<PAGE>
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998
                                                         Registration No. 
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------

                          SECURITIES AND EXCHANGE COMMISSION
                               WASHINGTON, D.C.  20549

                                     -----------

                            POST-EFFECTIVE AMENDMENT NO. 2
                                          TO
                                      FORM SB-2
                                          ON
                                       FORM S-3
                               REGISTRATION STATEMENT 
                                        UNDER 
                              THE SECURITIES ACT OF 1933

                                     -----------

                            CYTOCLONAL PHARMACEUTICS INC.
                    (Name of Small Business Issuer in its Charter)

               DELAWARE                                      75-2402409
   (State or other jurisdiction of                        (I.R.S.  employer
    incorporation or organization)                     identification number)

                              9000 HARRY HINES BOULEVARD
                                      SUITE 330
                                 DALLAS, TEXAS 75235
                                    (214) 353-2922
            (Address and Telephone Number of Principal Executive Offices)

                                     -----------

                              9000 HARRY HINES BOULEVARD
                                      SUITE 330
                                 DALLAS, TEXAS 75235
(Address of Principal Place of Business or Intended Principal Place of Business)

                                     -----------

                               ARTHUR P.  BOLLON, PH.D.
                         CHAIRMAN AND CHIEF EXECUTIVE OFFICER
                            CYTOCLONAL PHARMACEUTICS INC.
                              9000 HARRY HINES BOULEVARD
                                      SUITE 330
                                 DALLAS, TEXAS 75235
                                    (214) 353-2922
              (Name, Address and Telephone Number of Agent for Service)

                                     -----------

                                      COPIES TO:
                                ROBERT H.  COHEN, ESQ.
                        MORRISON COHEN SINGER & WEINSTEIN, LLP
                                 750 LEXINGTON AVENUE
                               NEW YORK, NEW YORK 10022
                                    (212) 735-8600

                                     -----------

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

     If the only securities being registered on this form are being offered
pursuant to a dividend or interest reinvestment plans, please check the
following box. / /

     If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/

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


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

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

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

                           CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
                                                                     PROPOSED
                                                                     MAXIMUM         MAXIMUM       PROPOSED AMOUNT    
            TITLE OF EACH CLASS OF                 AMOUNT TO     OFFERING PRICE     AGGREGATE            OF           
         SECURITIES TO BE REGISTERED             BE REGISTERED    PER SECURITY    OFFERING PRICE   REGISTRATION FEE   
         ----------------------------            -------------   ---------------  ---------------  -----------------  
<S>                                              <C>             <C>              <C>              <C>
  Class A Warrants (1)..........................    312,500            --                  --             --    

  Class B Warrants (2)..........................    482,720            --                  --             --    
 
  Warrants (3)..................................    506,250            --                  --             --    

  Common Stock, par value $.01 per share, 
    issuable upon the exercise of the Class A
    Warrants (4)................................    125,000          $3.75           $468,750           $142    

  Common Stock, par value $.01 per share, 
    issuable upon the exercise of the Class B 
    Warrants (5)................................    193,088          $4.375          $844,760           $256    

  Common Stock, par value $.01 per share, 
    issuable upon the exercise of the 
    Warrants (6)................................    202,500          $3.75           $759,375           $231    

  Total......................................... $2,072,885                                             $629    
</TABLE>


- --------------
(1)  These Class A Warrants are being registered for resale by Selling
     Securityholders (defined herein), each of whom was an investor in the
     Registrant's private placement completed in August 1994 (the "1994 Bridge
     Financing").  
(2)  These Class B Warrants are being registered for resale by Selling
     Securityholders, each of whom was an investor in the Registrant's private
     placement completed in April 1995 (the "1995 Bridge Financing").  
(3)  The Warrants (the "Blair Warrants") are being registered for resale by D.H.
     Blair Investment Banking Corp. ("Blair"), who served as placement agent in
     the 1994 Bridge Financing and who rendered advice and assistance in
     structuring the 1995 Bridge Financing.  
(4)  Issuable upon the exercise of the Class A Warrants being registered for
     resale by Selling Securityholders.  
(5)  Issuable upon the exercise of the Class B Warrants being registered for
     resale by Selling Securityholders.  
(6)  Issuable upon the exercise of the Blair Warrants being registered for
     resale by Blair.  

                                     -----------

     Pursuant to Rule 416 under the Securities Act of 1933, as amended, there
are also being registered such additional shares of Common Stock as may become
issuable pursuant to anti-dilution provisions of the Class A Warrants, the Class
B Warrants and the Blair Warrants (as defined herein).

                                     -----------

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


<PAGE>

                   Subject to Completion Dated September 30, 1998 

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


                            CYTOCLONAL PHARMACEUTICS INC.
                                   
                               312,500 CLASS A WARRANTS
                               482,720 CLASS B WARRANTS
                                506,250 BLAIR WARRANTS
                            520,588 SHARES OF COMMON STOCK

     This Prospectus relates to Cytoclonal Pharmaceutics Inc.'s  (called "CPI"
or the "Company" throughout this Prospectus) (i) 312,500 Class A Warrants
("Class A Warrants") purchased by investors during the Company's bridge
financing completed in August 1994 (the "1994 Bridge Financing"), (ii) 482,720
Class B Warrants (the "Class B Warrants") purchased by investors during the
Company's bridge financing completed in April 1995 (the "1995 Bridge Financing,"
and together with the 1994 Bridge Financing, the "Bridge Financings") and (iii)
506,250 warrants (the "Blair Warrants," and together with the Class A Warrants
and Class B Warrants, the "Warrants") that the Company issued to D.H. Blair
Investment Banking Corp. ("Blair") as part of its compensation for services as
placement agent in the 1994 Bridge Financing and for rendering advice and
assistance in structuring the 1995 Bridge Financing.  The Warrants are being
offered, from time to time, on behalf of and for the account of certain
securityholders (the "Selling Securityholders") as identified under the section
entitled, "Selling Securityholders." Each Class A Warrant entitles the
registered holder thereof to purchase, at any time until November 7, 2000 (the
"Expiration Date"), 0.4 share of common stock, $.01 par value per share (the
"Common Stock"), of the Company at an exercise price equal to $3.75 per share,
subject to adjustment.  Each Class B Warrant entitles the registered holder
thereof to purchase, at any time until the Expiration Date, 0.4 share of Common
Stock at an exercise price equal to $4.375 per share, subject to adjustment. 
Each Blair Warrant entitles the registered holder thereof to purchase, at any
time until the Expiration Date, 0.4 share of Common Stock at an exercise price
equal to $3.75 per share, subject to adjustment.  See "Description of
Securities."

     The Company has agreed to pay all expenses of registration in connection
with this offering but will not receive any of the proceeds from the sale of
Warrants and underlying Common Stock by the Selling Securityholders (as defined
herein).  In the event the Warrants are fully exercised, the Company will
receive gross proceeds equal to $2,072,885, less a Solicitation Fee (as defined
herein) equal to $42,238.  See "Selling Securityholders" and "Plan of
Distribution."  

     The Company has agreed, in connection with the 1995 Bridge Financing, to
pay to Janssen-Meyers Associates, L.P.  ("JMA") a solicitation fee equal to 5%
of the aggregate exercise price of all the Class B Warrants exercised (the
"Solicitation Fee").  The exercise prices and other terms of the Warrants were
arbitrarily determined by negotiations between the Company, JMA and Blair, and
are not necessarily related to the Company's assets, book value or financial
condition, or to any other recognized criteria of value.  The Common Stock and
the Company's Class C Warrants and Class D Warrants are quoted on the Nasdaq
SmallCap Market ("Nasdaq-SCM") under the symbols "CYPH," "CYPHW" and "CYPHZ,"
respectively.  However, there can be no assurance that an active trading market
in the Company's securities will be sustained.  See "Risk Factors-Arbitrary
Determination of Offering Price" and "-Possible Delisting of Securities from the
Nasdaq Stock Market."


<TABLE>
<CAPTION>
                           EXERCISE PRICE                                                NET          
                            PER SHARE OF         TOTAL             5%               PROCEEDS TO THE   
        SECURITY            COMMON STOCK    EXERCISE PRICE   SOLICITATION FEE (1)    COMPANY (2)(3)   
        --------           --------------   --------------   --------------------   ---------------   
  <S>                      <C>              <C>              <C>                    <C>
  Class A Warrants.......      $3.75          $  468,750              n/a              $  468,750     
  Class B Warrants.......      $4.375         $  844,760          $42,238              $  802,522     
  Blair Warrants.........      $3.75          $  759,375              n/a              $  759,375     
                                              ----------          -------              ----------     
                                              ----------          -------              ----------     
      Total..............                     $2,072,885          $42,238              $2,030,647     
</TABLE>


- --------------------------
(1)  Represents Solicitation Fees payable to JMA equal to 5% of the aggregate
     exercise price of all Class B Warrants exercised.  
(2)  Assumes the exercise of all the Warrants and that the Solicitation Fee is
     paid on all the Class B Warrants that are exercised.  There can be no
     assurance that any of the Warrants will be exercised.  
(3)  Before deducting expenses of this offering, payable by the Company,
     estimated at $67,000.  

     INVESTMENT IN THESE SECURITIES IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK AND SUBSTANTIAL DILUTION.  SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS
PROSPECTUS AND "DILUTION."  

     NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.








                The date of this Prospectus is October          , 1998


<PAGE>

                                AVAILABLE INFORMATION

     The Company is a reporting Company under Section 12(g) promulgated under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and has
filed a Post-Effective Amendment No. 2 to a Registration Statement on Form SB-2
on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. with respect to the Warrants and the
underlying shares of Common Stock offered hereby.  This Prospectus, which is
part of the Registration Statement, does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.  The
Company will provide to each person who receives a Prospectus, upon written or
oral request of such person, a copy of any of the information that is
incorporated by reference in this Prospectus (not including exhibits to the
information that is incorporated by reference unless the exhibits are themselves
specifically incorporated by reference).  Written requests may be sent to the
Company at 9000 Harry Hines Boulevard, Suite 330, Dallas, Texas 75235,
Attention: Arthur B.  Bollon, Ph.D., President.  Oral requests may be made by
calling the Company at (214) 353-2922.  Also, for further information with
respect to the Company, the Common Stock and the Warrants offered hereby,
reference is hereby made to the Registration Statement and such exhibits and
schedules, which may be inspected without charge at the office of the Commission
at 450 Fifth Street, N.W., Washington, D.C.  20549 and at its regional offices
at 7 World Trade Center, New York, New York 10048.  Copies of such material may
also be obtained at prescribed rates from the Public Reference Section of the
Commission.  The Commission maintains a World Wide Web site on the Internet at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.  Statements contained in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete and in each
instance reference is made to the copy of such contract or document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.  

     The Company intends to furnish annual reports to its stockholders and
holders of its warrants, which will include financial statements audited by its
independent certified public accountants, and such other periodic reports as it
may determine to furnish or as may be required by law, including Sections 13(a)
and 15(d) promulgated under the Exchange Act.

                  INCORPORATION OF CERTAIN INFORMATION BY REFERENCE

     The following documents, previously filed with the Commission by the
Company, are hereby incorporated by reference in this Prospectus:

     1.   The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1997;

     2.   The Company's Quarterly Report on Form 10-Q for the fiscal quarter
ended June 30, 1998; 

     3.   The Company's Quarterly Report on Form 10-QSB for the fiscal quarter
ended March 31, 1998; 

     4.   The Company's Current Report on Form 8-K, dated June 12, 1998, filed
with the Commission on September 9, 1998; 

     5.   The Company's definitive proxy statement filed with the Commission, on
August 5, 1998,  pursuant to Regulation 14A promulgated under the Exchange Act;
and 
     
     6.   The description of the capital stock, including Capital Stock,  set
forth in the Company's Registration Statement filed pursuant to Section 12 of
the Exchange Act on From 8-A on October 2, 1995, and any amendment or report
filed for the purpose of updating any such description. 

     All reports and other documents subsequently filed by the Company after the
date of this Prospectus pursuant to Section 13(a), 14 or 15(d) of the Exchange
Act and prior to the termination of this offering shall be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing such documents or reports.


                                     i


<PAGE>

                                  PROSPECTUS SUMMARY
                                           
     THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS AND NOTES THERETO APPEARING
ELSEWHERE IN THIS PROSPECTUS.  UNLESS OTHERWISE INDICATED, THE INFORMATION IN
THIS PROSPECTUS DOES NOT GIVE EFFECT TO THE EXERCISE OR CONVERSION OF: (i) THE
WARRANTS; (ii) THE UNIT PURCHASE OPTION (THE "IPO UNIT PURCHASE OPTION") GRANTED
TO THE UNDERWRITERS OF THE IPO TO PURCHASE UP TO AN AGGREGATE OF 200,000 UNITS
(AS DEFINED HEREIN), INCLUDING THE SECURITIES ISSUABLE UPON THE EXERCISE
THEREOF; (iii) OUTSTANDING OPTIONS, RIGHTS AND WARRANTS AND OTHER SECURITIES
CONVERTIBLE OR EXERCISABLE INTO COMMON STOCK; (iv) CURRENTLY OUTSTANDING OPTIONS
GRANTED UNDER THE COMPANY'S 1992 STOCK OPTION PLAN (THE "1992 PLAN"); (v)
CURRENTLY OUTSTANDING OPTIONS GRANTED UNDER THE COMPANY'S 1996 STOCK OPTION PLAN
(THE "1996 PLAN"); (vi) WARRANTS (THE "PRIVATE PLACEMENT WARRANTS") ISSUED IN
CONNECTION WITH THE COMPANY'S PRIVATE PLACEMENT COMPLETED IN APRIL 1998 TO
PURCHASE UP TO AN AGGREGATE OF 335,550 SHARES OF COMMON STOCK OF THE COMPANY
(THE "1998 PRIVATE PLACEMENT") AND (vii) THE UNIT PURCHASE OPTION (THE "PRIVATE
PLACEMENT UNIT PURCHASE OPTION") GRANTED TO THE PRIVATE PLACEMENT AGENT OF THE
1998 PRIVATE PLACEMENT TO PURCHASE UNITS FOR AN AGGREGATE OF 134,207 SHARES OF
COMMON STOCK AND WARRANTS TO PURCHASE 67,108 SHARES OF COMMON STOCK.  EACH
PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.

THE COMPANY 

     Cytoclonal Pharmaceutics Inc., a Delaware corporation ("CPI" or the
"Company"), is a biopharmaceutical company focusing on the development of
diagnostic and therapeutic products for the identification, treatment and
prevention of cancer and infectious diseases.  To date, the Company has been
involved solely in research and development activities relating to several
products that are at various developmental stages.  The Company's research and
development activities relate principally to its (i) proprietary Fungal
Paclitaxel Production System, (ii) diagnostic and imaging lung cancer products,
(iii) Human Gene Discovery Program and (iv) Vaccine program.  TAXOL-TM-  (the
brand name for Paclitaxel) has been designated by the National Cancer Institute
("NCI") as the most important cancer drug introduced in the past ten years.

     The Company's strategy is to focus on its (i) collaboration with 
Bristol-Myers Squibb Company, Inc. ("Bristol-Myers Squibb") on the 
development of Paclitaxel production from Microbial Fermentation and 
Paclitaxel-specific genes, (ii) Paclitaxel treatment of Polycystic Kidney 
Disease; (iii) Human Gene Discovery Program, including a proprietary cancer 
related gene ("LCG gene") and related monoclonal antibody ("MAb") addressing 
the need for diagnosis and treatment of lung cancer, the second most common 
form of cancer and (iv) Vaccine program.  Other programs, which involve tumor 
necrosis factor-polyethylene glycol ("TNF-PEG"), a fusion protein ("IL-T"), a 
potential anti-leukemia drug ("IL-P") and anti-sense therapeutics-are being 
pursued at modest levels, and may serve as platforms for future products or 
alternatives to the two primary programs if unforeseen problems develop.  In 
addition, several of the technologies under development are complementary and 
could possibly potentiate each other.

     The Company was created in 1991 to acquire certain proprietary cancer and
viral therapeutic technology ("Wadley Technologies") developed at the Wadley
Institute in Dallas, Texas ("Wadley").  Through its own research and development
efforts and agreements with other research institutions and biotechnology
companies, the Company has acquired and developed additional proprietary
technology and rights.  The Company has not developed any commercial products,
will require significant additional financing to complete development and obtain
regulatory approvals for its proposed products which, if ever received, may take
several years.

     In August 1998, the Company entered into an exclusive world-wide license
agreement with the Regents of the University of California, Los Angeles for
domestic and foreign patents and patents pending based upon and including any
subject matter claimed in or covered by a U.S. patent pending entitled, "Peptide
Antiestrogen Compositions and Methods for Treating Breast Cancer."  The
agreement grants the Company the right to (i) make, use, sell, offer for sale,
import certain products and practice any process or method involving the patents
and (iii) sublicense the foregoing rights 


                                       1

<PAGE>

to third parties. The agreement provides for up-front and maintenance fees, 
royalty payments and milestone payments. See "Risk Factors--Royalty 
Obligations; Possible Loss of Patents and Other Proprietary Rights." 

     In June 1998, the Company entered into a license and research agreement 
with Bristol-Myers Squibb concerning two technologies related to the 
production of Paclitaxel, the active ingredient in Bristol-Myers Squibb's 
largest-selling cancer product, TAXOL-TM-.  The agreement includes fees, 
milestone payments, research and development support and minimum and 
sales-based royalties.  See "Risk Factors--Dependence upon Bristol-Myers 
Squibb." 

     The Company has received an exclusive worldwide license to use patented 
fungal technology to synthesize Paclitaxel from the Research & Development 
Institute, Inc. at Montana State University ("RDI") .  Paclitaxel has proven 
to be effective in treating refractory ovarian and breast cancers and, in 
preliminary clinical trials, has shown potential in treating refractory 
non-small cell lung cancer ("NSCLC") and certain other cancer indications. 
Presently, Paclitaxel is made from the inner bark and needles of the 
slow-growing Pacific yew tree.  Scientists at the Company, in cooperation 
with the inventors of the fungal Paclitaxel technology, are using this 
technology and fermentation technology to develop a system for manufacturing 
Paclitaxel in commercial quantities and at lower costs than currently 
available production methods.  See "Risk--Royalty Obligations; Possible Loss 
of Patents and Other Proprietary Rights; --Dependence upon Bristol-Myers 
Squibb." 

