ENAMELON INC, S-1/A, 1997-10-16

ENAMELON INC
S-1/A, 1997-10-16
MISC HEALTH & ALLIED SERVICES, NEC

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 16, 1997

REGISTRATION NO. 333-35187
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- -------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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AMENDMENT NO. 3
TO
FORM S-1

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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ENAMELON, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

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DELAWARE 2834 13-3669775
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NUMBER)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)

15 KIMBALL AVENUE
YONKERS, NY 10704
(914) 237-1308
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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DR. STEVEN R. FOX,
CHAIRMAN OF THE BOARD
ENAMELON, INC.
15 KIMBALL AVENUE
YONKERS, NY 10704
(914) 237-1308
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

COPIES TO:

ERIC HONICK, ESQ. BARBARA L. BECKER, ESQ.
SNOW BECKER KRAUSS P.C. CHADBOURNE & PARKE LLP
605 THIRD AVENUE 30 ROCKEFELLER PLAZA
NEW YORK, NEW YORK 10158 NEW YORK, NEW YORK 10112
TEL: (212) 687-3860 TEL: (212) 408-5100

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, 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 of 1933, 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. [_]

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

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

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<PAGE>

++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+THE 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. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

Subject to Completion, dated October 16, 1997

PROSPECTUS

2,000,000 SHARES

[LOGO]

ENAMELON, INC.

COMMON STOCK

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Of the 2,000,000 shares of Common Stock, par value $.001 per share (the
"Common Stock"), offered hereby, 1,500,000 shares are being offered by
Enamelon, Inc. (the "Company") and 500,000 shares are being offered by certain
stockholders of the Company (the "Selling Stockholders"). See "Principal and
Selling Stockholders." The Company will not receive any of the proceeds from
the sale of shares of Common Stock by the Selling Stockholders.

The Common Stock is quoted on the Nasdaq National Market under the symbol
"ENML." On September 16, 1997, the last reported sales price of the Common
Stock on the Nasdaq National Market was $15.375 per share. See "Price Range of
Common Stock."

-----------

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.

-----------

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

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS(1) COMPANY(2) STOCKHOLDERS
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Per Share .................... $ $ $ $
- --------------------------------------------------------------------------------
Total(3) ..................... $ $ $ $
</TABLE>
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(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933, as amended. See "Underwriting."
(2) Before deducting estimated expenses of $300,000 payable by the Company.
(3) The Company and the Selling Stockholders have granted the Underwriters a
30-day option to purchase up to 300,000 additional shares of Common Stock
on the same terms and conditions as set forth above solely to cover over-
allotments, if any. If such option is exercised in full, the total Price to
the Public, Underwriting Discounts and Commissions, Proceeds to Company and
Proceeds to Selling Stockholders will be $ , $ , $ and $ ,
respectively. See "Underwriting."

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The shares of Common Stock offered by this Prospectus are offered by the
Underwriters subject to prior sale, withdrawal, cancellation or modification of
the offer without notice, to delivery to and acceptance by the Underwriters and
to certain further conditions. It is expected that delivery of certificates
representing shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1997.

-----------

LEHMAN BROTHERS
SBC WARBURG DILLON READ INC.
RODMAN & RENSHAW, INC.

, 1997
<PAGE>

TEXT: How Enamelon(TM) Toothpaste Prevents Cavities Before
They Begin.

DIAGRAMS: Left Diagram: Illustration of stylized hydroxyapatite rods that
form tooth enamel shown after demineralization.

Center Diagram: Illustration of toothbrush brushing the tops of two
teeth with calcium and phosphate ions emanating from
the toothpaste.

Right Diagram: Illustration of stylized hydroxyapatite rods shown
after remineralization.

TEXT UNDER LEFT
DIAGRAM: Demineralized Calcium Rods
Early tooth decay begins with the loss of calcium,
phosphate and other minerals, weakening the tooth
enamel.
TEXT UNDER CENTER
DIAGRAM: Tooth enamel consists of millions of hydroxyapatite
rods that traverse the entire depth of the enamel.
These rods are separated by an organic matrix.

TEXT UNDER RIGHT
DIAGRAM: Remineralized Calcium Rods
The new Enamelon toothpaste contains the active
ingredient sodium fluoride plus calcium and phosphate
ions, to enhance remineralization and strengthen
tooth enamel.

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK OF
THE COMPANY, INCLUDING SYNDICATE COVERING TRANSACTIONS OR THE IMPOSITION OF
PENALTY BIDS. FOR A DISCUSSION OF THESE ACTIVITIES, SEE "UNDERWRITING."

IN CONNECTION WITH THIS OFFERING, CERTAIN UNDERWRITERS AND SELLING GROUP
MEMBERS MAY ENGAGE IN PASSIVE MARKET MAKING TRANSACTIONS IN THE COMMON STOCK
ON THE NASDAQ NATIONAL MARKET IN ACCORDANCE WITH RULE 103 OF REGULATION M
UNDER THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SEE "UNDERWRITING."

Enamelon(TM) is a trademark of the Company. Certain other trademarks of the
Company and other companies, including Crest(R), Colgate(R), Aquafresh(R),
Mentadent(R), Arm & Hammer Dental Care(R) and Sensodyne(R), are used in this
Prospectus.
<PAGE>

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by reference to the more
detailed information and financial statements and notes thereto appearing
elsewhere in this Prospectus. This Prospectus contains forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements. Factors that might cause such differences include, but are not
limited to, those discussed in "Risk Factors." Unless otherwise indicated, all
information in this Prospectus assumes no exercise of the over-allotment option
granted to the Underwriters. See the "Glossary" beginning on page 47 of this
Prospectus for the definitions of certain terms used herein.

THE COMPANY

Enamelon, Inc. is focused on developing and marketing over-the-counter oral
care products that stop cavities before they begin. The Company's products are
based on proprietary formulations and technologies that have been shown in
animal and in vitro studies to enhance remineralization of tooth enamel and to
prevent early stage tooth decay. Enamelon(TM) anticavity fluoride toothpaste
contains the active ingredient sodium fluoride, plus calcium and phosphate
ions, to enhance the remineralization of tooth enamel. The Company has launched
its initial product, Enamelon(TM) all-family toothpaste, into markets
comprising approximately 5% of United States households and expects to begin
its national introduction in the first half of 1998. The Company is also
consumer testing an adult toothpaste for sensitive teeth and expects to begin
the national introduction of that product in late 1998.

On a daily basis, teeth lose small amounts of calcium and phosphate, the
major structural ingredients of tooth enamel. This demineralization process is
caused by plaque acids produced during the bacterial breakdown of sugars in the
mouth. If the demineralization process is not balanced by remineralization,
demineralization will eventually destroy the mineral structure of the teeth and
result in cavities, which must be repaired by a dentist. Saliva contains low
levels of calcium and phosphate ions to naturally combat demineralization. The
presence of fluoride in the saliva is known to facilitate the remineralization
process. However, even with the addition of fluoride, remineralization is
limited by the small amounts of calcium and phosphate ions normally present in
saliva. Enamelon(TM) toothpaste simultaneously supplies the active ingredient
sodium fluoride and high concentrations of ions of the inactive ingredients
calcium and phosphate in soluble form during brushing to enhance the
remineralization process.

The Company's in vitro studies have demonstrated that Enamelon(TM) toothpaste
enhances remineralization by increasing levels of fluoride uptake and that it
strengthens and hardens the tooth structure. This makes the tooth less soluble
and more resistant to attacks by acids from decay-causing bacteria. Based on
the Company's studies, it believes that with each application of Enamelon(TM)
toothpaste, teeth will become stronger and more resistant to decay. The Company
currently is conducting intra-oral and small-scale human clinical studies
required by government regulation to support additional advertising claims. The
Company believes that human clinical studies will show that its toothpaste
enhances the tooth remineralization process to a greater degree than currently
available products, which the Company believes will represent one of the most
significant advances in personal dental care since the introduction of mass-
marketed fluoride dental products in the early 1960's.

In March 1997, the Company initiated marketing activities by entering two
Behavior Scan(R) markets and is presently selling Enamelon(TM) toothpaste in
markets comprising approximately 5% of all United States households. The
Company's marketing strategy targets both consumers and dental professionals.
The Company believes that, in the markets it has entered, it has had
considerable success in obtaining retail distribution and has exceeded its
initial goals by obtaining more than 70% retail distribution on an all-
commodity basis.

The worldwide toothpaste market is estimated to exceed $5.0 billion in annual
retail sales. Annual toothpaste sales in the United States are expected to be
$1.8 billion in 1997 and are projected to reach $2.0 billion

3
<PAGE>

by the year 2000. Over the last five years, the toothpaste market has become
segmented as new, premium-priced products offering benefits such as tartar
control or whitening or containing ingredients such as baking soda have
steadily attracted consumers away from older, mature products.

The Company holds licenses from the American Dental Association Health
Foundation (the "ADAHF") to use patented technologies (the "ADAHF Patented
Technology") relating to a method for oral use of various amorphous calcium
phosphate compounds that enhance the natural activity of fluoride to prevent
tooth decay. The ADAHF has granted the Company (i) exclusive United States and
foreign licenses to develop, manufacture and market toothpaste and chewing gum
and other food and confectionery products using the ADAHF Patented Technology
and (ii) a non-exclusive international license covering products not covered by
the Company's exclusive licenses (including oral spray, mouth rinse and
professional gel products) using the ADAHF Patented Technology. The Company's
international license is co-extensive with a non-exclusive international
license granted to SmithKline Beecham Corp. ("SmithKline"), which also obtained
from the ADAHF an exclusive United States license covering products not covered
by the Company's exclusive licenses.

The Company itself has developed both patented and proprietary technologies
relating to the prevention of tooth decay before it begins (the "Enamelon
Proprietary Technology"). It has received five United States patents for
methods and materials that supply soluble calcium and phosphate salts to teeth
to enhance remineralization and one patent for its dual chamber toothpaste
tube, which is used to dispense Enamelon(TM) toothpaste. In addition, the
Company has 11 patent applications with respect to certain Enamelon Proprietary
Technology pending in the United States and 10 patent applications pending in
foreign jurisdictions.

The Company's objective is to become a leading marketer of a variety of oral
care and chewing gum and other food and confectionery products based on the
ADAHF Patented Technology and/or the Enamelon Proprietary Technology (together,
the "Enamelon Technologies"). The Company's strategic plan for accomplishing
this objective is to (i) market its toothpaste products with sodium fluoride as
the sole active ingredient in compliance with Food and Drug Administration
requirements, (ii) conduct further testing to establish additional advertising
and marketing claims, (iii) collaborate with corporate partners in certain
product areas and international markets and (iv) capitalize on additional
commercial applications of the Enamelon Technologies.

The Company was incorporated in Delaware in June 1992. In October 1996, the
Company completed its initial public offering. The Company's executive offices
are located at 15 Kimball Avenue, Yonkers, New York, 10704, and its telephone
number is (914) 237-1308.

THE OFFERING

<TABLE>
<C> <S>
Common Stock offered by the
Company............................ 1,500,000 shares
Common Stock offered by the Selling
Stockholders....................... 500,000 shares
Common Stock to be outstanding after
the Offering....................... 9,601,386 shares(1)
Use of Proceeds..................... To fund the national introduction of the
Company's toothpaste products; to fund
research and development; to purchase
manufacturing equipment; and for working
capital and other general corporate
purposes, which may include acquisitions.
See "Use of Proceeds."
Nasdaq National Market Symbol....... ENML
</TABLE>
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(1) Excludes an aggregate of 3,135,949 shares of Common Stock consisting of (i)
1,464,625 shares of Common Stock reserved for issuance upon the exercise of
options granted or available for grant under the Company's 1993 Stock
Option Plan, (ii) 750,000 shares of Common Stock reserved for issuance upon
the exercise of options available for grant under the Company's 1997 Stock
Option Plan and (iii) 921,324 shares of Common Stock reserved for issuance
upon exercise of outstanding warrants.

4
<PAGE>

SUMMARY FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED JUNE 30,
---------------------------- ----------------
1994 1995 1996 1996 1997
------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Total expenses.............. $ 536 $ 1,081 $ 3,120 $ 1,085 $ 4,810(1)
Other charges (income)...... 263 (20) (195) (68) (241)
------ -------- -------- ------- -------
Net loss.................... $ (799) $ (1,061) $ (2,925) $(1,017) $(4,569)
====== ======== ======== ======= =======
Net loss per share.......... -- (2) $ (0.20) $ (0.52) $ (0.19) $ (0.66)
Weighted average common
shares outstanding......... -- (2) 5,234 5,637 5,443 6,942
</TABLE>

<TABLE>
<CAPTION>
AT JUNE 30, 1997
AT DECEMBER 31, -----------------------
1996 ACTUAL AS ADJUSTED (3)
--------------- ------- ---------------
<S> <C> <C> <C>
SELECTED BALANCE SHEET DATA:
Cash and cash equivalents............... $11,390 $20,058 $41,736
Total assets............................ 12,392 22,565 44,243
Total liabilities....................... 1,093 2,550 2,850
Total stockholders' equity.............. 11,298 20,015 41,393
</TABLE>
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(1) Total expenses for the six months ended June 30, 1997 have been offset by
approximately $346,000 of revenues from sales of Enamelon(TM) toothpaste in
test markets.
(2) Earnings per share are not presented for prior periods since the Company
does not believe historical earnings per share are meaningful as a result
of changes in the Company's capital structure following the completion of
its initial public offering in October 1996.
(3) As adjusted to give effect to the sale by the Company of 1,500,000 shares
of Common Stock offered hereby at an assumed offering price of $15.375 per
share (the last reported sales price of the Common Stock on the Nasdaq
National Market on September 16, 1997), after deducting underwriting
discounts and commissions and estimated offering expenses payable by the
Company.

5
<PAGE>

RISK FACTORS

An investment in the shares of Common Stock offered hereby involves a high
degree of risk. The following risk factors should be considered carefully in
addition to the other information in this Prospectus before purchasing the
Common Stock offered by this Prospectus.

HISTORY OF OPERATING LOSSES; UNCERTAINTY OF FUTURE PROFITABILITY

The Company has a limited history of operations and has accumulated net
losses from inception in June 1992 through June 30, 1997, of $9,687,666.
Losses have resulted principally from research and development costs, costs of
manufacturing and test marketing Enamelon(TM) toothpaste and general and
administrative costs. Although the Company commenced test marketing of
Enamelon(TM) toothpaste in March 1997, costs of production and marketing
presently exceed revenues. The Company expects to continue to incur additional
operating losses at least through 1999, principally as a result of expenses of
ongoing clinical testing and anticipated marketing and manufacturing expenses
associated with the national introduction of Enamelon(TM) toothpaste. There
can be no assurance that the Company will ever generate an operating profit or
achieve profitability. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

DEPENDENCE ON SUCCESS OF INITIAL PRODUCT

The Company is dependent to a large extent on the success of Enamelon(TM)
toothpaste, which is being sold in markets comprising approximately 5% of
United States households and is expected to be introduced nationally in the
first half of 1998. There can be no assurance that Enamelon(TM) toothpaste
will become a commercially viable product, or that if it does become
commercially viable, it can be produced in a timely manner, can be
manufactured economically on a large scale, can be free from governmental and
competitive challenges, or can achieve and sustain market acceptance. See
"Business--Products," "--Research and Development," "--Marketing" and "--
Competition." The Company believes that the success of its initial product
will be dependent upon a number of factors, including those described under
"--Uncertainty of Results of Human Clinical Studies," "--Uncertainty of
Consumer Acceptance of Enamelon(TM) Toothpaste" and "--Limited Marketing
Capability."

UNCERTAINTY OF RESULTS OF HUMAN CLINICAL STUDIES

Based upon laboratory studies by the Company and others, the Company
believes that the current formulation of Enamelon(TM) toothpaste will achieve
expected results in humans. Nevertheless, results of in vitro and animal
laboratory studies are not necessarily indicative of results that will be
obtained in human clinical trials, which the Company has recently commenced.
The Company intends to continue to conduct human clinical studies of
Enamelon(TM) toothpaste in order to begin to establish additional advertising
claims concerning efficacy in humans. The Company believes that these
advertising claims will distinguish Enamelon(TM) toothpaste from competitors'
products and give the Company a competitive advantage. However, there can be
no assurance that the results of the human clinical studies will substantiate
the anticipated advertising claims. Adverse or inconclusive human clinical
trial results concerning any of the Company's toothpaste product formulations
could limit the product claims the Company can make for Enamelon(TM)
toothpaste. In such event, the Company may have to conduct further studies,
which would delay its ability to make expected advertising claims regarding
the effectiveness of Enamelon(TM) toothpaste in humans. See "Business--
Marketing" and "--Government Regulation."

UNCERTAINTY OF CONSUMER ACCEPTANCE OF ENAMELON(TM) TOOTHPASTE

The Company will be dependent upon consumer acceptance of Enamelon(TM)
toothpaste as an alternative to currently well-known brand name toothpastes.
Market acceptance will depend on many factors, including (i) the Company's
ability to demonstrate to consumers the effectiveness of Enamelon(TM)
toothpaste, (ii) whether the Company's marketing strategy will achieve desired
results, (iii) the extent to which consumers are willing to pay a premium for
Enamelon(TM) toothpaste and (iv) the response of the Company's competitors to
the national introduction of Enamelon(TM) toothpaste. There can be no
assurance that the Company will be able to market its toothpaste or other
products successfully or that any of its products will be accepted in the
marketplace. See "Business--Marketing."

6
<PAGE>

LIMITED MARKETING CAPABILITY

The Company has limited marketing capabilities and resources. Achieving
market penetration will require significant efforts by the Company to create
awareness of, and demand for, its toothpaste and other proposed products.
Accordingly, the Company's ability to build its customer base will be
dependent on its marketing efforts, including its ability to establish an
effective sales organization or establish strategic marketing arrangements
with other companies. The Company's failure to successfully develop its
marketing capabilities, both internally and through brokers, would have a
material adverse effect on the Company's business. Further, there can be no
assurance that the development of such marketing capabilities will lead to
sales of the Company's toothpaste and other proposed products. See "Business--
Marketing."

UNCERTAINTIES RELATED TO DEVELOPMENT OF ADDITIONAL PRODUCTS

The Company has focused its product development efforts to date on
Enamelon(TM) toothpaste. Accordingly, the Company will require significant
additional efforts to develop other products using the Enamelon Technologies.
All such future product development efforts are subject to certain risks and
may not succeed. These risks include, but are not limited to, the possibility
that (i) new products will be found ineffective or unsafe, (ii) even if safe
and effective, they will be difficult to develop into commercially viable
products or to manufacture economically on a large scale, free of governmental
or competitive challenges and (iii) any such products will fail to achieve and
sustain market acceptance. See "Business--Strategy" and "--Products."

COMPETITION

Competition in toothpaste products and other oral care products, as well as
in chewing gum and other food and confectionery products, is intense. The
Company's primary competitors include companies with substantially greater
financial, technological, marketing, personnel and research and development
resources than those of the Company. There can be no assurance that the
Company will be able to compete successfully in these markets. The Company's
toothpaste products will compete with other brand name toothpastes, including
Crest, Colgate, Aquafresh, Mentadent, Arm & Hammer Dental Care and Sensodyne.
Further, new products or future developments by others may provide therapeutic
or cost advantages over the Company's toothpaste and other proposed products.
There can be no assurance that developments by others of similar or more
effective products will not render the Company's products or technologies
noncompetitive or obsolete or that competitors will not challenge the validity
of the Company's patent rights. Since the Company's products and proposed
products will be new to the market and sold in competition with the products
of companies with greater financial and other resources, there can be no
assurance that a market for the Company's products and proposed products will
develop.

The Company's non-exclusive license to market products not covered by its
exclusive licenses (including oral sprays, mouth rinses, and professional
gels) outside of the United States is co-extensive with a license granted to
SmithKline, which has financial and other resources that are substantially
greater than those of the Company. Therefore, it is likely that the Company
will not be able to compete with SmithKline for the sale of those products
outside of the United States unless the Company enters into strategic
alliances with other companies having financial and other resources comparable
to those of SmithKline. However, there can be no assurance that the Company
will be able to successfully market products covered by its non-exclusive
license, even if it is able to form such alliances. See "--Uncertain Ability
to Protect Patents," "Business--Competition" and "--ADAHF Patents and
Licenses."

COMPLIANCE WITH THE FDA MONOGRAPH

The Company's toothpaste products are subject to regulation by the Food and
Drug Administration (the "FDA"). The FDA has published a final monograph,
Anticaries Drug Products for Over-the-Counter Human Use (the "Monograph"), for
over-the-counter ("OTC") anticaries drug products. The Monograph establishes
conditions under which OTC drug products that aid in the prevention of tooth
decay are generally recognized as being safe and effective and not misbranded.
The Company's products may be lawfully marketed without being required to file
a New Drug Application (an "NDA") with the FDA, if they use as their sole
active ingredient one of the active ingredients permitted in the Monograph and
only make labeling claims permitted by the

7
<PAGE>

Monograph. The Company's toothpaste and other proposed OTC drug products have
been and are being developed with the sole active ingredient being sodium
fluoride, an active ingredient permitted under the Monograph, and the Company
intends to comply with the Monograph in all other respects. However, there can
be no assurance that the FDA will determine that the Company's toothpaste and
other proposed OTC drug products meet all of the conditions of the Monograph.
The Company will be limited in the claims it can make with respect to its
products in order to remain in compliance with the Monograph. The Company's
inability to market its toothpaste and other proposed OTC drug products under
and in compliance with the Monograph would have a material adverse effect on
the Company. See "Business--Government Regulation."

In order to market its products other than in compliance with the Monograph,
the Company would be required to file an NDA. An NDA would require substantial
testing procedures which are costly and time consuming. Accordingly, if the
Company were required to file an NDA with respect to any of its products, the
Company's ability to sell such products in the United States could be delayed
indefinitely. Further, the Company may not have sufficient financial or other
resources available to complete the NDA process and assuming such financial
and other resources are available, there is no assurance that the FDA would
approve the Company's NDA, if one were necessary. See "Business--Government
Regulation."

COMPLIANCE WITH OTHER GOVERNMENT REGULATION

In addition to regulation by the FDA under the Monograph, the Company is
subject to additional FDA regulation as well as regulation under various other
federal and state laws and government agencies. Each domestic drug product
manufacturing facility must be registered with the FDA, and each manufacturer
must inform the FDA of every drug product it has in commercial distribution
and keep such list updated. Domestic manufacturing facilities are also subject
to at least biennial inspection by the FDA for compliance with Good
Manufacturing Practices ("GMP's") regulations promulgated by the FDA.
Compliance with GMP's is required at all times during the manufacture and
processing of drug products. Accordingly, to the extent that the Company uses
contract manufacturers, such manufacturers must be in compliance with FDA
requirements. To date, the Company has used, and plans to continue to use,
contract manufacturers to manufacture its Enamelon(TM) toothpaste. If any such
manufacturer is not in compliance with GMP's, the FDA could bring an action to
enforce its regulations, which could lead to closing such manufacturing
facility. In that instance, the Company would be required to contract with
another manufacturer, any such contract could possibly be on terms less
favorable to the Company than its former agreement, and the sales and
marketing of the Company's products could be disrupted. See "--Dependence on
Others to Manufacture," "Business--Manufacturing" and "--Government
Regulation."

The FDA has issued a tentative final monograph (the "Tentative Final
Monograph"), Oral Health Care Drug Products for Over-the-Counter Human Use,
which proposes to recognize the combination of sodium fluoride and the
desensitizing agent potassium nitrate as generally recognized as safe and
effective and not misbranded. The FDA has issued an enforcement policy
permitting the marketing of an anticaries/desensitizing drug product, in
accordance with the terms of the Tentative Final Monograph, pending the
establishment of a final monograph covering this combination. Although the
Company's adult toothpaste for sensitive teeth is being developed to comply
with the Tentative Final Monograph, there can be no assurance that the FDA
will determine that toothpaste meets the conditions of the Tentative Final
Monograph or that the requirements of the final monograph will be the same as
those of the Tentative Final Monograph. In either case, the Company would be
required to file an NDA, reformulate that toothpaste or discontinue its
development. Furthermore, some of the Company's other proposed products may
not be covered by an FDA monograph, but may be subject to other FDA
regulations, which could require additional testing and could limit the claims
that could be made for those products. See "Business--Government Regulation."

