------------------- ------------ ----------
<S> <C> <C>
1. Magid M. Abraham
Common Stock 285,720 285,720

2. Jeffrey Anderson
Common Stock 142,860 142,860
</TABLE>

- 31 -
<PAGE> 34

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ----------
<S> <C> <C>
3. Eric C. Appolonia
Common Stock 142,860 142,860

4. John Augustyn
Common Stock 142,860 142,860

5. The Aries Fund
Common Stock 142,860 142,860

6. The Aries Domestic Fund LP
Common Stock 285,720 285,720

7. William H. Baker and
Ann V. Baker, JT
Common Stock 142,860 142,860

8. George H. Baldwin, Jr.
Common Stock 285,720 285,720

9. Paul A. Balsamo
Common Stock 71,430 71,430

10. Charles A. Beach and
Elizabeth M. Beach, JT
Common Stock 142,860 142,860

11. Robert S. Benach and
Sonia T. Benach, JT
Common Stock 142,860 142,860

12. Howard Berg, M.D.
Common Stock 142,860 142,860

13. Donald P. Boggs
Common Stock 71,430 71,430

14. Midocean Trust Limited TTEE
for the Bressman Family Trust
Common Stock 571,440 571,440

15. Bridge Publishing
Common Stock 142,860 142,860

16. Morris L. Brunson
Common Stock 571,440 571,440

17. Claude L. Buller
Common Stock 285,720 285,720

18. Robert D. Burke, M.D.
Common Stock 142,860 142,860

19. Andrew P. Carter, Jr.
Common Stock 285,720 285,720

20. Jack Chehebar
Common Stock 142,860 142,860
</TABLE>

- 32 -
<PAGE> 35

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ----------
<S> <C> <C>
21. C.L.F.S., Ltd.
Common Stock 142,860 142,860

22. Mark H. Cohen and
Mary Jane P. Cohen, JT
Common Stock 142,860 142,860

23. Betty Cornell
Common Stock 285,720 285,720

24. Dr. Michael L. Darby and
Kelly O. Darby, JT
Common Stock 142,860 142,860

25. Michael H. Davidson, M.D.
Common Stock 142,860 142,860

26. Diane Doppelt and
Jeffrey Doppelt, TIC
Common Stock 285,720 285,720

27. Robert Doyon and
Pauline Doyon, JT
Common Stock 571,440 571,440

28. Jules H. Dreyfuss
Common Stock 285,720 285,720

29. Jonathan Elias and Irene Elias,
Tenants by the Entirety
Common Stock 142,860 142,860

30. William Embry and
Helen M. Embry, JT
Common Stock 142,860 142,860

31. Ralph Falk, II
Common Stock 285,720 285,720

32. Leonard R. Farber
Common Stock 142,860 142,860

33. Bruce Fetzer and
D'Arbra Fetzer, JT
Common Stock 142,860 142,860

34. Stephen Ficchi
Common Stock 71,430 71,430

35. Brian Frank
Common Stock 142,860 142,860

36. Melrene Friedler
Common Stock 285,720 285,720

37. Garrett Associates, Inc.
Common Stock 71,430 71,430

38. Jerome Gilbert
Common Stock 142,860 142,860
</TABLE>

- 33 -
<PAGE> 36

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ----------
<S> <C> <C>
39. Mark Gilder and
Judy Gilder, JT
Common Stock 71,430 71,430

40. Marvin A. Ginsburg and
Sheila Weiss Ginsburg, JT
Common Stock 71,430 71,430

41. Jeffrey Goffman
Common Stock 142,860 142,860

42. Irving Goldman
Common Stock 285,720 285,720

43. Goldstein Family Loving Trust
Common Stock 142,860 142,860

44. Paul Goslin
Common Stock 142,860 142,860

45. Charles Grodin
Common Stock 142,860 142,860

46. Guaranty and Trust Co. TTEE
Richard Hofmann IRA
Common Stock 71,430 71,430

47. Franklin Gutman and
Laurie Gutman, JT
Common Stock 71,430 71,430

48. William M. Hager
Common Stock 71,430 71,430

49. Raymond Haysbert
Common Stock 71,430 71,430

50. James J. Higbee
Common Stock 71,430 71,430

51. Birte Hofmann
Common Stock 71,430 71,430

52. Holistic Chiropractic Center
Common Stock 71,430 71,430

53. Samuel J. Holtzman Trust
FBO AMND REINSTD 2/8/94
Common Stock 142,860 142,860

54. Trevor W. Hunt
Common Stock 285,720 285,720

55. George R. Isely and
Judith A. Isely, JT
Common Stock 142,860 142,860

56. Stephen Baldwin Jayne
Common Stock 142,860 142,860

</TABLE>

- 34 -
<PAGE> 37

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ----------
<S> <C> <C>
57. Peter M. Kash and
Donna F. Kash, JT
Common Stock 142,860 142,860

58. Stephen J. Kornfeld and
Janice T. Kornfeld, JT
Common Stock 71,430 71,430

59. Randall H. Leisure
Common Stock 142,860 142,860

60. Charles Leithauser
Common Stock 285,720 285,720

61. George Lionikis, Sr.
Common Stock 142,860 142,860

62. Dr. Joseph Litner
Common Stock 214,290 214,290

63. Jeffrey A. Lotz and
Patricia E. Lotz, JT
Common Stock 71,430 71,430

64. Joseph O. Manzi
Common Stock 571,440 571,440

65. Gary R. Marano
Common Stock 71,430 71,430

66. Brian Mclean
Common Stock 142,860 142,860

67. Michael F. Merollis
Common Stock 71,430 71,430

68. Joseph Migliarese
Revocable Trust
Common Stock 71,430 71,430

69. Minmetals, Inc.
Common Stock 142,860 142,860

70. Victor Molinsky
Common Stock 142,860 142,860

71. Patrick Morgan and
Ruth Morgan, JT
Common Stock 71,430 71,430

72. Richard A. Nelson and
Elaine M. Nelson, JT
Common Stock 285,720 285,720

73. John New and
Rita New, JT
Common Stock 142,860 142,860

74. Orion Research
Common Stock 142,860 142,860
</TABLE>

- 35 -
<PAGE> 38

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ---------
<S> <C> <C>
75. Steven N. Ostrovsky
Common Stock 285,720 285,720

76. Pacific Northwest Trust -- FBO
Patrick D. Morgan -- SEP 71,430 71,430
Common Stock

77. Barry Paley
Common Stock 142,860 142,860

78. Alan N. Parnes, D.D.S.
Common Stock 71,430 71,430

79. Irwin H. Parnes
Common Stock 71,430 71,430

80. Michael Patoff and
Mary Patoff, JT
Common Stock 357,150 357,150

81. Robert M. Patton
Common Stock 285,720 285,720

82. Gary R. Perrine and
Rebecca C. Perrine, JT
Common Stock 142,860 142,860

83. Joseph V. Perrotta
Common Stock 71,430 71,430

84. Donald W. Peterson
Common Stock 71,430 71,430

85. James R. Pinke, M.D.
Common Stock 142,860 142,860

86. PLM Trust Farm Partnership
Common Stock 71,430 71,430

87. Dr. Stephen Posovsky
Money Purchase Keogh
Plan & Trust
Common Stock 71,430 71,430

88. Joseph R. Pugni
Common Stock 71,430 71,430

89. Steven Richman
Common Stock 142,860 142,860

90. Fred Rosen
Common Stock 71,430 71,430

91. Sidney Rosen
Common Stock 285,720 285,720

92. Elaine Rubin
Common Stock 285,720 285,720
</TABLE>

- 36 -
<PAGE> 39

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ---------
<S> <C> <C>
93. August J. Saccoccio
Common Stock 142,860 142,860