     In July 1996, the Company entered into an agreement (the "WSURF 
Agreement") with the Washington State University Research Foundation 
("WSURF") whereby the Company received an exclusive, world-wide license to 
use or sublicense patented technology or prospective patented technology 
related to genes for enzymes and the associated gene products, including the 
enzymes, in the biosynthetic pathway for Paclitaxel from the yew tree (the 
"WSURF Technology") .  This gene will be used along with a related fungal 
gene region to further optimize the fungal Paclitaxel production system.  In 
June 1998, the Company and WSURF amended the WSURF Agreement therein (i) 
covering additional patents, patent applications and genes for enzymes which 
are expected to be the subject of future patent filings and (ii) granting to 
the Company an option, expiring July 2006, to license any prospective WSURF 
Technology as it is developed. See "Risk Factors--Royalty Obligations; 
Possible Loss of Patents and Other Proprietary Rights; --Dependence upon 
Bristol-Myers Squibb." 

     The Company is directing its resources toward developing cancer 
diagnostic and imaging products utilizing the LCG gene and related MAb ("LCG 
MAb") isolated by the Company in its Human Gene Discovery Program.  The LCG 
gene and the LCG MAb are associated with specific lung cancer cells.  In 
Phase I human clinical trials, an LCG MAb derived from mouse cells was shown 
to be highly specific for cancerous lung tissue, but not normal lung tissue.  
These clinical studies will be expanded with a human derived form of the LCG 
MAb which is presently under development.  

     In June 1996, the Company entered into a Patent License Agreement (the 
"Regents Agreement") with the Board of Regents of the University of Texas 
System ("Regents") whereby the Company received an exclusive royalty-bearing 
license to manufacture, have manufactured, use, sell and sublicense products 
related to a U.S. Patent Application entitled, "A Method for Ranking 
Sequences to Select Target Sequence Zones of Nucleus Acids."   The technology 
has identified optimum regions within genes to bind anti-sense products.  
Anti-sense products are under development to control genes involved in human 
diseases such as cancer, diabetes, or AIDS. A patent application had been 
filed on this technology, and a Notice of Allowance of patent claims was 
received in June 1998.  This discovery potentially has broad applications to 
many human and viral genes involved in human disease.  See "Risk 
Factors--Royalty Obligations; Possible Loss of Patents and other Proprietary 
Rights." 

     In February 1996, the Company obtained exclusive rights to a technology 
and then pending patent developed at the University of California, Los 
Angeles for the Paclitaxel treatment of polycystic kidney disease.  Such 
patent claim was allowed in August 1997.

     Until the fiscal year ended December 31, 1997, the Company had generated 
no sales revenues.  For the six month period ended June 30, 1998, the 
Company, for the first time, generated revenue of $789,000 from the 
$1,250,000
                                       2

<PAGE>

received from Bristol-Myers Squibb with the remainder of $461,000 to be 
applied to the third and fourth quarters of 1998. However, the Company has 
incurred operating losses of $2,319,000, $3,106,000 and $3,357,000 for the 
fiscal years ended December 31, 1995, 1996 and 1997, respectively, and 
$1,575,000 and $1,044,000 for the six month periods ended June 30, 1997 and 
1998, respectively.  Since its inception, the Company has incurred net 
operating losses. The increase in net loss for 1996 from 1995 was primarily 
attributable to an increase in research and development expenses and general 
and administrative expenses partially offset by interest income generated 
from the proceeds of the Company's initial public offering of November 1995 
(the "IPO") and a decrease in interest expenses.  The increase in net losses 
for 1997 from 1996 was attributable to a decrease in interest income and an 
increase in general and administrative expenses.  The Company expects to 
incur additional losses in the foreseeable future.  See "Risk 
Factors--Accumulated Deficit; and --History of Significant Losses and 
Anticipated Continuing Future Losses." 

     The Company was originally incorporated in the state of Texas in September
1991 as Bio Pharmaceutics, Inc. In November 1991, the Company changed its name
to Cytoclonal Pharmaceutics Inc. The Company was reincorporated in Delaware by
merger into a wholly-owned Delaware subsidiary in January 1992.  The Company's
executive offices are located at 9000 Harry Hines Boulevard, Suite 330, Dallas,
Texas 75235 and its telephone number is (214) 353-2922.


                                       3

<PAGE>
                                     THE OFFERING

SECURITIES OFFERED BY THE COMPANY...... 312,500 Class A Warrants, 482,720
                                        Class B Warrants, 506,250 Blair
                                        Warrants and 520,588 shares of Common
                                        Stock issuable upon exercise of such
                                        Class A Warrants, Class B Warrants and
                                        Blair Warrants.  See "Description of
                                        Securities."

TERMS OF WARRANTS...................... Each Class A Warrant entitles the
                                        holder to purchase 0.4 share of Common
                                        Stock of the Company, for an exercise
                                        price of $3.75 per share, at any time
                                        until Expiration Date.  Each Class B
                                        Warrant entitles the holder to purchase
                                        0.4 share of Common Stock, for an
                                        exercise price of $4.375 per share, at
                                        any time until the Expiration Date. 
                                        Each Blair Warrant entitles the holder
                                        to purchase 0.4 share of Common Stock,
                                        for an exercise price of $3.75 per
                                        share, at any time until the Expiration
                                        Date.  The exercise prices and numbers
                                        of shares issuable upon the exercise of
                                        the Warrants are subject to adjustment
                                        in certain circumstances.  See
                                        "Description of Securities."

CAPITAL STOCK OUTSTANDING AS OF
  SEPTEMBER 29, 1998 AND ASSUMING NO
  EXERCISE OF THE WARRANTS

  Common Stock(1):..................... 10,191,252 shares

 Series A Convertible Preferred        
  Stock:............................... 764,003 shares

  Class A Warrants:.................... 312,500

  Class B Warrants:.................... 482,720

  Blair Warrants:...................... 506,250

 CAPITAL STOCK OUTSTANDING AS OF
  SEPTEMBER 29, 1998 AND ASSUMING
  EXERCISE OF ALL CLASS A WARRANTS

  Common Stock(1):..................... 10,316,252 shares

 Series A Convertible Preferred        
  Stock:............................... 764,003 shares

  Class B Warrants:.................... 482,720

  Blair Warrants:...................... 506,250

 CAPITAL STOCK OUTSTANDING AS OF
  SEPTEMBER 29, 1998 AND ASSUMING
  EXERCISE OF ALL CLASS A WARRANTS AND
  CLASS B WARRANTS

  Common Stock(1):..................... 10,509,340 shares

  Series A Convertible Preferred       
           Stock:...................... 764,003 shares

                                       4

<PAGE>

  Blair Warrants:...................... 506,250

 CAPITAL STOCK OUTSTANDING AS OF
  SEPTEMBER 29, 1998 AND ASSUMING
  EXERCISE OF ALL CLASS A WARRANTS,
  CLASS B WARRANTS AND BLAIR WARRANTS

  Common Stock(1):..................... 10,711,840 shares

  Series A Convertible Preferred       
           Stock:...................... 764,003 shares

 USE OF PROCEEDS....................... The Company intends to utilize the net
                                        proceeds from the exercise of the
                                        Warrants, if any, to fund research and
                                        development activities (including
                                        certain royalties and licensing fees),
                                        and for general working capital
                                        purposes and operating expenses.  See
                                        "Use of Proceeds." 
  
 RISK FACTORS.......................... Investment in these securities is
                                        speculative and involves a high degree
                                        of risk.  See "Risk Factors."

  
 NASDAQ--SCM SYMBOLS (3)................ Common Stock    -  CYPH
                                        Class C Warrants -  CYPHW
                                        Class D Warrants -  CYPHZ

- ----------- 
(1)  Does not include the possible issuance of (i) 1,398,700 shares of Common
     Stock reserved for issuance upon exercise of options granted or available
     for grant under the 1992 Plan and the 1996 Plan; (ii) 764,003 shares of
     Common Stock issuable upon the conversion of the Company's Series A
     Convertible Preferred Stock; (iii) 800,000 shares of Common Stock reserved
     for issuance upon exercise of the IPO Unit Purchase Option and underlying
     warrants; (iv) 335,550 shares issuable upon the exercise of the Private
     Placement Warrants; (v) 201,315 shares issuable upon the exercise of the
     Private Placement Unit Purchase Option, including the shares issuable upon
     the exercise of the warrants issuable upon the exercise thereof; (vi)
     170,000 shares of Common Stock issuable upon exercise of options granted as
     compensation for professional services; (vii) 36,000 shares of Common
     Stock issuable upon the exercise of warrants granted for research and
     development; (viii) 75,000 shares of Common Stock issuable upon the 
     exercise of Warrants granted for financial advisory services; (ix) 
     2,066,123 shares of Common Stock issuable upon the exercise of the 
     outstanding Class C Warrants issued in the Company's initial public 
     offering in November 1995 (the "IPO"); (x) 2,510,877 shares of Common 
     Stock issuable upon the exercise of the outstanding Class D Warrants 
     issued in the IPO; and (xi) 2,066,123 shares of Common Stock issuable 
     upon the exercise of the Class D Warrants underlying the outstanding 
     Class C Warrants issued in the IPO.  See "Description of Securities" and 
     "Bridge Financings."

                                       5


<PAGE>

                        SUMMARY FINANCIAL INFORMATION(1)

                         STATEMENT OF OPERATIONS DATA:


<TABLE>
<CAPTION>
                                                                  YEAR ENDED                                SIX MONTHS
                                                                 DECEMBER 31,                             ENDED JUNE 30,
                                                      ---------------------------------           -------------------------------
                                                          1997                  1996                 1998                1997
                                                      -----------           -----------           ----------          -----------
<S>                                                   <C>                   <C>                   <C>                 <C>
 Licensing and Research Collaborative
   Agreement Income...........................                  -                     -           $  789,000                    -

 Research and development expenses............        $ 1,469,000           $ 1,576,000              822,000          $   688,000

 General and administrative expenses..........          1,888,000             1,530,000             1,011,000             887,000

 Net interest expense (income)................           (105,000)             (216,000)             (85,000)             (58,000)
                                                      -----------           -----------           ----------          -----------
 Net loss.....................................         (3,252,000)           (2,890,000)            (959,000)          (1,517,000)
                                                      -----------           -----------           ----------          -----------
                                                      -----------           -----------           ----------          -----------
 Basic and diluted loss per share of common 
   stock......................................        $      (.42)          $      (.42)          $     (.11)         $      (.21)

 Weighted average number of shares outstanding
   --basic and diluted loss per share.........          8,268,000             7,640,000            9,286,000            8,073,000
                                                      -----------           -----------           ----------          -----------
                                                      -----------           -----------           ----------          -----------
</TABLE>


Balance Sheet Data:


<TABLE>
<CAPTION>
                                                              AT JUNE 30, 1998
                                         ------------------------------------------------------------
                                             ACTUAL     AS ADJUSTED(1) AS ADJUSTED(2)  AS ADJUSTED(3)
                                         ------------   -------------  --------------  --------------
<S>                                      <C>            <C>            <C>             <C>
 Working capital........................ $  7,798,000   $  8,200,000   $  9,002,000    $  9,762,000 

 Total assets...........................    9,959,000     10,361,000     11,163,000      11,923,000 

 Total liabilities......................    2,340,000      2,340,000      2,340,000       2,340,000 

 Accumulated deficit....................  (16,063,000)   (16,063,000)   (16,063,000)    (16,063,000)
   
 Total stockholders' equity.............    7,619,000      8,021,000      8,823,000       9,583,000 
</TABLE>



- -----------
(1)  Gives effect to the exercise of only the 312,500 Class A Warrants and the
     application of the net proceeds therefrom.  See "Plan of Distribution."  
(2)  Gives effect to the exercise of the 312,500 Class A Warrants, 482,720
     Class B Warrants, and the application of the net proceeds therefrom and 
     assumes that the Solicitation Fee is paid on the exercise of each Class B 
     Warrant.  See "Plan of Distribution."
(3)  Gives effect to the exercise of the 312,500 Class A Warrants, 482,720
     Class B Warrants, 506,250 Blair Warrants, and the application of the net
     proceeds therefrom and assumes that the Solicitation Fee is paid on the
     exercise of each Class B Warrant.  See "Plan of Distribution."

                                       6

<PAGE>

                                  RISK FACTORS

     AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS HIGHLY SPECULATIVE, 
INVOLVES A HIGH DEGREE OF RISK AND SHOULD BE MADE ONLY BY INVESTORS WHO CAN 
AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT.  PROSPECTIVE PURCHASERS, PRIOR TO 
MAKING AN INVESTMENT DECISION, SHOULD CAREFULLY CONSIDER, ALONG WITH OTHER 
MATTERS REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS: 

ACCUMULATED DEFICIT; HISTORY OF SIGNIFICANT LOSSES; ANTICIPATED CONTINUING 
FUTURE LOSSES; AND SUBSTANTIAL NON-CASH CHARGE TO EARNINGS.   

     The Company's balance sheet as of the fiscal year ended December 31, 
1997 and the six month period ended June 30, 1998 (unaudited) reflects an 
accumulated deficit of $(15,104,000) and $(16,063,000), respectively.  In 
addition, the Company's statement of operations for the fiscal year ended 
December 31, 1997 and the six month period ended June 30, 1998 (unaudited), 
reflect net losses of $(3,252,000) and ($959,000), respectively, or 
approximately $(.42) and ($.11) per share, respectively.  The Company has 
continued to incur substantial operating losses since its inception in 
September 1991 through the six month period June 30, 1998, and expects to 
incur significant operating losses for at least several years.  Although the 
Company generated $789,000 in revenues from the $1,250,000 received from 
Bristol-Myers Squibb for the six month period ended June 30, 1998, there can 
be no assurances that future revenues will be generated or that, if 
generated, the Company's operations will be profitable, or that the Company 
will be able to obtain sufficient additional funds to continue its planned 
activities.  In September 1998, the Company issued stock options, contingent 
upon stockholder approval, to acquire shares of Common Stock. If, at the time 
of stockholder approval, the market price of the Common Stock of the Company 
exceeds the exercise price of such options, the Company will incur a non-cash 
charge to earnings equal to the difference between the exercise price of such 
options and the market price, times the number of options granted.  See "Use 
of Proceeds." 

NO ASSURANCE OF FUTURE PRODUCT REVENUE.  

     Up until June 30, 1998, the Company had been in the development stage 
and, through December 31, 1997, had generated no sales revenue.  Although the 
Company generated $789,000 in revenues from the $1,250,000 received from 
Bristol-Myers Squibb for the six month period ended June 30, 1998, the 
Company has incurred substantial losses to date resulting principally from 
costs incurred in research and development activities and general and 
administrative expenses, as well as from the purchase of equipment and 
leasehold improvements to the Company's facilities.  The Company will be 
required to conduct significant research, development, testing and regulatory 
compliance activities which, together with projected general and 
administrative expenses, are expected to result in additional significant 
continuing operating losses.  The Company does not expect to receive 
regulatory approvals for any of its proposed products for at least several 
years, if ever.  The Company currently has no source of operating revenue and 
there can be no assurance that it will be able to develop any such revenue 
source or that its operations will become profitable, even if it is able to 
commercialize any products.  Further, the Company has a limited relevant 
operating history upon which an evaluation of its prospects can be made.  
Such prospects must be considered in light of the risks, expenses and 
difficulties frequently encountered in establishing a new business in the 
evolving, heavily regulated biotechnology industry, which is characterized by 
an increasing number of market entrants, intense competition and a high 
failure rate.  In addition, significant challenges are often encountered in 
shifting from developmental to commercial activities.  

NEED FOR SUBSTANTIAL ADDITIONAL FUNDS; NEGATIVE CASH FLOW.  

     The Company is currently experiencing, and has since its inception in 
September 1991, experienced, negative cash flow from operations which is 
expected to continue in the foreseeable future.  Since its inception the 
Company has been dependent upon equity infusions and upon the private 
financings and the Company's  IPO to fund its continuing operations.  The 
Company's cash requirements may vary materially from current estimates 
because of results of the Company's research and development programs, 
results of clinical studies, changes in the focus and direction of the 

                                       7

<PAGE>

Company's research and development programs, competitive and technological 
advances and other factors.  In any event, the Company will require 
substantial funds, in addition to the proceeds of this offering, to conduct 
development activities and pre-clinical and clinical trials, apply for 
regulatory approvals and commercialize products, if any, that it develops.

     The Company does not have any commitments or arrangements to obtain any 
additional financing other than pursuant to the BMS License Agreement (as 
defined herein) and RDI Agreement (as defined herein), and there can be no 
assurance that required financing will be available to the Company on 
acceptable terms, if at all.  Although the Company will seek to fund a 
portion of its product development efforts by entering into collaborative 
ventures with corporate partners, obtaining research contracts, entering into 
research and development partnerships and obtaining government grants, there 
can be no assurance that the Company will be able to enter into any such 
additional ventures on acceptable terms, if at all.  To the extent the 
Company raises additional capital by issuing securities, further dilution to 
the investors in this offering may result.  See "--Dependence upon 
Collaborations and Licenses with Others; --Royalty Obligations; Possible Loss 
of Patents and Other Proprietary Rights; --Competition; --Dependence upon 
Bristol-Myers Squibb; --Dilution." 

DEPENDENCE UPON COLLABORATIONS AND LICENSES WITH OTHERS.  

     The Company's strategy for the development, clinical testing, 
manufacturing and commercialization of its proposed products includes 
entering into various collaborations with corporate partners, licensors, 
licensees and others, and is dependent upon the subsequent success of these 
outside parties in performing their responsibilities.  In addition to its 
agreements with RDI and Enzon, Inc. ("Enzon"), the Company has entered into 
several other research and license agreements and is continually seeking to 
enter into additional arrangements with other collaborators.  There can be no 
assurance that its current arrangements or any future arrangements will lead 
to the development of products with commercial potential, that the Company 
will be able to obtain proprietary rights or licenses for proprietary rights 
with respect to any technology developed in connection with these 
arrangements or that the Company will be able to insure the confidentiality 
of any proprietary rights and information developed in such collaborative 
arrangements or prevent the public disclosure thereof.  

     In general, collaborative agreements provide that they may be terminated 
under certain circumstances.  There can be no assurance that the Company will 
be able to extend any of its collaborative agreements upon their termination 
or expiration, or that the Company will be able to enter into new 
collaborative agreements with existing or new partners in the future.  To the 
extent the Company chooses not to or is unable to establish any additional 
collaborative arrangements, it would require substantially greater capital to 
undertake research, development and marketing of its proposed products at its 
own expense. In addition, the Company may encounter significant delays in 
introducing its proposed products into certain markets or find that the 
development, manufacture or sale of its proposed products in such markets is 
adversely affected by the absence of such collaborative agreements.  See 
"--Royalty Obligations; Possible Loss of Patents and Other Proprietary 
Rights." 

EARLY STAGE OF PRODUCT DEVELOPMENT; TECHNOLOGICAL AND OTHER UNCERTAINTIES.  