Both the Company's products and its product claims may be challenged by the
Company's competitors or by the Federal Trade Commission (the "FTC") or other
governmental or private agencies. Such challenges may include an assertion
that the data obtained by the Company to substantiate the Company's
advertising claims may be inadequate or that such claims are inaccurate. There
can be no assurance that the Company will successfully defend any challenge in
this area or be able to modify its products or the claims with respect thereto
to such an extent that the products remain commercially viable. If the Company
is unable to defend such claims, it may become subject to an FTC cease and
desist order, which would impair its ability to market its products.

8
<PAGE>

The laws and regulations administered by governmental agencies are subject
to change and varying interpretations. While the Company uses and intends to
continue to use its best efforts to comply with relevant laws and regulations,
no assurance can be given that an agency might not assert a claim of
noncompliance against the Company in the future. Unanticipated changes in laws
or adverse interpretations of regulations could materially jeopardize the
Company's ability to distribute its products or engage in its contemplated
business activities.

The marketing of the Company's proposed products abroad will be subject to
significant regulation by foreign cosmetic and/or drug regulatory agencies. No
assurance can be given that the Company will be granted approval to market its
proposed products in foreign countries, and the failure to obtain such
required approvals would have an adverse effect on the Company's ability to
market its products internationally. See "Business--Government Regulation."

DEPENDENCE ON LICENSING AGREEMENTS

Since the Company believes that the ADAHF Patented Technology is a key
element in its product development, the Company considers its license
agreements with the ADAHF to be material to the Company's business. If sales
of the Company's products in the United States do not generate royalties of at
least $17,000 during the last year of any exclusivity period under the
Company's exclusive United States license, then the Company will not be
entitled to renew the period of exclusivity, and the ADAHF will be entitled to
license the ADAHF Patented Technology to the Company's competitors in the
United States. The foreign license rights also terminate if the United States
license rights terminate, except as to those countries for which the royalty
paid in the preceding year exceeds $7,000. Furthermore, if the Company fails
to pay the minimum royalties required under the license agreements or
otherwise breaches such agreements, then the ADAHF will be entitled to
terminate the agreements if such breaches remain uncured. In that event, the
Company would be unable to use the ADAHF Patented Technology, which could have
a material adverse effect on the ability of the Company to develop,
manufacture and sell its products, or even to continue in business. See
"Business--ADAHF Patents and Licenses" and "--Patents, Trademarks and Other
Proprietary Information."

UNCERTAIN ABILITY TO PROTECT PATENTS

The Company's ability to compete effectively depends on its success in
protecting the Enamelon Technologies, both in the United States and abroad. No
assurance can be given that the Company's protection of patents or other
proprietary technology within and/or outside of the United States is
sufficient to deter others, legally or otherwise, from developing or marketing
competitive products using the Enamelon Technologies.

The patents and pending patent applications constituting the ADAHF Patented
Technology (the "ADAHF Patent Rights") and certain of the Enamelon Proprietary
Technology (the "Enamelon Patent Rights" and collectively with the ADAHF
Patent Rights, the "Patent Rights") are material to the Company's business. No
assurance can be given that any further patents will be issued from the United
States or foreign patent offices for the Patent Rights or that the Company
will receive any patents in the future based on its continued development
efforts. The Company believes that the protection afforded by the Patent
Rights is material to its future revenues and earnings. There can be no
assurance that any of the Patent Rights will be found to be valid or that any
of the Patent Rights will be enforceable or prevent others from developing and
marketing competitive products or methods. A successful challenge to the
validity of the Patent Rights could have a material adverse effect on the
Company and could jeopardize its ability to engage in its contemplated
business. An infringement action on behalf of the Company to enforce any of
the Patent Rights may require the diversion of substantial funds from the
Company's operations and may require management to expend efforts that might
otherwise be devoted to the Company's operations. Furthermore, there can be no
assurance that the Company will be successful in enforcing the Patent Rights.
See "--Competition."

There can be no assurance that patent infringement claims in the United
States or in other countries will not be asserted against the Company by a
competitor or others, and if asserted, that the Company will be successful

9
<PAGE>

in defending against such claims. If any of the Company's products is
determined to infringe a patent of others, the Company or its sublicensees may
be required to pay substantial damages, may be enjoined from using and selling
such product, or may be required to obtain a royalty-bearing license. If such
a license is not available, the Company would be required either to redesign
those aspects of the product held to infringe so as to avoid future
infringement or to stop selling the product. In such case, any redesign
efforts undertaken by the Company could require significant expense, be
inadequate to avoid infringement, necessitate an FDA review, delay the
introduction or the re-introduction of the product into certain markets or be
so significant as to be impractical. See "Business--ADAHF Patents and
Licenses" and "--Patents, Trademarks and Other Proprietary Information."

PROTECTION OF PROPRIETARY TECHNOLOGY AND INFORMATION

The Company also intends to rely on trade secrets, know-how and continuing
technological advancement to establish and maintain a competitive position in
the market for its products. Although the Company has entered into
confidentiality and invention agreements with its employees and consultants,
no assurance can be given that such agreements will be honored or that the
Company will be able to effectively protect its rights to its unpatented trade
secrets and know-how. Moreover, no assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to the Company's trade secrets and know-
how. See "Business--Patents, Trademarks and Other Proprietary Information."

EVOLVING PRODUCT FORMULATIONS

The Company expects that the formulation of its toothpaste and other
products will be modified from time to time as a result of the Company's
ongoing research and product testing programs. As a result of such
modifications, products that the Company produces in the future may differ
from those that were the subject of earlier research and testing. Therefore,
the research studies conducted to date and relied upon by the Company for
efficacy and claims substantiation, as well as the Patent Rights obtained at
this time, might not necessarily be applicable to the Company's future product
formulations. In that event, the Company may be required to make significant
additional expenditures on development and testing of these new formulations
and in securing relevant patent rights. Furthermore, there can be no assurance
that future product formulations will comply with the Monograph, that the
Company will not be required to file an NDA in connection with new product
formulations, or that any products using such formulations will be
commercially viable. See "--Compliance with the FDA Monograph," "--Compliance
with Other Governmental Regulation," "Business--Research and Development," "--
ADAHF Patents and Licenses," and "--Patents, Trademarks and Other Proprietary
Information."

DEPENDENCE ON OTHERS TO MANUFACTURE

The Company is using a contract manufacturer to manufacture its toothpaste
products for the United States market. There can be no assurance that if the
Company's present contract manufacturer becomes unavailable, the Company will
be able to retain another qualified manufacturer on terms favorable to the
Company. The Company may seek to sublicense or enter into joint ventures or
strategic partnerships with major consumer product companies or other entities
on either an exclusive or non-exclusive basis, for manufacturing its products
in foreign markets as well as for manufacturing its other proposed products.
Manufacturing arrangements in these markets are likely to be encompassed in
any agreements establishing such relationships and may place primary
manufacturing responsibility on others. The Company has no plan, agreement,
understanding or arrangement with respect to such relationships, and no
assurance can be given that the Company will enter into any such arrangements.

The Company's dependence upon others to manufacture its products may
adversely affect its future profit margins, if any, and may affect the
Company's ability to sell toothpaste and other proposed products on a timely
and competitive basis. See "--Compliance with Other Government Regulation" and
"Business--Manufacturing."

10
<PAGE>

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING

The Company's cash requirements may vary materially from those now planned
depending on numerous factors, including the status of the Company's marketing
efforts, the Company's business development activities, the results of human
clinical trials, the regulatory process and competition. Although the Company
currently estimates that its cash and cash equivalents on hand, together with
the net proceeds of this offering, will be sufficient to finance its working
capital and other requirements for a period of approximately two years, there
can be no assurance that the Company's financial resources will not be
exhausted sooner. Thereafter, if the Company is not profitable, it will need
to raise additional funds through public or private financings, including
equity financings, which may be dilutive to stockholders. There can be no
assurance that the Company will be able to raise additional funds if its
capital resources are exhausted, or that funds will be available on terms
attractive to the Company or at all. If adequate funds are not available, the
Company may be required to reduce materially its proposed operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and "Use of Proceeds."

PRODUCT LIABILITY

The sale of any over-the-counter consumer product may result in claims of
adverse reactions by users. Although the Company has no intention of marketing
any product without reasonable belief in its safety and efficacy when used in
accordance with its instructions, misuse of the Company's products may result
in consumer injury. In addition, future developments, including possible
adverse medical studies and associated negative publicity, could have a
material adverse impact on the market for the Company's products and on its
results of operations. Further, the Company may be subject to certain consumer
claims and informal complaints relating to its products that are incidental
and routine to its business and for which the Company intends to maintain
insurance coverage.

The Company currently maintains product liability insurance of $6 million
per claim and $7 million in the aggregate on a "per occurrence" basis. Product
liability insurance coverage is expensive and subject to many exclusions, and
there can be no assurance that the Company will be able to maintain its
current insurance coverage or to obtain additional insurance coverage in
sufficient amounts or on favorable terms. Exclusions or damage limitations may
render any insurance coverage obtained insufficient to protect the Company
adequately from the successful assertion of a product liability claim. There
can be no assurance that the Company's present or future insurance coverage
will be sufficient to satisfy product liability claims, if any, made against
the Company with respect to injuries arising from the use of such products. In
the event of a successful product liability claim against the Company, the
insufficiency of insurance coverage and the negative publicity from such a
suit could have a material adverse effect on the Company and jeopardize its
ability to engage in its contemplated business activities. There also can be
no assurance that the Company will be able to increase such insurance coverage
or to maintain such coverage on acceptable terms. If the Company's insurance
coverage were to lapse or be terminated, then the Company would have no
insurance coverage for claims arising subsequent to the lapse or termination
of the policy. Product liability claims successfully asserted after the lapse
or termination of the policy could have a materially adverse effect on the
Company. See "Business--Liability Insurance."

DEPENDENCE ON KEY PERSONNEL

The success of the Company will be largely dependent upon the personal
efforts of Dr. Steven R. Fox, D. Brooks Cole, Norman Usen and Anthony E.
Winston. The loss of the services of any of such persons could have a material
adverse effect on the Company's business and prospects. The Company has
entered into a five-year employment agreement with Dr. Fox as Chairman of the
Board and Chief Executive Officer. As permitted by such agreement, Dr. Fox
also currently continues to practice dentistry on a part-time basis. The
Company has also entered into an employment agreement with Mr. Cole as
President and Chief Operating Officer pursuant to which Mr. Cole serves at the
pleasure of the Board of Directors. Although the Company has entered into
employment agreements with each of the aforementioned individuals, there can
be no assurance that the Company will be able to retain their services. The
success of the Company will also be dependent upon its ability to hire and
retain additional qualified management, marketing and financial personnel. The
Company will

11
<PAGE>

compete with other companies with greater financial and other resources for
such personnel. See "Management--Employment Agreements."

CONTROL BY PRINCIPAL STOCKHOLDERS

After giving effect to this offering, the Company's directors, executive
officers and principal stockholders will beneficially own approximately 34.8%
of the Common Stock (33.4% if the Underwriters' over-allotment option is
exercised in full). Consequently, they will have the ability to significantly
influence the election of the Company's directors and the outcome of all other
issues submitted to the Company's stockholders. See "Principal and Selling
Stockholders."

NO ASSURANCE OF ACTIVE OR CONTINUED PUBLIC MARKET; VOLATILITY OF STOCK PRICE

Although a public trading market for the Common Stock currently exists,
there can be no assurance that such trading market will provide significant
liquidity with regard to the Common Stock or that such market will be
sustained. See "Underwriting."

Trading volume and prices for the Common Stock have been and could continue
to be subject to wide fluctuations in response to quarterly variations in
operations, financial results, announcements with respect to sales and
earnings, technological innovations, new product developments, the sale or
attempted sale of a large amount of securities in the public market, and other
events or factors that cannot be foreseen or predicted by the Company. In
addition, various factors affecting consumer products companies, as well as
price and volume volatility affecting small and emerging growth companies
generally, but not necessarily related to their particular operating
performance, may have a significant impact on the market price of the Common
Stock. See "Price Range of Common Stock."

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of Common Stock by existing stockholders pursuant to Rule 144
("Rule 144") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to registration rights granted to certain holders
of warrants to purchase the Common Stock, or pursuant to other registrations
or exemptions from registration under the Securities Act, could have an
adverse effect on the price of the shares of Common Stock. As of September 16,
1997, the Company had approximately 8,101,386 shares of Common Stock
outstanding. In addition, the Company has reserved for issuance (i) 1,343,480
shares of Common Stock upon the exercise of options granted under the
Company's 1993 Stock Option Plan (the "1993 Plan"), (ii) 121,145 shares upon
the exercise of options available for grant under the 1993 Plan, (iii) 750,000
shares of Common Stock reserved for issuance upon the exercise of options
available for grant under the Company's 1997 Stock Option Plan (the "1997
Plan") and (iv) 921,324 shares of Common Stock reserved for issuance upon
exercise of outstanding warrants (the "Warrants").

12
<PAGE>

offering. Employees, consultants, and other eligible holders of options to
purchase approximately 1,198,431 shares of Common Stock granted under the 1993
Plan prior to the Company's initial public offering also have the right to
exercise their options and immediately sell the shares of Common Stock
received upon exercise under Rule 144. The Company and each of its executive
officers and directors and each of the Selling Stockholders have agreed that,
for a period of 120 days after the date of this Prospectus, they will not
offer, sell or otherwise dispose of any shares of Common Stock without the
prior written consent of Lehman Brothers Inc. No prediction can be made as to
the effect that future sales of Common Stock, or the availability of shares of
Common Stock for future sales, will have on the market prices for the Common
Stock prevailing from time to time. Sales of substantial amounts of Common
Stock, or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through the future sale of its equity securities. See
"Principal and Selling Stockholders."

ISSUANCE OF PREFERRED STOCK; ANTITAKEOVER PROVISIONS OF DELAWARE LAW

The Company's Amended Certificate of Incorporation authorizes the issuance
of 5,000,000 shares of Preferred Stock with such designations, rights and
preferences as may be determined from time to time by the Board of Directors.
Accordingly, the Board of Directors is empowered, without obtaining
stockholder approval, to issue Preferred Stock with dividend, liquidation,
conversion, voting or other rights that could adversely affect the voting
power or other rights of the holders of the Common Stock. In the event of
issuance, the Preferred Stock could be used, under certain circumstances, as a
method of discouraging, delaying or preventing a change in the control of the
Company. Certain provisions of Delaware law may also discourage third party
attempts to acquire control of the Company. See "Description of Securities."

13
<PAGE>

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 1,500,000 shares of
Common Stock offered by the Company hereby, at an assumed public offering
price of $15.375 per share (the last reported sales price of the Common Stock
on the Nasdaq National Market on September 16, 1997), and after deducting
underwriting discounts and commissions and estimated offering expenses, are
estimated to be $21.4 million ($24.6 million if the Underwriters' over-
allotment option to purchase up to 300,000 shares is exercised in full). The
Company will not receive any proceeds from the sale of Common Stock by the
Selling Stockholders. See "Principal and Selling Stockholders."

The Company intends to use approximately $15.3 million of the net proceeds
of this offering for the marketing costs associated with the national
introduction of its toothpaste products and approximately $1.6 million to fund
additional research and development to improve the efficacy of, and provide
claims substantiation for, the Company's products and proposed products. An
additional $1.2 million of the net proceeds will be used to purchase
manufacturing equipment for the production of the Company's patented split
system toothpaste tube and for high speed tube filling equipment. The balance
of the net proceeds will be used for working capital and other general
corporate purposes, which may include the acquisition of products or
businesses that are compatible with the Company's existing business or the
financing of joint ventures or license agreements to market its products. If
the Underwriters exercise the over-allotment option in full, the Company will
realize additional net proceeds, which will be added to the Company's working
capital.

The foregoing represents the Company's best estimate of its allocation of
the net proceeds from the sale of the Common Stock offered hereby based upon
the current state of its business operations, its current plans and current
economic and industry conditions and is subject to reallocation among the
categories listed above or to new categories. The amounts and timing of actual
expenditures will depend on numerous factors, including the status of the
Company's marketing efforts, the Company's business development activities,
the results of human clinical trials, the regulatory process and competition.
Additionally, the Company intends to review, from time to time, potential
opportunities to acquire, or enter into joint ventures or licensing
relationships with respect to, products and businesses compatible with its
existing business. The Company may, therefore, use a portion of the net
proceeds to make such acquisitions or to fund such joint ventures, although
the Company has no agreements or understandings and is not involved in any
negotiation with respect to any such transactions.

The Company believes that the net proceeds of this offering together with
its projected cash flow from operations, will be sufficient to finance its
working capital and other requirements for a period of approximately two years
from the date of this Prospectus. Pending the aforementioned uses, the net
proceeds from this offering will be invested in interest-bearing government
securities or short-term, investment grade securities.

DIVIDEND POLICY

The Company has not paid any dividends on its Common Stock since its
inception and for the foreseeable future intends to follow a policy of
retaining all of its earnings, if any, to finance the development and
continued expansion of its business. There can be no assurance that dividends
will ever be paid by the Company. Any future determination as to payment of
dividends will depend upon the Company's financial condition, results of
operations and such other factors as the Board of Directors deems relevant.

14
<PAGE>

CAPITALIZATION

The following table sets forth the capitalization of the Company at June 30,
1997 and as adjusted to reflect the sale of 1,500,000 shares of Common Stock
offered hereby by the Company after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company. This table
should be read in conjunction with the Financial Statements and Notes thereto
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
-----------------------
ACTUAL AS ADJUSTED(1)
------- --------------
(IN THOUSANDS)
<S> <C> <C>
Stockholders' equity:
Preferred Stock, $.01 par value; 5,000,000 shares
authorized; none issued and outstanding............. -- --
Common Stock, $.001 par value; 20,000,000 shares
authorized; 8,101,386 shares issued and outstanding;
9,601,386 shares issued and outstanding as
adjusted(2)......................................... $ 8 $ 10
Additional paid-in capital........................... 29,695 51,071
Accumulated deficit during the development stage..... (9,688) (9,688)
------- -------
Total stockholders' equity......................... 20,015 41,393
------- -------
Total capitalization............................. $20,015 $41,393
======= =======
</TABLE>
- --------
(1) As adjusted to reflect the consummation of this offering.

(2) Excludes an aggregate of 3,135,949 shares of Common Stock consisting of
(i) 1,464,625 shares of Common Stock reserved for issuance upon the
exercise of options granted or available for grant under the Company's
1993 Stock Option Plan, (ii) 750,000 shares of Common Stock reserved for
issuance upon the exercise of options available for grant under the 1997
Plan and (iii) 921,324 shares of Common Stock reserved for issuance upon
exercise of Warrants. See "Shares Eligible for Future Sale."

PRICE RANGE OF COMMON STOCK

The Company's Common Stock has been quoted on the Nasdaq National Market
under the symbol ENML since the Company's initial public offering on October
24, 1996. The following table sets forth the high and low sale prices for the
Common Stock as reported on the Nasdaq National Market for the periods
indicated.

<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
1996
Fourth Quarter (from October 25, 1996)...................... $ 7.25 $ 5.38
1997
First Quarter............................................... $25.25 $ 6.00
Second Quarter.............................................. $27.50 $13.00
Third Quarter (July 1, 1997 through September 16, 1997)..... $19.00 $14.13
</TABLE>

On September 16, 1997, the last reported sale price for the Common Stock as
reported by the Nasdaq National Market was $15.375 per share. As of such date
there were approximately 309 holders of record of the Common Stock.

15
<PAGE>

SELECTED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Set forth below is selected financial data with respect to the statements of
operations of the Company for the period from June 1992 (Inception) to
December 31, 1992, and for the years ended December 31, 1993, 1994, 1995 and
1996, and the six months ended June 30, 1996 and 1997 and the balance sheets
of the Company at December 31, 1992, 1993, 1994, 1995, 1996, and June 30,
1997. Year-end data was derived from the Company's Financial Statements
audited by BDO Seidman, LLP, independent certified public accountants, certain
of which are included elsewhere in the Prospectus. The data should be read in
conjunction with the Financial Statements and Notes thereto and Management's
Discussion and Analysis of Financial Condition and Results of Operations
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 9, 1992 SIX MONTHS ENDED
(INCEPTION) YEAR ENDED DECEMBER 31, JUNE 30, JUNE 9, 1992
TO DECEMBER 31, ------------------------------------- ------------------ (INCEPTION) TO
1992 1993 1994 1995 1996 1996 1997 JUNE 30, 1997
--------------- ----- ----- ------- ------- -------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENTS OF OPERATIONS
DATA:
Total expenses.......... $ 37 $ 311 $ 536 $ 1,081 $ 3,120 $ 1,085 $ 4,810(1) $ 9,895
Other charges (income).. -- (14) 263 (20) (195) (68) (241) (207)
---- ----- ----- ------- ------- -------- -------- -------
Net loss................ $(37) $(297) $(799) $(1,061) $(2,925) $ (1,017) $ (4,569) $(9,688)
==== ===== ===== ======= ======= ======== ======== =======
Net loss per share...... -- (2) -- (2) -- (2) $ (0.20)(3) $ (0.52) $ (0.19) $ (0.66) --
Weighted average shares
outstanding............ -- (2) -- (2) -- (2) 5,234 (3) 5,637 5,443 6,942 --
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31, AT JUNE 30, 1997
----------------------------- ----------------------
1992 1993 1994 1995 1996 ACTUAL AS ADJUSTED(4)
---- ---- ---- ------ ------- ------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash
equivalents............. $ 59 $517 $ 50 $1,791 $11,390 $20,058 $41,736
Total assets............. 112 795 265 2,041 12,392 22,565 44,243
Total liabilities........ 57 321 114 174 1,093 2,550 2,850
Total stockholders'
equity.................. 108 744 151 1,867 11,298 20,015 41,393
</TABLE>
- --------
(1) Total expenses for the six months ended June 30, 1997 have been offset by
approximately $346,000 of revenues from sales of Enamelon(TM) toothpaste
in test markets.
(2) Earnings per share are not presented for prior periods since the Company
does not believe historical earnings per share are meaningful as a result
of changes in the Company's capital structure following the completion of
its initial public offering in October 1996.
(3) Earnings per share are presented for 1995 on a pro forma basis to give
retroactive effect to the conversion of the redeemable preferred stock as
a result of the public offering in October 1996.
(4) As adjusted to give effect to the sale by the Company of 1,500,000 shares
of Common Stock offered hereby at an assumed offering price of $15.375 per
share (the last reported sales price of the Common Stock on the Nasdaq
National Market on September 16, 1997), after deducting underwriting
discounts and commissions and estimated offering expenses payable by the
Company.

16
<PAGE>

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

The following discussion and analysis should be read in conjunction with the
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
Except for the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
projected in the forward-looking statements discussed herein. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed in this section, as well as in the sections entitled "Risk
Factors" and "Business."

RESULTS OF OPERATIONS

Six Months ended June 30, 1997 Compared to Six Months Ended June 30, 1996

Total expenses were approximately $4,810,000 for the six months ended June
30, 1997, compared with total expenses of approximately $1,085,000 for the
same period in the prior year, an increase of $3,725,000. This increase was
primarily the result of higher marketing and selling expenses of $2,332,000,
higher research and development expenses of $665,000, higher administrative
and other expenses of $728,000.

Marketing and selling expenses increased from $42,000 to $2,373,000
primarily as a result of the efforts to support the launch of the Company's
initial toothpaste product into test markets. Since the Company is still
considered to be in the development stage for financial reporting purposes,
marketing expenses are offset by revenues, which for the six months ended June
30, 1997 were $346,000.

Research and development expenses increased from $674,000 to $1,339,000
primarily as a result of studies performed at universities and research
facilities and development activities necessary to broaden additional testing
after successfully conducting in vitro and animal studies and starting intra-
oral and small-scale human clinical studies.