94. Charles Sacks
Common Stock 71,430 71,430

95. Renolt Samaan
Common Stock 71,430 71,430

96. Barry Shemaria
Common Stock 142,860 142,860

97. Lee H. Silverstein,
D.D.S, M.S.
Common Stock 71,430 71,430

98. Bryan Simmons
Common Stock 142,860 142,860

99. Cynthia A. Simmons
Common Stock 71,430 71,430

100. Harold Singer
Common Stock 71,430 71,430

101. Eugene L. Snowden
Common Stock 71,430 71,430

102. Leonard A. Solomon
Common Stock 142,860 142,860

103. Ricky Solomon
Common Stock 71,430 71,430

104. Peter M. Speier and
Janyce Speier, JT
Common Stock 142,860 142,860

105. Dr. George Spiegel
Common Stock 142,860 142,860

106. Samuel R. Staggers
Common Stock 71,430 71,430

107. Donald G. Stark
Common Stock 71,430 71,430

108. STD Partners
Common Stock 142,860 142,860

109. Sterling Corp.
Common Stock 142,860 142,860

110. Faye L. Stilley
Common Stock 142,860 142,860

111. Bernard Strassner and
Bernice Strassner, JT
Common Stock 142,860 142,860
</TABLE>

- 37 -
<PAGE> 40

<TABLE>
<CAPTION>
Number To
Selling Security Holder Number Owned Be Sold
----------------------- ------------ ----------
<S> <C> <C>
112. Dennis Su
Common Stock 142,860 142,860

113. Eugene S. Sumner
Common Stock 285,720 285,720

114. Donna W. Timmerman
Common Stock 285,720 285,720

115. Terry Sports, Inc.
Common Stock 285,720 285,720

116. Douglas M. Trabilcy
Common Stock 571,440 571,440

117. Urgent Care Corp
P/S Robert Juranek
Common Stock 142,860 142,860

118. George Wailand
Common Stock 142,860 142,860

119. Charles Xue
Common Stock 285,720 285,720

120. Harold Yordy and
Phyllis Yordy, JT
Common Stock 71,430 71,430

121. Herman L. Zeller
Common Stock 142,860 142,860

122. Murray Zung
Common Stock 71,430 71,430
</TABLE>

PLAN OF DISTRIBUTION

MANNER OF DISTRIBUTION BY THE SELLING SECURITY HOLDERS

The Company has been advised by the Selling Security Holders that the
shares of Common Stock to be sold by the Selling Security Holders may be sold
by them from time to time directly to purchasers in privately negotiated
transactions. Alternatively, the Selling Security Holders may, from time to
time, offer the shares of Common Stock for sale in the over-the-counter market
through or to securities brokers or dealers that may receive compensation in
the form of discounts, concessions, or commissions from the Selling Security
Holders. The Selling Stock Holders, and any dealers or brokers that
participate in the distribution of the shares of Common Stock may be deemed to
be "underwriters" as that term is defined by the Securities Act, and any profit
on the sale of shares of Common Stock by them, and any discounts, commissions,
or concessions received by any such dealers or brokers, may be deemed to be
underwriting discounts and commissions under the Securities Act.

The Company has advised the Selling Security Holders that during such
time as they may be engaged in a distribution of Common Stock included herein,
they are required to comply with the Securities Act, any rule or regulation
under the Securities Act, and Regulation M under the Exchange Act.

REGISTRATION OF THE COMMON STOCK

The Company has undertaken to use its best efforts to cause the
Registration Statement (as hereinafter defined) under the Securities Act
registering the shares of Common Stock for resale by the Selling Security
Holders to remain effective until such time as all of the shares of Common
Stock issued upon exercise of the Class B Warrants issued in the Private
Placement may be sold without volume limitations under Rule 144 under the
Securities

- 38 -
<PAGE> 41

Act. The Company has agreed to pay all fees, costs and expenses incidental to
the registration of the Registration Statement, except that the Selling Security
Holders have agreed to bear their pro rata share of any underwriting discounts
and commissions and transfer taxes. The costs to be borne by the Company
include, without limitation, all registration, filing and NASD fees, printing
expenses, fees and disbursements of counsel and accountants for the Company, and
all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which such shares are to be
registered and qualified. The fees and disbursements of counsel and accountants,
if any, retained by the Selling Security Holders, and any other expenses
incurred by the Selling Security Holders not expressly provided for in the
individual subscription agreements between the initial purchaser of the Common
Stock and Class B Warrants and the Company, will be borne by the Selling
Security Holders.

LEGAL MATTERS

The validity of the securities offered hereby will be passed upon for
the Company by Covington and Burling, Washington, D.C., counsel to the Company.

EXPERTS

The consolidated balance sheets of the Company as of December 31, 1996
and 1997, and the consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the years then ended and for the period January 1,
1993 to December 31, 1997 have been audited by Coopers & Lybrand L.L.P.,
independent accountants, as set forth in their report thereon appearing in the
Prospectus, and are so included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports and other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information can be inspected and copied at
the public reference facilities of the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549; Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661; and 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such materials can be obtained from the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.

The Company has filed with the Commission a Registration Statement on
Form SB-2 (the "Registration Statement") under the Securities Act with respect
to the securities being 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
securities being offered hereby, reference is made to the Registration
Statement, exhibits and schedules, which may be inspected without charge at the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. Reference is made to the copies of any contracts or
other documents filed as exhibits to the Registration Statement. The Commission
maintains a website that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The address of the Commission's website is http://www.sec.gov.

- 39 -
<PAGE> 42

<TABLE>
<CAPTION>
INDEX TO FINANCIAL STATEMENTS

<S> <C>
Report of Independent Accountants, on Audited Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-2

Consolidated Balance Sheets as of December 31, 1996 and 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-3

Consolidated Statements of Operations for the years ended December 31, 1996 and 1997
and the period August 3, 1991 (inception) to December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . F-4

Consolidated Statements of Stockholders' Equity (Deficit) for the period August 3, 1991 (inception) to December 31, 1997 . F-5

Consolidated Statements of Cash Flows for the years ended December 31, 1996 and 1997
and the period August 3, 1991 (inception) to December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . F-7

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-9
</TABLE>

F-1
<PAGE> 43
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Antex Biologics Inc.

We have audited the accompanying consolidated balance sheets of Antex
Biologics Inc. and its subsidiary (a development stage enterprise) as of
December 31, 1996 and 1997, and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for the years then
ended and for the period January 1, 1993 to December 31, 1997. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits. We did not audit the financial statements of the Company for the
period from August 3, 1991 (inception) to December 31, 1992. The financial
statements for the period August 3, 1991 (inception) to December 31, 1992 were
audited by other auditors, whose report, dated February 28, 1993, expressed an
unqualified opinion on those statements.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Antex
Biologics Inc. and its subsidiary as of December 31, 1996 and 1997, and the
consolidated results of their operations and their cash flows for the years then
ended and for the period January 1, 1993 to December 31, 1997 in conformity with
generally accepted accounting principles.

Coopers & Lybrand L.L.P.