     There can be no assurance that the Company's research and development 
activities will result in any commercially viable products.  The development 
of each product will be subject to the risks of failure inherent in the 
development of products based on innovative technologies and the expense and 
difficulty of obtaining regulatory approvals.  All of the potential products 
currently under development by the Company will require significant 
additional research and development and pre-clinical testing and clinical 
testing prior to submission of any regulatory application for commercial use. 
 There can be no assurance that the Company's research or product development 
efforts will be completed successfully, that the products currently under 
development will be transformed successfully into marketable products, that 
required regulatory approvals can be obtained, that products can be 
manufactured at acceptable costs in accordance with regulatory requirements 
or that any approved products can be marketed successfully or achieve 
customer acceptance.  Additional risks include the possibility that any or 
all of the Company's products will be found to be ineffective or toxic, or 
that, if safe and effective, will be difficult to manufacture on a large 
scale or uneconomical 

                                       8

<PAGE>

to market; that the proprietary rights of third parties will preclude the 
Company from marketing one or more products; and that third parties will 
market superior or equivalent products. See "--No Assurance of FDA Approval; 
Government Regulation; --Dependence upon Third Parties For Manufacturing; No 
Manufacturing Experience; --Dependence upon Third Parties For Marketing; No 
Marketing Experience." 
 
ROYALTY OBLIGATIONS; POSSIBLE LOSS OF PATENTS AND OTHER PROPRIETARY RIGHTS.  

     Pursuant to its License Agreement with RDI relating to Paclitaxel, as 
amended,  (the "RDI Agreement"), the Company paid to RDI minimum royalty 
payments of $100,000 and $100,000 on June 10, 1997 and June 10, 1998, 
respectively.  Such License Agreement requires the Company to pay RDI an 
annual minimum royalty fee of $100,000 no later than June 10th  as long as 
such license is retained.  Pursuant to the License Agreement between the 
Company and RDI relating to a fungal strain known as FTS-2, the Company must 
pay to RDI royalties on sales of products incorporating the licensed 
technology if the product is covered by a pending or issued patent or a lower 
rate if the product is not covered by a patent.  In May 1998, the Company and 
RDI amended the RDI Agreement thereby requiring the Company to pay to RDI (i) 
a percentage of royalties received with respect to the manufacture, use or 
sale of the inventions by sublicensees, which royalty rate shall be reduced 
in the event the Company is required to pay royalties to others and (ii) all 
up-front, milestone and royalty payments it may receive pursuant to the 
BMS-RDI Sublicense Agreement (defined herein).  In addition, for the purchase 
of the Wadley Technology, the Company is required to pay royalties to WadTech 
a fee equal to 6.25% of the gross selling prices of products incorporating 
any of the Wadley Technology until payments totaling $1,250,000 (the "Fixed 
Sum") have been made. Thereafter, the royalty rate will be up to 3.75%.  
Minimum royalties payable to WadTech were $31,250 for the year beginning 
October 1, 1996, which has been paid by the Company, $62,500 for the year 
beginning October 1, 1997 and are $125,000 for each year thereafter.  WadTech 
has a perfected security interest in the Wadley Technology to secure the 
payment of the first $1,250,000 of royalties. The WadTech Agreement provides 
that the royalties and other sums payable by the Company to WadTech are at a 
higher rate until the Fixed Sum has been paid in full.  WadTech has the right 
to license such intellectual property to a third party or sell it through a 
foreclosure sale in the event that the Company does not fulfill its 
obligations under the Wadley Agreement.  The Company is also obligated to pay 
a royalty equal to 3% on sales of products produced through the use of a 
recombinant yeast expression system pursuant to a license agreement assigned 
to the Company in connection with its purchase of the Wadley Technology.  
Also, pursuant to its license agreement with WSURF, as amended (the "WSURF 
Agreement"), the Company is required to pay WSURF annual license fees per 
year, commencing on July 1, 1997, which initial payment has been made by the 
Company, as well as certain royalties and sublicensing fees.  The loss by the 
Company of the RDI, Wadley or WSURF technology could have a material adverse 
effect on the Company's business and the development of the Company's 
proposed products.  

     In addition, the Company's agreements with Enzon provide that if the 
parties decide to jointly develop any products, the costs and profits of 
product development will be split equally.  If the Company is unable to fund 
its portion of a product's development costs, the Company will lose its 
rights to such product, will no longer have the right to split the profits 
from such product and will only be entitled to a royalty.   In addition, the 
Company has paid $231,563 as of June 30, 1998 of the $285,240 owed the 
University of Texas ("UTD") pursuant to an extended agreement therein 
granting the Company a right of first refusal to acquire a license to develop 
and commercialize any intellectual property resulting from the agreement for 
a royalty to be negotiated not exceeding eight percent of the net sales of 
commercialized products.  Furthermore, the Company entered into a Patent 
License Agreement with the Board of Regents of the University of Texas 
("Regents") in which the Company is required to pay Regents certain and 
sublicensing fees.  In addition, the Company entered into a license agreement 
with the University of California at Los Angeles ("UCLA License Agreement I") 
pursuant to which the Company paid UCLA $5,000 and has agreed to pay an 
additional $10,000 upon issuance of a patent. Pursuant to an additional 
license agreement with UCLA ("UCLA License Agreement II"), the Company paid a 
license issue fee of $5,000 and has agreed to pay an additional $5,000 upon 
the issuance of a patent.  In addition, pursuant to an additional license 
agreement with UCLA ("UCLA License Agreement III"), the Company has agreed to 
pay a license issuance fee of $20,000, an additional $25,000 upon the 
issuance of a patent. annual maintenance fees based on a escalating 
sliding-scale and minimum annual royalty payments.  The loss by the Company 
of any of the foregoing agreements could have a material adverse effect on 
the Company's business and the development of the Company's proposed 
products.
                                       9

<PAGE>

COMPETITION.

     Many of the Company's competitors have greater financial, technical, human
and other resources than the Company.  In addition, many of these competitors
have significantly greater experience than the Company in undertaking
pre-clinical testing and human clinical trials of new products and in obtaining
United States Food and Drug Administration ("FDA") and other regulatory
approvals.  Accordingly, certain of the Company's competitors may succeed in
obtaining FDA approvals more rapidly and efficiently than the Company. 
Furthermore, if the Company is able to commence commercial production and sale
of any products, it will also be competing with companies having substantially
greater resources and experience in these areas.  Company personnel currently
has limited or no experience in the production and sale of any pharmaceutical or
biological products.  Investors should be aware that in June 1991, the NCI
formalized a Collaborative Research and Development Agreement ("CRADA") for
development of Paclitaxel with Bristol-Myers Squibb as its pharmaceutical
manufacturing and marketing partner, therein granting to Bristol-Myers Squibb 
until December 1997 the exclusive use of NCI's clinical data relating to 
Paclitaxel in seeking approval from the FDA, which shortened significantly 
the approval process and prevented any other party from obtaining FDA 
approval using the NCI data.  Although Bristol-Myers Squibb has lost its 
right of exclusivity under the CRADA, effective Paclitaxel exclusivity is 
still being maintained by Bristol-Myers Squibb due to a patent on its 
infusion method, that exclusivity currently being contested by other 
competitors in the courts.  Bristol-Myers Squibb received FDA approval for 
the commercial sale of its Paclitaxel as a treatment for refractory ovarian 
cancer in December 1992, for refractory breast cancer in April 1994, Kaposi's 
Sarcoma in August 1997 and lung cancer in 1998.  Since December 1992, 
Bristol-Myers Squibb has been the sole source of Paclitaxel for commercial 
purposes. It is the Company's understanding that Bristol-Myers Squibb is 
currently conducting clinical trials required for FDA approval of Paclitaxel 
for treating other cancers.  See "-Dependence upon Bristol-Myers Squibb." 

UNCERTAIN ABILITY TO PROTECT PROPRIETARY TECHNOLOGY.  

     The Company's success will depend, in part, on its ability to obtain patent
protection for its products and processes in the United States and elsewhere. 
The Company has filed and intends to continue to file patent applications as
appropriate.  No assurance, however, can be given that any additional patents
will issue from any of these applications or, if patents do issue, that the
claims allowed will be sufficiently broad to protect the Company's technology. 
In addition, no assurance can be given that any patents issued to or licensed by
the Company will not be successfully challenged or circumvented by others, or
that the rights granted will provide adequate protection to the Company.  

     The Company is aware of patent applications and issued patents belonging to
competitors and, although it has no knowledge of such, it is uncertain whether
any of these, or patent applications of which it may not have any knowledge,
will require the Company to alter its potential products or processes, pay
licensing fees or cease certain activities.  There can be no assurance that the
Company will be able to obtain licenses to technology that it may require or, if
obtainable, that such licenses will be at an acceptable cost.  The Company's
failure to obtain any requisite license to any technology may have a material
adverse effect on the Company.  Expensive and protracted litigation may also be
necessary to enforce any patents issued to the Company or to determine the scope
and validity of others' claimed proprietary rights.  

     The Company also relies on trade secrets and confidential information that
it seeks to protect, in part, by confidentiality agreements.  There can be no
assurance that these agreements will not be breached, that the Company would
have adequate remedies for any breach or that the Company's trade secrets will
not otherwise become known or be discovered independently by competitors.  

NO ASSURANCE OF FDA APPROVAL; GOVERNMENT REGULATION.  

     The FDA and comparable agencies in foreign countries impose substantial
requirements upon the introduction of therapeutic and diagnostic pharmaceutical
and biological products through lengthy and detailed laboratory and 

                                      10

<PAGE>

clinical testing procedures, sampling activities and other costly and 
time-consuming procedures.  Satisfaction of these requirements typically 
takes several years or more and varies substantially based upon the type, 
complexity and novelty of the product.  The regulatory review may result in 
extensive delay in the regulatory approval process.  Regulatory requirements 
ultimately imposed could adversely affect the Company's ability to clinically 
test, manufacture or market potential products.  Government regulation also 
applies to the manufacture and marketing of pharmaceutical and biological 
products.  See "--Competition."

     The effect of government regulation may be to delay marketing of new
products for a considerable period of time, to impose costly procedures upon the
Company's activities and to furnish a competitive advantage to larger companies
competing with the Company.  There can be no assurance that FDA or other
regulatory approval for any products developed by the Company will be granted on
a timely basis, if at all.  Any such delay in obtaining, or failure to obtain,
such approvals would adversely affect the marketing of any contemplated products
and the ability to earn product revenue.  Further, regulation of manufacturing
facilities by state, local and other authorities is subject to change.  Any
additional regulation could result in limitations or restrictions on the
Company's ability to utilize any of its technologies, thereby adversely
affecting the Company's operations.  

     The Company is also subject to regulation by the Occupational Safety and
Health Administration ("OSHA") and the Environmental Protection Agency ("EPA")
and to regulation under the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other regulatory statutes, and may in the
future be subject to other federal, state or local regulations.  Either or both
of OSHA or the EPA may promulgate regulations that may affect the Company's
research and development programs. The Company is unable to predict whether any
agency will adopt any regulation which could have a material adverse effect on
the Company's operations.

UNCERTAINTY RELATED TO HEALTH CARE REIMBURSEMENT AND REFORM MEASURES.  

     The Company's success in generating revenue from sales of human 
therapeutic and diagnostic products may depend, in part, on the extent to 
which reimbursement for the costs of such products and related treatments 
will be available from government health administration authorities, private 
health insurers and other organizations.  Significant uncertainty exists as 
to the reimbursement status of newly-approved health care products.  There 
can be no assurance that adequate third-party insurance coverage will be 
available for the Company to establish and maintain price levels sufficient 
for realization of an appropriate return on its investment in developing new 
products.  Government and other third-party payers are increasingly 
attempting to contain health care costs by limiting both coverage and the 
level of reimbursement of new therapeutic and diagnostic products approved 
for marketing by the FDA and by refusing, in some cases, to provide any 
coverage of uses of approved products for disease indications for which the 
FDA has not granted marketing approval. If adequate coverage and 
reimbursement levels are not provided by government and third-party payers 
for uses of the Company's products, the market acceptance of these products 
would be adversely affected.  See "--Competition; --No Assurance of FDA 
Approval, Government Regulation."

DEPENDENCE UPON BRISTOL-MYERS SQUIBB

     In June 1998, the Company entered into a Master License Agreement (the "BMS
License Agreement") and a Sponsored Research Agreement (the "R&D Agreement")
with Bristol-Myers Squibb.  Pursuant to the BMS License Agreement, the Company
granted to Bristol-Myers Squibb an exclusive sublicense under each of (i) the
RDI Agreement (the "BMS-RDI Sublicense Agreement") and (ii) the WSURF Agreement.
Pursuant to the RDI Agreement, the Company acquired a license to certain patents
and technology relating to the use of microorganisms for the production of
Paclitaxel and other taxanes and components.  Pursuant to the WSURF Agreement,
the Company acquired a license to certain patents and technology relating to the
several genes coded for the enzymes involved in the biosynthesis of Paclitaxels
and other taxanes.  The BMS License Agreement contemplates sales-based royalty
payments and payments by Bristol-Myers Squibb to the Company on the advent of
certain milestones and royalties, grants Bristol-Myers Squibb a right of first
negotiation during the term of the BMS Agreement to obtain from the Company an
exclusive, world-wide right to license or sublicense any part of the technology
licensed to the Company under the RDI Agreement and WSURF Agreement and
potentially new anti-cancer drugs from microorganisms supplied by the Company.
The term of the BMS

                                      11

<PAGE>

License Agreement shall run, subject to earlier termination in certain 
circumstances, until the later of (i) ten (10)  years from the first 
commercial sale of the licensed products or (ii) such time as neither the 
making, use nor sale at the time by Bristol-Myers Squibb, its affiliates or 
sublicensees in such country of the licensed product does not infringe (a) 
any U.S. or foreign patents or patent applications, including reissues, 
renewals, extensions, continuations or continuations-in-part, copyrights or 
trademarks owned and licensed by RDI to the Company under the RDI Agreement, 
(b) certain U.S. and foreign patents or patent applications owned by WSURF 
and licenced by WSURF to the Company under the WSURF Agreement and (c) other 
licensed property together with all patent rights pertaining thereto, to the 
extent that such patent rights are not already part of the RDI Agreement and 
WSURF Agreement. Bristol-Myers Squibb shall have the right to terminate the 
BMS License Agreement after December 12, 1998, effective upon ninety (90) 
days notice, in which event the Bristol-Myers Squibb sublicense under the RDI 
Agreement and WSURF Agreement would terminate, although any payment 
obligations would survive termination. There can be no assurance, however, 
that Bristol-Myers Squibb will be successful in manufacturing or marketing 
the licensed property, if at all, or that the Company will be able to 
maintain the RDI Agreement or the WSURF Agreement.  See "--Competition." 

     The R&D Agreement, renewable by Bristol-Myers Squibb for successive 
one-year periods thereafter, provided that the BMS License Agreement remains 
in effect at the time, contemplates, without assurance, a program directed 
toward developing microbial fermentation and genetic engineering technologies 
for the production of Paclitaxel and other taxanes.  See "--Competition." 

DEPENDENCE UPON THIRD PARTIES FOR MANUFACTURING; NO MANUFACTURING EXPERIENCE. 

     The Company currently does not have facilities or personnel capable of
manufacturing any products in commercial quantities.  If the Company completes
development of, and obtains regulatory approval for, fungal Paclitaxel, it
intends to use third-parties to manufacture Paclitaxel.  No assurance can be
given that it will be able to enter into any arrangements with such
manufacturers on acceptable terms, if at all.  In the future, the Company may,
if it becomes economically attractive to do so, establish its own manufacturing
facilities to produce other products that it may develop.  Building and
operating production facilities would require substantial additional funds and
other resources.  However, there can be no assurance that such funds would be
available on favorable terms to the Company, if at all.  There is no assurance
that the Company will be able to successfully make the transition to commercial
production, should it choose to do so.  

DEPENDENCE UPON THIRD PARTIES FOR MARKETING; NO MARKETING EXPERIENCE.  

     The Company currently has no marketing and sales personnel and no
experience regarding marketing pharmaceutical products.  Significant additional
expenditures and management resources would be required to develop an internal
sales force, and there can be no assurance that such funds would be available. 
Further, there can be no assurance that, with such a sales force, the Company
would successfully penetrate the markets for any products developed.  For
certain products under development, the Company may seek to enter into
development and marketing agreements which grant exclusive marketing rights to
its corporate partners in return for royalties to be received on sales, if any. 
Under certain of these agreements, the Company's marketing partner may have the
responsibility for all or a significant portion of the development and
regulatory approval.  In the event that the marketing and development partner
fails to develop a marketable product or fails to successfully market a product,
the Company's business may be adversely affected.  The sale of certain products
outside the United States will also be dependent upon the successful completion
of arrangements with future partners, licensees or distributors in each
territory.  There can be no assurance, however, that the Company will be
successful in establishing any additional collaborative arrangements, or that,
if established, such future partners will be successful in commercializing
products, if at all.  

DEPENDENCE UPON KEY PERSONNEL AND COLLABORATORS; LIMITED MANAGEMENT TEAM.  

     The Company's success depends on the continued contributions of its
executive officers, scientific and technical personnel and consultants.  The
Company is particularly dependent on Arthur P. Bollon, Ph.D., its Chairman,
Chief Executive Officer and President, and Daniel Shusterman, its Vice President
of Operations, Treasurer and Chief Financial Officer, and its senior scientists,
Susan L. Berent, Ph.D., Hakim Labidi, Ph.D., Rajinder S. Sidhu, Ph.D. and


                                      12

<PAGE>

Richard M. Torczynski, Ph.D.  As of September 25, 1998, the Company had 16
full-time employees, 13 of whom are engaged directly in research and development
activities and 3 of whom are in executive and administrative positions.  The
Company's employees are not governed by any collective bargaining agreement and
the Company believes that its relationship with its employees is good.  The
Company currently has an employment agreement with Dr. Bollon which expires on
November 6, 2000.  Although the Company maintains "key person" life insurance in
the amount of $2 million on the life of Dr. Bollon, his death or incapacity
could have a material adverse effect on the Company.  During the Company's
limited operating history, many key responsibilities within the Company have
been assigned to a relatively small number of individuals.  The competition for
qualified personnel is intense, and the loss of services of certain key
personnel could adversely affect the Company.  

     The Company's scientific collaborators and its scientific advisors are
employed by employers other than the Company and some have consulting or other
advisory arrangements with other entities that may conflict or compete with
their obligations to the Company.  Inventions or processes discovered by such
persons will not necessarily become the property of the Company but may remain
the property of such persons or of such persons' full-time employers.  

PRODUCT LIABILITY INSURANCE.  

     The use of Company products in clinical trials and the marketing of any
products may expose the Company to product liability claims. The Company intends
to obtain product liability insurance for its ongoing clinical trials.  There
can be no assurance that the Company will be able to obtain, maintain or
increase its insurance coverage in the future on acceptable terms, if at all, or
that any claims against the Company will not exceed the amount of such coverage.
Furthermore, certain distributors of pharmaceutical and biological products
require minimum product liability insurance coverage as a condition precedent to
purchasing or accepting products for distribution.  Failure to satisfy such
insurance requirements could impede the ability of the Company to achieve broad
distribution of its proposed products, which could have a material adverse
effect upon the business and financial condition of the Company.  