Administrative and other expenses increased from $370,000 to $1,097,000
primarily attributable to increased payroll and benefits, consulting and other
administrative office expenses which resulted from the Company's expanded
operations.

Interest and dividend income increased from $68,000 to $241,000 primarily
due to the increase in cash and cash equivalents from the initial public
offering in October, 1996.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Total expenses were approximately $3,120,000 for the year ended December 31,
1996, compared with total expenses of $1,081,000 in the prior year, an
increase of $2,039,000. This increase was primarily the result of higher
marketing and selling expenses of $362,000, higher research and development
expenses of $1,215,000 and higher administrative and other expenses of
$462,000. Additionally, the Company anticipates that total expenses will
increase over the next few years as the Company increases its product
development, manufacturing and marketing activities. Such increased business
activities will require additional personnel and payments to third parties.

The increase of $362,000 in marketing and selling expenses resulted from
marketing creative fees necessary to bring the Company's product to test
market.

The increase in research and development expenses from $547,000 to
$1,762,000 resulted from the expansion of the Company's research and
development program at its laboratory facility and clinical testing at various
independent oral care research facilities in the United States.

17
<PAGE>

The increase in administrative and other expenses from $534,000 to $996,000
is primarily attributable to increased consulting and administrative office
expenses, associated with the hiring of additional personnel.

These increases were offset in part by $195,000 of interest and dividend
income earned from $10,425,000 of net proceeds from the Company's initial
public offering in October 1996.

Year Ended December 31, 1995 Compared to Year Ended December 31, 1994

Total expenses were approximately $1,081,000 in 1995, compared with total
expenses of $536,000 in 1994, an increase of $545,000. The increase was
primarily attributable to a $341,000 increase in research and development
expenses and a $204,000 increase in administrative expenses.

The increase in research and development expenses from $206,000 to $547,000,
was primarily the result of the expansion of the Company's research and
development program at its laboratory facility, additional laboratory
supplies, expansion of the in vitro studies and the initiation of in vivo
studies at the University of Connecticut. The increase was also attributable
to increased compensation for the Company's Vice President of Product
Development/Operations and the hiring of a Vice President of Technology and
Clinical Research.

During 1995, ten in vitro studies, comparing approximately 120 potential
formulations, were performed at Indiana University. Based on the data and the
results of in-house laboratory studies, the Company successfully transitioned
the science from a concept to practical technology, which can be incorporated
into toothpaste. Results from animal studies at the University of Connecticut
provided the Company with the initial indication that the technology
successfully enhanced remineralization.

The increase in administrative and other expenses from $331,000 to $534,000,
was primarily attributable to increased legal and accounting fees incurred in
connection with the Company's efforts to secure additional investment capital
and the preparation of interim financial statements. The increase was also
attributable to increased compensation for the Company's Chief Executive
Officer.

The net loss in 1994 was increased by approximately $270,000 as a result of
the Company expensing deferred offering costs related to a proposed private
placement transaction that was not consummated. See "Financial Statements."

LIQUIDITY AND CAPITAL RESOURCES

Since its inception in June 1992, the Company has financed its operations
primarily through private placements of Series A Preferred Stock and Common
Stock and a public offering of Common Stock, all totaling approximately $29.4
million, net of expenses and underwriting discounts. In June 1997, the Company
and a selling stockholder completed a private placement of 1,200,000 shares of
Common Stock at $13.00 per share, of which 1,080,000 shares were sold by the
Company. Net cash proceeds to the Company from such private placement were
$13,077,000. At June 30, 1997, the Company had cash and cash equivalents of
approximately $20,058,000 and working capital of $18,558,000. The Company has
no outstanding debt or available lines of credit as of June 30, 1997.

Since its inception and through June 30, 1997, the Company has incurred
losses aggregating approximately $9,688,000 and had available net operating
loss carryforwards as of June 30, 1997 of approximately $9,688,000. The net
operating loss carryforwards will expire if not used by the period from 2007
through 2011 and may be limited by United States federal tax law as a result
of future changes in ownership. The Company expects to continue to incur
operating losses at least through 1999 while it continues clinical testing and
initial toothpaste marketing efforts. In March 1997, the Company began to test
market Enamelon(TM) all family toothpaste in selected United States markets.
The Company intends to begin a national introduction of this product in the
first half of 1998.

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Since its inception and through June 30, 1997, the Company has paid
$1,177,000 for the purchase of equipment and approximately $367,000 for costs
associated with obtaining patents, trademarks and licenses.

The Company's cash requirements may vary materially from those now planned
depending on numerous factors, including the status of the Company's marketing
efforts, the Company's business development activities, the availability of
alternative financing for the acquisition of manufacturing equipment, the
results of clinical trials, the regulatory process and competition. The
Company currently estimates that cash and cash equivalents on hand together
with the net proceeds of this offering, will be sufficient to finance its
working capital and other requirements for a period of approximately two
years. Thereafter, or sooner if conditions necessitate, the Company may need
to raise additional funds through public or private financings. If adequate
funds are not available, then the Company may be required to reduce the scope
of proposed operations.

EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS

In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share." In
accordance with this statement, basic earnings per share are based on the
weighted average shares outstanding during the period and diluted earnings per
share are based on the weighted average number of common shares and all
dilutive potential common shares that were outstanding during the period.
Effective December 15, 1997, the Company will adopt this statement. The effect
of the adoption will not have a material impact on the Company's net loss per
share previously reported.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." The statement, which is effective in
1998, requires disclosure of reportable operating segments. The Company will
be reviewing this statement to determine its applicability to the Company, if
any.

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BUSINESS

OVERVIEW

Enamelon, Inc. is focused on developing and marketing over-the-counter oral
care products that stop cavities before they begin. The Company's products are
based on proprietary formulations and technologies that have been shown in
animal and in vitro studies to enhance remineralization of tooth enamel and to
prevent early stage tooth decay. Enamelon(TM) anticavity fluoride toothpaste
contains the active ingredient sodium fluoride, plus calcium and phosphate
ions, to enhance the remineralization of tooth enamel. The Company has
launched its initial product, Enamelon(TM) all-family toothpaste, into markets
comprising approximately 5% of United States households and expects to begin a
national introduction in the first half of 1998. The Company is also consumer
testing an adult toothpaste for sensitive teeth and expects to begin the
national introduction of that product in late 1998.

The Company holds licenses from the ADAHF to use the ADAHF Patented
Technology. The ADAHF has granted the Company (i) exclusive United States and
foreign licenses to develop, manufacture and market toothpaste and chewing gum
and other food and confectionery products using the ADAHF Patented Technology
and (ii) a non-exclusive international license covering products not covered
by the Company's exclusive licenses (including oral spray, mouth rinse and
professional gel products) using the ADAHF Patented Technology. The Company's
international license is co-extensive with a non-exclusive international
license granted to SmithKline, which also obtained from the ADAHF an exclusive
United States license covering products not covered by the Company's exclusive
licenses. The Company will be required to pay the ADAHF royalties under these
license agreements.

The Company itself has also developed the Enamelon Proprietary Technology.
It has been granted five United States patents for methods and materials that
supply soluble calcium and phosphate salts to teeth to enhance
remineralization, and one patent for its dual chamber toothpaste tube, which
is used to dispense Enamelon(TM) toothpaste. In addition, the Company has 11
patent applications with respect to certain Enamelon Proprietary Technology
pending in the United States and 10 patent applications pending in foreign
jurisdictions.

The Company's objective is to become a leading marketer of a variety of oral
care and chewing gum and other food and confectionery products based on the
Enamelon Technologies.

The significant events in the Company's progress to date include the
following:

. In 1992, the Company was organized and received from the ADAHF exclusive
United States and foreign licenses for toothpaste and chewing gum and
other food and confectionery products, and a non-exclusive international
license for products not covered by the exclusive licenses.

. In January 1995, the Company conducted successful in vitro testing of a
prototype formulation using the Enamelon Technologies at the Oral Health
Research Institute of Indiana University.

. In October 1995 and January 1996, the Company conducted successful animal
studies of a prototype formulation using the Enamelon Technologies at the
School of Dentistry of the University of Connecticut.

. In June 1996, the Company commenced preliminary intra oral and clinical
studies of its toothpaste intended to establish additional advertising
claims.

. In October 1996, the Company completed its initial public offering of
1,700,000 shares of Common Stock at $7.00 per share receiving net cash
proceeds of approximately $10.4 million.

. In November 1996, the Company was granted its first patent and in 1997
was granted five additional patents, all of which relate to Enamelon
Proprietary Technology. See "Patents, Trademarks and Other Proprietary
Information."

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<PAGE>

. In March 1997, the Company initiated marketing activities for
Enamelon(TM) toothpaste in selected United States markets.

The Company is currently selling Enamelon(TM) all-family toothpaste in
markets comprising approximately 5% of all United States households, which
include Seattle, Washington; Denver, Colorado; Tampa, Florida;
Buffalo/Rochester, New York; Pittsfield, Massachusetts; and Midland, Texas. In
addition, the Company is conducting intra-oral and small-scale human clinical
studies to establish additional advertising claims to consumers and dentists.
The Company expects to introduce Enamelon(TM) all-family toothpaste nationally
in the first half of 1998.

The worldwide toothpaste market is estimated to exceed $5.0 billion in
annual retail sales. Annual toothpaste sales in the United States are
estimated to be $1.8 billion in 1997 and are projected to reach $2.0 billion
by the year 2000. Over the last five years, the toothpaste market has become
segmented as new, premium-priced products offering benefits such as tartar
control or whitening or containing ingredients such as baking soda have
steadily attracted consumers away from older, more mature products.

TECHNOLOGY

On a daily basis, teeth lose small amounts of calcium and phosphate, the
major structural ingredients of tooth enamel. This demineralization occurs as
plaque acids gradually dissolve tooth enamel.

Saliva contains low levels of calcium and phosphate ions to naturally fight
this demineralization process. The presence of fluoride in the saliva is also
known to facilitate remineralization of calcium and phosphate. However,
remineralization is limited by the small amounts of calcium and phosphate ions
normally present in the saliva. If the demineralization process is not
balanced by remineralization, it eventually dissolves the mineral structure of
the tooth and causes dental cavities, which can only be repaired by a dentist.

In the 1950's, scientists at Indiana University discovered that the
inclusion of fluoride in toothpaste reduces the incidence of tooth decay. When
teeth are brushed with a fluoride-containing toothpaste, the fluoride diffuses
into the tooth. This fluoride promotes the subsequent uptake of minerals,
including calcium and phosphate, from saliva. However, with currently
available fluoride toothpastes, this process is limited by the low levels of
calcium and phosphate ions found in saliva. This slow remineralization process
can be overcome by demineralization cycles resulting in the gradual
destruction of the mineral structure of teeth.

In contrast, the Company's studies have demonstrated that Enamelon(TM)
toothpaste simultaneously supplies the active ingredient, sodium fluoride, and
high concentrations of ions of the inactive ingredients calcium and phosphate
in soluble form during brushing. The Company's in vitro and animal studies
have demonstrated that Enamelon(TM) toothpaste enhances remineralization with
a higher level of fluoride uptake, and the tooth structure was shown to be
strengthened and hardened. This makes the tooth less soluble and more
resistant to attacks by acids from decay-causing bacteria. The Company
currently is conducting intra-oral and small-scale human clinical studies
intended to establish additional advertising claims. See "--Research and
Development".

STRATEGY

The Company's objective is to develop a variety of oral care and chewing gum
and other food and confectionery products that are based on the Enamelon
Technologies and prevent tooth decay at its earliest stage. The Company has
developed a strategic plan to accomplish this goal. The Company's primary
strategies are to:

. Launch Enamelon(TM) Toothpaste. The Company is focusing on the national
introduction of its Enamelon(TM) all-family toothpaste in the first half
of 1998 and the launch of an adult toothpaste for sensitive teeth in the
United States later in 1998. The Company is developing its toothpaste
products and packaging, along with the necessary manufacturing processes
required to achieve desired production

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speeds while controlling manufacturing costs. The Company seeks to
establish distinctive brand identity emphasizing the enhanced
remineralization benefits of its products, which will be communicated to
both consumers and dental professionals.

. Conduct Further Testing. The Company believes that a heightened
understanding of the chemistry required for effective remineralization of
tooth enamel will lead to stronger protection from competition. Human
clinical studies are being conducted to establish additional marketing
claims for consumers and dentists.

. Collaborate with Corporate Partners in Certain Product Areas and
International Markets. The Company intends to seek domestic and
international strategic alliances with consumer product companies that
will assist in the marketing and manufacturing of oral care products
outside of the United States.

. Capitalize on Additional Commercial Applications. The Company believes
that products such as chewing gum, mouthwash, dental gels, lozenges and
mints may provide benefits similar to those of its toothpaste and
represent large potential markets for the application of the Enamelon
Technologies.

PRODUCTS

The Company has introduced toothpaste as its initial product line. The
Company also is exploring application of the Enamelon Technologies to mouth
rinse, professional gel and chewing gum and other food and confectionery
products, which it intends to develop after the national introduction of its
all-family toothpaste and its adult toothpaste for sensitive teeth. See "--
ADAHF Patents and Licenses," "--Patents, Trademarks and Other Proprietary
Information," "Risk Factors--Dependence on Successful Development of Initial
Products," and "--Uncertainties Related to Development of Additional
Products."

Toothpastes

All-Family Toothpaste. The Company's introductory product, Enamelon(TM) all-
family fluoride toothpaste, provides the active ingredient sodium fluoride and
is formulated to stop cavities before they begin and to enhance
remineralization of tooth enamel. Product development activities for the
Company's all-family toothpaste were completed at the end of 1996. The Company
introduced its toothpaste into test markets consisting of approximately 5% of
United States households in the early part of 1997. The Company intends to
begin a national introduction of this product in the first half of 1998.

Adult Toothpaste for Sensitive Teeth and Other Toothpaste Products. The
Company is planning to follow-up the introduction of its all-family toothpaste
with a toothpaste for sensitive teeth with the active ingredients sodium
fluoride and potassium nitrate. This toothpaste will enhance remineralization
of tooth enamel and provide cavity prevention and pain relieving properties
for individuals with exposed dentin caused by receding gums. The Company is
currently consumer testing its package design, product appeal and product
performance of the initial formulations of its toothpaste for sensitive teeth
and plans to commercially introduce such product by the end of 1998. Other
products, such as tartar control and gum care toothpastes, are also
anticipated as possible future product line extensions. See "Risk Factors--
Uncertainties Related to Development of Additional Products."

In order to dispense its toothpaste products, the Company has developed a
patented split system toothpaste tube that simultaneously dispenses two
formulations. The split system tube has dual chambers, maintaining separation
between two-component formulations until they are dispensed onto a toothbrush.
Unlike presently used split system toothpaste dispensing systems, which employ
expensive pumps, the Company's tube was designed to be filled with
conventional high-speed tube filling equipment, thus making the cost lower
than other dual chamber toothpaste dispensing systems. The split system tube
may also have commercial applications outside of the toothpaste field. See
"Business--Manufacturing."

Additional Potential Products

The Company has initiated marketing and product development activities for a
range of new products based on the Enamelon Technologies. In particular, the
Company has targeted the chewing gum market, because it

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<PAGE>

believes that chewing gum represents an attractive delivery system for the
Enamelon Technologies in a market that exceeded $1.3 billion of United States
retail sales in 1996. The Company has developed a prototype chewing gum
product and is exploring strategic alliances with major confectionary
manufacturers for marketing, sales and distribution of a chewing gum in the
United States and international markets. The Company believes that a chewing
gum formulated using the Enamelon Technologies may reduce the demineralizing
effects of plaque acids through the increased stimulation of saliva.
Accordingly, the Company believes that its proposed chewing gum may be a
beneficial supplement to brushing. FDA regulations, however, may limit claims
that the Company can make for its proposed chewing gum.

The Company also believes that the use of the Enamelon Technologies in other
food and confectionary products, such as lozenges or mints, can provide
benefits similar to those in the Company's toothpaste and other proposed oral
care products. The Company has begun to evaluate the possible uses of the
Enamelon Technologies in these products and intends to explore such
applications following the commercialization of its toothpastes.

The Company is also pursuing the development of other oral care products,
including mouthwash and professional gels for foreign markets and professional
dentifrices for both the domestic and foreign markets. The Company believes
that these products will compliment its existing products and broaden its
position in the oral care category.

MARKETING

The Company's marketing strategy aims to create product and brand awareness
among consumers by promoting the unique technology and health benefits of its
products. To differentiate its products from the competing toothpaste and oral
care products, the Company has positioned its products at the high end of the
price spectrum with a product that the Company believes will make teeth
stronger and more resistant to tooth decay. The Company uses daytime and
primetime television advertising, consumer sampling programs and distribution
of coupons by mail and Sunday newspaper supplements to educate consumers and
create demand.

In addition, the Company is targeting the dental profession to create
awareness of its remineralization technology and its products. To implement
this strategy, the Company frequently places technical articles in
professional journals, attends professional conventions and develops direct
response programs directed to dentists and dental hygienists for distribution
of patient samples. The Company believes that these programs have been well
received and that the long term benefits of professional endorsements for its
products are significant.

The Company is selling Enamelon(TM) toothpaste in four major United States
markets: Seattle, Washington; Denver, Colorado; Tampa, Florida; and
Buffalo/Rochester, New York. These markets account for approximately 5% of
United States households and enable the Company to measure the brand's
performance under actual competitive retail conditions. The Company is also
selling its all-family toothpaste in two Behavior Scan(R) markets: Pittsfield,
Massachusetts and Midland, Texas. Behavior Scan(R) is a market research
division of Information Resources Inc. (IRI). These markets are being used to
accurately measure consumer sales on a continuous basis through in store UPC
scanners. In these markets, the Company's marketing plans are precisely
executed and consumer acceptance of its products under retail conditions can
be measured and evaluated.

The Company believes that its toothpaste marketing programs have been
successful to date. In the first 20 weeks in the Behavior Scan(R) markets,
overall market share has exceeded the Company's original expectations. In
these markets, Behavior Scan(R) surveys have shown that sales of the six ounce
size of Enamelon(TM) toothpaste rank in the top 10% of all items in the
toothpaste category and that household penetration is increasing. A separate
independent survey has shown that the level of consumer satisfaction among
consumers who have purchased Enamelon(TM) toothpaste is high.

The Company believes that retailers in the markets in which it participates
have reacted positively, distribution for Enamelon(TM) toothpaste having been
obtained in retail outlets that account for more than 70% of toothpaste
category sales. To support its marketing efforts, the Company is outsourcing
the services of a sales

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<PAGE>

management organization that has ties with national retailers. In addition,
the Company is recruiting, training and supervising food brokers that have
relationships with regional food chains.

The information received from these initial markets is being used to refine
the Company's plans for the national launch of Enamelon(TM) all-family
toothpaste, which is scheduled to begin in the first half of 1998.

RESEARCH AND DEVELOPMENT

The Company operates a research and development facility in East Brunswick,
New Jersey, with a staff of six chemists. The Company's research and
development activities relate to technology, formulation, flavor, packaging
and process development, and stability and safety evaluations. In addition,
the Company sponsors research related to efficacy testing at leading
universities and outside research facilities.

Prior to the market introduction of Enamelon(TM) toothpaste, the Company
conducted in vitro and animal studies to assess the effectiveness of the
Enamelon Technologies. The results of the in vitro studies generally
demonstrated that the prototype toothpaste formulations using the Enamelon
Technologies resulted in increased hardness and fluoride uptake over that
obtained by the prevailing industry standard. The results of the animal
studies generally demonstrated that interproximal lesions were reduced over a
two-week period with daily treatment with prototype formulations. While the
formulations used in the foregoing tests differ from the final formulation of
Enamelon(TM) toothpaste, similar ingredients are used in the final
formulation, and the Company believes that the results of similar in vitro and
animal tests with the final formulation would not differ significantly from
those described above.

The Company has also conducted the studies required by the Monograph in
order to sell Enamelon(TM) toothpaste to the public and is now performing
additional in vitro, animal, intra-oral and small-scale human clinical studies
at leading independent oral research facilities in the United States, which
are intended to begin to establish additional advertising claims.

Notwithstanding the foregoing, the results of the Company's in vitro and
animal tests are not necessarily indicative of the results that will be
obtained in human clinical studies. The human studies are being conducted
under substantially different conditions from those of the laboratory tests,
and there can be no assurance that the human studies will support additional
advertising claims, including comparative claims. While studies to date
support the claims being made for Enamelon(TM) toothpaste, there can be no
assurance that additional studies will be supportive, that additional claims
can be made for the product, or that the technology can be applied in other
oral care products. Furthermore, some of the Company's other proposed products
may not be covered by the Monograph, but may be subject to other FDA
regulations, which could require additional testing and could limit the claims
that could be made for those products. See "Risk Factors--Dependence on
Successful Development and Marketing of Initial Product," "--Substantiation of
Additional Advertising Claims," and "--Compliance with the FDA Monograph."

The current focus of the Company's toothpaste development program is on the
development of a toothpaste for sensitive teeth. The Company has also begun to
conduct research on methods for employing the Enamelon Technologies in other
oral care products that it will seek to market. However, the formulations of
the Company's toothpaste products and other proposed products constantly
change as dictated by consumer testing and research and development. See "Risk
Factors--Evolving Product Formulations."

In June 1997, the Company leased approximately 5,000 square feet of space
near its New Jersey offices for use as the Company's pilot manufacturing
facility. The Company believes that the additional space and equipment will
enable it to enhance its ability to develop new and improved product
formulations using the Enamelon Technologies. See "Business--Properties."

From the Company's inception to June 30, 1997, the Company spent
approximately $3,970,705 on its research and development activities, including
$1,762,000 for the year ended December 31, 1996. The Company expects the level
of its research and development expense to increase in the future.

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<PAGE>

MANUFACTURING

The Company currently uses a contract manufacturer to manufacture its
toothpaste products for the United States market. In connection with the
foreign marketing of its toothpaste products, as well as domestic and foreign
marketing of its other proposed products, the Company may seek to sublicense
or enter into joint ventures or strategic partnerships with major consumer
product companies or other third parties on either an exclusive or non-
exclusive basis. Manufacturing arrangements in these markets are likely to be
reflected in any agreements establishing such relationships and may place
primary manufacturing responsibilities on others.

The Company possesses laboratory size batching and tube filling
capabilities, enabling it to produce small quantities of its proposed products
at Enamelon's laboratory facility. The Company has contracted with an FDA-
approved manufacturer with facilities capable of providing proper batching and
high speed filling and packaging, according to the Company's specifications.
The Company purchases all packaging and raw materials, and the manufacturer is
responsible for quality control. The Company maintains a quality assurance
program that supplements the manufacturer's quality control program.

The Company has purchased manufacturing equipment for the production of its
patented, split system toothpaste tube and for high speed tube filling. The
equipment is owned by the Company for use by the contract manufacturer. The
Company believes that this will provide greater long-term flexibility,
permitting it to change manufacturers or even to commence its own
manufacturing operations. As demand for the Company's products increases, it
may be necessary to use other contract manufacturers. See "Business--
Government Regulation," "Use of Proceeds," "Risk Factors--Dependence on Others
to Manufacture" and "--Compliance with Other Government Regulations."

COMPETITION

The United States toothpaste industry is dominated by Procter & Gamble Co.'s
Crest, Colgate-Palmolive Company's Colgate, SmithKline's Aquafresh,
Chesebrough-Pond's USA Co.'s Mentadent, Church & Dwight Co., Inc.'s Arm &
Hammer Dental Care, and Block Drug Co., Inc.'s Sensodyne. The industry is led
by Procter & Gamble Co. and its leading brand, Crest, which established its
position as a market leader when it received the seal of the American Dental
Association's Council on Dental Therapeutics for its use of fluoride in the
early 1960's.

Although the toothpaste market is mature, in recent years new products have
captured market share from established brands. Market share gains have been
achieved by higher priced, more therapeutically oriented new products with
unique marketing positions. Consequently, the Company believes that the focus
on enhanced remineralization of tooth enamel will capture consumer and
professional interest. See "Risk Factors--Dependance on Successful Development
of Initial Product" and "--Competition."