McLean, Virginia
February 27, 1998

F-2
<PAGE> 44
Antex Biologics Inc.
(a development stage enterprise)

<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
1996 1997
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,918,836 $5,697,156
Restricted cash 300,000 -
Accounts and other receivables 95,668 712,906
Prepaid expenses and deposits 247,717 272,917
---------- ---------
Total current assets 7,562,221 6,682,979
Property and equipment, net 537,113 446,861
Prepaid expenses 151,667 -
Deferred compensation trust 191,189 229,405
--------- ---------
$8,442,190 $7,359,245
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 272,119 $ 531,345
Deferred research and development revenue 744,198 554,152
Deferred gain on sale and leaseback 349,857 -
Obligation under capitalized lease 451,412 -
--------- -----------
Total current liabilities 1,817,586 1,085,497
Deferred gain on equipment - 106,983
Deferred compensation 191,189 229,405
Excess of fair value over cost of net assets acquired, net of
accumulated amortization of $152,944 and $181,180 129,409 101,173
Other 45,219 19,647

Commitments and contingencies

Stockholders' equity:
Preferred stock, $.01 par value; 5,000,000 shares
authorized; none outstanding - -
Common stock, $.01 par value; 95,000,000 shares
authorized; 22,479,679 and 22,480,304 shares
issued and outstanding 224,797 224,803
Additional paid-in capital 17,752,416 17,752,839
Deficit accumulated during the development stage (11,718,426) (12,161,102)
---------- ----------
Total stockholders' equity 6,258,787 5,816,540
---------- ----------
$8,442,190 $7,359,245
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-3
<PAGE> 45
Antex Biologics Inc.
(a development stage enterprise)

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED
DECEMBER 31 AUGUST 3, 1991
--------------------- (INCEPTION)
TO
1996 1997 DECEMBER 31, 1997
---- ---- -----------------
<S> <C> <C> <C>
Revenues $3,827,111 $4,755,712 $ 9,454,898
---------- ---------- -----------

Expenses:
Research and development 2,154,047 3,859,116 13,258,751
General and administrative 1,251,556 1,643,189 8,598,058
--------- --------- ---------
Total expenses 3,405,603 5,502,305 21,856,809
--------- --------- ----------

Income (loss) from operations 421,508 (746,593) (12,401,911)

Other income (expense):
Interest income 228,966 314,040 949,166
Interest expense (115,039) (10,123) (708,357)
----------- ----------- -----------

Net income (loss) $ 535,435 $ (442,676) $(12,161,102)
========== =========== ============

Earnings (loss) per share:
Basic $0.03 $(0.02)
===== =======
Diluted $0.02 $(0.02)
===== =======

Weighted average shares
outstanding:
Basic 16,745,540 22,188,172
========== ==========
Diluted 26,100,006 22,188,172
========== ==========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-4
<PAGE> 46
Antex Biologics Inc.
(a development stage enterprise)

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)

For the Period August 3, 1991 (inception) to December 31, 1997
<S> <C>
Initial capitalization ($.20 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1991 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sale of common stock for cash, January 1992 ($4.61 per share) . . . . . . . . . . . . . . . . . . . . . . .
Sale of common stock for cash, February 1992 ($6.90 per share) . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock for services, March 1992 to July 1992 ($2.00 per share) . . . . . . . . . . . . .
Conversion of notes payable into preferred stock, September 1992 ($4.48 per share) . . . . . . . . . . . .
Sale of preferred stock for cash, September 1992 ($4.48 per share) . . . . . . . . . . . . . . . . . . . .
Issuance of preferred stock upon exercise of warrants, September 1992
($1.92 per share) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of common stock for cash ($1.00 per share) and services ($1.00
per share), October 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of preferred stock into common stock, December 1992 . . . . . . . . . . . . . . . . . . . . . .
Sale of common stock and warrants for cash, December 1992 ($4.84 per unit,
net of offering costs of $1,396,893 or $1.16 per unit) . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1992 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sale of common stock and warrants for cash, January 1993 ($5.27 per
unit, net of offering costs of $131,723 or $.73 per unit) . . . . . . . . . . . . . . . . . . . . . . .
Compensation and consulting expense in connection with options granted . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Sale of common stock and warrants for cash, March and April 1995 ($39,972 per unit, net of offering
costs of $706,971 or $10,028 per unit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Required registration of common stock and warrants, October 1995 ($1,525 per unit) . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-5
<PAGE> 47

<TABLE>
<CAPTION>
DEFICIT
PREFERRED STOCK COMMON STOCK ACCUMULATED
- ------------------------------------------------------------------ ADDITIONAL DURING THE
PAID-IN DEVELOPMENT
SHARES PAR VALUE SHARES PAR VALUE CAPITAL STAGE TOTAL
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- $ - 390,830 $ 3,908 $ 74,093 $ - $ 78,001
- - - - - (941,145) (941,145)

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

- - 390,830 3,908 74,093 (941,145) (863,144)

- - 43,430 435 199,565 - 200,000
- - 115,801 1,158 798,842 - 800,000
- - - - 383,014 - 383,014
113,700 1,137 - - 507,972 - 509,109
89,328 893 - - 399,296 - 400,189

46,900 469 - - 89,531 - 90,000

- - 75,000 750 149,250 - 150,000
(249,928) (2,499) 249,928 2,499 - - -

- - 1,200,000 12,000 5,791,227 - 5,803,227
- - - - - (2,415,723) (2,415,723)

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

- - 2,074,989 20,750 8,392,790 (3,356,868) 5,056,672

- - 180,000 1,800 946,477 - 948,277
- - - - 64,011 - 64,011
- - - - - (2,725,902) (2,725,902)

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

- - 2,254,989 22,550 9,403,278 (6,082,770) 3,343,058
- - - - - (3,040,032) (3,040,032)

- -------------------------------------------------------------------------------------------------------------------------
- - 2,254,989 22,550 9,403,278 (9,122,802) 303,026

- - 10,071,630 100,716 2,717,314 - 2,818,030
- - - - (107,530) - (107,530)
- - - - - (3,131,059) (3,131,059)

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

- - 12,326,619 123,266 12,013,062 (12,253,861) (117,533)
</TABLE>

F-5
<PAGE> 48
Antex Biologics Inc.
(a development stage enterprise)

<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)

For the Period August 3, 1991 (inception) to December 31, 1997
<S> <C>
Issuance of exchange option, May 1996 ($.37 per share, net of related costs of $351,082) . . . . . . . . .
Issuance of common stock upon exercise of Class B Warrants and stock options, May - August 1996,
($.50 per share, net of related costs of $214,811) . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Issuance of common stock upon excise of stock options, October 1997 . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Balance at December 31, 1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-6
<PAGE> 49

<TABLE>
<CAPTION>
DEFICIT
PREFERRED STOCK COMMON STOCK ACCUMULATED
- ---------------------------------------------------------------- ADDITIONAL DURING THE
PAID-IN DEVELOPMENT
SHARES PAR VALUE SHARES PAR VALUE CAPITAL STAGE TOTAL
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>

- $ - - $ - $ 979,166 $ - $ 979,166
- - 10,153,060 101,531 4,760,188 - 4,861,719
- - - - - 535,435 535,435

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

- - 22,479,679 224,797 17,752,416 (11,718,426) 6,258,787
- - 625 6 423 - 429
- - - - - (442,676) (442,676)

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

- $ - 22,480,304 $224,803 $17,752,839 $(12,161,102) $5,816,540

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

</TABLE>

F-6
<PAGE> 50

Antex Biologics Inc.
(a development stage enterprise)

CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

YEAR ENDED
DECEMBER 31 AUGUST 3, 1991
---------------------- (INCEPTION)
TO
1996 1997 DECEMBER 31, 1997
---- ---- -----------------

OPERATING ACTIVITIES
Net income (loss) $ 535,435 $ (442,676) $(12,161,102)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:

Depreciation and amortization of
property and equipment, net of
amortization of deferred gain on
sale/leaseback and equipment 47,334 80,688 196,865
Amortization of deferred credits (51,183) (53,807) (341,960)
Expense recorded on issuance of
common stock and vesting of options - - 531,134

