CONFIDENTIAL

                       COLLABORATION AND LICENSE AGREEMENT


          THIS  COLLABORATION AND LICENSE AGREEMENT (the "Agreement") is entered
into as of June 12, 1998 (the "Effective  Date") between Aphton  Corporation,  a
company  organized  under  the laws of  Delaware  with its  principal  executive
offices at the World  Trade  Center,  80 SW Eight  Street,  Suite  2160,  Miami,
Florida,  (hereinafter "Aphton"),  and SmithKline Beecham PLC, having a place of
business at New Horizons Court, Great West Road,  Brentford,  Middlesex TW8 9EP,
United Kingdom (hereinafter "SB").

          WHEREAS:

          1.  Aphton is  currently  developing  an  anti-gonadotropin  releasing
hormone   (GnRH)   immunogen   product  for  the  treatment  and  prevention  of
gonadotropin  and gonadal  steroid  hormone  associated  diseases and cancers in
humans and owns and/or has rights under certain patents. patent applications and
proprietary  information  relating thereto.  Aphton has developed an immunogenic
GnRH conjugate in animal models.

          2. SB has substantial  expertise and has access within the SB group to
established   facilities  for  the  development,   manufacture,   marketing  and
distribution of vaccines and desires to enter into this Agreement to develop and
market  Aphton's GnRH immunogen  product for human use on a worldwide  exclusive
basis under Aphton's patent,  patent  applications  and proprietary  information
relating thereto.

          3.  Aphton  and SB  desire  to  collaborate  in  developing  the GnRIH
immmunogen product and Aphton is willing to grant a worldwide  exclusive license
under Aphton's patents, patent applications and proprietary information relating
hereto and subject to the terms and conditions set forth herein.


<PAGE>


          NOW, THEREFORE, the parties hereto hereby agree as follows:

                                   ARTICLE 1
                                   DEFINITIONS

          Unless  otherwise  defined,  capitalized  terms used in this Agreement
shall have the meanings set forth below:

          1.1  "Affiliate"  shall  mean,  with  respect  to any  party  to  this
Agreement,   any  other  Person,  which  directly  or  indirectly  controls,  is
controlled  by, or is under common  control with,  such party. A Person shall be
regarded as in control of another  Person if it owns,  or directly or indirectly
controls,  at least fifty percent  (50%) of the voting stock or other  ownership
interest of the other  Person,  or if it directly or  indirectly  possesses  the
power to direct or cause the  direction  of the  management  and policies of the
other Person by any means whatsoever.

          1.2  "Aphton  Immunogen"  shall mean  Immunogens  for use in the Field
owned and/or controlled and/or discovered and/or developed by Aphton at any time
during  the term of this  Agreement  including  but not  limited  to  Immunogens
discovered and/or developed by Aphton during the Development Program Term.

          1.3  "Aphton   Know-How"  means  any  present  and  future  biological
materials,   research  and  development   information,   inventions,   know-how,
pre-clinical,  clinical and other technical data relating to the Product for use
in the Field which are Secret and Substantial,  and vhich are owned, licensed to
or otherwise held by Aphton and/or its Affiliates  with the rights to license or
sublicense the same to SB and which are necessary or useful for the development,
use, production or commercialization of the Product within the Field as provided
in this  Agreement.  Aphton  Know-How  shall  include  without  limitation,  all
chemical,   pharmacological,   toxicological,   clinical,   assay,  control  and
manufacturing data and any other information relating thereto and any materials,
reagents and media.

          1.4 "Aphton  Patents"  shall mean all patents and patent  applications
(including those arising from the Development Program) which are or become owned
and/or  controlled,  in whole or in part,  by Aphton  and/or any  Affiliates  of
Aphton and/or  licensed,  in whole or in part to Aphton and/or any Affiliates of
Aphton  and  under  which  Aphton  has now or in the  future  the right to grant
licenses and which  generically or specifically  claim Product and/or the use of
Product and/or a process for manufacturing Product, and/or intermediates used in
such  process,  and  which  in  each  case  are  necessary  or  useful  for  the
development,  use,  production or  commercialization  of the Product  within the
Field.  Included  within  the  definition  of  Patents  are  any  continuations,
continuations in part, divisions,  patents of additions,  reissues,  renewals or
extensions  (other than SPC)  thereof.  Also included  within the  definition of
Patents are any patents or patent applications which generically or specifically
claim or have claims covering any  improvements of Product or  intermediates  or
manufacturing  processes  required or useful for the production of Product which
are  developed by Aphton  and/or under which Aphton  otherwise  has the right to
grant  licenses  or  sublicences,  now or in the future  during the term of this
Agreement.  The list of  patent  applications  and  patents  encompassed  within
Patents on the Effective Date is set forth in Schedule A attached hereto.

                                      -2-

<PAGE>


          1.5  "Aphton  Royalties"  shall have the  meaning set forth in Section
6.2.2.

          1.6 "Blocking  Patents" shall mean any patents owned and/or controlled
by Third  Persons  having  claims which would be infringed by SB making,  having
made, using, having used, selling,  offering for sale or having sold,  importing
or having  imported all or part of Product and which would prevent SB from using
the Technology.

          1.7   "Co-Exclusive   License"   shall  mean  that  on  a   Regulatory
Jurisdiction per Regulatory Jurisdiction basis a license to Technology hereunder
for use in the Field may not be granted to more than two (2) Persons,  including
SB or rather than  granting  such a license to a Third Person in addition to SB,
Aphton may use Technology hereunder.

          1.8 "Commercial  Failure" shall mean the circumstances under which the
quarterly  Net  Sales  of  Product   decline  by  [Redacted]*  on  a  Regulatory
Jurisdiction  per Regulatory  Jurisdiction  basis;  provided,  however that such
decline  is  not  caused  by  (i) a  significant  change  in  market  conditions
(including,  without  limitation,  governmentally-mandated  price  reductions or
launch by a Third Person of a Competing  Product or other product  targeting any
gonadotropin,  gonadotropin  receptor or gonadal steroid  associated  disease or
condition), (ii) change of existing laws or regulations, or adoption of new laws
or regulations,  (iii) Force Majeure Events, (iv) safety and efficacy reasons as
reasonably  determined by SB after  discussion with the  appropriate  regulatory
authority,  (v) change of marketing  strategy  (including  without  limitation a
reduction of price) and/or (vi) availability of Product.

          1.9  "Commercial  Launch" shall mean the first  commercial sale of the
Product in Finished Form in any Regulatory Jurisdiction in the Territory.

          1.10 "Company  Information"  shall mean the  information  or materials
provided by either Aphton or SB to the other party,  whether furnished before or
after the Effective  Date,  including,  without  limitation,  the information on
materials, substances,  formulations,  techniques,  technology, equipment, data,
reports, know-how, sources for supply, patent position and business plans.

          1.11  "Competing  Product" shall mean any Immunogen  targeting GnRH or
GnRH receptors,  any GnRH analog, any GnRH antagonist product which is designed,
licensed  for  use  and  put to use  for  the  treatment  or  prevention  of any
gonadotropin or gonadal steroid hormone associated disease or condition.

          1.12 "Development Program" shall have the meaning set forth in Section
3.1.

          1.13  "Development  Program  Term" shall mean the period  specified in
Schedule B during  which the  Development  Program  will be  executed  up to and
including the filing of the Product dossier in USA, EU and Japan..

          1.14 "Field" shall mean the  diagnosis,  treatment  and  prevention of
gonadotropin, gonadal steroid hormone(s) or GnRH receptor(s) associated diseases
and cancers in humans  including  but not limited to  endometriosis,  polycystic
ovaries,  uterine  fibroids,  contraception,  infertility,  precocious  puberty,
prostate cancer, breast cancer, ovarian cancer and endometrial cancer.

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -3-

<PAGE>

          1.15 "Finished Form" shall mean a finished pharmaceutical dosage form,
packaged and labeled for sale or distribution.

          1.16  "Force  Majeure  Events"  shall  have the  meaning  set forth in
Section 12 hereof.

          1.17 "GnRH" shall mean gonadotropin  releasing  hormone,  a peptide of
human or animal  origin with  variable  amino acid  sequence,  including but not
limited to what is commonly known as GnRH I, GnRH II, GnRH III and LHRH.

          1.18 "Immunogen"  shall mean (i) any construct  including GnRH or GnRH
analog or portion of GnRH and/or (ii) antigens and/or (iii) proteins and/or (iv)
other  physical  forms based on such  Immunogen,  such as peptides  (monoclonal,
bispecific, anti idiotypic antibodies) and/or nucleic acids (DNA, RNA) delivered
in any form including recombinant vectors.

          1.19 "Major Markets" shall mean USA,  France,  Germany,  UK, Japan and
Italy.

          1.20 "Marketing  Plan" shall mean the marketing plan prepared by SB as
set forth in Section 5.1 (ii) which contains a.o.  forecasted  sales and Product
Costs and Expenses, broken down per Major Markets.

          1.21  "Multivalent  Product" shall mean a Product which contains other
than Aphton Immunogen also one or more therapeutically  and/or  prophylactically
active Immunogens which are not included in Product.

          1.22 "Net Sales" shall mean the gross  receipts  from sales of Product
in the Territory by SB and/or its Affiliates and/or its sublicensees  and/or its
distributors to Third Persons less the fol1owing deductions:

          (i) transportation charges, including insurances; and

          (ii)  sales and excise  taxes and duties  paid or allowed by a selling
party  and  any  other   governmental   charges  imposed  upon  the  production,
importation, use or sale of Product, including without limitation, contributions
and payments  required by any governmental  authorities as liability  provisions
and/or made pursuant to injury compensation  schemes and/or as product liability
insurance premiums such as the National Vaccine Compensation Act in the US; and

          (iii) trade, quantity and cash discounts,  commissions and other price
reduction programs customary to the trade or required by law; and

          (iv) allowances or credits to customers or charges back from customers
on  account of  rejection  or return of  Product  subject to royalty  under this
Agreement or on account of retroactive price reductions  affecting such Product;
and

          (v)  royalties  payable  and/or  paid by SB to  Third  Persons  on the
manufacture, use and/or sale of Product not otherwise deducted or shared between
both parties hereunder.

                                      -4-

<PAGE>

          Sales  between  or  among SB and its  Affiliates  or  sublicensees  or
distributors  shall be excluded from the  computation  of Net Sales except where
such Affiliates or sublicensees  are end users,  but Net Sales shall include the
subsequent  final sales to Third Persons by such  Affiliates of  sublicensees or
distributors.

          If a Product is sold as Multivalent  Product, Net Sales of Multivalent
Product shall be  multiplied  by the fraction  A/A+B where A is the unit invoice
price of a  separately  sold  Product  which  contains as  specific  immunogenic
material  Aphton  Immunogen and B is the unit invoice price of a separately sold
vaccine which contains as specific  immunogenic material only Immunogen(s) other
than Aphton Immunogen contained in Multivalent Product.

          1.23  "Person"  shall mean an  individual,  corporation,  partnership,
trust, business trust,  association,  joint stock company,  joint venture, pool,
syndicate,  sole  proprietorship,   unincorporated  organization,   governmental
authority or any other form of entity not specifically listed herein.

          1.24  "Product"  shall mean any product  comprising an anti-GnRH or an
anti-GnRH  receptor  Immunogen   construct  being  owned  or  controlled  and/or
developed by Aphton hereunder,  for use in the Field, to the extent such product
is encompassed in Technology.