If the Company attempts to develop a chewing gum using the Enamelon
Technologies, then it will be entering a highly competitive industry. The
chewing gum market in the United States is dominated by major competitors
including Wm. Wrigley Jr. Co., Warner-Lambert Company and RJR Nabisco, Inc.
The Company also intends to compete in other food and confectionery
categories. To the extent that the Company will sublicense or enter into joint
ventures or strategic partnerships with major consumer products companies for
any of its food or confectionery products, of which no assurance can be given,
it may be aligning itself with one or more of its major competitors instead of
competing with them. The Company will also be required to comply with
applicable FDA regulations, which may limit the claims that may be made for
the Company's proposed food and confectionery products.

Additionally, the Company is pursuing the development of its rights to
manufacture and market mouth rinses and professional gels outside of the
United States, in addition to its proposed toothpastes and chewing gum and
other food and confectionery products. The international markets for these
products are in many ways similar to the United States markets in that
consumers are becoming increasingly aware of the importance of oral hygiene.
Product innovation with emphasis on therapeutic benefits is continuous. The
Company's

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<PAGE>

competition in markets outside the United States will vary by product and from
country to country. However, in general, such markets tend to be highly
competitive and dominated by large multinational and domestic corporations.
The Company does not presently have the resources that are necessary to
compete on a global scale and intends to seek corporate partners and/or
negotiate license agreements with companies that have the resources to compete
effectively in foreign markets. Although the Company will attempt to form
strategic alliances with global companies, it may also seek to negotiate on a
country-by-country basis with major regional companies, as necessary or
appropriate.

ADAHF PATENTS AND LICENSES

The United States and foreign patents and pending patent applications
constituting the ADAHF Patented Technology (the "ADAHF Patent Rights") and
certain of the Enamelon Proprietary Technology (the "Enamelon Patent Rights"
and collectively with the ADAHF Patent Rights, the "Patent Rights") are
material to the Company's business.

United States License Agreement

The ADAHF Patent Rights licensed to the Company relate to five United States
patents. Three of the issued patents relate to formulations, applicable to
toothpastes, chewing gums, mouth rinses and professional gels, containing or
capable of producing Amorphous Calcium Phosphate, Amorphous Calcium Carbonate
Phosphate and Amorphous Calcium Phosphate Fluoride, as well as the application
of these formulations to teeth. The other two patents relate to Amorphous
Calcium Phosphate Carbonate Fluoride and Amorphous Calcium Fluoride compounds
and other technology not covered in the first three United States patents.

In June 1992, the Company entered into a license agreement with the ADAHF,
which was subsequently restated and amended (the "License Agreement"). The
License Agreement grants the Company the exclusive United States license to
manufacture and sell toothpastes and chewing gum and other food and
confectionery products using the ADAHF Patented Technology. Under the License
Agreement, the Company is required to make royalty payments of 4% of net
sales, subject to minimum royalty payments of $3,000 in 1992, $5,000 in 1993
and $7,000 in each subsequent year. The License Agreement extends until three
years after the Company determines and thereafter notifies the ADAHF that the
following two conditions have been met: (i) the material claimed in the ADAHF
patents and patent application has been stabilized in the form to be used in
toothpastes, tooth cleansing gels, tooth cleaning powder, chewing gums,
confections and foods to enable it to be stored and marketed in a manner
similar to other such products and (ii) a licensed product has received the
first FDA approval necessary, if any, for marketing to professionals or the
general public. The exclusive license under the License Agreement may be
extended by the Company in additional four-year increments as to each of the
product categories or as to all such product categories, provided that the
Company has complied with its royalty and other obligations under the License
Agreement and has, as to each relevant product category or categories, sold
products generating more than $17,000 in royalties in the last year of the
preceding exclusivity period. Unless the License Agreement is otherwise
terminated as provided therein, it will extend for the term of the last to
expire of any patent licensed under the License Agreement in the United
States, including patents of improvements licensed as described below. If the
period of exclusivity under the License Agreement is not renewed, then the
license becomes non-exclusive for the remaining term of the agreement. The
Company paid $5,000 as an initial license fee under the License Agreement.

The License Agreement may not be assigned, transferred or sublicensed by the
Company without the prior written consent of the ADAHF, which consent may not
be unreasonably withheld. However, the License Agreement may be assigned to
another company in which the Company or Dr. Fox owns more than 50% of the
voting stock without the prior written consent of the ADAHF.

The License Agreement provides that improvements that are used with or that
require use of toothpastes and chewing gum and other foods or confections that
embody material claimed in the ADAHF Patent Rights, as well as any
improvements and inventions that are made jointly by the Company and the ADAHF
that do not

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<PAGE>

relate to remineralization or commercialization of such products or of the
subject matter of the ADAHF Patent Rights, will be owned by the ADAHF and
licensed to the Company. The Company has the right to veto the granting of
third-party licenses relating to such improvements and inventions that are
developed in part by the Company.

The ADAHF Patent Rights may claim the effectiveness of ingredients that do
not fall under the Monograph. However, Enamelon(TM) toothpaste does not rely
on those ingredients as active ingredients, but relies only on sodium fluoride
as the sole active ingredient. See "Risk Factors--Compliance with the
Monograph" and "--Compliance with Other Government Regulation."

Foreign License Agreement

In November 1992, the Company entered into a foreign license agreement with
the ADAHF, which was subsequently restated and amended (the "Foreign License
Agreement"). The Foreign License Agreement grants the Company an exclusive
license to manufacture and sell toothpastes and chewing gum and other food and
confectionery products using technology that is the subject matter of foreign
patent applications filed by the ADAHF in certain foreign countries. In
addition, the Foreign License Agreement grants the Company the non-exclusive
right to manufacture and sell other products in such countries using the
technology that is the subject of such foreign patent applications, including
oral sprays, mouth rinses and professional gels. Under the Foreign License
Agreement, the Company is required to pay 7% of net sales (4% if such sales
are made by an entity that enters into a joint venture with the Company and
bear the costs of prosecution of foreign patent applications). If the Company
sublicenses a foreign patent, it is required to pay to the ADAHF 25% of the
gross income resulting from such sublicense actually received by the Company.
The Foreign License Agreement expires upon the earlier of the termination of
the License Agreement, except as to those countries for which the royalty paid
per country in the preceding year exceeded $7,000, or the expiration of the
last to expire of any foreign patent licensed under the Foreign License
Agreement or the abandonment or lapse of all foreign patents and applications.
The ADAHF may abandon or permit the lapse of all foreign patent applications
and foreign patents and retains the authority to make all final decisions
controlling patent prosecution and maintenance. If the ADAHF does abandon or
permit the lapse of foreign patent applications or foreign patents,
competitors would be free to manufacture and sell products using the ADAHF
Patented Technology that could compete with the Company's toothpaste or other
proposed products in those countries.

The Company was notified in July 1995 that the ADAHF entered into a license
agreement with SmithKline for exclusive rights in the United States for the
fields of use other than toothpastes, chewing gum and other food and
confectionery products (including oral sprays, mouth rinse and professional
gels) utilizing the ADAHF Patented Technology. The Company's non-exclusive
rights for these additional applications outside of the United States are co-
extensive with the non-exclusive rights granted to SmithKline for these
products outside of the United States. Since SmithKline has substantially
greater financial and other resources than those of the Company, the Company
may be limited in its ability to compete effectively with SmithKline outside
of the United States, unless the Company enters into a strategic alliance with
another company having financial and other resources comparable to those of
SmithKline. See "Risk Factors--Competition."

Under the Foreign License Agreement, the Company was also granted an option
and right of first refusal during the term of the Foreign License Agreement,
for a limited license under future patents and patent applications for
inventions and material covered by and claimed in the ADAHF's foreign patent
rights, for all territories not included within the United States or licensed
territories under the licenses, with respect to toothpastes and chewing gum
and other food and confectionery products. Before granting such a license for
a territory to third-parties, the ADAHF must first notify the Company, which
will then have the right to obtain a license for that territory on terms
consistent with the Foreign License Agreement. To the extent the ADAHF has not
granted a license to a third-party notwithstanding the Company's failure to
exercise its right of first refusal, the Company has the additional option to
receive a license in any of such territories on terms consistent with the
Foreign License Agreement.

The Company presently is the licensee under the Foreign License Agreement of
certain ADAHF Patent Rights under patent applications pending in six foreign
jurisdictions. Patent applications made in certain other

27
<PAGE>

foreign jurisdictions, however, have been abandoned, and the other pending
foreign patent applications with respect to the ADAHF Patent Rights may also
be abandoned. Nevertheless, the Company believes that its filing of current
and contemplated patent applications with respect to the Enamelon Patent
Rights in any foreign jurisdictions in which patent applications have been
abandoned and the subsequent issuance of patents in those jurisdictions will
be adequate to preclude other manufacturers from using the Enamelon
Technologies in those jurisdictions. There can be no assurance, however, that
patents will issue in those jurisdictions or that manufacturers outside of the
United States will not infringe the Patent Rights or challenge their validity.
See "Risk Factors--Uncertain Ability to Protect Patents and Other Intellectual
Property" and "Business--Patents, Trademarks and Other Proprietary
Information."

Both the License Agreement and the Foreign License Agreement provide that
the ADAHF has the right to consent, which consent may not be unreasonably
withheld, to any assignment of the ADAHF Patented Technology in connection
with any joint venture between the Company and a third party to manufacture,
use or sell products using the ADAHF Patented Technology. In addition, the
License Agreement and Foreign License Agreement are both subject to (i)
licenses granted to the United States government, which are not transferable
for non-commercial purposes and (ii) rights retained by the ADAHF to make and
use its inventions for research and testing, but not to sell or use them
commercially in fields licensed exclusively to the Company.

The ADAHF has made no representation or warranty, express or implied, with
respect to the efficacy or possible commercial exploitation of the Company's
proposed products.

PATENTS, TRADEMARKS AND OTHER PROPRIETARY INFORMATION

Patents

The Company has been granted five United States patents relating to methods
and materials that supply soluble calcium and phosphate salts to teeth to
enhance remineralization, and one patent relating to its dual chamber
toothpaste tube, which is used to dispense Enamelon(TM) toothpaste. In
addition, the Company has 11 patent applications with respect to various
aspects of the Enamelon Technologies pending in the United States, 6 patent
applications pending with the PCT countries (which include Canada, Japan,
Belgium, France, Germany, the United Kingdom, the Netherlands, Australia, and
Sweden, among others), and 4 patent applications pending in India. The issued
patents and the patent applications relate to the Company's remineralization
technology as it could be applied to a broad range of oral care and food
products, including toothpaste, mouth rinse, chewing gum, lozenges, and
professional treatments. No assurance can be given that the pending patent
applications will issue or that if they do issue, the claims will be of
sufficient scope to prevent competitors from marketing certain products that
are similar to the Company's toothpaste or other proposed products.

To the extent that the methods and materials covered by the Enamelon Patent
Rights result in and rely on the formation of compounds covered by the ADAHF
Patent Rights, the Company will have to pay royalties to the ADAHF under the
License Agreements, even if the Company is using technology covered by the
Enamelon Patent Rights in the manufacture of its products. No such royalties
will be payable with respect to products using technology not covered by the
ADAHF Patent Rights. Company scientists and ADAHF scientists are presently
determining whether Enamelon(TM) toothpaste uses any of the technology covered
by the ADAHF Patent Rights. See "Business--ADAHF Patents and Licenses."

The Enamelon Patent Rights may claim the effectiveness of ingredients that
do not fall under the Monograph. Enamelon(TM) toothpaste relies only on sodium
fluoride as the sole active ingredient, which is covered by the Monograph.

The Company is not aware of the existence of any challenges to the validity
of the Enamelon Patent Rights or of any claim made by a third party of patent
infringement with respect to Enamelon(TM) toothpaste. No assurance can be
given, however, that such challenges or claims will not be asserted in the
future. See "Risk Factors--Uncertain Ability to Protect Patents and Other
Intellectual Property."

28
<PAGE>

The ADAHF has advised the Company that the ADAHF may have co-inventorship
rights to certain Enamelon Patent Rights. If the ADAHF has such co-
inventorship rights, such Enamelon Patent Rights will be assigned to the ADAHF
under the License Agreement and the Foreign License Agreement and will be
licensed back to the Company under the License Agreement and the Foreign
License Agreement, as the case may be. In that event, the Company will not be
required to make royalty payments to the ADAHF with respect to any of the
Enamelon Patent Rights unless such Enamelon Patent Right is deemed to be a
"Field Development" made by the ADAHF under the applicable license agreement,
and the ADAHF will not have the right to sublicense the Enamelon Patent Rights
without the Company's consent, which may be withheld in its sole discretion.

Trademarks

The Company intends to protect the names of certain of its products and
formulations by registration of its trademarks, where appropriate, both in the
United States and in foreign countries.

The Company has filed applications in the United States Patent and Trademark
Office to register the word mark ENAMELON on the Principal Register for
toothpaste, chewing gum, certain confection products, and various oral care
products, such as medicated mouth washes and professional dental gels. The
registration covering toothpaste was issued in late August 1997. The
applications covering chewing gum, confection and oral care products have been
allowed, subject to use of the mark. The Company has also registered or
applied to register the ENAMELON mark for toothpaste, chewing gum and/or
certain confectionery products in certain foreign countries. It is possible
that prior registrations and/or uses of the mark (or a confusingly similar
mark) may exist in one or more countries, in which case the Company might
thereby be precluded from registering and/or using the ENAMELON mark in such
countries.

In connection with the Company's anticipated Internet web site, the Company
has registered with Network Solutions, Inc. the Internet domain name
"ENAMELON.COM." There can be no assurance that a registered trademark held by
a third party that may be used to prevent the Company from using this domain
name does not exist.

The Company has also filed applications to register the trademarks FLUOREMIN
and LIQUID CALCIUM and its stylized "E" logo in the United States and Canada.
In addition, the Company is considering other trademarks and has filed
applications to register those marks in the United States and Canada.

The Company is not aware of any third-party challenges to the validity of
its trademarks, trademark registrations, or trademark applications (other than
through pending foreign office actions), or of any claim by a third party of
trademark infringement with respect to its products, marks, registrations or
applications. No assurance can be given, however, that such challenges or
claims will not be asserted in the future. See "Risk Factors--Uncertain
Ability to Protect Patents and Other Intellectual Property."

Proprietary Information

Much of the Company's technology is dependent upon the knowledge, experience
and skills of key scientific and technical personnel. To protect rights to its
proprietary know-how and technology, Company policy requires all employees and
consultants to execute confidentiality agreements that prohibit the disclosure
of confidential information to anyone outside the Company. These agreements
also require disclosure and assignment to the Company of discoveries and
inventions made by such persons while devoted to Company activities. There can
be no assurance that these agreements will not be breached, that the Company
will have adequate remedies for any such breach or that the Company's trade
secrets will not otherwise become known or be independently developed by
competitors. In addition, it is possible others may infringe the patent rights
of the Company. See "Risk Factors--Protection of Proprietary Technology and
Information."

29
<PAGE>

GOVERNMENT REGULATION

Under the Federal Food, Drug, and Cosmetic Act, as amended, and the
implementing regulations promulgated by the FDA, a non-prescription (over-the-
counter) drug may be marketed in one of two ways. The FDA has established a
program to promulgate "monographs" determining the conditions under which most
non-prescription drugs may be marketed without the requirement of an NDA. The
monographs establish those active ingredients that are safe and effective at
specified levels and all aspects of the labeling that are permitted for these
products. The monographs establish all of the conditions for marketing a non-
prescription drug without the need for an NDA. Any non-prescription drug that
does not comply with the final monograph may lawfully be marketed only if it
has an approved NDA. Because it is time consuming and costly to obtain FDA
approval of an NDA, most non-prescription drugs (except those that have
recently been switched from prescription to non-prescription status) are
marketed pursuant to an FDA over-the-counter drug monograph.

The FDA has published the Monograph for over-the-counter anticaries drug
products, the category of over-the-counter drug products covering the
Company's toothpaste and proposed oral care products. The Monograph
establishes conditions under which non-prescription drug products that aid in
the prevention of dental caries or cavities are generally recognized as being
safe and effective and not misbranded. The Company intends to rely on the
advice of FDA counsel to satisfy formulation and labeling requirements of the
Monograph to the extent that they apply to the Company's products. See "Risk
Factors--Compliance with the Monograph."

The FDA has also published the Tentative Final Monograph for OTC Oral Health
Care Drug Products, which addresses combination drug products containing 5
percent potassium nitrate as a desensitizing ingredient and sodium fluoride as
an anticavity ingredient, the category of OTC drug products covering the
Company's proposed adult toothpaste for sensitive teeth. The Tentative Final
Monograph proposes conditions under which such products will be determined to
be generally recognized as safe and effective and not misbranded. The FDA has
issued an enforcement policy permitting the marketing of an
anticaries/desensitizing drug product, in accordance with the terms of the
Tentative Final Monograph, pending the establishment of a Final Monograph
covering this combination. The Company intends to satisfy formulation and
labeling requirements of the Tentative Final Monograph in the development of
its adult toothpaste for sensitive teeth. See "Risk Factors--Government
Regulation."

Although the Company intends to make only such labeling claims as are
permitted by the Monograph and the Tentative Final Monograph in order to avoid
the substantial expense and time required to receive FDA approval under an
NDA, it may seek to file an NDA with the FDA in order to make further claims
not covered by the Monograph or the Tentative Final Monograph. If the Company
decides to or is required to make such additional claims, it may seek
strategic partners to assist in the financing of the NDA process. Further, the
Company may not have sufficient financing or other resources available to
complete the NDA process and assuming such financing and resources are
available, there is no assurance that the FDA will approve the NDA. Proposed
products not subject to the Monograph or the Tentative Final Monograph may be
subject to other FDA regulations.

Each domestic drug product manufacturing facility must be registered with
the FDA. Each manufacturer must inform the FDA of every drug product it has in
commercial distribution and keep such list updated. Domestic manufacturing
facilities are also subject to at least biennial inspection by the FDA for
compliance with Good Manufacturing Practices ("GMP's") promulgated by the FDA.
Compliance with GMP's is required at all times during the manufacturing and
processing of drug products. Accordingly, to the extent that the Company uses
contract manufacturers, such manufacturers must be in compliance with all FDA
requirements. The Company currently uses contract manufacturers that are in
compliance with all FDA requirements.

The Company is also subject to regulation under various federal and state
laws regarding, among other things, occupational safety, environmental
protection, hazardous substance control and product advertising and promotion.
In connection with its research and development activities, the Company is
subject to federal, state and local laws, rules, regulations and policies
governing the use, generation, storage, discharge, handling and disposal of
certain materials and wastes. The Company believes that it has complied with
these laws and regulations in all material respects, and it has not been
required to take any action to correct any material noncompliance. The Company
does not currently anticipate that any material capital expenditures will be
required in order to comply with federal, state and local environmental laws
or that compliance with such laws

30
<PAGE>

will have a material effect on the financial condition or competitive position
of the Company. The Company may also be subject to foreign government
regulations regarding over-the-counter drug products. Accordingly, the Company
intends to submit applications to foreign regulatory agencies, if necessary,
to make therapeutic health claims for its products to be marketed abroad. See
"Risk Factors--Compliance with Other Government Regulation."

LIABILITY INSURANCE

The Company's business involves exposure to potential product liability
risks that are inherent in manufacturing and marketing of pharmaceutical
products. The Company currently has general liability insurance with coverage
limits of $1,000,000 per occurrence and $2,000,000 on an annual aggregate
basis and product liability insurance with coverage limits of $6,000,000 per
occurrence and $7,000,000 on an aggregate basis. While the Company's insurance
policies provide coverage on a "per occurrence" basis and are subject to
annual renewal, there can be no assurance that the Company will be able to
maintain such insurance on acceptable terms, that the Company will be able to
secure increased coverage or that any insurance will provide adequate
protection against potential liabilities.

PERSONNEL

The Company has, as of the date of this Prospectus, 20 full-time employees
and four part-time employees. None of the Company's employees is represented
by a union, and the Company believes that its relationship with its employees
is good.

PROPERTIES

The Company currently leases office facilities located at 15 Kimball Avenue,
Yonkers, New York from an affiliate and one of his relatives for a total of
$3,100 per month. See "Certain Transactions." The Company also leases office
and laboratory facilities in East Brunswick, New Jersey for $5,670 per month,
which expires December 31, 1998. The combined amount of space which relate to
the above leased premises totals approximately 5,200 square feet.

The Company leased an additional 5,000 square feet for its product
development needs in the second quarter of 1997 in East Brunswick, New Jersey
for $2,854 per month and anticipates occupying the additional space in the
third quarter of 1997. See "Business--Research and Development."

The Company believes that if its business develops as anticipated, it will
need additional space for its administrative and research and development
needs. Since the Company presently intends to rely on outside manufacturers to
manufacture its products, it does not have a manufacturing facility. See "Risk
Factors--Dependence on Others to Manufacture" and "Business--Manufacturing."

LEGAL MATTERS

The Company is not a party to any pending legal or administrative
proceeding.

31
<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table sets forth information regarding the Company's directors
and executive officers.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Dr. Steven R. Fox....... 43 Chairman of the Board and Chief Executive Officer
D. Brooks Cole.......... 57 President and Chief Operating Officer
Norman Usen............. 55 Vice President--Product Development and Secretary
Anthony E. Winston...... 52 Vice President--Technology and Clinical Research
Thomas J. Duncan........ 49 Vice President--Operations
Edwin Diaz.............. 34 Vice President--Finance, Chief Financial Officer and Treasurer
Dr. S.N. Bhaskar........ 74 Director
Dr. Bert D. Gaster...... 70 Director
Richard A. Gotterer..... 34 Director
Eric D. Horodas, Esq.... 44 Director
</TABLE>

The business experience, principal occupations and employment, as well as
the periods of service, of each of the directors and executive officers of the
Company during at least the last five years are set forth below.

Steven R. Fox, D.D.S., F.I.C.D., F.A.C.D., is the founder of the Company and
has been Chairman of the Board of Directors and Chief Executive Officer of the
Company since June 1992. From June 1992 through December 1995 and from June
1992 through June 1996, respectively, Dr. Fox was also the Company's President
and Treasurer. Dr. Fox is a member of the faculty of the Harvard School of
Dental Medicine. Since July 1978, Dr. Fox has been a practicing dentist and
currently practices dentistry on a part-time basis. Dr. Fox was an Assistant
Clinical Professor at New York University's College of Dentistry from 1979 to
1987. Dr. Fox has been active in various professional organizations, including
the International Dental Research Society, the American Dental Association and
the Ethics Committee of the Ninth District Dental Society.

D. Brooks Cole has been the President and Chief Operating Officer of the
Company since January 1996. Commencing in September 1993, Mr. Cole was
retained by the Company as a consultant. Mr. Cole has over twenty-five years
of experience in the marketing of over-the-counter drugs, oral care products
and cosmetics. Mr. Cole was employed by the Mentholatum Company, Inc., an
over-the-counter drug company, in various positions from 1980 to 1993, most
recently as President of the United States Division, and a member of the
Executive Committee and the Board of Directors from 1983 to 1993. He was
employed at Avon Products, Inc., a cosmetics company, in various positions
from 1971 to 1980, most recently as a Vice President from 1976 to 1980. Mr.
Cole was employed at Vick Chemical Company, a consumer drug company, and
served in several sales, promotion and product marketing positions from 1961
to 1971. Mr. Cole was a Vice President of the Non Prescription Drug
Manufacturers Association and served on its Executive Committee from 1990 to
1993 and presently serves on its Board of Directors.

Norman Usen has been Vice President--Product Development and Secretary of
the Company since May 1995. Prior to that time, Mr. Usen served as Vice
President--Research and Development and Product Development of the Company
from July 1993 to May 1995 and as Vice-President of Operations from May 1995
to November 1996. Mr. Usen has specialized in consumer product development
with 30 years' experience in product development, contract manufacturing and
consumer research. He had substantial responsibility for the development of
Arm & Hammer Toothpaste and Toothpowder for Church & Dwight Co., Inc. from
1982 to 1991. Since 1992, Mr. Usen, as President and sole stockholder of Nu-
Products, Inc. ("NP"), has been an independent consultant. From August 1993
through April 1995, NP was retained by the Company as a consultant on a part-
time basis to coordinate product development.