Changes in operating assets
and liabilities:
Accounts and other receivables 48,798 (617,238) (712,906)
Prepaid expenses and deposits (216,001) 126,467 (156,675)
Accounts payable and accrued
expenses 73,607 259,226 98,765
Deferred research and development 744,198 (220,612) 523,586
Deferred option payment (250,000) - -
Due from affiliate - - 420,448
------------- ----------- ---------------
Net cash provided by (used in)
operating activities 932,188 (867,952) (11,601,845)
------------- ----------- ---------------

INVESTING ACTIVITIES
Purchase of property and equipment (156,499) (202,745) (506,178)
Decrease in restricted cash - 300,000 -
------------- ----------- ---------------
Net cash provided by (used in)
investing activities (156,499) 97,255 (506,178)
------------- ----------- ---------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

(Continued)

F-7
<PAGE> 51
Antex Biologics Inc.
(a development stage enterprise)

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>

YEAR ENDED
DECEMBER 31 AUGUST 3, 1991
---------------------- (INCEPTION)
TO
1996 1997 DECEMBER 31, 1997
---- ---- -----------------
<S> <C> <C> <C>

FINANCING ACTIVITIES
Net proceeds from sales of common stock
and warrants and the exchange option $ 979,166 $ - $ 11,516,170
Net proceeds from exercise of warrants
and stock options 4,861,719 429 4,862,148
Proceeds from sale and leaseback
agreement - - 2,164,792
Principal repayments on sale and
leaseback agreement (601,689) (451,412) (2,164,792)
Proceeds from issuance of notes payable - - 500,000
Proceeds from sale of preferred stock - - 400,189
Proceeds from exercise of warrants - - 90,000
------------ ----------- -----------
Net cash provided by (used in)
financing activities 5,239,196 (450,983) 17,368,507
------------ ----------- -----------
Net increase (decrease) in cash and
cash equivalents 6,014,885 (1,221,680) 5,260,484

Cash and cash equivalents at
beginning of period 903,951 6,918,836 436,672
------------ ----------- -----------

Cash and cash equivalents at
end of period $ 6,918,836 $ 5,697,156 $ 5,697,156
============ =========== ===========

Supplemental cash flows disclosures:

Notes payable and accrued interest
converted to preferred stock $ - $ - $ 509,109
============ =========== ===========
Sale and leaseback of property and
equipment $ - $ - $ 2,099,175
============ =========== ===========
Capitalized equipment $ - $ 152,832 $ 152,832
============ =========== ===========
Deferred compensation $ 29,739 $ 38,216 $ 229,405
============ =========== ===========
Interest paid $ 115,039 $ 10,123 $ 699,248
============ =========== ===========
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-8
<PAGE> 52
Antex Biologics Inc.
(a development stage enterprise)
Notes to Consolidated Financial Statements

1. BUSINESS

Antex Biologics Inc. (the "Company") is a biopharmaceutical company
committed to improving health by developing new products to prevent and treat
infectious diseases and related disorders. With respect to its human bacterial
vaccine research and development, the Company currently has a strategic alliance
with SmithKline Beecham and technology license agreements with Pasteur Merieux
Connaught and the United States Navy.

Since inception, the Company's revenues have been generated solely in
support of its research and development activities and as of December 31, 1997,
the Company's research and products are not sufficiently developed to enable the
Company to generate sufficient revenues on an ongoing basis. As a result, the
Company is considered to be in the development stage.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF CONSOLIDATION

The financial statements include the accounts of Antex Biologics Inc. and
its 73.75% owned subsidiary, MicroCarb Human Vaccines Inc., incorporated in
April 1996. All intercompany transactions have been eliminated.

CASH EQUIVALENTS

The Company considers all short-term, highly liquid investments with an
original maturity of three months or less to be cash equivalents. The Company
invests its excess cash in a money market fund with a major bank. This fund
invests in securities of the U.S. Government. The Company has not had any losses
on its cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment acquired are stated at cost and depreciated on a
straight-line basis over estimated useful lives of five years. When assets are
retired or sold, the cost and related accumulated depreciation are removed from
the accounts, and any related gain or loss is reflected in operations.
Expenditures for maintenance, repairs and minor renewals are charged to
operations.

EXCESS OF FAIR VALUE OVER COST OF NET ASSETS ACQUIRED

The excess of fair value over cost of net assets acquired resulting from
the acquisition of the Company on August 3, 1991 is being amortized over a
period of ten years, using the straight-line method, and is included in general
and administrative costs on the statements of operations. The amounts of
$28,236, $28,236, and $181,180 have been reflected as contra-expenses for the
years

F-9
<PAGE> 53
Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

ended December 31, 1996 and 1997, and for the period August 3, 1991 (inception)
to December 31, 1997, respectively.

REVENUE RECOGNITION

Cash payments received in advance of performing contracted research and
development services are recorded as deferred revenue until the services are
performed.

Revenue equal to expenses incurred by the Company which are directly
reimbursable pursuant to the provisions of the strategic alliance is recognized
when the related expenses are incurred.

Milestone payments are recognized as revenue when earned.

RESEARCH AND DEVELOPMENT COSTS

Research and development costs are expensed as incurred.

INCOME TAXES

Deferred income taxes are recognized for the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year end based on enacted tax laws and
statutory tax rates applicable to the periods in which the differences are
expected to affect taxable income. Valuation allowances are established when
necessary to reduce net deferred tax assets to the amount expected to be
realized. Income tax expense is the tax payable for the period and the change
during the period in deferred tax assets and liabilities.

EARNINGS PER SHARE

In 1997, the Company adopted Statement of Financial Accounting Standards
No. 128 ("SFAS 128"), Earnings per Share. Basic earnings per share is computed
by dividing net income (loss) available to common shareholders by the weighted
average number of common shares outstanding during the period. Diluted earnings
per share is computed by dividing net income (loss) available to common
shareholders by the weighted average number of common shares outstanding after
giving effect to all dilutive potential common shares that were outstanding
during the period. The Company did not have any dilutive potential common shares
during the year ended December 31, 1997. Net income (loss) as reported is
available to common shareholders and was not adjusted for the computation of
basic or diluted earnings per share. Earnings per share for the year ended
December 31, 1996 has been restated to conform to SFAS 128.

The following table reconciles the weighted average number of common
shares outstanding during each year for basic earnings per share with the
comparable amount for diluted earnings per share.

F-10
<PAGE> 54
Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

Weighted average shares outstanding 17,037,203 22,479,835
Escrowed shares (291,663) (291,663)
----------- -----------
Weighted average shares outstanding -
basic 16,745,540 22,188,172
Dilutive potential common shares 9,354,466 -
---------- ----------
Weighted average shares outstanding -
diluted 26,100,006 22,188,172
========== ==========
</TABLE>

NEW ACCOUNTING STANDARDS

The Financial Accounting Standards Board has issued two new standards
which become effective for reporting periods beginning after December 15, 1997.
SFAS 130, Reporting Comprehensive Income, requires additional disclosures with
respect to certain changes in assets and liabilities that previously were not
required to be reported as results of operations for the period. The Company
will begin making the additional disclosures required by SFAS 130 in the first
quarter of 1998. SFAS 131, Disclosures about Segments of an Enterprise and
Related Information, requires financial and descriptive information with respect
to "operating segments" of an entity based on the way management disaggregates
the entity for making internal operating decisions. The Company will begin
making the disclosures required by SFAS 131 with financial statements for the
year ending December 31, 1998.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31
1996 1997
---------- -----------

<S> <C> <C>
Research and development equipment $ 1,996,028 $ 2,319,304
</TABLE>

F-11
<PAGE> 55
Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

<TABLE>
<S> <C> <C>
Office equipment 88,737 93,709
Leasehold improvements 317,843 320,772
Construction in progress - 24,400
---------- ----------
2,402,608 2,758,185
Accumulated amortization and depreciation (1,865,495) (2,311,324)
----------- -----------
$ 537,113 $ 446,861
========== ==========
</TABLE>

In August 1993, the Company entered into a $2,164,792 sale and leaseback
agreement covering substantially all of the Company's then existing research and
development equipment, furniture and fixtures, and leasehold improvements.
Effective February 28, 1997, the Company prepaid the remaining outstanding
principal balance and reacquired the related assets for $1.

