VYREX CORP, S-3, 1997-11-20

VYREX CORP
S-3, 1997-11-20
PHARMACEUTICAL PREPARATIONS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1997

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

SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

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

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VYREX CORPORATION
(Exact Name of Registrant as specified in its charter)

NEVADA 88-0271109 88-0271109
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)

2159 AVENIDA DE LA PLAYA
LA JOLLA, CALIFORNIA 92037
TEL (619) 454-4446 / FAX (619) 459-9522
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

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CORPORATION TRUST COMPANY OF NEVADA
ONE EAST FIRST STREET, RENO, NEVADA 89501, (702) 688-3061
(Name, address and telephone number of agent for service)

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

COPIES TO:
FISHER THURBER, LLP
DAVID A. FISHER
TIMOTHY J. FITZPATRICK
4225 EXECUTIVE SQUARE
LA JOLLA, CALIFORNIA 92037-1483
TEL (619) 535-9400 / FAX (619) 535-1616

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

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement has become
effective.

If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /

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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY
DETERMINE.

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<PAGE>

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Amount to be Offering Price per Aggregate Registration
Securities to be Registered Registered (1) Share Offering Price(2) Fee
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock Underlying
IPO Warrants(3) 1,057,097 $ 8.00 $8,456,776 $2,562.66
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying
Private Warrants(4) 82,604 $ 8.00 $ 660,832 $ 200.25
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying
Convertible Debentures(5) 282,329 $ 6.50 $1,835,836 $ 556.31
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying
Debenture Warrants(6) 17,000 $ 8.38 $142,460 $ 43.17
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying
Underwriter's Purchase Options(7) 100,000 $8.97 $897,000 $ 271.82
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock Underlying
Underwriter's Warrants(8) 100,000 $10.89 $1,089,000 $ 330.00
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock
Placement Agent Shares(9) 8,000 $6.50 $52,000 $ 15.76
- ----------------------------------------------------------------------------------------------------------------------------
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $3,979.97
- ----------------------------------------------------------------------------------------------------------------------------
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</TABLE>

(1) Pursuant to Rule 416 under the Securities Act of 1933 (the "Act"), this
Registration Statement covers such additional indeterminate number of
shares of Common Stock and Warrants as may be issued by reason of
adjustments in the number of shares of Common Stock and Warrants pursuant
to anti-dilution provisions contained in the Warrants and Debentures.
Because such additional shares of Common Stock and Warrants will, if
issued, be issued for no additional consideration, no additional
registration fee is required.

(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457.

(3) Previously Registered Common Stock underlying previously registered and
outstanding warrants issued pursuant to the Registration Statement on Form
SB-2 (File No. 33-99880) filed by the registrant in connection with the
initial public offering of its securities.

(4) Common Stock underlying outstanding warrants issued in private placements
prior to or in connection with the registrant's initial public offering of
its securities.

(5) Common Stock underlying convertible debentures issued by the registrant on
November 6, 1997. The principal and interest due on the convertible
debentures may be converted to Common Stock at a discount to the market
price of the registrant's Common Stock on the date of conversion. The
discount is determined by the holding period of the converting debenture
holder. The amount to be registered is estimated to include the number of
shares required to fulfill such conversion rights based upon potential
fluctuations in such market prices. The proposed offering price of shares
issued upon conversion of debentures is calculated on the basis of the
closing price for the registrant's Common Stock as reported on The Nasdaq
SmallCap Market on November 17, 1997 of $6.50 which date is within five
business days prior to the date of filing of this Registration Statement.

(6) Common Stock underlying warrants issued to purchasers of convertible
debentures of the registrant. The debenture warrants are not registered
herein. The debenture warrants are exercisable over a three-year period
commencing on the date of issuance at the lesser of: (i) $8.38 (125% of the
market price of the registrant Common Stock on the date of issuance,) or
(ii) 125% of the market price of the registrant Common Stock on the
effective date of this Registration Statement. The proposed offering price
assumes debenture warrants are exercised at a price of $8.38 (125% trading
price of registrant's Common Stock on the date of issuance.

(7) Common Stock underlying non-transferable options issued to the underwriter
of the initial public offering of the registrant's securities and certain
of the underwriter's partners and employees. The underwriter's purchase
options entitle the holders to purchase 100,000 units at $8.97 per Unit.
The Common Stock and warrants included in the units underlying the
underwriter's purchase options may only be purchased together. The
underwriter's purchase options are exercisable over a four-year period
ending March 26, 2001.

(8) Common Stock underlying warrants included in the units underlying unit
purchase options issued to the underwriter of the initial public offering
of the registrant's securities and certain of the underwriter's partners
and employees. The underwriter's warrants are not registered herein. The
underwriter's warrants are substantially identical to the warrants
registered pursuant to the initial public offering of the registrant's
securities except they may be exercised for $10.89 per share.

(9) Common Stock issued to the placement agent of certain convertible
debentures issued by the registrant on November 6, 1997 in consideration of
services rendered. The placement agent shares are being registered for
resale by the holder. Proposed offering price of placement agent shares is
calculated using an assumed $6.50 market price for Company's Common Stock.

<PAGE>

Subject to completion dated November 20, 1997
PROSPECTUS
VYREX CORPORATION
1,057,097 Previously Registered Shares of Common Stock
589,933 Shares of Common Stock Offered by
Certain Selling Security Holders

This prospectus (the "Prospectus") relates to the public offering,
which is not being underwritten, of 1,057,097 previously registered
shares (the "IPO Warrant Shares") underlying outstanding warrants (the
"IPO Warrants") included in the units (the "Units") offered pursuant to
the initial public offering (the "Unit Offering") of the Common Stock,
par value $0.001 per share (the "Common Stock"), of Vyrex Corporation, a
Nevada corporation ("Vyrex" or the "Company"). This Prospectus also
relates to the public offering, which is not being underwritten, and the
resale by the holders of: (i) 100,000 shares of Common Stock included in
the units underlying unit purchase options ("UPOs") issued to the
underwriter of the Unit Offering and certain of its partners and
employees (the "Underwriter's Shares"), (ii) 100,000 shares of Common
Stock (the "Underwriter's Warrant Shares") underlying the warrants (the
"Underwriter's Warrants") included in the units underlying the UPOs, and
(iii) 82,604 shares of Common Stock (the "Private Warrant Shares")
underlying warrants issued prior to or in connection with the Unit
Offering, ("Private Warrants"). The IPO Warrants, the UPOs, the
Underwriter's Warrants and the Private Warrants are herein referred to as
the "Existing Warrants". This Prospectus also relates to the Public
Offering, which is not being underwritten, and the resale by the holders
of an aggregate of 307,329 shares of Common Stock (collectively, the "New
Shares"), consisting of (i) up to 282,329 shares of Common Stock (the
"Debenture Shares") issuable upon conversion of certain outstanding
debentures (the "Debentures"), (ii) up to 17,000 shares of Common Stock
(the "Debenture Warrant Shares") issuable upon exercise of outstanding
warrants to purchase Common Stock issued in connection with the issuance
of the Debentures (the "Debenture Warrants"), and (iii) 8,000 shares of
Common Stock (the "Placement Agent Shares") issued to the placement agent
for the Company in connection with the issuance of the Debentures (the
"Placement Agent"). The Company has the right to accelerate the
expiration of the IPO Warrants following at least 30 days' prior notice
provided the closing price of the Company's Common Stock on the Nasdaq
Stock Market equals or exceeds $10.00 per share for 10 consecutive
trading days ending within the 30 days prior to the date the notice of
acceleration is given, and at such time as there is a current effective
registration statement covering the IPO Warrant Shares. The Company has
the right to accelerate the expiration of certain of the Private Warrants
if the Common Stock of the Company publicly trades for $12.00 per share
for 20 out of 30 consecutive trading days after certain notice
requirements are met. The Existing Warrants and the Debenture Warrants
are herein referred to as the "Warrants." The Company has the right to
reduce the exercise price and/or extend the term of the Warrants. The
IPO Warrant Shares, the Underwriter's Shares, the Underwriter's Warrant
Shares, the Private Warrant Shares, the Debenture Shares, the Debenture
Warrant Shares, and the Placement Agent Shares are collectively referred
to as the "Securities."

CONTINUED ON FOLLOWING PAGE

THE SECURITIES OFFERED ARE SPECULATIVE AND INVOLVE A HIGH DEGREE
OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION AND SHOULD NOT BE
PURCHASED BY INVESTORS WHO CANNOT AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS" STARTING ON PAGE ___.

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

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
NOR ANY STATE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

The date of this prospectus is November ___, 1997
<PAGE>

(1) Estimated solely for the purpose of calculating the registration fee
in accordance with Rule 457 under the Securities Act, based upon
$6.50 per Share sale price of the Registrant's Common Stock as
reported by Nasdaq on November 17, 1997.

(2) Excludes the Placement Agent Shares and commissions previously paid
to the Placement Agent and underwriters upon issuance of the
Existing Warrants, and the Debentures. This Prospectus also relates
to the indeterminate number of shares of Common Stock which may be
issued upon conversion of the Debentures on a date when market
prices for the Common Stock may be lower than upon the date of this
Prospectus.

(3) Before deducting expenses of the offering payable by the Company,
estimated to be $35,000.

(4) Assumes (i) exercise of all IPO Warrants and sale by the Company of
1,057,097 underlying shares of Common Stock at an exercise price of
the IPO Warrants of $8.00 per share, and (ii) exercise of all other
outstanding warrants, and conversion of principal of $1,000,000 and
all interest on outstanding Debentures and subsequent sale by
Selling Security Holders of 582,933 received therefrom at average of
exercise and conversion prices therefore of approximately $8.00 per
share.

CONTINUED FROM COVER PAGE

The Placement Agent Shares and, upon issuance, the New Shares, will be
held by certain Debenture holders, warrant holders or stockholders of the
Company or by pledgees, donees, transferees or other successors in
interest that receive such shares as a gift, partnership distribution or
other non-sale related transfer (the "Selling Security Holders"). The
Private Warrants, and the Placement Agent Shares, were received by
certain Selling Security Holders in private placement transactions of the
Company, and were issued pursuant to certain exemptions from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"), provided by Section 3(b) and 4(2) thereof. The
Securities are being registered by the Company pursuant to registration
covenants or registration rights agreements made to or existing with the
holders thereof. See "Description of Securities" and "Plan of
Distribution."

The Securities other than the Placement Agent Shares which have been
issued will be issued by the Company and are offered hereby to those
parties holding the Warrants and the Debentures. The Securities may be
offered for resale by the Selling Security Holders from time to time in
transactions on The Nasdaq SmallCap Market tier of the Nasdaq Stock
Market ("Nasdaq"), in privately negotiated transactions, or by a
combination of such methods of sale, at fixed prices that may be changed,
at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Securities
may be sold by the Selling Security Holders through one or more of the
following: (a) a block trade in which the broker or dealer so engaged
will attempt to sell the Securities as agent but may position and resell
a portion of the block as principal to facilitate the transaction, (b)
purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus, and (c) ordinary
brokerage transactions and transactions in which the broker solicits
purchases. The Selling Security Holders may effect such transactions by
selling the Securities to or through broker-dealers and such
broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Security Holders or the
purchasers of the Securities from whom such broker-dealers may act as
agent or to whom they sell as principal or both (which compensation to a
particular broker-dealer might be in excess of customary commissions).
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 may be sold under Rule 144 promulgated under
the Securities Act rather than pursuant to this Prospectus.

The Company will not receive any of the proceeds from the sale of
the New Shares or the Placement Agent Shares by the Selling Security
Holders, although the Company will receive proceeds from the exercise of
the Existing Warrants and the Debenture Warrants. The Company has agreed
to bear certain expenses in connection with the registration and sale of
the Securities being offered by certain of the Selling Security Holders
and to indemnify certain Selling Security Holders against certain
liabilities, including liabilities under the Securities Act. See "Plan
of Distribution."

ii
<PAGE>

The Common Stock and IPO Warrants of the Company are traded on
Nasdaq under the symbols "VYRX" and "VRYXW", respectively. On November
17, 1997, the last sale prices for the Common Stock and IPO Warrants as
quoted on Nasdaq were $6.50 and $1.75, respectively.

The Selling Security Holders and any broker-dealers or agents that
participate with the Selling Security Holders in the distribution of the
Securities may be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions or discounts
under the Securities Act.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy statements and other information filed
by the Company may be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street
NW, Judiciary Plaza, Washington, DC 20549, and at the Commission's
regional offices: Chicago Regional Office, Suite 1400, 500 West Madison
Street, Chicago, Illinois 60661; and New York Regional Office, Suite
1300, 7 World Trade Center, New York, New York 10048. Copies of such
materials can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, NW, Judiciary
Plaza, Washington, DC 20549. The Commission maintains a Web Site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
Commission's Web Site is located at http://www.sec.gov. The Common Stock
of the Company is quoted on Nasdaq, and such material may also be
inspected at the offices of Nasdaq Operations, 1735 "K" Street, NW,
Washington, DC 20006.

This Prospectus constitutes a part of a Registration Statement on
Form S-3 (the "Registration Statement") filed by the Company with the
Commission under the Securities Act. Vyrex filed with the Commission a
Registration Statement on Form SB-2 on December 1, 1995, as amended by
Amendment No. 1, and Amendment No. 2, as filed with the Commission on
February 20, 1996, and March 20, 1996, respectively (collectively, the
"IPO Registration Statement"), pursuant to the Securities Act with
respect to the Unit Offering. This Prospectus omits certain of the
information set forth in the Registration Statement and the IPO
Registration Statement and the exhibits and schedules thereto. For
further information with respect to the Company and the Securities
offered hereby, reference is made to the Registration Statement and the
IPO Registration Statement and the exhibits and schedules filed as a part
thereof. Statements contained in this Prospectus concerning the contents
of any contract or any other document referred to are not necessarily
complete; reference is made in each instance to the copy of such contract
or document filed as an exhibit to the Registration Statement and the IPO
Registration Statement. Each such statement is qualified in all respects
by such reference to such exhibit. Each of the Registration Statement or
the IPO Registration Statement, including all exhibits and schedules
thereto, may be inspected without charge at the Commission's principal
office in Washington, D.C., and copies of all or any part thereof may be
obtained from such office after payment of fees prescribed by the
Commission.

Information contained herein is subject to completion or amendment.
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.

DOCUMENTS INCORPORATED BY REFERENCE

The Company regularly files documents with the Securities and
Exchange Commission to comply with applicable government regulations,
including the Form 10-QSB and Form 10-KSB. Vyrex will provide without
charge to each

iii
<PAGE>

person, including any beneficial owner, to whom this Prospectus is
delivered, upon written or oral request of such person, a copy of any and
all of the documents that have been or may be filed with the Securities
and Exchange Commission (other than exhibits to such documents which are
not specifically incorporated by reference into such documents). Such
requests should be directed to:

Vyrex Corporation
Attn: Steven J. Kemper
Chief Financial Officer
2159 Avenida de la Playa
La Jolla, California 92037
(619) 454-4446

The following documents previously filed with the Commission, except
as superseded or modified herein, are hereby incorporated by reference
into this Prospectus:

1. The Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996.
2. The Company's Amendment to its Annual Report on Form
10-K/A SB for the fiscal year ended December 31, 1996.
3. The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1997, June 30, 1997, and
September 30, 1997.
4. The Company's definitive Form 14a (Proxy) dated May 9,
1997.
5. The Company's 1934 Act Registration Statement on Form 8-A.
6. Certain exhibits from the Company's 1933 Act Filings.

All documents filed with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering, shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents. Any statement contained in any
document incorporated or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein, or in any
other subsequently filed document which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except
as modified or superseded, to constitute a part of this Prospectus.

No person is authorized in connection with any offering made hereby
to give any information or make any representation not contained or
incorporated by reference in this Prospectus, and any information not
contained or incorporated herein must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer
to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such offer
or solicitation. Neither the delivery of this Prospectus at any time nor
any sale made hereunder shall, under any circumstances, imply that the
information herein is correct as of any date subsequent to the date
hereof.

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

FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements. When included
in this Prospectus, the words "expects," "intends," "anticipates,"
"plans," "projects" and "estimates," and analogous or similar expressions
are intended to identify forward-looking statements. Such statements,
which include statements contained in "Prospectus Summary," "Risk
Factors" and elsewhere are inherently subject to a variety of risks and
uncertainties that could cause actual results to differ materially from
those reflected in such forward-looking statements. For a discussion of
certain of such risks, see "Risk Factors." These forward-looking
statements speak only as of the date of this Prospectus. The Company
expressly disclaims any obligation or undertaking to release publicly any
updates or revisions to any forward-looking statement contained herein to
reflect any change in the Company's expectations with regard thereto or
any change in events, conditions or circumstances on which any such
statement is based.

iv
<PAGE>

PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY DOES NOT PURPORT TO BE COMPLETE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE DETAILED INFORMATION
APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, THE
INFORMATION IN THIS PROSPECTUS DOES NOT GIVE EFFECT TO THE EXERCISE OF:
(i) THE EXISTING WARRANTS, (ii) ISSUANCE OF THE NEW SHARES, OR (iii)
EXERCISE OF OTHER OUTSTANDING WARRANTS AND OPTIONS.

THE COMPANY

Vyrex Corporation is a research and development stage company seeking to
discover and develop pharmaceuticals and nutraceuticals for the treatment and
prevention of various disorders. The Company's current research programs are
targeting respiratory, cardiovascular and neurodegenerative diseases, as
well as AIDS, cancer and aging related conditions. Currently the Company's
research is focused on antioxidant therapeutics, nutraceuticals and
genomes/proteomics utilizing the Company's patented CD-Tagging-TM-method.

The Company's pharmaceutical research focuses primarily on antioxidant
compounds. The Company's lead compounds are Vantox-Registered Trademark- and
Panavir-Registered Trademark-, and derivatives of Vantox-Registered
Trademark- and Panavir-Registered Trademark- which are currently under
development. Vantox-Registered Trademark- is an inhaled antioxidant. The
Company believes inhaled antioxidants may have application in the treatment
of asthma, acute respiratory distress syndrome, cystic fibrosis, smoke
inhalation, oxygen toxicity and other areas. The Company is developing
derivatives of Vantox-Registered Trademark- and Panavir-Registered Trademark-
in an effort to improve bioavailability, delivery and potency and to address
additional indications.

The Company has entered into an Agreement to provide four initial
nutritional supplement products to Retired Persons Services, Inc., which
administers the American Association of Retired Persons Pharmacy Service.
The Company has initiated pilot production of these formulations. The
formulations are designed to provide dietary support for the heart, prostate,
bones and joints, and to address vitality and immunity concerns. The Company
intends to formulate additional nutritional supplements, either internally or
by licensing their use from other companies and individuals. The Company is
also developing proprietary derivatives of various nutritional supplements
(ProNutrients-TM-) and is also working to develop proprietary nutritional
supplements which are incorporated into foods (Nutrafoods-TM-). The Company
is discussing licensing and joint development of these proposed products with
food and nutritional supplement companies, and exploring other potential
channels for distribution.

The Company's genomic and proteomic technology, CD-Tagging-TM-, is being
developed to assist in pharmaceutical drug discovery efforts. The Company is
currently working to optimize the various procedures used in CD-Tagging
technology in an effort to accelerate its drug and nutraceutical development
programs. The Company has entered into a collaboration agreement with The
Immune Response Corporation regarding the use of CD-Tagging-TM- for spinal
cord injury and other central nervous system trauma. The Company is also
seeking licensing opportunities for CD-Tagging-TM-.

The Company was incorporated on January 2, 1991, in the State of
Nevada. The Company's offices are located at 2159 Avenida de la Playa,
La Jolla, California, 92037, and its telephone number is (619) 454-4446.

<PAGE>

THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
SECURITIES OFFERED (1)(2) . . . . . . . . . . . . . . . . . 1,647,030 shares of Common Stock

COMMON STOCK OUTSTANDING PRIOR TO THIS OFFERING (3):. . . . 7,121,409

COMMON STOCK OUTSTANDING AFTER THIS OFFERING (4): . . . . . 8,768,439

USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . The net proceeds of this offering will be used for research
and development, working capital, acquisitions and general
corporate purposes. The amount of proceeds to be received by
the Company could vary significantly based on market and
other factors. See "Use of Proceeds."

NASDAQ SYMBOLS
Common Stock . . . . . . . . . . . . . . . . . . . . . VYRX
Warrants . . . . . . . . . . . . . . . . . . . . . . . VYRXW

RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . This offering involves a high degree of risk. See "Risk
Factors."
</TABLE>

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

(1) For a description of the voting and other rights of the Common Stock
see "Description of Securities--Common Stock."

(2) Includes: (i) 1,057,097 shares of Common Stock issuable upon exercise
of the IPO Warrants; (ii) 200,000 shares of Common Stock issuable upon
exercise of the UPOs and the Underwriter's Warrants included therein;
(iii) 82,604 shares issuable upon exercise of the Private Warrants; (iv)
up to 17,000 shares of Common Stock issuable upon conversion of the
Debentures; (v) up to 282,329 shares of Common Stock issuable upon
exercise of the Debenture Warrants; and (vi) 8,000 Placement Agent
Shares.

(3) Does not include: (i) 2,875,000 shares of Common Stock reserved for
issuance under the Company's stock-based compensation plans of which
options to acquire 1,531,709 shares have been granted as of the date of
this Prospectus; (ii) 1,057,097 shares of Common Stock issuable upon
exercise of the IPO Warrants; (iii) 200,000 shares of Common Stock
issuable upon exercise of the UPOs and the Underwriter's Warrants
included therein; (iv) 82,604 shares issuable upon exercise of the
Private Warrants; (v) up to 282,329 shares of Common Stock issuable upon
conversion of the Debentures; and (vi) up to 17,000 shares of Common
Stock issuable upon exercise of the Debenture Warrants.

(4) Does not include 2,875,000 shares of Common Stock reserved for
issuance under the Company's stock-based compensation plans of which
options to acquire 1,531,709 shares have been granted as of the date of
this Prospectus, and any shares which may be issued upon conversion of
Additional Debentures as defined herein. See "Material Changes" and
"Description of Securities."

2
<PAGE>

SUMMARY FINANCIAL INFORMATION

The Summary Financial Information set forth below should be read in
conjunction with the financial statements included in the materials
incorporated by reference herein.