Anthony E. Winston has been the Vice President--Technology and Clinical
Research since January 1995. Mr. Winston has over 25 years of technology
development and clinical research experience most recently as

32
<PAGE>

Technical Director for Church & Dwight Co., Inc. where he was responsible for
technology development, clinical research, ADA and FDA interface, claim
substantiation and patent protection for Arm & Hammer's baking soda
toothpastes, including their latest introduction: Peroxy Care(R). Mr. Winston
is the holder or co-holder of more than 60 United States patents, of which 14
are for toothpaste products, with 2 additional oral care patents pending.

Thomas J. Duncan has been the Vice President--Operations since May 1997.
Commencing in November 1996, Mr. Duncan served as Director of Manufacturing.
Mr. Duncan has over 20 years' experience in manufacturing and engineering at
consumer products companies. Mr. Duncan was a Project Manager in Corporate
Engineering at Church & Dwight Co., Inc. from 1982 through 1995. Mr. Duncan
also was a Division Engineer at Boyle-Midway Division of American Home
Products from May 1978 through October 1981.

Edwin Diaz, CPA, has been Chief Financial Officer, Vice President--Finance,
and Treasurer since August 1996. Prior to joining the Company, Mr. Diaz was
the Corporate Controller of NYCOR, INC., a manufacturer of devices used in
heating and cooling systems, from September 1994 to August 1996. He was the
Controller of Lancer Industries, Inc., a company specializing in the
acquisition of distressed and under-performing companies, from 1990 until
August 1994. Mr. Diaz was employed by the Alferi Organization, a real estate
development company, as Assistant Controller from 1988 until 1990 and by the
accounting firm of Arthur Young & Company from 1986 until 1988.

S.N. Bhaskar, D.D.S., M.S., Ph.D., Major General U.S. Army (Ret.), has been
a director of the Company since August 1994 and the Chairman of the Scientific
Advisory Board since August 1992. Since 1981, Dr. Bhaskar has been in a
private dental practice in Monterey and Salinas, California. From January 1955
to December 1980, Dr. Bhaskar was Major General, Dental Corps in the United
States Army, Assistant Surgeon General for Dental Services of the United
States Army and Chief of the United States Army Dental Corps. He is an
Honorary Fellow of the Academy of General Dentistry, a Diplomat to the
American Board of Oral Medicine and the American Board of Oral Pathology, and
a member of the Dental Research Advisory Committee to the United States Army.
Dr. Bhaskar is a former Vice Chairman of Atrix Laboratories, Inc. and a
consultant to the Board of Directors at Vipont, Inc., a publicly-traded
company engaged in the development and marketing of oral care products.

Bert D. Gaster, D.D.S., M.S.D., has been a director of the Company since
November 1992 and is a tenured Associate Professor at New York University's
College of Dentistry. Dr. Gaster has held various faculty positions with New
York University's College of Dentistry since 1972, including that of Clinic
(Module) Director for nine years. Dr. Gaster is a member of the American
College of Prosthodontics, has served on the Budget Policy Development
Committee and currently is a Director of the New York University Dental Alumni
Association. Dr. Gaster is currently an attending Prosthodontist with four
hospitals in the New York metropolitan area.

Richard A. Gotterer has been a director of the Company since November 1992
and has been a portfolio manager of fixed income securities at Schroder
Capital Management Inc., an investment banking firm since September 1993. Mr.
Gotterer was a private investor from June 1990 through August 1993. Mr.
Gotterer was the Vice President of Finance and Chief Financial Officer of
Channel American LPTV Holdings, Inc., an entertainment company, from February
1988 to May 1990. He was a financial analyst with Oppenheimer & Co., Inc., an
investment banking firm, from October 1985 to October 1987.

Eric D. Horodas has been a director of the Company since November 1992. Mr.
Horodas is President of Markev Realty Corporation, and is Vice President and
Secretary of Baco Realty Corporation, both of which are actively engaged in
originating, managing and servicing commercial real estate and mortgage
investments. He has also been acting as a consultant to various insurance
regulators and insurance industry members in connection with the restructuring
and rehabilitation of financially troubled insurance companies since October
1993. Mr. Horodas was a founding partner and member of the Management
Committee of the law firm of Rubinstein & Perry, from February 1988 until
October 1993.

All directors hold office until the next annual meeting of stockholders or
until their successors are elected and qualify. Officers are elected annually
by, and serve at the discretion of, the Board of Directors.

33
<PAGE>

SCIENTIFIC ADVISORY BOARD

The Company has established a four-member Scientific Advisory Board (the
"SAB"). Each member is a distinguished chemist or dental researcher chosen for
his continuing commitment to chemistry and dental science. The SAB provides
expertise and advice to the Company in several areas including guidance for
the ethical and scientific conduct of the scientific testing of the Company's
proposed products. The SAB also works in cooperation with the Company and the
scientists at the American Dental Association's Paffenbarger Research Center
at the United States Government's National Institute of Standards and
Technology, where the ADAHF Patented Technology was developed.

Consulting compensation at annual rates ranging from $5,000 to $15,000 is
paid to certain members of the SAB. In addition, the Company intends to grant,
from time to time, stock options to members of the SAB. See "Management--
Employee Benefit Plans" for a description of options already granted to
certain SAB members. SAB members are elected annually by, and serve at the
discretion of, the Board of Directors. Currently, the members of the SAB are
as follows:

S.N. Bhaskar, D.D.S., Ph.D., Major General United States Army (Ret.) serves
as the Chairman of the SAB and is also a member of the Company's Board of
Directors. See "Management--Directors and Executive Officers."

Robert Bruce Merrifield, Ph.D., is the recipient of the 1984 Nobel Prize in
Chemistry as well as numerous other scientific honors, and has been the John
D. Rockefeller, Jr. Professor at The Rockefeller University since 1966. He has
been a member of the faculty at The Rockefeller Institute for Medical Research
since 1963. Dr. Merrifield is an Associate Editor of The International Journal
of Peptide and Protein Research, on the Editorial Board of Analytical
Biochemistry, and a member of the American Chemical Society, American Society
of Biological Chemists, American Institute of Chemists and the National
Academy of Sciences. Dr. Merrifield has been the Nobel Guest Professor,
Uppsala, Sweden.

Joseph L. Henry, D.D.S., M.S., Ph.D., F.A.C.D., F.R.S.H., F.I.C.D., has held
faculty positions at the Harvard School of Dental Medicine, including Interim
Dean for the Dental School and Associate Dean for Government and Community
Affairs, since 1975. In December 1994, Dr. Henry retired as Associate Dean at
the Harvard School of Dental Medicine, and Professor and Chairman of the
Department of Oral Diagnosis and Oral Radiology at the Harvard School of
Dental Medicine. Dr. Henry held various faculty positions at Howard University
College of Dentistry from 1953 to 1975, including Professor of Oral Medicine,
Superintendent and Director of Clinics, and served as Dean of the Dental
College for nine years.

Hans-Peter Weber, D.M.D., has held several faculty positions at the Harvard
School of Dental Medicine since 1989, and has been Chairman and Associate
Professor of the Department of Restorative Dentistry at the Harvard School of
Dental Medicine since 1992. Dr. Weber also served as the Director of Implant
Dentistry at the Harvard School of Dental Medicine from 1992 to 1994. He has
published numerous articles in professional journals and is an Associate
Fellow of the Academy of Prosthodontics.

COMMITTEES OF THE BOARD OF DIRECTORS

The Audit Committee, established in July 1993, currently consists of Mr.
Gotterer (Chairman) and Dr. Bhaskar. The functions of the Audit Committee are
to recommend annually to the Board of Directors the appointment of the
independent certified public accountants of the Company, review the scope of
their annual audit and other services they are asked to perform, review the
report on the Company's financial statements following the audit, review the
accounting and financial policies of the Company and review management's
procedures and policies with respect to the Company's internal accounting
controls.

The Compensation Committee, also established in July 1993, currently
consists of Mr. Horodas (Chairman) and Dr. Gaster. The functions of the
Compensation Committee are to review and approve salaries, benefits and
bonuses for all executive officers of the Company and to review and recommend
to the Board of Directors matters relating to employee compensation and
employee benefit plans. The Compensation Committee also administers the 1993
Plan and the 1997 Plan. See "Management--Employee Benefit Plans."

34
<PAGE>

EXECUTIVE COMPENSATION

The table below summarizes the compensation received by the Company's Chief
Executive Officer for the fiscal years ended December 31, 1994, 1995 and 1996,
as well as the compensation of each executive officer of the Company who
received compensation in excess of $100,000 for services rendered to the
Company during any of those years ("named executive officers"). No other
executive officer of the Company received compensation in excess of $100,000
during such years.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
-------------------- ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITION(1) YEAR SALARY ($) BONUS ($) OPTIONS (#)
------------------------------ ----- ---------- --------- ------------
<S> <C> <C> <C> <C>
Steven R. Fox..........................
Chairman of the Board and Chief 1996 $175,000 $75,000 50,000
Executive Officer(2)(3) 1995 $ 75,000 $10,000 450,000
1994 $ 75,000 -- --
Anthony E. Winston.....................
Vice President--Technology and 1996 $135,000 $20,250 --
Clinical Research 1995 $129,875 -- 160,000
D. Brooks Cole......................... 1996 $150,000 $22,500 50,000
President and Chief Operating
Officer(3)
Norman Usen............................ 1996 $115,000 $17,000 --
Vice President--Product Development
</TABLE>
- --------
(1) See "Management--Employment and Consulting Agreements" for a description
of Dr. Fox's employment agreement with the Company as Chairman of the
Board and Chief Executive Officer which commenced on January 1, 1994;
Anthony E. Winston's employment agreement with the Company as the
Company's Vice President-Technology and Clinical Research which commenced
on January 1, 1995; D. Brooks Cole's employment agreement with the Company
whereby Mr. Cole became the Company's President and Chief Operating
Officer as of January 1, 1996; and Norman Usen's employment agreement with
the Company as the Company's Vice President--Product Development.
(2) Dr. Fox resigned as the Company's President effective on January 1, 1996,
and as Treasurer effective August 1, 1996.
(3) Options granted on December 11, 1996 issued at $6.875 for Dr. Fox and
$6.25 for Mr. Cole vest 25% as of December 11, 1997 and an additional 25%
on December 11 in each successive year.

The following table sets forth the individual grants of stock options made
during the fiscal year ended December 31, 1996 to each of the named executive
officers.

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR
OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION
NAME GRANTED(#) FISCAL YEAR ($/SH) DATE
---- ---------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Steven R. Fox.................... 50,000(1) 31.3% $6.875 12/10/01
D. Brooks Cole................... 50,000(1) 31.3% $6.25 12/10/06
Anthony E. Winston............... -- -- -- --
Norman Usen...................... -- -- -- --
</TABLE>
- --------
(1) Options granted on December 11, 1996 vest 25% as of December 11, 1997 and
an additional 25% each successive year.

35
<PAGE>

The following table sets forth the number of exercisable or vested and
unexercisable or unvested options during the fiscal year ended December 31,
1996 held by each of the named executive officers and the year-end value of
such options.

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS AT
SHARES OPTIONS AT FISCAL FISCAL
ACQUIRED YEAR-END(#) YEAR-END($)
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------------- ----------------
<S> <C> <C> <C> <C>
Steven R. Fox...... -- -- 450,000/50,000 $ 1,462,500/0
Anthony E.
Winston........... -- -- 160,000/0 360,000/0
D. Brooks Cole..... -- -- 135,000/50,000 498,870/0
Norman Usen........ -- -- 168,762/30,000(1) 830,309/147,600
</TABLE>
- --------
(1) These options vested on May 1, 1997.

COMPENSATION OF DIRECTORS

Each non-employee director receives $500 for attendance at each meeting plus
reimbursement for expenses for each meeting attended and an annual grant of
options to purchase 3,500 shares of Common Stock. Each member of the Audit
Committee and the Compensation Committee receives $250 for each meeting
attended together with reimbursement of expenses.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Dr. Bert D. Gaster and Mr. Eric D. Horodas served as members of the
Company's compensation committee during the last completed fiscal year. There
are no compensation committee (or board of directors) interlock relationships
with respect to the Company.

EMPLOYMENT AGREEMENTS

The Company has entered into an employment agreement with Dr. Steven R. Fox,
pursuant to which Dr. Fox is employed as Chairman of the Board of Directors
and Chief Executive Officer for a term of five years commencing on January 1,
1994. The agreement, as amended, provides that Dr. Fox shall devote such time
to the Company as necessary to perform his responsibilities thereunder, but no
less than forty hours per week, in consideration of an annual salary of
$75,000, which has been increased in stages to $250,000, effective January 1,
1997. The employment agreement acknowledges that Dr. Fox shall be entitled to
maintain his dental practice and see patients on a basis that does not
interfere with the performance of his duties thereunder. Dr. Fox continues to
practice dentistry on a part-time basis. Pursuant to the agreement, if Dr. Fox
opposes a change of control of the Company, as defined in the agreement, and
thereafter elects to terminate his employment with the Company, he is entitled
to a one time payment of either (i) two and nine-tenths (2.9) times the sum of
Dr. Fox's current base annual salary plus any amounts due to him under the
Company's Incentive Compensation Plan if a majority of the Company's Board of
Directors opposed the change of control or (ii) two and one-half (2.5) times
the sum of Dr. Fox's current base annual salary plus any amounts due to him
under the Company's Incentive Compensation Plan if a majority of the Company's
Board of Directors voted in favor of the change of control. However, such
payment shall not exceed the maximum payment permitted by Section 280G of the
Internal Revenue Code of 1986, as amended. Pursuant to the Company's Incentive
Compensation Plan, Dr. Fox is entitled to 50% of all amounts allocated to such
plan. See "--Employee Benefit Plans."

The Company has entered into an employment agreement with D. Brooks Cole on
January 1, 1996, pursuant to which Mr. Cole is employed as President and Chief
Operating Officer. The agreement, as amended, provides

36
<PAGE>

that Mr. Cole will devote all of his business time to the Company in
consideration of an annual salary of $175,000, effective January 1, 1997,
subject to adjustment. In addition, Mr. Cole is entitled to 15% of all amounts
allocated to the Company's Incentive Compensation Plan. Mr. Cole serves at the
pleasure of the Board of Directors; however, if the Company elects to
terminate the agreement, Mr. Cole is entitled to six months severance pay,
including all salary and benefits. Pursuant to the employment agreement, Mr.
Cole was granted a seven-year option to purchase 99,000 shares of Common Stock
at an exercise price equal to $3.00 per share, immediately exercisable from
the date of the grant, and expiring seven years thereafter.

The Company has entered into an employment agreement with Norman Usen,
pursuant to which Mr. Usen is employed full-time as Vice President--Product
Development for a term of three years commencing on May 1, 1995, which was
extended to June 30, 2000. The consulting agreement between the Company and
Mr. Usen's consulting company, Nu-Products, Inc. ("NP"), terminated upon the
commencement of Mr. Usen's employment agreement. Pursuant to the employment
agreement, as extended effective July 1, 1997, Mr. Usen will devote his full
time to the Company in consideration of an annual salary of $143,000 for the
period July 1, 1997 to June 30, 1998, and $150,000 for the period ending June
30, 2001. If Mr. Usen is terminated by the Company without cause, as defined
in the agreement, then he will be entitled to continue to receive his salary
and benefits until the end of the term of the agreement. As additional
compensation, Mr. Usen will be entitled to 12.5% of all amounts allocated to
the Company's Incentive Compensation Plan. Pursuant to the employment
agreement, Mr. Usen was granted seven-year options to purchase an aggregate
90,000 shares of Common Stock at an exercise price equal to $1.33 per share.
The options previously granted to NP were terminated and reissued to Mr. Usen.

The Company has entered into an employment agreement with Anthony E.
Winston, pursuant to which Mr. Winston is employed full-time as Vice
President--Technology and Clinical Research for a term of two years ending in
January 1997, which was extended to January 2000. Pursuant to the employment
agreement, Mr. Winston will devote his full time to the Company in
consideration of an annual salary of $143,000 for the period ending January
1998, $151,000 for the period ended January 1999, and $160,000 for the period
ending January 2000. If Mr. Winston is terminated from the Company without
cause, as defined in the agreement, then he shall be entitled to continue to
receive his salary and benefits until the end of the term of the agreement. As
additional compensation, Mr. Winston shall be entitled to 10% of all amounts
allocated to the Company's Incentive Compensation Plan. Pursuant to the
employment agreement, Mr. Winston was granted ten-year options to purchase an
aggregate 150,000 shares of Common Stock at an exercise price equal to $1.33
per share.

EMPLOYEE BENEFIT PLANS

1993 Stock Option Plan

In July 1993, the Board of Directors adopted the 1993 Plan which was
approved by the Company's stockholders in September 1993. The 1993 Plan
provides for the grant to qualified employees (including officers and
directors) of the Company of options to purchase shares of Common Stock. As of
September 16, 1997, a total of 1,464,625 shares of Common Stock were reserved
for issuance upon exercise of stock options granted or to be granted under the
1993 Plan. The 1993 Plan is administered by the Board of Directors or a
committee of the Board of Directors (the "Committee") whose members are not
entitled to receive options under the 1993 Plan (excluding options granted
exclusively for directors fees). The Committee has complete discretion to
select the optionee and to establish the terms and conditions of each option,
subject to the provisions of the 1993 Plan. Options granted under the Plan may
or may not be "incentive stock options" as defined in Section 422 of the
Internal Revenue Code ("Incentive Options") depending upon the terms
established by the Committee at the time of grant, but the exercise price of
options granted may not be less than 100% of the fair market value of the
Common Stock as of the date of grant (110% of the fair market value if the
grant is an Incentive Option granted to an employee who owns more than 10% of
the outstanding Common Stock). Options may not be exercised more than 10 years
after the grant (five years if the grant is an Incentive Option to any
employee who owns more than 10% of the outstanding Common Stock). Options
granted under the 1993 Plan are not transferable

37
<PAGE>

and may be exercised only by the respective grantees during their lifetimes or
by their heirs, executors or administrators in the event of death. Under the
1993 Plan, shares subject to canceled or terminated options are reserved for
subsequently granted options. The number of options outstanding and the
exercise price thereof are subject to adjustment in the case of certain
transactions such as mergers, recapitalizations, stock splits or stock
dividends.

As of August 1, 1997, the Company had granted pursuant to the 1993 Plan
options exercisable for periods of three to ten years to purchase an aggregate
of 1,381,071 shares of Common Stock, at exercise prices ranging from $1.33 to
$17.50 per share, options to purchase an aggregate of 144,515 shares granted
to other members of the Company's Board of Directors at exercise prices
ranging from $3.06 to $6.25 per share, and options to purchase an aggregate of
28,875 shares granted to members of the Company's Scientific Advisory Board
other than members of the Company's Board of Directors at exercise prices
ranging from $2.00 to $17.50 per share.

1997 Stock Option Plan

In December 1996, the Board of Directors adopted the 1997 Plan which was
approved by the Company's stockholders in May 1997. The 1997 Plan provides for
the grant to qualified employees (including officers and directors),
independent contractors and consultants of the Company and/or any subsidiary
or parent thereof options to purchase shares of Common Stock. A total of
750,000 shares of Common Stock, par value $.001, have been reserved for
issuance upon exercise of stock options to be granted under the 1997 Plan. The
1997 Plan will be administered by the Board of Directors or a Stock Option
Committee or Compensation Committee of the Board of Directors (the
"Committee") which shall be composed of at least two outside directors
appointed by the Board of Directors of the Company. The Committee has complete
discretion to select the optionee and to establish the terms and conditions of
each option, subject to the provisions of the 1997 Plan. Options granted under
the 1997 Plan may or may not be "incentive stock options" as defined in
Section 422 of the Internal Revenue Code ("Incentive Options") depending upon
the terms established by the Committee at the time of grant, but in no event
shall the option price be less than 100% of the fair market value of the
Common Stock at the time of grant (110% of the fair market value if the grant
is an Incentive Option granted to an employee who owns more than 10% of the
outstanding Common Stock). Options may not be exercised more than 10 years
after the grant. Options granted under the 1997 Plan are not transferable,
except by will or the laws of descent and distribution, and may be exercised
only by the respective grantees during their lifetimes or by their heirs,
executors or administrators in the event of death. Under the 1997 Plan, shares
subject to canceled or terminated options are reserved for subsequently
granted options. In no event shall an employee be granted options for more
than 150,000 shares of Common Stock during any calendar year period, subject
to changes in the Company's capitalization. The number of options outstanding
and the exercise price thereof are subject to adjustment in the case of
certain transactions such as mergers, recapitalizations, stock splits or stock
dividends.

As of the date of this Prospectus, the Company has not granted any options
pursuant to the 1997 Plan.

INCENTIVE COMPENSATION PLAN

The Company has established a five-year incentive compensation program to
award officers and key employees for their efforts on behalf of the Company as
measured by yearly increases in the net income (before income taxes and
extraordinary items) generated by the Company. The program provides for
incentive compensation utilizing an objective formula based upon guidelines in
accordance with the Company's goals. The Company will establish a yearly bonus
pool, equal to five percent of its net income before income taxes including
the amount provided for by the incentive compensation plan, and extraordinary
items ("ICP Income"), to be distributed to officers and key employees. For the
subsequent four fiscal years, such bonus pool shall only be established in the
event the Company's ICP Income equals or exceeds by at least 5% the Company's
ICP Income for the prior fiscal year. Amounts remaining in the yearly bonus
pool which are not distributed do not carry over into the subsequent year's
pool. The maximum amount an executive or key employee may receive from the
bonus pool is limited to two times such person's salary.

38
<PAGE>

INDEMNIFICATION

Pursuant to the Company's Certificate of Incorporation and By-laws, officers
and directors of the Company will be indemnified by the Company to the fullest
extent allowed under Delaware law for claims brought against them in their
capacities as officers or directors. Indemnification is not allowed if the
officer or director does not act in good faith and in a manner reasonably
believed to be in the best interests of the Company, or if the officer or
director had no reasonable cause to believe his conduct was lawful.
Accordingly, indemnification may occur for liabilities arising under the
Securities Act. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted for directors, officers and controlling
persons of the Company pursuant to the foregoing provisions or otherwise, it
is the position of the Securities and Exchange Commission, that such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable.

39
<PAGE>

PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth as of the date of this Prospectus, certain
information, with respect to the beneficial ownership of shares of Common
Stock by (i) each person known by the Company to be the owner of more than 5%
of the outstanding shares of Common Stock, (ii) each director, (iii) the
Company's Chief Executive Officer, and executive officers earning, including
salary and bonus, greater than $100,000 annually ("Named Executive Officer"),
(iv) all directors and executive officers as a group and (v) each Selling
Stockholder.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED SHARES TO OWNED AFTER
PRIOR TO THE OFFERING(1) BE SOLD IN THE OFFERING(1)
------------------------------------ THE ----------------------
NAME AND ADDRESS NUMBER PERCENT(2) OFFERING NUMBER PERCENT
---------------- --------------- -------------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Dr. Steven R. Fox(3).... 3,423,240(4) 40.0% 410,000 3,013,240 30.0%
Mr. Norman Usen(3)...... 198,762(5) 2.4% 20,000 178,762 1.8%
Mr. Anthony E.
Winston(3)............. 160,000(6) 1.9% -- 160,000 1.6%
Mr. D. Brooks Cole(3)... 135,000(7) 1.6% 50,000 85,000 *%
Mr. Eric Horodas(3)..... 109,262(8)(9) 1.3% -- 109,262 1.1%
Mr. Richard
Gotterer(3)............ 90,512(8) 1.1% 10,000 80,512 *%
Dr. S.N. Bhaskar(3)..... 68,756(10) *% -- 68,756 *%
Dr. Bert Gaster(3)...... 25,253(8) *% 10,000 15,253 *%
All directors and
executive officers as a
group (10
persons)(11)........... 4,225,285 45.9% 500,000 3,725,285 34.8%
</TABLE>
- --------
* Represents less than 1%.
(1) Unless otherwise indicated, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. A person is deemed to
be the beneficial owner of securities that can be acquired by such person
within 60 days from the date hereof upon the exercise of warrants or
options. Each beneficial owner's percentage ownership is determined by
assuming that options or warrants that are held by such person (but not
those held by any other person) and which are exercisable within 60 days
from the date hereof have been exercised.
(2) The number of shares of Common Stock reflected as outstanding prior to
the offering includes (i) shares of Common Stock outstanding as of
September 16, 1997 and (ii) shares issuable pursuant to stock options or
warrants by the indicated person that may be exercised within 60 days
after August 11, 1997 ("presently exercisable options" or "presently
exercisable warrants," as the case may be), as set forth below. The
number of shares of Common Stock reflected as to be outstanding after the
Offering includes the 1,500,000 shares of Common Stock being offered for
sale by the Company in this offering.
(3) The address of this person is c/o Enamelon, Inc., 15 Kimball Avenue,
Yonkers, NY 10704.