4. INCOME TAXES

Significant components of the net deferred tax asset are as follows:

<TABLE>
<CAPTION>
DECEMBER 31
1996 1997
---- ----
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards
generated $ 4,424,400 $ 4,589,700
Research and development tax credit
carryforwards 226,100 226,100
Other deferred tax assets 482,200 431,400
----------- -----------
5,132,700 5,247,200
Valuation allowance (5,132,700) (5,247,200)
----------- -----------

Net deferred tax asset $ - $ -
=========== ===========
</TABLE>

Management has provided a full valuation allowance against total deferred
tax assets as of the balance sheet dates because the Company's ability to
generate sufficient future taxable income is uncertain.

As of December 31, 1997, the Company had net operating loss carryforwards
of approximately $11,884,000 for federal and state tax reporting purposes which
will expire in years 2006 to 2012. Due to certain changes in ownership, the
Company's ability to utilize tax net operating loss carryforwards arising prior
to April 1995 is limited.

5. COMMITMENTS AND CONTINGENCIES

LEASE OBLIGATION

F-12
<PAGE> 56

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

The Company leases research facilities and office space pursuant to a
noncancelable operating lease expiring in January 1999. The lease provides for
fees for excess utility usage and administrative services and scheduled
increases in rental payments. Rent expense was approximately $224,000,
$232,000 and $1,350,000 for the years ended December 31, 1996 and 1997, and the
period August 3, 1991 (inception) to December 31, 1997, respectively. Future
minimum lease payments are as follows:

<TABLE>
<CAPTION>
YEAR ENDING DECEMBER 31 AMOUNT
----------------------- ------

The Company is currently in negotiations to extend its lease and to
increase its total space to approximately 25,000 square feet.

LICENSES

The Company has two licenses for exclusive rights for issued and pending
patent applications that are co-owned. Under both, if the Company fails to pay
certain royalty levels for certain products by 1998 or 2001, as the case may be,
the licensor may convert the licenses to non-exclusive licenses.

Royalties are expensed as incurred.

ENVIRONMENTAL MATTERS

6. STRATEGIC ALLIANCE

On May 7, 1996, the Company executed definitive agreements with SmithKline
Beecham Corporation and SmithKline Beecham Biologicals Manufacturing s.a.
("SmithKline"), effective March 1, 1996, which established a corporate joint
venture, MicroCarb Human Vaccines Inc. ("MCHV"), to develop and commercialize
human bacterial vaccines utilizing the Company's proprietary technologies. The
agreements provide for the following: a payment of $3,000,000 to the Company in
connection with SmithKline's acquisition of a 26.25% equity interest in MCHV;

F-13
<PAGE> 57

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

payments totalling $2,400,000 and $2,600,000 to the Company to fund research and
development for the first and second years, respectively, with SmithKline having
the option to fund future years; two separate options granted to SmithKline
expiring October 1, 1997 and 1998, respectively, to acquire from the Company
additional equity interests in MCHV; an exchange option granted by the Company
to SmithKline enabling SmithKline to convert its equity interest in MCHV for up
to 4,793,685 shares of the Company's common stock, under specified conditions;
and a warrant granted by the Company to SmithKline enabling SmithKline to
acquire up to 7,682,637 shares of the Company's common stock, under specified
conditions, and only to the extent that stipulated options and warrants
previously granted and outstanding as of the date of the establishment of the
strategic alliance are exercised. The agreements also provide for SmithKline to
make milestone payments and pay royalties to MCHV; and for SmithKline to
reimburse the Company for expenses the Company incurs for agreed upon production
lots of vaccines for clinical trials, the conduct of agreed upon clinical
trials, and agreed upon prosecution and maintenance of the Company's patents and
patent applications. As further stipulated in the agreements, SmithKline will be
responsible for conducting additional clinical trials, manufacturing, and sales
and distribution.

With respect to the $3,000,000 the Company received in 1996 for the equity
interest purchase, $1,330,248, representing the portion applicable to the
exchange option granted by the Company, has been reflected as additional paid-in
capital, net of related legal fees.

The first option to acquire an additional equity interest in MCHV expired
on October 1, 1997. Effective November 1, 1997, in accordance with the
provisions of the SmithKline warrant, the maximum number of warrants exercisable
was reduced to 5,761,978.

7. TECHNOLOGY LICENSE AGREEMENTS

In December 1994, the Company entered into a technology license agreement
with Pasteur Merieux Connaught , whereby the Company granted an exclusive
license to develop, produce and market any product using the Company's
Haemophilus influenzae nontypeable Hin47 adhesion protein in all countries other
than those of the Asia-Pacific region, as defined. The Company earned a license
fee in 1994 and is entitled to milestone payments based on the licensee's
performance or the passage of time. Two such milestone payments have
subsequently been earned. Upon commercialization, the licensee is obligated to
pay a guaranteed minimum annual royalty to the Company on sales of any product
incorporating the Company's technology. The licensee successfully completed a
Phase IA clinical trial in 1997, and a second Phase IB clinical trial is
ongoing.

In August 1994, the Company entered into a Cooperative Research and
Development Agreement ("CRADA") with the United States Navy, whereby the Company
granted Government Purpose License Rights to its Campylobacter vaccine
technology. In exchange for the rights granted, the United States Navy agreed to
conduct and fund the costs involved in Phase I, II and III clinical trials for
the vaccine, subject to the availability of required funds. The Company

F-14
<PAGE> 58

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

retained all commercial rights to develop, produce and market any product
involving the Campylobacter technology. Either party may terminate the CRADA
upon thirty days written notice. A Phase I clinical trial of the vaccine
candidate was successfully completed in 1996. A second Phase I clinical trial of
the vaccine candidate with an adjuvant was successfully completed in January
1997. A Phase II clinical trial is ongoing.

8. CAPITAL TRANSACTIONS

INITIAL PUBLIC OFFERING

In December 1992, the Company closed an initial public offering of
1,200,000 units at $6.00 per unit, each unit consisting of one share of the
Company's common stock and one warrant to purchase one share of the Company's
common stock at $7.50 per share. In January 1993, the Company sold an additional
180,000 units at $6.00 per unit. On December 17, 1997, the warrants related to
these units expired.

In connection with the offering, the Company issued, to the investment
banker who offered the units, an option to purchase up to 120,000 units at $8.40
per unit. This option expired on December 17, 1997.

PRIVATE PLACEMENT

In April 1995, the Company completed a private placement resulting in
gross proceeds to the Company of $3,525,000. Pursuant to the terms of the
private placement, the Company issued 70.5 units, each unit consisting of
142,860 shares of common stock and an equal number of Class B warrants. Each
Class B warrant entitled the holder thereof to purchase one share of common
stock at an exercise price of $0.50 per share. The Class B warrants were
exercised in their entirety in 1996 resulting in gross proceeds to the Company
of approximately $5,072,000.

In connection with the private placement, the Company issued to the
Placement Agent a unit purchase option granting the Placement Agent the option
to purchase 24.67 units from the Company at a purchase price of $50,000 per
unit. Each warrant comprising the Placement Agent's units has the same terms and
conditions as did a Class B warrant, except that it is not subject to redemption
by the Company. The unit purchase option is exercisable for a two-year period
commencing on March 24, 1998.