CUMULATIVE
FROM
NINE MONTHS NINE MONTHS INCEPTION
ENDED ENDED THROUGH
SEPT. 30, 1997 SEPT. 30, 1996 YEAR ENDED DECEMBER 31, SEPT. 30, 1997
--------------- -------------- ----------------------------------------- -----------------
(unaudited) (unaudited) 1996 1995 1994 (unaudited)
---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Operating Data:
Revenues . . . . . . . . . . . . . $ -- $ -- $ -- $ 10,000 $ -- $ 310,000
----------- ----------- ---------- ------------ ------------ ------------

Operating expenses:. . . . . . . .
Research and development 1,307,329 258,457 869,812 294,953 313,886 3,701,114
Marketing & selling 113,492 -- -- -- -- 113,492
General and administrative 931,353 645,044 1,127,270 221,649 154,611 2,928,901
----------- ----------- ---------- ------------ ------------ ------------

Total operating expenses 2,352,174 903,501 1,997,082 516,602 468,497 6,743,507
----------- ----------- ---------- ------------ ------------ ------------

Loss from operations . . . . . . . (2,352,174) (903,501) (1,997,082) (506,602) (468,497) (6,433,507)
----------- ----------- ---------- ------------ ------------ ------------

Other income (expense):
Interest income . . . . . . . 162,576 120,154 176,468 1,918 814 364,996
Charge from issuance of
stock options for arranging
bridge financing. . . . . . . -- -- -- (1,349,900) -- (1,349,900)
----------- ----------- ---------- ------------ ------------ ------------

Totals 162,576 120,154 176,468 (1,347,982) 814 (984,904)
----------- ----------- ---------- ------------ ------------ ------------

Net loss . . . . . . . . . . . . . $(2,189,598) $(783,347) $(1,820,614) $(1,854,584) $(467,683) $(7,418,411)
----------- ----------- ---------- ------------ ------------ ------------
----------- ----------- ---------- ------------ ------------ ------------

Net loss per common share. . . . . $(0.31) $(.14) $(.28) $(.30) $(.08) $(1.22)
----------- ----------- ---------- ------------ ------------ ------------
----------- ----------- ---------- ------------ ------------ ------------

Weighted average common
and common equivalent
shares outstanding . . . . . . . . 7,121,246 5,486,925 6,514,324 6,137,020 6,137,020 6,076,851
----------- ----------- ---------- ------------ ------------ ------------
----------- ----------- ---------- ------------ ------------ ------------
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
--------------------------

ACTUAL PRO FORMA(1)
----------- -------------
<S> <C> <C>
BALANCE SHEET DATA:
Cash, cash equivalents and short term investments . . . . . . . $2,912,797 $ 3,860,297
Working capital . . . . . . . . . . . . . . . . . . . . . . . . 2,681,692 3,629,192
Total assets. . . . . . . . . . . . . . . . . . . . . . . . . . 3,239,151 4,525,651
Outstanding convertible debentures. . . . . . . . . . . . . . . -- 1,000,000
Stockholders' equity. . . . . . . . . . . . . . . . . . . . . . 2,928,649 3,215,149
</TABLE>

(1) Pro forma reflects the issuance of $1,000,000 of Debentures, and Debenture
Warrants to purchase 17,000 shares of Common Stock on November 6, 1997,
and the Company's receipt of $947,500 in connection therewith. Excludes
any proceeds (if any) that would be received by the Company from the sale
of: (i) 1,057,097 shares of Common Stock upon the exercise of outstanding
IPO Warrants, (ii) 82,604 shares of Common Stock upon the exercise of
outstanding Private Warrants, (iii) 200,000 shares of Common Stock upon
exercise of the UPOs and the Underwriter's Warrants included therein, and
(iv) 17,000 shares of Common Stock upon exercise of outstanding Debenture
Warrants. Also excludes the effect of the issuance of up to 282,329
shares of Common Stock upon the conversion of principal and interest due
on outstanding Debentures.

3
<PAGE>

RISK FACTORS

AN INVESTMENT IN THE COMMON STOCK BEING OFFERED HEREBY IS SPECULATIVE IN
NATURE, INVOLVES A HIGH DEGREE OF RISK AND SHOULD NOT BE MADE BY ANY INVESTOR
WHO CANNOT AFFORD THE LOSS OF HIS/HER ENTIRE INVESTMENT. ACCORDINGLY,
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING FACTORS, IN
ADDITION TO ALL OF THE OTHER INFORMATION PRESENTED IN THIS PROSPECTUS BEFORE
PURCHASING ANY OF THE COMMON STOCK OFFERED HEREBY. THIS PROSPECTUS CONTAINS,
IN ADDITION TO HISTORICAL INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER MATERIALLY
FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS. FACTORS THAT
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE THOSE DISCUSSED BELOW AS
WELL AS THOSE DISCUSSED ELSEWHERE IN THIS PROSPECTUS.

EARLY STAGE OF DEVELOPMENT; ABSENCE OF PRODUCTS. The Company is in the
development stage. It has not completed the development of any product and,
accordingly, has not begun to generate revenues from operations. Most of the
Company's proposed pharmaceutical products will require significant additional
research and development, including in the majority of cases extensive
preclinical and clinical testing, before the Company will be able to apply for
FDA approval. There can be no assurance the Company's research and development
efforts will be successful, that any of the Company's potential pharmaceutical
products under development will prove to be safe and effective in clinical
trials, that the Company will be able to obtain FDA approval for any of its
proposed pharmaceutical products, that any such proposed pharmaceutical
products can be manufactured at acceptable cost and with appropriate quality,
or that any such proposed products, if they do receive regulatory approval, can
be successfully marketed. The Company cannot predict when, if ever, it will
begin to market any proposed pharmaceutical products which may not occur for a
number of years. The Company is also developing nutraceutical products which
the Company believes may be sold before any of its proposed pharmaceutical
products will be sold. However, as of the date of this Prospectus no
nutraceutical products have completed testing or been sold. There can be no
assurance such products will complete testing, achieve consumer acceptance or
generate any revenue. There can be no assurance that the Company can
successfully complete the product development required to initiate its
strategies with regard to nutraceutical products or to successfully market any
nutraceutical product.

NO OPERATING REVENUES; ACCUMULATED DEFICIT; EXPECTATION OF FUTURE LOSSES.
The Company has experienced significant operating losses since its inception in
1991. As of September 30, 1997 the Company had a deficit accumulated in the
development stage of $7,418,411 (see the Summary Financial Information included
herein). The Company expects to incur substantial additional operating losses
over the next several years and expects cumulative losses to increase as the
Company's research and development efforts and clinical trials expand. The
Company has generated no revenues from operations. The development of the
Company's proposed pharmaceutical products will require the commitment of
substantial resources to prepare and submit applications to the FDA, and to
conduct research, preclinical and clinical trials, and for both its proposed
pharmaceutical and nutraceutical products the Company must either establish
commercial scale manufacturing processes and facilities or contract for such
manufacturing facilities, and to establish additional quality control,
regulatory, marketing, sales and administrative capabilities. There can be no
assurance the Company will be successful in these endeavors, especially in
light of the high failure rate of development stage pharmaceutical and
nutrition companies with limited resources. There can be no assurance the
Company will not incur substantial and continuing net losses beyond the next
several years or that the Company will ever reach profitability. Furthermore,
there can be no assurance the Company will apply for or obtain regulatory
approvals, enter into arrangements with third parties for product development
and commercialization, or successfully market or license any products. To
achieve profitable operations, the Company, alone or with others, must
successfully identify, develop, manufacture and market its proprietary products
or technologies. There can be no assurance the Company will be able to
accomplish these tasks. Significant delays in any of these matters could
materially adversely impact the Company.

FUTURE CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING.
Substantial expenditures will be required to enable the Company to conduct
existing and planned product research and development, continue the FDA
application process, including conducting preclinical studies and clinical
trials, and to manufacture and market its proposed products including its
proposed nutraceutical products. The Company will need to raise substantial
additional funds to support its long-term proposed product development and
commercialization programs including its

4
<PAGE>
nutraceutical product development programs. The Company has no established
bank financing arrangements and it is not anticipated the Company will secure
any bank financing in the foreseeable future. Therefore, it is likely the
Company will need to seek additional financing through subsequent future public
or private sales of its securities, including equity and debt securities. The
Company may also seek funding for the development and marketing of its proposed
products through strategic alliances and other arrangements with corporate
partners. There can be no assurance such collaborative arrangements or
additional funds will be available when needed, or on terms acceptable to the
Company, if at all. Any such additional financing may result in significant
dilution to existing stockholders. If adequate funds are not available, the
Company may be required to delay, scale back or eliminate one or more of its
potential product development and drug and nutraceutical discovery programs,
halt operations, or obtain funds through arrangements with collaborative
partners or others that may require the Company to relinquish rights to certain
of its technologies, potential product candidates or potential products the
Company would not otherwise relinquish. The Company's future cash requirements
will be affected by results of research and development, preclinical studies
and clinical trials, nutraceuticals product development and marketing costs,
relationships with corporate partners, changes in the focus and direction of
the Company's research and development programs, competitive and technological
advances, the regulatory approval process and other factors.

INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE. The Company is
engaged in rapidly evolving and highly competitive fields and competition is
expected to increase. There are many companies, including large
pharmaceutical, chemical, and vitamin and nutrition supplement companies,
engaged in developing, manufacturing and marketing products similar to those
proposed to be developed by the Company, many of which have established a
significant presence in the markets which the Company's proposed products are
designed to address. Virtually all of these companies have substantially
greater capital resources, research and development staffs, facilities and
experience in obtaining regulatory approvals, as well as in the manufacturing,
marketing and distribution of products, than the Company. There can be no
assurance the Company's competitors will not succeed in developing technologies
and products that are more effective and less costly than any potential
products under research and development by the Company or which could render
the Company's proposed products or technology obsolete.

DEPENDENCE UPON KEY PERSONNEL. The Company's success in developing
marketable products and achieving a competitive position will depend, in large
part, on its ability to attract and retain qualified scientific and management
personnel and in particular, to retain Dr. Sheldon S. Hendler. The proprietary
technology which has been transferred to the Company was primarily developed by
Dr. Hendler. The Company does not currently maintain life insurance on this
individual. Dr. Hendler is the largest stockholder in the Company. The loss
of Dr. Hendler or other scientists and management personnel would likely have a
material adverse impact on the business and operations of the Company. The
Company will also need to hire additional management, administrative and
scientific personnel in the future to meet its plans. Competition for such
personnel is intense, and no assurance can be given that the Company will be
able to hire and/or retain satisfactory personnel. The Company's anticipated
growth and expansion into areas and activities requiring additional expertise,
such as clinical trials, government approvals, nutraceutical product
development, manufacturing and marketing are expected to place increased
demands on the Company's resources. These demands are expected to require the
addition of new management personnel and the development of additional
expertise by existing management personnel. The failure to acquire such
services or to develop such expertise could have a material adverse effect on
the Company's prospects for success. In addition, the Company relies on
consultants and advisors to assist the Company from time to time in reviewing
its research and development strategy. All of the Company's consultants and
advisors are employed by employers other than the Company, and may have
commitments to or consulting or advisory contracts with other entities that may
affect their ability to contribute to the Company.

RELIANCE ON COLLABORATIVE PARTNERS. The Company has relied in the past on
certain established companies interested in its technology to fund a portion of
its research and development expenses. In March of 1997 the Company entered
into a collaboration with The Immune Response Corporation to utilize the
Company's CD-Tagging-TM- technology, along with other technologies, to discover
small molecules to develop therapies for spinal cord and other central nervous
system traumas. The Company is utilizing laboratory facilities and services at
The Immune Response Corporation. The Company has entered into a License
Agreement with Pollufil, S.A. for testing, development and commercialization of
certain uses of the Company's potential Vantox-Registered Trademark- product.
The Company has also entered into license agreements with Dr. Jarvik regarding
the Company's CD-Tagging-TM- technology and with American Qualex

5
<PAGE>
International Inc. for manufacture and marketing of certain research supplies.
The Company anticipates that it may need to enter into collaborative
arrangements with certain parties to further its development of nutraceutical
products. To date the Company has not entered into any collaborative
agreements with regard to the development of its proposed nutraceuticals,
although it has entered into an agreement regarding the marketing of four
nutritional supplement products.

There can be no assurance the Company will be able to negotiate acceptable
collaborative arrangements in the future, or that any collaborative
arrangements will be successful. In addition, there can be no assurance the
Company's collaborative partners will not pursue alternative technologies or
develop alternative compounds either on their own or in collaboration with
others, including the Company's competitors, as a means of developing
treatments for the diseases targeted by the collaborative programs.

PATENTS AND PROPRIETARY RIGHTS. The Company's success will depend in
large part on its ability to obtain patent protection for its proposed
products, both in the United States and other countries. The patent position
of biotechnology and pharmaceutical companies is highly uncertain and involves
complex legal and factual questions. There is no consistent policy regarding
the breadth of claims allowed in biotechnology and pharmaceutical patents. The
Company currently has nine (includes CD-Tagging-TM-) patents issued, and one
patent allowed in the United States, and six patent applications pending in the
United States. There have been foreign counterparts of certain of these
applications filed in other countries on behalf of the Company. The Company
intends to file additional applications as appropriate for patents covering
both its proposed products and processes. There can be no assurance patents
will issue from any of the pending applications, or for patents that have
issued or may be issued, the claims allowed will be sufficiently broad to
protect the Company's technology. In addition, there can be no assurance any
patents issued to the Company will not be challenged, invalidated or
circumvented, or the rights granted thereunder will provide proprietary
protection to the Company. In addition, any patents obtained by the Company
will be of limited duration. All United States patents issuing from patent
applications applied for June 8, 1995 or thereafter will have a term of 20
years from the date of filing. All United States patents in force before June
8, 1995 will have a term of the longer of: (1) 17 years from the date of
issuance; or (2) 20 years from the date of filing. All United States patents
issuing from patent applications applied for before June 8, 1995 will have a
term of the longer of (1) 17 years from the date of issuance; or (2) 20 years
from the date of filing. The commercial success of the Company will also
depend in part on the Company's neither infringing patents issued to
competitors nor breaching the technology licenses upon which the Company's
proposed products might be based.

It may become necessary for the Company to obtain licenses of potential
products or other proprietary rights or trade secrets of other parties.
Failure by the Company to obtain such licenses may have a material adverse
impact on the Company. Litigation, which could result in substantial costs to
the Company, may also be necessary to enforce any patents issued to the Company
or to determine the scope and validity of others' proprietary rights. In
addition, the Company may have to participate in interference proceedings
declared by the U.S. Patent and Trademark Office to determine the priority of
inventions which could result in substantial costs to the Company.

The Company also attempts to protect its proprietary technology and
processes by seeking to obtain confidentiality agreements with its contractors,
consultants, employees, potential collaborative partners, licensees, licensors
and others. There can be no assurance these agreements will adequately protect
the Company, that these agreements will not be breached, or the Company will
have adequate remedies for any breach, or that the Company's trade secrets will
not otherwise become known or be independently discovered by competitors. In
addition the Company does not generally require its principal scientific
advisors to enter into confidentiality agreements, and to the extent there is
collaboration between any of the scientific advisors and the Company, the
aspects of such collaboration will not necessarily remain the trade secrets of
the Company. This approach could increase the risk to the Company that it may
not be able to protect its proprietary information.

There can be no assurance others will not independently develop similar or
more advanced technologies or design around aspects of the Company's technology
which may be patented, or duplicate the Company's trade secrets. In some
cases, the Company may rely on trade secrets to protect its innovations. There
can be no assurance trade secrets will be established, or secrecy obligations
will be honored, or that others will not independently develop similar or
superior

6
<PAGE>

technology. To the extent consultants, key employees or other third parties
apply technological information independently developed by them or by others to
Company projects, disputes may arise as to the proprietary rights to such
information which may not be resolved in favor of the Company.

GOVERNMENTAL REGULATION AND UNCERTAINTY OF PRODUCT APPROVALS. The
production and marketing of the Company's proposed products are subject to
strict regulation by federal and state governmental authorities in the United
States and in foreign countries where such potential products may be produced
and marketed. In the United States, the FDA regulates, where applicable,
development, testing, labeling, manufacturing, registration, notification,
clearance or approval, marketing, distribution, record keeping and reporting
requirements for human and animal drugs, medical devices, biologies, cosmetics
and food additives. Most, if not all, of the Company's proposed products,
including its proposed Panavir-Registered Trademark-, Vantox-Registered
Trademark-, and other products may require FDA clearance prior to marketing.
The Federal Environmental Protection Agency ("EPA") has regulations covering
certain areas for some of the Company's proposed products. Comparable state
and local agencies may have similar regulations. The FDA and EPA regulatory
approval processes may take a number of years and both FDA and EPA regulatory
approval may require the expenditure of substantial resources. The processing,
formulation, packaging, labeling and advertising of the Company's proposed
nutraceutical products is subject to regulation by one or more federal
agencies, including the FDA, the Federal Trade Commission (the "FTC"), the
Consumer Product Safety Commission, the United States Department of Agriculture
and the Environmental Protection Agency. These activities are also regulated
by various agencies of the state and localities in which the Company's
nutraceutical products may be sold, including without limitation the California
Department of Health and Human Services, Food and Drug branch. The Nutrition
Labeling and Education Act and the Dietary Supplement Act provide regulations
which require that vitamin, mineral and dietary supplements labels have to
provide the same basic nutritional information found on the labels on most
conventional foods. The regulations also require that health claims made for
vitamins, minerals and dietary supplements be scientifically valid, and mandate
nutrition information found on the label to state the nutrition content per
serving. Compliance with these regulations could adversely affect the
Company's operations and its financial condition. There can be no assurance
the production and marketing of the Company's proposed products or other
potential products which may be developed by the Company in the future, if any,
will satisfy then current requirements of the FDA, EPA, FTC, or comparable
state, local and foreign authorities. Delays in receiving or failure to
receive governmental approvals may have a material adverse impact on the
Company. In addition, there can be no assurance that government regulations
applicable to the Company or its proposed products or the interpretation
thereof will not change and thereby prevent the Company from marketing some or
all of its potential products for a period of time or permanently, or otherwise
materially and adversely affect the Company. Moreover, if regulatory approval
of a drug is granted, such approval may entail limitations on the indicated
uses for which the drug may be marketed. Even if such regulatory approval is
obtained, a marketed drug, its manufacturer and the facilities in which the
drug is manufactured are subject to continual review and periodic inspections.
Later discovery of previously unknown problems with a product, manufacturer or
facility may result in restrictions on such product or manufacturer, including
withdrawal of the potential product from the market, product seizures, a halt
in operation and other materially adverse consequences. The Company is unable
to predict the extent of adverse governmental regulation which might arise from
future federal, state or foreign legislative or administrative action, or the
extent of the impact of such legislative changes on the business of the
Company.

DEBT SERVICE AND PENALTIES. The Company has $1,000,000 of Debentures
outstanding and is contractually committed to issue additional Debentures or
other debt instruments. Such instruments generally require the payment of
interest as long as the Debentures are outstanding and the payment of principal
upon maturity of the Debentures, or under certain conditions, upon demand. At
maturity the payment of principal and interest on the Debentures may be made in
Common Stock of the Company, provided certain conditions are met. The
Debentures are convertible only under certain conditions and if such conditions
are not met the Company could be required to repay the principal and all
interest due on the Debentures in cash. If cash to repay the Debentures was
not available the holders of the Debentures could force the Company into
bankruptcy or take other measures which could materially adversely impact the
Company. In order to convert the Debentures into Common Stock: (i) there must
be an effective registration statement covering the Debenture Shares and
Debenture Warrant Shares, (ii) the Company must currently be listed on the
Nasdaq SmallCap or other exchange, (iii) the Company must not have certain
legal action pending against it, and (iv) must meet other conditions.
Additionally, the Company cannot convert the Debentures into Common Stock if
such conversion would result in the issuance of 20% or more of the then
outstanding Common Stock of the Company.

7
<PAGE>
The purchasers of the Debentures have agreed to purchase an additional
$3,000,000 of Debentures in multiple tranches during the 21 months following
the effective date of the Registration Statement. The Company is subject to
monetary penalties in the event it does not issue such additional Debentures.

The Debentures contain penalties which could be detrimental to the Company
if required to be paid could materially adversely affect the Company and its
financial condition. The Company is subject to a penalty of $100 per day per
$10,000 of outstanding Debentures if the Registration Statement is not
effective by January 20, 1998.

DILUTIVE AND OTHER ADVERSE EFFECTS OF OUTSTANDING OPTIONS AND WARRANTS.
Under the terms of the Existing Warrants, options issued under the Company's
stock option plan and other outstanding options and warrants, the holders
thereof are given an opportunity to profit from a rise in the market price of
the Common Stock with a resulting dilution in the interests of the other
stockholders. The terms on which the Company may obtain additional financing
may be adversely affected by the existence of such options and warrants. The
holders of the warrants may exercise them at a time when the Company might be
able to obtain additional capital through a new offering of securities on terms
more favorable than those provided by the warrants. In addition, holders of
certain Common Stock of the Company have registration rights, and the exercise
of such rights may involve substantial expense to the Company.

POSSIBLE DEPRESSIVE EFFECT ON PRICE OF SECURITIES OF FUTURE SALES OF
COMMON STOCK. Actual sales or the prospect of sales of Common Stock under Rule
144 or otherwise in the future may depress the prices of the Company's
securities or any market that may develop, and also make it difficult to sell
the Company's securities purchased by investors herein. There are options
outstanding both pursuant to the Company's Stock Option Plan and options not
pursuant to any plan which are exercisable for up to 1,531,709 shares of Common
Stock. The vast majority of all of these options and warrants are currently
exercisable. Exercise of any of these warrants or options would result in
additional dilution to the purchaser of the shares offered herein, and exercise
of any significant amount of these options or warrants will result in
substantial additional dilution. Resale of shares acquired upon the exercise
of these options may depress the prices of the Company's securities or make
them more difficult to sell by the investors herein. The sale or availability
for sale of substantial amounts of Common Stock in the public market after
this offering could adversely affect the prevailing market prices of the
Company's securities and could impair the Company's ability to raise additional
capital through the sale of its equity securities.

POSSIBLE ADVERSE EFFECTS OF AUTHORIZATION AND ISSUANCE OF PREFERRED STOCK.
The Company's Board of Directors is authorized to issue up to 10,000,000 shares
of preferred stock. The Board of Directors has the power to establish the
dividend rates, liquidation preferences, voting rights, redemption and
conversion terms and privileges with respect to any series of preferred stock.
The issuance of any series of preferred stock having rights superior to those
of the Common Stock may result in a decrease in the value or market price of
the Common Stock and could further be used by the Board as a device to prevent
a change in control favorable to the Company. Holders of preferred stock to be
issued in the future may have the right to receive dividends and certain
preferences in liquidation and conversion rights. The issuance of such
preferred stock could make the possible takeover of the Company or the removal
of management of the Company more difficult, discourage hostile bids for
control of the Company in which stockholders may receive premiums for their
Common Stock or IPO Warrants and adversely affect the voting and other rights
of the holder of the Common Stock, or depress the market price of the Common
Stock or IPO Warrants.

POSSIBLE VOLATILITY OF STOCK PRICE. The market prices for securities of
emerging and development stage companies such as Vyrex have historically been
highly volatile. Future announcements concerning the Company or its
competitors, including the results of testing, technological innovations or new
commercial products, government regulations, developments concerning
proprietary rights, litigation or public concern as to safety of potential
products developed by the Company or others, may have a significant impact on
the market price of the Company's securities.

CONTROL BY PRESENT STOCKHOLDERS; POSSIBLE DEPRESSIVE EFFECT ON THE
COMPANY'S SECURITIES. The current officers and directors of the Company will
be able to elect all of the Company's directors and otherwise control the
Company's operations. This concentration of ownership by the Company's
officers and directors may discourage potential purchasers from seeking control
of the Company through the purchase of Common Stock, and this possibility could
have a depressive effect on the price of the Company's securities.

8
<PAGE>
In addition, Dr. Sheldon S. Hendler, Chairman of the Board and Chief
Executive Officer of the Company owns approximately 43% of the outstanding
Common Stock of the Company. As a result thereof, Dr. Hendler alone may
control or exert overwhelming influence over the Company's operations.