(4) Includes 36,348 shares held in trust for the benefit of Dr. Fox's minor
children. Also includes 450,000 shares issuable upon exercise of
currently exercisable stock options, but does not include options to
purchase 50,000 shares, which have not vested. Shares owned directly by
Dr. Fox are owned jointly with his wife.
(5) Includes 198,762 shares issuable upon exercise of currently exercisable
stock options.
(6) Includes 160,000 shares issuable upon exercise of currently exercisable
stock options.
(7) Includes 135,000 shares issuable upon exercise of currently exercisable
stock options, but does not include options to purchase 50,000 shares,
which have not vested.
(8) Includes 25,253 shares issuable upon exercise of currently exercisable
stock options.
(9) Includes 9,375 shares issuable upon exercise of currently exercisable
warrants.
(10) Includes 68,756 shares issuable upon exercise of currently exercisable
stock options.
(11) Includes 1,100,777 shares issuable upon exercise of currently exercisable
stock options and 9,375 shares issuable upon exercise of currently
exercisable warrants.

By virtue of his ownership of shares of Common Stock and position with the
Company, Dr. Steven R. Fox may be deemed a "parent" and a "founder" of the
Company as such terms are defined under the federal securities laws.

40
<PAGE>

CERTAIN TRANSACTIONS

The Company has subleased its office facilities in Yonkers, New York,
without a written agreement, since December 1, 1992, from Dr. Steven R. Fox,
the Chairman of the Board, at a rent of $600 per month. Commencing January 1,
1996 for a period of one year, the Company entered into a lease with a
relative of Dr. Fox for additional office facilities at a rent of $2,500 per
month. Such lease has been extended for a one year period ending December
1997. See "Business--Properties" for a description of such facilities. For
information concerning employment and consulting agreements with, and
compensation of, the Company's executive officers and directors, see
"Management--Executive Compensation," "--Employment Agreements" and "--
Employee Benefit Plans."

The Company believes that the terms of each of the foregoing transactions
and those which will exist after the consummation of this offering are no less
favorable to the Company than could have been obtained from non-affiliated
third parties, although no independent appraisals were obtained. In the
future, all transactions between the Company and its affiliates will also be
on terms which the Company believes will continue to be no less favorable to
the Company than the Company could obtain from non-affiliated parties.

DESCRIPTION OF SECURITIES

COMMON STOCK

Under the Company's Amended Certificate of Incorporation, the Company is
authorized to issue 20,000,000 shares of Common Stock, $0.001 par value per
share, of which 8,101,386 shares are currently outstanding and held of record
by approximately 309 holders. Holders of shares of Common Stock are entitled
to one vote for each share held of record on all matters to be voted on by
stockholders. There are no preemptive, subscription, conversion or redemption
rights pertaining to the shares of Common Stock. Holders of shares of Common
Stock are entitled to receive dividends when, as and if declared by the Board
of Directors from funds legally available therefor and to share ratably in the
assets of the Company available upon liquidation, dissolution or winding up.
The holders of shares of Common Stock do not have cumulative voting rights for
the election of directors, and accordingly, the holders of more than 50% of
the shares of Common Stock are able to elect all directors. If the officers
and directors of the Company were to exercise all of their presently
exercisable warrants and options, they would control 51.9% of the votes and
would have the ability to affect the outcome of any election for directors or
votes on other matters presented to the Company's stockholders. All of the
outstanding shares of Common Stock are duly authorized, validly issued, fully
paid and non-assessable.

PREFERRED STOCK

The Company is authorized by its Amended Certificate of Incorporation to
issue 5,000,000 shares of Preferred Stock, $0.01 par value per share. Pursuant
to the Company's Certificate of Designation, 827,250 shares have been
designated as Series A Preferred Stock, of which 558,399 shares were issued.
Such shares were automatically converted into 558,399 shares of Common Stock
upon consummation of initial public offering and are no longer available for
issuance. The terms of the remaining 268,851 authorized and unissued shares of
Series A Preferred Stock preclude their issuance, because they provide for
conversion upon the consummation of the Company's initial public offering.

WARRANTS

In connection with certain private placements of Common Stock, the Company
has issued Warrants to purchase an aggregate of 751,324 shares of Common
Stock, which are exercisable at various times until 2006 at prices ranging
from $1.33 to $5.75. The Company also issued to the underwriters in its
initial public offering Warrants to purchase an aggregate of 170,000 shares of
Common Stock at $8.40 per share. Warrants to purchase 87,189 shares of Common
Stock at a price of $1.33 per share may be called by the Company if the
average

41
<PAGE>

closing price of the Common Stock on the Nasdaq National Market is greater
than $2.66 for the ten trading days prior to the effective date of the call;
Warrants to purchase 29,518 shares of Common Stock at a price of $4.00 per
share may be called by the Company if the average closing price of the Common
Stock on the Nasdaq National Market is greater than $8.00 for the 10 trading
days prior to the effective date of the call. In addition, certain of the
Warrants have registration rights. See "--Registration Rights," "Risk
Factors--Shares Eligible for Future Sale," and "Shares Eligible for Future
Sale."

REGISTRATION RIGHTS

The holders of at least 40% of the Common Stock issued upon conversion of
the Company's Series A Preferred Stock have three "demand" registration rights
until October 24, 2001 and unlimited demand registration rights for a filing
by the Company of a Registration Statement on Form S-3, provided the
anticipated aggregate offering price in each such filing exceeds $500,000,
until January 23, 2001. The holders also have unlimited "piggy-back"
registration rights (subject to certain limitations) for a period of seven
years, exercisable until January 23, 2003. In addition, holders of Warrants to
purchase 634,617 shares of Common Stock at prices ranging from $3.60 to $5.75
per share have three demand registration rights exercisable until October 24,
2001, and unlimited piggyback registration rights exercisable until January
23, 2003 (subject to certain limitations), and holders of Warrants to purchase
170,000 shares of Common Stock at $8.40 per share have one demand registration
right exercisable after October 23, 1997, and certain piggyback registration
rights exercisable until October 29, 2001. The Company has obtained waivers of
such piggyback registration rights exercisable with respect to 1,193,016
shares of Common Stock in connection with this offering.

The Company intends to file a registration statement under the Securities
Act to register the shares of Common Stock issued and reserved for issuance in
compensatory arrangements and under the 1993 Plan and the 1997 Plan.
Registration would permit the resale of such shares by non-affiliates in the
public market without restriction under the Securities Act.

LIMITATIONS UPON TRANSACTIONS WITH "INTERESTED STOCKHOLDERS"

Section 203 of the Delaware General Corporation Law prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder unless (i)
prior to the date of the business combination, the transaction is approved by
the board of directors of the corporation, (ii) upon consummation of the
transaction which resulted in the stockholder becoming an interested
stockholder, the interested stockholder owns at least 85% of the outstanding
voting stock or (iii) on or after such date the business combination is
approved by the board of directors and by the affirmative vote of at least 66
2/3% of the outstanding voting stock which is not owned by the interested
stockholder. A "business combination" includes mergers, asset sales and other
transactions resulting in a financial benefit to the stockholder. An
"interested stockholder" is a person who, together with affiliates and
associates, owns (or within three years, did own), 15% or more of the
corporation's voting stock. The restrictions of Section 203 do not apply,
among other things, if a corporation, by action of its stockholders, adopts an
amendment to its certificate of incorporation or by-laws expressly electing
not to be governed by Section 203, provided that, in addition to any other
vote required by law, such amendment to the certificate of incorporation or
by-laws must be approved by the affirmative vote of a majority of the shares
entitled to vote. Moreover, an amendment so adopted is not effective until
twelve months after its adoption and does not apply to any business
combination between the corporation and any person who became an interested
stockholder of such corporation on or prior to such adoption. The Company's
Amended Certificate of Incorporation and By-laws do not currently contain any
provisions electing not to be governed by Section 203 of the Delaware General
Corporation Law. The provisions of Section 203 of the Delaware General
Corporation Law may have a depressive effect on the market price of the Common
Stock, because they could impede any merger, consolidating takeover or other
business combination involving the Company or discourage a potential acquirer
from making a tender offer or otherwise attempting to obtain control of the
Company.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for the Common Stock is North American
Transfer Co.

42
<PAGE>

UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the form
of which is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part, the Company and the Selling Stockholders have agreed
to sell to each of the Underwriters named below, and each of such
Underwriters, for whom Lehman Brothers Inc., SBC Warburg Dillon Read Inc. and
Rodman & Renshaw, Inc. are acting as representatives (the "Representatives"),
has severally agreed to purchase from the Company and the Selling
Stockholders, the respective number of shares of Common Stock set forth
opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Lehman Brothers Inc. ..........................................
SBC Warburg Dillon Read Inc. ..................................
Rodman & Renshaw, Inc. ........................................
----
Total........................................................
====
</TABLE>

The Underwriting Agreement provides that the obligations of the Underwriters
to purchase the shares of Common Stock are subject to certain conditions, and
that if any of the foregoing shares of Common Stock are purchased by the
Underwriters pursuant to the Underwriting Agreement, then all of the shares of
Common stock agreed to be purchased by the Underwriters pursuant to the
Underwriting Agreement must be so purchased.

The Company and the Selling Stockholders have been advised that the
Underwriters propose to offer the shares of Common Stock in part directly to
the public at the offering price set forth on the cover page of this
Prospectus, and in part to certain selected dealers (who may include the
Underwriters) at such public offering price less a selling concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain brokers and
dealers. After this offering, the public offering price, the concession to
selected dealers and the reallowance may be changed by the Underwriters.

The Company and the Selling Stockholders have granted to the Underwriters an
option to purchase up to an aggregate of 300,000 additional shares of Common
Stock, at the public offering price, less the aggregate underwriting discounts
and commissions shown on the cover page of this Prospectus, exercisable solely
to cover over-allotments, if any. Such option may be exercised at any time
until 30 days after the date of the Underwriting Agreement. To the extent that
the option is exercised, the Underwriters will be committed, subject to
certain conditions, to purchase a number of additional shares of Common stock
proportionate to such Underwriter's initial commitment as indicated in the
preceding table and the Company will be obligated, pursuant to such over-
allotment option to sell such shares of Common Stock to the Underwriters.

The Company has agreed that, without the prior written consent of Lehman
Brothers Inc., it will not, subject to certain limited exceptions, directly or
indirectly, offer, sell or otherwise dispose of any shares of Common Stock, or
any securities convertible into or exchangeable or exercisable for any such
shares, for the period ending 120 days after the date of this Prospectus. All
of the executive officers and directors of the Company and the Selling
Stockholders have agreed pursuant to lock-up agreements, that, without the
prior written consent of Lehman Brothers Inc., they will not, subject to
certain limited exceptions, directly or indirectly, offer, sell or otherwise
dispose of any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for any such shares for the period ending 120 days
after the date of this Prospectus. See "Shares Eligible for Future Sale."

The Company and Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act and to contribute, under certain circumstances, to payments
that the Underwriters may be required to make in respect thereof.

43
<PAGE>

Until the distribution of the Common Stock is completed, rules of the
Securities and Exchange Commission (the "Commission") may limit the ability of
the Underwriters and certain selling group members to bid for and purchase
shares of Common Stock. As an exception to these rules, the Representatives
are permitted to engage in certain transactions that stabilize the price of
the Common Stock. Such transactions may consist of bids or purchases for the
purpose of pegging, fixing or maintaining the price of Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with this offering (i.e., they sell more shares of Common Stock
than the number of shares set forth on the cover page of the Prospectus), the
Representatives may reduce that short position by purchasing Common Stock in
the open market. The Representatives also may elect to reduce any short
position by exercising all or part of the over-allotment option described
herein.

The Representatives also may impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of this Offering.

In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
an offering.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.

Any offers in Canada will be made only pursuant to an exemption from the
requirements to file a prospectus in the relevant province of Canada in which
such offer is made.

Purchasers of Common stock offered hereby may be required to pay stamp taxes
and other charges in accordance with the laws and practices of the country of
purchase in addition to the offering price set forth on the cover page hereof.

The Representatives have informed the Company that they do not intend to
confirm sales of Common Stock offered hereby to any accounts over which they
exercise discretionary authority.

In connection with the Company's private placement in June of 1997 of
1,200,000 shares of Common Stock (the "1997 Private Placement"), the Company
paid Rodman & Renshaw, Inc. ("Rodman") a fee of $200,000 in connection with
the waiver of its right to act as the placement agent with respect to the 1997
Private Placement. In connection with the Company's initial public offering of
Common Stock in October 1996, Rodman received 119,000 Warrants (the "Rodman
Warrants") to purchase shares of Common Stock (subject to adjustment) at an
exercise price of $8.40 per share of Common Stock exercisable for a period of
five years from the effective date of the initial public offering, commencing
one year after such effective date. The Company also granted Rodman certain
registration rights with respect to the shares of Common Stock issued upon
exercise of the Rodman Warrants which are not exercisable in connection with
this offering. In addition, Rodman was granted a right of first refusal to
perform services for the Company with respect to certain transactions for a
two-year period following the initial public offering. In connection with the
1997 Private Placement, SBC Warburg Dillon Read Inc. acted as a placement
agent and received a customary fee for such services.

44
<PAGE>

SHARES ELIGIBLE FOR FUTURE SALE

Future sales of Common Stock by existing stockholders pursuant to Rule 144
("Rule 144") promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), pursuant to registration rights granted to certain holders
of warrants to purchase the Company's Common Stock, or pursuant to other
registrations or exemptions from registration under the Securities Act, could
have an adverse effect on the price of the shares of Common Stock. As of
September 16, 1997, the Company had approximately 8,101,386 shares of Common
Stock outstanding. In addition, the Company has reserved for issuance (i)
1,343,480 shares of Common Stock upon exercise of options granted under the
Company's 1993 Stock Option Plan, (ii) 121,145 shares upon the exercise of
options available for grant under the 1993 Plan, (iii) 750,000 shares of
Common Stock reserved for issuance upon the exercise of options available for
grant under the Company's 1997 Stock Option Plan and (iv) 921,324 shares of
Common Stock reserved for issuance upon exercise of outstanding Warrants.

Of the 8,101,386 shares of Common Stock issued and outstanding, 1,700,000
were sold publicly in the Company's initial public offering, approximately
338,684 shares have been sold publicly pursuant to Rule 144, and 1,200,000
shares may be sold publicly pursuant to a registration statement that was
declared effective by the Securities and Exchange Commission on August 11,
1997. The remaining 4,862,702 outstanding shares of Common Stock are
"restricted securities," as that term is defined in Rule 144, and may only be
sold pursuant to a registration statement under the Securities Act or an
applicable exemption from registration thereunder, including exemptions
provided by Rule 144. All of such shares are presently eligible for resale
under Rule 144. In addition, certain of the holders of 558,399 shares of
Common Stock and Warrants to purchase 634,617 shares of Common Stock at prices
ranging from $3.60 to $5.75 per share have three demand registration rights
exercisable until October 24, 2001, and unlimited piggyback registration
rights exercisable until January 23, 2003 (subject to certain limitations),
and holders of Warrants to purchase 170,000 shares of Common Stock at $8.40
per share have one demand registration right exercisable after October 23,
1997, and certain piggyback registration rights exercisable until October 29,
2001. The Company has obtained waivers of piggyback registration rights
exercisable with respect to 1,193,016 shares of Common Stock in connection
with this offering. Employees, consultants, and other eligible holders of
options to purchase approximately 1,198,431 shares of Common Stock granted
under the 1993 Stock Option Plan prior to the Company's initial public
offering also have the right to exercise their options and immediately sell
the shares of Common Stock received upon exercise under Rule 144. The Company
and each of its executive officers and directors and each of the Selling
Stockholders have agreed that, for a period of 120 days after the date of this
Prospectus, they will not offer, sell or otherwise dispose of any shares of
Common Stock without the prior written consent of Lehman Brothers Inc. No
prediction can be made as to the effect that future sales of Common Stock, or
the availability of shares of Common Stock for future sales, will have on the
market prices for the Common Stock prevailing from time to time. Sales of
substantial amounts of Common Stock, or the perception that such sales could
occur, could adversely affect prevailing market prices for the Common Stock,
or the perception that such sales could occur, could adversely affect
prevailing market prices for the Common Stock and could impair the Company's
ability to raise capital through the future sale of its equity securities. See
"Principal and Selling Stockholders" and "Risk Factors--Shares Eligible for
Future Sale."

LEGAL COUNSEL

The validity of the shares of Common Stock offered by the Company hereby
will be passed upon for the Company by Snow Becker Krauss P.C., New York, New
York, and for the Underwriters by Chadbourne & Parke LLP, New York, New York.
SBK Investment Partners, a partnership consisting of members of Snow Becker
Krauss P.C., counsel to the Company, owns 96,600 shares of Common Stock and
holds a currently exercisable option to purchase 32,628 shares of Common Stock
at $3.22 per share. In addition, certain members of Snow Becker Krauss P.C.
beneficially own Common Stock individually.

45
<PAGE>

EXPERTS

The financial statements included in this Prospectus have been audited by
BDO Seidman, LLP, independent certified public accountants, to the extent and
for the periods indicated in their report appearing elsewhere herein and are
included in reliance on such report given upon the authority of said firm as
experts in auditing and accounting.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 including all amendments thereto (the "Registration Statement") under the
Securities Act with respect to the Common Stock offered by this Prospectus via
the Electronic Data Gathering Analysis and Retrieval system ("EDGAR") and may
be found on the Commission's web site at http://www.sec.gov. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information with respect to the
Company and this offering, reference is made to the Registration Statement,
including the exhibits filed therewith. Statements contained in this
Prospectus as to the contents of any contract or other document are not
necessarily complete and where the contract or other document has been filed
as an exhibit to the Registration Statement, each such statement is qualified
in all respects by such reference to the applicable document filed with the
Commission.

The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith the Company
files reports, proxy statements and other information with the Commission.
Such reports, proxy statements and other information may be inspected and
copied at public reference facilities of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Northeast Regional Office, 7 World
Trade Center, 13th Floor, New York, New York 10048, upon payment of the fees
prescribed by the Commission. Copies of all or any part of the Registration
Statement (including exhibits thereto) also may be obtained from the Public
Reference Section of the Commission at the Commission's principal office in
Washington, D.C., at the Commission's prescribed rates. Electronic filings
made via EDGAR are publicly available through the Commission's web site
referenced above.

The Company distributes to its stockholders annual reports containing
audited financial statements certified by its certified public accountants and
such other periodic reports as the Company determines to be appropriate or as
may be required by law.

46
<PAGE>

GLOSSARY

The following glossary is intended to provide the reader with an explanation
of certain terms used in this Prospectus.

Active Element responsible for the therapeutic activity of a
Ingredient product. However, other ingredients in the product may
enhance the effectiveness of the active ingredient. In
Enamelon(TM) toothpaste, the active ingredient is sodium
fluoride.

Calcium Important elemental constituent of teeth and bones.

Caries An oral disease caused by the presence of cariogenic
bacteria in plaque. Signs of the disease are lesions
and/or cavities in the teeth.

Cavity Area of the tooth where mineral loss, due to
demineralization, has been extensive, resulting in
collapse of the tooth structure. A cavity cannot be
remineralized and must be filled by a dentist.

Demineralization Chemical process whereby acids, produced by cariogenic
bacteria in plaque, dissolve and remove calcium and
phosphate from tooth enamel and/or dentin, making the
tooth weaker and more porous. If allowed to continue,
demineralization will eventually cause the tooth
structure to collapse and a cavity to be formed.

Dentin An underlying tooth material that contains minerals and
organic matter. Dentin is covered by enamel in the crown
and cementum in the root.

Enamelon TechnologiesThe ADAHF Patented Technology together with the Enamelon
Proprietary Technology.

Fluoride Inorganic form of the element fluorine in combination
with other elements.

Inactive Ingredient Element not responsible for the therapeutic activity of
the product. Inactive ingredients may be important for
other product attributes and may substantially enhance
the effectiveness of the active ingredient.

Interproximal LesionsLesions that occur between the teeth.

In Vitro Literally means "in glass" (Latin). Refers to
experimental studies carried out under laboratory
conditions that do not involve living species.

In Vivo Literally means "in life" (Latin). Refers to
experimentation performed on live animals or humans.

Ions Dissolved particles bearing a positive or negative
charge. Because of their charges, ions attract a sphere
of water molecules around themselves, which helps to keep
them in solution.

Lesions Defects in teeth resulting from loss of tooth mineral due
to demineralization in localized areas of the tooth.
Lesions often, but not always, show up as visible white
or colored spots on teeth. They may or not be detected by
x-rays.

Phosphate
Combination of the elements phosphorous and oxygen in
ionic form or part of an inorganic or organic compound.
An important constituent of teeth and bones.

47
<PAGE>

Plaque
Soft sticky film formed on teeth and between teeth due to
eating sugar-containing foods. Contains a very high
concentration of bacteria.

Plaque Acids Acidic materials formed by the break-down of sugars due
to the action of plaque bacteria. Plaque acids, primarily
lactic and acetic acid, are highly corrosive to the tooth
mineral structure, and cause demineralization of the
tooth.

Professional Gels Therapeutic materials applied to the teeth for the
prevention, arrestment, or reversal of lesions or
cavities. Applied directly by a qualified dental
practitioner or supplied to the user through a
prescription supplied by a qualified dental practitioner.

Remineralization Chemical process whereby calcium and phosphate, lost
during demineralization, are replaced into tooth enamel
and dentin, thereby rebuilding, restoring and
restrengthening the tooth.

Sodium Fluoride Compound consisting of the element sodium combined with
the element fluorine and which provides fluoride ions
when dissolved in water. Sodium fluoride is an accepted
active ingredient in anti-caries products for over-the-
counter use.

Tooth Enamel Outer hard mineral layer of the crown, which is the part
of the tooth that emerges from the gum.

48
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

INDEX TO FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996
(AUDITED)

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Report of Independent Certified Public Accountants.................... F-2
Financial statements:
Balance sheets...................................................... F-3
Statements of operations............................................ F-4
Statements of stockholders' equity.................................. F-5
Statements of cash flows............................................ F-6
Notes to the financial statements................................... F-7- F-15

SIX MONTHS ENDED JUNE 30, 1996 AND 1997
(UNAUDITED)

Financial statements:
Balance sheets...................................................... F-16
Statements of operations............................................ F-17
Statements of stockholders' equity.................................. F-18
Statements of cash flows............................................ F-19
Notes to financial statements....................................... F-20-F-21
</TABLE>

F-1
<PAGE>

REPORT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS

Enamelon, Inc.
Yonkers, New York

We have audited the accompanying balance sheets of Enamelon, Inc. (A
Development Stage Company) as of December 31, 1995 and 1996, and the related
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996 and for the period from June
9, 1992 (Inception) to December 31, 1996. 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 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 financial position of Enamelon, Inc. as of
December 31, 1995 and 1996, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1996 and
for the period from June 9, 1992 (Inception) to December 31, 1996, in
conformity with generally accepted accounting principles.