          1.25  "Product   Cost  and  Expenses"   shall  mean  on  a  Regulatory
Jurisdiction per Regulatory  Jurisdiction basis and pro-rated per month for each
year during the five year period after Commercial Launch,  with the exception of
paragraphs  (ii)  and  (iii)  below  which  shall  only  be  considered  for the
calculation of Excess (as defined in Section 6.2.5) in the first 12 months after
Commercial Launch in a Regulatory Jurisdiction:

          (i) SB's fully  absorbed  standard  cost of goods,  formulation,  bulk
manufacturing, filling, packaging and storing of the Products; and

          (ii) Costs  related to regulatory  approvals to the following  extent:
(a) from  the  moment  of  Commercial  Launch  in Major  Markets  and 12  months
thereafter, all costs incurred by SB during the year preceding Commercial Launch
(including  a reasonable  overhead)  related to  regulatory  approvals up to and
including PLA/ELA in such Major Market;  (b) for the purpose of determining said
costs under paragraph (ii)(a) above in Regulatory Jurisdictions other than Major
Markets,  the average  weighted  cost per unit of Product as this  results  from
paragraph (ii)(a) for Major Markets,  shall apply to number of doses sold in the
Regulatory  Jurisdiction  other than Major Markets in the 12 months period after
Commercial Launch in such Regulatory Jurisdiction; and

          (iii)  Prelaunch  cost:  as from  Commercial  Launch  in a  Regulatory
Jurisdiction  and  12  months  thereafter,  all  prelaunch  costs  (including  a
reasonable  overhead) incurred by SB during the year preceding Commercial Launch
in such Regulatory  Jurisdiction  necessary for the marketing,  distribution and
selling of the Product in such Regulatory Jurisdiction; and

          (iv) Costs relating to marketing  distributing and selling the Product
in Major Markets as such costs result from the forecasted  costs given under the
Marketing  Plan  for  such  Major  Market  in  such  year.  For the  purpose  of
determining  such costs under this paragraph  (iv)

                                      -5-

<PAGE>

for  Regulatory  Jurisdictions  other than Major Markets,  the average  weighted
percentage  of such  costs on Net Sales in Major  Markets  shall  apply for said
Regulatory Jurisdictions.

          1.26  "Product   Trademark"  shall  mean  all  trademarks,   trademark
applications or registered marks for the Product in any Regulatory Jurisdiction.

          1.27  "Regulatory  Jurisdiction"  shall  mean  any  country,  kingdom,
territory,  principality,  or other  jurisdiction  in which  regulatory or other
governmental approval for manufacturing,  promoting, marketing, distributing and
selling the Product is required.  For the avoidance of doubt the European  Union
shall not be considered as a separate Regulatory Jurisdiction.

          1.28 "SB Adjuvant  Technology"  shall mean  technology  pertaining  to
adjuvants  (including  but not limited to SB  Know-How  and/or  patents),  owned
and/or  controlled  by SB and/or its  Affiliates  at any time during the term of
this Agreement.

          1.29  "SB  Know-How"  shall  mean all  present  and  future  technical
information,  materials and know-how which are now and/or at any time during the
term of this Agreement developed,  owned, proprietary to and/or controlled by SB
and/or its  Affiliates.  SB Know-How  shall  include,  without  limitation,  all
chemical,   pharmacological,   toxicological,   clinical,   assay,  control  and
manufacturing data and any other information relating thereto and any materials,
seeds, strains, reagents and media.

          1.30 "Secret" shall mean that the Aphton  Know-How as a body or in the
precise  configuration  and assembly of its components is not generally known or
easily  accessible and has been treated as trade secret by Aphton,  so that part
of its value consists in the lead-time SB gains when it is communicated to it.

          1.31 "Substantial" shall mean that the Aphton Know-How includes useful
information  which is of importance for the whole or significant part of (i) the
manufacturing  process or (ii) the Product or (iii) the development  thereof and
excludes information which is trivial.

          1.32  "SPC"  shall  mean  supplementary  Protection  Certificates  for
medicinal products and their equivalents provided under Council Regulation (EEC)
No 1768/92 of June 18, 1992.

          1.33  "Technology"  shall mean  Aphton  Know-How  and Aphton  Patents.

          1.34 "Territory" shall mean worldwide.

          1.35 "Third  Person"  shall mean any Person other than Aphton or SB or
their respective Affiliates.

          1.36 "Work Report"  shall mean the report  prepared by each party on a
quarterly  basis or on some  other  timely  basis  as  decided  by the  Steering
Committee  (as  defined in  Section  4.2.(c)  hereunder)  and  submitted  to the
Steering  Committee  setting  forth the work  performed by each party during the
Development  Program Term in the previous quarter in furtherance of the

                                      -6-

<PAGE>

goals of the  Agreement  and setting  out a proposed  plan for future work to be
performed by that party as requested by the Steering Committee.

          "Interpretative  Rules". For the purpose of this Agreement,  except as
otherwise  provided in this Agreement or unless the context otherwise  requires:
(a) defined  terms include the plural as well as the singular and the use of any
gender  shall  be  deemed  to  include  the  other  gender;  (b)  references  to
"Articles",  "Sections" and other subdivisions and to "Schedules" and "Exhibits"
without reference to a document, are to designated Articles,  Sections and other
subdivisions  of, and to Schedules and Exhibits to, this Agreement;  (c) the use
of the term "including"  means "including but not limited to"; and (d) the words
"herein", "hereof',  "hereunder" and other words of similar import refer to this
Agreement as a whole and not to any particular provisions.

                                    ARTICLE 2
                                  LICENSE GRANT

          2.1 License  Grant.  Aphton hereby grants to SB and its  Affiliates as
from the Effective  Date an exclusive  right and license with the right to grant
sublicenses  in the  Territory  to develop,  make,  have made,  use,  have used,
register,  promote, market,  distribute,  sell, and have sold Product for use in
the Field under the Technology and SPC.

          2.2  Co-Exclusive  License.  Aphton  shall  have the right to turn the
exclusive right and license granted to SB hereunder into a Co-Exclusive  License
on a Regulatory Jurisdiction per Regulatory Jurisdiction basis and to co-promote
in that  Regulatory  Jurisdiction  on sixty (60) days notice to SB if in a given
Regulatory Jurisdiction:  (a) within one hundred and twenty (120) days after the
receipt of all necessary  regulatory approvals including price approvals for the
Commercial  Launch of the Product within said Regulatory  Jurisdiction,  SB does
not use commercially  reasonable  diligence to begin promoting and marketing the
Product in that Regulatory  Jurisdiction,  (b) SB ceases any significant efforts
to continue  marketing the Product in such Regulatory  Jurisdiction for a period
of 180  days,  (c) a  Commercial  Failure  of the  Product  in  such  Regulatory
Jurisdiction  occurs,  or  (d) a  Competing  Product  is  introduced  by SB in a
Regulatory  Jurisdiction which causes a material reduction of sales of more than
[Redacted]*%  of Product per calendar year in such Regulatory  Jurisdiction.  SB
will take all steps as may be necessary or useful to  reasonably  permit a Third
Person or Aphton to co-promote  the Product as set forth under this Section 2.2.
In such event parties  shall  discuss in good faith all  necessary  arrangements
including  supply by SB of Product at arm's  length  conditions,  the use of SBs
trademarks  and  the  terms  and  conditions  of  licensing  under  SB  Adjuvant
Technology and/or SB Know-How.

          2.3 Additional Technology.  During the Development Program Term, if SB
or  Aphton  believe  that  technology  related  to  the  subject  matter  of the
Development Program that is controlled by a Third Person,  which may include new
lmmunogens, adjuvants and/or Blocking Patents ("Additional Technology") would be
valuable or necessary to the Development  Program in the Field hereunder  Aphton
or SB as appropriate  shall present such  Additional  Technology to the Steering
Committee  along  with a written  report.  The  Steering  Committee  shall  then
determine,  except for Blocking  Patents which shall be at SB's sole  discretion
subject to other  provisions  contained  herein,  whether  licenses  to,  and/or
acquisitions  of,  such  Additional

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -7-

<PAGE>

Technology  should be made, and SB shall approach and negotiate the terms of any
agreement(s) with any Third Person including,  without  limitation  payments for
sponsored  research.  No such Third Person license and/or  acquisition  shall be
effective  with  respect  to SB unless and until SB has  specifically  agreed in
writing to abide by the  applicable  terms and  conditions  of any such  license
and/or acquisition.

                                   ARTICLE 3
                               DEVELOPMENT PROGRAM

          3.1 Responsibilities.

          (i) During the Development  Program Term parties will cooperate in the
development of Products. The initial program of activities to be conducted under
the  Development  Program  during the  Development  Program Term is set forth in
Schedule B, which can be amended  and/or  complemented  from time to time by the
Steering Committee.

          (ii) The Development Program shall be conducted under the direction of
the  Steering  Committee  who  shall  have  overall  responsibilities  for  such
Development Program, including but not limited to fixing the budget and updating
quarterly the Development  Program.  The  responsibilities  and operation of the
Steering Committee are set forth in Section 4.

          (iii) The objective of the Development Program will be the development
of Products for use in the Field.

          (iv) During the  Development  Program Term and any extensions  thereof
Aphton  undertakes  to (i) use best  efforts  to  materially  perform  all those
additional or residual activities not performed by SB hereunder and set forth in
the  Development  Program;  (ii)  use all  reasonable  efforts  to  achieve  the
Development  Program's  objective  and (iii) use best  efforts  to  achieve  the
milestones within the Development Program Term.

          (v) During the term of this  Agreement  Aphton  shall not enter into a
collaboration  agreement with a Third Person to develop a Competing  Product for
use in the Field without the prior written consent of SB.

          (vi) During the  Development  Program Term,  Aphton shall submit to SB
quarterly  progress reports  detailing the development work  accomplished in the
previous quarter.

          (vii)  If the  Steering  Committee  (as  defined  in  Section  4.2(a))
determines  that during the  Development  Program SB Know-How and/or SB Adjuvant
Technology  is  required  for the  development  of the  Product,  SB  will  make
available such technology. In case Aphton would exercise its right to co-promote
Product in accordance with Section 2.2, parties will negotiate in good faith the
terms and conditions of such licensing as set forth in Section 2.2.

          3.2 SB's  Responsibility.  SB will be responsible  for (a) funding all
costs  associated  with the  development  of the  Product  by Aphton  during the
Development  Program Term in accordance with the budget approved by the Steering
Committee,  including all costs  associated  with  manufacturing  and developing
clinical trial batches of the Product including. but not limited to, the cost of
active  substance  for  clinical  trials and the  assistance  of clinical  trial

                                      -8-

<PAGE>

support personnel,  (b) paying all out-of-pocket  expenses incurred by Aphton at
SB's request  during the  Development  Program Term, and (c) funding those costs
associated with obtaining regulatory approval to market the Product in SB's name
in each Regulatory Jurisdiction in the Territory including,  but not limited to,
the cost of clinical trials.

          In the event  that SB's  funding  obligation  under this  Section  3.2
exceeds  [Redacted]*  per  indication  within the Field  during the term of this
Agreement,  such portion exceeding [Redacted]* shall be fully creditable against
Aphton  Royalties  as set forth in Section  6.2.2 and/or the  royalties  payable
under  Section  6.5.  For the  avoidance  of  doubt,  prostate  cancer  shall be
considered as one (1) indication, regardless its stage of development.

                                   ARTICLE 4
                       OPERATION OF THE STEERING COMMITTEE

          4.1  Cooperation of the Parties.  The parties shall  cooperate in good
faith under this Agreement.  For the purpose thereof,  each party shall, subject
to  the  conditions  set  forth  in  Article  10  hereof,  provide  any  Company
Information  to the other  party as  determined  by the  Steering  Committee  to
effectively  develop  Product.  Each party  shall  prepare  its Work Report on a
quarterly  basis during the  Development  Program Term which will be reviewed by
the Steering Committee.

          4.2 Steering Committee.

          (a)  A  steering   committee  (the  "Steering   Committee")  shall  be
established to supervise the  performance of the parties during the  Development
Program  Term.  The  Steering  Committee  shall have an equal  number of members
appointed by each party and shall be  initially  comprised of a total of six (6)
members.  The total number of Steering  Committee  members may be changed by the
Steering Committee from time to time as appropriate, but in all cases it will be
comprised  of an equal  number  of  members  from  each  party.  Each  party may
substitute  its  representatives  from  time to time  and  the  substitution  is
effective upon notice to the other party.