ANTI-TAKEOVER PROVISIONS - LIMITATION ON VOTING RIGHTS. The Company's
Articles of Incorporation and Bylaws contain provisions that may make it more
difficult to acquire control of the Company by means of tender offer,
over-the-counter purchases, a proxy fight, or otherwise. The Articles of
Incorporation also include provisions restricting stockholder voting rights.
The Company's Articles of Incorporation include a provision that requires that
any action required by the stockholders may not be affected by a written
consent, and that special meetings of the stockholders may only be called by
the Board of Directors. This provision makes it difficult for stockholders to
pass any resolution not supported by the Board of Directors except at a
regularly called meeting. The Company's Articles of Incorporation provide for
a staggered term of the Board of Directors, thus eliminating the ability to
elect all of the directors in any one year. This provision may make the
implementation of a change in management a process requiring more than one year
even if supported by a majority of the stockholders. The Company's Articles of
Incorporation provide directors may only be removed for cause and a vote of 70%
of the shareholders. Certain provisions of the Articles of Incorporation may
only be amended by a vote of 70% of the stockholders. As a result of the
number of shares currently owned by management, this provision may for some
time have the effect of indirectly eliminating any possibility stockholders
could pass a resolution unless approved by management, in connection with any
question submitted or required to be submitted to a vote of the stockholders.
The Company's Articles of Incorporation also require that stockholders give
advance notice to the Company of any directorship nominations or other business
to be brought by the stockholders at any stockholder's meeting. This provision
makes it more difficult for stockholders to nominate candidates for the Board
of Directors who are not supported by management. In addition, the Articles of
Incorporation require advance notice for stockholder proposals to be brought
before the annual meeting. The requirements include that the notice must
specify certain information regarding the stockholder and the meeting. This
provision to implement stockholder proposals makes it more difficult even if a
majority of stockholders are in support thereof. The Company is also subject
to certain provisions of California law if more than 50% of its outstanding
securities are held of record by persons with addresses in California, and if
more than 50% of its property, payroll and sales are from California. These
provisions of California law will control the operations of the Company with
respect to certain of the anti-takeover provisions discussed herein, until such
time as either (i) the Company is listed on the New York or American Stock
Exchange or the National Market System of Nasdaq, and it has 800 stockholders;
or (ii) the Company no longer has either more than 50% of its outstanding
securities held by persons with addresses in California, or less than 50% of
its property, payroll and sales are in California. Each of these provisions
may also have the effect of deterring hostile take-overs or delaying changes in
control or management of the Company. In addition, the indemnification
provisions of the Company's Bylaws and Articles of Incorporation may represent
a conflict of interest with the stockholders since officers and directors may
be indemnified prior to any judicial determinations as to their conduct.

CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS.
Holders of the IPO Warrants will only be able to exercise the IPO Warrants if:
(i) a current prospectus under the Securities Act relating to the securities
underlying the IPO Warrants is then in effect and (ii) such securities are
qualified for sale or exempt from qualification under the applicable securities
laws of the states in which the various holders of the IPO Warrants reside.
Although the Company has undertaken to use its best efforts to maintain the
effectiveness of a current prospectus covering the securities underlying the
IPO Warrants, there can be no assurance the Company will be able to do so. The
IPO Warrants may have no value if a current prospectus, covering the securities
issuable upon the exercise of the IPO Warrants, is not kept effective or if
such securities are not qualified, or exempt from qualification, in the states
in which the holders of the IPO Warrants reside.

POSSIBLE ACCELERATION OF EXERCISE PERIOD OF IPO WARRANTS. The Company
may, at its option, accelerate the expiration period of the IPO Warrants upon
not less than 30 days' prior notice (the "Acceleration Notice") to the
registered holder of the IPO Warrants, in the event that (i) there exists a
current prospectus relating to the Common Stock issuable upon exercise of the
IPO Warrants under an effective registration statement filed with the
Commission, and qualified for sale or exempt from qualification under
applicable state securities laws and (ii) the shares of Common Stock of the
Company have had a closing "bid" price of not less than $10.00 per share for a
period of ten consecutive trading days ending not more than ten calendar days
immediately prior to the date of the Acceleration Notice.

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Accordingly, an investor may be confronted with an investment decision to
exercise, sell or lose his or her IPO Warrants at a time when the investor may
not have the financial resources to exercise the IPO Warrants. See "Description
of Securities."

POSSIBLE DELISTING OF SECURITIES FROM THE NASDAQ STOCK MARKET AND POSSIBLE
ILLIQUIDITY. While the Company's Common Stock and IPO Warrants are currently
listed on the Nasdaq SmallCap Market, there can be no assurance the Company
will meet the criteria for continued listing of its securities on the Nasdaq
SmallCap Market. The continued listing criteria for the Nasdaq SmallCap Market
generally include a minimum of $2,000,000 in net tangible assets, a market
capitalization of $35 million or net income of $500,000 in less than two years,
a minimum bid price for Common Stock of $1.00 per share, and 500,000 shares in
the public float. In addition, the Common Stock must have at least two
registered and active market makers, must be held by at least 300 holders and
the market value of its public float must be at least $200,000. If an issuer
does not meet the $1.00 minimum bid price requirement, it may, however, remain
on the Nasdaq SmallCap Market if the market value of its public float is at
least $1,000,000, and the issuer has net tangible assets of at least
$2,000,000. If the Company is unable to meet the continued listing criteria of
the Nasdaq SmallCap Market and is delisted therefrom, trading, if any, in the
Common Stock and the IPO Warrants would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" or, if then available,
the "OTC Bulletin Board Service." As a result, an investor would likely find it
more difficult to dispose of, or to obtain accurate quotations as to the value
of, the Company's securities.

LACK OF MARKETING EXPERIENCE; DEPENDENCE ON OUTSIDE PARTIES FOR MARKETING
AND DISTRIBUTION; UNCERTAINTY OF MARKET ACCEPTANCE OF PROPOSED PRODUCTS. If
successfully developed and approved by applicable regulatory agencies, the
Company intends to market its proposed products currently under development
through contractual arrangements with others such as joint venture, licensing
or similar collaborative agreements or distribution agreements. This may
result in a lack of control by the Company over some or all of the marketing
and distribution of such potential products. There can be no assurance the
Company will be able to enter into any marketing arrangements on terms
acceptable to the Company or that any marketing efforts undertaken on behalf of
the Company will be successful. The Company may, in the future, determine to
directly market certain of its proposed products. The Company has limited
marketing experience and significant additional capital expenditures and
management resources would be required to develop a direct sales force. In the
event the Company elects to engage in direct marketing activities, there can be
no assurance the Company would be able to obtain the requisite funds or attract
and retain the human resources necessary to successfully market any of its
potential products.

The Company's future growth and profitability will depend, in large part,
on the success of its personnel and others conducting marketing efforts on
behalf of the Company in fostering acceptance among the various markets of the
use of the Company's potential products as an alternative to other available
products or otherwise. The Company's success in marketing its potential
products will be substantially dependent on educating its targeted markets as
to the distinctive characteristics and perceived benefits of the Company's
potential products. There can be no assurance that the Company's efforts or
the efforts of others will be successful or that any of the Company's proposed
products will be favorably accepted among the targeted markets.

LACK OF MANUFACTURING CAPABILITY; DEPENDENCE ON OUTSIDE PARTIES FOR
MANUFACTURING OF PROPOSED PRODUCTS. The Company has no manufacturing
facilities or expertise, and does not intend to manufacture any potential
product or products. The Company initially intends to enter into arrangements
with others to manufacture all of its proposed products and has done so with
respect to its nutraceutical products. The Company does not have any contracts
or agreements obligating any party to manufacture any quantity of
nutraceuticals for any price. Failure to secure such contracts or agreements
could have a material adverse impact on the business and operations of the
Company. There can be no assurance the Company will be able to enter into
satisfactory arrangements for the manufacture of its proposed products with
manufacturers whose facilities and procedures comply with FDA or other
regulatory requirements, that the manufacturers will continue to comply with
such standards, or that such manufacturers will be able to adequately supply
the Company with its product needs. The Company's dependence on third parties
for manufacturing may adversely affect the Company's ability to develop and
deliver products on a timely and competitive basis. The Company may in the
future undertake to manufacture some or all of its proposed products directly.
The Company has no experience with the manufacture of any of its proposed
products under development. In the event the Company were

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to undertake to manufacture any of its proposed products, the Company would be
required to finance considerable additional capital expenditures, attract and
retain experienced personnel, develop a manufacturing capability, and comply
with extensive government regulations with respect to its facilities, including
among others, FDA manufacturing requirements. The Company would not be able to
develop any reasonable manufacturing capability without obtaining significant
capital in excess of the funds anticipated from this offering. There can be no
assurance the Company would be able to successfully establish manufacturing
operations.

DEPENDENCE ON SUPPLIERS. The materials used in the Company's potential
products are currently available only from a limited number of suppliers. The
Company anticipates there will continue to be a limited number of suppliers for
its proposed products. In the event the Company could not obtain adequate
quantities of necessary materials from its existing suppliers, there can be no
assurance the Company would be able to access alternative sources of supply
within a reasonable period of time or at commercially reasonable rates.
Regulatory requirements applicable to pharmaceutical products tend to make the
substitution of suppliers costly and time-consuming. The Company does not have
any contracts or agreements with any of its raw material suppliers for its
proposed nutraceutical products to provide quantities of raw materials at
specific prices. The Company believes there are numerous suppliers of its raw
materials for its proposed nutraceutical products. There can be no assurance
adequate suppliers will be available or that the lack of such contracts or
agreements will not have a material adverse impact on the business and
operations of the Company. The unavailability of adequate commercial
quantities, the inability to develop alternative sources, a reduction or
interruption in supply or a significant increase in the price of materials
could have a material adverse effect on the Company's ability to manufacture
and market its proposed products.

PRODUCT LIABILITY; AVAILABILITY OF INSURANCE. The design, development and
manufacture of the Company's proposed products involve an inherent risk of
product liability claims and associated adverse publicity. The Company
obtained clinical trial product liability insurance for its Panavir-Registered
Trademark- Phase I human clinical trial and intends to obtain insurance for
future clinical trials of Panavir-Registered Trademark-, Vantox-Registered
Trademark-, and other potential products under development, and for potential
product liability associated with the commercial sale of the Company's proposed
products. There can be no assurance the Company will be able to obtain or
maintain insurance for any of its clinical trials or proposed commercial
products. Although the Company currently maintains liability insurance in
connection with its Panavir-Registered Trademark- trials, there can be no
assurance the coverage limits of the Company's insurance policies will be
adequate. Such insurance is expensive, difficult to obtain and may not be
available in the future on acceptable terms or at all. The Company will also
be exposed to product liability claims in the event that, among other things,
the use of its proposed nutraceutical products result in injury. The Company
is required by the Retired Person's Services, Inc. agreement to have at least
$1.0 million in insurance coverage for product liability on its proposed
nutrition products. The Company intends to require the manufacturers of its
nutraceutical products to add the Company as a named insured to their existing
issuance policies. The Company has not yet received endorsements as named
insured for any insurance policies. The Company also plans to seek additional
coverage of its own. There can be no assurance the Company will be able to
procure additional coverage or that existing or future coverage will be
sufficient to cover potential liabilities. A successful claim brought against
the Company in excess of the Company's insurance coverage would have a material
adverse effect upon the Company.

HAZARDOUS MATERIAL; ENVIRONMENTAL MATTERS. The Company, at present,
contracts with outside vendors for manufacture of its proposed products.
However, the Company's research and development processes at times involve the
controlled use of hazardous materials, chemicals, viruses and various
radioactive compounds. In addition, various of such materials, chemicals,
viruses and compounds may be used by the Company in the future to the extent
Vyrex undertakes to perform its own manufacturing. To the extent certain such
materials, chemicals, viruses and compounds are or will be used by the Company,
Vyrex will be subject to federal, state and local laws and regulations
governing the use, manufacture, storage, handling and disposal of certain
materials and waste products. Although the Company believes its safety
procedures for handling and disposing of materials would comply with the
standards prescribed by such laws and regulations, the risk of accidental
contamination or injury from these materials cannot be completely eliminated.
In the event of such an accident, the Company could be held liable for any
damages that result, and any such liability could exceed the resources of the
Company. There can be no assurance the Company will not be required to incur
significant costs to comply with environmental laws and regulations in the
future, or that the operations, business

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or assets of the Company will not be affected adversely or materially by
current or future environmental laws or regulations.

HEALTH CARE REFORM. Political, economic and regulatory influences are
subjecting the health care industry in the United States to fundamental
changes. Reforms under consideration may include mandated basic health care
benefits, controls on health care spending through limitations on the growth of
private health insurance premiums and Medicare and Medicaid spending, the
creation of large insurance purchasing groups and fundamental changes to the
health care delivery system. The Company anticipates Congress and certain
state legislatures will continue to review and assess alternative health care
delivery systems and payment methods and public debate of these issues will
likely continue in the future. Due to uncertainties regarding the ultimate
features of reform initiatives and their enactment and implementation, the
Company cannot predict which, if any, of such reform proposals will be adopted,
when they may be adopted or what impact they may have on the Company.

UNCERTAINTY OF HEALTH CARE REIMBURSEMENT. Vyrex's ability to
commercialize its proposed products successfully may depend in part on the
extent to which reimbursement for the cost of such proposed products and
related treatment will be available from government health administration
authorities, private health insurers and other organizations. Third-party
payers are increasingly challenging the price of medical products and services.
Significant uncertainty exists as to the reimbursement status of newly approved
health care products, and there can be no assurance adequate third-party
coverage will be available to enable Vyrex to maintain price levels sufficient
to realize an appropriate return on its investment in product development.

FORWARD-LOOKING STATEMENTS. Prospective investors are cautioned that the
statements in this Prospectus that are not descriptions of historical facts may
be forward-looking statements that are subject to risks and uncertainties.
Actual results could differ materially from those currently anticipated due to
a number of factors, including those identified under "Risk Factors" and
elsewhere in this Prospectus or documents incorporated by reference herein.

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USE OF PROCEEDS

The net proceeds of this offering will be used to fund research and
development, working capital and general corporate purposes including
acquisitions. As of the date of this Prospectus, the Company has not targeted,
and it is not in negotiations to complete any acquisition. The proceeds of
this offering are subject to great variability due to market conditions. None
of the shares underlying the Existing Warrants have an exercise price per share
which is less than the market price per share of the Common Stock as of the
date of this Prospectus. The current exercise prices range from $8.38
estimated for the Debenture Warrants to $10.89 for the UPO Warrants. The
conversion price of a Debenture and the exercise price of the UPOs, and the
Debenture Warrants may fluctuate based on the market price of the Common Stock.
If the price of the Common Stock does not trade above the exercise price of a
Warrant, there is no anticipated incentive for a Warrant holder to exercise.
Even if the price of the Common Stock is above the exercise price of a Warrant,
there is no event which can compel the holder to exercise the Warrant and
purchase Common Stock. There can be no assurance any Warrant will be exercised
and the Company will receive any proceeds therefrom.

The shares underlying any Additional Debentures (as defined herein) and
any proceeds therefrom are subject to the Company completing the sale of
Debentures which is subject to several conditions, and may not occur. There
can be no assurance any Additional Debentures will be issued and the Company
will receive any proceeds therefrom. See "Material Changes" and "Description
of Securities-Debentures."

The Company's expenditures are anticipated to exceed the proceeds it
receives from the sale of the Securities, and the Company will likely require
additional capital from the sale of additional debt or equity securities in
order to continue its research and development activities.

The foregoing represents the Company's best estimate of the allocation of
the net proceeds of this offering. This estimate is based on certain
assumptions, including, but not limited to, the exercise of all Warrants and
the Company's receipt of the exercise price therefrom, and the conversion of
all Debentures, and the reduction of indebtedness resulting therefrom. There
can be no assurance either of these events will occur or the Company will
receive any proceeds to allocate, or if there are such proceeds, will be
allocated as set forth herein. Future events, including the problems, delays,
expenses, difficulties and complications frequently encountered by development
stage companies as well as changes in economic, regulatory or competitive
conditions or the Company's planned business and the success or lack thereof or
of the Company's research, development and testing activities or marketing and
distribution efforts or inability to obtain regulatory approvals as
anticipated, may make shifts in the allocation of funds and curtailment of
certain planned expenditures necessary or desirable. Any such shifts will be
at the discretion of the Company. There is no assurance the Company's
estimates will prove to be accurate, that new technologies will not be
undertaken which will require considerable additional expenditures, that
unforeseen expense will not occur or the Company will successfully develop and
commercialize any of its technologies or that additional funds can be obtained.

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MATERIAL CHANGES

On November 6, 1997, the Company entered into two securities purchase
agreements (the "Debenture Agreements") with two investors (the "Debenture
Holders") and pursuant thereto, the Company issued each Debenture Holder a
Debenture in the amount of $500,000 (the "Initial Debenture"). Each Initial
Debenture is a 6% interest accruing and deferred convertible debenture due
November 15, 2000. The Initial Debentures are convertible at the election of
the holder at any time commencing upon the earlier to occur of (i) the
effective date of this Registration Statement, or (ii) 60 days following the
date of issuance, at a conversion price equal to the lesser of:

(i) 130% of the average closing bid price of the Common Stock on the
five consecutive trading days preceding the initial issuance date of
the Debenture ("Market Price"); or
(ii) (a) beginning on the 60th day after the issuance date and ending
on the 90th day after the issuance date the conversion rate
shall be 84% of the Market Price;
(b) beginning on the 91st day after the issuance date and ending
on the 120th day after the issuance date the conversion rate
shall be 82% of the Market Price;
(c) beginning on the 121st day after the issuance date and ending
on the maturity date the conversion rate shall be 80% of the
Market Price.

No more than 33% of the principal amount of the Initial Debentures may be
convertible during any thirty (30) calendar day period. The entire unpaid
balance and all accrued interest outstanding on the maturity date automatically
converts into Common Stock in accordance with the foregoing Conversion Rate.

In connection with the issuance of the Initial Debentures, the Company
issued Debenture Warrants to the Debenture Holders, each exercisable for 8,500
shares of Common Stock. The Debenture Warrants have a term of three years and
an exercise price per share of the lesser of: (i) $8.38 (125% of the per share
Market Price on the date of issuance) or (ii) 125% of the per share Market
Price on the effective date of the Registration Statement.

Pursuant to the Debenture Agreements, the Debenture Holders have each
agreed to purchase an additional $1,500,000 of Debentures ("Additional
Debentures") in multiple tranches during the 21 months following the effective
date of the Registration Statement.

Each tranche will be between $100,000 and $225,000. Each tranche may be
completed at the election of the Company subject to the existence of certain
conditions. Each Additional Debenture shall be substantially similar to the
Initial Debentures but shall have a term of 18 months and be convertible into
Common Stock at 86% of the Market Price on the date of issuance.

In connection with each Additional Debenture, the Company shall issue the
purchaser a Debenture Warrant to purchase Common Stock at a rate of one warrant
to purchase 1,700 shares of Common Stock for each $100,000 of Additional
Debentures purchased.

The Debenture Holders were also granted a five-day right of first refusal
to purchase any additional debt or equity securities which the Company proposes
to issue in any private placement transaction during the 18 months following
the date of the Initial Debentures.

In connection with the execution of the Debenture Agreements and the
issuance of the Initial Debentures the Company issued the Placement Agent 8,000
Placement Agent Shares and paid the Placement Agent a cash commission equal to
five percent of the amount of the Initial Debentures. In addition, the Company
agreed to pay the Placement Agent five percent of the amount of all Additional
Debentures issued.

The Company provided the Debenture Holders and the Placement Agent with
certain registration rights, for the shares underlying the Initial Debentures,
the Debenture Warrants, the Placement Agent Shares, and the shares underlying
any Additional Debentures. Pursuant to the Debenture Agreements the Company
must elect to require the Debenture Holders to purchase an aggregate of no less
than $1,325,000 in Additional Debentures or the Company must provide each of
the Debenture Holders a warrant to purchase an additional 10,000 shares of
Common Stock.

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DESCRIPTION OF SECURITIES

The authorized capital stock of the Company consists of 50,000,000 shares
of Common Stock and 10,000,000 shares of Preferred Stock.

COMMON STOCK. As of September 30, 1997, the Company had 7,121,409 shares
of Common Stock issued and outstanding. The holders of Common Stock are
entitled to one vote for each share held of record on all matters submitted to
a vote of the stockholders. Except as set forth below under the heading of
"Application of Pseudo-Foreign Corporation Statute of California," the holders
of Common Stock are not entitled to cumulative voting rights with respect to
the election of directors, and as a consequence, minority stockholders will not
be able to elect directors on the basis of their votes alone. Subject to
preferences that may be applicable to any then outstanding shares of Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends
as may be declared by the Board of Directors out of funds legally available
therefor. In the event of a liquidation, dissolution or winding up of the
Company, holders of the Common Stock are entitled to share ratably in all
assets remaining after payment of liabilities and the liquidation preference of
any then outstanding Preferred Stock. Holders of Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to
the Common Stock. All outstanding shares of Common Stock are, and all shares
of Common Stock to be outstanding upon completion of this offering will be,
fully paid and nonassessable. See "Plan of Distribution."

PREFERRED STOCK. The preferred Stock may be issued in series, and shares
of each series will have such rights and preferences as are fixed by the Board
in resolutions authorizing the issuance of that particular series. In
designating any series of Preferred Stock, the Board may, without further
action by the holders of Common Stock, fix the number of shares constituting
that series and fix the dividend rights, dividend rate, conversion rights,
voting rights (which may be greater or lesser than the voting rights of the
Common Stock), rights and terms of redemption (including any sinking fund
provisions), and the liquidation preferences of the series of Preferred Stock.
It is to be expected that the holders of any series of Preferred Stock, when
and if issued, will have priority claims to dividends and to any distributions
upon liquidation of the Company, and that they may have other preferences over
the holders of the Common stock.

The Board may issue series of Preferred Stock without action of the
stockholders of the Company. Accordingly, the issuance of Preferred Stock may
adversely affect the rights of the holder of the Common Stock. In addition,
the issuance of Preferred Stock may be used as an "anti-takeover" device
without further action on the part of the stockholders. Issuance of Preferred
Stock may dilute the voting power of holder of Common Stock (such as by issuing
Preferred Stock with super-voting rights) and may render more difficult the
removal of current management, even if such removal may be in the stockholders
best interest. The Company has no current plans to issue any of the Preferred
Stock.

IPO WARRANTS. The Company issued 1,057,097 IPO Warrants as part of the
Units issued in the Unit Offering. The IPO Warrants are traded on Nasdaq under
the symbol "VYRXW". Each IPO Warrant entitles the holder, upon payment of the
exercise price of $8.00, to purchase one share of Common Stock. The IPO
Warrants are exercisable at any time, through March 21, 1998, subject to
certain terms and conditions.

The Company may, at its option, accelerate the expiration period of the
IPO Warrants upon not less than 30 days prior notice to the registered holders
of the IPO Warrants, in the event that: (i) there exists a current prospectus
relating to the IPO Warrant Shares under an effective registration statement
filed with the Securities and Exchange Commission and the issuance of the IPO
Warrant Shares have been qualified for sale or exempt from qualification under
applicable state securities laws; and (ii) the shares of Common Stock of the
Company have had a closing bid price of not less then $10.00 for a period of
ten consecutive trading days ending not more than ten calendar days immediately
prior to the date of the notice. Holders of IPO Warrants will automatically
forfeit their rights to purchase the IPO Warrant Shares unless the IPO Warrants
are exercised before the close of business on the business day immediately
prior to the final date set for exercise. All of the outstanding IPO Warrants
may be affected. A notice of any acceleration of the final exercise

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date is required to be mailed to each of the registered holders of the IPO
Warrants by first class mail, postage prepaid, 30 days before the date fixed
for acceleration of the final exercise date, and is required to be published in
the Wall Street Journal and at least one other newspaper of general circulation
in San Diego and New York City. The notice of acceleration of the final
exercise date is required to specify the date fixed for exercise, the place
where the IPO Warrant certificates shall be delivered and that the right to
exercise the IPO Warrants shall terminate at 5:00 p.m. (Los Angeles time) on
the final exercise date.

The IPO Warrants may be exercised upon surrender of the certificate(s)
therefor on or prior to the final exercise date (as explained above) at the
offices of the Company's warrant agent, ChaseMellon Shareholder Services (the
"Warrant Agent"), with the "Subscription Form" on the reverse side of the
certificate(s) completed and executed as indicated and accompanied by payment
(in the form of certified or cashier's check payable to the order of the
Company) of the full exercise price for the number of IPO Warrants being
exercised.