BDO Seidman, LLP
New York, New York
February 11, 1997

F-2
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1995 1996
----------- -----------
<S> <C> <C>
ASSETS
Current:
Cash and cash equivalents (Note 1)................. $ 1,790,666 $11,389,894
Prepaid expenses and other assets.................. 11,077 193,290
Inventory.......................................... -- 53,183
----------- -----------
Total current assets............................. 1,801,743 11,636,367
Equipment, net (Note 1 and 2)...................... 58,077 438,348
Deferred costs, net (Note 1 and 3)................. 172,157 308,030
Other assets....................................... 8,939 8,939
----------- -----------
Total assets..................................... $ 2,040,916 $12,391,684
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................... $ -- $ 553,377
Accrued expenses................................... 173,939 539,894
----------- -----------
Total current liabilities........................ 173,939 1,093,271
----------- -----------
COMMITMENTS (NOTES 6 AND 7)
STOCKHOLDERS' EQUITY (NOTE 4):
Preferred stock, $0.01 par value--shares authorized
4,172,750; none issued or outstanding............. -- --
Common stock, $0.001 par value--shares authorized
20,000,000; issued and outstanding 4,635,273 and
6,900,378......................................... 4,635 6,900
Additional paid-in capital......................... 4,055,925 16,409,926
Accumulated deficit during the development stage... (2,193,583) (5,118,413)
----------- -----------
Total stockholders' equity....................... 1,866,977 11,298,413
----------- -----------
Total liabilities and stockholders equity........ $ 2,040,916 $12,391,684
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-3
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
PERIOD FROM
JUNE 9, 1992
YEAR ENDED DECEMBER 31, (INCEPTION) TO
----------------------------------- DECEMBER 31,
1994 1995 1996 1996
--------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
Expenses:
Marketing and selling.... $ -- $ -- $ 362,371 $ 362,371
Research and
development............. 206,126 546,994 1,761,718 2,631,305
Administrative and
other................... 330,154 533,587 996,160 2,091,000
--------- ----------- ----------- -----------
Total expenses......... 536,280 1,080,581 3,120,249 5,084,676
Other charges (income):
Interest and dividends... (7,325) (19,663) (195,419) (236,232)
Write-off of deferred
offering costs (Note
1)...................... 269,969 -- -- 269,969
--------- ----------- ----------- -----------
Net loss............... $(798,924) $(1,060,918) $(2,924,830) $(5,118,413)
========= =========== =========== ===========
Pro forma net loss per
common share (Note 1)..... $ (0.21) $ (0.20) $ (0.52)
========= =========== ===========
Weighted average common
shares outstanding........ 3,784,800 5,234,289 5,636,935
========= =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-4
<PAGE>

ENAMELON, INC.

(A DEVELOPMENT COMPANY)

STATEMENT OF STOCKHOLDERS' EQUITY (NOTE 4)

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL ACCUMULATED TOTAL
------------------- PAID-IN DEFICIT DURING THE STOCKHOLDERS'
SHARES PAR VALUE CAPITAL DEVELOPMENT STAGE EQUITY
--------- --------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
Issuance of common stock
in June and December
1992................... 3,331,458 $3,331 $ 111,684 $ -- $ 115,015
Issuance of common stock
for legal services
rendered............... 9,792 10 29,960 -- 29,970
Net loss................ -- -- -- (37,070) (37,070)
--------- ------ ----------- ----------- -----------
BALANCE, DECEMBER 31,
1992................... 3,341,250 3,341 141,644 (37,070) 107,915
Issuance of common stock
at $3.06 per share in
private placement, net
of costs............... 293,619 294 868,648 -- 868,942
Issuance of common stock
for legal services
rendered............... 17,268 17 63,348 -- 63,365
Net loss................ -- -- -- (296,671) (296,671)
--------- ------ ----------- ----------- -----------
BALANCE, DECEMBER 31,
1993................... 3,652,137 3,652 1,073,640 (333,741) 743,551
Issuance of common stock
at $1.33 per share in
private placement, net
of costs............... 118,125 118 141,783 -- 141,901
Issuance of common stock
for legal services
rendered............... 14,538 15 63,985 -- 64,000
Net loss................ -- -- -- (798,924) (798,924)
--------- ------ ----------- ----------- -----------
BALANCE, DECEMBER 31,
1994................... 3,784,800 3,785 1,279,408 (1,132,665) 150,528
Issuance of common stock
at $1.33 per share in
private placement, net
of costs............... 93,750 94 124,906 -- 125,000
Issuance of common stock
at $4.00 per share in
private placement, net
of costs............... 648,723 648 2,504,024 -- 2,504,672
Issuance of common stock
for legal services
rendered............... 108,000 108 147,587 -- 147,695
Net loss................ -- -- -- (1,060,918) (1,060,918)
--------- ------ ----------- ----------- -----------
BALANCE, DECEMBER 31,
1995................... 4,635,273 4,635 4,055,925 (2,193,583) 1,866,977
Issuance of common stock
for legal services
rendered............... 6,706 7 26,817 -- 26,824
Issuance of common stock
in public offering, net
of costs............... 1,700,000 1,700 10,423,572 -- 10,425,272
Conversion of preferred
stock to common stock.. 558,399 558 1,903,442 -- 1,904,000
Warrants exercised...... -- -- 170 -- 170
Net loss................ -- -- -- (2,924,830) (2,924,830)
--------- ------ ----------- ----------- -----------
BALANCE, DECEMBER 31,
1996................... 6,900,378 $6,900 $16,409,926 $(5,118,413) $11,298,413
========= ====== =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-5
<PAGE>

ENAMELON, INC.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOW

<TABLE>
<CAPTION>
PERIOD FROM
JUNE 9, 1992
YEAR ENDED DECEMBER 31, (INCEPTION) TO
----------------------------------- DECEMBER 31,
1994 1995 1996 1996
--------- ----------- ----------- --------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss................. $(798,924) $(1,060,918) $(2,924,830) $(5,118,413)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Write-off of deferred
offering costs......... 269,969 -- -- 269,969
Stock issued for
services............... -- 147,695 26,824 174,519
Depreciation and
amortization........... 15,433 23,490 45,488 89,257
Increase in prepaid
expenses and other
assets................. (7,896) (2,203) (182,213) (202,228)
Increase in inventory... -- -- (53,183) (53,183)
Increase in deferred
costs.................. -- -- -- (1,133)
Increase in accrued
expenses and account
payable................ 63,633 59,287 616,078 788,017
--------- ----------- ----------- -----------
Net cash used in
operating activities.. (457,785) (832,649) (2,471,836) (4,053,195)
--------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of equipment... (39,559) (28,949) (411,056) (489,678)
Patents, trademarks and
licenses................ (35,707) (27,505) (150,575) (298,181)
--------- ----------- ----------- -----------
Net cash used in
investing activities.. (75,266) (56,454) (561,631) (787,859)
--------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from sale of
common stock............ 141,901 2,718,459 11,900,000 15,744,317
Proceeds from sale of
preferred stock......... -- -- 2,025,000 2,025,000
Offering costs........... (75,520) (88,787) (1,292,305) (1,538,369)
--------- ----------- ----------- -----------
Net cash provided by
financing activities.. 66,381 2,629,672 12,632,695 16,230,948
--------- ----------- ----------- -----------
Net increase in cash and
cash equivalents.......... (466,670) 1,740,569 9,599,228 11,389,894
Cash and cash equivalents,
beginning of period....... 516,767 50,097 1,790,666 --
--------- ----------- ----------- -----------
Cash and cash equivalents,
end of period............. $ 50,097 $ 1,790,666 $11,389,894 $11,389,894
========= =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF
NONCASH FINANCING
ACTIVITIES:
The Company issued common
stock for professional
services performed by
unrelated parties....... $ 64,000 $ 147,695 $ 26,824 $ 331,854
========= =========== =========== ===========
Accrued offering cost.... -- -- $ 282,423 --
========= =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-6
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF ACCOUNTING POLICIES

Organization

The Company (a development stage company) was founded in June 1992 to
develop and market over-the-counter oral care products that prevent tooth
decay at its earliest stage and are based on proprietary formulations and
technologies. To date, the Company has not commenced any product
commercialization or realized any operating revenues.

The Company completed formulation of its all-family toothpaste and the
testing required by the monograph published by the Food and Drug
Administration during 1996. The Company intends to begin in the early part of
1997 to test market Enamelon(TM) toothpaste in several representative markets
comprising approximately 5% of all United States households. Test marketing
and additional clinical human studies to establish additional marketing claims
for consumers and dentists are expected to continue throughout 1997, with a
national roll-out of Enamelon(TM) toothpaste in the first half of 1998. The
Company expects to continue to incur operating losses throughout this period
and may require additional financing to continue its operations thereafter.

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.

Fair Value of Financial Instruments

The carrying amounts of cash, prepaid expenses and accrued expenses
approximate fair value because of the short maturity of these items.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of highly liquid debt instruments
with original maturities of three months or less, principally Treasury Bills
and money market accounts.

Equipment

Equipment is stated at cost. Depreciation is computed over the estimated
useful lives of the assets using the straight-line method.

Deferred Costs

Organization costs are amortized using the straight-line method over a
sixty-month period.

Licensing costs and patent rights are amortized using the straight-line
method over seventeen years, which is the term of the licensing agreements and
the estimated useful lives of the patents, respectively.

Trademarks are being amortized using the straight-line method over seventeen
years.

Deferred offering costs related to a proposed private placement had been
deferred until the proceeds of the private placement were raised. Since the
related private placement transaction did not occur as expected, these costs
were expensed in 1994.

F-7
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Income Taxes

Income taxes are computed in accordance with the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"), which requires, among other things, a liability approach to calculating
deferred income taxes. SFAS 109 requires a company to recognize deferred tax
liabilities and assets for the expected future tax consequences of temporary
differences between the carrying amount of assets and liabilities for
financial reporting purposes and the amounts used for income tax purposes.
Deferred tax assets must be reduced by a valuation allowance to amounts
expected to be realized.

Earnings Per Share

Earnings per share are presented for 1995 and 1996 on a pro forma basis to
give retroactive effect to the conversion of the redeemable preferred stock as
a result of the public offering discussed in Note 4. The calculation of
earnings per share reflects the conversion of the preferred stock as if it
occurred on January 1, 1995.

The weighted average number of common shares outstanding used in computing
the net loss per common share for the year ended December 31, 1996 was
adjusted for the effects of the application of Securities and Commission (SEC)
Staff Accounting Bulletin (SAB) No. 83. Pursuant to SAB No. 83, common stock
issued by the Company at a price less than the initial public offering price
during the twelve months immediately preceding the initial filing of the
offering together with common stock purchase warrants and options issued
during such period with an exercise price less than the initial public
offering price, are treated as outstanding for all periods presented. Earnings
(loss) per share are computed using the treasury stock method, under which the
number of shares outstanding reflects an assumed use of the proceeds from the
issuance of such shares and from the assumed exercise of such warrants and
options, to repurchase shares of the Company's common stock at the average
market price outstanding since the initial public offering.

Recent Accounting Standards

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,"
which requires that certain long-lived assets be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
may not be recoverable. The adoption of this pronouncement in 1996 did not
have a significant effect on the Company's financial statements.

In October 1995, the Financial Accounting Standards Board issued SFAS No.
123, "Accounting for Stock-Based Compensation," which allows the choice of
either the intrinsic value method or the fair value method of accounting for
employee stock options. The Company has selected the option to continue the
use of the current intrinsic value method.

Presentation of Prior Year Data

Certain reclassifications have been made to conform prior year data with the
current presentation.

F-8
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

2. EQUIPMENT

Equipment is summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------- ESTIMATED
1995 1996 USEFUL LIFE
------- -------- -----------
<S> <C> <C> <C>
Furniture and fixtures.......................... $ 6,691 $ 27,334 5-7 years
Equipment....................................... 71,931 462,344 3-10 years
------- --------
78,622 489,678
Less: Accumulated depreciation.................. 20,545 51,330
------- --------
$58,077 $438,348
======= ========
</TABLE>

3. DEFERRED COSTS

Deferred costs are summarized as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
-----------------
1995 1996
-------- --------
<S> <C> <C>
Patent rights........................................... $132,207 $256,557
Trademarks.............................................. 43,082 67,840
Licensing costs......................................... 18,962 18,962
Organization cost....................................... 1,133 2,600
-------- --------
195,384 345,959
Less: Accumulated amortization.......................... 23,227 37,929
-------- --------
$172,157 $308,030
======== ========
</TABLE>

4. STOCKHOLDERS' EQUITY

Redeemable Preferred Stock

In January 1996, the Company issued 500,000 units at $4.00 per unit, each
consisting of 1.103 shares of 5% convertible Series A preferred stock and 1
common stock purchase warrant, exercisable at $5.75 per share. In April 1996,
the Company issued an additional 6,250 units at $4.00 per unit. The Company
received proceeds of $2,025,000 for these issuances. In October 1996, the
558,399 shares of Series A Preferred Stock were converted into common stock
and retired upon the consummation of the initial public offering.

In connection with the placement of the transaction, the Company issued
warrants to purchase 100,000 shares at an exercise price of $4.80 and 23,750
shares at $3.60 per share, which expire January 23, 2003.

Common Stock

In November 1992, the Board of Directors amended the Company's Certificate
of Incorporation to increase the number of authorized common shares from
15,000 shares to 3,000,000 shares and effected a 100-for-one stock split.

The Company effectuated a 1.19688-for-one stock split of its common stock in
July 1993, a one-for-1.65068 reverse stock split of its common stock in
September 1994 and a three-for-one stock split in June 1995. All common
shares, common stock options and price per share information disclosed in the
financial statements and

F-9
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

notes thereto have been adjusted to give retroactive effect for these stock
splits. The Board of Directors amended the Company's Certificate of
Incorporation to increase the Company's authorized shares of common stock from
3,000,000 to 20,000,000 in September 1993.

In December 1992, 9,792 shares of stock were issued for services performed
by unrelated parties. In September 1993, November 1993 and January 1994, an
additional 4,545 shares, 12,723 shares and 14,538 shares, respectively, were
issued for services performed by unrelated parties. In May and June 1995, an
additional 105,000 shares and 3,000 shares, respectively, were issued for
services performed by unrelated parties. In January 1996, an additional 6,706
shares were issued for services performed by unrelated parties. Common stock
issued for services was valued at the estimated fair value of the stock
issued.

In January 1993, the Company issued an aggregate 293,619 shares of its
common stock to private investors, officers and directors of the Company for
the aggregate consideration of $900,000.

In September 1994, the Company sold 118,125 shares of common stock and
warrants to purchase 59,064 shares of common stock at an exercise price of
$1.33 per share for an aggregate amount of $157,500.

In May 1995, the Company issued an aggregate 93,750 shares of its common
stock and warrants to purchase 93,750 shares of common stock at an exercise
price of $1.33 per share to private investors, officers and directors of the
Company for an aggregate consideration of $125,000.

On various dates through December 31, 1995, the Company issued an aggregate
648,723 shares of its common stock pursuant to a private placement memorandum
dated June 20, 1995 to private investors, officers and directors of the
Company for an aggregate consideration of $2,504,672, net of expenses. In
connection with the private placement, the Company authorized the issuance of
warrants to purchase 26,276 shares of common stock at an exercise price of
$4.00 per share, and 1,562 shares of common stock at an exercise price of
$3.60 per share, which expire December 14, 2000, to representatives in the
offering.

Initial Public Offering

In October 1996, the Company completed the initial public offering of
1,700,000 shares of common stock at $7.00 per share. Cash proceeds net of
costs was $10,425,000. Concurrent with the public offering, 558,399 shares of
redeemable preferred stock were automatically converted into an equivalent
number of shares of common stock.

Stock Option Plan

In 1993, the Company adopted the 1993 Stock Option Plan ("1993 Plan"). The
1993 Plan provides for the grant of options to qualified employees (including
officers and directors) of the Company to purchase an aggregate of 1,500,000
shares of common stock. The 1993 Plan is administered by the Board of
Directors or a committee of the Board of Directors (the "Compensation
Committee") whose members are not entitled to receive options under the 1993
Plan (excluding options granted exclusively for directors' fees). Options
granted under the 1993 Plan may or may not be "incentive stock options" as
defined in the Internal Revenue Code ("Incentive Options") depending upon the
terms established by the Compensation Committee at the time of grant. The
exercise price shall not be less than 85% of the fair market value of the
Company's common stock as of the date of grant (110% of the fair market value
if the grant is an Incentive Option to an employee who owns more than 10% of
the Company's outstanding common stock). Options granted under the 1993 Plan
are subject to a maximum term of 10 years.

F-10
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

SFAS No. 123, Accounting for Stock-Based Compensation, requires the Company
to provide pro forma information regarding net income and earnings per share
as if compensation cost for the Company's stock option plans had been
determined in accordance with the fair value based method prescribed in SFAS
No. 123. The Company estimates the fair value of each stock option at the
grant date by using the Black-Scholes option-pricing model with the following
weighted-average assumptions used for grants during the period from January 1,
1995 to October 24, 1996 ("pre IPO"), and October 25, 1996 to December 31,
1996 ("post IPO"), respectively; no dividend yield for both years; expected
volatility of .01 and 35 percent; risk-free interest rates of 6.5 and 6.2
percent and expected lives of 6.3 and 6.8 years for the options.

Under the accounting provisions of SFAS No. 123, the Company's net loss and
loss per share would have been reduced to the pro forma amounts indicated
below:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Net loss
As reported...................................... $1,060,918 $2,924,830
Pro forma........................................ $1,735,766 $3,365,581
Loss per share
As reported...................................... $ (0.20) $ (0.52)
Pro forma........................................ $ (0.33) $ (0.60)
</TABLE>

A summary of activity for the Company's Plan, including those options
granted pursuant to the terms of certain employment and other agreements (see
Note 7), is as follows:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
OPTION SHARES EXERCISE PRICE
------------- --------------
<S> <C> <C>
Balance, January 1, 1995...................... 380,487 $3.02
Granted....................................... 937,081 2.35
Exercised..................................... -- --
Canceled...................................... (108,762) 3.37
--------- -----
Balance, December 31, 1995.................... 1,208,806 2.50
Granted....................................... 160,000 6.51
Exercised..................................... -- --
Canceled...................................... -- --
--------- -----
Balance, December 31, 1996.................... 1,368,806 $2.97
========= =====
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1995 1996
---------- ----------
<S> <C> <C>
Options exercisable................................ 1,148,806 1,192,806
Weighted average exercise price of options
exercisable....................................... $ 2.56 $ 2.57
Weighted average fair value of options granted
during the year................................... $ 674,848 $ 440,751
</TABLE>

F-11
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The following table summarizes information about fixed stock options
outstanding at December 31, 1996:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
--------------------------------- ---------------------
WEIGHTED-
AVERAGE WEIGHTED- WEIGHTED-
NUMBER REMAINING AVERAGE NUMBER AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL EXERCISE EXERCISABLE EXERCISE
EERCISE PRICESX AT 12/31/96 LIFE PRICE AT 12/31/96 PRICE
- --------------- ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$1.33 to $2.67.......... 405,213 6.2 $1.37 375,213 $1.38
$3.00 to $4.00.......... 803,593 3.1 3.07 803,593 3.07
$5.81 to $7.00.......... 160,000 7.5 6.51 14,000 6.25
--------- ---------
$1.33 to $7.00.......... 1,368,806 4.6 2.97 1,192,806 2.57
========= =========
</TABLE>

5. INCOME TAXES

At December 31, 1996, the Company had a deferred tax asset of approximately
$2,047,000 primarily attributable to net operating loss carryforwards. The
deferred tax asset has been fully reserved by a valuation allowance of the
same amount.

The net operating loss carryforwards at December 31, 1996 totaling
approximately $5,118,000 will expire if not used by the period from 2007
through 2011 and may be limited by United States federal tax law as a result
of future changes in ownership.

6. COMMITMENTS

Leases

The Company leases office facilities in New York from a related party and
laboratory facilities in New Jersey. The lease for the laboratory facilities
includes provisions requiring the Company to pay a proportionate share of the
increase in real estate taxes and operating expenses over base period amounts.
The minimum rents for the leased property for the subsequent years are as
follows:

<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
------------
<S> <C>
1997..................... $ 79,000
1998..................... 52,000
--------
$131,000
========
</TABLE>

Rent expense for the years ended December 31, 1994, 1995 and 1996 was
$34,155, $35,500 and $83,028 respectively, and $160,483 for the period from
June 9, 1992 (inception) to December 1996.

Patent License Agreements

In June 1992, the Company entered into a patent licensing agreement with the
ADAHF, the holder and/or the applicant for the patents for the Amorphous
Calcium Compounds ("ACC"). The agreement, as modified, grants the Company the
exclusive United States license to manufacture and sell dentifrices, chewing
gum, food and confection formulated according to the patented process in
return for royalty payments to the licensor. In November 1992, the Company
entered into an exclusive international patent licensing agreement which, as
modified, granted the Company patent license rights in Austria, Belgium,
Canada, China, Denmark, France,

F-12
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

Germany, Greece, Ireland, Italy, Japan, Luxembourg, Monaco, the Netherlands,
Portugal, Spain, Sweden, Switzerland, Liechtenstein, Taiwan and the United
Kingdom. The grants extend to improvements in patent compounds and utilities
in dentifrices, chewing gum, food and confectionery products developed by the
ADAHF.

The exclusive United States license has been granted for an initial term
from the date of the agreement until three years following the physical and
chemical stabilization of the formula in a commercially viable product and
following the first Food and Drug Administration ("FDA") approval necessary to
market any ACC products in their commercially viable form to professionals or
the general public. The foreign license expires upon the earlier of the
termination of the United States license or the expiration of the foreign
patents licensed thereunder. The licenses are renewable in four year
increments for the life of the ACC patents subject to minimum royalty payment
terms, and transferable under certain conditions with the prior written
consent of the licensor, which consent may not be unreasonably withheld. The
licenses are subject to cancellation in the event the Company fails to comply
with its terms and conditions, including payment of royalties and other
amounts due thereunder.

The Company was also granted an option and right of first refusal, as
amended, for a limited license under future patents and patent applications
for ACC for all territories not included within the licensed territories under
the foreign patent license, with respect to dentifrices, chewing gum, food and
confection. Before granting such a license to third parties, the ADAHF must
first offer the license to the Company on the terms consistent with the
foreign license agreement. To the extent the ADAHF has not granted the license
to a third party due to the Company's failure to exercise its right of first
refusal, the Company has the option to receive a license in any of such
territories with the terms consistent with the foreign license agreement.

In consideration for the grant of the exclusive United States license, the
Company is required to make royalty payments of four percent of net sales,
subject to minimum royalty payments of $7,000. In consideration for the grant
of foreign patent rights, the Company is required to pay seven percent of net
sales and four percent in a joint venture and bear the costs of prosecution of
foreign patent applications. However, to the extent the ADAHF grants a foreign
license to a third party to use ACC in products other than dentifrices,
chewing gum, food and confection, then such third party must share with the
Company the costs associated with the foreign patent applications. If the
Company sublicenses a foreign patent, it will pay to the ADAHF twenty-five
percent of the gross income resulting from such sublicenses actually received
by the Company.

7. EMPLOYMENT AND CONSULTING AGREEMENTS

The Company has established a five-year incentive compensation program (the
"Incentive Compensation Program") for certain of its officers and key
employees. The Incentive Compensation Program provides for the establishment
of a yearly pool, equal to 5% of the Company's net income before expenses
pursuant to the Incentive Compensation Program, taxes and extraordinary items
("Plan Net Income"). Such pool shall only be established in the event that the
Company's Plan Net Income equals or exceeds by at lease 5% the Company's Plan
Net Income for the prior fiscal year.

The Company has entered into a five-year employment agreement for the
services of a Chairman of the Board of Directors and Chief Executive Officer
commencing January 1, 1994. The agreement, as amended, provides for an annual
salary of $175,000 in 1996 and $250,000 per year commencing in January 1997,
subject to adjustment, as well as 50% of all amounts allocated by the Board of
Directors to the Company's Incentive Compensation Program. The Company has
also granted this officer options to purchase 400,000 shares of common stock
at an exercise price of $3.00 per share and 50,000 shares of common stock at
$6.875 per share, each of which expires five years from the date of grant.