          (b) The Steering  Committee  shall meet as often as required to ensure
the  effective  operation of the  Development  Program but in no event less than
quarterly  on such  date and at such  place as to be  agreed  upon  between  the
parties.  The meetings of the Steering Committee may be held in person or in any
other reasonable manner,  including,  without  limitation,  by telephone,  video
conference or E-mail. Each of the Steering Committee members shall have one vote
and all the  decisions  of the  Committee  must be made by a  majority  vote.  A
representative of SB shall chair each meeting. Members of the Steering Committee
will be  permitted  to attend such  meetings  by  electronic  means  (telephone,
E-mail,   video   conference,   etc.).  It  is   contemplated   that  additional
representatives  of the  parties  may attend  and  participate  in the  Steering
Committee  meetings,  however,  such  additional  representatives  will  not  be
entitled to participate in the voting process. As a first order of business, the
Steering  Committee will draft procedures which will govern the operation of the
Steering  Committee and its decision making process and the specific criteria to
be used in the determinations set forth in Section 4.2(c) below. However in case
of deadlock,  the Steering Committee shall document the opinions of both parties
and the opinion of SB's representatives shall prevail,  provided,  however, that
if such decision  would have a significant  impact on the time to market Product
or on Aphton Royalties,

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -9-

<PAGE>

the Steering  Committee  shall escalate the issue to the General  Manager Senior
Vice  President  of SB and C.E.O.  of Aphton who shall try to resolve  the issue
within  thirty (30) days.  Failing to agree on such issue,  the  decision of the
General Manager Senior Vice President of SB shall prevail.

          (c) The Steering  Committee  shall be responsible  for (i) determining
the profile of Product,  (ii) overall  management  of the  Development  Plan and
related  activities.  (iii) planning and reviewing clinical trial and regulatory
strategies,  (iv) review of manufacturing  arrangements to ensure consistency of
supply  and  Product   compliance   with   regulatory   requirements   and  Good
Manufacturing  Practice during the  Development  Program Term, (v) reviewing the
quarterly  Work Reports  submitted by each party,  and (vi) approving the annual
budget.

          Notwithstanding the foregoing,  during the period in which SB's rights
are no longer  exclusive  in a  Regulatory  Jurisdiction  pursuant  to  Aphton's
exercise of its rights under Section 2.2 hereof,  the Steering Committee will no
longer be responsible  for the items  described in the foregoing  clauses (iii),
(iv) and (v) with respect to such Regulatory Jurisdiction.

                                   ARTICLE 5
                      DEVELOPMENT, MANUFACTURING, MARKETING

          5.1  (i) SB will in  accordance  with  SB's  reasonable  business  and
scientific judgment and the Development Program, exercise its reasonable efforts
and  diligence in  developing  and  commercializing  Product and in  undertaking
investigations and actions required to obtain appropriate governmental approvals
to market  Product.  All such activity  shall be undertaken at SB's expense.  At
SB's  request,  Aphton shall supply to SB  reasonable  technical  assistance  in
undertaking such investigations and actions.

               (ii)  SB  shall  further  be   responsible   for  and  shall  use
commercially  reasonable  efforts to (a) prepare the Marketing  Plan and provide
Aphton with a copy prior to release; SB shall take hereto any reasonable comment
of Aphton into  consideration and  representatives of both parties shall discuss
every quarter about its contents;  (b) market and  commercialize  the Product in
the Territory; (c) formulate and develop marketing strategies for the Product on
a Regulatory  Jurisdiction  per Regulatory  Jurisdiction  basis; (d) perform all
Product  distribution  and sales  functions,  including but not limited to order
taking and processing,  (e) deliver and process the sales of the Product and (f)
cooperate with Aphton to maintain the  effectiveness  of any licenses,  permits,
approvals or  registrations  obtained in connection with the performance of this
Agreement.

          5.2 Aphton shall supply any Aphton  Know-How  which SB may require and
shall provide to SB, at SB's request,  technical  assistance  within its area of
expertise concerning  development,  production and commercialization of Product.
Provision of such technical  assistance  shall  include,  but not be limited to,
visits by Aphton personnel to SB at Aphton's expense, and visits by SB personnel
to  Aphton,  at SB's  expense,  at times and for  periods of time upon which the
parties will agree.  Aphton will provide  reasonable  quantities of  preclinical
test material for SB as required through the course of the Development Program.

                                     -10-

<PAGE>

          5.3 SB shall be responsible  for scaling up Product and  manufacturing
Product at its facilities.

                                   ARTICLE 6
                               COMPENSATION TERMS

          6.1 Simultaneously  with the execution and delivery of this Agreement,
Aphton and SB have entered into a  Subscription  Agreement,  dated the Effective
Date, in the form attached hereto as Exhibit C, pursuant to which (i) Aphton has
agreed to sell and SB has  agreed  to  purchase  the  number of shares of common
stock,  par value  $.001 per  share,  of  Aphton  set forth in the  Subscription
Agreement for a purchase price of US  $5,000,000,  (ii) Aphton shall be entitled
to a Put Option (as defined in the Subscription Agreement) and (iii) SB shall be
entitled  to a Call Option (as defined in the  Subscription  Agreement),  all as
subject to the terms and conditions set forth therein.

          6.2 Royalties.

          6.2.1 As sole consideration of SB hereunder, other than its obligation
to fund the  development  costs up to a maximum amount of [Redacted]* US Dollars
in  accordance  with  Section 3.2 above and taking into account (i) the advanced
stage of the preclinical  development of product,  (ii) Aphton's contribution in
the  development  cost for the  portion  exceeding  [Redacted]*  US Dollars  and
Aphton's  contribution in the Product Cost and Expenses for the five years after
Commercial Launch,  (iii) the expected probability of a launch date as set forth
in Development Program,  (iv) no third party royalties for Additional Technology
(as this term is defined in Section 2.3) are  expected to be payable  during the
term of this Agreement, and (v) in absence of any license fee, technology access
fee,  milestone  payments.  SB shall pay the  following  royalties  to Aphton in
consideration of all rights and licenses granted hereunder:  Aphton Royalties as
set forth in Section 6.2.2 and royalties  under Aphton  Know-How as set forth in
Section 6.5.

          6.2.2 Aphton  Royalties.  Subject to Section 6.4 and commencing in the
year in which Commercial Launch occurs in Regulatory  Jurisdictions set forth in
Section 6.4(i). SB shall make payments to Aphton ("Aphton Royalties") based upon
Net Sales (as determined by Section 6.4). The amount of Aphton  Royalties  shall
be determined in accordance with the following principles:

          The applicable  royalty rate in a given calendar year will be based on
the ratios set forth below  (attributable to the relevant  portions of Net Sales
as  determined  by  Section  6.4) and Aphton  Royalties  will be  determined  as
follows:

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -11-

<PAGE>


           ------------------------- -------------------------
                Net Sales levels
            (in million US Dollars)        Royalties %
           ------------------------- -------------------------
           ------------------------- -------------------------
                      $[Redacted]*          [Redacted]*%
           ------------------------- -------------------------
           ------------------------- -------------------------
                      $[Redacted]*          [Redacted]*%
           ------------------------- -------------------------
           ------------------------- -------------------------
                      $[Redacted]*          [Redacted]*%
           ------------------------- -------------------------
           ------------------------- -------------------------
                      $[Redacted]*          [Redacted]*%
           ------------------------- -------------------------
           ------------------------- -------------------------
                      $[Redacted]*          [Redacted]*%
           ------------------------- -------------------------

          6.2.3 The foregoing Net Sales levels are incremental, and the payments
of Aphton  Royalties  (if any) will change in relation to the level of Net Sales
achieved in a calendar year (e.g., if Net Sales of the Product are $[Redacted]*,
Aphton  Royalties  due would be the sum of:  (i)  [Redacted]*%  of the Net Sales
attributable to the first  $[Redacted]* of Net Sales;  and (ii)  [Redacted]*% of
the Net Sales  attributable  to the next  $[Redacted]*  of Net Sales.  Net Sales
levels set forth in the table above (1st column)  will be indexed for  inflation
or deflation in accordance with the U.S. Department of Commerce,  Consumer Price
Index  or its  successor  index,  beginning  in the  first  full  calendar  year
following one year after the first Commercial  Launch of the Product or the year
2002, whichever is earlier.

          6.2.4 If the average sales price per dose in a Regulatory Jurisdiction
and in a given  calendar  year drops below  [Redacted]*  per dose as indexed for
inflation or  deflation in  accordance  with the local  consumer  price index or
equivalent index beginning the first full calendar year following one year after
the first Commercial Launch of the Product in such Regulatory Jurisdiction,  the
above mentioned percentages which determine Aphton Royalties will be reduced and
parties will  negotiate in good faith an amendment to this Agreement in order to
reflect such reduction.

          6.2.5  In  the  event  on a  Regulatory  Jurisdiction  per  Regulatory
Jurisdiction   basis,  Cost  and  Expenses  of  SB  pertaining  to  Product  (as
forecasted)  during any year of the  [Redacted]*  years period after  Commercial
Launch in such  Regulatory  Jurisdiction  exceeds  [Redacted]*% of the Net Sales
("Target Cost and Expenses") over such year, SB shall be entitled to:

          (A) apply a fixed  royalty of  [Redacted]*%  on Net Sales to determine
Aphton  Royalties  regardless the portion of Net Sales achieved in the Territory
in such year; and

          (B) credit the difference ("Excess") between the Cost and Expenses and
the Target  Cost and  Expenses of such  period in such  Regulatory  Jurisdiction
against Aphton Royalties and royalties  payable under Section 6.5 payable in the
same year to the following extent:

          In each such year of the [Redacted]*  years after Commercial Launch in
          such  Regulatory   Jurisdiction,   SB  shall  be  entitled  to  credit
          [Redacted]*%  of such  Excess  deducted  pro  rata  from  the  monthly
          payments  set  forth  in  Section  7.2.  However,  in no  event  shall
          [Redacted]*% of such Excess exceed [Redacted]% of Aphton Royalty which
          would have been payable in such Regulatory  Jurisdiction and such year
          pursuant to Section 6.2.5.B above assuming Excess equals  [Redacted]*,
          i.e.,  [Redacted]*%  of Net Sales in such year and in such  Regulatory
          Jurisdiction.

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -12-

<PAGE>

          In no event  shall  such  credit  cause  total  Aphton  Royalties  and
royalties  payable  under  Section 6.5 in such year and in the  Territory  to be
reduced by more than  [Redacted]*.  Any portion  remaining  uncredited  shall be
carried forward to any subsequent year, until such credit is exhausted.

          Parties shall adjust the Excess and the amount creditable  pursuant to
Section  6.2.5.B  above  once the actual  costs  incurred  by SB and  defined in
Section  1.25 are  available  on a six month basis but in no event later than 90
days  after  the end of the  relevant  6  month  period  and  shall  credit  the
difference on account of SB or Aphton as the case may be.

          For the  avoidance of doubt,  in case Costs and Expenses do not exceed
[Redacted]*%  of Net Sales,  Aphton  Royalties shall be determined in accordance
with Section 6.2.2 through 6.2.4.

          SB shall at all times use its reasonable efforts to diligently promote
sales  of  Product  in  accordance  with  the  provisions  of  Section  5 herein
regardless the royalty percentage earned by Aphton.

          6.3 In the  event  of a  Blocking  Patent  covering  Product  licensed
hereunder, all financial obligations to Third Persons will be [Redacted]* and SB
shall deduct Aphton's share herein from Aphton Royalties  hereunder.  Any unused
credit shall be carried forward to any subsequent calendar year.

          6.4 Aphton  Royalties as  determined by Section 6.2.2 above is subject
to the following conditions:

          (i)  Net  Sales  shall  apply  to  sales   generated   in   Regulatory
Jurisdictions  in which  Aphton  has a granted  unencumbered,  unrevoked  Aphton
Patent  covering  Product and until in each Regulatory  Jurisdiction  within the
Territory  expiration,  lapse  or  invalidation  of the  last  remaining  Patent
covering Product in such Regulatory Jurisdiction.

          (ii) no Aphton Royalties shall be payable and only Know-How  Royalties
shall  apply as set forth in  Section  6.5,  in those  Regulatory  Jurisdictions
wherein  Aphton has exercised its  co-promotion  rights  pursuant to Section 2.2
above.