The holders of the IPO Warrants will not have any of the rights or
privileges of stockholders of the Company (except to the extent they own
Company Stock of the Company) prior to the exercise of the IPO Warrants. The
exercise price of the IPO Warrants and the number of IPO Warrant Shares are
subject to adjustment upon the occurrence of certain events such as stock
splits, stock dividends or the like, as set forth in the IPO Warrant Agreement.

In the event of a capital reorganization of the Company, reclassification
of the Common Stock or a consolidation or merger of the Company with or into,
or a disposition of substantially all of the Company's properties and assets
to, any other corporation, the IPO Warrants then outstanding will thereafter be
exercisable into the kind and amount of shares of stock or other securities or
property (including cash) to which the holders thereof would have been entitled
if they had exercised such IPO Warrants and received IPO Warrant Shares
immediately prior to such reorganization, reclassification, consolidation,
merger or disposition, consistent with the requirements for exercise set forth
in the IPO Warrant Agreement.

For the life of the IPO Warrants, the IPO Warrant holders have the
opportunity to profit from a rise in the market price of the Common Stock
without assuming the risk of ownership of the IPO Warrant Shares, with a
resulting dilution in the interest of the Company's stockholders by reason of
exercise of IPO Warrants at a time when the exercise price is less than the
market price for the Common Stock. Further, the terms on which the Company
could obtain additional capital during the life of the IPO Warrants may be
adversely affected as a result of the IPO Warrants being outstanding. The IPO
Warrant holders may be expected to exercise their IPO Warrants at a time when
the Company would, in all likelihood, be able to obtain any needed capital by
an offering of Common Stock on terms more favorable than those provided for by
the IPO Warrants.

For a holder to exercise the IPO Warrants there must be a current
registration statement in effect with the Securities and Exchange Commission
and registration or qualification with, or approval from, various state
securities agencies with respect IPO Warrant Shares. The Company has agreed to
use its best efforts to cause a registration statement with respect to such
securities under the Securities Act to continue to be effective during the term
of the IPO Warrants and to take such other actions under the laws of various
states as may be required to cause the sale of IPO Warrant Shares to be lawful.
However, the Company will not be required to honor the exercise of IPO Warrants
if, in the opinion of the Company's Board of Directors upon advice of counsel,
the sale of securities upon exercise would be unlawful.

The Company is not required to issue fractional shares of Common Stock,
and in lieu thereof will make a cash payment based upon the current market
value of such fractional shares. A holder of the IPO Warrants will not possess
any voting or any other rights as a stockholder of the Company unless he or she
exercises the IPO Warrants.

The IPO Warrant exercise price was arbitrarily determined by negotiation
between the Company and the underwriter of the Unit Offering. The Company may
reduce the exercise price of the IPO Warrants or extend the warrant expiration
date upon notice to IPO Warrant holders. The foregoing is merely a summary of
the rights and

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<PAGE>

privileges of the holders of IPO Warrants, and is qualified in its entirety by
reference to the IPO Warrant Agreement between the Company and the Warrant
Agent which is incorporated herein by reference.

PRIVATE WARRANTS. As of the date of this prospectus, the Company has
Private Warrants outstanding to purchase 82,604 shares of Common Stock issued
in conjunction with previous financing transactions and for services rendered.

The Private Warrants are exercisable for three years from the date of
issuance, and the last one to expire will expire on May 6, 1998. The exercise
price of the Private Warrants is $ 8.00 per share, subject to adjustment in the
event of stock splits, stock dividends and similar events. If at any time the
Common Stock of the Company trades on Nasdaq for $12 per share for 20 out of 30
consecutive trading days, the Company has the right to accelerate the three
year exercise period for these warrants by providing ten days prior written
notice to the Private Warrant holder, granting the Private Warrant holder 45
days after the last day of the 30 day trading period to exercise the Private
Warrant. The Company must have an effective registration statement covering
all of the Private Warrant Shares before it can provide notice to shorten the
exercise period. The Company must also use its best efforts to keep the
registration statement effective for a minimum period of six months after the
termination of the shortened exercise period. The holders of the Private
Warrants are entitled to certain "piggy back" registration rights with respect
to the Private Warrant Shares. See "Registration Rights."

UNDERWRITER'S PURCHASE OPTIONS--UNDERWRITER'S SHARES AND UNDERWRITER'S
WARRANTS. As of the date of this prospectus, the Company has outstanding UPOs
to purchase 100,000 units composed of one Underwriter Share and one
Underwriter's Warrant which the UPOs were issued in conjunction with the Unit
Offering on March 21, 1996 may be at an exercise price of $8.97. The UPOs
expire on March 26, 2001. Each unit issuable upon exercise of the UPOs
consists of one share of Common Stock and an Underwriter's Warrant. The
Underwriter's Warrants are exercisable at any time until March 21, 1998. The
holder of the UPOs has the right, for a period ending March 21, 2002, to
include the securities issuable upon exercise of the UPOs as part of certain
other registered offerings of securities commenced by the Company, and for a
period lasting until March 21, 2001 to request the Company register the
underlying securities. Upon receipt of such a request, the Company must use
its best efforts to file a registration statement registering the securities
underlying the UPOs. The number of units covered by the UPOs and the exercise
price were adjusted on the date of issuance of the Debentures and are subject
to further adjustment upon the subdivision, combination or reclassification of
the Common Stock, or certain mergers and consolidations.

It may be expected the UPOs will be exercised only if it is advantageous
to the holders thereof. Therefore, for the life of the UPOs, the holder is
given, at a nominal cost, the opportunity to profit from a rise in the market
price for the Common Stock, which may adversely affect the terms upon which the
Company will obtain additional capital during that to obtain any needed capital
on terms more favorable than those provided for by the UPO.

DEBENTURES. The Company has issued $1,000,000 Initial Debentures due
November 15, 2000 and pursuant to the Debenture Agreements may issue $3,000,000
of Additional Debentures. The Initial Debentures are convertible into Common
Stock of the Company upon the earlier to occur of: (i) January 5, 1998 (60 days
from the date of Issuance); or (ii) the effective date of the Registration
Statement. The Initial Debentures are convertible into Common Stock at a
conversion price for each share of Common Stock equal to the lesser of
subsections (i) or (ii) below:

(i) 130% of the average closing bid price of the Common Stock on the
five consecutive trading days preceding the initial issuance date of
the Debenture; or
(ii) (a) beginning on the 60th day after the issuance date and ending
on the 90th day after the issuance date the conversion rate
shall be 84% of the Market Price;
(b) beginning on the 91st day after the issuance date and ending
on the 120th day after the issuance date the conversion rate
shall be 82% of the Market Price;
(c) beginning on the 121st day after the issuance date and ending
on the maturity date the conversion rate shall be 80% of the
Market Price.

17
<PAGE>

Notwithstanding the foregoing, no more than 33% of the principal amount of
the Initial Debentures may be converted into Common Stock during any thirty
(30) calendar day period. The entire unpaid balance and accrued interest
outstanding on the maturity date shall automatically convert into Common Stock
in accordance with the this conversion rate. The $3,000,000 balance of
Additional Debentures, if issued, will be convertible into Common Stock at a
conversion price for each share of Common Stock equal to 86% of the Market
Price on the date of conversion. Principal and interest on Additional
Debentures may be converted into Common Stock at the election of the holder
without limitation, and shall be converted into Common Stock on the maturity
date.

DEBENTURE WARRANTS. As of the date of this prospectus, the Company has
issued Debenture Warrants to purchase 17,000 shares of Common Stock, the
Debenture Warrants were issued in conjunction with the issuance of the Initial
Debentures. Debenture Agreements call for Debenture Warrants to be issued to
purchase 17,000 shares of Common Stock for each $1,000,000 of Additional
Debentures issued. The Debenture Warrants are exercisable for a period of
three years from the date of issuance and are exercisable at a price equal to
the lessor of: (i) $8.38 (125% of the Market Price of the Company'' Common
Stock on the date of issuance), or (ii) 125% of the Market Price of the Common
Stock on the Effective Date.

REGISTRATION RIGHTS. The holders of the Private Warrants are entitled to
certain rights with respect to the registration of Shares under the Securities
Act, pursuant to agreements among such holders and the Company (the "Private
Warrant Registration Rights Agreements"). Under the terms of the Private
Warrant Registration Rights Agreements, and subject to certain limitations
therein, if the Company proposes to register any of its securities under the
Securities Act, either for its own account or for the account of other security
holders exercising registration rights, the holders of the Private Warrants are
entitled to notice of such registration and are entitled to include the Private
Warrant Shares therein. These rights are subject to certain conditions and
limitations, including in certain circumstances the right of the underwriters
of an offering and/or the Company to limit the number of shares included in
such registration or exclude all shares.

The holders of the UPOs also have the right for a period ending March 21,
2002, to include the securities issuable upon exercise of the UPOs as part of
certain other registered offerings of securities commenced by the Company, or
for a period of ending March 21, 2001, to request the Company register the
securities underlying the UPOs. Upon receipt of such a request, the Company
has agreed to use its best efforts to file a registration statement registering
the Underwriter's Shares and the Underwriter's Warrant Shares underlying the
UPOs.

In connection with the issuance of the Debentures, the Company is required
to file a registration statement covering the Debenture Shares, the Debenture
Warrant Shares, and the Placement Agent Shares with the Securities and Exchange
Commission by December 6, 1997. The Company is further required to use its
best efforts to have the Registration Statement declared effective by January
20, 1998. Failure to file the Registration Statement by December 6, 1997, or
to have it declared effective by January 20, 1998, will result in the Company
having to pay significant monetary damages computed on a daily basis until the
Registration Statement is filed and effective. The Company is required to keep
the registration statement effective, until the earlier of: (i) the date which
is two years after the closing date, (ii) the date when all of the investors
therein may sell all of their registrable securities under Rule 144, or (iii)
the date when the Debenture Holders no longer hold any registrable securities.

The Company has also agreed to file a Registration Statement to enable the
holders to exercise the IPO Warrants issued in connection therewith. The
Company has agreed to use its best efforts to keep the Registration Statement
effective while the IPO Warrants are exercisable, and to qualify the underlying
shares of Common Stock in the states in which the holders of the IPO Warrants
reside.

NEVADA TAKEOVER LEGISLATION

Sections 78.411-78.444 of the General Corporation law of Nevada ("Business
Combination Statute"), is applicable to the Company since it has 200 or more
stockholders. These provisions may make it more difficult to effect certain
transactions between a corporation and a person or group who owns 10% or more
of the corporation's

18
<PAGE>

outstanding voting stock, including rights to acquire stock, or a person who is
an affiliate or associate of the corporation and who was the owner of 10% or
more of such voting stock at any time within three years immediately prior to
the date in question ("Interested Stockholder"). The Business Combination
Statute prevents the following transactions between the corporation and the
Interested Stockholder for three years following the date the stockholder
became a 10% or more holder of the corporation's voting stock, unless certain
conditions are met: (i) any merger or consolidation; (ii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of the corporation's
assets having a total market value equal to 10% or more of the total market
value of all the assets of the corporation; or 5% or more of the total market
value of all outstanding shares of the corporation or representing 10% or more
of the earning power of the corporation; (iii) the issuance or transfer by the
corporation of any shares of the corporation that have an aggregate market
value equal to 5% or more of the aggregate market value of all the outstanding
shares of the corporation to stockholders except under the exercise of warrants
or rights to purchase shares offered, or a dividend or distribution paid or
made, pro rata to all stockholders of the corporation; (iv) the adoption of any
plan or proposal for the liquidation or dissolution of the corporation proposed
by, or under any agreement or arrangement or understanding, whether or not in
writing, with, the Interested Stockholder; (v) any reclassification of
securities, recapitalization, merger or consolidation or other transaction
which has the effect, directly or indirectly, of increasing the proportionate
share of the outstanding shares owned by the Interested Stockholder, and (vi)
any receipt by the Interested Stockholder of the benefit, except proportionally
as a stockholder of the corporation, of any loan or other financial assistance
or any tax credit or other tax advantage provided by or through the
corporation.

The three year ban does not apply if either the proposed transaction or
the transaction by which the Interested Stockholder became an Interested
Stockholder is approved by the Board of Directors of the corporation prior to
the date the stockholder became an Interested Stockholder.

APPLICATION OF PSEUDO-FOREIGN CORPORATION STATUE OF CALIFORNIA

The Company is a Nevada corporation which is authorized to do business as
foreign corporation in California. Under Section 2115 of the California General
Corporation Law, certain foreign corporations (i.e., corporations not organized
under California law) are placed in a special category (referred to in this
discussion as pseudo-foreign corporation) if they have characteristics of
ownership and operation which indicates they have significant contacts in
California. So long as the Company is in this special category and does not
qualify for one of the statutory exemptions, it is subject to a number of key
provisions of the California General Corporations Law applicable to
corporations incorporated in California.

The Company is a pseudo-foreign corporation since more than 50% of the
Company's shares are held by California residents, substantially all of its
operations are in California, and no exemptions from this statute are currently
applicable to the Company. Therefore, certain provisions of the California
General Corporations Law, pursuant to Section 2115 thereof, will be applicable
to the Company. Among the more important provisions are those relating to the
election and removal of directors, cumulative voting, classified boards of
directors, standard of liability of directors, distributions, dividends and
repurchases of shares, stockholder meetings, approval of certain corporate
transactions, appraisal rights, and inspection of corporate records.

19
<PAGE>

CERTAIN ARTICLES OF INCORPORATION AND BYLAW PROVISIONS WITH
POSSIBLE ANTI-TAKEOVER EFFECTS

The Company's Articles of Incorporation contain several provisions that
may make the acquisition of control of the Company by means of tender offer,
open market purchases, a proxy fight or otherwise more difficult. These
provisions may also discourage transactions in which the stockholders might
otherwise receive a premium for their shares over the current market prices,
and may limit the ability of the stockholders to approve transactions that they
may deem to be in their best interests. The Company is subject to certain
provisions of California law as summarized above under "Application of
Pseudo-Foreign Corporation Statute of California" until such time as either (i)
it is listed on the New York or American Stock Exchange or on the National
Market System of Nasdaq and has 800 stockholders, or (ii) it is no longer a
pseudo-foreign corporation pursuant to California law. To the extent the
provisions discussed below are inconsistent with California law, California law
may control until it is no longer classified as a pseudo-foreign corporation.
Set forth below is a description of certain provisions of the Company's
Articles of Incorporation.

CLASSIFIED BOARD OF DIRECTORS

The Articles of Incorporation divide the Board of Directors into three
classes, with each class having a term of three years. Each such class is as
nearly equal in number as possible. At each annual meeting of stockholders,
commencing with the next annual meeting of stockholders, directors in Class I
will be elected to succeed those directors of that class whose terms have
expired, and each newly elected director will serve for a three-year term. At
each subsequent regularly scheduled meeting of stockholders held to elect
directors, the directors of the next succeeding Class shall be elected to a
three year term. Currently Directors Gregory F. Gilbert and Carl M. Lewis are
in Class I, Joyce M. Hendler and Nolan E. Penn are in Class II, and Sheldon S.
Hendler and Dennis J. Carlo are in Class III.

The Company believes a classified Board of Directors will help to assure
the continuity and stability of the Company's Board of Directors and its
business strategies and policies. The classified board provision could
increase the likelihood that, in the event of a takeover of the Company,
incumbent directors will retain their positions. In addition, the classified
board provision will help ensure the Company's Board of Directors, if
confronted with an unsolicited proposal from a third party who has acquired a
block of the voting stock of the Company, will have sufficient time to review
the proposal and appropriate alternatives, to seek the best available result
for the Corporation.

NO STOCKHOLDER ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS

The Company's Articles of Incorporation provide that no action shall be
taken by stockholders except at an annual or special meeting of stockholders.
The Company's Articles of Incorporation also provide that special meetings of
stockholders can only be held pursuant to a resolution approved by the Board of
Directors, and not by the stockholders and only to consider such business as
shall be provided in such resolution, or in the notice to stockholders of the
special meeting.

STOCKHOLDER NOMINATION OF DIRECTORS

The Company's Articles of Incorporation establish an advance notice
procedure with regard to the nomination (other than by or at the direction of
the Board of Directors or a committee thereof), of candidates for election as
directors (the "Nomination Procedure"). Only persons who are nominated by the
Board of Directors, a committee appointed by the Board of Directors or by a
stockholder who has given timely prior written notice to the Secretary of the
Company prior to the meeting at which directors are to be elected, shall be
eligible for election as directors of the Company. Except in limited
circumstances, such written notice must be received at the Company's principal
executive office not less than 60 days prior to the scheduled meeting, and must
contain specified information as to the nominee and the stockholder making the
nomination. The presiding officer of the meeting may refuse to acknowledge the
nomination of any person not made in compliance with the Nomination Procedure.
Stockholders may be given relatively limited advance notice of the date of a
stockholders meeting held to elect directors. In order to nominate a director
at such a meeting the stockholder must promptly comply with the prior notice
provisions, resulting in only a short period to

20
<PAGE>

prepare and submit a nomination. This is likely to result in it being more
difficult for stockholders to nominate candidates to the Board of Directors who
are not selected by management.

Although the Company's Articles of Incorporation do not give the Board of
Directors any power to approve or disapprove stockholder nominations for the
election of the directors or any other business properly bought by the Company
stockholders before an annual or special meeting, this provision may have the
effect of precluding a nomination for the election of directors or precluding
the conducting of business at a particular meeting if the proper procedures are
not followed, or may discourage or deter a third party from conducting a
solicitation of proxies to elect its own slate of directors or otherwise
attempting to obtain control of the Company.

STOCKHOLDER PROPOSALS AT STOCKHOLDER MEETINGS

The Company's Articles of Incorporation establish an advance notice
procedure for stockholder proposals brought before a regularly scheduled
stockholders meeting. Except in very limited circumstances, to be timely, a
stockholder's notice must be received at the Company's principal executive
offices not less than 60 days prior to the scheduled meeting. The
stockholder's notice must set forth in writing each matter the stockholder
proposes to bring before the meeting, including a brief description and the
reasons for conducting such business at the meeting, the names and addresses as
they appear on the Company's books of the stockholder making the proposal, and
any other stockholder known by the proponent to be supporting the proposal, the
class and number of shares beneficially owned by the stockholder making the
proposal and any other stockholder known to be supporting the proposal. This
provision will preclude conducting business at a particular meeting if the
proper notice procedures are not followed.

CERTAIN VOTING REQUIREMENTS

The Company's Articles of Incorporation require the affirmative vote of
70% of the outstanding voting stock to approve or authorize an amendment to
certain of the Articles of Incorporation. The Articles of Incorporation also
provide that no director of the Company may be removed except for cause, and
requires a vote of 70% of the outstanding shares to remove a director. The 70%
voting requirement may have the effect of delaying, deferring or preventing a
change of control of the Company.

TRANSFER AGENT AND WARRANT AGENT

ChaseMellon Shareholder Services is the transfer agent for the Common
Stock and warrant agent with respect to the Warrants.

21
<PAGE>

SELLING SECURITY HOLDERS

The following table sets forth certain information, as of the date hereof,
with respect to the beneficial ownership of the Company's Private Warrant
Shares, Underwriter's Shares, Underwriter's Warrant Shares, Debenture Shares,
Debenture Warrant Shares, and Placement Agent Shares (collectively the "Resale
Securities") registered herein by each Selling Security Holder named below.
The shares of Common Stock are being registered to permit public secondary
trading of the Resale Securities, and the Selling Security Holders may offer
the Resale Securities for resale from time to time. Except as described below,
none of the Selling Security Holders has had any position, office or other
material relationship with the Company within the past three years. The
following table assumes each Selling Security Holder sells all of the Resale
Securities held by such Selling Security Holder in this offering. The Company
is unable to determine the exact number of Resale Securities that will actually
be sold.

NAME NUMBER NUMBER
BENEFICIALLY OWNED OFFERED HEREBY

Dr. Ghanshyam Patel(1) . . . . . . . . 5,000 5,000
Sean Pickett(1). . . . . . . . . . . . 2,500 2,500
Richard & Robin Alman(1) . . . . . . . 5,000 5,000
William Chester(1) . . . . . . . . . . 2,500 2,500
Allan Margolis(1). . . . . . . . . . . 10,000 10,000
Allan & Ruth Zelcer(1) . . . . . . . . 5,000 5,000
Eric & Florence Stein(1) . . . . . . . 2,500 2,500
Samuel & Susan Smith(1). . . . . . . . 2,500 2,500
Mark Block(1). . . . . . . . . . . . . 5,000 5,000
Knight Family Holdings, Inc.(1). . . . 5,000 5,000
Harry Smith(1) . . . . . . . . . . . . 2,500 2,500
Mark McCarty(1). . . . . . . . . . . . 2,500 2,500
Steven & Kimberly Silvers(1) . . . . . 2,500 2,500
David Fisher(1)(2) . . . . . . . . . . 5,812 5,812
Charter Financial(1)(2). . . . . . . . 18,792 18,792
Timothy Fitzpatrick(1)(2). . . . . . . 2,000 2,000
Nancy Mauriello(1)(2). . . . . . . . . 1,500 1,500
Merrill Cannon(1)(2) . . . . . . . . . 1,000 1,000
Angela Schwegman(1)(2) . . . . . . . . 500 500
Rachel Newhall(1)(2) . . . . . . . . . 500 500
Karl Bishopric(3). . . . . . . . . . . 1,960 1,960
Jesus Oguendo(3) . . . . . . . . . . . 600 600
George Fisher(3) . . . . . . . . . . . 360 360
Peter Howard(3). . . . . . . . . . . . 12,180 12,180
Richard Davis(3) . . . . . . . . . . . 4,460 4,460
James Grant(3) . . . . . . . . . . . . 24,460 24,460
Joseph Smith(3). . . . . . . . . . . . 2,420 2,420
Ray Martinez(3). . . . . . . . . . . . 2,000 2,000
Ronald Stein (3) . . . . . . . . . . . 1,560 1,560
William Fusselmann(3). . . . . . . . . 50,000 50,000
First Equity Corporation(3). . . . . . 100,000 100,000
Endeavour Capital Fund SA(4) . . . . . 149,665 149,665
Mabcrown, Inc.(4). . . . . . . . . . . 149,664 149,664
Jesup & Lamont(5). . . . . . . . . . . 8,000 8,000
------- -------
Total. . . . . . . . . . . . . . . . . 589,933 589,933

- --------------------------
(1) Represents the Private Warrant Shares issuable from time to time upon
exercise of Private Warrants.
(2) Beneficially owned by a Partner, Associate or employee of Fisher Thurber
LLP (securities counsel to the Company).
(3) Represents Underwriter's Shares and Underwriter's Warrant Shares issuable
upon exercise of the UPOs and the Underwriter's Warrants included therein.
(4) Represents Debenture Shares which may be acquired upon conversion of
outstanding Debentures and Debenture Warrant Shares issuable upon exercise
of Debenture Warrants. Includes approximately 150% of the Debenture
Shares which would be issued upon a conversion of all Debentures at a time
market prices for Common Stock are the same as on the date of this
Prospectus. The number of Debenture Shares owned and offered may vary
based upon fluctuations in the market price of the Common Stock, stock
dividends, stock splits and other similar circumstances. See "Description
of Securities - Debentures and Debenture Warrants."
(5) Represents Placement Agent Shares.

22
<PAGE>

PLAN OF DISTRIBUTION

The Warrants may be exercised by surrendering properly endorsed
certificates to the Company's Transfer Agent accompanied by payment in
full of the exercise price for each share of Common Stock as to which the
Warrants are being exercised and any applicable transfer or other taxes.
Payment of the exercise price for the Warrants may be made by tendering cash or
a cashier's check.

The Debentures may be converted into Common Stock of the Company at the
election of the holder by providing proper notice thereof and the Debenture to
be converted in whole or in part to the Company's Transfer Agent.