F-13
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)

The Company entered into an employment agreement for the services of a
President and Chief Operating Officer which provides for an annual salary of
$150,000 in 1996 and $175,000 in 1997, subject to adjustment, as well as 15%
of all amounts allocated by the Board of Directors to the Company's Incentive
Compensation Program. In addition, in 1996 the Company granted this individual
an option to purchase 99,000 shares of common stock at an exercise price of
$3.00 per share which expires seven years from the date of grant.

In May 1995, the Company entered into a three-year employment agreement for
the services of a Vice President--Product Development. This agreement, which
replaced a prior consulting agreement (the "Consulting Agreement"), provides
for annual compensation of $105,000 in the first year, $115,000 in the second
year and $125,000 in the third year, subject to adjustment, as well as 12.5%
of all amounts allocated by the Board of Directors to the Company's Incentive
Compensation Program. In addition, options to purchase 108,762 shares of
common stock at various exercise prices previously granted to the individual
pursuant to the Consulting Agreement were canceled and regranted to the
officer at an exercise price of $1.33 per share. Furthermore, the Company has
granted this individual an option to purchase an additional 90,000 shares of
common stock at an exercise price of $1.33 per share which expires seven years
from the date of grant.

The Company has entered into a an employment agreement for a term of three
years expiring January 2000, for the services of a Vice President--Technology
and Clinical Research. The agreement as amended provides for an annual salary
of $143,000 in 1997, $151,000 in 1998 and $160,000 in 1999, as well as 10% of
all amounts allocated by the Board of Directors to the Company's Incentive
Compensation Program. In addition, the Company has granted this individual an
option to purchase 150,000 shares of common stock at an exercise price of
$1.33 per share, which expires ten years from the date of grant.

The Company has entered into an employment agreement commencing August 1996
for the services of a Vice President and Chief Financial Officer. The
agreement provides for an annual salary of $89,000, subject to adjustment, as
well as not less than 5% of all amounts allocated by the Board of Directors to
the Company's Incentive Compensation Program. In addition, the Company has
granted this individual an option to purchase 25,000 shares of the Company's
common stock subject to certain vesting provisions at an exercise price of
$7.00 per share.

F-14
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEET
(UNAUDITED)

<TABLE>
<CAPTION>
JUNE 30,
1997
-----------
<S> <C>
ASSETS
Current:
Cash and cash equivalents....................................... $20,057,600
Accounts receivable............................................. 232,447
Prepaid expenses and other assets............................... 232,838
Inventory....................................................... 585,145
-----------
Total currents assets......................................... 21,108,030
Equipment, less accumulated depreciation of $100,856............ 1,075,756
Deferred costs, less accumulated amortization of $49,313........ 365,662
Other assets--security deposits................................. 15,231
-----------
Total assets.................................................. $22,564,679
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................ $ 1,366,186
Accrued expenses................................................ 1,183,877
-----------
Total current liabilities..................................... 2,550,063
-----------
COMMITMENTS
STOCKHOLDERS' EQUITY (NOTES 2 AND 4):
Preferred stock, $0.01 par value--shares authorized 4,172,750;
none issued or outstanding Common stock, $0.001 par value--
shares authorized 20,000,000; issued and outstanding
8,101,386...................................................... 8,101
Additional paid-in capital...................................... 29,694,181
Accumulated deficit during the development stage................ (9,687,666)
-----------
Total stockholders' equity.................................... 20,014,616
-----------
Total liabilities and stockholders' equity.................... $22,564,679
===========
</TABLE>

See accompanying notes to financial statements.

F-15
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS ENDED JUNE 9, 1992
JUNE 30 (INCEPTION) TO
------------------------ JUNE 30,
1996 1997 1997
----------- ----------- --------------
<S> <C> <C> <C>
Expenses:
Marketing and selling.............. $ 41,604 $ 2,373,223 $ 2,735,594
Research and development........... 673,986 1,339,400 3,970,705
Administrative and other........... 369,636 1,097,227 3,188,227
----------- ----------- -----------
Total expenses................... 1,085,226 4,809,850 9,894,526
Other charges (income):
Interest and dividends............. (68,479) (240,597) (476,829)
Write-offs of deferred offering
costs............................. -- -- 269,969
----------- ----------- -----------
Net loss......................... $(1,016,747) $(4,569,253) $(9,687,666)
=========== =========== ===========
Net loss per common share (note 2)... $ (0.19) $ (0.66)
=========== ===========
Weighted average common shares
outstanding......................... 5,442,847 6,941,772
=========== ===========
</TABLE>

See accompanying notes to financial statements.

F-16
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)

<TABLE>
<CAPTION>
ACCUMULATED
COMMON STOCK ADDITIONAL DEFICIT DURING THE TOTAL
------------------- PAID-IN DEVELOPMENT STOCKHOLDERS'
SHARES PAR VALUE CAPITAL STAGE EQUITY
--------- --------- ----------- ------------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER
31,1996................ 6,900,378 $6,900 $16,409,926 $(5,118,413) $11,298,413
Options exercised....... 121,008 121 208,412 -- 208,533
Issuance of common stock
at $13.00 per share in
private placements, net
of cost................ 1,080,000 1,080 13,075,843 -- 13,076,923
Net loss................ -- -- -- (4,569,253) (4,569,253)
--------- ------ ----------- ----------- -----------
BALANCE, JUNE 30, 1997.. 8,101,386 $8,101 $29,694,181 $(9,687,666) $20,014,616
========= ====== =========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-17
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
PERIOD FROM
SIX MONTHS ENDED JUNE 30, 1992
JUNE 30, (INCEPTION) TO
------------------------ JUNE 30,
1996 1997 1997
----------- ----------- --------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss............................ $(1,016,747) $(4,569,253) $(9,687,666)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Write-off of deferred offering
costs............................. -- -- 269,969
Stock issued for services.......... 26,824 -- 174,519
Depreciation and amortization...... 19,107 60,910 150,167
Change in operating assets and
liabilities:
Accounts receivable................ -- (232,447) (232,447)
Prepaid expenses and other assets.. (13,313) (45,840) (249,201)
Inventory.......................... -- (531,962) (585,145)
Accrued expenses and accounts
payable........................... 168,402 1,493,175 2,281,192
----------- ----------- -----------
Net cash used in operating
activities....................... (815,727) (3,825,417) (7,878,612)
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of equipment.............. (100,790) (686,934) (1,176,612)
Patents, trademarks and licenses.... (44,900) (69,016) (367,197)
----------- ----------- -----------
Net cash used in investing
activities....................... (145,690) (755,950) (1,543,809)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock.. -- 14,248,533 29,992,850
Proceeds from sale of preferred
stock.............................. 2,004,000 -- 2,025,000
Offering costs...................... (383,559) (999,460) (2,537,829)
----------- ----------- -----------
Net cash provided by financing
activities....................... 1,620,441 13,249,073 29,480,021
----------- ----------- -----------
Net increase in cash and cash
equivalents.......................... 659,024 8,667,706 20,057,600
Cash and cash equivalents, beginning
of period............................ 1,790,666 11,389,894 --
----------- ----------- -----------
Cash and cash equivalents, end of
period............................... $ 2,449,690 $20,057,600 $20,057,600
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH
FINANCING ACTIVITIES:
The Company issued common stock for
professional services performed by
unrelated parties.................. $ 26,824 $ -- $ 331,854
=========== =========== ===========
Accrued offering costs.............. $ -- $ 86,040 $ 86,040
=========== =========== ===========
</TABLE>

See accompanying notes to financial statements.

F-18
<PAGE>

ENAMELON, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO THE FINANCIAL STATEMENTS
(UNAUDITED)

1. STATEMENT OF INFORMATION FURNISHED

The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with Item 210 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation have been included. Results for the interim
period ended June 30, 1997 are not necessarily indicative of results for the
entire year.

For further information, refer to the annual financial statements and
footnotes thereto included elsewhere herein.

2. AMOUNTS PER SHARE

Net loss per share is presented for the six months ended June 30, 1996 on a
pro forma basis to give retroactive effect to the conversion of the redeemable
preferred stock as a result of the public offering consummated in October
1996. The calculation of net loss per share reflects the conversion of the
preferred stock as if it occurred on January 1, 1996.

The weighted average number of common shares outstanding used in computing
the pro forma net loss per common share was adjusted for the effects of the
application of Securities and Exchange Commission (SEC) Staff Accounting
Bulletin (SAB) No. 83. Pursuant to SAB No. 83, common stock issued by the
Company at a price less than the initial public offering price during the
twelve months immediately preceding the initial public offering, together with
common stock purchase warrants and options issued during such period with an
exercise price less than the initial public offering price, are treated as
outstanding for all periods presented. Earnings (loss) per share are computed
using the treasury stock method, under which the number of shares outstanding
reflects an assumed use of the proceeds from the issuance of such shares and
from the assumed exercise of such warrants and options, to repurchase shares
of the Company's common stock at the initial public offering price.

3. INVENTORY IS SUMMARIZED AS FOLLOWS:

<TABLE>
<CAPTION>
JUNE 30,
1997
--------
<S> <C>
Raw materials............................ $183,924
Work in process.......................... 17,373
Finished goods........................... 383,848
--------
$585,145
========
</TABLE>

Inventories are valued at cost by the first-in, first-out method.

4. PRIVATE PLACEMENT

In June 1997, the Company completed a private placement of 1,080,000 shares
of common stock at $13.00 per share. Cash proceeds net of costs were
$13,077,000. In connection with the offering the Company filed a Registration
Statement on Form S-1 with the Securities and Exchange Commission on July 11,
1997, which became effective August 11, 1997.

F-19
<PAGE>

TEXT: Enamelon(TM) is now available in selected markets* throughout
the United States.

Footnote at bottom of page:
*Buffalo/Rochester, New York; Seattle, Washington; Denver,
Colorado; Tampa, Florida.

PHOTOGRAPH: Photograph of Enamelon(TM) toothpaste tube, consumer and
professional samples, in store floor display and television
commercial being played on a television.
<PAGE>

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

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, ANY OF THE SELL-
ING STOCKHOLDERS OR ANY OF THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTI-
TUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OF-
FER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURIS-
DICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DE-
LIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUM-
STANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS COR-
RECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary....................................................... 3
Risk Factors............................................................. 6
Use of Proceeds.......................................................... 14
Dividend Policy.......................................................... 14
Capitalization........................................................... 15
Price Range of Common Stock.............................................. 15
Selected Financial Data.................................................. 16
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 17
Business................................................................. 20
Management............................................................... 32
Principal and Selling Stockholders....................................... 40
Certain Transactions..................................................... 41
Description of Securities................................................ 41
Underwriting............................................................. 43
Shares Eligible for Future Sale.......................................... 45
Legal Counsel............................................................ 45
Experts.................................................................. 46
Additional Information................................................... 46
Glossary................................................................. 47
Index to Financial Statements............................................ F-1
</TABLE>

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

2,000,000 SHARES

[LOGO]

ENAMELON,INC.

COMMON STOCK

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

PROSPECTUS
, 1997

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

LEHMAN BROTHERS

SBC WARBURG DILLON READ INC.

RODMAN & RENSHAW, INC.

- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the costs and expenses payable by the
Registrant in connection with the issuance and distribution of the securities
being registered hereunder.

All of the amounts shown are estimates (except for the SEC and NASD filing
fees).

<TABLE>
<S> <C>
SEC registration fee.......................................... $ 10,040.55
NASD fee...................................................... 3,813.38
NASDAQ filing fee............................................. 17,500.00
Transfer agent's fee.......................................... 15,000.00
Printing and engraving expenses............................... 100,000.00
Legal fees and expenses....................................... 100,000.00
Blue sky filing fees and expenses (including counsel fees).... 2,500.00
Accounting fees and expenses.................................. 30,000.00
Miscellaneous expenses........................................ 21,146.07
-----------
Total....................................................... $300,000.00
===========
</TABLE>

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Under Section 145 of the Delaware General Corporation Law, the Registrant
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Registrant's Bylaws
provide that the Registrant will indemnify its directors, executive officers,
other officers, employees and agents to the fullest extent permitted by
Delaware law.

The Registrant's Certificate of Incorporation provides for the elimination
of liability for monetary damages for breach of the directors' fiduciary duty
of care to the Registrant and its stockholders. These provisions do not
eliminate the directors' duty of care and, in appropriate circumstances,
equitable remedies such as injunctive or other forms of non-monetary relief
will remain available under Delaware law. In addition, each director will
continue to be subject to liability for breach of the director's duty of
loyalty to the Registrant, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

Effective November 30, 1992, the Company effectuated a 100-for-one stock
split of its Common Stock. In July 1993, the Company effectuated a 1.19688-
for-one stock split of its Common Stock. In September 1994, the Company
effectuated a one-for-1.65068 stock split of its Common Stock. In June 1995,
the Company effectuated a three-for-one stock split of its Common Stock. All
of the following information regarding the issuance of shares of the Company's
Common Stock has been adjusted, where appropriate, to reflect such stock
splits. Since July 1994, the Registrant has sold the following securities
without registration under the Securities Act:

(1) In September 1994, the Registrant sold an aggregate of 118,125 shares
of its Common Stock and Warrants to purchase 59,064 shares of Common Stock
at an exercise price of $1.33 a share to six unaffiliated persons, for an
aggregate consideration of $157,500 ($1.33 per share ascribing no value to
the Warrants).

II-1
<PAGE>

(2) In May 1995, the Registrant sold an aggregate of 93,750 shares of its
Common Stock and Warrants to purchase 93,750 shares of Common Stock at an
exercise price of $1.33 a share to eight persons, for an aggregate
consideration of $125,000 ($1.33 per share ascribing no value to the
Warrants). Eric Horodas, a Director of the Registrant, acquired 9,375
shares of Common Stock and 9,375 Warrants.

(3) In June 1995 the Registrant sold an aggregate of 3,000 shares of its
Common Stock to an unrelated party in consideration for services rendered
to the Registrant, valued at $8,045 ($2.68 per share).

(4) In August through December 1995, the Registrant sold an aggregate of
648,723 shares of its Common Stock to an aggregate of 112 unaffiliated
persons, for an aggregate consideration of $2,594,892 ($4.00 per share).

(5) In connection with the sales in ITEM 15(4) above, the Registrant
authorized the issuance of warrants to purchase an aggregate of 26,276
shares of Common Stock at an exercise price of $4.00 per share, and 1,562
shares of Common Stock at an exercise price of $3.60 per share.

(6) In January 1996 the Registrant sold an aggregate of 6,706 shares of
its Common Stock to an unrelated party in consideration for services
rendered to the Registrant, valued at $26,824 ($4.00 per share).

(7) In January 1996, the Registrant sold an aggregate of 500,000 Units to
an aggregate of 19 unaffiliated persons, for an aggregate consideration of
$2,000,000 ($4.00 per Unit). Each Unit consisted of 1.103 shares of 5%
Convertible Preferred Stock and 1 Common Stock Purchase Warrant,
exercisable at $5.75 per share.

(8) In connection with the placement of the offering in ITEM 15(7) above,
the Registrant authorized the issuance of warrants to purchase an aggregate
of 100,000 shares of Common Stock at an exercise price of $4.80 per share,
and 23,750 shares of Common Stock at an exercise price of $3.60 per share.

(9) In April 1996, the Registrant sold an aggregate of 6,250 Units to an
unrelated party, for an aggregate consideration of $25,000 ($4.00 per
Unit). Each Unit consisted of 1.103 shares of 5% Convertible Preferred
Stock and 1 Common Stock Purchase Warrant, exercisable at $5.75 per share.

(10) In April and May of 1997, the Registrant sold an aggregate of 35,375
shares of its Common Stock to an aggregate of four unaffiliated persons for
an aggregate consideration of $100,373.

(11) In May of 1997 the Board of Directors of the Company authorized the
issuance of warrants to purchase 3,055 shares of Common Stock at $3.60 a
share in settlement of certain claims.

(12) In June 1997 the Registrant sold an aggregate of 1,080,000 shares of
Common Stock to 42 unaffiliated persons, for an aggregate consideration of
$14,040,000 ($13.00 per share).

The issuances described in ITEMS 15(1),(3), (5), (6),(8) and (11) above were
made in reliance upon the exemption from the registration requirements of the
Securities Act provided by Section 4(2) of the Securities Act for transactions
by an issuer not involving a public offering. The issuances described in ITEMS
15 (2), (4), (7), (9) and (12) above were made in reliance upon the exemption
from the registration requirements of the Securities Act for transactions by
an issuer not involving a public offering provided by Section 4(6) of the
Securities Act and Regulation D promulgated thereunder. The recipients of the
securities in each of the above transactions represented their intentions to
acquire the securities for investment only and not with a view to or a sale in
connection with any distribution thereof. Allen & Company Incorporated acted
as the placement agent for the issuances described in ITEM 15(7) above and
received a fee of 100,000 warrants described in 15(8). Claremont York Capital
acted as a finder in such transaction and received 23,750 warrants as
described in 15(8). No underwriter or underwriting discount or commission was
involved in any other issuance. The issuances described in ITEM 15(10) were
made in reliance upon Section 3(b) of the Securities Act and Rule 701
promulgated thereunder.

II-2
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) EXHIBITS

The following Exhibits are filed herewith and made a part hereof.

<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.*****
3.1 Certificate of Incorporation of the Registrant, as amended.**
3.2 Amended and Restated By-Laws of the Registrant.**
4.1 Specimen Copy of Stock Certificate for shares of Common Stock.**
5.1 Opinion of Snow Becker Krauss P.C.*****
10.1 Restated Patent License Agreement by and between the Registrant and the
American Dental Association Health Foundation dated as of June 24,
1992.**
10.2 Amendment Agreement by and between the Registrant and the American
Dental Association Health Foundation dated as of June 12, 1995.**
10.3 Restated Foreign Patent License Agreement by and between the Registrant
and the American Dental Health Foundation dated as of November 18,
1992.**
10.4 Foreign License Amendment Agreement by and between the Registrant and
the American Dental Association Health Foundation dated as of June 14,
1995.**
10.5 The Registrant's 1993 Stock Option Plan.**
10.6 The Registrant's Incentive Compensation Plan.**
10.7 Employment Agreement between the Registrant and Dr. Steven R. Fox, as
amended as of June 15, 1996.**
10.8 Amended and Restated Employment Agreement between the Registrant and D.
Brooks Cole dated as of June 1, 1995.**
10.9 Employment Agreement between the Registrant and Norman Usen and Nu-
Products dated as of May 1, 1995.**
10.10 Employment Agreement between the Registrant and Anthony E. Winston dated
as of January 17, 1995.**
10.11 Employment Agreement between the Registrant and Edwin Diaz dated as of
July 29, 1996.**
10.12 Amendment, dated as of January 16, 1997, to Employment Agreement between
the Registrant and Anthony Winston.***
10.13 Amendment, dated as of July 1, 1997, to Employment Agreement between the
Registrant and Norman Usen.*****
10.14 Lease Agreement with Elaine Fox dated December 19, 1995.**
10.15 Lease Agreement with Unum Life Insurance Company of America dated
December 27, 1993.**
10.16 Lease Agreement with East Brunswick Woods Associates, L.P. dated
November 1995.**
10.17 Registrant's 1997 Stock Option Plan.****
23.1 Consent of Snow Becker Krauss P.C. (included in Exhibit 5.1).
23.2 Consent of BDO Seidman, LLP.****
24.1 Power of Attorney.*****
</TABLE>
- --------

** Incorporated by reference to the Company's Form S-1 Registration
Statement effective October 24, 1996.
*** Incorporated by reference to the Company's March 28, 1997 Form 10-KSB.
**** Incorporated by reference to the Company's Form S-1 Registration
Statement effective August 11, 1997.
***** Previously filed.

II-3
<PAGE>

(b) FINANCIAL STATEMENT SCHEDULES

All other schedules have been omitted because the information to be set
forth therein is not applicable or is shown in the financial statements or the
notes thereto.

ITEM 17. UNDERTAKINGS.

The Company hereby undertakes:

(1) To 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; and

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

(2) For determining liability under the Act, to 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.

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

(4) For determining liability under the Act, the information omitted from
the form of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus filed by the
registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Act shall
be deemed to be part of this registration statement as of the time it was
declared effective.

II-4
<PAGE>

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 3 TO THE REGISTRATION STATEMENT TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF YONKERS, STATE OF NEW YORK, ON THE 16TH DAY OF OCTOBER 1997.

ENAMELON, INC.

/s/ Dr. Steven R. Fox
By: _________________________________
(Dr. Steven R. Fox, Chairman of
the Board of Directors and Chief
Executive Officer)

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
AND BY DR. STEVEN FOX AS ATTORNEY-IN-FACT FOR THE SPECIFIC PERSONS IN THE
CAPACITIES WITH ENAMELON, INC. AND ON THE DATES INDICATED:

SIGNATURE TITLE DATE

/s/ Dr. Steven R. Fox Chairman of the
- ------------------------------------- Board of Directors October 16,
DR. STEVEN R. FOX and Chief Executive 1997
Officer (Principal
Executive Officer)

* Treasurer, Vice
- ------------------------------------- President--Finance October 16,
EDWIN DIAZ and Chief Financial 1997
Officer (Principal
Financial Officer)

* Director
- ------------------------------------- October 16,
DR. BERT D. GASTER 1997

II-5
<PAGE>

SIGNATURE TITLE DATE

* Director
- ------------------------------------- October 16,
RICHARD A. GOTTERER 1997

* Director
- ------------------------------------- October 16,
ERIC D. HORODAS 1997

* Director
- ------------------------------------- October 16,
DR. S.N. BHASKAR 1997

/s/ Dr. Steven R. Fox
*By______________________________
DR. STEVEN R. FOX ATTORNEY-IN-FACT

II-6
<PAGE>

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT DESCRIPTION
------- -----------
<C> <S>
1.1 Form of Underwriting Agreement.*****
3.1 Certificate of Incorporation of the Registrant, as amended.**
3.2 Amended and Restated By-Laws of the Registrant.**
4.1 Specimen Copy of Stock Certificate for shares of Common Stock.**
5.1 Opinion of Snow Becker Krauss P.C.*****
10.1 Restated Patent License Agreement by and between the Registrant and
the American Dental Association Health Foundation dated as of June 24,
1992.**
10.2 Amendment Agreement by and between the Registrant and the American
Dental Association Health Foundation dated as of June 12, 1995.**
10.3 Restated Foreign Patent License Agreement by and between the
Registrant and the American Dental Health Foundation dated as of
November 18, 1992.**
10.4 Foreign License Amendment Agreement by and between the Registrant and
the American Dental Association Health Foundation dated as of June 14,
1995.**
10.5 The Registrant's 1993 Stock Option Plan.**
10.6 The Registrant's Incentive Compensation Plan.**
10.7 Employment Agreement between the Registrant and Dr. Steven R. Fox, as
amended as of June 15, 1996.**
10.8 Amended and Restated Employment Agreement between the Registrant and
D. Brooks Cole dated as of June 1, 1995.**
10.9 Employment Agreement between the Registrant and Norman Usen and Nu-
Products dated as of May 1, 1995.**
10.10 Employment Agreement between the Registrant and Anthony E. Winston
dated as of January 17, 1995.**
10.11 Employment Agreement between the Registrant and Edwin Diaz dated as of
July 29, 1996.**
10.12 Amendment, dated as of January 16, 1997, to Employment Agreement
between the Registrant and Anthony Winston.***
10.13 Amendment, dated as of July 1, 1997, to Employment Agreement between
the Registrant and Norman Usen.*****
10.14 Lease Agreement with Elaine Fox dated December 19, 1995.**
10.15 Lease Agreement with Unum Life Insurance Company of America dated
December 27, 1993.**
10.16 Lease Agreement with East Brunswick Woods Associates, L.P. dated
November 1995.**
10.17 The Registrant's 1997 Stock Option Plan.****
23.1 Consent of Snow Becker Krauss P.C. (included in Exhibit 5.1).
23.2 Consent of BDO Seidman, LLP.****
24.1 Power of Attorney.*****
</TABLE>
- --------