          (iii) the royalty  percentage  of Aphton  Royalties for each Net Sales
levels as set forth in Section 6.2.2 shall be reduced by [Redacted]*% in case SB
Immunogens or SB Adjuvant Technology or SB Know-How is needed for the Product to
have the  safety,  immunogenicity  or  efficacy  profile  as  determined  by the
Steering Committee and pursuant to a request or recommendation by the regulatory
authorities.

          6.5  Know-How  Royalties.  As a  consideration  for the use of  Aphton
Know-How granted to SB under this Agreement, SB shall pay to Aphton for a period
of  [Redacted]*  years  from the first  bona  fide  commercial  sale of  Product
anywhere in the  Territory  the following  royalty:  [Redacted]*%  of annual Net
Sales from sales of Product in those Regulatory  Jurisdictions  where Aphton has
no granted,  unencumbered  and unrevoked Aphton Patent covering  Product.  After
this  [Redacted]*  year  period  and until  termination  or  expiration  of this
Agreement,  said  royalty  rate  shall  be  reduced  to  [Redacted]*%  for  such
Regulatory Jurisdictions.

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -13-

<PAGE>


          6.6 Payment Method and Timing of Payment;  Withholding  Taxes. (a) (i)
SB shall  pay  Aphton  Royalties  as this  results  from  Section  6.2.2  and/or
royalties set forth in Section 6.5 in  accordance  with the provision of Section
7.2. For the purpose of determining the monthly payments of Aphton Royalties and
the portions of Net Sales set forth in Section 6.2.2,  Net Sales of Product made
in Regulatory Jurisdictions specified in Section 6.4(i) shall be accumulated per
calendar  year on a rolling  monthly  basis and SB shall  apply the  appropriate
percentage  of royalty  until a portion of Net Sales set forth in Section  6.2.2
has been  exhausted.  Once a certain portion of Net Sales has been exceeded in a
given calendar year, SB shall apply the next  applicable  royalty  percentage as
set forth in Section 6.2.2 for Net Sales made in said Regulatory  Jurisdictions.
(ii) Any payment made by SB to Aphton  hereunder  shall be made by wire transfer
in U.S.  Dollars to the  account  designated  by Aphton.  Payment by SB shall be
deemed to have been made as of the day on which such  payment is received at the
account  designated by Aphton.  All payments under this Agreement other than the
payments  set forth in Section 7.2 will be due no later than the first  business
day after the fifteenth  (15th) day of the month or if SB fails to make a timely
payment  due under  this  Agreement,  interest  at a per diem rate  equal to the
then-current  U.S. prime rate shall accrue on the amount of payment for each day
such payment is overdue,  provided that such  interest  shall in no event exceed
the maximum rate permitted by applicable law. (b) Any withholding or other taxes
that SB or any of its  Affiliates  are  required  by law to  withhold  or pay on
behalf of Aphton with  respect to the  payments to Aphton  under this  Agreement
shall be deducted from such payments to Aphton and paid  contemporaneously  with
the  remittance  to  Aphton;  provided,  however,  that in  regard to any tax so
deducted SB shall furnish  Aphton with proper  evidence of the taxes paid on its
behalf.  Aphton will furnish SB with appropriate documents to secure application
of the most favorable rate of withholding tax under applicable tax treaties.

          6.7  Monetary  Conversion  from the  currency of a foreign  country in
which  Product is sold into US  Dollars  shall be made at the  exchange  rate in
force on the last business day of the period for which Aphton  Royalties  and/or
royalties set forth in Section 6.5 are being payable,  as certified by Barclay's
Bank, London.

                                   ARTICLE 7
                      BOOKS, RECORDS AND INSPECTION RIGHTS

          7.1 Books,  Records and Inspection  Rights. SB shall maintain complete
and accurate  books and records in  connection  with its  promotion,  marketing,
distribution and selling of the Product and, in the case of Aphton, its research
and development costs. Upon a reasonable written request of one party, the other
party  shall  permit  the  first  party  to  inspect  or to use  an  independent
accounting  firm to audit,  in each case at the first  party's own expense,  the
internal  accounts of the second party provided such examination  shall not take
place more often than once a year and shall not cover such records for more than
two (2) years.

          7.2 Within sixty (60) days after the close of each calendar month on a
rolling  monthly basis as from Commercial  Launch,  SB shall deliver to Aphton a
true  accounting  of  Products  sold by SB,  its  Affiliates,  sublicensees  and
distributors  during  such  period  and  shall at the same  time pay all  Aphton
Royalties  and/or royalties due pursuant to Section 6.5 for such calendar month.
Such  accounting  shall show sales on a Regulatory  Jurisdiction  per Regulatory
Jurisdiction basis.

                                      -14-

<PAGE>

                                   ARTICLE 8
                         REPRESENTATIONS AND WARRANTIES

          8.1 Due Organization,  Valid Existence and Due Authorization.  Each of
Aphton and SB hereby represents and warrants to the other party that on the date
hereof  (a)  such  party  is  duly  incorporated  and  validly  existing  and/or
registered as applicable under the laws of the relevant jurisdiction and (b) has
the full  power and  authority  (i) to own and  operate  its  properties  and to
conduct its business as described  in its  articles of  association  and (ii) to
execute, deliver and perform this Agreement.

          8.2 Approvals,  Binding Obligations and No Violations.  Each of Aphton
and SB hereby represents and warrants to the other party that on the date hereof
such party has taken all requisite actions and obtained all consents, approvals,
authorizations and permits necessary for the execution, delivery and performance
of this  Agreement.  This  Agreement  constitutes  the legal,  valid and binding
obligation of each of Aphton and SB enforceable against such party in accordance
with its terms.  The execution,  delivery and performance of this Agreement will
not violate (a) such party's articles of incorporation, (b) any other agreements
or obligations of such party or (c) any currently effective laws, regulations or
decrees of the United States or any other relevant jurisdiction.

          8.3 Patents and Patent Applications. Aphton warrants and represents to
SB that (a) it owns and/or controls all the patents and has  proprietary  rights
to all the patent  applications  listed in Schedule A attached  hereto,  (b) the
list in Schedule A contains all patents and/or patent  applications  relating to
Product that are owned and/or  controlled by Aphton on the Effective  Date,  and
(c) to its best knowledge,  there are no actual or threatened  claims by a Third
Person against Aphton's  ownership of, or proprietary rights to, such patents or
patent applications.

          8.4 Aphton  acknowledges  that in entering into this  Agreement SB has
relied  or  will  rely  upon  information  supplied  by  Aphton  pursuant  to  a
Confidentiality  Agreement signed by SB on April 16, 1996 and by Aphton on March
4, 1996 and Aphton  warrants and  represents  that such product  information  is
accurate and  complete in all  material  aspects.  Aphton  further  warrants and
represents that to the best of its knowledge it has and will supply  information
concerning Technology and Product.

          8.5  Aphton  warrants  and  represents  that  its  directors,   and/or
scientists  and have no present  knowledge of existence of any  pre-clinical  or
clinical data or  information  covering  Product which suggest that there may be
toxicity,  safety  and/or  efficacy  concerns  which may  materially  impair the
utility and/or safety of Product.

          8.6 Aphton  warrants that the  agreement  dated August 4, 1994 between
Aphton and  [Redacted]*  and  [Redacted]* on the subject matter of the exclusive
license of GnRH is still in full force and effect and Aphton is not aware of any
circumstance justifying termination of this Agreement for breach.

          8.7 Sales and Marketing Capabilities. SB hereby represents that it has
sufficient sales and marketing capabilities including adequate personnel trained
in detailing vaccines to adequately support its obligations under this Agreement
in the Major Markets within the Territory.

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -15-

<PAGE>

          8.8  Disclaimer.  Except as expressly set forth herein,  neither party
makes any express or implied warranties,  statutory or otherwise, concerning the
value, adequacy,  freedom from fault of, other quality,  efficiency,  stability,
characteristics or usefulness of, or merchantability of fitness for a particular
purpose of, the Product; provided however, nothing contained in this Section 8.8
shall be deemed a waiver  of, or be deemed  to limit,  the  obligations  of each
party hereunder.

                                   ARTICLE 9
                             INTELLECTUAL PROPERTIES

          9.1 Product  Trademarks.  SB shall be responsible for the selection of
Product Trademarks.  SB shall be responsible for registration and maintenance of
such  Product  Trademarks  and SB shall  own  and/or  control  any such  Product
Trademarks.

          9.2 Intellectual Property Developed During the Term of this Agreement.

          9.2.1 Any  invention  or  discovery in the Field made solely by Aphton
during  the course of the  Development  Program  Term  shall be owned  solely by
Aphton.  Any  invention  or  discovery in the Field made solely by SB during the
course  of the  Development  Program  Term  shall be  owned  solely  by SB.  Any
invention  or  discovery  in the Field made  jointly by Aphton and SB during the
course of the Development Program Term shall be jointly owned by SB and Aphton.

          9.2.2 Any patent and/or patent application arising out of an invention
or  discovery  in the Field made  solely by an  employee or agent of SB shall be
filed by and in the name of SB. Any patents  and/or patent  application  arising
out of an  invention  or  discovery  in the Field made  solely by an employee or
agent of  Aphton  shall be filed by and in the name of Aphton  and such  Patents
shall be  automatically  and  exclusively  licensed to SB  hereunder  for use of
Products  within the Field in  accordance  with Section 2.1. In doing so, Aphton
shall take into account any  reasonable  recommendation  of SB including but not
limited to in which Regulatory  Jurisdiction  Patents will be filed. Any patents
and/or patent applications  arising out of an invention or discovery  pertaining
to Products for use in the Field made jointly by SB and Aphton shall be filed in
the joint  names of SB Bio and Aphton  ("Joint  Patents").  Neither  party shall
license its rights  under a Joint  Patents to a Third  Person  without the prior
written agreement of the other party.

          9.3 Aphton Intellectual Property; Infringement.

          (a)  Aphton  shall be  responsible  for the  filing,  prosecution  and
maintenance of Aphton Patent at its own expense. Aphton shall disclose to SB the
complete texts of all patents and patent applications filed and/or controlled by
Aphton which relate to Product as well as all  information  received  concerning
the  institution  or  possible  institution  of  any  interference,  opposition,
re-examination,  reissue,  revocation,  nullification or any official proceeding
involving a Aphton Patent anywhere in the Territory.  SB shall have the right to
review  all  such  pending   applications   and  other   proceedings   and  make
recommendations  to Aphton  concerning  them and their  conduct and Aphton shall
take any such SB comment and recommendation into consideration. Aphton agrees to
keep SB promptly and fully informed of the course of patent prosecution or other
proceedings   including   the   provision   to  SB  of  copies  of   substantive
communications,  search  reports and Third Person  observations  submitted to or
received from patent offices throughout the Territory. Aphton shall provide such
patent  consultation  to SB at no cost to SB.  SB  shall  hold  all  information
disclosed to it under this section as confidential  subject to the provisions of
Section 10.

                                      -16-

<PAGE>

          SB  shall   have  the   right  but  not  the   obligation   to  assume
responsibility  for any  Aphton  Patent  or any part of an Aphton  Patent  which
Aphton  desires,  after  consultation  with SB, to abandon or otherwise cause or
allow to be forfeited.

          (b) In the event that either party becomes aware of an infringement of
any of the Aphton  Patents or of any action by a Third Person for a  declaration
that any of the Aphton Patents are invalid or  unenforceable or any infringement
of SB's rights  hereunder,  it shall promptly notify the other party in writing.
SB shall have the first right but not the  obligation to  [Redacted]*.  Prior to
starting such infringement  action, SB shall consult with Aphton on the strategy
to be followed and take any reasonable recommendation of Aphton into account. If
SB has not commenced a particular infringement action within ninety (90) days of
notification  of any  such  infringement  Aphton  after  notifying  SB  shall be
entitled to bring such infringement action at its own expense. The parties shall
cooperate with each other and provide all necessary and reasonable assistance in
any of such actions.

          (c) Either  party shall select its outside  counsel to  represent  its
interests, unless specified otherwise herein.

          (d) Aphton and SB shall [Redacted]*.