The Company must have on file a current registration statement with the
Securities and Exchange Commission pertaining to the IPO Warrants in order for
a holder to exercise them. The IPO Warrant Shares must also be registered or
exempt for sale under the securities laws of the state in which the holder
resides. The Company intends to use its best efforts to keep the Registration
Statement incorporating this Prospectus current, but there can be no assurance
such Registration Statement (or any other registration statement filed by the
Company covering the Securities) can be kept current. In the event a
Registration Statement including the IPO Warrant Shares is not kept current, or
if the IPO Warrant Shares are not registered or exempt for sale in the state in
which a holder resides, the IPO Warrants may be deprived of some or all of their
value.

The Company will not be required to pay a fee to any selling agent with
respect to any exercise of the Warrants.

The Common Stock offered by the Selling Security Holders are not being
underwritten. The Selling Security Holders will act independently of the
Company in making decisions with respect to the timing, manner and size of each
sale. The Common Stock offered hereby may be sold by the Selling Security
Holders from time to time in transactions (which may include block
transactions) in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, or at negotiated prices. The
Selling Security Holders may effect such transactions by selling the Common
Stock directly to purchasers or through broker-dealers that may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Security Holders and/or
the purchasers of the Securities for whom such broker-dealers may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions).

The Selling Security Holders and any broker-dealers that act in connection
with the sale of the Common Stock as principals may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act and
any commission received by them and any profit on the resale of such Common
Stock as principals might be deemed to be underwriting discounts and
commissions under the Securities Act. The Selling Security Holders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the Common Stock against certain liabilities,
including liabilities arising under the Securities Act. The Company will not
receive any proceeds from the sales by the Selling Security Holders, although
the Company will receive proceeds from the exercise of the Warrants, and will
benefit indirectly by the reduction in Company debt resulting from the
conversion of any Debentures. Sales of the Securities by the Selling Security
Holders, or even the potential of such sales, could have an adverse effect on
the market price of the Company's outstanding Common Stock and IPO Warrants.

At the time a particular offer of Common Stock is made, except as herein
contemplated, by or on behalf of a Selling Security Holder or the Company
including following exercise of Warrants, to the extent required, a prospectus
will be distributed which will set forth the number of shares of Common Stock
being offered and the terms of the offering, including the name or names of any
underwriters, dealers or agents, if any, the purchase price paid by any
underwriter for Common Stock purchased from the Selling Security Holder and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.

In order to comply with the securities laws of certain states, if
applicable, the Common Stock may be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may

23
<PAGE>

not be sold unless they have been registered or qualified for sale in the
applicable state or an exemption from the registration or qualification
requirement is available and is complied with.

Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock may not simultaneously engage
in market making activities with respect to the securities of the Company for a
period of at least one, and possibly five business days prior to the
commencement of such distribution. In addition and without limiting the
foregoing, each Selling Security Holder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M, Rule 101, 102 and 107, which
provisions may limit the timing of purchases and sales of shares of the
Company's Common Stock by the Selling Security Holders.

The Private Warrants, Debentures, Debenture Warrants, and the Placement
Agent Shares were originally issued to certain Selling Security Holders
pursuant to an exemption from the registration requirements of the Securities
Act provided by Sections 3(b) and 4(2) thereof. The Company agreed to register
the Private Warrant Shares, Debenture Shares, Debenture Warrant Shares and
Placement Agent Shares under the Securities Act and to indemnify and hold such
Selling Security Holders harmless against certain liabilities under the
Securities Act that could arise in connection with the sale by such Selling
Security Holders of such Common Stock. In connection therewith the Company has
agreed to pay all reasonable fees and expenses except for fees and expenses for
counsel to the Selling Security Holders and any underwriting discounts and
commissions.

LEGAL MATTERS

The validity of the issuance of the shares of Common Stock offered hereby
will be passed upon for the Company by Fisher Thurber LLP, 4225 Executive
Square, Suite 1600, La Jolla, California 92037-1483. Partners, associates and
employees of Fisher Thurber LLP hold various amounts of the Securities. See
"Selling Security Holders."

EXPERTS

The financial statements of the Company appearing in the Company's annual
report (Form 10-K/A SB) for the year ended December 31, 1996, have been
audited by Ernst & Young LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements referred to above are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

The financial statements of the Company as of December 31, 1995, and for
the year then ended, incorporated by reference in this Prospectus, have been
audited by J.H. Cohn LLP, independent public accountants, as set forth in their
report thereon which is also incorporated by reference in this Prospectus, and
have been so included in reliance upon the report of such firm given the
authority of such firm as experts in accounting and auditing.

24
<PAGE>

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

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

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

TABLE OF CONTENTS
PAGE
----
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
Material Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14
Description of Securities. . . . . . . . . . . . . . . . . . . . . . . . . .15
Certain Articles of Incorporation and Bylaw
Provisions with Possible Anti-Takeover Effects . . . . . . . . . . . . . . .20
Selling Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . .22
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24

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

UNTIL _____ ___, _____, ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED
SECURITIES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED
TO DELIVER A PROSPECTUS. THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO
DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR
UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

[ VYREX LOGO ]

1,647,000
SHARES OF COMMON STOCK

-----------

PROSPECTUS

-----------

November ___, 1997

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

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The following table sets forth the various expenses in connection with the
sale and distribution of the securities being registered. All of the amounts
shown are estimates except the Securities and Exchange Commission ("SEC")
registration fee and the National Association of Securities Dealers Automated
Quotation Service (Nasdaq) fee.

SEC Filing Fee . . . . . . . . . . . . . . . . . . . $ 3,979,97
----------

Nasdaq Fee . . . . . . . . . . . . . . . . . . . . . $ *
----------

Blue Sky Fees and Expenses . . . . . . . . . . . . . $ *
----------

Printing and Engraving Expenses. . . . . . . . . . . $ *
----------

Accounting Fees and Expenses . . . . . . . . . . . . $ *
----------

Legal Fees and Expenses. . . . . . . . . . . . . . . $ *
----------

Miscellaneous. . . . . . . . . . . . . . . . . . . . $ *
----------

Total (Estimated) . . . . . . . . . . . . . . $ *
----------

* To be filed by amendment

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

The statutes, charter provisions, Bylaws, Indemnification Agreements, or
other arrangements under which any controlling person, director or officer of
the Registrant is insured or indemnified in any manner against any liability
which he may incur in his capacity as such, are as follows:

(a) Section 78.751 of the Nevada Corporation law provides for the
indemnification of officers and directors of the Company against expenses,
judgments, fines and amounts paid in settlement under certain conditions and
subject to certain limitations.

(b) Article VII of the Bylaws of the Company provides that the Company
shall have power to indemnify any person who was or is a party or is threatened
to be made a party to any proceeding by reason of the fact that such person is
or was an agent of the Company, against expenses, judgments, fines, settlements
and other amounts, actually and reasonably incurred in connection with such
proceeding if the person acted in good faith, reasonably believing the acts to
be in the best interest of the Company, and acted having no reason to believe
the conduct unlawful. The Company shall advance the expenses reasonably expected
to be incurred by such agent in defending any such proceeding upon receipt of
the undertaking required by Nevada Corporation Code Section 78.751(5).

(c) Article Twelve of the Company's Articles of Incorporation provides
that the liability of the directors of the Company for monetary damages shall be
eliminated to the fullest extent permissible under Nevada law. Accordingly, a
director will not be liable for monetary damages for breach of duty to the
Company or its shareholders in any action brought by or in the right of the
Company. However, a director remains liable to the extent required by law (i)
for acts or omission that involve intentional misconduct or a knowing and
culpable violation of law, and (ii) for the payment of distributions in
violation of Nevada law. The effect of the provisions in the Articles of
Incorporation is to eliminate the rights of the Company and its shareholder
(through shareholders' derivative suits on behalf of the Company) to

II-1
<PAGE>

recover monetary damages against a director for breach of duty as a director,
including breaches resulting from negligent behavior in the context of
transactions involving a change of control of the Company or otherwise, except
in the situations described in clauses (i) and (ii) above. These provisions will
not alter the liability of directors under federal securities laws.

(d) Pursuant to Authorization provided under the Articles of
Incorporation, the Company has entered into indemnification agreements with each
of its directors and officers. Generally, the indemnification agreements attempt
to provide the maximum protection permitted by Nevada law as it may be amended
from time to time. Moreover, the indemnification agreements provide for certain
additional indemnification. Under such additional indemnification provisions,
however, an individual will not receive indemnification for judgments,
settlements or expenses if he or she is found liable to the Company (except to
the extent the court determines he or she is fairly and reasonably entitles to
indemnity for expenses), for settlements not approved by the Company or for
settlements and expenses if the settlement is not approved by the court. The
indemnification agreements provide for the Company to advance to the individual
any and all reasonable expenses (including legal fees and expenses) incurred in
investigating or defending any such action, suit or proceeding. In order to
receive an advance of expenses, the individual must submit to the Company copies
of invoices presented to him or her for such expenses. Also, the individual must
repay such advances upon a final judicial decision that he or she is not
entitled to indemnification. The Company's Bylaws contain a provision of similar
effect relating to advancement or expenses to a director or officer, subject to
an undertaking to repay if it is ultimately determined that indemnification is
unavailable.

(e) The Registrant currently maintains a director and officer insurance
policy with policy limits of $5,000,000.

ITEM 16. EXHIBITS

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.1 Restated Articles of Incorporation.(1)

4.2 Registrants' Bylaws as amended to date.(1)

4.3 Form of Registration Rights Agreement between the Registrant and
holders of the Debentures.(2)

4.4 Form of certificate for shares of Common Stock of the
Registrant.(1)

4.5 Form of Underwriters Unit Purchase Option.(1)

4.6 Form of Warrant Agreement between the Registrant and ChaseMellon
Shareholder Services, Inc.(1)

4.7 Form of Common Stock Purchase Warrant (Debenture Warrant) issued
to holders of the Debentures.(2)

4.8 Form of Common Stock Purchase Warrant issued in 1994 and 1995
between the Registrant and the parties listed on the attached
schedule.(1)

4.9 Form of 6% Convertible Debenture (Debentures).(2)

4.10 Form of Warrant certificate (IPO Warrants).(1)

4.11 Form of Securities Purchase Agreement dated November 6, 1997
between the Registrant and holders of the Debentures.(2)

II-2
<PAGE>

5.1 Opinion Fisher Thurber LLP regarding the legality of the
securities being registered.(3)

23.1 Consent of Ernst & Young LLP, independent public accountants.(2)

23.2 Consent of J.H. Cohn LLP, independent public accountants.(2)

23.3 Consent of Fisher Thurber LLP (included in Exhibit 5.1).

24.1 Power of attorney (see pg. II-5).

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

(1) Incorporated by reference to the Company's Registration Statement in Form
SB-2 Registration No. 33-99880 filed on December 1, 1995, and as
subsequently amended.
(2) Filed herewith.
(3) To be filed by amendment.

ITEM 17. UNDERTAKINGS

The Registrant hereby undertakes:

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

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

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

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

(2) That, for determining liability under the Securities Act, 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 remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.

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

II-3
<PAGE>

will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.

The Registrant hereby undertakes:

(1) For determining any liability under the Securities Act, to treat 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)(l) or (4) or 497(h)
under the Securities Act as part of this Registration Statement as of the time
the Commission declared it effective.

(2) For determining any liability under the Securities Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the Registration Statement,
and the offering of the securities at that time as the initial bona fide
offering thereof.

II-4
<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of La Jolla, State of California, on November 20, 1997.

Vyrex Corporation

By: /s/
-------------------------------------------
Sheldon S. Hendler, Chief Executive Officer

KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Sheldon S. Hendler, as his or her true and lawful
attorney-in-fact and agents, with full power of substitution, for him or her and
in his or her name, place and stead, in any and all capacities, to sign any and
all amendments (including post-effective amendments) to this Registration
Statement, and to sign any registration statement for the same offering covered
by this Registration Statement that is to be effective upon filing pursuant to
Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agents, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
connection therewith as fully to all intents and purposes as he or she might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents, or their substitutes may lawfully do or cause to be
done by virtue hereof.

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

SIGNATURES

/s/ /s/
- ------------------------------------ ------------------------------------
Sheldon S. Hendler Dennis J. Carlo
Chief Executive Officer and Director Director
November 20, 1997 November 20, 1997

/s/ /s/
- ------------------------------------ ------------------------------------
Carl M. Lewis Nolan E. Penn
Executive Vice President, Secretary, Director
General Counsel and Director November 20, 1997
November 20, 1997

/s/ /s/
- ------------------------------------ ------------------------------------
Joyce M. Hendler Gregory F. Gilbert
Director Director
November 20, 1997 November 20, 1997

II-5

<PAGE>

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

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

EXHIBITS
TO
FORM S-3

REGISTRATION STATEMENT

Under

THE SECURITIES ACT OF 1933

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

VOLUME I

VYREX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)

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

<PAGE>

VOLUME I

INDEX TO EXHIBITS TO FORM S-3

EXHIBIT
NUMBER DESCRIPTION
- ------- -----------

4.1 Restated Articles of Incorporation.(1)

4.2 Registrants' Bylaws as amended to date.(1)

4.3 Form of Registration Rights Agreement between the Registrant
and holders of the Debentures.(2)

4.4 Form of certificate for shares of Common Stock of the
Registrant.(1)

4.5 Form of Underwriters Unit Purchase Option.(1)

4.6 Form of Warrant Agreement between the Registrant and
ChaseMellon Shareholder Services, Inc.(1)

4.7 Form of Common Stock Purchase Warrant (Debenture Warrant)
issued to holders of the Debentures.(2)

4.8 Form of Common Stock Purchase Warrant issued in 1994 and 1995
between the Registrant and the parties listed on the attached
schedule.(1)

4.9 Form of 6% Convertible Debenture (Debentures).(2)

4.10 Form of Warrant certificate (IPO Warrants).(1)

4.11 Form of Securities Purchase Agreements dated November 6, 1997
between the Registrant and holders of the Debentures.(2)

5.1 Opinion Fisher Thurber LLP regarding the legality of the
securities being registered.(3)

23.1 Consent of Ernst & Young LLP, independent public
accountants.(2)

23.2 Consent of J.H. Cohn LLP, independent public accountants.(2)

23.3 Consent of Fisher Thurber LLP (included in Exhibit 5.1).

24.1 Power of attorney (see pg. II-5).

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

<PAGE>

EXHIBIT 4.3

FORM OF REGISTRATION RIGHTS AGREEMENT BETWEEN THE
REGISTRANT AND HOLDER OF THE DEBENTURES

<PAGE>

ANNEX IV TO
STOCK PURCHASE
AGREEMENT

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT, dated as of November 6, 1997 (this
"AGREEMENT"), is made by and between VYREX CORPORATION, a Nevada corporation
(the "COMPANY"), and the person named on the signature page hereto (the "INITIAL
INVESTOR").

W I T N E S S E T H:

WHEREAS, upon the terms and subject to the conditions of the Securities
Purchase Agreement, dated as of November 6, 1997, between the Initial Investor
and the Company (the "SECURITIES PURCHASE AGREEMENT"), the Company has agreed to
issue and sell to the Initial Investor one or more 6% Convertible Debentures of
the Company (collectively the "DEBENTURES"), and warrants to purchase up to
68,000 shares of Common Stock which Debentures will be convertible into shares
of the common stock, $.001 par value (the "COMMON STOCK"), of the Company (the
"CONVERSION SHARES") upon the terms and subject to the conditions of such
Debentures, and the Warrants will be exercisable for shares of Common Stock (the
"WARRANT SHARES"); and

WHEREAS, to induce the Initial Investor to execute and deliver the
Securities Purchase Agreement, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
"SECURITIES ACT"), with respect to the Conversion Shares and Warrant Shares;

NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Initial
Investor hereby agrees as follows:

1. DEFINITIONS.

As used in this Agreement, the following terms shall have the following
meanings:

"INVESTOR" means the Initial Investor and any permitted transferee or
assignee who agrees to become bound by the provisions of this Agreement in
accordance with Section 9 hereof.

"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the Securities Act and pursuant to Rule 415 under the
Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of

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<PAGE>

effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the "SEC").

"REGISTRABLE SECURITIES" means the Conversion Shares and the Warrant
Shares.

"REGISTRATION STATEMENT" means a registration statement of the Company
under the Securities Act.

As used in this Agreement, the term Investor includes (i) each Investor (as
defined above) and (ii) each person who is a permitted transferee or assignee of
the Registrable Securities pursuant to Section 9 of this Agreement.

Capitalized terms used herein and not otherwise defined herein shall have
the respective meanings set forth in the Securities Purchase Agreement.

2. REGISTRATION.

(a) MANDATORY REGISTRATION. The Company shall prepare and file with the
SEC, no later than thirty (30) days following the initial Closing Date under the
Securities Purchase Agreement, either a Registration Statement on Form S-3
registering for resale by the Investor a sufficient number of shares of Common
Stock for the Initial Investors (or such lesser number as may be required by the
SEC, but in no event less than the number of shares into which the Debentures
would be convertible and the Warrants exercisable at the time of filing of the
Form S-3, or an amendment to any pending Company Registration Statement on Form
S-3, and such Registration Statement or amended Registration Statement shall
state that, in accordance with Rule 416 and 457 under the Securities Act, it
also covers such indeterminate number of additional shares of Common Stock as
may become issuable upon conversion of the Debentures and the exercise of the
Warrants resulting from adjustment in the Conversion Price, or to prevent
dilution resulting from stock splits, or stock dividends). If at any time the
number of shares of Common Stock into which the Debentures may be converted
exceeds the aggregate number of shares of Common Stock then registered, the
Company shall, within ten (10) business days after receipt of a written notice
from any Investor, either (i) amend the Registration Statement filed by the
Company pursuant to the preceding sentence, if such Registration Statement has
not been declared effective by the SEC at that time, to register all shares of
Common Stock into which the Debenture may be converted, or (ii) if such
Registration Statement has been declared effective by the SEC at that time, file
with the SEC an additional Registration Statement on Form S-3 to register the
shares of Common Stock into which the Debenture may be converted that exceed the
aggregate number of shares of Common Stock already registered. If the staff of
the SEC determines that all of the Conversion Shares cannot be registered by the
Company for resale by the Investor because, in the view of the staff, such
registration would constitute a primary offering by the Company, then the
Company shall have an additional sixty (60) days in which to amend such
registration statement to another available form.

(b) LIQUIDATED DAMAGES. The Company shall use its best efforts to obtain
effectiveness of the Registration Statement as soon as practicable. If (i) the
Registration Statement(s) covering

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<PAGE>

the Registrable Securities required to be filed by the Company pursuant to
Section 2(a) hereof is not declared effective by the SEC on or before
[seventy-five days following the Closing Date] (other than by reason of any act
or failure to act in a timely manner by the Investors or Investors' counsel), or
if, after the Registration Statement has been declared effective by the SEC,
sales cannot be made pursuant to the Registration Statement (by reason of stop
order, or the Company's failure to update the Registration Statement), or (ii)
the Common Stock is not listed or included for quotation on the NASDAQ National
Market System (the "NASDAQ-NMS"), NASDAQ Small Cap, the New York Stock Exchange
(the "NYSE") or the American Stock Exchange (the "AMEX"), then the Company will
make payments to the Investors in such amounts and at such times as shall be
determined pursuant to this Section 2(b) as partial relief for the damages to
the Investors by reason of any such delay in or reduction of their ability to
sell the Registrable Securities (which remedy shall not be exclusive of any
other remedies available at law or in equity). The Company shall pay to each
holder of Registrable Securities an amount equal to the aggregate "Purchase
Price" (as defined below) of the Debentures held by such Investors (including,
without limitation, Debentures that have been converted into Conversion Shares
then held by such Investors) (the "AGGREGATE SHARE PRICE") multiplied by two
hundredths (.02) times the sum of: (i) the number of months (prorated for
partial months) after the end of such 75-day period and prior to the date the
Registration Statement is declared effective by the SEC, provided, however, that
there shall be excluded from such period any delays which are solely
attributable to changes required by the Investors in the Registration Statement
with respect to information relating to the Investors, including, without
limitation, changes to the plan of distribution, or to the failure of the
Investors to conduct their review of the registration statement pursuant to
Section 2(a) above in a reasonably prompt manner; (ii) the number of months
(prorated for partial months) that sales cannot be made pursuant to the
Registration Statement after the Registration Statement has been declared
effective; and (iii) the number of months (prorated for partial months) that the
Common Stock is not listed or included for quotation on the NASDAQ-NMS, NASDAQ
Small Cap, NYSE or AMEX after the Registration Statement has been declared
effective. (For example, if the Registration Statement becomes effective one (1)
month after the end of such 75-day period, the Company would pay $20,000 for
each $1,000,000 of Aggregate Share Price and would continue to pay $20,000 per
month for each $1,000,000 of Aggregate Share Price until the Registration
Statement becomes effective.) Such amounts shall be paid in cash or, at each
Investor's option (but subject to the limitations contained in Section 3.1 of
the Debenture), may be convertible into Common Stock at the "Conversion Price"
(as defined in the Debenture). Any shares of Common Stock issued upon conversion
of such amounts shall be Registrable Securities. If the Investor desires to
convert the amounts due hereunder into Registrable Securities it shall so notify
the Company in writing within two (2) business days of the date on which such
amounts are first payable in cash and such amounts shall be so convertible
(pursuant to the mechanics set forth in the Debenture), beginning on the last
day upon which the cash amount would otherwise be due in accordance with the
following sentence. Payments of cash pursuant hereto shall be made within ten
(10) days after the end of each period that gives rise to such obligation,
provided that, if any such period extends for more than thirty (30) days,
interim payments shall be-made for each such thirty (30) day period. The term
"PURCHASE PRICE" means the purchase price paid by the Investors for the
Debenture. Upon agreement of both the Purchaser and the Company, any liquidated
damages due under the provisions of this subparagraph may be paid in shares of
Common Stock,

-4-
<PAGE>

registered as if such stock were Debenture Shares, and valued at the Conversion
Rate, as such term is defined in Section 4 of the Debenture.

If the Registration Statement covering the Registrable Securities is not
filed in proper form with the Securities and Exchange Commission within thirty
(30) days after the Closing, the Company will make payment to the Initial
Investor in the amount of $500 per day for each $10,000 in principal amount of
Debentures for each day thereafter until such Registration Statement, in proper
form, is filed with the Securities and Exchange Commission.

3. OBLIGATIONS OF THE COMPANY. In connection with the registration of
the Registrable Securities, the Company shall do each of the following.

(a) Prepare promptly, and file with the SEC by thirty (30) days after the
initial Closing Date, a Registration Statement with respect to not less than the
number of Registrable Securities provided in Section 2(a), above, and thereafter
use its best efforts to cause each Registration Statement relating to
Registrable Securities to become effective on the earlier of (i) five days after
notice from the Securities and Exchange Commission that the Registration
Statement may be declared effective, or (b) sixty (60) days after the Closing
Date, and keep the Registration Statement effective at all times until the
earliest (the "REGISTRATION PERIOD") of (i) the date that is two years after the
Closing Date (ii) the date when the Investors may sell all Registrable
Securities under Rule 144 without restriction, or (iii) the date the Investors
no longer own any of the Registrable Securities, which Registration Statement
(including any amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading;

(b) Prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to keep the Registration effective at all times during the
Registration Period, and, during the Registration Period, comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statement
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statement;

(c) The Company shall permit a single firm of counsel designated by the
Initial Investors to review the Registration Statement and all amendments and
supplements thereto a reasonable period of time prior to their filing with the
SEC, and not file any document in a form to which such counsel reasonably
objects.