CONTROL OF THE COMPANY; ABILITY TO DIRECT MANAGEMENT.  

     The Company's current officers, directors and stockholders of more than 5%
of the Company's securities beneficially own or control approximately 32% of the
outstanding shares of Common Stock, which represents approximately 29% of the
total outstanding voting securities of the Company.  Such officers, directors
and principal stockholders may, therefore, be able to elect all of the Company's
directors, to determine the outcome of most corporate actions requiring
stockholder approval, and otherwise to control the business of the Company. 
Such control could preclude any unsolicited acquisition of the Company and
consequently adversely affect the market price of the Company's securities.  In
addition, the Company's Board of Directors is authorized to issue from time to
time shares of preferred stock, without stockholder authorization, in one or
more designated series or classes.  See "--Possible Restriction on 'Market
Making' Activities in the Company's Securities; Illiquidity" and "Description of
Securities."  

DIVIDEND POLICY.  

     Since its inception, the Company has not paid any dividends on its Common
Stock.  The Company intends to retain future earnings, if any, to provide funds
for the operation of its business and, accordingly, does not anticipate paying
any cash dividends on its Common Stock in the reasonably foreseeable future. 
Furthermore, the terms of the Company's outstanding Series A Preferred Stock do
not allow for the payment of cash dividends on the Common Stock unless and until
all accrued and unpaid dividends on the Series A Preferred Stock shall have been
paid or set apart for payment.  See "Description of Securities."   

INDEMNIFICATION OF OFFICERS AND DIRECTORS.  

     The Company's Certificate of Incorporation includes certain provisions
permitted pursuant to the Delaware General Corporation Law ("DGCL") whereby
officers and Directors of the Company are to be indemnified against 


                                      13

<PAGE>

certain liabilities.  The Company's Certificate of Incorporation also limits, 
to the fullest extent permitted by DGCL, a director's liability for monetary 
damages for breach of fiduciary duty, including gross negligence, except 
liability for (i) breach of the director's duty of loyalty, (ii) acts or 
omissions not in good faith or which involve intentional misconduct or a 
knowing violation of the law, (iii) the unlawful payment of a dividend or 
unlawful stock purchase or redemption and (iv) any transaction from which the 
director derives an improper personal benefit.  The DGCL does not eliminate a 
director's duty of care and this provision has no effect on the availability 
of equitable remedies such as injunction or rescission based upon a 
director's breach of the duty of care.  In addition, an insurance policy, 
which provides for coverage for certain liabilities of its officers and 
Directors has been issued to the Company.

POSSIBLE RESTRICTION ON "MARKET MAKING" ACTIVITIES IN THE COMPANY'S SECURITIES;
ILLIQUIDITY.  

     Bruce Meyers and Peter Janssen beneficially own approximately 14.4% and
9.0%, respectively, of the outstanding shares of Common Stock prior to exercise
of the Warrants being registered hereby, which represents approximately 13.5%
and 8.4%, respectively, of the total outstanding voting securities of the
Company.  JMA is a limited partnership of which Messrs.  Meyers and Janssen are
the principals of the corporate general partner.  If JMA or its affiliates are
deemed to have control of the Company, regulatory requirements of the
Commission, Nasdaq and the New York Stock Exchange, Inc. could prevent JMA from
engaging in market-making activities relating to the Company's securities.  If
JMA is unable to make a market in the Company's securities because it is deemed
to have effective voting control of the Company or if, for any other reason, it
chooses not to or is unable to make a market in the Company's securities, there
can be no assurance that any other broker-dealers would make a market in the
Company's securities.  Without market-makers, it would be very difficult for
holders of the Company's securities to sell their securities in the secondary
market and the market prices for such securities would be adversely affected. 
Moreover, there can be no assurance that an active trading market for the
Company's securities will develop or be maintained whether or not JMA makes a
market in the Company's securities.  In the absence of such a market, investors
may be unable to liquidate their investment in the Company.  See "-Absence of
Public Market; Possible Volatility of Common Stock and Warrant Prices." 

POSSIBLE DELISTING OF SECURITIES FROM THE NASDAQ STOCK MARKET.  

     The Company's Common Stock, Class C  Warrants and Class D Warrants are
currently quoted on the Nasdaq-SCM under the symbols "CYPH," "CYPHW" and
"CYPHZ," respectively.  However, there can be no assurance that the Company will
continue to meet the criteria for continued listing of securities on the 
Nasdaq-SCM.  For continued inclusion on the Nasdaq-SCM, an issue shall 
maintain (i) either (A) net tangible assets of $2 million, (B) market 
capitalization of $35 million or (C) net income of $500,000 in the most 
recently completed fiscal year or in two of the last three most recently 
completed fiscal years, (ii) a minimum bid price per share of $1.00, (iii) in 
the case of a convertible debt security, a principal amount outstanding of at 
least $5 million, (iv) in the case of common stock, at least 300 round lot 
holders and (v) 500,000 publicly held shares having a market value of at 
least $1 million.  If the Company becomes unable to meet the continued 
listing criteria of the Nasdaq-SCM because of continued operating losses or 
otherwise, and became delisted therefrom, trading, if any, in the Common 
Stock and the Warrants would thereafter be conducted in the over-the-counter 
market in the so-called "pink sheets" or, if available, the NASD's 
"Electronic Bulletin Board."   As a result, an investor may find it more 
difficult to dispose of, or to obtain accurate quotations as to the value of, 
the Company's securities.  

RISK OF LOW-PRICED STOCKS; "PENNY STOCK" REGULATIONS.  

     If the Company's securities are delisted from the Nasdaq-SCM, they may
become subject to Rule 15g-9 promulgated under the Exchange Act, which imposes
additional sales practice requirements on broker-dealers that sell such
securities except in transactions exempted by such Rule, including transactions
meeting the requirements of Rules 505 or 506 under Regulation D promulgated
under the Securities Act, and transactions in which the purchaser is an
institutional accredited investor (as defined in the Securities Act) or an
established customer (as defined in the Securities Act) of the broker-dealer. 
For transactions covered by this Rule, a broker-dealer must make a special
suitability 


                                      14

<PAGE>

determination for the purchaser and have received the purchaser's written 
consent to the transaction prior to sale.  Consequently, the Rule may affect 
the ability and/or willingness of broker-dealers to sell the Company's 
securities and may consequently affect the ability of purchasers in this 
Offering to sell any of the securities acquired in the Offering in the 
secondary market.  

     The Commission has also adopted regulations which define a "penny stock" to
be any equity security that has a market price (as therein defined) of less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions.  Unless exempt, the rules require the delivery, prior to
any transaction in a penny stock, of a disclosure schedule prepared by the
Commission relating to the penny stock market.  Disclosure also has to be made
about commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities.  Finally, monthly
statements have to be sent disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
The foregoing penny stock restrictions will not apply to the Company's
securities if such securities retain their listing on the Nasdaq-SCM and have
certain price and volume information provided on a current and continuing basis
or meet certain minimum net tangible assets or average revenue criteria.  There
can be no assurance, however, that the Company's securities will continue their
current qualification for exemption from these restrictions.  In any event, even
if the Company were exempt from such restrictions, it would remain subject to
Section 15(b)(6) of the Exchange Act, which gives the Commission the authority
to prohibit any person that is engaged in unlawful conduct while participating
in a distribution of penny stock from associating with a broker-dealer or
participating in a distribution of penny stock, if the Commission finds that
such a restriction would be in the public interest.  If the Company's securities
were subject to the rules on penny stocks, the prices of and market liquidity
for the Company's securities could be severely adversely affected.  

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS; POTENTIAL DILUTIVE EFFECT
OF OUTSTANDING SECURITIES AND POSSIBLE NEGATIVE IMPACT ON FUTURE FINANCINGS.  

     Certain of the Company's outstanding securities are, and will be,
"restricted securities" as that term is defined in Rule 144 promulgated under
the Securities Act and may, under certain circumstances, be sold without
registration pursuant to Rule 144.  A substantial portion of the outstanding
shares of Common Stock are and will be eligible for sale under Rule 144 at
varying periods.  

     The holders of the IPO Unit Purchase Option have certain demand
registration rights with respect to the shares of Common Stock issuable upon the
exercise of such option, which would permit resale of the securities acquired
upon exercise thereof commencing November 2, 1998.  Holders of (i) 2,000,000
shares of Common Stock outstanding, (ii) options to purchase 200,000 shares of
Common Stock, (iii) 764,003 shares of Series A Preferred Stock convertible into
an equal number of shares of Common Stock and (iv) options to purchase 100,000
shares of Series A Preferred Stock convertible into an equal number of shares of
Common Stock (the Common Stock referred to in (i) through (iv) above
collectively, the "Registrable Securities") are entitled to demand and
"piggy-back" registration rights with respect to such Registrable Securities
through November 7, 2000.  The holders of more than 50% of the Registrable
Securities may request that the Company file a registration statement under the
Securities Act, and, subject to certain conditions, the Company generally will
be required to use its best efforts to effect any such registration.  In
addition, if the Company proposes to register any of its securities, either for
its own account or for the account of other stockholders, the Company is
required, with certain exceptions, to notify the holders described above and,
subject to certain limitations, to include in the first two such registration
statements filed after December 7, 1996 and before November 7, 2000, all of the
shares of the Registrable Securities requested to be included by such holders. 
In addition, the Company has (i) registered the Warrants and the 520,588 shares
of Common Stock issuable upon the exercise of such warrants; (ii) registered
150,000 shares of Common Stock issuable upon exercise of Warrants issued to
Blair for services rendered to the Company as placement agent for the Company's
private placement completed in 1992; (iii) registered 1,190,000 shares of Common
Stock issuable upon exercise of options authorized for grant under the 1992 Plan
and 1996 Plan; (iv) agreed to file a registration statement to register the
671,035 shares of Common Stock issued in connection with the 1998 Private
Placement and the 335,550 shares of Common Stock issuable upon exercise of the
Private Placement Warrants by October 23, 1998; (v) granted certain "piggy-back"
registration rights to the holders of 20,000 shares of Common Stock issued by
the Company in connection with the formation of the joint venture with Pestka
Biomedical Laboratories, Inc.;

                                      15

<PAGE>

and (vi) granted certain "piggy-back" registration rights to the holders of 
options and warrants to acquire an aggregate of 245,000 shares of Common 
Stock granted and issued in connection with financial advisory and public 
relations services rendered to the Company and pursuant to a license 
agreement.  The exercise of one or more of these registration rights may 
involve substantial expense to the Company and may adversely affect the terms 
upon which the Company may obtain additional financing.  See "Description of 
Securities" and "Bridge Financings."  

     Additionally, any shares of Common Stock purchased upon exercise of the
Class C and Class D Warrants or the IPO Unit Purchase Option may be tradeable
without restriction, provided that the Company satisfies certain securities
registration and qualification requirements.  The sale, or availability for
sale, of substantial amounts of Common Stock and/or Warrants in the public
market pursuant to Rule 144 or otherwise could adversely affect the market price
of the Common Stock and the Company's other securities and could impair the
Company's ability to raise additional capital through the sale of its equity
securities or debt financing.  Also, to the extent that the IPO Unit Purchase
Option, any options granted under the 1992 Plan, the 1996 Plan, the Warrants, or
any other rights, warrants and options are exercised, the ownership interest of
the Company's stockholders will be diluted correspondingly.  If, and to the
extent, that the Company in the future reduces the exercise price(s) of
outstanding warrants and/or options, the Company's stockholders could experience
additional dilution.  See "Description of Securities" and "Bridge Financings."

ARBITRARY DETERMINATION OF OFFERING PRICE.  

     The exercise prices and other terms of the Warrants have been determined by
negotiation between the Company and Blair and JMA and do not necessarily bear
any relationship to the Company's assets, book value or financial condition, or
to any other recognized criterion of value.  It should be noted that JMA, of
which Messrs.  Bruce Meyers and Peter Janssen are principals, beneficially owns
21.4% of the Company's Common Stock, which represents 20.0% of all of the
outstanding voting securities as of September 29, 1998.

ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF COMMON STOCK AND WARRANT
PRICES.  

     The Company's Common Stock, Class C Warrants and Class D Warrants are
currently listed on the Nasdaq-SCM.  There can be no assurances, however, that
an active market for such securities of the Company will be sustained.  The
market prices for securities of emerging health care companies have been highly
volatile.  Announcements of biological or medical discoveries or technological
innovations by the Company or its competitors, developments concerning
proprietary rights, including patents and litigation matters, regulatory
developments in both the United States and foreign countries, public concern as
to the safety of new technologies, general market conditions, quarterly
fluctuations in the Company's revenues and financial results and other factors
may have a significant impact on the market price of the Company's securities.  

POTENTIAL ANTI-TAKEOVER EFFECTS.  

     The Company is governed by the provisions of Section 203 of the DGCL, an
anti-takeover law enacted in 1988.  In general, the law prohibits a public
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner.  "Business combination"
is defined to include mergers, asset sales and certain other transactions
resulting in a financial benefit to the stockholders.  An "interested
stockholder" is defined as a person who, together with affiliates and
associates, owns (or, within the prior three years, did own) 15% or more of a
corporation's voting stock.  As a result of the application of Section 203,
potential acquirors of the Company may be discouraged from attempting to effect
an acquisition transaction with the Company, thereby possibly depriving holders
of the Company's securities of certain opportunities to sell or otherwise
dispose of such securities at above-market prices pursuant to such transaction. 
In addition, certain provisions contained in each of the employment agreements
with each of Dr. Arthur P.  Bollon, Chairman, President and Chief Executive
Officer of the Company, and Mr. Daniel Shusterman, Vice President of Operations,
Treasurer and Chief 

                                      16

<PAGE>

Financial Officer of the Company, obligate the Company to make certain salary 
payments if their respective employment is terminated without just cause or 
due to a Disability (as defined therein).  See "Description of Securities."

POSSIBLE ADVERSE AND ANTI-TAKEOVER EFFECTS OF AUTHORIZATION OF PREFERRED STOCK.

     The Company's Certificate of Incorporation authorizes the issuance of a
maximum of 10,000,000 shares of preferred stock on terms which may be determined
by the Company's Board of Directors without further stockholder action.  Of
these 10,000,000 shares, 4,000,000 shares have been designated Series A
Preferred Stock.  The terms of the Series A Preferred Stock include dividend and
liquidation preferences and conversion rights which could adversely affect the
rights of holders of the Common Stock being offered hereby.  In addition, each
share of Series A Preferred Stock is entitled to one vote on all matters on
which the Common Stock has the right to vote.  Holders of Series A Preferred
Stock are also entitled to vote as a separate class on any proposed adverse
change in the rights, preferences or privileges of the Series A Preferred Stock
and any increase in the number of authorized shares of Series A Preferred Stock.
Further, the terms of any additional series of preferred stock, which may also
include priority claims to assets and dividends, as well as special voting
rights, could adversely affect the rights of holders of the Common Stock being
offered hereby.  Other than 1,663,143 shares of Series A Preferred Stock, of
which 899,140 has been converted into Common Stock as of September 29, 1998, no
preferred stock has been issued to date and the Company has no current plans to
issue additional preferred stock other than in payment of in-kind dividends. 
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 shares of Common Stock, otherwise dilute or subordinate the
rights of holders of Common Stock and adversely affect the market price of the
Common Stock.  See "Description of Securities."

CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS.

     The Warrants will be exercisable only if a current prospectus relating to
the securities underlying the Warrants is then in effect under the Securities
Act and such securities are qualified for sale or exempt from qualification
under the applicable securities or "blue sky" laws of the states in which the
various holders of the Warrants then reside.  There can be no assurance that the
Company will be able to do so.  The value of the Warrants may be greatly reduced
if a current prospectus covering the securities issuable upon the exercise of
the 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 Warrants
then reside.  See "Description of Securities."  

                           DETERMINATION OF OFFERING PRICE

     The exercise prices and other terms of the Warrants have been determined by
negotiation between the Company, Blair and JMA and do not necessarily bear any
relationship to the Company's assets, book value or financial condition, or to
any other recognized criterion of value.  It should be noted that Messrs. 
Meyers and Janssen, who are the principals of JMA, collectively own 21.4% of the
Company's Common Stock and 20.0% of the Company's securities.  

                                   USE OF PROCEEDS

     Holders of Warrants are not obligated to exercise their Warrants and there
can be no assurance that such holders will choose to exercise all or any of
their Warrants.  Furthermore, the Company is unable to predict the timing, if
ever, of the exercise of any of the above securities, although they are likely
to be exercised at such time as the market price of the Common Stock is
substantially above the exercise price of the Warrants.  In the event that all
of the 312,500 outstanding Class A Warrants, the 482,720 Class B Warrants and
the 506,250 Blair Warrants are exercised, the net proceeds to the Company would
be approximately $2,030,647 after deducting the expenses of the offering and
assuming payment of the Solicitation Fee.  The net proceeds received upon the
exercise of the Warrants will be used for research 

                                      17

<PAGE>

and development and general corporate purposes.  The foregoing represents the 
Company's best estimate of the use of the net proceeds received upon exercise 
of the Warrants based upon the current status of its business operations, its 
current plans and current economic conditions.  Future events, including the 
problems, delays, expenses and complications frequently encountered by early 
stage companies as well as changes in competitive conditions affecting the 
Company's business and the success or lack thereof of the Company's marketing 
efforts, may make shifts in the use of funds necessary or desirable.  

     Prior to expenditure, the net proceeds will be invested in high-liquidity,
United States government and corporate obligations, interest-bearing money
market funds and other financial instruments.  

                               SELLING SECURITYHOLDERS

     An aggregate of up to 312,500 Class A Warrants, 482,720 Class B Warrants,
506,250 Blair Warrants and an aggregate of 520,588 shares of Common Stock
issuable upon exercise of the Warrants may be offered by certain securityholders
who received their Warrants in connection with the 1994 Bridge Financing and the
1995 Bridge Financing or by their transferees.  