          (e) The parties  shall keep one another  informed of the status of and
of their  respective  activities  regarding any patent  litigation or settlement
thereof concerning Product.

          (f) Aphton shall authorize SB to act as Aphton's agent for the purpose
of making any  application  for any  extensions of the term of Patents and shall
provide reasonable assistance therefor to SB, at Aphton's expense (In the United
States of America as permitted under Title 35 of the United States Code).

          (g) Aphton, on behalf of itself,  its officers,  agents and successors
hereby  waives any and all  actions  and causes of  action,  claims and  demands
whatsoever in law or equity of any kind against SB and its Affiliates based upon
the  exercise by SB of its rights  under this  Section 9.3 except in the case of
gross negligence and/or willful misconduct by SB.

          9.4 Third Party Claims of  Infringement.  In the event that a claim of
patent  infringement is made against Aphton or SB in connection with the Product
or the rights of SB licensed hereunder during the term of this Agreement, either
individually  or  collectively,  the party sued shall promptly  notify the other
party in writing.  Each party sued shall have the obligation to [Redacted]*  and
the other  party  shall  cooperate  and provide  all  necessary  and  reasonable
assistance in any such action.

          9.5 Ownership of Regulatory  Permits,  Approvals.  The parties  hereby
agree that where permissible by law any and all licenses,  permits, approvals or
registrations obtained of Product, including without limitation any U.S. FDA New
Drug  Application,  (NDA) (the  "Product  Registrations")  shall be  co-owned by
Aphton and SB during the term of this Agreement.  To the extent  co-ownership is
not permitted in a particular  Regulatory  Jurisdiction,  SB shall be named sole
owner.  SB shall take all  reasonable  measures to enable Aphton to sell Product
under SB's Product  Registration  in such  Regulatory  Jurisdiction  in case the
license hereunder would become co-exclusive in accordance with Section 2.2.

------------------------
*    The redacted  portions of this  document  have been  omitted  pursuant to a
     request for  confidential  treatment and such  redacted  portions have been
     filed separately with the Securities and Exchange Commission.

                                      -17-

<PAGE>

          9.6 S.P.C.  If SB request  Aphton to do so,  Aphton  shall  diligently
apply for patent  extension  and SPC where  possible  and SB shall  provide  all
necessary  assistance,  including  marketing  authorisation  certificates  where
needed.

                                   ARTICLE 10
                   EXCHANGE OF INFORMATION AND CONFIDENTIALITY

          10.1 (a) During the term of this Agreement,  SB shall have full access
to all matters  encompassed  within Technology and Aphton shall upon the request
of SB promptly disclose and/or supply SB with all Technology.

          (b) During the term of this  Agreement,  SB shall have full  access to
(and  Aphton  will  promptly  disclose  upon  request  of  SB)  all  technology,
information,  inventions,  data,  process  technology and any other  information
related to Product, whether patentable or not, which Aphton may develop, acquire
or otherwise have or obtain rights or access to.

          (c)  During the term of this  Agreement,  each  party  shall  promptly
disclose  to the  other  party  any  information  that it  obtains  or  develops
regarding  the efficacy and safety of Product and shall  promptly  report to the
other party any confirmed information of serious or unexpected reactions or side
effects related to the utilization or medical administration of Product.

          10.2 Company Information.

          (a)  Each  of  Aphton  and  SB  acknowledges   that  all  the  Company
Information  provided by the other party is confidential  and proprietary to the
other party and further that the information developed by either or both parties
during the term of this  Agreement  which relates to the research,  development,
marketing or sales of the Product shall be treated as  Confidential  Information
and agrees to (a) maintain such  information  in  confidence  during the term of
this  Agreement  and for a  period  of 5  years  thereafter  and  (b)  use  such
information  solely for the purpose of  performing  its  respective  obligations
hereunder.  Each of Aphton and SB covenants  that it shall not disclose any such
information  to a Third  Person  except  to its  employees,  agents or any other
person  under  its  authorization,  on a  need  to  know  basis,  provided  such
employees,  agents or person under its  authorization  are subject in writing to
the same confidentiality obligations as either Aphton or SB, as the case may be.

          (b) Notwithstanding anything provided above, the restrictions provided
in this section  shall not apply to the  information  that is (i) already in the
public domain as of the Effective  Date, (ii) received by either Aphton or SB on
an unrestricted basis whereby the receiving party has no duty of confidentiality
to the party providing such information,  (iii) is required to be disclosed to a
governmental or other  regulatory  authority to the extent that such is required
by applicable laws, regulations or court orders of the applicable  jurisdiction,
in which case the disclosing party shall promptly notify the other party of such
disclosure, (iv) is subsequently and independently developed by employees of the
receiving  party or its  Affiliates  who had no  knowledge  of the  confidential
information  disclosed,  and (v)  known by  either  Aphton  or SB at the time of
disclosure and such prior knowledge is established by documentary evidence.

                                      -18-

<PAGE>


          10.3 Injunctive Relief. Each party acknowledges that damages resulting
from  disclosure of the Company  Information  would be an inadequate  remedy and
that in the event of any such  disclosure,  the other party shall be entitled to
seek  injunctive  relief or other  equitable  relief in  addition to any and all
remedies  available at law or in equity,  including  the recovery of damages and
reasonable attorneys' fees.

          10.4 Nothing herein shall be construed as preventing either party from
disclosing  any  information  received  from the other party to an  Affiliate or
sublicensee   or   distributor,   provided  such  Affiliate  or  sublicensee  or
distributor has undertaken a similar obligation of confidentiality  with respect
to the confidential information.

          10.5 All confidential  information disclosed by one party to the other
shall remain the  intellectual  property of the disclosing  party.  In the event
that a court or other legal or administrative  tribunal,  directly or through an
appointed master, trustee or receiver,  assumes partial or complete control over
the assets of a party to this Agreement based on the insolvency or bankruptcy of
such party,  the bankrupt or insolvent  party shall promptly notify the court or
other tribunal (i) that confidential  information  received from the other party
under this  Agreement  remains  the  property of the other party and (ii) of the
confidentiality  obligations under this Agreement.  In addition, the bankrupt or
insolvent party shall, to the extent  permitted by law, take all steps necessary
or desirable to maintain the  confidentiality of the other party's  confidential
information and to insure that the court, other tribunal or appointee  maintains
such information in confidence in accordance with the terms of this Agreement.

                                   ARTICLE 11
                                    INDEMNITY

          11.1  Each  party  shall  indemnify  and hold the  other  party or its
Affiliates harmless,  and hereby forever releases and discharges the other party
or its Affiliates,  from and against all claims, demands,  liabilities,  damages
and expenses, including attorney's fees and costs (collectively,  "Damages") but
excluding punitive or consequential damages (such as lost profits),  arising out
of (i) the gross  negligence,  recklessness,  wrongful acts of the  indemnifying
party or its Affiliates, (ii) any breach or violation of, or failure to properly
perform  any  covenant or  agreements  made by such  indemnifying  party in this
Agreement and (iii) any breach of any of the  representations or warranties made
by such indemnifying party in this Agreement.

          11.2 If either SB or Aphton, or any Affiliate of SB or Aphton (in each
case an  "Indemnified  Party"),  receives any written claim which it believes is
the subject of indemnity  hereunder  by either SB or Aphton,  as the case may be
(in each case an "Indemnifying  Party"), the Indemnified Party shall, as soon as
reasonably  practicable  after forming such belief,  give notice  thereof to the
Indemnifying Party, including full particulars of such claim to the extent known
to the Indemnified  Party;  provided,  however,  that the failure to give timely
notice to the  Indemnifying  Party as contemplated  hereby shall not release the
Indemnifying Party from any liability to the Indemnified Party. The Indemnifying
Party shall have the right, by prompt notice to the Indemnified Party, to assume
the  defense  of  such  claim  with  counsel  reasonably   satisfactory  to  the
Indemnified  Party,  and  at  the  cost  of  the  Indemnifying   Party.  If  the
Indemnifying  Party does not assume the defense of such claim,  the  Indemnified
Party may assume such  defense with counsel of its choice at the sole expense of
the Indemnifying Party. If

                                      -19-

<PAGE>

the  Indemnifying  Party so assumes  such  defense,  the  Indemnified  Party may
participate  therein through counsel of its choice, but the cost of such counsel
shall be borne solely by the Indemnified Party.

          11.3 The party not assuming the defense of any such claim shall render
all  reasonable   assistance  to  the  party  assuming  such  defense,  and  all
out-of-pocket costs of such assistance shall be borne solely by the Indemnifying
Party.

          11.4 No such claim shall be settled other than by the party  defending
the same, and then only with the consent of the other party,  which shall not be
unreasonably withheld;  provided, however, that the Indemnified Party shall have
no  obligation  to consent to any  settlement of any such claim which imposes on
the  Indemnified  Party any liability or obligation  which cannot be assumed and
performed in full by the Indemnifying Party.

                                   ARTICLE 12
                                  FORCE MAJEURE

          Neither party shall be held liable or  responsible  to the other party
or be deemed to have breached or defaulted  under this  Agreement for failure or
delay in performing  its  obligations  hereunder to the extent,  and as long as,
such failure or delay is caused by or results from causes beyond the  reasonable
control of the affected party,  including,  without  limitation,  fire,  floods,
embargoes,  war, insurrections,  riots, civil commotions,  strikes,  lockouts or
other  labor  disturbances,  acts of God,  omissions  or delays in acting by any
governmental  authority ("Force Majeure Events").  In the event of occurrence of
the foregoing,  either party must use reasonable efforts to mitigate the adverse
consequence of such force majeure.

                                   ARTICLE 13
                              TERM AND TERMINATION

          13.1 Term of this  Agreement.  The term of this Agreement shall expire
upon the expiration,  lapse or invalidation of the last remaining  Aphton Patent
in the Territory or twenty (20) years from Effective Date whichever comes later.
Expiration of the  Agreement  under this Section 13.1 shall not preclude SB from
continuing to exercise the rights and licenses  granted to it hereunder  without
any further royalty or other obligation.

          13.2  Termination  by  Either  Party.  Upon  occurrence  of any of the
following,  either party may terminate this Agreement, in whole or in part, with
respect  to the  Product:  (a) mutual  agreement,  (b)  material  breach of this
Agreement provided that the non-breaching  party notifies the breaching party in
writing of such breach and the  breaching  party does not cure the breach within
60 days after receiving the notice and (c) liquidation, dissolution, winding-up,
insolvency,  bankruptcy,  or filing  any  petition  therefor,  appointment  of a
receiver,  custodian or trustee, or any other similar  proceeding,  by or of any
party.

          13.3  Termination  by SB. SB shall  have the right to  terminate  this
Agreement  (i) prior to receipt  of  regulatory  approval,  upon sixty (60) days
prior  notice to Aphton,  or (ii) after  regulatory  approval,  upon one hundred
eighty (180) days prior notice to Aphton, in the event that SB determines at its
sole discretion that for safety, efficacy or economical reasons it does not wish
to promote,  market or sell the Product. In such event, SB shall have no further
obligation to

                                      -20-

<PAGE>

Aphton,  except as  provided  in Section  13.4  hereof and Aphton  shall have no
further obligation to SB.

          13.4 Effect of Termination.

          13.4.1 Upon the  expiration or termination of this Agreement by Aphton
pursuant  to Section  13.2.b or l3.2.c,  (a) SB shall cease to have the right to
use,  promote,  market,  distribute,  sell or  otherwise  to  commercialize  the
Products in any manner, (b) the Product  Registrations and any and all requisite
approvals, permits, licenses, filings, registration, or any application thereof,
or any other  regulatory  records  obtained  pursuant  to this  Agreement  or in
connection with the Product, shall be delivered, transferred and assigned to and
exclusively owned by Aphton,  provided,  that any permits or registrations which
cannot be so assigned  shall be terminated  by SB, and (c) all right,  title and
interest in and to the Product,  Technology, and any goodwill pertaining thereto
(including, without limitation, all documentation embodying Product Intellectual
Property,  relating to suppliers,  customer lists,  manuals,  specifications and
formulas),  will be  fully  assigned  and  transferred  to  Aphton  and SB shall
immediately cease to use, either directly or indirectly, the Product Trademarks,
brand names, trade names,  labels,  markings,  patents,  know-how related to the
Products and (d) SB shall cease to use the Company Information.  The obligations
of Article  10,  Article 11 and  Article 12 hereof,  however,  will  survive any
termination of the Agreement.