-5-
<PAGE>

(d) Furnish to each Investor whose Registrable Securities are included in
the Registration Statement and its legal counsel identified to the Company, (i)
promptly after the same is prepared and publicly distributed, filed with the
SEC, or received by the Company, one (1) copy of the Registration Statement,
each preliminary prospectus and prospectus, and each amendment or supplement
thereto, and (ii) such number of copies of a prospectus, and all amendments and
supplements thereto and such other documents, as such Investor may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such Investor;

(e) As promptly as practicable after becoming aware of such event, and in
no event later than two (2) business days after becoming aware of such event,
notify each Investor of the happening of any event of which the Company has
knowledge, as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, and use its best efforts promptly to prepare a supplement
or amendment to the Registration Statement or other appropriate filing with the
SEC to correct such untrue statement or omission, and deliver a number of copies
of such supplement or amendment to each Investor as such Investor may reasonably
request;

(f) As promptly as practicable after becoming aware of such event, and in
no event later than two (2) business days after becoming aware of such event,
notify each Investor who holds Registrable Securities being sold of the issuance
by the SEC of a Notice of Effectiveness or any notice of effectiveness or any
stop order or other suspension of the effectiveness of the Registration
Statement at the earliest possible time;

(g) Use its commercially reasonable efforts to secure designation of all
the Registrable Securities covered by the Registration Statement as a National
Association of Securities Dealers Automated Quotations System ("NASDAQ") "Small
Capitalization" within the meaning of Rule 11Aa2-1 of the SEC under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
quotation of the Registrable Securities on the NASDAQ Small Cap Market; or if,
despite the Company's commercially reasonable efforts to satisfy the preceding
clause, the Company is unsuccessful in doing so, to secure NASDAQ/OTC Bulletin
Board authorization and quotation for such Registrable Securities and, without
limiting the generality of the foregoing, to arrange for at least two market
makers to register with the National Association of Securities Dealers, Inc.
("NASD") as such with respect to such Registrable Securities;

(h) Provide a transfer agent and registrar, which may be a single entity,
for the Registrable Securities not later than the effective date of the
Registration Statement;

(i) Cooperate with the Investors who hold Registrable Securities being
offered to facilitate the timely preparation and delivery of certificates for
the Registrable Securities to be offered pursuant to the Registration Statement
and enable such certificates for the Registrable Securities to be in such
denominations or amounts as the case may be, as the Investors may reasonably
request, nd, within three (3) business days after a Registration Statement which

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<PAGE>

includes Registrable Securities is ordered effective by the SEC, the Company
shall deliver, and shall cause legal counsel selected by the Company to deliver,
to the transfer agent for the Registrable Securities (with copies to the
Investors whose Registrable Securities are included in such Registration
Statement) an appropriate instruction and opinion of such counsel;

(j) Take all other reasonable actions necessary to expedite and facilitate
disposition by the Investor of the Registrable Securities pursuant to the
Registration Statement;

(k) Use its best efforts to qualify the sale of the Registrable Securities
for sale in such states as the Investor actually maintains its principal
residence, provided, however, the Company shall not be required to qualify in
any state where it would be required to register as a broker or dealer or where
the state would require an escrow or other similar restrictions to upon the
Company, any of its shareholders or the Investor; and

(l) The Company shall not be obligated to take any action to effect any
such registration, qualification or compliance pursuant to this Registration
Rights Agreement or to pay any amount for failure to do so if the Company would
be required to provide audited financial statements in the Registration
Statement for a period other than the end of its fiscal year, in which event the
Company's obligation to register, qualify or comply with the provisions
requiring it to cause the Registration Statement to become effective shall be
deferred for a period not to exceed the shorter of: (i) the time reasonably
required to obtain audited financial statements for the period ending on the
last day of its fiscal year, and to include them in the Registration Statement
or an amendment thereto, or (ii) 120 days from the date required for such
Registration Statement to become effective pursuant to this Registration Rights
Agreement.

4. OBLIGATIONS OF THE INVESTORS. In connection with the registration of
the Registrable Securities, the Investors shall have the following obligations:

It shall be a condition precedent to the obligations of the Company to
complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Investor that such Investor shall furnish
to the Company such information regarding itself, the Registrable Securities
held by it, and the intended method of disposition of the Registrable Securities
held by it, as shall be reasonably required to effect the registration of such
Registrable Securities and shall execute such documents in connection with such
registration as the Company may reasonably request. At least five (5) days
prior to the first anticipated filing date of the Registration Statement, the
Company shall notify each Investor of the information the Company requires from
each such Investor (the "REQUESTED INFORMATION") if such Investor elects to have
any of such Investor's Registrable Securities included in the Registration
Statement. If at least two (2) business days prior to the filing date the
Company has not received the Requested Information from an Investor (a
"NON-RESPONSIVE INVESTOR"), then the Company may file the Registration Statement
without including Registrable Securities of such Non-Responsive Investor;

Each Investor by such Investor's acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the

-7-
<PAGE>

preparation and filing of the Registration Statement hereunder, unless such
Investor has notified the Company in writing of such Investor's election to
exclude all of such Investor's Registrable Securities from the Registration
Statement; and

Each Investor agrees that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3(e) or 3(f), above,
such Investor will immediately discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until such Investor's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 3(e) or 3(f) and, if so directed by the
Company, such Investor shall deliver to the Company (at the expense of the
Company) or destroy (and deliver to the Company a certificate of destruction)
all copies in such Investor's possession, of the prospectus covering such
Registrable Securities current at the time of receipt of such notice. No
Investor shall have any right to seek or obtain an injunction or restraining
order, or otherwise delay any such registration as a result of any controversies
that might arise with respect to the interpretation of this Agreement.

5. EXPENSES OF REGISTRATION. All reasonable expenses, other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 3, but including,
without limitation, all registration, listing, and qualifications fees, printers
and accounting fees, the fees and disbursements of counsel for the Company,
shall be borne by the Company. The Investors shall be responsible for the fees
and expenses of their respective counsels.

6. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:

To the extent permitted by law, the Company will indemnify and hold
harmless each Investor who holds such Registrable Securities, the directors, if
any, of such Investor, the officers, if any, of such Investor, each person, if
any, who controls any Investor within the meaning of the Securities Act or the
Exchange Act (each, an "INDEMNIFIED PERSON"), against any losses, claims,
damages, liabilities or expenses (joint or several) incurred (collectively,
"CLAIMS") to which any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any of the following statements, omissions or violations in the
Registration Statement, or any post-effective amendment thereof, or any
prospectus included therein: (i) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
post-effective amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in the final prospectus (as amended or
supplemented, if the Company files any amendment thereof or supplement thereto
with the SEC) or the omission or alleged omission to state therein any material
fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading or
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation under the
Securities Act, the Exchange Act or any state securities law (the matters in the
foregoing

-8-
<PAGE>

clauses (i) through (iii) being, collectively, "VIOLATIONS"). The Company shall
reimburse the Investors, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim. Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 6(a) shall not (I) apply to a Claim arising out of or
based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Indemnified Person expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant to Section
3(b) hereof; (II) be available to the extent such Claim is based on a failure of
the Investor to deliver or cause to be delivered the prospectus made available
by the Company; or (III) apply to amounts paid in settlement of any Claim if
such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Each Investor shall indemnify
the Company and its officers, directors and agents against any claims arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company, by or on behalf of such
Investor, expressly for use in connection with the preparation of the
Registration Statement, subject to such limitations and conditions as are
applicable to the Indemnification provided by the Company to this Section 6.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Investors pursuant to Section
9.

Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action (including any
governmental action), such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying party under this
Section 6, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; PROVIDED,
HOWEVER, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the reasonable fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained by the
indemnifying party, the representation by such counsel of the Indemnified Person
or Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. In such event, the Company shall pay for only one separate legal
counsel for the Investors; such legal counsel shall be selected by the Investors
holding a majority in interest of the Registrable Securities included in the
Registration Statement to which the Claim relates. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Section 6,
except to the extent that the indemnifying party is prejudiced in its ability to
defend such action. The indemnification required by this Section 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.

-9-
<PAGE>

7. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 6 to the fullest extent permitted by law; PROVIDED,
HOWEVER, that (a) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 6; (b) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any seller of Registrable
Securities who was not guilty of such fraudulent misrepresentation; and (c)
contribution by any seller of Registrable Securities shall be limited in amount
to the net amount of proceeds received by such seller from the sale of such
Registrable Securities.

8. REPORTS UNDER EXCHANGE ACT. With a view to making available to the
Investors the benefits of Rule 144 promulgated under the Securities Act or any
other similar rule or regulation of the SEC that may at any time permit the
Investors to sell securities of the Company to the public without registration
("Rule 144"), the Company agrees to:

(a) make and keep public information available, as those terms are
understood and defined in Rule 144;

(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and

(c) furnish to each Investor so long as such Investor owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company and (iii) such other information as may be reasonably requested to
permit the Investors to sell such securities pursuant to Rule 144 without
registration.

9. ASSIGNMENT OF THE REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be
automatically assigned by the Investors to any transferee of the Registrable
Securities (or all or any portion of any Debenture of the Company which is
convertible into such securities) only if: (a) the Investor agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (b) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (i) the name and address of such
transferee or assignee and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) immediately following
such transfer or assignment the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, and (d) at or before the time the Company received the
written notice contemplated by clause (b) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
contained herein; provided, however, that in no event shall the rights

-10-
<PAGE>

granted by this provision be (a) assigned on more than two occasions, or (b) to
greater than five (5) assignees. In the event of any delay in filing or
effectiveness of the Registration Statement as a result of such assignment, the
Company shall not be liable for any damages arising from such delay, or the
payments set forth in Section 2(b) hereof.

10. AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and Investors who hold an eighty (80%) percent
interest of the Registrable Securities. Any amendment or waiver effected in
accordance with this Section 10 shall be binding upon each Investor and the
Company.

11. MISCELLANEOUS.

A person or entity is deemed to be a holder of Registrable Securities
whenever such person or entity owns of record such Registrable Securities. If
the Company receives conflicting instructions, notices or elections from two or
more persons or entities with respect to the same Registrable Securities, the
Company shall act upon the basis of instructions, notice or election received
from the registered owner of such Registrable Securities.

Notices required or permitted to be given hereunder shall be in writing and
shall be deemed to be sufficiently given when personally delivered (by hand, by
courier, by telephone line facsimile transmission, receipt confirmed, or other
means) or sent by certified mail, return receipt requested, properly addressed
and with proper postage pre-paid (i) if to the Company, Vyrex Corporation , 2159
Avenida de la Playa, La Jolla, CA 92037-3215, attn.: Steven J. Kemper, with a
copy to David Fisher, Esq., Fisher Thurber LLP, 4225 Executive Square, Suite
1600, La Jolla, CA 92037-1483; (ii) if to the Initial Investor, at the address
set forth under its name in the Securities Purchase Agreement, with a copy to
Samuel Krieger, Esq., Krieger & Prager, 319 Fifth Avenue, Third Floor, New York,
NY 10016; and (iii) if to any other Investor, at such address as such Investor
shall have provided in writing to the Company, or at such other address as each
such party furnishes by notice given in accordance with this Section 11(b), and
shall be effective, when personally delivered, upon receipt and, when so sent by
certified mail, four (4) calendar days after deposit with the United states
Postal Service.

Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.

This Agreement shall be governed by and interpreted in accordance with the
laws of the State of New York. Each of the parties consents to the jurisdiction
of the federal courts whose districts encompass any part of the City of New York
or the state courts of the State of New York sitting in the City of New York in
connection with any dispute arising under this Agreement and hereby waives, to
the maximum extent permitted by law, any objection, including any objection
based on FORUM NON COVENIENS, to the bringing of any such proceeding in such
jurisdictions. A facsimile transmission of this signed Agreement shall be legal
and binding on all parties hereto. This Agreement may be signed in one or more
counterparts,

-11-
<PAGE>

each of which shall be deemed an original. The headings of this Agreement are
for convenience of reference and shall not form part of, or affect the
interpretation of, this Agreement. If any provision of this Agreement shall be
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement or the validity or enforceability of this Agreement
in any other jurisdiction. This Agreement may be amended only by an instrument
in writing signed by the party to be charged with enforcement. This Agreement
supersedes all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.

This Agreement constitutes the entire agreement among the parties hereto
with respect to the subject matter hereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein.
This Agreement supersedes all prior agreements and understandings among the
parties hereto with respect to the subject matter hereof.

Subject to the requirements of Section 9 hereof, this Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties hereto.

All pronouns and any variations thereof refer to the masculine, feminine or
neuter, singular or plural, as the context may require.

The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning thereof.

This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by telephone line facsimile transmission of a copy of this
Agreement bearing the signature of the party so delivering this Agreement.

The Company acknowledges that any failure by the Company to perform its
obligations under Section 3(a), or any delay in such performance could result in
to the Investors and the Company agrees that, in addition to any other liability
of the company may have by reason of any such failure or delay, the Company
shall be liable for all direct damages caused by any such failure or delay,
unless same is the result of force majeure. Neither party shall be liable for
consequential damages.

-12-
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunto duly authorized as of the day
and year first above written.

VYREX CORPORATION

By:
---------------------------
Name:
Title:

ENDEAVOUR CAPITAL FUND, S.A.

By
---------------------------
Name:
Title:

-13-

<PAGE>

EXHIBIT 4.7

FORM OF COMMON STOCK PURCHASE WARRANT (DEBENTURE WARRANT)
ISSUED TO HOLDERS OF THE DEBENTURES

<PAGE>

ANNEX V

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE
BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE OR CANADIAN PROVINCE, OR UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SECURITIES ARE RESTRICTED
AND MAY NOT BE OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER
THE SECURITIES ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

VYREX CORPORATION

COMMON STOCK PURCHASE WARRANT

1. ISSUANCE. In consideration of good and valuable consideration,
the receipt of which is hereby acknowledged by Vyrex Corporation, a Nevada
corporation (the "COMPANY"), Endeavour Capital Fund, S.A., or registered assigns
(the "HOLDER") is hereby granted the right to purchase at any time commencing
two (2) days following the date hereof and until 5:00 P.M., New York City time,
on November 5, 2000 (the "EXPIRATION DATE"), eight thousand five hundred (8,500)
fully paid and nonassessable shares of the Company's Common Stock, $.001 par
value per share (the "COMMON STOCK") at an initial exercise price of the lesser
of (a) $_______ [125% of the Market Price on the closing date] per share, or (b)
125% of the Market Price on the Effective Date, as defined in the Securities
Purchase Agreement between the Company and Holder dated November 6, 1997 (the
"EXERCISE PRICE"), subject to further adjustment as set forth in Section 6
hereof.

2. EXERCISE OF WARRANTS. This Warrant is exercisable in whole or
in part at the Exercise Price per share of Common Stock payable hereunder,
payable in cash or by certified or official bank check, or by "cashless
exercise", by means of tendering this Warrant Certificate to the Company to
receive a number of shares of Common Stock equal in Market Value to the
difference between the Market Value of the shares of Common Stock issuable upon
exercise of this Warrant and the total cash exercise price thereof. Upon
surrender of this Warrant Certificate with the annexed Notice of Exercise Form
duly executed, together with payment of the Exercise Price for the shares of
Common Stock purchased, the Holder shall be entitled to receive a certificate or
certificates for the shares of Common Stock so purchased. For the purposes of
this Section 2, "MARKET VALUE" shall be an amount equal to the average closing
bid price of a share of Common Stock for the Five (5) trading days preceding the
Company's receipt of the Notice of Exercise Form duly executed, multiplied by
the

1
<PAGE>

number of shares of Common Stock to be issued upon surrender of this Warrant
Certificate.

3. RESERVATION OF SHARES. The Company hereby agrees that at all
times during the term of this Warrant there shall be reserved for issuance upon
exercise of this Warrant such number of shares of its Common Stock as shall be
required for issuance upon exercise of this Warrant (the "WARRANT SHARES"). The
Company shall use its best efforts and all due diligence to increase the number
of shares of Common Stock so reserved to cure any deficiencies, and, if
necessary, to obtain approval of its stockholders therefor, including
authorization of such additional number of shares of Common Stock as may be
required in excess of the number so reserved.

4. MUTILATION OR LOSS OF WARRANT Upon receipt by the Company of
evidence satisfactory to it of the loss, theft, destruction or mutilation of
this Warrant, and (in the case of loss, theft or destruction) receipt of
reasonably satisfactory indemnification, and (in the case of mutilation) upon
surrender and cancellation of this Warrant, the Company will execute and deliver
a new Warrant of like tenor and date and any such lost, stolen, destroyed or
mutilated Warrant shall thereupon become void.

5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or equity, and the rights of the Holder are limited to those expressed in this
Warrant and are not enforceable against the Company except to the extent set
forth herein.

6. PROTECTION AGAINST DILUTION.

6.1 ADJUSTMENT MECHANISM. If an adjustment of the Exercise
Price is required pursuant to this Section 6, the Holder shall be entitled to
purchase such number of additional shares of Common Stock as will cause (i) the
total number of shares of Common Stock the Holder is entitled to purchase
pursuant to this Warrant, multiplied by (ii) the adjusted purchase price per
share, to equal (iii) the dollar amount of the total number of shares of Common
Stock the Holder is entitled to purchase before adjustment multiplied by the
total purchase price before adjustment.

6.2 CAPITAL ADJUSTMENTS. In case of any stock split or
reverse stock split, stock dividend, reclassification of the Common Stock,
recapitalization, merger or consolidation, or like capital adjustment affecting
the Common Stock of the Company, the provisions of this Section 6 shall be
applied as if such capital adjustment event had occurred immediately prior to
the date of this Warrant and the original purchase price had been fairly
allocated to the stock resulting from such capital adjustment; and in other
respects the provisions of this Section shall be applied in a fair, equitable
and reasonable manner so as to give effect, as nearly as my be, to the purposes
hereof. A rights offering to stockholders shall be deemed a stock dividend to
the extent of the bargain purchase element of the rights.

2
<PAGE>

6.3 MERGER, SALE OF ASSETS, ETC. If at any time while this
Warrant, or any portion hereof, is outstanding and unexpired there shall be (i)
a reorganization (other than a combination, reclassification, exchange or
subdivision of shares otherwise provided for herein), (ii) a merger or
consolidation of the Company with or into another corporation or other entity
including a merger or consolidation in which the Company is the surviving entity
but the shares of the Company's capital stock outstanding immediately prior to
the merger are converted by virtue of the merger into other property, whether in
the form of securities, cash, or otherwise, or (iii) a sale or transfer of the
Company's properties and assets as, or substantially as, an entirety to any
other person, then as a part of such reorganization, merger, consolidation, sale
or transfer lawful provision shall be made so that the holder of this Warrant
shall thereafter be entitled to receive upon exercise of this Warrant, during
the period specified herein and payment of the Exercise Price then in effect,
the number of shares of stock or other securities or property resulting from
such reorganization, merger, consolidation, sale or transfer that a holder of
the shares deliverable upon exercise of this Warrant would have been entitled to
receive in such reorganization, consolidation, merger, sale or transfer if this
Warrant had been exercised immediately before such reorganization, merger,
consolidation, sale or transfer, all subject to further adjustment as provided
in this Section 6. The foregoing provisions of this Section 6 shall similarly
apply to successive reorganization, consolidations, mergers, sales and transfers
and to the stock or securities of any other corporation or other entity that are
at the time receivable upon the exercise of this Warrant. If the per-share
consideration payable to the Holder hereof for shares in connection with any
such transactions is in a form other than cash or marketable securities, then
the value of such consideration shall be determined in good faith by the
Company's Board of Directors. In all events, appropriate adjustment (as
determined in good faith by the Company's Board of Directors) shall be made in
the application of the provisions of this Warrant with respect to the rights and
interests of the Holder after the transaction, to the end that the provisions of
this Warrant shall be applicable after that event, as near as reasonably may be,
in relation to any shares or other property deliverable after that event upon
exercise of this Warrant.

7. TRANSFER TO COMPLY WITH THE SECURITIES ACT; REGISTRATION RIGHTS.

(a) This Warrant has not been registered under the Securities Act and
has been issued to the holder for investment purposes and not with a view to the
distribution of either the Warrant or the Warrant Shares. Neither this Warrant
nor any of the Warrant Shares or any other security issued or issuable upon
exercise of this Warrant may be sold, transferred, pledged or hypothecated in
the absence of an effective registration statement under the Act relating to
such security or an opinion of counsel reasonably satisfactory to the Company
that registration is not required under the Securities Act. Each certificate
for the Warrant, the Warrant Shares and any other security issued or issuable
upon exercise of this Warrant shall contain a legend on the

3
<PAGE>

face thereof, in form and substance satisfactory to counsel for the Company,
setting forth the restrictions on transfer contained in this Section.

(b) The Company agrees to file a registration statement, which
shall include the Warrant Shares, on Form S-3 or another available form (the
"REGISTRATION STATEMENT"), pursuant to the terms of the Registration Rights
Agreement between the Company and the Holder dated November 6, 1997.

8. NOTICES. Any notice required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon, (a) by personal
delivery or fax, or (ii) one business day after deposit with a nationally
recognized overnight delivery service such as Federal Express, with postage and
fees prepaid, addressed to each of the other parties thereunto entitled at the
following addresses, or at such other addresses as a party may designate by
written notice to each of the other parties hereto.

COMPANY: VYREX CORPORATION
2159 Avenida de la Playa
La Jolla, CA 92037-3215
Attn.: Steven J. Kemper
Telecopier No.: (619) 459-9522

with a copy to:

David Fisher, Esq.
Fisher Thurber LLP
4225 Executive Square, Suite 1600
La Jolla, CA 92037-1483
Telecopier No.: (619) 535-1616

HOLDER: At the address set forth on the signature page of the Agreement.

with a copy to:

Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077

9. SUPPLEMENTS AND AMENDMENTS; WHOLE AGREEMENT. This
Warrant may be amended or supplemented only by an instrument in writing signed
by the parties hereto. This Warrant and the Securities Purchase Agreement
(including Annexes thereto) between the Company and the Holder dated November 6,
1997, contain the full understanding of the parties hereto with respect to the
subject matter hereof and thereof and there are no representations, warranties,
agreements or

4
<PAGE>

understanding of the parties hereto with respect to the subject matter hereof
and thereof and there are no representations, warranties, agreements or
understandings other than expressly contained herein and therein.

10. GOVERNING LAW. This Warrant shall be deemed to be a contract
under the laws of the State of New York and for all purposes shall be governed
by and construed in accordance with the laws of such State applicable to
contracts to be made and performed entirely within such State.

11. COUNTERPARTS. This Warrant may be executed in any
number of counterparts and each of such counterparts shall for all purposes be
deemed to be an original, and all such counterparts shall together constititute
but one and the same instrument.

12. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Warrant are inserted for convenience only and shall not control
or affect the meaning or construction of any of the provisions hereof.
Capitalized terms used herein which are not otherwise defined shall have the
meanings ascribed to such terms as in the Securities Purchase Agreement.

IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the
6th day of November, 1997.

VYREX CORPORATION

By:
----------------------------
Name:
---------------------
Title:
--------------------

Attest:

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

<PAGE>

EXHIBIT 4.9

FORM OF 6% CONVERTIBLE DEBENTURE (DEBENTURES)

<PAGE>

ANNEX IA

DEBENTURE

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR
CANADIAN PROVINCE, OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE
OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

No. A-1 US $ 500,000
------ -------
VYREX CORPORATION

6% CONVERTIBLE DEBENTURE DUE NOVEMBER 15, 2000

THIS DEBENTURE is one of a duly authorized issue of up to $4,000,000 in
Debentures of VYREX CORPORATION, a corporation organized and existing under
the laws of the State of Nevada (the "Company") designated as its 6%
Convertible Debenture Due November 15, 2000.