     Blair is a Selling Security Holder that beneficially owns all 506,250 Blair
Warrants and the Common Stock underlying such warrants.  The Company is
registering all 506,250 Blair Warrants for resale to the public.  The following
table sets forth certain information with respect to each Selling Security
Holder for whom the Company is registering the Class A and Class B Warrants and
the Common Stock underlying such warrants for resale to the public.  The Company
will not receive any of the proceeds from the sale of the Warrants, however, it
will receive proceeds from the exercise, if any, of any such Warrants less a 5%
Solicitation Fee payable to JMA in certain instances.  Except as described
below, there are no material relationships between any of the Selling
Securityholders and the Company, nor have any such material relationships
existed within the past three years.                                       


<TABLE>
<CAPTION>
                                                          NUMBER OF CLASS A        NUMBER OF CLASS B    
SELLING SECURITYHOLDER                                   WARRANTS BENEFICIALLY   WARRANTS BENEFICIALLY  
- ----------------------                                         OWNED (1)                OWNED (2)      
<S>                                                      <C>                     <C>
Lea & Uriel Adar.......................................              ---                 25,000
Argonaut Partnership L.P...............................              ---                 15,094
Tom & Noreen Axon......................................              ---                 25,000
Clifford Barr..........................................           12,500                    ---
Anthony Bartone........................................           25,000                    ---
Robert Bauers..........................................              ---                 12,500
Bear Stearns Sec. Corp. Custodian Marc Friedland IRA...              ---                 25,000
Andrew Bressman........................................           25,000                    ---
David F. Burr..........................................              ---                 25,000
Robert V. Call, Jr.....................................           12,500                 25,000
Horace J. Caulkins.....................................            6,250                    ---
CLFS, Ltd..............................................              ---                 12,500
Douglas M. Colbert.....................................           12,500                  6,250
Howard Commander.......................................              ---                 12,500
Richard H. Davimos
    TTEE FBO Richard H. Davimos Trust..................           25,000                     --
Delaware Charter Guarantee & Trust Co. 
    F/B/O Beverly Levy IRA.............................              ---                  3,970
  Kenneth Eitman IRA Rollover..........................              ---                 25,000
Gerstenhaber Investments c/o David Gustenhaber.........              ---                  9,906
Richard J.  Haughwout..................................              ---                 12,500
</TABLE>


                                      18

<PAGE>

<TABLE>
<CAPTION>
                                                          NUMBER OF CLASS A        NUMBER OF CLASS B    
SELLING SECURITYHOLDER                                   WARRANTS BENEFICIALLY   WARRANTS BENEFICIALLY  
- ----------------------                                         OWNED (1)                OWNED (2)      
<S>                                                      <C>                     <C>
Ginger Huggins.........................................              ---                  6,250
Barry J. Jacobson c/o Joseph P.  Day Realty...........               --                  18,750
Barry J. Jacobson......................................              ---                 50,000
Gary Kaplowitz.........................................              ---                 12,500
Kinder Investments L.P. ...............................          100,000                     --
Herbert Lerman.........................................           12,500                    ---
Momentum Enterprises Inc. Money Purchase Trust.........           12,500                    ---
Todd J. Mueller........................................              ---                 12,500
James B. Murphy........................................              ---                 12,500
Denis J. Nayden........................................           25,000                 50,000
Omnitek, Inc...........................................           12,500                    ---
Charles Potter.........................................           12,500                    ---
James Rhodes...........................................              ---                 10,000
Michael McNulty Rosner.................................              ---                 12,500
Allan Rothstein........................................              ---                 25,000
Barry A. Schatz........................................              ---                 25,000
Mark Shnitkin..........................................            6,250                    ---
Software Marketing Corporation.........................              ---                 12,500
Kathleen and Forrest Vander Vliet......................           12,500                    ---

      TOTAL.............................................          312,500                482,720
</TABLE>


- -----------
(1)  Does not include an aggregate of 125,000 shares of Common Stock issuable
     upon exercise of the Class A Warrants.  
(2)  Does not include an aggregate of 193,088 shares of Common Stock issuable
     upon exercise of the Class B Warrants.

                              DESCRIPTION OF SECURITIES

CLASS A WARRANTS, CLASS B WARRANTS AND BLAIR WARRANTS

     There are currently outstanding Warrants to purchase an aggregate of
520,588 shares of Common Stock.  Each warrant entitles the holder to purchase
 .04 of a share of Common Stock.  The Warrants consist of 312,500 Class A
Warrants to purchase 125,000 shares of Common Stock, 482,720 Class B Warrants to
purchase 193,088 shares of Common Stock and 506,250 Blair Warrants to purchase
202,500 shares of Common Stock.  The Class A Warrants are exercisable at $3.75
per share of Common Stock.  The Class B Warrants are exercisable at $4.375 per
share of Common Stock.  The Blair Warrants are exercisable at an exercise price
of $3.75 per share of Common Stock.  The Warrants are all currently exercisable
and expire on November 7, 2000.  The Warrants contain provisions that protect
holders thereof from dilution by adjustment of the exercise price and rate in
the event of a merger, acquisition, recapitalization or split-up of shares of
the Company, the issuance by the Company of a stock dividend, sales of stock
below current market price and other unusual events.  The Blair Warrants were
granted as part of Blair's compensation for services as placement agent in the
Company's 1994 Bridge Financing and in connection with the waiver of certain
rights.  See "Bridge Financings."  


                                      19

<PAGE>

     GENERAL.  The Warrants may be exercised upon surrender of the certificate
therefor on or prior to the expiration or redemption date (as explained above)
at the offices of the Company with the form of "Election to Purchase" on the
reverse side of the certificate filled out and executed as indicated,
accompanied by payment (in the form of a certified or cashier's check payable to
the order of the Company) of the full exercise price for the number of Warrants
being exercised.  

     The Warrants contain provisions that protect the holders thereof against
dilution by adjustment of the exercise price and rate in certain events, such as
stock dividends, stock splits or combinations, mergers, sales of all or
substantially all of the Company's assets at less than market value, sales of
stock at below market price and other unusual events.  


                                  BRIDGE FINANCINGS

     In order to fund its continuing operations, the Company completed two
Bridge Financings, one in August 1994 (the "1994 Bridge Financing") and one in
April 1995 (the "1995 Bridge Financing").  In connection with the 1994 Bridge
Financing, the Company issued (i) an aggregate of $1,000,000 in principal amount
of 9% Subordinated Notes ("1994 Notes") and (ii) an aggregate of 500,000 bridge
warrants ("Class A Warrants") to purchase an aggregate of 200,000 shares of the
Company's Common Stock exercisable at $3.75, which Class A Warrants are
exercisable until November 2, 2000.  In connection with the 1995 Bridge
Financing, the Company issued (i) an aggregate of $2,037,500 in principal amount
of 9% Subordinated Notes ("1995 Notes") and (ii) an aggregate of 1,018,750
bridge warrants ("Class B Warrants") to purchase an aggregate of 407,500 shares
of the Company's Common Stock exercisable at $4.375, which Class B Warrants are
exercisable until November 2, 2000.  The Company repaid the 1994 Notes and 1995
Notes in 1995, including $400,000 of the Notes which were past due, from the net
proceeds of the Company's initial public offering completed in November 1995
(the "IPO").  In addition, the Company issued the Blair Warrants to the
placement agent of the 1994 Bridge Financing, as described below.  The
outstanding Class A Warrants, Class B Warrants and underlying shares of Common
Stock are being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in a registration statement of which this Prospectus is a
part.  

     In connection with the 1994 Bridge Financing, Blair acted as placement
agent.  In consideration of these services, the Company paid to Blair a fee
equal to $120,000, a non-accountable expense allowance of $10,000 and an option
to acquire warrants to purchase up to an aggregate of 66,667 shares of the
Company's Common Stock at an exercise price of $3.75 per share (the "Blair
Placement Agent Warrants").  In addition, in connection with the 1994 Bridge
Financing, the Company executed a merger and acquisition agreement ("M/A
Agreement") with Blair and granted Blair a right of first refusal with respect
to offerings of securities of the Company.  In anticipation of the 1995 Bridge
Financing, all such rights of Blair with respect to the M/A Agreement and right
of first refusal were canceled in consideration of the payment by the Company to
Blair of $50,000.  In addition, pursuant to a consulting agreement with the
Company, Blair rendered investment banking advice and assistance in structuring
the 1995 Bridge Financing.  In consideration of these services, the Company
granted Blair an option to acquire warrants equaling 33 1 3% of all warrants
issued in connection with the 1995 Bridge Financing.  Such warrants to purchase
an aggregate of 135,833 shares of Common Stock provide for an exercise price of
$3.75 per share (together with the Blair Placement Agent Warrants, the "Blair
Warrants").  The holders of these warrants issued to the placement agent of the
1994 Bridge Financing have certain demand and "piggy-back" registration rights. 
The Blair Warrants and underlying shares of Common Stock are being registered
under the Securities Act in a registration statement of which this Prospectus is
a part.  See "Risk Factors--Arbitrary Determination of Offering Price."

     JMA acted as placement agent for the 1995 Bridge Financing and in
consideration thereof received a fee of $203,750 plus a non-accountable expense
allowance of $61,125.  In addition, JMA was granted, in connection with its
services as Placement Agent for the 1995 Bridge Financing, a (i) 5% Solicitation
Fee for the Class B Warrants, (ii) five-year right of first refusal to act as
agent for offerings of securities by the Company and certain of its shareholders
and (iii) merger and acquisition agreement.  See "Possible Restriction on
'Market Making.' Activities in the Company's Securities; Illiquidity--Arbitrary
Determination of Offering Price" and "Plan of Distribution."


                                      20

<PAGE>

     The aggregate net proceeds to the Company from the issuance of its Bridge
Notes and Warrants were approximately $2,500,000.  The Company used the proceeds
from the 1994 Bridge Financing to fund its operations (including paying for
research and development activities, operating expenses and accrued liabilities,
and for officers compensation) and a portion of the expenses of the 1994 Bridge
Financing and the 1995 Bridge Financing.  

                                 PLAN OF DISTRIBUTION

     The securities offered hereby are being offered directly by the Company
pursuant to the terms of the Warrants.  No underwriter is being utilized in
connection with this offering.  

     In connection with the 1995 Bridge Financing, the Company has agreed to pay
JMA a fee (the "Solicitation Fee") equal to 5% of the aggregate exercise price
of all Class B Warrants exercised after November 2, 1996, if (i) the market
price of the Common Stock on the date that the Class B Warrants are exercised is
greater than the Class B Warrant exercise price; (ii) the exercise of the Class
B Warrants was solicited by JMA or its representative or agent and the
warrantholder designates in writing that the exercise was solicited thereby;
(iii) the Class B Warrants are not held in a discretionary account; (iv)
disclosure of this compensation arrangement is made by JMA at the time of the
exercise of the Class B Warrants; and (v) the solicitation of the exercise of
the Class B Warrants was not in violation of Rule 10b-6 promulgated under the
Exchange Act.  JMA will generally be prohibited, pursuant to Rule 10b-6, from
engaging in market-making activities with regard to the Company's securities for
a period specified by Rule 10b-6 promulgated under the Exchange Act prior to any
solicitation of the exercise of Warrants until the termination of such
solicitation.  Accordingly, JMA may be unable to provide a market for the
Company's securities during certain periods while the Class B Warrants are
exercisable.  See "Bridge Financings."

                                    LEGAL MATTERS

     The validity of the securities offered hereby will be passed upon for the
Company by Morrison Cohen Singer & Weinstein, LLP, New York, New York, a partner
of which holds options to acquire shares of Common Stock.  Certain legal matters
with respect to information contained in this Prospectus under the headings
"Risk Factors--Royalty Obligations; Possible Loss of Patents and Other
Proprietary Rights; and --Uncertain Ability to Protect Proprietary Technology"
will be passed upon for the Company by Gardere & Wynne, LLP, Dallas, Texas.

                                       EXPERTS

     The balance sheet as at December 31, 1997 and the statements of operations,
changes in stockholders' equity (capital deficiency) and cash flows for each of
the years in the two-year period ended December 31, 1997 and for the period from
inception (September 11, 1991) through December 31, 1997 included in the 
Annual Report on Form 10-KSB which is incorporated by reference in this 
Prospectus have been audited by, and are incorporated by reference herein in 
reliance upon the report of Richard A. Eisner & Company, LLP, independent 
auditors, given on the authority of that firm as experts in accounting and 
auditing.

                                      21

<PAGE>

NO DEALER, SALESPERSON OR ANY OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING SECURITYHOLDERS.  THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION TO BUY, ANY
SECURITY BY ANY PERSON IN ANY JURISDICTION WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL.   NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES  IMPLY THAT THE INFORMATION IN THIS PROSPECTUS IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF THIS PROSPECTUS. 


<TABLE>
<CAPTION>
                                  TABLE OF CONTENTS

                                                                           Page
                                                                           ---- 
<S>                                                                        <C>
Available Information....................................................     i
Prospectus Summary.......................................................     1
Risk Factors.............................................................     7
Determination of Offering Price..........................................    17
Use of Proceeds..........................................................    17
Selling Securityholders..................................................    18
Description of Securities................................................    19
Bridge Financings........................................................    20
Plan of Distribution.....................................................    21
Legal Matters............................................................    21
Experts..................................................................    21
</TABLE>


                             CYTOCLONAL PHARMACEUTICS INC.

                                    Consisting of
                               312,500 Class A Warrants
                               482,720 Class B Warrants
                                   506,250 Warrants
                            520,588 Shares of Common Stock

                                     ----------- 

                                      PROSPECTUS

                                     ----------- 

                                 September _____,1998








<PAGE>


                                       PART II

                        INFORMATION NOT REQUIRED IN PROSPECTUS


Item 14.  Other Expenses of Issuance and Distribution

     The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are as follows: 


<TABLE>
<CAPTION>
                                                                     AMOUNT
                                                                     ------ 
     <S>                                                            <C>
     Printing Expenses............................................. $ 5,000
     Accounting Fees and Expenses..................................  10,000
     Legal Fees and Expenses.......................................  50,000
     Miscellaneous Expenses........................................   2,000

     Total......................................................... $67,000
</TABLE>



ITEM 15.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

     The Certificate of Incorporation and By-Laws of the Registrant provides
that the Company shall indemnify any person to the full extent permitted by the
Delaware General Corporation Law (the "GCL").  Section 145 of the GCL, relating
to indemnification, is hereby incorporated herein by reference.  

     Insofar as indemnification for liabilities under the Securities Act may be
permitted to Directors, officers or controlling persons of the Company pursuant
to the Company's By-laws and the Delaware General Corporation Law, the Company
has been informed that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities Act
and is therefore unenforceable.  

     The Company's Certificate of Incorporation includes certain provisions
permitted pursuant to Delaware law whereby officers and Directors of the Company
are to be indemnified against certain liabilities.  The Company's Restated
Certificate of Incorporation also limits, to the fullest extent permitted by
Delaware law, a director's liability for monetary damages for breach of
fiduciary duty, including gross negligence, except liability for (i) breach of
the director's duty of loyalty, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of the law,
(iii) the unlawful payment of a dividend or unlawful stock purchase or
redemption and (iv) any transaction from which the director derives an improper
personal benefit.  Delaware law does not eliminate a director's duty of care and
this provision has no effect on the availability of equitable remedies such as
injunction or rescission based upon a director's breach of the duty of care.  In
addition, the Company has obtained an insurance policy providing coverage for
certain liabilities of its officers and Directors.  

     In accordance with Section 102(a)(7) of the GCL, the Certificate of
Incorporation of the Registrant eliminates the personal liability of directors
to the Company or its stockholders for monetary damages for breach of fiduciary
duty as a director with certain limited exceptions set forth in
Section 102(a)(7).  


ITEM 16.  EXHIBITS


                                      II-1


<PAGE>

  1.1    Amended Form of Underwriting Agreement between Registrant and the
         Underwriters (1)
  1.2    Agreement Among Underwriters (1)
  3.1    Certificate of Incorporation, as amended (1)
  3.2    By-laws (1)
  4.1    Specimen certificates representing Class C Warrants, Class D Warrants
         and Common Stock (1)
  4.2    Form of Warrant Agreement with warrant certificates between Registrant,
         the Underwriters and Warrant Agent (1)
  4.3    Form of Unit Purchase Option (1)
  4.4    Warrant Certificate issued to The Washington State University Research
         Foundation (1)
  5.1    Opinion of Morrison Cohen Singer & Weinstein, LLP 
  5.2    Opinion of Gardere & Wynne, LLP
  10.1   Form of Consulting Agreement between the Registrant and JMA (1)
  10.2   Employment Agreement dated March 1, 1992 between the Registrant and
         Arthur P. Bollon, Ph.D. (1)
  10.3   Employment Agreement dated March 1, 1992 between the Registrant and
         Bruce Meyers, as amended (1)
  10.4   Employment Agreement effective November 2, 1995 between the Registrant
         and Daniel Shusterman (1)
  10.5   1992 Stock Option Plan, as amended (1)
  10.6   Form of Stock Option Agreement (1)
  10.7   Lease Agreement dated August 22, 1997 between the Registrant and
         Andrews-Dillingham Properties (8)
  10.8   Lease Agreement dated October 1, 1991 between the Registrant and J.K.
         and Susie Wadley Research Institute and Blood Bank, as amended (1)
  10.9   Purchase Agreement dated October 10, 1991 between the Registrant and
         Wadley Technologies, Inc. ("Wadley") (1)
 10.10   Security Agreement dated October 10, 1991 between the Registrant and
         Wadley (1)
 10.11   License Agreement dated March 15, 1989 between the Registrant and
         Phillips Petroleum Company, as amended (1)
 10.12   License Agreement dated June 10, 1993 between Registrant and Research &
         Development Institute, Inc. ("RDI"), as amended, relating to the Fungal
         Paclitaxel Production System (1) 
 10.13   Amendment, dated May 27, 1998, to that certain License Agreement, 
         dated June 10, 1993, between the RDI, and the Company (6)*
 10.14   Research and Development Agreement effective June 10, 1993 between
         Registrant and RDI, as amended (1)
 10.15   License Agreement dated February 22, 1995 between Registrant and RDI, 
         as amended, relating to FTS-2 (1)
 10.16   Research, Development and License Agreement dated March 26, 1992 
         between Registrant and Enzon, Inc. ("Enzon"), as amended (1)
 10.17   Research, Development and License Agreement dated July 13, 1992 between
         Registrant and Enzon relating to the Registrant's tumor necrosis factor
         technology (1)
 10.18   Agreement effective June 30, 1992 between Registrant and University of
         Texas at Dallas ("UTD"), as amended (1)
 10.19   Research Agreement effective April 8, 1994 between Registrant and
         Sloan-Kettering Institute for Cancer Research (1)
 10.20   Joint Venture Agreement dated September 17, 1992 between Registrant and
         Pestka Biomedical Laboratories, Inc. ("Pestka") (1)
 10.21   Stock Purchase Agreement dated September 17, 1992 between Registrant 
         and Pestka (1)
 10.22   License Agreement dated September 17, 1992 between Cytomune, Inc. and
         Pestka (1)
 10.23   Research and Development Agreement dated September 17, 1992 between
         Cytomune, Inc. and Pestka (1)

                                      II-2

<PAGE>

 10.24   Marketing Agreement dated as of November 1, 1994 between Helm AG and 
         the Registrant (1)
 10.25   Extension Agreement with RDI dated June 5, 1995 (1)
 10.26   Third Amendment to Lease Agreement dated April 30, 1995 (1)
 10.27   Form of Subordinated Note Extension (1)
 10.28   Form of Note Extension (1)
 10.29   September 25, 1995 RDI Extension (1)
 10.30   October 25, 1995 RDI Extension (1)
 10.31   Amendment to License Agreement dated June 10, 1993, as amended, and
         Research and Development Agreement effective June 10, 1993, as amended,
         both agreements between the Company and RDI (1)
 10.32   License Agreement No. W960206 effective February 27, 1996 between the
         Company and The Regents of the University of California (2)
 10.33   License Agreement No.  W960207 effective February 27, 1996 between the
         Company and The Regents of the University of California (2)
 10.34   Amended and Restated License Agreement between the Washington State
         University Research Foundation and the Company, dated June 3, 1998 (6)*
 10.35   Amendment to Agreement, effective June 30, 1992, as amended, between
         Registrant and the University of Texas at Dallas (3)
 10.36   1996 Stock Option Plan (4)
 10.37   Patent License Agreement between the Registrant and The University of
 10.39   Texas System (1) Master License Agreement, dated as of June 12, 1998,
         between the Company and Bristol-Myers Squibb Company, Inc. (6)* 
 10.40   Sublicense Agreement, dated May 27, 1998, between the Company and
         Bristol-Myers Squibb Company, Inc. under the Research & Development
         Institute, Inc. License Agreement, as amended, dated June 10, 1993 (6)*
 10.41   Sublicense Agreement, dated May 19, 1998, between the Company and
         Bristol-Myers Squibb Company, Inc. under the Washington State 
         University Research Foundation License Agreement, dated July 8, 1996 
         (6)*
 10.42   Exclusive License Agreement between The Regents of the University of
         California and the Company for Peptide Antiestrogen for Breast Cancer
         Therapy Case No. LA97-103*
  11.1   Statement re: Computation of per share earnings (5)
  24.1   Consent of Morrison Cohen Singer & Weinstein, LLP (included in its
         opinion filed as Exhibit 5.1 hereto) 
  24.3   Consent of Richard A. Eisner & Company, LLP

- -----------
*    Confidential Portions omitted and filed separately with the Commission
     pursuant to Rule 24b-2 promulgated under the Securities Act.