COMMON STOCK

As of December 31, 1997, common stock reserved for future issuance
includes the following:

<TABLE>
<S> <C>
Common Stock Warrants:
SmithKline 5,761,978
</TABLE>

F-15
<PAGE> 59

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

<TABLE>
<S> <C>
Placement Agent's option 3,524,357
Common Stock Options:
Stock option plans 9,189,375
Exchange option 4,793,685
Placement Agent's option 3,524,356
----------
Total 26,793,751
==========
</TABLE>

9. STOCK OPTION PLANS

1992 DIRECTORS' STOCK OPTION PLAN

In 1992, the Company adopted the 1992 Directors' Stock Option Plan (the
"Directors' Plan"). The Directors' Plan, as amended, provides for the grant of
options to purchase up to an aggregate of 1,700,000 shares of the Company's
common stock to nonemployee directors. Under the Directors' Plan, upon initial
election to the Board, a director is granted an option to purchase the number of
shares of common stock equal to $20,000 ($10,000 if elected on or after the
six-month anniversary of the most recent annual shareholders meeting) divided by
the greater of the market price of the common stock on the date of grant or
$0.50. At the time of reelection to serve or upon continuing to hold office for
the following year, a director is granted an additional option to purchase the
number of shares of common stock equal to $20,000 divided by the greater of the
market price of the common stock on the date of the grant or $0.50. For
directors who have served for at least three years, this basic annual grant is
supplemented every third year by an additional grant of an option to purchase a
number of shares of common stock equal to 150% of the number of shares covered
by the basic grant. Vesting occurs quarterly in four equal installments over a
period of one year following the date of grant. Options granted under the
Directors' Plan have a term of five years.

1992 STOCK OPTION PLAN

In 1992, the Company adopted the 1992 Stock Option Plan (the "Plan"). The
Plan, as amended, provides for the grant of options to purchase up to an
aggregate of 7,500,000 shares of the Company's common stock. The Plan provides
for the issuance of incentive stock options ("ISOs") to employees and
non-qualified stock options ("NQSOs") to employees and others. The exercise
price of ISOs must be at least equal to the fair market value of the Company's
common stock on the date of grant. Under the Plan, ISOs and NQSOs may have a
term of up to ten years.

STOCK OPTIONS OUTSTANDING

Stock options outstanding under these plans are as follows:

F-16
<PAGE> 60

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

<TABLE>
<CAPTION>
DIRECTORS' PLAN PLAN
--------------- ----

WEIGHTED WEIGHTED
AVERAGE AVERAGE
EXERCISE EXERCISE
SHARES PRICE SHARES PRICE
------ ----- ------ -----
<S> <C> <C> <C> <C>
December 31, 1995 45,000 $3.28 2,229,230 $1.41

Granted 66,300 $1.81 1,495,000 $0.50
Expired - (14,219) $4.44
Exercised - (10,000) $0.50
------- ---------

December 31, 1996 111,300 $2.40 3,700,011 $1.03

Granted 101,052 $0.59 456,000 $0.84
Expired (10,000) $6.00 (22,875) $0.68
Exercised - (625) $0.69
------- ---------

December 31, 1997 202,352 $1.32 4,132,511 $1.01
======= =========
</TABLE>

The range of exercise prices for options outstanding as of December 31,
1997 was $0.59 to $6.00 and $0.37 to $6.00 for the Directors' Plan and the Plan,
respectively. Additional information regarding options outstanding and
exercisable as of December 31, 1997 is as follows:

<TABLE>
<CAPTION>
WEIGHTED WEIGHTED
AVERAGE AVERAGE
OUTSTANDING EXERCISE EXERCISABLE EXERCISE
EXERCISE PRICE SHARES PRICE SHARES PRICE
- -------------- ------ ----- ------ -----
<S> <C> <C> <C> <C>
$0.37 to $0.56 3,050,000 $0.48 2,724,581 $0.47
$0.59 to $0.87 497,052 $0.74 135,338 $0.74
$0.97 to $1.81 398,811 $1.12 148,811 $1.36
$2.00 to $4.00 46,000 $2.79 43,188 $2.69
$6.00 343,000 $6.00 343,000 $6.00
-------- --------
4,334,863 $1.02 3,394,918 $1.11
========= =========
</TABLE>

STOCK-BASED COMPENSATION DISCLOSURE

The Company has adopted the disclosure-only provisions of SFAS 123 for
its stock options plans. The Plan provides for the issuance of stock options
that generally vest over a four year

F-17
<PAGE> 61

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

period and have a maximum term of ten years. The Directors' Plan provides for
the issuance of stock options that vest over a one year period and have a
maximum term of five years. Had compensation cost for the Company's stock option
plans been determined on the fair value at the grant date for awards in 1996 and
1997, consistent with the provisions of SFAS 123, the Company's net income
(loss) would have been adjusted to the pro forma amounts indicated below.

Net income (loss) -- as reported $ 535,435 $ (442,676)
SFAS 123 pro forma adjustment (1,029,201) (340,892)
------------ -----------
Net loss -- pro forma $ (493,766) $ (783,568)
============ ===========

Earnings (loss) per share - basic,
as reported $0.03 $(0.02)
===== ======
Earnings (loss) per share - diluted,
as reported $0.02 $(0.02)
===== ======

Earnings (loss) per share - basic
and diluted, proforma $(0.03) $(0.04)
====== ======
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted-average
assumptions:

<TABLE>
<CAPTION>
1996 1997
---- ----
<S> <C> <C>
Expected life (years) 9.94 9.09
Interest rate 6.30% 6.86%
Volatility 177.6% 166.7%
Dividend yield 0% 0%
</TABLE>

The weighted average remaining contractual life of options outstanding is
9.26 years and 7.78 years for 1996 and 1997, respectively. The weighted average
fair value of the options is $0.55 and $0.78 per option for 1996 and 1997,
respectively. The expense related to the value ascribed to the stock options is
recognized over the vesting period of one to four years.

10. 401(K) PLAN AND EXECUTIVE COMPENSATION BENEFITS

The Company has a 401(k) Plan which covers all employees who have
completed six months of service and are at least 21 years of age. Each eligible
employee may potentially contribute up

F-18
<PAGE> 62

Antex Biologics Inc.
(a development stage enterprise)

Notes to Consolidated Financial Statements

to 15% of their salary, subject to certain annual limits. The Company does not
match employee contributions.

As part of a deferred compensation plan adopted in 1993, the Company has
established a "Rabbi Trust". The Trust holds the assets of the deferred
compensation plan; which could be available to creditors in the event of a
liquidation. Accordingly, an asset and a corresponding liability have been
recorded for financial reporting purposes resulting from $125,000 of
compensation deferred by an officer and capital appreciation thereon.

In 1993, the Company entered into Split Dollar Agreements with two
officers whereby the Company pays the premiums on split dollar life insurance
policies held by these individuals. Under the terms of the agreements, the
officers are required to reimburse the Company for these premiums. However,
since it is possible that the Company may waive this reimbursement, no asset for
the premiums has been recorded. The Company paid approximately $90,800 and
$88,900 in premium payments in 1996 and 1997, respectively.

F-19
<PAGE> 63

PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24: INDEMNIFICATION OF DIRECTORS AND OFFICERS

As permitted by Section 102(b)(7) of the Delaware General Corporation Law
(the "DGCL"), Article Eighth of the Company's Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or to its stockholders for monetary damages for breach of fiduciary duty
as a director other than (i) for any breach of the director's duty of loyalty to
the corporation or its stockholders, (ii) for acts or omissions not in good
faith or which involved intentional misconduct or a knowing violation of law,
(iii) under Section 174 of the DGCL, or (iv) for any transaction from which the
director derived an improper personal benefit.