FOR VALUE RECEIVED, the Company promises to pay to Endeavour Capital
Fund, S.A., the registered holder hereof (the "Holder"), the principal sum of
Five Hundred Thousand and 00/100 (US $500,000) Dollars on November 15, 2000
(the "Maturity Date") and to pay interest on the principal sum outstanding
from time to time in arrears upon conversion as provided herein on November
15, 2000 at the rate of 6% per annum accruing from the date of initial
issuance. Accrual of interest shall commence on the first such business day
to occur after the date hereof until payment in full of the principal sum has
been made or duly provided for. Subject to the provisions of PARA4 below,
the principal of, and interest on, this Debenture are payable at the option
of the Company, in shares of Common Stock of the Company, $.001 par value
("Common Stock"), or in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts, at the address last appearing on the Debenture Register of the Company
as designated in writing by the Holder from time to time; provided, however
that this Debenture shall only be payable in shares of Common Stock on the
Maturity Date . The Company will pay the principal of and accrued interest
due upon this Debenture on the Maturity Date, less any amounts required by
law to be deducted, to the registered holder of this Debenture as of the
tenth day prior to the Maturity Date and addressed to such holder at the last
address appearing on the Debenture Register. The forwarding of such check,
or the required number of shares of Common Stock determined pursuant to the
provisions of PARA4 below, shall constitute a payment of principal and
interest hereunder and shall satisfy and discharge the liability for
principal and interest on this Debenture to the extent of the sum represented
by such check plus any amounts so deducted.

--1
<PAGE>

This Debenture is subject to the following additional provisions:

1. The Debentures are issuable in denominations of Five Thousand
Dollars (US$5,000) and integral multiples thereof. The Debentures are
exchangeable for an equal aggregate principal amount of Debentures of
different authorized denominations, as requested by the Holder surrendering
the same. No service charge will be made for such registration or transfer
or exchange.

2. The Company shall be entitled to withhold from all payments of
principal of, and interest on, this Debenture any amounts required to be
withheld under the applicable provisions of the United States income tax laws
or other applicable laws at the time of such payments, and Holder shall
execute and deliver all required documentation in connection therewith.

3. This Debenture has been issued subject to investment representations
of the original purchaser hereof and may be transferred or exchanged only in
compliance with the Securities Act of 1933, as amended (the "Act"), and other
applicable state and foreign securities laws. In the event of any proposed
transfer of this Debenture, the Company may require, prior to issuance of a
new Debenture in the name of such other person, that it receive reasonable
transfer documentation including legal opinions that the issuance of the
Debenture in such other name does not and will not cause a violation of the
Act or any applicable state or foreign securities laws. Prior to due
presentment for transfer of this Debenture, the Company and any agent of the
Company may treat the person in whose name this Debenture is duly registered
on the Company's Debenture Register as the owner hereof for the purpose of
receiving payment as herein provided and for all other purposes, whether or
not this Debenture be overdue, and neither the Company nor any such agent
shall be affected by notice to the contrary.

4. The Holder of this Debenture is entitled, at its option, to convert
at any time commencing sixty (60) days after the date hereof or such earlier
date as the Registration Statement is declared effective, the principal
amount of this Debenture together with accrued but unpaid interest, provided
that the principal amount is at least US $10,000 (unless if at the time of
such election to convert the aggregate principal amount of all Debentures
registered to the Holder is less that Ten Thousand Dollars (US $10,000), then
the whole amount thereof) into shares of Common Stock of the Company
("Debenture Shares") at a conversion price for each share of Common Stock
("Conversion Rate") equal to the LESSOR of subsections (i) or (ii) below:

(i) 130% of the average closing bid price of the Common Stock on
the five consecutive trading days preceding the initial
issuance date of this Debenture (the "Issuance Date"); or

(ii) (a) beginning on the 60th day after the Issuance Date and
ending on the 90th day after the Issuance Date the Conversion Rate shall be 84%
of the Market Price;

(b) beginning on the 91st day after the Issuance Date and
ending on the 120th day after the Issuance Date the Conversion Rate shall be 82%
of the Market Price;

(c) beginning on the 121st day after the Issuance Date and
ending on the Maturity Date the Conversion Rate shall be 80% of the Market
Price.

Notwithstanding the foregoing, no more than 33% of the principal amount of
this Debenture shall be convertible during any thirty (30) calendar day period.
Notwithstanding anything to the

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<PAGE>

contrary contained herein, the entire unpaid balance and accrued interest
outstanding on the Maturity Date hereof shall automatically convert into Common
Stock in accordance with the foregoing Conversion Rate.

For purposes of this Section 4, the Market Price shall be the average
closing bid price of the Common Stock on the five (5) trading days immediately
preceding the Conversion Date, as reported by the National Association of
Securities Dealers, or the closing bid price on the over-the-counter market on
such date or, in the event the Common Stock is listed on a stock exchange, the
Market Price shall be the closing price on the exchange on such date, as
reported in the Wall Street Journal. Conversion shall be effectuated by
surrendering the Debentures to be converted to the Company's transfer agent,
Chase Mellon Shareholder Services, with the form of conversion notice attached
hereto as Exhibit A, executed by the Holder of the Debenture evidencing such
Holder's intention to convert this Debenture or a specified portion (as above
provided) hereof, and accompanied, if required by the Company, by proper
assignment hereof in blank. Interest accrued or accruing from the date of
issuance to the date of conversion shall, at the option of the Holder, be paid
in cash or Common Stock upon conversion at the Conversion Rate. No fraction of
Shares or scrip representing fractions of shares will be issued on conversion,
but the number of shares issuable shall be rounded to the nearest whole share.
The date on which notice of conversion is given (the "Conversion Date") shall be
deemed to be the date on which the Holder faxes the conversion notice duly
executed, to the Company. Facsimile delivery of the conversion notice shall be
accepted by the Company at facsimile number (619) 459-9522; Att.: Steven J.
Kemper). Certificates representing Common Stock upon conversion will be
delivered within three (3) business days from the date the notice of conversion
with the original Debenture is delivered to the Company's transfer agent.

5. No provision of this Debenture shall alter or impair the obligation of
the Company, which is absolute and unconditional, to pay the principal of, and
interest on, this Debenture at the time, place, and rate, and in the coin or
currency, herein prescribed. This Debenture and all other Debentures now or
hereafter issued of similar terms are direct obligations of the Company.

6. No recourse shall be had for the payment of the principal of, or the
interest on, this Debenture, or for any claim based hereon, or otherwise in
respect hereof, against any incorporator, shareholder, officer or director, as
such, past, present or future, of the Company or any successor corporation,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability being,
by the acceptance hereof and as part of the consideration for the issue hereof,
expressly waived and released.

7. If the Company merges or consolidates with another corporation or
sells or transfers all or substantially all of its assets to another person and
the holders of the Common Stock are entitled to receive stock, securities or
property in respect of or in exchange for Common Stock, then as a condition of
such merger, consolidation, sale or transfer, the Company and any such
successor, purchaser or transferee agree that the Debenture may thereafter be
converted on the terms and subject to the conditions set forth above into the
kind and amount of stock, securities or property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which this Debenture might have been converted immediately before
such merger, consolidation, sale or transfer, subject to adjustments which shall
be as nearly equivalent as may be practicable. In the event of any proposed
merger, consolidation or sale or transfer of all or substantially all of the
assets of the Company (a "Sale"), the Holder hereof shall have the right to
convert by delivering a Notice of Conversion to the Company within fifteen (15)
days of receipt of notice of such Sale from the Company. In the event the
Holder hereof shall elect not to convert, the

--3
<PAGE>

Company may prepay all outstanding principal and accrued interest on this
Debenture, less all amounts required by law to be deducted, upon which tender of
payment following such notice, the right of conversion shall terminate.

8. The Holder of the Debenture, by acceptance hereof, agrees that this
Debenture is being acquired for investment and that such Holder will not offer,
sell or otherwise dispose of this Debenture or the Shares of Common Stock
issuable upon conversion thereof except under circumstances which will not
result in a violation of the Act or any applicable state Blue Sky or foreign
laws or similar laws relating to the sale of securities.

9. This Debenture shall be governed by and construed in accordance with
the laws of the State of New York. Each of the parties consents to the
jurisdiction of the federal courts whose districts encompass any part of the
City of New York or the state courts of the State of New York sitting in the
City of New York in connection with any dispute arising under this Agreement and
hereby waives, to the maximum extent permitted by law, any objection, including
any objection based ON FORUM NON COVENIENS, to the bringing of any such
proceeding in such jurisdictions.

10. The following shall constitute an "Event of Default":

a. The Company shall default in the payment of principal or
interest on this Debenture and same shall continue for a
period of three (3) days; or

b. Any of the representations or warranties made by the Company
herein, in the Securities Purchase Agreement, or in any
agreement, certificate or financial or other written
statements heretofore or hereafter furnished by the Company in
connection with the execution and delivery of this Debenture
or the Securities Purchase Agreement shall be false or
misleading in any material respect at the time made; or

c: The Company fails to issue shares of Common Stock to the
Holder or to cause its Transfer Agent to issue shares of
Common Stock upon exercise by the Holder of the conversion
rights of the Holder in accordance with the terms of this
Debenture, fails to transfer or to cause its Transfer Agent to
transfer any certificate for shares of Common Stock issued to
the Holder upon conversion of this Debenture and when required
by this Debenture or the Registration Rights Agreement, and
such transfer is otherwise lawful, or fails to remove any
restrictive legend or to cause its Transfer Agent to transfer
on any certificate or any shares of Common Stock issued to the
Holder upon conversion of this Debenture as and when required
by this Debenture, the Agreement or the Registration Rights
Agreement and such legend removal is otherwise lawful, and any
such failure shall continue uncured for five (5) business
days.

d. The Company shall fail to perform or observe, in any material
respect, any other covenant, term, provision, condition,
agreement or obligation of the Company under this Debenture
and such failure shall continue uncured for a period of thirty
(30) days after written notice from the Holder of such
failure; or

--4
<PAGE>

e. The Company shall (1) admit in writing its inability to pay
its debts generally as they mature; (2) make an assignment for
the benefit of creditors or commence proceedings for its
dissolution; or (3) apply for or consent to the appointment of
a trustee, liquidator or receiver for its or for a substantial
part of its property or business; or

f. A trustee, liquidator or receiver shall be appointed for the
Company or for a substantial part of its property or business
without its consent and shall not be discharged within sixty
(60) days after such appointment; or

g. Any governmental agency or any court of competent jurisdiction
at the instance of any governmental agency shall assume
custody or control of the whole or any substantial portion of
the properties or assets of the Company and shall not be
dismissed within sixty (60) days thereafter; or

h. Any money judgment, writ or warrant of attachment, or similar
process in excess of One Hundred Thousand ($100,000) Dollars
in the aggregate shall be entered or filed against the Company
or any of its properties or other assets and shall remain
unpaid, unvacated, unbonded or unstayed for a period of sixty
(60) days or in any event later than five (5) days prior to
the date of any proposed sale thereunder; or

i. Bankruptcy, reorganization, insolvency or liquidation
proceedings or other proceedings for relief under any
bankruptcy law or any law for the relief of debtors shall be
instituted by or against the Company and, if instituted
against the Company, shall not be dismissed within sixty (60)
days after such institution or the Company shall by any action
or answer approve of, consent to, or acquiesce in any such
proceedings or admit the material allegations of, or default
in answering a petition filed in any such proceeding; or

j. The Company shall have its Common Stock suspended or delisted
from an exchange or over-the-counter market from trading for
in excess of two trading days; provided, however, that so
long as the Common Stock continues to be quoted on the NASDAQ
Over-the Counter System, it shall not constitute a default
hereunder.

Then, or at any time thereafter, and in each and every such case, unless such
Event of Default shall have been waived in writing by the Holder (which waiver
shall not be deemed to be a waiver of any subsequent default) at the option of
the Holder and in the Holder's sole discretion, the Holder may consider this
Debenture immediately due and payable, without presentment, demand, protest or
notice of any kinds, all of which are hereby expressly waived, anything herein
or in any note or other instruments contained to the contrary notwithstanding,
and the Holder may immediately enforce any and all of the Holder's rights and
remedies provided herein or any other rights or remedies afforded by law.

11. Nothing contained in this Debenture shall be construed as conferring
upon the Holder the right to vote or to receive dividends or to consent or
receive notice as a shareholder in respect of any meeting of shareholders or any
rights whatsoever as a shareholder of the Company, unless and to the extent
converted in accordance with the terms hereof.

--5
<PAGE>

IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed by an officer thereunto duly authorized.

Dated: November 6, 1997

VYREX CORPORATION

By:
---------------------

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<PAGE>

EXHIBIT A

NOTICE OF CONVERSION

(To be Executed by the Registered Holder in order to Convert the Debenture)

The undersigned hereby irrevocably elects to convert $ ________________ of
the principal amount of the above Debenture No. ___ into Shares of Common Stock
of VYREX CORPORATION (the "Company") according to the conditions hereof, as of
the date written below.

Date of Conversion*
----------------------------------------------------------

Applicable Conversion Price
--------------------------------------------------

Signature
--------------------------------------------------------------------
[Name]

Address:
----------------------------------------------------------------------
----------------------------------------------------------------------

* This original Debenture and Notice of Conversion must be received by the
Company's transfer agent by the third business date following the Date of
Conversion.

--7

<PAGE>

Exhibit 4.11

FORM OF SECURITIES PURCHASE AGREEMENT DATED NOVEMBER 6, 1997,
BETWEEN THE REGISTRANT AND HOLDER OF THE DEBENTURES

<PAGE>

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT, dated as of the date of acceptance
set forth below, is entered into by and between Vyrex Corporation, a Nevada
corporation, with headquarters located at 2159 Avenida de la Playa, La Jolla,
California 92037-3215 ("COMPANY") and the undersigned (the "BUYER").

W I T N E S S E T H:

WHEREAS, the Company and the Buyer are executing and delivering this
Agreement in reliance upon certain exemptions from securities registration
afforded, INTER ALIA, by Rule 506 under Regulation D ("REGULATION D") as
promulgated by the United States Securities and Exchange Commission (the "SEC")
under the Securities Act of 1933, as amended (the "1933 ACT"), and/or Section
4(2) of the 1933 Act; and

WHEREAS, the Buyer wishes to purchase, upon the terms and subject to
the conditions of this Agreement, 6% Convertible Debentures (the "DEBENTURES"),
of the Company which will be convertible into shares of Common Stock, $.001 par
value per share (the "COMMON STOCK"), of the Company upon the terms and subject
to the conditions of such Debentures (the Common Stock and the Debentures
sometimes referred to herein as the "SECURITIES"), and subject to acceptance of
this Agreement by the Company.

NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:

1. AGREEMENT TO PURCHASE; PURCHASE PRICE.

a. PURCHASE. The undersigned hereby agrees to purchase from the
Company up to $2,000,000 in principal amount of Debentures, $500,000 principal
amount at the Closing Date as defined below, and the balance as more
specifically set forth in PARA4(j) hereof. The purchase price for each
Debenture shall be 100% of the principal amount of such Debenture (the "PURCHASE
PRICE") and shall be payable in United States Dollars. The Debentures offered
hereby are part of an aggregate offering of up to $4,000,000 in principal amount
of Debentures, including $1,000,000 principal amount at the First Closing. In
the event that any buyer in the offering does not fulfill its obligation to
purchase Additional Debentures (as defined in PARA4(j) hereof), then the Buyer
shall have the right, but not the obligation to purchase such Additional
Debentures.

b. FORM OF PAYMENT. The Buyer shall pay the Purchase Price for each
Debenture by delivering immediately available good funds in United States
Dollars to the escrow agent (the "ESCROW AGENT") identified in the Joint Escrow
Instructions attached hereto as ANNEX II (the "JOINT ESCROW INSTRUCTIONS") as
set forth below. Promptly following payment by the Buyer to the Escrow Agent of
the Purchase Price of the Debenture, the Company shall deliver the Debenture
duly executed on behalf of the Company to the Escrow Agent. By

1
<PAGE>

signing this Agreement, the Buyer and the Company, and subject to acceptance by
the Escrow Agent, each agrees to all of the terms and conditions of, and becomes
a party to, the Joint Escrow Instructions, all of the provisions of which are
incorporated herein by this reference as if set forth in full.

c. METHOD OF PAYMENT. Payment into escrow of the Purchase Price for
each Debenture shall be made by wire transfer of funds to:

Morse, Zelnick, Rose & Lander, LLP
450 Park Avenue, Suite 902
New York, New York 10022

Account Name: Morse, Zelnick, Rose & Lander, LLP
Attorney Trust Account
The Chase Manhattan Bank
ABA #: 021000021
Account No.: 967086639
F/B/O Vyrex Corporation

Not later than 1:00 p.m., New York time, on the date which is one (1) New
York Stock Exchange trading day after the Company shall have accepted this
Agreement and returned a signed counterpart of this Agreement to the Escrow
Agent by facsimile (the "Closing Date"), the Buyer shall deposit with the Escrow
Agent the Purchase Price for the initial $500,000 Debenture, in currently
available funds. Time is of the essence with respect to such payment on the
Closing Date and each Additional Closing Date (as defined in PARA4j hereof), and
failure by the Buyer to make such payment, shall allow the Company to cancel
this Agreement.

2. BUYER REPRESENTATIONS, WARRANTIES, ETC.; ACCESS TO INFORMATION;
INDEPENDENT INVESTIGATION.

The Buyer represents and warrants to, and covenants and agrees with,
the Company as follows:

a. Without limiting Buyer's right to sell the Common Stock pursuant
to the Registration Statement as defined in the Registration Rights Agreement,
the Buyer is purchasing the Debentures and will be acquiring the shares of
Common Stock issuable upon conversion of the Debentures for its own account for
investment only and not with a view towards the public sale or distribution
thereof and not with a view to or for sale in connection with any distribution
thereof;

b. The Buyer is (i) an "ACCREDITED INVESTOR" as that term is defined
in Rule 501 of the General Rules and Regulations under the 1933 Act by reason of
Rule 501(a)(3), and (ii) experienced in making investments of the kind described
in this Agreement and the related documents, (iii) able, by reason of the
business and financial experience of its officers (if an entity) and
professional advisors (who are not affiliated with or compensated in any way by
the Company or any of its affiliates or selling agents), to protect its own
interests in connection

2
<PAGE>

with the transactions described in this Agreement, and the related documents,
and (iv) able to afford the entire loss of its investment in the Securities;

c. All subsequent offers and sales of the Debentures and the shares
of Common Stock issuable upon conversion of, or issued as interest on, the
Debentures (the "SHARES" or "COMMON STOCK" and, together with the Debentures,
the "SECURITIES") by the Buyer shall be made pursuant to registration of the
Shares under the 1933 Act or pursuant to an exemption from registration;

d. The Buyer understands that the Debentures are being offered and
sold, and the Shares are being offered, to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities
laws and that the Company is relying upon the truth and accuracy of, and the
Buyer's compliance with, the representations, warranties, agreements,
acknowledgments and understandings of the Buyer set forth herein in order to
determine the availability of such exemptions and the eligibility of the Buyer
to acquire the Debentures and to receive an offer of the Shares, and Buyer shall
indemnify and hold harmless the Company from and against any liability incurred
by the Company proximately caused by any breach thereof by Buyer;

e. The Buyer and its advisors, if any, have been furnished with all
materials relating to the business, finances and operations of the Company and
materials relating to the offer and sale of the Debentures and the offer of the
Shares which have been requested by the Buyer, including ANNEX VI hereto. The
Buyer and its advisors, if any, have been afforded the opportunity to ask
questions of the Company and have received complete and satisfactory answers to
any such inquiries. Without limiting the generality of the foregoing, the Buyer
has also had the opportunity to obtain and to review the Company's (1) Annual
Report on Form 10-KSB for the fiscal year ended December 31, 1996, as amended,
(2) Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31, 1997
and June 30, 1997, (3) Proxy Statement for Annual Meeting of Stockholders held
June 27, 1997, and (4) Registration Statement on Form SB-2 (file # 33-99880)
(the "COMPANY'S SEC DOCUMENTS");

f. The Buyer understands that its investment in the Securities
involves a high degree of risk;

g. The Buyer understands that no United States federal or state
agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities;

h. This Agreement has been duly and validly authorized, executed and
delivered on behalf of the Buyer and is a valid and binding agreement of the
Buyer enforceable in accordance with its terms, subject as to enforceability to
general principles of equity and to bankruptcy, insolvency, moratorium and other
similar laws affecting the enforcement of creditors' rights generally;

i. Neither Buyer, nor any affiliate of Buyer, shall enter into, any
put option, short position, or other similar position with respect to the
Debentures or the Shares;

3
<PAGE>

provided, however, that the foregoing shall not in any manner restrict the Buyer
from selling any Shares simultaneous with, or following the delivery of a
Conversion Notice.

j. Notwithstanding the provisions hereof or of the Debentures, in no
event, other than the automatic conversion of the outstanding amount of a
Debenture at maturity, shall the holder be entitled to convert any Debenture to
the extent after such conversion, the sum of (1) the number of shares of Common
Stock beneficially owned by the Buyer and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unconverted portion of the Debenture), and (2) the number of shares of Common
Stock issuable upon the conversion of the Debenture with respect to which the
determination of this proviso is being made, would result in beneficial
ownership by the Buyer and its affiliates of more than 4.9% of the outstanding
shares of Common Stock. For purposes of the proviso to the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Securities Exchange Act of 1934, as amended, and Regulation
13 D-G thereunder, except as otherwise provided in clause (1) of such proviso.