          13.4.2 Upon  termination  of this  Agreement by SB pursuant to Section
13.2.b or in case of Section  l3.2.c other than  bankruptcy of Aphton,  SB shall
have a royalty free exclusive license under Technology to develop, use, make and
sell the Product in Territory.

          13.4.3.  Termination of this Agreement shall terminate all outstanding
obligations  and  liabilities  between the parties  arising from this  Agreement
except those  described in Sections 7.1, 9.1, 9.2,  9.3(f),  9.3(g),  9.4, 13.4,
14.2.

          13.4.4  Upon   termination  of  this  Agreement  and  subject  to  the
provisions  contained  in Section 2;  Aphton  shall have the right to retain any
sums already paid by SB hereunder,  and SB shall pay all sums accrued  hereunder
which are due.

                                   ARTICLE 14
                                  MISCELLANEOUS

          14.1  Effectiveness  of  this  Agreement.   This  Agreement  shall  be
effective     as    of    the     Effective     Date    first    given    above.

          14.2 Governing Law. This Agreement  shall be governed by and construed
in  accordance  with laws of the State of New York without  giving effect to the
principles  of conflict of law  thereunder  (other  than  Section  5-1401 of the
General Obligations Law). Any dispute, controversy or claim arising out of or in
relation to this  Agreement or the breach,  termination  or invalidity  thereof,
that cannot be settled  amicably by  agreement of the parties  hereto,  shall be
finally settled by the Courts of New York.

                                      -21-

<PAGE>

          14.3 Notices.  Any notice or other  communication  that is required or
that may be  delivered  hereunder  shall be in  writing  and shall be  delivered
personally  (including by courier) and by facsimile to the other party hereto at
the address set forth below:

          (a) if to Aphton:   Aphton Corporation
                              Philip C. Gevas, Chairman, President and Chief
                              Executive Officer
                              Aphton Corporation
                              80 S.W.8th Street, Suite 2160
                              Miami, Florida 33130
                              305-374-7338 (office)
                              305-374-7615 (facsimile)

                              with a copy to:
                              Dimitrios T. Drivas, Esq.
                              White & Case LLP
                              1155 Avenue of the Americas
                              New York, NY 10036
                              212-819-8286 (office)
                              212-354-8113 (facsimile)

          (b) if to SB:       SmithKline Beecham PLC
                              New Horizons Court
                              Great West Road
                              Brentford, Middlesex TW8 9EP
                              United Kingdom
                              Attn: General Counsel

                              with a copy to:
                              SmithKline Beecham Biologicals S.A.
                              89 rue de l'Institut
                              1330 Rixensart
                              Belgium
                              Attn: Jean Stephenne
                              Senior Vice President - General Manager
                              Tel: 32 2 656.82.50
                              Fax: 32.2.656.80.25

                              and:

                              Director Business Development
                              Tel: 32-2-656-9905
                              Fax: 32-2-656-8026

          14.4 No Third Party  Beneficiary.  Nothing herein expressed or implied
is  intended  to or shall be  construed  to confer upon or give to any person or
entity other than the parties hereto and their successors and permitted  assigns
any rights or remedies under or by reason of this Agreement.

                                      -22-

<PAGE>

          14.5 Integration.  This Agreement  constitutes the entire agreement of
the parties hereto  regarding the subject matter hereof and supersedes all prior
agreements with respect thereto.

          14.6 Amendments. No provision in this Agreement shall be supplemented,
deleted or amended except in a writing executed by Aphton and SB.

          14.7 No  Assignment  and Binding  Effect.  Except for the right of the
Parties  to  assign to an  Affiliate,  neither  Aphton  nor SB may  assign  this
Agreement  or any of its  rights,  interests,  duties or  obligations  hereunder
without the prior written consent of the other party,  which consent will not be
unreasonably  withheld.  This  Agreement  shall be binding upon and inure to the
benefit of the successors and permitted assigns of Aphton or SB.

          14.8 Headings.  The headings in this Agreement are for  convenience of
reference and shall not affect the meaning or  interpretation  of the provisions
hereof.

          14.9 Severability and No Waiver. If any provision herein shall be held
invalid  or  unenforceable  by  a  court  of  competent  jurisdiction  or  other
authority, the remainder of the provisions herein shall remain in full force and
effect and shall not be affected  thereby.  Nothing  contained in this Agreement
shall cause the failure of either party hereto to insist upon strict  compliance
with any other  provision  hereof by the other party to operate as a waiver with
respect to such provision, unless such waiver is in writing and delivered to the
other party hereto in accordance with Section 14.3 hereof.

          14.10  Originals.  Aphton and SB shall  execute two  originals of this
Agreement.  Each party hereto shall retain one original.  Each original shall be
equally valid.

          14.11   Bankruptcy   Acknowledgment.   Each  of  the  parties   hereto
acknowledges  and  agrees  that this  Agreement  (i)  constitutes  a license  of
Intellectual  Property (as such term is defined in the United States  Bankruptcy
Code,  as  amended  (the  "Code")),  and  (ii) is an  executory  contract,  with
significant  obligations to be performed by each party hereto. The parties agree
that each may fully  exercise  all of its  rights and  elections  under the Code
following  any event of  bankruptcy  affecting  the  other,  including,  without
limitation, those set forth in Section 365(n) of the Code.

          14.12 Quality Assurance. Aphton and SB shall retain batch data records
and quality control certificates for each batch of the Product and, if requested
by the other party will provide  such  information  to that party.  Such records
shall be retained for the longest period required by any Regulatory Jurisdiction
in the Territory.

          14.13  Product  Recalls.  Aphton and SB shall observe at all times all
legal  requirements in order to maintain an effective system for the recall from
the market of the Product.  Notwithstanding  anything herein to the contrary, if
SB or Aphton  deems it  necessary  to effect a recall of the  Product,  it shall
notify the other party using reasonable  notice under the  circumstances of such
intended recall and SB shall decide on such recall.

                                      -23-

<PAGE>

          IN WITNESS  WHEREOF,  Aphton and SB have caused this  Agreement  to be
executed in duplicate by their duly authorized representatives as of the day and
year first above written.

APHTON CORPORATION                    SMITHKLINE BEECHAM PLC



By: /s/ Philip C. Gevas               By: /s/ Jean Stephenne
   -------------------------------      ----------------------------------------
Name:  Philip C. Gevas                Name:  Jean Stephenne
Title: Chairman, President            Title: Senior Vice President - General
       and Chief Executive Officer           Manager



<PAGE>

                                   SCHEDULE A
                                   ----------

                     PATENTS ASSIGNED TO APHTON CORPORATION

                 SERIAL NO./      PATENT NO./      PUBLICATION
  COUNTRY        FILING DATE      GRANT DATE       NO. AND DATE      STATUS
-------------- --------------- ---------------- ----------------- --------------


                      [Omitted pursuant to Regulation S-K]







                 SERIAL NO./      PATENT NO./      PUBLICATION
  COUNTRY        FILING DATE      GRANT DATE       NO. AND DATE      STATUS
-------------- --------------- ---------------- ----------------- --------------


                      [Omitted pursuant to Regulation S-K]




<PAGE>

                                   SCHEDULE B
                                   ----------

                            CLINICAL DEVELOPMENT PLAN

                      [Omitted pursuant to Regulation S-K]


<PAGE>
                                   SCHEDULE C
                             Subscription Agreement

          THIS  AGREEMENT  is made as of this  12th day of June,  1998,  between
APHTON  CORPORATION (the "Company"),  a Delaware  corporation with its principal
executive offices at the World Trade Center, 80 S.W. Eighth Street,  Suite 2160,
Miami,  Florida,  and  SMITHKLINE  BEECHAM  plc  (the  "Purchaser"),  a  company
organized  under the laws of England with its registered  office at New Horizons
Court, Brentford Middlesex TW8 9EP, England.

                              W I T N E S S E T H:
                              - - - - - - - - - -

          WHEREAS,  the  Purchaser  desires to  subscribe  for,  and the Company
desires to issue,  the number of shares set forth in Section 1 of this Agreement
(the  "Initial  Shares")  of Common  Stock,  par value  $.001 per share,  of the
Company  (the  "Common  Stock") on the terms and subject to the  conditions  set
forth herein; and

          WHEREAS,  simultaneously  with  the  execution  and  delivery  of this
Agreement,  the Company and the Purchaser have entered into a Collaboration  and
License Agreement (the "Collaboration and License Agreement");

          NOW, THEREFORE, IT IS AGREED:

          Section 1.  Agreement to Sell and Purchase the Shares.  Subject to the
terms and conditions set forth in this Agreement,  the Company agrees to sell to
the Purchaser,  and the Purchaser agrees to purchase from the Company the number
of Initial Shares equal to the quotient of 5,000,000 divided by the Share Price.
For purposes of this Section 1, the "Share  Price" shall mean the average of the
closing  prices of the  Common  Stock as  reported  on The Nasdaq  Stock  Market
("Nasdaq")  for the  five  consecutive  trading  days  immediately  prior to the
Closing  Date  (as  hereinafter  defined),  multiplied  by  1.6.  Any  resulting
fractional shares shall be rounded to the nearest whole number.

          Section 2.  Delivery of the Shares at the Closing.

          2.1 Initial  Closing.  The  completion of the purchase and sale of the
Initial   Shares  under   Section  1  (the   "Initial   Closing")   shall  occur
simultaneously  with  the  execution  and  delivery  of this  Agreement  and the
Collaboration and License Agreement (the "Initial Closing Date").  The Purchaser
shall make payment of the full purchase price in the amount of US$5,000,000 (the
"Purchase  Price") of the Initial Shares pursuant to such wire transfer or other
payment  instructions  as shall have been  specified by the Company at least two
business  days prior to the date hereof.  Simultaneously  with the execution and
delivery  hereof,  the Company shall deliver to the  Purchaser,  in exchange for
such  payment,  one or more  stock  certificates  registered  in the name of the
Purchaser,  or in such  name or names  as may be  designated  by the  Purchaser,
representing the number of Initial Shares as determined pursuant to Section 1.


<PAGE>

          2.2 Legend.  The certificate or certificates  representing the Initial
Shares and any Put Option  Shares and any Call  Option  Shares,  each as defined
below  (collectively,  the "Shares") shall contain a legend restricting transfer
under the Securities Act of 1933, as amended (the "Securities Act"), such legend
to be substantially as follows:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT  AND HAVE NOT BEEN  REGISTERED  UNDER THE  SECURITIES ACT OF 1933, AS
AMENDED (THE  "ACT").  SUCH  SECURITIES  MAY NOT BE SOLD OR  TRANSFERRED  IN THE
ABSENCE OF SUCH  REGISTRATION  OR AN EXEMPTION  THEREFROM UNDER THE ACT WHICH IS
CONFIRMED IN A LEGAL OPINION SATISFACTORY TO THE COMPANY."

          The  certificate  shall  also  include  any  legends  required  by any
applicable state securities laws.

          Section  3.  Further  Agreements  of the  Company  and the  Purchaser.

          3.1  Put  Option.  The  Purchaser  hereby  grants  to the  Company  an
irrevocable option (the "Put Option"),  exercisable at anytime during the period
commencing on the first  anniversary of the Closing Date and ending on the third
anniversary  of the Closing  Date.  Such Put Option shall entitle the Company to
sell to the  Purchaser  for a purchase  price of  US$5,000,000  (the "Put Option
Price")  the  number  of  shares  of Common  Stock  (the  "Put  Option  Shares")
determined pursuant to this Section 3.1. The completion of the purchase and sale
of the Put Option  Shares shall occur no later than 15 days after the receipt by
the  Purchaser of a notice (the "Put Option  Notice")  from the  Company,  which
notice shall set forth the number of Put Option Shares to be sold. The number of
Put Option Shares to be sold shall be equal to the quotient of 5,000,000 divided
by the average of the closing  prices of the Common  Stock as reported on Nasdaq
for the five consecutive  trading days immediately  prior to the date of the Put
Option Notice.  Any resulting  fractional shares shall be rounded to the nearest
whole number.