The Company maintains, at its expense, a policy of insurance that insures
its directors and officers, subject to certain exclusions or deductions that are
usual in such insurance policies, against certain liabilities that may be
incurred in those capacities, including liabilities arising under the Securities
Act of 1933, as amended, and the Exchange Act.

ITEM 25: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following is an itemized statement of the expenses expected to be
incurred in connection with the offer and sale of the shares of Common Stock
covered by this Registration Statement:

<TABLE>
<S> <C>
Legal fees $ 7,000
Accounting fees and expenses 3,000
Printing and duplication expenses 2,000
-----

TOTAL $12,000
=======
</TABLE>

All expenses are estimates.

The Selling Security Holders will not bear any portion of the foregoing
expenses, but will pay fees in connection with the resale of the shares of
Common Stock effected to or through securities brokers and/or dealers in the
form of markups, markdowns, or commissions, as well as the fees and
disbursements of counsel and accountants, if any, retained by the Selling
Security Holders and any other fees and expenses not expressly agreed to be
borne by the Company.

ITEM 26: RECENT SALES OF UNREGISTERED SECURITIES

PRIVATE PLACEMENT

On April 18, 1995, the Company completed the private offer and sale (the
"Private Placement") of 70.5 Units (each, a "Unit"), at a purchase price of
$50,000 per Unit, each Unit consisting of 142,860 shares (the "Unit Shares") of
Common Stock and an equal number of Class B Warrants (the Unit Shares, the Class
B Warrants, and the Common Stock issuable upon exercise of the Class B Warrants,
collectively, the "Private Placement Securities"). An aggregate of 10,071,630
Unit Shares and an equal number of Class B Warrants were sold in the Private
Placement. The Private Placement Securities were sold to 122 "accredited
investors" as such term is defined in Rule 501(a) under the Securities Act.

II-1
<PAGE> 64

The Company received $3,525,000 in gross proceeds as a result of the
Private Placement. D.H. Blair Investment Banking Corp. acted as Placement Agent.
In consideration for its services provided as Placement Agent, the Placement
Agent received among other things (i) a placement fee equal to ten percent (10%)
of the gross proceeds realized by the Company from the Private Placement, (ii) a
nonaccountable expense allowance equal to three percent of the gross proceeds
realized by the Company from the Private Placement, (iii) a Unit Purchase Option
(the "Private Placement Unit Purchase Option"), exercisable for two years
beginning on March 24, 1998, at a purchase price of $50,000 per Unit, to
purchase 24.67 Units (each such Unit having terms that are the same as the Units
sold in the Private Placement, except that the Warrants comprising such Units
are not subject to redemption) and (iv) reimbursement by the Company for certain
expenses (including legal fees) incurred in connection with the Offering.

In 1996, all of the Class B Warrants issued in the Private Placement, plus
Class B Warrants to purchase an additional 71,430 shares of Common Stock issued
as the result of an inadvertent overissuance, were exercised by the holders
thereof (the "Warrant Exercises"). The Company received gross proceeds of
$5,072,000 from the Warrant Exercises before paying associated fees of $215,000.

Both the Private Placement and the Warrant Exercises were effected under
an exemption from registration pursuant to Section 4(2) of the Securities Act
and Rule 506 promulgated thereunder. Each investor was provided with business
and financial information with respect to the Company and was provided with the
opportunity to obtain additional information in order to verify the information
provided or to further inform himself respecting the Company. In addition, each
investor acknowledged in writing, that he was "an accredited investor" as
defined in Rule 501, as indicated by his responses to an investor questionnaire,
and that he was able to bear the economic risk of an investment in the Private
Placement Securities. Each investor agreed that he would not sell or otherwise
transfer the Private Placement Securities unless they were registered or
otherwise qualified under the Securities Act and any applicable state securities
laws or unless an exemption from such registration or qualification was
applicable. Each investor also consented to the placement of a legend on any
certificate or other document that evidenced the Unit Shares and Class B
Warrants comprising his Units and the Common Stock issuable upon exercise of
such warrants stating that they have not been registered or otherwise qualified
under the securities laws and setting forth or referring to the restrictions and
transferability and sale thereof.

A notice on Form D was filed with the Commission with respect to the
issuance of the Units.

JOINT VENTURE

On May 7, 1996, the Company entered into a joint venture (the "Joint
Venture") with SmithKline Beecham Corporation ("SBB"), and SmithKline Beecham
Biologicals Manufacturing s.a., a Belgian affiliate of SBB that is engaged in
the development, commercialization and marketing of human vaccines ("SKB"). In
connection with the entry into the Joint Venture, the Company granted to SKB an
option (the "Exchange Option") to convert its interest in the Joint Venture into
up to 4,793,685 shares of Common Stock, subject to the limitation that in no
event may SKB convert its equity interest in the Joint Venture into Common Stock
to the extent that it would result in SKB, taking into account all other shares
of Common Stock acquired by SKB regardless of the source, owning in excess of
28% of the outstanding shares of Common Stock. In addition, to protect SKB
against the dilution of its right to convert its interest in the Joint Venture
into Common Stock, the Company granted to SKB a warrant (the "SKB Warrant") to
purchase an indeterminate number of additional shares of Common Stock that
becomes exercisable under certain circumstances if and to the extent that
certain designated warrants and employee stock options outstanding as of the
date of the establishment of the Joint Venture are exercised.

The Exchange Option and the SKB Warrant were issued by the Company to SKB
in reliance on an exemption from registration under Section 4(2) of the
Securities Act.

ITEM 27: EXHIBITS

<TABLE>
<CAPTION>
Exhibit
No. Description
--- -----------

<S> <C>
3.1 Certificate of Incorporation (1)
</TABLE>

II-2

<PAGE> 65

<TABLE>
<S> <C>
3.2 Certificate of Merger relating to merger of BioCarb Inc. with and into the Registrant as
filed with the Delaware Secretary of State on September 21, 1992 (1)

3.3 Certificate of Amendment to Certificate of Incorporation (7)

3.4 Certificate of Ownership and Merger Merging Virgo Biologicals Inc. Into MicroCarb Inc., dated
August 16, 1996 (effecting the change in the corporate name from MicroCarb Inc. to Antex
Biologics Inc.) (11)

3.5 ByLaws, as amended (3)

4.1 Form of Common Stock Certificate (3)

4.2 Form of Redeemable Warrant Agreement (including form of specimen warrant certificate) (8)

5.1 Opinion of Covington & Burling (14)

*10.1 Amended and Restated Stock Option Plan, as amended (10)

*10.2 1992 Directors' Stock Option Plan, as amended (10)

*10.3 Employment Agreement dated as of January 1, 1996 by and between the Company and V. M.
Esposito (9)

*10.4 Employment Agreement dated as of May 1, 1995 by and between the Company and Gregory C.
Zakarian (8)

*10.5 Employment Agreement effective as of October 1, 1997 by and between the Company and Theresa
M. Stevens (Smith) (12)

*10.6 Employment agreement effective as of December 8, 1997 by and between the Company and Larry R.
Ellingsworth (13)

10.7 Form of Confidentiality Agreement by and between the Company and its employees (1)

10.8 Form of Inventions Disclosure Agreement by and between the Company and its employees (1)

10.9 Form of Non-disclosure and Invention Assignment Agreement by and between the Company and its
employees (1)

10.10 Patent License Agreement dated as of May 15, 1992 by and between the Company and HSC Research
and Development Limited Partnership (1)