3. COMPANY REPRESENTATIONS, ETC.

The Company represents and warrants to the Buyer that:

a. CONCERNING THE SHARES. There are no preemptive rights of any
stockholder of the Company, as such, to acquire the Common Shares;

b. REPORTING COMPANY STATUS. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Nevada. The Company has registered its Common Stock pursuant to Section 12 of
the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and the
Common Stock is listed and traded on the NASDAQ/Small Cap. The Company has
received no notice, either oral or written, with respect to the continued
eligibility of the Common Stock for such listing;

c. AUTHORIZED SHARES. The Company has sufficient authorized and
unissued Shares as may be reasonably necessary to effect the conversion of the
Debentures. The Shares have been duly authorized and, when issued upon
conversion of, or as interest on, the Debentures, will be duly and validly
issued, fully paid and non-assessable and will not subject the holder thereof to
personal liability by reason of being such holder;

d. SECURITIES PURCHASE AGREEMENT; REGISTRATION RIGHTS AGREEMENT AND
STOCK. This Agreement and the Registration Rights Agreement, the form of which
is attached hereto as ANNEX IV (the "REGISTRATION RIGHTS AGREEMENT"), and the
transactions contemplated thereby, have been duly and validly authorized by the
Company, this Agreement has been duly executed and delivered by the Company and
this Agreement is, and the Registration Rights Agreement, when executed and
delivered by the Company, will be, valid and binding agreements of the Company
enforceable in accordance with their respective terms, subject as to
enforceability to general principles of equity and to bankruptcy, insolvency,
moratorium, and other similar laws affecting the enforcement of creditors'
rights generally; and the Debenture will be duly and validly authorized and,
when executed and delivered on behalf of the

4
<PAGE>

Company in accordance with this Agreement, will be a valid and binding
obligation of the Company in accordance with its terms, subject to general
principles of equity and to bankruptcy, insolvency, moratorium, or other similar
laws affecting the enforcement of creditors' rights generally;

e. NON-CONTRAVENTION. The execution and delivery of this Agreement
and the Registration Rights Agreement by the Company, the issuance of the
Securities, and the consummation by the Company of the other transactions
contemplated by this Agreement, the Registration Rights Agreement, and the
Debentures do not and will not conflict with or result in a breach by the
Company of any of the terms or provisions of, or constitute a default under (i)
the articles of incorporation or by-laws of the Company, (ii) any indenture,
mortgage, deed of trust, or other material agreement or instrument to which the
Company is a party or by which it or any of its properties or assets are bound,
including any listing agreement for the Common Stock except as herein set forth,
(iii) any existing applicable law, rule, or regulation or any applicable decree,
judgment, or (iv) order of any court, United States federal or state regulatory
body, administrative agency, or other governmental body having jurisdiction over
the Company or any of its properties or assets, except such conflict, breach or
default which would not have a material adverse effect on the transactions
contemplated herein;

f. APPROVALS. No authorization, approval or consent of any court,
governmental body, regulatory agency, self-regulatory organization, or stock
exchange or market or the Stockholders of the Company is required to be obtained
by the Company for the issuance and sale of the Securities to the Buyer as
contemplated by this Agreement, except such authorizations, approvals and
consents that have been obtained;

g. SEC FILINGS. None of the SEC Filings with the Securities and
Exchange Commission since January 1, 1996 contained, at the time they were
filed, any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements made
therein in light of the circumstances under which they were made, not
misleading. The Company has since January 1, 1996 timely filed all requisite
forms, reports and exhibits thereto with the Securities and Exchange Commission;

h. ABSENCE OF CERTAIN CHANGES. Since January 1, 1997, there has
been no material adverse change and no material adverse development in the
business, properties, operations, financial condition, or results of operations
of the Company, except as disclosed in ANNEX VI or in the documents referred to
in Section 2(e) hereof;

i. FULL DISCLOSURE. There is no fact known to the Company (other
than general economic conditions known to the public generally) or as disclosed
in the documents referred to in Section 2(e), that has not been disclosed in
writing to the Buyer that (i) could reasonably be expected to have a material
adverse effect on the condition (financial or otherwise) or in the earnings,
business affairs, properties or assets of the Company or (ii) could reasonably
be expected to materially and adversely affect the ability of the Company to
perform its obligations pursuant to this Agreement;

j. ABSENCE OF LITIGATION. Except as set forth in ANNEX VI hereto,
and in the documents referred to in Section 2(e), which the Buyer has reviewed,
there is no action,

5
<PAGE>

suit, proceeding, inquiry or investigation before or by any court, public board
or body pending or, to the knowledge of the Company or any of its subsidiaries,
threatened against or affecting the Company or any of its subsidiaries, wherein
an unfavorable decision, ruling or finding would have a material adverse effect
on the properties, business, condition (financial or other), results of
operations or prospects of the Company and its subsidiaries taken as a whole or
the transactions contemplated by this Agreement or any of the documents
contemplated hereby or which would adversely affect the validity or
enforceability of, or the authority or ability of the Company to perform its
obligations under, this Agreement or any of such other documents;

k. ABSENCE OF EVENTS OF DEFAULT. Except as set forth in ANNEX VI
hereto, no Event of Default, as defined in the respective agreement to which the
Company is a party, and no event which, with the giving of notice or the passage
of time or both, would become an Event of Default (as so defined), has occurred
and is continuing, which would have a material adverse effect on the Company's
financial condition or results of operations;

l. NO DEFAULT. The Company is not in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust or other material instrument
or agreement to which it is a party or by which it or its property is bound, and
neither the execution, nor the delivery by the Company, nor the performance by
the Company of its obligations under this Agreement or the Debentures, other
than the conversion provision thereof, will conflict with or result in the
breach or violation of any of the terms or provisions of, or constitute a
default or result in the creation or imposition of any lien or charge on any
assets or properties of the Company under, any material indenture, mortgage,
deed of trust or other material agreement applicable to the Company or
instrument to which the Company is a party or by which it is bound or any
statute or the Articles of Incorporation or By-Laws of the Company, or any
decree, judgment, order, rule or regulation of any court or governmental agency
or body having jurisdiction over the Company or its properties, or the Company's
listing agreement for its Common Stock;

m. PRIOR ISSUES. During the twelve (12) months preceding the date
hereof, the Company has not issued any securities except as set forth in the
documents listed in PARA2e hereof. Except as set forth in ANNEX VI hereto, no
person holds any unfulfilled registration rights with respect to any securities
of the Company.

4. CERTAIN COVENANTS AND ACKNOWLEDGMENTS.

a. TRANSFER RESTRICTIONS. The Buyer acknowledges that (1) the
Debentures have not been and are not being registered under the provisions of
the 1933 Act and, except as provided in the Registration Rights Agreement, the
Shares have not been and are not being registered under the 1933 Act, and may
not be transferred unless (A) subsequently registered thereunder or (B) the
Buyer shall have delivered to the Company an opinion of counsel, reasonably
satisfactory in form, scope and substance to the Company and its transfer agent,
to the effect that the Securities to be sold or transferred may be sold or
transferred pursuant to an exemption from such registration; (2) any sale of the
Securities made in reliance on Rule 144 promulgated under the 1933 Act may be
made only in accordance with the terms of said Rule and further, if said Rule is
not applicable, any resale of such Securities under circumstances in which the
seller, or the person through whom the sale is made, may be deemed to be an

6
<PAGE>

underwriter, as that term is used in the 1933 Act, may require compliance with
some other exemption under the 1933 Act or the rules and regulations of the SEC
thereunder; and (3) neither the Company nor any other person is under any
obligation to register the Securities (other than pursuant to the Registration
Rights Agreement) under the 1933 Act or to comply with the terms and conditions
of any exemption thereunder.

b. RESTRICTIVE LEGEND. The Buyer acknowledges and agrees that the
Debentures, and, until such time as the Common Stock has been registered under
the 1933 Act as contemplated by the Registration Rights Agreement and sold in
accordance with such Registration Statement, the shares of Common Stock issued
to the Holder upon conversion of the Debentures shall bear a restrictive legend
in substantially the following form (and a stop-transfer order may be placed
against transfer of the Debenture and such shares of Common Stock):

NEITHER THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE
HEREOF HAVE BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE OR
CANADIAN PROVINCE, OR UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"). THE SECURITIES ARE RESTRICTED AND MAY NOT BE
OFFERED, RESOLD, PLEDGED OR TRANSFERRED EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS.

c. REGISTRATION RIGHTS AGREEMENT. The parties hereto agree to enter
into the Registration Rights Agreement, in substantially the form attached
hereto as ANNEX IV, on or before the Initial Closing Date.

d. FILINGS. The Company undertakes and agrees to make all necessary
filings in connection with the sale of the Debentures to the Buyer under any
United States laws and regulations, or by any domestic securities exchange or
trading market, and to provide a copy thereof to the Buyer promptly after such
filing.

e. REPORTING STATUS. So long as the Buyer beneficially owns any of
the Debentures, the Company shall file all reports required to be filed with the
SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "1934 ACT"), and the Company shall not terminate its status as an
issuer required to file reports under the 1934 Act even if the 1934 Act or the
rules and regulations thereunder would permit such termination.

f. USE OF PROCEEDS. The Company will use the proceeds from the sale
of the Debentures (excluding amounts paid by the Company for legal fees and
finder's fees in connection with the sale of the Debentures) for internal
working capital purposes , and shall not, directly or indirectly, use such
proceeds for any loan to or investment in any other

7
<PAGE>

corporation, partnership enterprise or other person, except for wholly owned
subsidiaries or for the purpose of making acquisitions of businesses.

g. CERTAIN AGREEMENTS. For a period of eighteen (18) months
following the First Closing, the Purchaser shall have a five (5) day right of
first refusal (together with any other purchasers in this offering) to purchase
any debt or equity securities of the Company which the Company intends to offer
in a private placement transaction. However, this provision shall not apply to
(x) the issuance of securities (other than for cash) in connection with a
merger, consolidation, sale of assets, disposition of a business, product or
license by the Company, strategic alliance, bank loan or agreement, compensation
to employees or consultants, or the exercise of outstanding options, or (y) the
exchange of the capital stock for assets, stock, partnership, limited liability
company, or other joint venture interests.

h. AVAILABLE SHARES. The Company shall have at all times authorized
and reserved for issuance, free from preemptive rights, shares of Common Stock
sufficient to yield the number of Common Stock issuable at conversion as may be
required to satisfy the conversion rights of the Buyer pursuant to the terms and
conditions of the Debentures.

i. WARRANTS. The Company agrees to issue to Buyer at the Closing,
transferable divisible warrants (the "Warrants") for 8,500 shares of Common
Stock. Such Warrants shall bear an exercise price per share of Common Stock as
follows: 125% of the Market Price, as defined in the Debenture, on the Closing
Date, and shall be exercisable two (2) business days following issuance, and
for a period of three (3) years thereafter, in the form annexed hereto as ANNEX
V, together with demand registration rights. At each Additional Closing Date,
the Company shall issue to the Buyer at each such closing, additional Warrants
at the rate of one Warrant for the purchase of 17,000 shares of Common Stock for
each $1 million of Additional Debentures purchased, or pro rated for any
portion thereof.

j. The Buyer irrevocably agrees to purchase up to an additional
$1,350,000 of Debentures (the "ADDITIONAL DEBENTURES") in a series of tranches,
commencing ninety (90) days after the effective date of the registration
statement contemplated by the Registration Rights Agreement attached hereto as
ANNEX IV (the "EFFECTIVE DATE") and ending 21 months following the Effective
Date, upon the same terms and conditions and substantially in the form as those
applicable to the initial Debentures issued pursuant to the Agreement except as
set forth in 4(j)(d) and the maturity date of such Additional Debenture shall be
eighteen (18) months from the Additional Closing Date on which such Additional
Debenture was issued (each an "ADDITIONAL CLOSING DATE"). Buyer's obligation to
purchase the Additional Debentures, on each Additional Closing Date (which shall
occur not less than thirty (30) days apart), shall be contingent upon the
satisfaction of the following conditions:

(a) The Company shall give the Buyer ten (10) days prior written
notice and at least thirty (30) days shall have lapsed since the prior tranche;

(b) The Debentures issued in each tranche shall be not less than
$100,000 nor in excess of $225,000 principal amount;

8
<PAGE>

(i) the Registration Statement required to be filed under
the Registration Rights Agreement, is effective;

(ii) The representations and warranties contained in
Section 3 shall be true and correct in all material respects;

(iii) The dollar value of the average daily trading volume
of the Company's Common Stock for the previous three months must exceed $40,000
per day;

(iv) The number of shares issuable upon conversion of the
Debentures, together with the Shares of Common Stock issued prior thereto
pursuant to this Agreement, will not exceed 20% of the outstanding Common Shares
of the Company.

(d) The conversion price for shares to be issued upon conversion
of the Additional Debentures shall be 86% of the Market Price on the Additional
Closing Date.

(e) In the event that the Company does not exercise its option
to require the Buyer to purchase at least $1,325,000 of Debentures (including
the $500,000 at the First Closing), the Company will, not later than eighteen
(18) months after the date hereof, issue to the Buyer an additional 10,000
Warrants upon the terms and conditions of PARA4i hereof. In any event, the
Company's obligations under the Registration Rights Agreement, shall be to
register the necessary Common Stock underlying $4,000,000 in Debentures, and the
shares underlying 68,000 Warrants to purchase Common Stock.

5. TRANSFER AGENT INSTRUCTIONS.

a. Promptly following the delivery by the Buyer of the Purchase
Price for each Debenture in accordance with Section 1(c) hereof, the Company
will irrevocably instruct its transfer agent to issue Common Stock from time to
time upon conversion of the Debenture in such amounts as specified from time to
time by the Company to the transfer agent, bearing the restrictive legend
specified in Section 4(b) of this Agreement prior to registration of the Shares
under the 1933 Act, registered in the name of the Buyer or its nominee and in
such denominations to be specified by the Buyer in connection with each
conversion of the Debenture. The Company warrants that no instruction other
than such instructions referred to in this Section 5 and stop transfer
instructions to give effect to Section 4(a) hereof prior to registration and
sale of the Shares under the 1933 Act will be given by the Company to the
transfer agent and that the Shares shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this
Agreement, the Registration Rights Agreement, and applicable law. Nothing in
this Section shall affect in any way the Buyer's obligations and agreement to
comply with all applicable securities laws upon resale of the Securities. If
the Buyer provides the Company with an opinion of counsel reasonably
satisfactory to the Company and its transfer agent that registration of a resale
by the Buyer of any of the Securities in accordance with clause (1)(B) of
Section 4(a) of this Agreement is not required under the 1933 Act, the Company
shall (except as provided in clause (2) of Section 4(a) of this Agreement)
permit the transfer of the Securities and, in the case of the Shares,

9
<PAGE>

promptly instruct the Company's transfer agent to issue one or more certificates
for Common Stock without legend in such name and in such denominations as
specified by the Buyer.

b. The Company will permit the Buyer to exercise its right to
convert the Debenture and/or exercise the Warrant, as the case may be,by
telecopying an executed and completed Notice of Conversion or Exercice Notice,
as the case may be, in the respective forms attached to the Form of Debenture
attached hereto as ANNEX I and Form of Warrant attached hereto as Annex V, to
the Company and delivering within three business days thereafter, the original
Notice of Conversion and the Debenture representing the Shares, or the original
Exercise Notice and Warrant, to the Company by express courier to the Transfer
Agent. Each date on which a Notice of Conversion or Exercise Notice is
telecopied to and received by the Company in accordance with the provisions
hereof shall be deemed a Conversion Date or exercise date.. The Company will
transmit, or cause to be transmitted, the certificates representing the Shares
of Common Stock issuable upon conversion of any Debenture (together with a
replacement Debenture representing any principal amount not so converted) or
exercise of the Warrant (together with a replacement Warrant representing any
portion not exercised) to the Buyer via express courier, by electronic transfer
or otherwise, within three (3) business days after receipt by the Company or its
transfer agent of the original Notice of Conversion and the Debenture
representing the Shares to be converted or the original Exercise Notice and
Warrant (the "DELIVERY DATE").

d. In lieu of delivering physical certificate representing the
Common Stock issuable upon conversion of a Debenture or exercise of a Warrant,
provided the company's transfer agent is participating in the Depository Trust
Company ("DTC") Fast Aautomated Securities Transfer program, upon request of the
Buyer and its compliance with the provisions contained in this paragraph, so
long as the certificates do not bear a legend and the Buyer thereof is not
obligated to return such certificate for the placement of a legend thereon, the
Company shall use its best efforts to cause its transfer agent to electronically
transmit the Common stock issuable upon conversion or exercise to the Buyer by
crediting the account of Buyer's Prime Broker with DTC through its Deposit
Withdrawal Agent Commission system.

e. The Company understands that a delay in the issuance of the
Shares of Common Stock beyond the Delivery Date could result in economic loss to
the Buyer. As compensation to the Buyer for such loss, the Company agrees to
pay late payments to the Buyer for late issuance of Shares upon Conversion in
accordance with the following schedule (where "NO. BUSINESS DAYS LATE" is
defined as the number of business days beyond three (3) business days from
Delivery Date):

Late Payment For Each
$10,000 of Debenture
No. Business Days Late Principal Amount Being Converted
---------------------- --------------------------------

1 $100
2 $200
3 $300
4 $400
5 $500

10
<PAGE>

6 $600
7 $700
8 $800
9 $900
10 $1,000
GREATER THAN 10 $1,000 +$200 for each Business Day
Late beyond 10 days

The Company shall pay any payments incurred under this Section in immediately
available funds upon demand. Nothing herein shall limit Buyer's right to pursue
actual damages for the Company's failure to issue and deliver Common Stock to
the Buyer. Furthermore, in addition to any other remedies which may be
available to the Buyer, in the event that the Company fails for any reason to
effect delivery of such shares of Common Stock within five business days after
the Delivery Date, the Buyer will be entitled to revoke the relevant Notice of
Conversion by delivering a notice to such effect to the Company whereupon the
Company and the Buyer shall each be restored to their respective positions
immediately prior to delivery of such Notice of Conversion.

6. DELIVERY INSTRUCTIONS.

Each Debenture shall be delivered by the Company to the Escrow Agent
pursuant to Section 1(b) hereof, or a delivery against payment basis at each
closing.

7. CLOSING DATE.

The date and time of the issuance and sale of the initial $1,000,000
Debenture (the "CLOSING DATE" ) shall occur no later than 12:00 Noon, New York
time on the second NYSE trading day after the fulfillment or waiver of all
Closing conditions pursuant to Sections 8 and 9, or such other mutually agreed
to time. The Closing shall occur on such date at the offices of the Escrow
Agent. Notwithstanding anything to the contrary contained herein, the Escrow
Agent will be authorized to release the funds representing the Purchase Price
for the Debenture, and the Debenture only upon satisfaction of the conditions
set forth in Section 8 hereof. The Additional Debentures shall be issued and
sold on the Additional Closing Dates in accordance with this section and the
Joint Escrow Instructions.

8. CONDITIONS TO THE COMPANY'S OBLIGATION TO SELL.

The Buyer understands that the Company's obligation to sell the
Debentures on the Closing Date and Additional Closing Dates to the Buyer
pursuant to this Agreement is conditioned upon:

a. The receipt and acceptance by the Buyer of this Agreement as
evidenced by execution of this Agreement by the Buyer for at least One Million
Three Hundred Thousand ($1,000,000.00) Dollars in Debenture (or such lesser
amount as the Company, in its sole discretion, shall determine);

11
<PAGE>

b. Delivery by the Buyer to the Escrow Agent of good funds as
payment in full of an amount equal to the Purchase Price for the Debenture in
accordance with Section 1(c) hereof;

c. The accuracy on the Closing Date and each Additional Closing Date
of the representations and warranties of the Buyer contained in this Agreement
as if made on the Closing Date and the performance by the Buyer on or before the
Closing Date and each Additional Closing Date of all covenants and agreements of
the Buyer required to be performed on or before the Closing Date and each
Additional Closing Date;

d. There shall not be in effect any law, rule or regulation
prohibiting or restricting the transactions contemplated hereby, or requiring
any consent or approval which shall not have been obtained.

9. CONDITIONS TO THE BUYER'S OBLIGATION TO PURCHASE.

The Company understands that the Buyer's obligation to purchase the
Debentures on the Closing Date and each Additional Closing Date is conditioned
upon:

a. Acceptance by the Company of this Agreement for the sale of
Debentures, as indicated by execution of this Agreement;

b. Delivery by the Company to the Escrow Agent of the appropriate
Debenture in accordance with this Agreement;

c. The accuracy in all material respects on the Closing Date and
each Additional Closing Date of the representations and warranties of the
Company contained in this Agreement as if made on the Closing Date and such
Additional Closing Date and the performance by the Company on or before the
Closing Date and each Additional Closing Date of all covenants and agreements of
the Company required to be performed on or before the Closing Date and such
Additional Closing Date, and as to Additional Debentures, the conditions set
forth in PARA4j; and

d. On the Closing Date and each Additional Closing Date, the Buyer
having received an opinion of counsel for the Company, dated the Closing Date
and each Additional Closing Date, in form, scope and substance reasonably
satisfactory to the Buyer, to the effect set forth in ANNEX III attached hereto,
and on the First Closing Date only, the Registration Rights Agreement annexed
hereto as ANNEX IV and the 68,000 Warrant shares.

10. GOVERNING LAW; COST OF COLLECTION; MISCELLANEOUS.

12
<PAGE>

objection, including any objection based on FORUM NON CONVENIENS, to the
bringing of any such proceeding in such jurisdictions. A facsimile transmission
of this signed Agreement shall be legal and binding on all parties hereto. This
Agreement may be signed in one or more counterparts, each of which shall be
deemed an original. The headings of this Agreement are for convenience of
reference and shall not form part of, or affect the interpretation of, this
Agreement. If any provision of this Agreement shall be invalid or unenforceable
in any jurisdiction, such invalidity or unenforceability shall not affect the
validity or enforceability of the remainder of this Agreement or the validity or
enforceability of this Agreement in any other jurisdiction. This Agreement may
be amended only by an instrument in writing signed by the party to be charged
with enforcement. This Agreement supersedes all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof. Any costs (including attorneys fees and disbursements) incurred by
Buyer with respect to any default by the Company under this Agreement, the
Registration Rights Agreement, or the Debenture, shall be the obligation of the
Company.

11. NOTICES. Any notice required or permitted hereunder shall be
given in writing (unless otherwise specified herein) and shall be deemed
effectively given upon, (a) by personal delivery or fax (with written
confirmation copy by recognized overnight delivery service), or (b) one business
day after deposit with a nationally recognized overnight delivery service such
as Federal Express, with postage and fees prepaid, addressed to each of the
other parties thereunto entitled at the following addresses, or at such other
addresses as a party may designate by ten days advance written notice to each of
the other parties hereto.

COMPANY: VYREX CORPORATION
2159 Avenida de la Playa
La Jolla, CA 92037-3215
Attn.: Steven J. Kemper
Telecopier No. (619) 459-9522

with a copy to:

David Fisher, Esq.
Fisher Thurber LLP
4225 Executive Square, Suite 1600
La Jolla, CA 92037-1483
Telecopier No. (619) 535-1616

PURCHASER: At the address set forth on the signature page of the Agreement.

with a copy to:

Krieger & Prager, Esqs.
319 Fifth Avenue
New York, New York 10016
Telecopier No. (212) 213-2077

13
<PAGE>

ESCROW AGENT: Morse, Zelnick, Rose & Lander LLP
450 Park Avenue, Suite 902
New York, NY 10022
Telecopier No. (212) 838-9190

12. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Company's
representations and warranties shall survive the execution and delivery hereof
of this Agreement and the delivery of the Debenture.

IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyer
or one of its officers thereunto duly authorized as of the date set forth below.

AGGREGATE INITIAL PURCHASE PRICE OF SUCH DEBENTURE: $ 500,000

SIGNATURES FOR ENTITIES

IN WITNESS WHEREOF, the undersigned represents that the foregoing
statements are true and correct and that it has caused this Securities Purchase
Agreement to be duly executed on its behalf this 6th day of November, 1997.

Endeavour Capital Fund, S.A.

By
--------------------------------------
Telecopier No.: 011-972 2 582 4443 (Signature of Authorized Person)
Address:
14/14 Dirvei Chaim Street
Jerusalem, 94479 Israel

--------------------------------------
Print Name and Title
- -----------------------------------
Jurisdiction of Incorporation
or Organization

This Agreement has been accepted as of the date set forth below.

VYREX CORPORATION

By:
------------------------------
Title:
Date:

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<PAGE>

ANNEX I FORM OF DEBENTURE

ANNEX II JOINT ESCROW INSTRUCTIONS

ANNEX III OPINION OF COUNSEL

ANNEX IV REGISTRATION RIGHTS AGREEMENT

ANNEX V FORM OF WARRANT

ANNEX VI COMPANY DISCLOSURE MATERIALS

15
<PAGE>

ANNEX VI

COMPANY DISCLOSURE

<PAGE>

EXHIBIT 23.1

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Vyrex Corporation
for the registration of 1,647,030 shares of its common stock and to the
incorporation by reference therein of our report dated March 3, 1997, with
respect to the financial statements of Vyrex Corporation included in its
Annual Report (Form 10-KSB) for the year ended December 31, 1996, filed with
the Securities and Exchange Commission.

/s/ ERNST & YOUNG LLP
-------------------------------
Ernst & Young LLP

San Diego, California
November 18, 1997

<PAGE>

EXHIBIT 23.2

CONSENT OF J.H. COHN LLP,
INDEPENDENT PUBLIC ACCOUNTANTS

<PAGE>

EXHIBIT 23.2

CONSENT OF J. H. COHN LLP

We consent to the incorporation by reference in this Registration Statement
on Form S-3 being filed by Vyrex Corporation (the "Company") of our report
dated February 9, 1996, which appears in the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996 (the "Form 10-KSB"), on the
financial statements of the Company as of December 31, 1995 and for the year
then ended, which are also included in the Form 10-KSB and incorporated by
reference in this Registration Statement. We also consent to the reference
to our firm under the caption "Experts" in the Registration Statement.

/s/ J. H. Cohn LLP
--------------------
J. H. Cohn LLP

San Diego, California
November 20, 1997