          The Purchaser shall pay the Put Option Price in immediately  available
funds by wire transfer to the account of the Company specified in the Put Option
Notice.  Simultaneously  with such  payment,  the Company  shall  deliver to the
Purchaser,  in  exchange  for  such  payment,  one or  more  stock  certificates
registered  in the  name of the  Purchaser,  or in such  name or names as may be
designated  by the  Purchaser,  representing  the number of Put Option Shares so
purchased.

          3.2 Call Option. If and when the Company exercises the Put Option, the
Purchaser shall have the option,  exercisable once within 90 days of the date of
the Put Option  Notice,  to purchase  from the  Company for a purchase  price of
US$5,000,000  (the "Call Option Price") an amount of additional shares of Common
Stock (in excess of the Put Option  Shares) (the "Call Option  Shares") equal to
the number of Put Option Shares.  The completion of the purchase and sale of the
Call  Option  Shares  shall occur no later than 15 days after the receipt by the
Company of a notice (the "Call Option  Notice") from the Purchaser  stating that
it desires to purchase the Call Option Shares.  Any resulting  fractional shares
shall be rounded to the nearest whole number.

                                      -2-

<PAGE>

          The  Purchaser  shall  make  payment  of  the  Call  Option  Price  in
immediately  available  funds by wire  transfer  to the  account of the  Company
specified  in the Put  Option  Notice.  Simultaneously  with such  payment,  the
Company shall deliver to the Purchaser, in exchange for such payment, one or two
more stock certificates registered in the name of the Purchaser, or in such name
or names as may be designated by the Purchaser,  representing the number of Call
Option Shares so purchased.

          Section 4.  Representations,  Warranties And Covenants Of The Company.
The Company hereby represents and warrants to, and covenants with, the Purchaser
that:

          4.1 Organization. The Company is a corporation duly organized, validly
existing and in good standing  under the laws of the State of Delaware,  and has
full power and  authority  to own and operate its  properties  and assets and to
carry on its business as presently  conducted  and as proposed to be  conducted.
The  Company  is  qualified  as a foreign  corporation  to do  business  in each
jurisdiction  in the United States in which the ownership of its property or the
conduct of its business requires such qualification,  except where failure so to
qualify would not have a material adverse effect on the Company.

          4.2  Authority.  The  Company  has full right,  power,  authority  and
capacity  to enter  into  this  Agreement  and to  consummate  the  transactions
contemplated  hereby.  Upon the execution and delivery of this  Agreement,  this
Agreement  shall  constitute  a valid and  binding  obligation  of the  Company,
enforceable  in  accordance  with its  terms,  except as  enforceability  may be
limited applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting  creditors' and contracting  parties' rights generally and except
as enforceability  may be subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

          4.3  Validity of Shares.  The sale of the Shares is not subject to any
preemptive rights or rights of first refusal that have not been waived and, when
issued,  sold and delivered in compliance with the provisions of this Agreement,
the Shares will be validly  issued,  fully paid and  nonassessable,  and will be
free of any liens or  encumbrances  created by the Company;  provided,  however,
that the Shares may be subject to  restrictions  on transfer  under state and/or
federal  securities  laws as set forth herein or as  otherwise  required by such
laws at the time a transfer is proposed.

          4.4 Accuracy of Reports and Information. The Company's Common Stock is
registered  pursuant to Section 12(g) of the Securities Exchange Act of 1934, as
amended (the "Exchange  Act").  All reports (the "SEC  Reports")  required to be
filed by the Company  during the period January 1, 1998 through the date of this
Agreement pursuant to Section 13(a) or 15(d) of the Exchange Act, have been duly
filed and were in compliance with the  requirements of their respective forms as
of the dates at which the information  was furnished.  Copies of all SEC Reports
filed by the Company  during such period are  available  to the  Purchaser  upon
request.  The Company  will  continue  to file all reports  required to be filed
under the  Exchange  Act. At the time they were  filed,  the SEC Reports did not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made therein, in the light of the circumstances
under which they were made, not  misleading.  As of the date of this  Agreement,

                                      -3-

<PAGE>

certain of the Company's SEC Reports are under review by the SEC and are subject
to further revision based on future comments of the SEC staff.

          4.5 No Conflict; No Violation. The execution, delivery and performance
of this Agreement and consummation of the transactions  contemplated hereby will
not conflict with any provisions of the Certificate of  Incorporation or By-laws
of the Company or result in any material  violation or default of, or permit the
acceleration  of any obligation  under (in each case, upon the giving of notice,
the  passage  of time,  or  both),  any  material  mortgage,  indenture,  lease,
agreement or other instrument,  permit,  franchise,  license,  judgment,  order,
decree,  law,  ordinance,  rule or  regulation  applicable to the Company or its
properties,  the effect of which  would have a  material  adverse  effect on the
Company.

          4.6  Consents and  Approvals.  All  consents,  approvals,  orders,  or
authorizations of, or registrations, qualifications, designations, declarations,
or filings with, any governmental authority, required on the part of the Company
in  connection  with the valid  execution  and delivery of this  Agreement,  the
offer,  sale  or  issuance  of the  Shares,  or the  consummation  of any  other
transaction  contemplated hereby have been obtained, or will be effective at the
Initial  Closing or the date of the closings,  if any, for the Put Option Shares
or the Call  Option  Shares,  as  applicable,  except for  notices  required  or
permitted  to be filed with  certain  state and federal  securities  commissions
after such closing  dates,  as the case may be, which notices will be filed on a
timely basis.

          4.7  Absence  of Certain  Developments.  With  respect to the  Initial
Closing,  since April 30, l998 (and,  with  respect to the  closings for the Put
Option  Shares  or the Call  Option  Shares,  since  the end of the last  fiscal
quarter  prior to the date of the Put  Option  Notice  for which  the  Company's
filing on Form 10-Q is publicly  available),  there has been no material adverse
change in the financial condition or results of operations of the Company.

          4.8  Ex-Distribution  Dates.  The  Company  shall not  deliver the Put
Option Notice at any time when any of the closing prices used to compute the Put
Option Price are for dates prior to the  ex-dividend  dale for any  distribution
with respect to the Shares unless the Purchaser  receives such distribution with
respect to the Put Option Shares and any Call Option Shares. The Purchaser shall
not be entitled  to any rights as a holder of the Put Option  Shares or any Call
Option  Shares until  completion  of the closings at which it actually  acquires
such Shares.

          4.9 HSR Act  Filings.  Subject  to terms and  conditions  hereof,  the
Company  agrees to use  commercially  reasonable  efforts to make  promptly  any
necessary filings under the  Hart-Scott-Rodino  Antitrust  Improvements Act (the
"HSR Act") at such time as such filings may be required.

          4.10 Rule 14-4 Reporting. With a view to making available the benefits
of certain  rules and  regulations  of the SEC which may at any time  permit the
sale of the Shares to the public without registration, the Company agrees to use
its best efforts to:

          (a) Make and keep  public  information  available,  as those terms are
     understood and defined in Rule 144 under the Securities Act; and

                                      -4-

<PAGE>

          (b) Use its best  efforts to file with the SEC in a timely  manner all
     reports and other  documents  required of the Company under the  Securities
     Act and the Exchange Act.

          Section 5. Representations, Warranties and Covenants of the Purchaser.
The Purchaser represents and warrants to, and covenants with, the Company that:

          5.1 Accredited  Investor.  The Purchaser is an  "accredited  investor"
within  the  meaning  of Rule  501(a)  under the  Securities  Act,  and has such
knowledge,  sophistication and experience in business and financial matters that
it  is  capable  of  evaluating  the  merits  and  risks  of  the   transactions
contemplated by this Agreement.

          5.2 Investment  Presentations.  The Purchaser is aware that the Shares
have not been  registered  under  the  Securities  Act or any  applicable  state
securities  laws,  and agrees that the Shares will not be offered or sold in the
absence  of  registration  under the  Securities  Act and any  applicable  state
securities  laws or an  exemption  from  the  registration  requirements  of the
Securities Act and any applicable state securities laws.

          The Purchaser  understands that the offering and sale of the Shares is
intended to be exempt from  registration  under the Securities Act, by virtue of
Section 4(2) and/or  Section 4(6) of the  Securities  Act and the  provisions of
Regulation D promulgated  thereunder,  based, in part, upon the representations,
warranties and  agreements  contained in this Agreement and the Company may rely
on such representations,  warranties and agreements in connection therewith. The
Purchaser  will not transfer the Shares in  violation of the  provisions  of any
applicable Federal or state securities laws.

          The  Purchaser  is  acquiring  the Shares for its own  account and for
investment, and not with a view to the resale or distribution thereof; it has no
present intention of selling, negotiating, or otherwise disposing of the Shares.
The  Purchaser's  financial  condition and  investments are such that it is in a
financial  position to hold the Shares for an  indefinite  period of time and to
bear the economic  risk of, and  withstand a complete  loss of, such Shares.  In
addition,  by virtue of its  expertise,  the  advice  available  to it,  and its
previous  investment  experience,  the  Purchaser  has  extensive  knowledge and
experience  in financial  and business  matters,  investments,  securities,  and
private  placements  and the  capability to evaluate the merits and risks of the
transactions contemplated by this Agreement.

          5.3 Authority.  The Purchaser further  represents and warrants to, and
covenants  with,  the Company  that (i) the  Purchaser  has full  right,  power,
authority  and  capacity  to enter into this  Agreement  and to  consummate  the
transactions  contemplated  hereby and (ii) upon the  execution  and delivery of
this Agreement,  this Agreement shall constitute a valid and binding  obligation
of  the  Purchaser,   enforceable  in  accordance  with  its  terms,  except  as
enforceability   may  be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium or similar laws affecting creditors' and contracting
parties'  rights  generally and by general  principles of equity  (regardless of
whether such enforceability is considered in a proceeding in equity or at law).

                                      -5-

<PAGE>

          5.4 Purchaser  Review.  The Purchaser  hereby  represents and warrants
that the Purchaser has  carefully  examined the Company's  Annual Report on Form
10-K for the fiscal year ended  January  31,  1998,  and all  reports  (the "SEC
Reports")  required  to be filed by the Company  during the period from  January
1,1997 through the date of this Agreement  pursuant to Section 13(a) or 15(d) of
the  Securities  Exchange  Act of 1934 as amended (the  "Exchange  Act") and the
financial  statements  contained  therein.  The Purchaser  acknowledges that the
Company has made available to the Purchaser all documents and  information  that
it has requested  relating to the Company and has provided answers to all of its
questions   concerning  the  Company  and  the  Shares.  The  Purchaser  further
acknowledges  that, as of the date of this  Agreement,  certain of the Company's
SEC  Reports  are under  review by the SEC and are  subject to further  revision
based on future  comments of the SEC staff. In evaluating the suitability of the
acquisition  of the Shares  hereunder,  the  Purchaser  has not relied  upon any
representations or other information (whether oral or written) other than as set
forth in the SEC Reports,  the License  Agreement  or as contained  herein or in
documents  and  information  made  available to it by the Company and answers to
questions so furnished to it by the Company.

          5.5 HSR Act Filings.  Subject to the terms and conditions  hereof, the
Purchaser agrees to use its commercially reasonable efforts to make promptly any
necessary filings under the  Hart-Scott-Rodino  Antitrust  Improvements Act (the
"HSR Act") at such time as such filings may by required. The Purchaser shall pay
the HSR Act filing fee.

          Section 6. Conditions To Initial Closing.

          6.1  Conditions  to  Obligation  of  the  Purchaser.  The  Purchaser's
obligation to purchase the Initial Shares at the Initial Closing Date is subject
to the fulfillment,  at or prior to the Initial Closing, of all of the following
conditions:

          (a) Representations  and Warranties True;  Performance of Obligations.
     The  representations and warranties made by the Company in Section 4 hereof
     shall be true  and  correct  in all  material  respects  on the date of the
     Initial  Closing with the same force and effect as if they had been made on
     and as of said date, and the Company shall have  performed all  obligations
     and  conditions  herein  required to be  performed by it on or prior to the
     Initial Closing.