10.11 Patent License Agreement dated as of May 15, 1992 by and between the Company and HSC Research
and Development Limited Partnership (1)

10.12 Patent and Technology License Agreement dated as of November 21, 1990 by and between BioCarb
Inc. and HSC Research Development Corporation (1)

10.13 Form of Technology License Agreement dated as of October 26, 1992 by and between the Company
and GalaGen Inc. (1)

10.14 Lease dated January 13, 1989 by and between Crown Pointe Center Venture and BioCarb Inc. with
Assignment of Lease dated September 13, 1990 (1)
</TABLE>

II-3
<PAGE> 66

<TABLE>
<S> <C>
10.15 Stock Purchase Agreement dated as of July 17, 1991 by and between BioCarb AB and Howard C.
Krivan, Ph.D. (2)

10.16 Form of Unit Purchase Option with Underwriter (3)

10.17 Sale and Leaseback Agreement dated as of August 13, 1993 by and between the Registrant and
Aberlyn Capital Management Limited Partnership for a total of $2,164,792 (4)

10.18 Form of Private Placement Unit Purchase Option (8)

10.19 MicroCarb Human Vaccines Inc. Stockholders Agreement dated May 6, 1996, effective March 1,
1996, by and between the Company, SmithKline Beecham Biologicals Manufacturing s.a., and
MicroCarb Human Vaccines Inc. (6)

10.20 Stock Purchase Agreement dated May 6, 1996, effective March 1, 1996, by and between MicroCarb
Human Vaccines Inc., the Company and SmithKline Beecham Biologicals Manufacturing s.a.
(Certain confidential information omitted) (6)

10.21 SKB Transitory License Agreement dated May 6, 1996, effective March 1, 1996, by and between
the Company and SmithKline Beecham Biologicals Manufacturing s.a. (Certain confidential
information omitted) (6)

10.22 MicroCarb Vaccines License Agreement dated May 6, 1996, effective March 1, 1996, by and
between MicroCarb Human Vaccines Inc. and the Company (Certain confidential information
omitted) (6)

10.23 Assignment of Transitory License Agreement and Restatement of Rights and Obligations Under
the Vaccines License Agreement dated May 6, 1996, effective March 1, 1996, by and between
SmithKline Beecham Biologicals Manufacturing s.a., MicroCarb Human Vaccines Inc. and the
Company (6)

10.24 Research and Development, Research Support and License Agreement dated May 6, 1996, effective
March 1, 1996, by and between MicroCarb Human Vaccines Inc., the Company and SmithKline
Beecham Corporation (Certain confidential information omitted) (6)

10.25 Exchange Option Agreement dated May 6, 1996, effective March 1, 1996, by and between
SmithKline Beecham Biologicals Manufacturing s.a., the Company and MicroCarb Human Vaccines
Inc. (6)

10.26 Warrant to Purchase Common Stock of the Company dated May 6, 1996, effective March 1, 1996,
issued to SmithKline Beecham Biologicals Manufacturing s.a. (Certain confidential information
omitted) (6)

10.27 Registration Rights Agreement dated May 6, 1996, effective March 1, 1996, by and between the
Company and SmithKline Beecham Biologicals Manufacturing s.a. (6)

23.1 Consent of Covington & Burling, included in Exhibit 5.1

23.2 Consent of Coopers & Lybrand L.L.P.**
</TABLE>

* Management plan or compensatory plan or arrangement

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

(1) Incorporated by reference to an exhibit to the Company's Registration
Statement on Form S-1 (Reg No. 33-53774) filed on October 27, 1992.

II-4
<PAGE> 67

<TABLE>
<S> <C>
(2) Incorporated by reference to an exhibit to Amendment No. 1 to the Company's Registration Statement on Form S-1 filed on
December 2, 1992.

(3) Incorporated by reference to an exhibit to Amendment No. 2 to the Company's Registration Statement on Form S-1 filed on
December 15, 1992.

(4) Incorporated by reference to an exhibit to Form 10-QSB for the quarter ended September 30, 1993 filed on November 12,
1993.

(5) Incorporated by reference to an exhibit to Form 10-KSB for the year ended December 31, 1993 filed on March 29, 1994.

(6) Incorporated by reference to an exhibit to Form 8-K filed on May 22, 1996.

(7) Incorporated by reference to an exhibit to Form 10-QSB for the quarter ended March 31, 1997 filed on May 14, 1997.

(8) Incorporated by reference to an exhibit to the Company's Registration Statement on Form SB-2 (Registration No. 33-96168)
filed on August 24, 1995.

(9) Incorporated by reference to an exhibit to Form 10-QSB for the quarter ended March 31, 1996 filed on May 20, 1996.

(10) Incorporated by reference to an exhibit to Form S-8 (Registration No. 333-32377) filed on July 30, 1997.

(11) Incorporated by reference to an exhibit to Form 8-K filed on September 9, 1996.

(12) Incorporated by reference to an exhibit to Form 10-QSB for the quarter ended September 30, 1997 filed on November 6,
1997.

(13) Incorporated by reference to an exhibit to Form 10-KSB for the year ended December 31, 1997 filed on March 19, 1998.

(14) Incorporated by reference to an exhibit to the Company's Registration Statement on Form SB-2 (Registration
No. 333-26353) filed on May 9, 1997.

</TABLE>

** Filed herewith.
- -------------------------------------------------------------

ITEM 28: UNDERTAKINGS.

(a) The undersigned Registrant will:

(1) file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:

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

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

(iii) include any additional or changed material information
on the plan of distribution.

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<PAGE> 68
(2) for determining liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering thereof.

(3) file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.

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

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<PAGE> 69
SIGNATURES

In accordance with 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 SB-2 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned in the
City of Gaithersburg, State of Maryland, April 29, 1998.

ANTEX BIOLOGICS INC.

By:/s/ V.M. ESPOSITO
-------------------------
V.M. Esposito
President

In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.

<TABLE>
<CAPTION>
SIGNATURE DATE
--------- ----
<S> <C>
/s/ V.M. ESPOSITO April 29, 1998
------------------------------
V.M. Esposito
Director, President, and
Chief Executive Officer
(Principal Executive Officer)

/s/ GREGORY C. ZAKARIAN April 29, 1998
----------------------------
Gregory C. Zakarian
Treasurer and Chief Financial
Officer
(Principal Financial Officer and
Principal Accounting Officer)

CHARLES J. COULTER* April 29, 1998
------------------------------
Charles J. Coulter
Director

BRUCE E. ELMBLAD* April 29, 1998
------------------------------
Bruce E. Elmblad
Director

DONALD G. STARK* April 29, 1998
-------------------------------
Donald G. Stark
Director

/s/ V.M. ESPOSITO
------------------------------
*V.M. Esposito
Attorney-in-fact
</TABLE>

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<PAGE> 70
EXHIBIT INDEX

The following exhibits are filed with this Registration Statement.

<TABLE>
<CAPTION>
Page No. of
Exhibit Sequentially
Number Number Copy
- ------ -----------
<S> <C>

23.2 Consent of Coopers & Lybrand L.L.P.
</TABLE>

II-8

<PAGE> 1
Exhibit 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Registration Statement on Form SB-2
(Post-Effective Amendment No. 1) of Antex Biologics Inc. of our report, dated
February 27, 1998, on our audits of the consolidated financial statements of
Antex Biologics Inc. as of December 31, 1996 and 1997, and for the years then
ended, and for the period January 1, 1993 to December 31, 1997. We also
consent to the reference to our firm under the caption "Experts."

Coopers & Lybrand L.L.P.

McLean, Virginia
April 29, 1998