(1)  Filed as an exhibit to the Company's Registration Statement on Form SB-2
     (File No. 33-91802) and is incorporated by reference herein.  
(2)  Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
     fiscal year ended December 31, 1995 and is incorporated by reference
     herein.  
(3)  Filed as an exhibit to the Company's Post-Effective Amendment No.1 to its
     Registration Statement on Form  SB-2 (File No. 33-91802) and is
     incorporated by reference herein.  
(4)  Filed as an exhibit to the Company's Registration Statement on Form S-8
     (File No. 333-11691) and is incorporated by reference herein.  
(5)  Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
     fiscal year ended December 31, 1996 and is incorporated by reference
     herein.  
(6)  Filed as an exhibit to the Company's Current Events on Form 8-K (File No. 
     000-26078) and is incorporated by reference herein.
(7)  Filed as an exhibit to the Company' Post Effective Amendment No. 1 to
     Registration Statement on Form SB-2 (File No.  333-13409) and is
     incorporated by reference herein.


                                      II-3

<PAGE>

ITEM 17.  UNDERTAKINGS

RULE 415 OFFERING--UNDERTAKINGS REQUIRED BY REGULATION S-B, ITEM 512(a).  
                              
     The undersigned registrant hereby undertakes:

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

          (i)  Include any prospectus required by Section 10(a)(3) of the
               Securities Act of 1933. 
          
     (2)  That, for determining liability under the Securities Act of 1933, each
     post-effective amendment shall be deemed to be a new registration statement
     relating to the securities offered herein, and the offering of such
     securities at that time shall be deemed to be an 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.













                                      II-4

<PAGE>

     

                                           

                                      SIGNATURES

     Pursuant to the requirements of the Securities Act of 133, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements filing on Form S-3 and has duly caused this registration statement
to be signed on its behalf by the undersigned, thereunder duly authorized, in
the city of Dallas, state of Texas, on September 30, 1998.

                                   CYTOCLONAL PHARMACEUTICS INC.

                                   By: Arthur P. Bollon
                                      -----------------------------------------
                                      Arthur P.  Bollon, Ph.D.,
                                      CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE
                                      OFFICER

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


<TABLE>
<CAPTION>
          SIGNATURE                        TITLE                        DATE
          ---------                        -----                        ---- 
    <S>                         <C>                                <C>
        Arthur P. Bollon        Chairman, President, Chief
    ------------------------    Executive Officer and Director
    Arthur P.  Bollon, Ph.D.    (principal executive officer)      September 30, 1998
                                

                                Vice President Operations,
        Daniel Shusterman       Treasurer and Chief Financial
    ------------------------    Officer (principal financial
     Daniel Shusterman, J.D.    and accounting officer)            September 30, 1998

            Ira Gelb
    ------------------------ 
         Ira Gelb, M.D.         Director                           September 30, 1998

          Irwin Gerson
    ------------------------ 
        Irwin C.  Gerson        Director                           September 30, 1998

        Walter Lovenberg
    ------------------------    
   Walter M.  Lovenberg, Ph.D.  Director                           September 30, 1998
</TABLE>




                                      II-5

<PAGE>


                                    EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                       PAGE NO.
                                                                       --------
  <S>                                                                  <C>
    5.1   Opinion of Morrison Cohen Singer & Weinstein, LLP
    5.2   Opinion of Gardere & Wynne, LLP                                      
  10.42   Exclusive License Agreement between The Regents of the
          University of California and the Company for Peptide
          Antiestrogen for Breast Cancer Therapy Case No. LA97-103*
   24.3   Consent of Richard A. Eisner & Company, LLP
</TABLE>



















- -----------------------
*    Confidential Portions omitted and filed separately with the Commission
     pursuant to Rule 24b-2 promulgated under the Securities Act.








<PAGE>

                                                                    EXHIBIT 5.1

                        MORRISON COHEN SINGER & WEINSTEIN, LLP
                                 750 Lexington Avenue
                               New York, New York 10022

                                     -----------

                              Telephone: (212) 735-8600

                                        -----

                               Facsimile (212) 735-8708               



                                  September 30, 1998




Cytoclonal Pharmaceutics Inc.
9000 Harry Hines Boulevard
Dallas, Texas 75235

          Re:  Post Effective Amendment No. 2 to
               Registration Statement on Form SB-2
               on Registration Statement on Form S-3
               ------------------------------------- 

Dear Sirs:

     We refer to Post-Effective Amendment No. 2 to the Registration Statement on
Form SB-2 on Registration Statement on Form S-3 (the "Registration Statement")
filed by you, Cytoclonal Pharmaceutics Inc., a Delaware corporation (the
"Company"), pursuant to the Securities Act of 1933, as amended, with the
Securities and Exchange Commission thereby registering (i) 312,500 Class A
Warrants (the "Class A Warrants") entitling the registered holders thereof to
acquire 0.4 share of common stock, $.01 par value per share (the "Common
Stock"), of the Company per Class A Warrant at an exercise price equal to $3.75
per share of Common Stock, subject to adjustment, until November 7, 2000 (the
"Expiration Date"), (ii) 482,720 Class B Warrants (the "Class B Warrants")
entitling the registered holders thereof to acquire 0.4 share of Common Stock of
the Company per Class B Warrant at an exercise price equal
 to $4.375 per share
of Common Stock, subject to adjustment, until the Expiration Date, (iii) 506,250
warrants (together with the Class A Warrants and Class B Warrants, the
"Warrants") entitling the registered holders thereof to purchase 0.4 share of
Common Stock of the Company per warrant at an exercise price equal to $3.75 per
share of Common Stock, subject to adjustment, until the Expiration Date and (iv)
520,588 shares of Common Stock of the Company issuable upon the exercise of the
Warrants (the "Warrant Shares"). 


<PAGE>

Cytoclonal Pharmaceutics Inc.
September 30, 1998
- -Page Two-


     We have examined and are familiar with originals, or copies certified or
otherwise identified to our satisfaction, of such corporate records of the
Company, certificates of officers of the Company and of public officials and
such other documents as we have deemed appropriate as a basis for the opinions
expressed below.

     Based upon the foregoing, we are of the opinion that:

          1.   The Warrants have been duly and validly authorized and when sold,
               paid for and issued as contemplated by the Registration Statement
               will be duly and validly issued and fully paid and nonassessable.

          2.   The Warrant Shares have been duly and validly authorized and when
               sold, paid for, and issued upon exercise of the Warrants in
               accordance with the terms of the Warrants will be duly and
               validly issued and fully paid and nonassessable.

     We hereby consent to the use of this opinion in the above-mentioned
Registration Statement and to the reference to our name under the heading "Legal
Matters" in the Prospectus constituting a part of such Registration Statement.

                                   Very truly yours,

                                   /s/ MORRISON COHEN SINGER & WEINSTEIN, LLP
                                   MORRISON COHEN SINGER & WEINSTEIN, LLP




<PAGE>

                                                       EXHIBIT 5.2

                                      
                              CONSENT OF COUNSEL

     The undersigned hereby consents to the use of our name and the statement 
with respect to us appearing under the heading "Legal Matters" included in 
this Post-Effective Amendment No. 2 to Form SB-2 on Form S-3.



GARDERE & WYNNE, L.L.P.


Daniel F. Perez                       September 30, 1998
- ------------------------              ------------------------
Daniel F. Perez                       Date















<PAGE>


                         EXCLUSIVE LICENSE AGREEMENT
                                       
                                   BETWEEN
                                       
                 THE REGENTS OF THE UNIVERSITY OF CALIFORNIA
                                       
                                     AND
                                       
                       CYTOCLONAL PHARMACEUTICALS, INC.
                                       
                                     FOR
                                       
                PEPTIDE ANTIESTROGEN FOR BREAST CANCER THERAPY
                                       
                              CASE NO.  LA97-103


<PAGE>

                              TABLE OF CONTENTS


<TABLE>
<CAPTION>
Article No.    Title                                              Page
- -----------    -----                                              ----
<S>                                                               <C>
Recitals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
1.   DEFINITIONS.. . . . . . . . . . . . . . . . . . . . . . . . .  2 
2.   GRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . .  5 
3.   LICENSE ISSUE FEE . . . . . . . . . . . . . . . . . . . . . .  6 
4.   ROYALTIES . . . . . . . . . . . . . . . . . . . . . . . . . .  7 
5.   DUE DILIGENCE . . . . . . . . . . . . . . . . . . . . . . . . 10 
6.   PROGRESS AND ROYALTY REPORTS. . . . . . . . . . . . . . . . . 11 
7.   BOOKS AND RECORDS . . . . . . . . . . . . . . . . . . . . . . 13 
8.   LIFE OF THE AGREEMENT . . . . . . . . . . . . . . . . . . . . 13 
9.   TERMINATION BY THE REGENTS. . . . . . . . . . . . . . . . . . 14 
10.  TERMINATION BY THE LICENSEE . . . . . . . . . . . . . . . . . 15 
11.  DISPOSITION OF PATENT PRODUCTS ON HAND UPON TERMINATION . . . 15 
12.  USE OF NAMES AND TRADEMARKS . . . . . . . . . . . . . . . . . 15 
13.  LIMITED WARRANTY. . . . . . . . . . . . . . . . . . . . . . . 16 
14.  PATENT PROSECUTION AND MAINTENANCE. . . . . . . . . . . . . . 17 
15.  PATENT MAKING . . . . . . . . . . . . . . . . . . . . . . . . 20 
16.  PATENT INFRINGEMENT . . . . . . . . . . . . . . . . . . . . . 20 
17.  INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . 22 
18.  NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 
</TABLE>

                                      i

<PAGE>

<TABLE>
<S>                                                                <C>
19.  ASSIGNABILITY . . . . . . . . . . . . . . . . . . . . . . . . 24 
20.  LATE PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 24 
21.  WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 
22.  FAILURE TO PERFORM. . . . . . . . . . . . . . . . . . . . . . 25 
23.  GOVERNING LAWS. . . . . . . . . . . . . . . . . . . . . . . . 25 
24.  GOVERNMENT APPROVAL OR REGISTRATION . . . . . . . . . . . . . 25 
25.  EXPORT CONTROL LAWS . . . . . . . . . . . . . . . . . . . . . 25 
26.  FORCE MAIEURE . . . . . . . . . . . . . . . . . . . . . . . . 26 
27.  CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . 26 
28.  INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT.. . . . . . . . 28 
29.  MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 29 
</TABLE>




                                      ii

<PAGE>

UC Case No.  LA97-103 
Print date: August 4, 1998


                          EXCLUSIVE LICENSE AGREEMENT
                                      FOR 
                         CYTOCLONAL PHARMACEUTICS, INC.

     This license agreement ("Agreement") is effective this
 6th day of 
August, 1998, by and between The Regents of the University of California 
("The Regents"), a California corporation, having its statewide 
administrative offices at 1111 Franklin Street, 12th Floor, Oakland, 
California 94607-5200, and Cytoclonal Pharmaceutics, Inc, ("Licensee"), a 
corporation, having a principal place of business at 9000 Harry Hines Blvd., 
Dallas, TX 75235.

                                    RECITALS

     Whereas, certain inventions, characterized as "Peptide Antiestrogen for 
Breast Cancer Therapy" ("Invention") were made at the University of 
California, Los Angeles by Dr.  Richard Pietras and are claimed in Patent 
Rights defined below;

     Whereas, the Licensee entered into a Secrecy Agreement ("Secrecy 
Agreement"), effective 3-31-98 that allowed the Licensee to evaluate its 
interest in taking a license to the Invention;

     Whereas, the Invention was made under funding provided by UC Breast 
Cancer Research Program;

     Whereas, Dr.  Pietras is an employee of the University of California;

     Whereas, the Licensee is a "small entity" as defined in 37 CFR Section 
1.9 and a "small-business concern" defined in 15 U.S.C.  Section 632;


<PAGE>

     Whereas, both parties recognize that royalties due under this Agreement 
will be paid on pending patent applications and issued patents;

     Whereas, the Licensee requested certain rights from The Regents to 
commercialize the Invention; and

     Whereas, The Regents responded to the request of the Licensee by 
granting the following rights to the Licensee so that the products and other 
benefits derived from the Invention can be enjoyed by the general public.



The parties agree as follows:

1.   DEFINITIONS.

     As used in this Agreement, the following terms will have the meaning set
forth below:

     1.1    "Patent Rights" means all U.S.  patents and patent applications and
foreign patents and patent applications assigned to The Regents, and in the case
of foreign patents and patent applications those requested under Paragraph 14.4
herein, including any reissues, extensions, substitutions, continuations,
divisions, and continuations-in-part applications (only to the extent, however,
that claims in the continuations-in-part applications are supported in the
specification of the parent patent application) based on and including any
subject matter claimed in or covered by U.S. Patent Provisional Application
Serial Number [        ] entitled Peptide Antiestrogen Compositions and Methods
for Treating Breast Cancer, filed by The Regents as well as the PCT application
[                           ] filed 4-17-98 based upon the U.S.  provisional
and both of which are assigned to The Regents.

                                      2

<PAGE>

     1.2    "Patent Products" means:

               i    any kit, composition of matter, material, or product; 

              ii    any kit, composition of matter, material, or product to be
                    used in a manner requiring the performance of the Patent
                    Method; or

             iii    any kit, composition of matter, material, or product
                    produced by the Patent Method; 

to the extent that the manufacture, use, or sale of such kit, composition of 
matter, material, or product, in a particular country, would be covered by or 
infringe, but for the license granted to the Licensee pursuant to this 
Agreement, an unexpired claim of a patent or pending claim of a patent 
application were it issued as a claim in a patent under Patent Rights in that 
country in which such patent has issued or application is pending.  This 
definition of Patent Products also includes a service either used by the 
Licensee or provided by the Licensee to its customers when such service 
requires the practice of the Patent Method.

     1.3    "Patent Method" means any process or method covered by the claims 
of a patent application or patent within Patent Rights or the use or practice 
of which would constitute in a particular country, but for the license 
granted to the Licensee pursuant to this Agreement, an infringement of an 
unexpired claim of a patent or pending claim of a patent application were it 
issued as a claim in a patent within Patent Rights in that country in which 
the Patent Method is used or practiced.

     1.4    "Net Sales" means the gross invoice prices from the sale of 
Patent Products by the Licensee, an Affiliate, a Joint Venture, or a 
sublicensee to independent third parties for cash or other forms of 
consideration in accordance with generally accepted accounting principles 
limited to the 

                                      3

<PAGE>

following deductions (if not already deducted from the gross invoice price 
and at rates customary within the industry): (a) allowances (actually paid 
and limited to rejections, returns, and prompt payment and volume discounts 
granted to customers of Patent Products, whether in cash or Patent Products 
in lieu of cash); (b) freight, transport packing, insurance charges 
associated with transportation; and (c) taxes, tariff, or import/export 
duties based on sales when included in gross sales, but not value-added taxes 
or taxes assessed on income derived from such sales.  Where the Licensee 
distributes Patent Products for end use to itself, an Affiliate, a Joint 
Venture, or a sublicensee, then such distribution will be considered a sale 
at the price normally charged to independent third parties, and The Regents 
will be entitled to collect a royalty on such sale in accordance with Article 
4 (Royalties).

     1.5    "Affiliate(s)" of the Licensee means any entity which, directly or
indirectly, controls the Licensee, is controlled by the Licensee, or is under
common control with the Licensee ("control" for these purposes being defined as
the actual, present capacity to elect a majority of the directors of such
affiliate, or if not, the power to direct at least forty percent (40%) of the
voting rights entitled to elect directors) provided, however, that in any
country where the local law will not permit foreign equity participation of a
majority, then an "Affiliate" will include any company in which the Licensee
owns or controls, directly or indirectly, the maximum percentage of such
outstanding stock or voting rights permitted by local law.  Each reference to
the Licensee herein will be meant to include its Affiliates.

     1.6    "Joint Venture" means any separate entity established pursuant to
an agreement between a third party and the Licensee to constitute a vehicle for
a joint venture, in which the 

                                      4

<PAGE>

separate entity manufactures, uses, purchases, sells, or acquires Patent 
Products from the Licensee.  Each reference to the Licensee herein will be 
meant to include its Joint Venture(s).

2.   GRANT.

     2.1    Subject to the limitations set forth in this Agreement and 
subject to the licenses granted to the U.S.  Government as set forth in the 
Recitals above, The Regents hereby grants to the Licensee exclusive licenses 
under Patent Rights to make, use, sell, offer for sale, and import Patent 
Products and to practice the Patent Method where Patent Rights exist.

     2.2    The licenses granted hereunder will be subject to the overriding 
obligations to the U.S.  Government including those set forth in 35 U.S.C.  
200-212 and applicable governmental implementing regulations.