          (b) Proceedings and Documents.  All corporate and other proceedings in
     connection with the transactions contemplated at the Initial Closing hereby
     and all documents and instruments  incident to such  transactions  shall be
     reasonably  satisfactory  in substance  and form to the  Purchaser  and its
     counsel,  and the  Purchaser  and its counsel  shall have received all such
     counterpart  originals or  certified  or other copies of such  documents as
     they may reasonably request.

          (c) Qualifications;  Legal Investment. All authorizations,  approvals,
     or permits,  if any, of any government  authority or regulatory body of the
     United  States or of any state that are  required  in  connection  with the
     lawful sale and issuance of the Initial  Shares  pursuant to this Agreement
     shall have been duly  obtained and shall be effective on and as the Initial
     Closing.  No stop order or other  order  enjoining  the sale of the Initial
     Shares shall have been issued and no proceedings  for such purpose shall be
     pending or, to

                                      -6-

<PAGE>

     the knowledge of the Company,  threatened by the SEC or any commissioner of
     corporations or similar officer of any state having  jurisdiction over this
     transaction.  At the time of the Initial Closing,  the sale and issuance of
     the Initial Shares shall be legally  permitted by all laws and  regulations
     to which the Purchaser and the Company are subject.

          6.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell the Initial  Shares at the  Initial  Closing is subject to the
fulfillment to the Company's  satisfaction,  on or prior to the Initial Closing,
of the following conditions:

          (a)  Representations  and  Warranties  True. The  representations  and
     warranties  made by the  Purchaser  in  Section 5 hereof  shall be true and
     correct at the date of the Initial Closing,  with the same force and effect
     as if they bad been made on and as of said date.

          (b) Performance of Obligations. The Purchaser shall have performed and
     complied with all agreements and conditions herein required to be performed
     or complied with by it on or before the Initial Closing,

          (c) Qualifications;  Legal Investment. All authorizations,  approvals,
     or permits,  if any, of any government  authority or regulatory body of the
     United  States or of any state that are  required  in  connection  with the
     lawful sale and issuance of the Initial  Shares  pursuant to this Agreement
     shall  have been duly  obtained  and  shall be  effective  on and as of the
     Initial  Closing.  No stop order or other order  enjoining  the sale of the
     Initial Shares shall have been issued and no  proceedings  for such purpose
     shall be pending or, to the knowledge of the Company, threatened by the SEC
     or any  commissioner of corporations or similar officer of any state having
     jurisdiction over this transaction. At the time of the Initial Closing, the
     sale and issuance of the Initial  Shares shall be legally  permitted by all
     laws and regulations to which the Purchaser and the Company are subject.

          Section 7. Conditions To Put Option And Call Option Closings.

          7.1  Conditions  to  Obligations  of the  Purchaser.  The  Purchaser's
obligations  to purchase any Call Option  Shares or Put Option Shares is subject
to the  fulfillment,  at or  prior  to the  respective  closings,  of all of the
following conditions:

          (a) Representations  and Warranties True;  Performance of Obligations.
     The  representations and warranties made by the Company in Section 4 hereof
     shall be true and  correct  in all  material  respects  on the date of such
     closing  with the same  force and effect as if they had been made on and as
     of said date;  and the Company  shall have  performed all  obligations  and
     conditions  herein  required  to be  performed  by it on or  prior  to such
     closing.

          (b) Proceedings and Documents.  All corporate and other proceedings in
     connection  with the  transactions  contemplated  at the  relevant  closing
     hereby and all  documents  and  instruments  incident to such  transactions
     shall be reasonably satisfactory in substance and form to the Purchaser and
     its counsel, and the Purchaser and its counsel

                                      -7-

<PAGE>

     shall have  received all such  counterpart  originals or certified or other
     copies of such documents as they may reasonably request.

          (c) Qualifications;  Legal Investment. All authorizations,  approvals,
     or permits, if any, of any governmental authority or regulatory body of the
     United  States or of any state that are  required  in  connection  with the
     lawful  sale and  issuance of any Put Option  Shares or Call Option  Shares
     pursuant  to this  Agreement  shall  have been duly  obtained  and shall be
     effective on and as of such closing. No stop order or other order enjoining
     the sale of the Shares shall have been issued and no  proceedings  for such
     purpose shall be pending or, to the knowledge of the Company, threatened by
     the SEC or any commissioner of corporations or similar officer of any other
     state  having  jurisdiction  over  this  transaction.  At the  time of such
     closing,  the sale and issuance of the Shares shall be legally permitted by
     all laws and  regulations  to  which  the  Purchaser  and the  Company  are
     subject.

          (d) No Termination of Development Agreement; No Breach. No termination
     of the  Collaboration  and License  Agreement  dated as of the date of this
     Agreement   between  the  Company  and  the  Purchaser  shall  have  become
     effective.  In addition,  the Company  shall not have  committed a material
     breach  of  said  Collaboration  and  License  Agreement  as to  which  the
     Purchaser has provided the Company with written notice,  unless such breach
     has been cured by the Company or waived by the Purchaser.

          (e)  Bankruptcy.  The Company shall not have (i) filed in any court or
     agency  pursuant to any statute or  regulation  of any state or country,  a
     petition  in  bankruptcy  or  insolvency  or for  reorganization  or for an
     arrangement or for the appointment of a receiver or trustee of the party or
     of its assets, or (ii) been served with an involuntary petition against it,
     filed in any insolvency  proceeding,  which petition has not been dismissed
     as of the closing date with respect to either the Put Option  Shares or the
     Call Option Shares.

          (f) HSR Act Clearance.  The waiting period, if any,  applicable to the
     consummation of the purchase and sale of the Shares under the HSR Act shall
     have expired or been terminated.

          7.2 Conditions to Obligations of the Company. The Company's obligation
to issue and sell any Put Option  Shares or Call Option  Shares at the  relevant
closing is subject to the fulfillment to the Company's satisfaction, on or prior
to the respective closings, of the following conditions:

          (a) Representations  and Warranties True;  Performance of Obligations.
     The  representations  and  warranties  made by the  Purchaser  in Section 6
     hereof  shall be true and correct in all  material  respects on the date of
     such closing with the same force and effect as if they had been made on and
     as of said date; and the Purchaser shall have performed all obligations and
     conditions  herein  required  to be  performed  by it on or  prior  to such
     closing.

                                      -8-

<PAGE>

          (b) Qualifications;  Legal Investment. All authorizations,  approvals,
     or permits, if any, of any governmental authority or regulatory body of the
     United  States or of any state that are  required  in  connection  with the
     lawful  sale and  issuance of any Put Option  Shares or Call Option  Shares
     pursuant  to this  Agreement  shall  have been duly  obtained  and shall be
     effective on and as of such closing. No stop order or other order enjoining
     the sale of the Shares shall have been issued and no  proceedings  for such
     purpose shall be pending or, to the knowledge of the Company, threatened by
     the SEC or any commissioner of corporations or similar officer of any other
     state  having  jurisdiction  over  this  transaction.  At the  time of such
     closing,  the sale and issuance of the Shares shall be legally permitted by
     all laws and  regulations  to  which  the  Purchaser  and the  Company  are
     subject.

          (c) HSR Act Clearance.  The waiting period, if any,  applicable to the
     consummation of the purchase and sale of the Shares under the HSR Act shall
     have expired or been terminated.

          Section 8. Broker's  Fee. The parties  hereto  hereby  represent  that
there are no brokers or finders  entitled to compensation in connection with the
transactions contemplated hereby.

          Section  9.  Notices.  All  notices,  requests,   consents  and  other
communications  hereunder  shall be in  writing,  shall be mailed by first class
registered or certified mail, postage prepaid, and shall be deemed given when so
mailed;

          (a) if to the  Company,  to Aphton  Corporation,  80 S.W.  8th Street,
     Miami, Florida 33130, Attention:  Philip C. Gevas, Chief Executive Officer,
     with a copy (which shall not  constitute  notice) to White & Case LLP, 1155
     Avenue of the  Americas,  New York,  New York 10036,  Attention:  Dimitrios
     Drivas,  Esq.,  or to such other  person at such other place as the Company
     shall designate to the Purchaser in writing; and

          (b) if to the Purchaser,  to SmithKline  Beecham plc, One New Horizons
     Court (1/NHC/3),  Brentford, Middlesex TW8 9EP, England, Attention: General
     Counsel,  with a copy (which  shall not  constitute  notice) to  SmithKline
     Beecham  Biologicals  Manufacturing  S.A.,  89  rue  de  l'Institut,   1330
     Rixensart,  Belgium,  Attention: Jean Stephenne,  Senior Vice President and
     General  Manager or to such other person at such other place as the Company
     shall designate to the Purchaser in writing.

          Section  10.  Entire  Agreement.  This  Agreement  together  with  the
Collaboration   and  License   Agreement   embodies  the  entire  agreement  and
understanding  between the parties  hereto  with  respect to the subject  matter
hereof and  supersedes all prior oral or written  agreements and  understandings
relating to the subject matter hereof and thereof. No statement, representation,
warranty,  covenant or  agreement  of any kind not  expressly  set forth in this
Agreement shall affect, or be used to interpret, change or restrict, the express
terms and provisions of this Agreement.

                                      -9-

<PAGE>

          Section 11. Amendments.  This Agreement may not be modified or amended
except  pursuant to an  instrument  in writing  signed by the Company and by the
Purchaser.

          Section 12.  Headings.  The  headings of the various  sections of this
Agreement have been inserted for  convenience of reference only and shall not be
deemed to be part of this Agreement.

          Section 13.  Severability.  In case any  provision  contained  in this
Agreement  should be  invalid,  illegal or  unenforceable  in any  respect,  the
validity,  legality and  enforceability  of the remaining  provisions  contained
herein shall not in any way be affected or impaired thereby.

          Section 14.  Governing  Law. This  Agreement  shall be governed by and
construed  in  accordance  with the laws of the State of New York and the United
States of America.

          Section 15.  Counterparts.  This  Agreement  may be executed in two or
more counterparts, each of which shall constitute an original, but all of which,
when taken  together,  shall  constitute  but one  instrument,  and shall become
effective  when one or more  counterparts  have been signed by each party hereto
and delivered to the other party.

          Section 16.  Expenses.  Each of the parties shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection  with this  Agreement and the  transactions
contemplated  hereby  whether or not the  transactions  contemplated  hereby are
consummated.

          Section 17. Publicity. Neither party shall issue any press releases or
otherwise  make  any  public   statement   with  respect  to  the   transactions
contemplated  by this Agreement  without the prior written  consent of the other
party,  except as may be required by applicable law or regulation as long as the
disclosing party has used good faith efforts under the  circumstances to consult
with the other party as provided in this Section 17.

          Section 18.  Confidentiality.  The Purchaser  acknowledges  and agrees
that any  information  or data it has acquired  from the Company,  not otherwise
properly in the public domain, was received in confidence.  The Purchaser agrees
not to divulge, communicate or disclose, except as may be required by law or for
the performance of this Agreement, or use to the detriment of the Company or for
the  benefit  of any  other  person  or  persons,  or  misuse  in any  way,  any
confidential   information  of  the  Company  unless  such  information  becomes
available to the public  generally or it is required by a  governmental  body to
disclose such information.

                                      -10-

<PAGE>

          IN WITNESS  WHEREOF,  the parties hereto have caused this Agreement to
be  executed  by their duly  authorized  representatives  the day and year first
above written.



                               APHTON CORPORATION



                               By: /s/ Philip C. Gevas
                                   ---------------------------------------
                                   Name:  Philip C. Gevas
                                   Title: Chairman., President and Chief
                                            Executive Officer


                             SMLTHKLINE BEECHAM plc



                             By: /s/ Jean Stephenne
                                 ------------------------------------------
                                 Name:  Jean Stephenne
                                 Title: Attorney-in-Fact


                                      -11-