     2.3    The manufacture of Patent Products and the practice of the Patent 
Method will be subject to applicable government importation laws and 
regulations of a particular country on Patent Products made outside the 
particular country in which such Patent Products are used or sold.

     2.4    The Regents also grants to the Licensee the right to issue 
sublicenses to third parties to make, use, sell, offer for sale, and import 
Patent Products and to practice Patent Method where Patent Rights exist, 
provided the Licensee retains current exclusive rights thereto under this 
Agreement.  To the extent applicable, such sublicenses will include all of 
the rights of and obligations due to The Regents (and, if applicable, the 
United States Government) that are contained in this Agreement including 
payment to The Regents of [        ] of the issue fee provided for in Article 
3 (License Issue Fee) and payment of royalties at the rates provided for in 
Article 4 (Royalties).

                                      5

<PAGE>

     2.5    The Licensee will notify The Regents of each sublicense granted 
hereunder and provide The Regents with a copy of each sublicense.  The 
Licensee will collect and pay all fees and royalties due The Regents as set 
forth in Paragraphs 3.1 and 4.1 below (and guarantee all such payments due) 
from the sublicensees.  The Licensee will require the sublicensees to provide 
it with progress and royalty reports in accordance with the provisions 
herein, and the Licensee will collect and deliver to The Regents all such 
reports due from the sublicensees.

     2.6    Upon termination of this Agreement for any reason, The Regents, 
at its sole discretion, will determine whether any or all sublicenses will be 
canceled or assigned to The Regents.

     2.7    Because this Agreement grants the exclusive right to use or sell 
the Patent Products in the United States, the Licensee acknowledges that any 
Patent Products embodying the Invention or produced through the use thereof 
will be manufactured substantially in the United States.

     2.8    Nothing in this Agreement will be deemed to limit the right of 
The Regents to publish any and all technical data resulting from any research 
performed by The Regents relating to the Invention and to make and use the 
Invention, Patent Product(s), Patent Method(s), and associated technology 
solely for educational and research purposes and for purposes not covered by 
this Agreement.

3.   LICENSE ISSUE FEE.

     3.1    As partial consideration for all the rights and licenses granted 
to the Licensee, the Licensee will pay to The Regents a license issue fee of 
$20,000 within 30 days after the execution of this Agreement by both parties.

     3.2    Upon issuance of a patent application under the Patent Rights, 
the Licensee will also pay to The Regents $25,000.  This fee is nonrefundable 
and is not an advance against royalties.

                                      6

<PAGE>

     3.3    Licensee must pay to The Regents a license maintenance fee
according to the schedule below:

               Year 1      [      ]
                         
               Year 2      [      ]
                         
               Year 3      [      ]
                         
               Year 4      [      ]
                         
               Year 5      [      ]
                         
               Year 6      [      ]

            And thereafter

Payment of the license maintenance fee begins on the one-year anniversary 
date of the effective date of this Agreement and continues annually on each 
anniversary date of the effective date of this Agreement.  The license 
maintenance fee will not be due and payable on any anniversary date of the 
effective date of this Agreement if on such date the Licensee is commercially 
selling Patent Products and paying an earned royalty to The Regents on the 
sales of such Patent Products.

     3.4    The fees set forth in Paragraphs 3.1, 3.2 and 3.3 above are 
non-refundable, non-creditable, and not an advance against royalties.

4.   ROYALTIES.

     4.1    As further consideration for all the rights and licenses granted 
to the Licensee, the Licensee and its sublicensees will pay to The Regents an 
earned royalty at the rate of [       ] percent [          ] based on the Net 
Sales of Patent Products.

     4.2    Paragraphs 1.1, 1.3, and 1.4 define Patent Rights, Patent 
Products, and Patent Method so that royalties will be payable on Patent 
Products and Patent Method covered by both pending 

                                      7

<PAGE>

patent applications and issued patents. Earned royalties will accrue in each 
country for the duration of Patent Rights in that country and will be payable 
to The Regents when Patent Products are invoiced, or if not invoiced, when 
delivered to a third party or to itself, an Affiliate, Joint Venture, or the 
sublicensee in the case where such delivery of the Patent Products to the 
Licensee, an Affiliate, Joint Venture, or the sublicensee is intended for end 
use or FOR PURPOSES OTHER THAN CLINICAL TRIALS.

     4.3    Royalties accruing to The Regents will be paid to The Regents 
quarterly on or before the following dates of each calendar year:

            -   February 28 for the calendar quarter ending December 31;
         
            -   May 31 for the calendar quarter ending March 31;
         
            -   August 31 for the calendar quarter ending June 30; and
         
            -   November 30 for the calendar quarter ending September 30.

     4.4    Each such payment will be for royalties which accrued up to the 
most recently completed calendar quarter of the Licensee.

     4.5    If Licensee is required to pay a non-Affiliate third party 
royalties with respect to a Licensed Product under agreements for patent 
rights which Licensee in its reasonable judgement determines are necessary to 
license or acquire with respect to such Licensed Product, Licensee may deduct 
[     ] % from the Regents' royalty rate pursuant to Paragraph 4.1 for every 
[     ] in royalty paid to such non-Affiliate third parties.  In no event 
will the royalties due to The Regents pursuant to Paragraph 4.1 above be 
reduced to less than [        ] of the amount that would be otherwise due to 
The Regents thereunder.

                                      8

<PAGE>

     Beginning in the first year of commercial sales, the Licensee will pay 
to The Regents a minimum annual royalty of [            ].  This minimum 
annual royalty will be paid to The Regents by February 28 of each year and 
will be credited against the earned royalty due and owing for the calendar 
year in which the minimum payment was made.

     4.6    Milestone payments will be made on each Licensed Product as 
indicated below. Licensee will pay to The Regents the following payments 
within 30 days of reaching the milestones:

            Filing of IND      [    ]
                             
            Filing of NDA      [    ]
                             
            FDA Approval       [    ]

     4.7    All monies due The Regents will be payable in United States funds 
collectible at par in San Francisco, California.  When Patent Products are 
sold for monies other than United States dollars, the earned royalties will 
first be determined in the foreign currency of the country in which such 
Patent Products were sold and then converted into equivalent United States 
funds.  The exchange rate will be that rate quoted in the Wall Street Journal 
on the last business day of the reporting period.

     4.8    Earned royalties on sales of Patent Products occurring in any 
country outside the United States will not be reduced by any taxes, fees, or 
other charges imposed by the government of such country except those taxes, 
fees, and charges allowed under the provisions of Paragraph 1.4 (Net Sales). 
The Licensee will also be responsible for all bank transfer charges.

     4.9    Notwithstanding the provisions of Article 26 (Force Majeure), if 
at any time legal restrictions prevent prompt remittance of part or all 
royalties owed to The Regents by the Licensee 

                                      9

<PAGE>

with respect to any country where a Patent Product is sold or distributed, 
the Licensee will convert the amount owed to The Regents into United States 
funds and will pay The Regents directly from another source of funds for the 
amount impounded.

     4.10   In the event that any patent or any claim thereof included within 
the Patent Rights is held invalid in a final decision by a court of competent 
jurisdiction and last resort and from which no appeal has or can be taken, 
all obligation to pay royalties based on such patent or claim or any claim 
patentably indistinct therefrom will cease as of the date of such final 
decision.  The Licensee will not, however, be relieved from paying any 
royalties that accrued before such decision or that are based on another 
patent or claim that has not expired or that is not involved in such decision.

     4.11   No royalties will be collected or paid hereunder to The Regents 
on Patent Products sold to the account of the U.S.  Government.  The Licensee 
and its sublicensee will reduce the amount charged for Patent Products 
distributed to the United States Government by an amount equal to the royalty 
for such Patent Products otherwise due The Regents as provided herein.

5.   DUE DILIGENCE.

     5.1    Upon the execution of this Agreement, Licensee must diligently 
proceed with the development, manufacture and sale ("Commercialization") of 
Licensed Products and must earnestly and diligently endeavor to market them 
within a reasonable time after execution of this Agreement and in quantities 
sufficient to meet the market demands for them.

     5.2    Licensee must endeavor to obtain all necessary governmental 
approvals for the Commercialization of Licensed Products.

                                      10

<PAGE>

     5.3    The Regents has the right and option to terminate this Agreement 
if Licensee fails to perform any of the terms in this Paragraph 5.3.  This 
right, if exercised by The Regents, supersedes the rights granted in Article 
2 (Grant).

            I    Identify a lead compound by  [          ]

            II   Complete toxicity studies by [          ]

            III  File IND by [          ]

            IV   Complete Phase I clinical trials by [          ]

            V    Complete Phase 11 clinical trials by [          ]

            VI   Complete Phase III clinical trials by [          ]

            VII  Submit Product License Application by [          ]

     5.4    To exercise its right under Paragraph 5.3 to terminate this 
Agreement, The Regents must give Licensee written notice of the deficiency. 
Licensee thereafter has 60 days to cure the deficiency or request 
arbitration. If The Regents does not receive within 60 days either a written 
request for arbitration or satisfactory tangible evidence that Licensee has 
cured the deficiency, then The Regents may, at its option, terminate this 
Agreement by giving written notice to Licensee.

     5.5    Licensee has the sole discretion for making all decisions as to 
how to commercialize any Licensed Product.

6.   PROGRESS AND ROYALTY REPORTS.

     6.1    Beginning August 15, 1999 and semi-annually thereafter, the 
Licensee will submit to The Regents a progress report covering activities by 
the Licensee related to the development and testing of all Patent Products 
and the obtaining of the governmental approvals necessary for marketing them. 
These progress reports will be provided to The Regents to cover the progress 
of 

                                      11

<PAGE>

the research and development of the Patent Products until their first 
commercial sale in the United States.

     6.2    The progress reports submitted under Paragraph 6.1 will include, 
but not be limited to, the following topics so that The Regents may be able 
to determine the progress of the development of Patent Products and may also 
be able to determine whether or not the Licensee has met its diligence 
obligations set forth in Article 5 (Due Diligence) above:

     -    summary of work completed

     -    key scientific discoveries

     -    summary of work in progress

     -    current schedule of anticipated events or milestones

     -    market introduction date of Patent Products,

     -    a summary of resources (dollar value) spent in the reporting
          period, and

     -    activities of the sublicensees, if any.

     6.3    The Licensee will also report to The Regents in its immediately 
subsequent progress and royalty report the date of first commercial sale of a 
Patent Product(s) in each country.

     6.4    After the first commercial sale of a Patent Product, the Licensee 
will provide The Regents with quarterly royalty reports to The Regents on or 
before each February 28, May 31, August 3 1, and November 30 of each year.  
Each such royalty report will cover the most recently completed calendar 
quarter of the Licensee (October through December, January through March, 
April through June, and July through September) and will show:

                                      12

<PAGE>

            6.4a   the gross sales and Net Sales of Patent Products sold by 
the Licensee and reported to the Licensee as sold by its sublicensees during 
the most recently completed calendar quarter;

            6.4b   the number of Patent Products sold or distributed by the 
Licensee and reported to the Licensee as sold or distributed by its 
sublicensees;

            6.4c   the royalties, in U.S.  dollars, payable hereunder with 
respect to Net Sales; and

            6.4d   the exchange rates used, if any.

     6.5    If no sales of Patent Products have been made during any reporting
period after the first commercial sale of a Patent Product, then a statement to
this effect is required.

7.   BOOKS AND RECORDS.

     7.1    The Licensee will keep books and records accurately showing all 
Patent Products manufactured, used, and/or sold under the terms of this 
Agreement.  Such books and records will be preserved for at least five years 
after the date of the royalty payment to which they pertain and will be open 
to inspection by representatives or agents of The Regents at reasonable times 
to determine the accuracy of the books and records and to determine 
compliance by the Licensee with the terms of this Agreement. 

     7.2    The fees and expenses of representatives of The Regents 
performing such an examination will be borne by The Regents.  However, if an 
error in royalties of more than five percent (5%) of the total royalties due 
for any year is discovered, then the fees and expenses of these 
representatives will be borne by the Licensee.

8.   LIFE OF THE AGREEMENT.

                                      13

<PAGE>


     8.1    Unless otherwise terminated by operation of law or by acts of the 
parties in accordance with the terms of this Agreement, this Agreement will 
be in force from the effective date recited on page one and will remain in 
effect for the life of the last-to-expire patent licensed under this 
Agreement, or until the last patent application licensed under this Agreement 
is abandoned.

     8.2    Any termination of this Agreement will not affect the rights and 
obligations set forth in the following Articles:

            Article 7         Books and Records
            Article 11        Disposition of Patent Products on Hand Upon
                              Termination
            Article 12        Use of Names and Trademarks
            Paragraph 14.6    Patent Prosecution and Maintenance
            Article 17        Indemnification
            Article 22        Failure to Perform
            Article 27        Confidentiality

     8.3    Any termination of this Agreement shall not relieve the Licensee 
of its obligation to pay any monies due or owing at the time of such 
termination and shall not relieve any obligations, of either party to the 
other party, established prior to termination.

9.   TERMINATION BY THE REGENTS.

     9.1    If the Licensee should violate or fail to perform any term or 
covenant of this Agreement, then The Regents may give written notice of such 
default ("Notice of Default") to the Licensee.  If the Licensee should fail 
to repair such default within 60 days after the date of such notice takes 
effect, The Regents will have the right to terminate this Agreement and the 
licenses herein by a second written notice ("Notice of Termination") to the 
Licensee.  If a Notice of Termination is sent to the Licensee, this Agreement 
will automatically terminate on the date such notice takes effect.  Such 
termination will not relieve the Licensee of its obligation to pay any 
royalty 

                                      14

<PAGE>

or license fees owing at the time of such termination and will not impair any 
accrued right of The Regents.  These notices will be subject to Article 18 
(Notices).

10.  TERMINATION BY THE LICENSEE.

     10.1   The Licensee will have the right at any time to terminate this 
Agreement in whole or as to any portion of Patent Rights by giving notice in 
writing to The Regents.  Such Notice of Termination will be subject to 
Article 18 (Notices) and termination of this Agreement will be effective 60 
days after the effective date thereof.

     10.2   Any termination pursuant to the above paragraph will not relieve 
the Licensee of any obligation or liability accrued hereunder prior to such 
termination or rescind anything done by the Licensee or any payments made to 
The Regents hereunder prior to the time such termination becomes effective, 
and such termination will not affect in any manner any rights of The Regents 
arising under this Agreement prior to such termination.  Such termination 
will not relieve the Licensee of its obligation to pay any fees or royalties 
owing at the time of such termination and will not impair any accrued right 
of The Regents.

11.  DISPOSITION OF PATENT PRODUCTS ON HAND UPON TERMINATION.

     11.1   Upon termination of this Agreement, the Licensee will have the 
privilege of selling of all previously made or partially made Patent 
Products, but no more, within a period of 120 days, provided, however, that 
the sale of such Patent Products will be subject to the terms of this 
Agreement including, but not limited to the payment of royalties based on the 
Net Sales of Patent Products at the rates and at the times provided herein 
and the rendering of reports in connection therewith.

12.  USE OF NAMES AND TRADEMARKS.

                                      15

<PAGE>

     12.1   Nothing contained in this Agreement will be construed as 
conferring any right to use in advertising, publicity, or other promotional 
activities any name, trade name, trademark, or other designation of either 
party hereto by the other (including contraction, abbreviation or simulation 
of any of the foregoing).  Unless required by law or consented to in writing 
by the Executive Director, Office of Technology Transfer of The Regents, the 
use by the Licensee of the name "The Regents of the University of California" 
or the name of any campus of the University of California for use in 
advertising, publicity, or other promotional activities is expressly 
prohibited.

     12.2   It is understood that The Regents will be free to release to the 
inventors and senior administrative officials employed by The Regents the 
terms of this Agreement upon their request.  If such release is made, The 
Regents will request that such terms will be kept in confidence in accordance 
with the provisions of Article 27 (Confidentiality) and not be disclosed to 
others.  It is further understood that should a third party inquire whether a 
license to Patent Rights is available, The Regents may disclose the existence 
of this Agreement and the extent of the grant in Article 2 (Grant) to such 
third party, but will not disclose the name of the Licensee, except where The 
Regents is required to release such information under either the California 
Public Records Act or other applicable law.

13.  LIMITED WARRANTY.

     13.1   The Regents warrants to the Licensee that it has the lawful right 
to grant this license.

     13.2   This license and the associated Invention, Patent Rights, Patent 
Products, and Patent Methods are provided WITHOUT WARRANTY OF MERCHANTABILITY 
OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR 
IMPLIED.  THE REGENTS MAKES NO REPRESENTATION OR WARRANTY THAT THE INVENTION, 

                                      16

<PAGE>

PATENT RIGHTS, PATENT PRODUCTS, OR PATENT METHOD WILL NOT INFRINGE ANY PATENT 
OR OTHER PROPRIETARY RIGHT.

     13.3   IN NO EVENT WILL THE REGENTS BE LIABLE FOR ANY INCIDENTAL, 
SPECIAL, OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR 
THE USE OF THE INVENTION, PATENT RIGHTS, PATENT METHOD, OR PATENT PRODUCTS.

     13.4   Nothing in this Agreement will be construed as:

            13.4a   a warranty or representation by The Regents as to the 
validity, enforceability, or scope of any Patent Rights; or

            13.4b   a warranty or representation that anything made, used, 
sold, or otherwise disposed of under any license granted in this Agreement is 
or will be free from infringement of patents of third parties; or

            13.4c   an obligation to bring or prosecute actions or suits 
against third parties for patent infringement except as provided in 
Article 16. (Patent Infringement); or

            13.4d   conferring by implication, estoppel, or otherwise any 
license or rights under any patents of The Regents other than Patent Rights 
as defined herein, regardless of whether such patents are dominant or 
subordinate to Patent Rights; or

            13.4e   an obligation to furnish any know-how not provided in 
Patent Rights or Patent Products.

14.  PATENT PROSECUTION AND MAINTENANCE.

     14.1   The Regents will diligently prosecute and maintain the United 
States and foreign patents comprising Patent Rights using counsel of its 
choice. The Regents will promptly provide 

                                      17

<PAGE>

the Licensee with copies of all relevant documentation so that the Licensee 
may be currently and promptly informed and apprised of the continuing 
prosecution, and may comment upon such documentation sufficiently in advance 
of any initial deadline for filing a response, provided, however, that if the 
Licensee has not commented upon such documentation prior to the initial 
deadline for filing a response with the relevant government patent office or 
The Regents must act to preserve Patent Rights, The Regents will be free to 
respond appropriately without consideration of comments by the Licensee, if 
any.  Both parties hereto will keep this documentation in confidence in 
accordance with the provisions of Article 27 (Confidentiality) herein.  
Counsel for The Regents will take instructions only from The Regents.

     14.2   The Regents will use all reasonable efforts to amend any patent 
application to include claims requested by the Licensee and required to 
protect the Patent Products contemplated to be sold or Patent Method to be 
practiced under this Agreement.

     14.3   The Regents and the Licensee will cooperate in applying for an 
extension of the term of any patent included within Patent Rights, if 
appropriate, under the Drug Price Competition and Patent Term Restoration Act 
of 1984.  The Licensee will prepare all such documents, and The Regents will 
execute such documents and will take such additional action as the Licensee 
may reasonably request in connection therewith.

     14.4   The Regents will, at the request of the Licensee, file, 
prosecute, and maintain patent applications and patents covered by Patent 
Rights in foreign countries if available.  The Licensee must notify The 
Regents within seven months of the filing of the corresponding United States 
application of its decision to request The Regents to file foreign 
counterpart patent applications. This notice concerning foreign filing must 
be in writing and must identify the countries desired.  The 

                                      18

<PAGE>

absence of such a notice from the Licensee to The Regents within the seven 
month period will be considered an election by the Licensee not to request 
The Regents to secure foreign patent rights on behalf of the Licensee.  The 
Regents will have the right to file patent applications at its own expense in 
any country the Licensee has not included in its list of desired countries, 
and such applications and resultant patents, if any, will not be included in 
the licenses granted under this Agreement.

     14.5   All past, present and future costs of preparing, filing, 
prosecuting and maintaining all United States and foreign patent applications 
and all costs and fees relating to the preparation and filing of patents 
covered by Patent Rights in Paragraph 1.1 will be borne by the Licensee.  
This includes patent preparation and prosecution costs for this Invention 
incurred by The Regents prior to the execution of this Agreement.  Such costs 
will be due upon execution of this Agreement and will be payable at the time 
that the license issue fee is payable.  The costs of all interferences and 
oppositions will be considered prosecution expenses and also will be borne by 
the Licensee.  The Licensee will reimburse The Regents for all costs and 
charges within 30 days following receipt of an itemized invoice from The 
Regents for same.

     14.6   The obligation of the Licensee to underwrite and to pay patent 
preparation, filing, prosecution, maintenance, and related costs will 
continue for costs incurred until three months after receipt by either party 
of a Notice of Termination.  The Licensee will reimburse The Regents for all 
patent costs incurred during the term of the Agreement and for three months 
thereafter whether or not invoices for such costs are received during the 
three-month period after receipt of a Notice of Termination.  The Licensee 
may with respect to any particular patent application or patent terminate its 
obligations to the patent application or patent in any or all designated 
countries upon three months written notice to The Regents.  The Regents may 
continue prosecution and/or maintenance of such 

                                      19

<PAGE>

application(s) or patent(s) at its sole discretion and expense, provided, 
however, that the Licensee will have no further right or licenses thereunder.

     14.7   The Licensee will notify The Regents of any change of its status 
as a small entity (as defined by the United States Patent and Trademark 
Office) and of the first sublicense granted to an entity that does not 
qualify as a small entity as defined therein.

15.  PATENT MAKING.

     15.1   The Licensee will mark all Patent Products made, used, or sold 
under the terms of this Agreement, or their containers, in accordance with 
the applicable patent marking laws.

16.  PATENT INFRINGEMENT.

     16.1   In the event that the Licensee learns of the substantial 
infringement of any patent licensed under this Agreement, the Licensee will 
call the attention of The Regents thereto in writing and will provide The 
Regents with reasonable evidence of such infringement.  Both parties to this 
Agreement acknowledge that during the period and in a jurisdiction where the 
Licensee has exclusive rights under this Agreement, neither will notify a 
third party of the infringement of any of Patent Rights without first 
obtaining consent of the other party, which consent will not be unreasonably 
withheld. Both parties will use their best efforts in cooperation with each 
other to terminate such infringement without litigation.

     16.2   If the Licensee desires that Patent Rights be enforced against 
infringers, the Licensee either may request permission from The Regents to 
file suit against the infringement of Patent Rights or may request that The 
Regents take legal action against the infringement of Patent Rights. Such 
request must be made in writing and must include reasonable evidence of such 
infringement and 

                                      20

<PAGE>

damages to the Licensee. If the infringing activity has not been abated 
within 90 days following the effective date of such request, The Regents will 
have the right to elect to:

            16.2a   commence suit on its own account; or

            16.2b   refuse to participate in such suit and The Regents will 
give notice of its election in writing to the Licensee by the end of the 
100th day after receiving notice of such request from Licensee. The Licensee 
may thereafter bring suit for patent infringement if and only if The Regents 
elects not to commence suit and if the infringement occurred during the 
period and in a jurisdiction where the Licensee had exclusive rights under 
this Agreement. However, in the event the Licensee elects to bring suit in 
accordance with this Paragraph, The Regents may thereafter join such suit at 
its own expense.

     16.3   Such legal action as is decided upon will be at the expense of 
the party on account of whom suit is brought and all recoveries recovered 
thereby will belong to such party, provided, however, that legal action 
brought jointly by The Regents and the Licensee and participated in by both 
will be at the joint expense of the parties and all recoveries will be 
allocated in the following order: a) to each party reimbursement in equal 
amounts of the attorney's costs, fees, and other related expenses to the 
extent each party paid for such costs, fees, and expenses until all such 
costs, fees, and expenses are consumed for each party; and b) any remaining 
amount shared jointly by them in proportion to the share of expenses paid by 
each party.

     16.4   Each party will cooperate with the other in litigation 
proceedings instituted hereunder but at the expense of the party on account 
of whom suit is brought. Such litigation will be controlled by the party 
bringing the suit, except that The Regents may be represented by counsel of 
its choice in any suit brought by the Licensee.

                                      21

<PAGE>

17.  INDEMNIFICATION.

     17.1   The Licensee will (and require its sublicensees to) indemnify, 
hold harmless, and defend The Regents, its officers, employees, and agents; 
the sponsors of the research that led to the Invention; the inventors of any 
invention covered by patents or patent applications in Patent Rights 
(including the Patent Products and Patent Method contemplated thereunder) and 
their employers against any and all claims, suits, losses, damage, costs, 
fees, and expenses resulting from or arising out of exercise of this license 
or any sublicense. This indemnification will include, but will not be limited 
to, any product liability.

     17.2   The Licensee, at its sole cost and expense, will insure its 
activities in connection with the work under this Agreement and obtain, keep 
in force, and maintain insurance as follows: (or an equivalent program of 
self insurance).

     17.3   Comprehensive or Commercial Form General Liability Insurance 
(contractual liability included) with limits as follows:


<TABLE>
<S>                                                              <C>
            Each Occurrence  . . . . . . . . . . . . . . . . . . $5,000,000

            Products/Completed Operations Aggregate  . . . . . . $5,000,000

            Personal and Advertising Injury  . . . . . . . . . . $5,000,000

            General Aggregate (commercial form only)   . . . . . $5,000,000
</TABLE>


It should be expressly understood, however, that the coverages and limits 
referred to under the above will not in any way limit the liability of the 
Licensee. The Licensee will furnish The Regents with certificates of 
insurance evidencing compliance with all requirements. Such certificates will:

            17.3a   Provide for 30 day advance written notice to The Regents 
of any modification;

                                      22

<PAGE>

            17.3b   Indicate that The Regents has been endorsed as an 
additional Insured under the coverages referred to under the above; and

            17.3c   Include a provision that the coverages will be primary 
and will not participate with nor will be excess over any valid and 
collectable insurance or program of self-insurance carried or maintained by 
The Regents.

     17.4   The Regents will promptly notify the Licensee in writing of any 
claim or suit brought against The Regents in respect of which The Regents 
intends to invoke the provisions of this Article 17 (Indemnification). The 
Licensee will keep The Regents informed on a current basis of its defense of 
any claims pursuant to this Article 17 (Indemnification).

18.  NOTICES.

     18.1   Any notice or payment required to be given to either party will 
be deemed to have been properly given and to be effective:

            18.1a   on the date of delivery if delivered in person; 

            18.1b   on the date of mailing if mailed by first-class certified 
mail, postage paid; or

            18.1c   on the date of mailing if mailed by any global express 
carrier service that requires the recipient to sign the documents 
demonstrating the delivery of such notice of payment; to the respective 
addresses given below, or to another address as designated in writing by the 
party changing its prior address.
            
In the case of the Licensee:       XXX
                                   XXX
                                   XXX, XXX XXX
                                   Telephone: XXX
                                   Facsimile: XXX
                                   Attention: XXX

                                      23

<PAGE>

     In the case of The Regents:        THE REGENTS OF THE UNIVERSITY
                                         OF CALIFORNIA
                                        Business Research Partnerships
                                        University of California, Los Angeles
                                        10945 LeConte Avenue, Suite 1401
                                        Los Angeles, CA 90095
                                        Telephone: 310-206-4401  
                                        Facsimile:  310-206-3619
                                        Attention: Emily E. Waldron

19.  ASSIGNABILITY.

     19.1   This Agreement is binding upon and will inure to the benefit of 
The Regents, its successors and assigns, but will be personal to the Licensee 
and assignable by the Licensee only with the written consent of The Regents. 
Any other attempt by Licensee to assign this Agreement is void unless 
Licensee obtains the prior written consent of The Regents.

20.  LATE PAYMENTS.

     20.1   In the event royalty payments, fees, or patent prosecution costs 
are not received by The Regents when due, the Licensee will pay to The 
Regents interest charges at a rate of ten percent (10%) simple interest per 
annum. Such interest will be calculated from the date payment was due until 
actually received by The Regents. Acceptance by The Regents of any late 
payment interest from the Licensee under this Paragraph 20 will in no way 
affect the provision of Article 21 (Waiver) herein.

21.  WAIVER.

     21.1   It is agreed that no waiver by either party hereto of any breach 
or default of any of the covenants or agreements herein set forth will be 
deemed a waiver as to any subsequent and/or similar breach or default.

                                      24

<PAGE>

22.  FAILURE TO PERFORM.

     22.1   In the event of a failure of performance due under the terms of 
this Agreement and if it becomes necessary for either party to undertake 
legal action against the other on account thereof, then such legal action 
will be conducted in San Francisco, California, and the prevailing party will 
be entitled to reasonable attorney's fees in addition to costs and necessary 
disbursements.

23.  GOVERNING LAWS.

     23.1   THIS AGREEMENT WILL BE INTERPRETED AND CONSTRUED IN ACCORDANCE 
WITH THE LAWS OF THE STATE OF CALIFORNIA, excluding any choice of law rules 
that would direct the application of the laws of another jurisdiction, but 
the scope and validity of any patent or patent application will be governed 
by the applicable laws of the country of such patent or patent application.

24.  GOVERNMENT APPROVAL OR REGISTRATION.

     24.1   If this Agreement or any associated transaction is required by 
the law of any nation to be either approved or registered with any 
governmental agency, the Licensee will assume all legal obligations to do so. 
The Licensee will notify The Regents if it becomes aware that this Agreement 
is subject to a United States or foreign government reporting or approval 
requirement. The Licensee will make all necessary filings and pay all costs 
including fees, penalties, and all other out-of-pocket costs associated with 
such reporting or approval process.

25.  EXPORT CONTROL LAWS.

     25.1   The Licensee will observe all applicable United States and 
foreign laws with respect to the transfer of Patent Products and related 
technical data to foreign countries, including, without 

                                      25

<PAGE>

limitation, the International Traffic in Arms Regulations (ITAR) and the 
Export Administration Regulations.

26.  FORCE MAIEURE.

     26.1   The parties to this Agreement will be excused from any 
performance required hereunder if such performance is rendered impossible or 
unfeasible due to any acts of God, catastrophes, or other major events beyond 
their reasonable control, including, without limitation, war, riot, and 
insurrection; laws, proclamations, edicts, ordinances, or regulations; 
strikes, lock-outs, or other serious labor disputes; and floods, fires, 
explosions, or other natural disasters. However, any party to this Agreement 
will have the right to terminate this Agreement upon 30 days' prior written 
notice if either party is unable to fulfill its obligations under this 
Agreement due to any of the causes mentioned above and such inability 
continues for a period of one year. Notices will be subject to Article 18 
(Notices).

27.  CONFIDENTIALITY.

     27.1   The Licensee and The Regents respectively will treat and maintain 
the proprietary business, patent prosecution, software, engineering drawings, 
process and technical information, and other proprietary information 
("Proprietary Information") of the other party in confidence using at least 
the same degree of care as that party uses to protect its own proprietary 
information of a like nature for a period from the date of disclosure until 
five years after the date of termination of this Agreement. This 
confidentiality obligation will apply to the information defined as "Data" 
under the Secrecy Agreement, and such Data will be treated as Proprietary 
Information hereunder.

     27.2   All Proprietary Information will be labeled or marked 
confidential or as otherwise similarly appropriate by the disclosing party, 
or if the Proprietary Information is orally disclosed, 

                                      26

<PAGE>

it will be reduced to writing or some other physically tangible form, marked 
and labeled as set forth above by the disclosing party, and delivered to the 
receiving party within 30 days after the oral disclosure as a record of the 
disclosure and the confidential nature thereof. Notwithstanding the 
foregoing, the Licensee and The Regents may use and disclose Proprietary 
Information to its employees, agents, consultants, contractors, and, in the 
case of the Licensee, its sublicensees, provided that any such parties are 
bound by a like duty of confidentiality.

     27.3   Nothing contained herein will in any way restrict or impair the 
right of the Licensee or The Regents to use, disclose, or otherwise deal with 
any Proprietary Information:

            27.3a   that recipient can demonstrate by written records was 
previously known to it;

            27.3b   that is now, or becomes in the future, public knowledge 
other than through acts or omissions of recipient;

            27.3c   that is lawfully obtained without restrictions by 
recipient from sources independent of the disclosing party;

            27.3d   that is required to be disclosed to a governmental entity 
or agency in connection with seeking any governmental or regulatory approval, 
or pursuant to the lawful requirement or request of a governmental entity or 
agency;

            27.3e   that is furnished to a third party by the recipient with 
similar confidentiality restrictions imposed on such third party, as 
evidenced in writing; or

            27.3f   that The Regents is required to disclose pursuant to the 
California Public Records Act or other applicable law.

                                      27

<PAGE>

     27.4   Upon termination of this Agreement, the Licensee and The Regents 
will destroy or return to the disclosing party proprietary information 
received from the other in its possession within 15 days following the 
effective date of termination. The Licensee and The Regents will provide each 
other, within 30 days following termination, with a written notice that 
Proprietary Information has been returned or destroyed. Each party may, 
however, retain one copy of Proprietary Information for archival purposes in 
non-working files.

28.  INFRINGEMENT UNDER DRUG PRICE COMPETITION ACT.

     28.1   In the event either party receives notice pertaining to any 
patent included within Patent Rights pursuant to the DRUG PRICE COMPETITION 
AND PATENT TERM RESTORATION ACT OF 1984, (Public Law 98-417, "the Act") 
including but not necessarily limited to notices pursuant to Sections 101 and 
103 of the Act from persons who have filed an abbreviated NDA ("ANDA") or a 
"paper" NDA, or in the case of an infringement of Patent Rights as defined in 
Section 271(e) of Title 35 of the United States Code, such party will notify 
the other party promptly but in no event later than ten days after receipt of 
such notice.

     28.2   If the Licensee wishes action to be taken against such 
infringement, as provided in the Act, the Licensee will request such action 
by written notice to The Regents. Within 30 days after receiving such 
request, The Regents will give written notice to the Licensee of its election 
to:

            28.2a   commence suit on its own account; or

            28.2b   refuse to participate in such suit. The Licensee may 
thereafter bring suit for patent infringement as provided by the Act if and 
only if The Regents elects not to commence suit and if the infringement 
occurred during the period that the Licensee had exclusive rights in the 

                                      28

<PAGE>

United States under this Agreement.  However, in the event the Licensee 
elects to bring suit in accordance with this paragraph, The Regents may 
thereafter join such suit at its own expense.

     28.3   The provisions of Paragraphs 16.3 and 16.4 will likewise apply to 
any legal action brought under this Article 28.

     28.4   The Regents hereby authorizes the Licensee to include in any NDA 
for a Patent Product, a list of patents included within Patent Rights 
identifying The Regents as patent owner.

29.  MISCELLANEOUS.

     29.1   The headings of the several sections are inserted for convenience 
of reference only and are not intended to be a part of or to affect the 
meaning or interpretation of this Agreement.

     29.2   This Agreement will not be binding upon the parties until it has 
been signed below on behalf of each party, in which event, it will be 
effective as of the date recited on page one.

     29.3   No amendment or modification hereof will be valid or binding upon 
the parties unless made in writing and signed on behalf of each party.

     29.4   This Agreement embodies the entire understanding of the parties 
and will supersede all previous communications, representations or 
understandings, either oral or written, between the parties relating to the 
subject matter hereof. The Secrecy Agreement specified in the Recitals in 
this Agreement and dated 3-31-98 is hereby terminated.

     29.5   In case any of the provisions contained in this Agreement are 
held to be invalid, illegal, or unenforceable in any respect, such 
invalidity, illegality, or unenforceability will not affect any other 
provisions hereof, but this Agreement will be construed as if such invalid or 
illegal or unenforceable provisions had never been contained herein.

                                      29

<PAGE>

     29.6   This Agreement has been negotiated and prepared jointly by both 
parties and shall not be construed for or against any party but shall be 
given a fair and reasonable construction in accordance with the intention of 
the parties.

     In witness whereof, both The Regents and the Licensee have executed this 
Agreement, in duplicate originals, by their respective officers hereunto duly 
authorized, on the date and year hereinafter written.

                                          THE REGENTS OF THE UNIVERSITY
CYTOCLONAL PHARMACEUTICS, INC.                    OF CALIFORNIA


By:  /s/ Arthur P. Bollon                By:  /s/ Emily Waldron  
     -----------------------------            -----------------------------
         (Signature)  8/6/98                      (Signature)  8/4/98


Name: Arthur P. Bollon                   Name:  Emily E. Waldron
     -----------------------------
      (Please Print)                     Title:  Technology Transfer Officer


Title:  Chairman &  
        Chief Executive Officer
     -----------------------------


                                      30




<PAGE>


                                                                   EXHIBIT 24.3



                           INDEPENDENT AUDITORS' CONSENT

     We consent to the incorporation by reference in this Registration Statement
on Form S-3 (Post-Effective Amendment No. 2 to Form SB-2) of Cytoclonal 
Pharmaceutics Inc. of our report, dated February 6, 1998, (with respect to 
Note K[2], April 13, 1998) on our audits of the financial statements of 
Cytoclonal Pharmaceutics Inc. as of December 31, 1997 and for each of the years
in the two-year period ended December 31, 1997 and for the period from 
September 11, 1991 (inception) through December 31, 1997, included in the 
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.  
We also consent to the reference of our firm under the caption "Experts" 
included in the Prospectus.


RICHARD A. EISNER & COMPANY, LLP
- --------------------------------- 
Richard A. Eisner & Company, LLP

New York, New York
September 25, 1998