APHTON SUPPLY AGREEMENT


          This Agreement (the  "Agreement") is entered into as of August 1, 1998
by Connaught  Laboratories  Limited,  a company  incorporated  under the laws of
Ontario,  Canada,  with its principal place of business in North York,  Ontario,
Canada ("CLL" and, together with its Affiliates, "PMC"), and Aphton Corporation,
a Delaware corporation,  with its principal executive offices in Miami, Florida,
USA ("Aphton").


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


          WHEREAS,  Aphton owns or controls certain patents, patent applications
and  proprietary   information   relating  to  its  therapeutic  cancer  vaccine
("Gastrimmune(TM)"); and

          WHEREAS, CLL and Aphton have entered into a Co-Promotion Agreement and
License dated as of February 14, 1997 (the "Marketing License"), which provides,
among other things,  that PMC will have certain  rights to  co-promote,  market,
distribute and sell Gastrimmune(TM) in Europe and North America;

          WHEREAS, Section 3.2 of the Marketing License provides that Aphton and
PMC  will  enter  into  a  supply   agreement   to  provide   for  a  supply  of
Gastrimmune(TM) for PMC to co-promote, market, distribute and sell in accordance
with the Marketing License.


          NOW, THEREFORE, the parties hereto agree as follows:

          1. DEFINITIONS

          Unless otherwise  defined in this Agreement,  capitalized  terms shall
have the meaning set forth in the Marketing License.

          1.01 "Affiliate" shall mean, with respect to any Person, (i) any other
Person of which the securities or other ownership  interests  representing fifty
percent  (50%)  or more of the  equity  or  fifty  percent  (50%) or more of the
ordinary voting power or fifty percent (50%) or more of the general  partnership
interests are, at the time such  determination is being made, owned,  Controlled
or held, directly or indirectly, by such Person, or (ii) any other Person which,
at the time such  determination is being made, is Controlling,  Controlled by or
under common  Control with,  such Person.  As used herein,  the term  "Control,"
whether  used  as a  noun  or  verb,  refers  to  the  possession,  directly  or
indirectly, of the power to direct, or cause the direction of, the management or
policies of a Person,  whether  through the ownership of voting  securities,  by
contract or otherwise.

          1.02 "Fully  Absorbed  Cost" shall mean all fixed and variable  costs,
including overhead,  of Product in accordance with Generally Accepted Accounting
Principles in effect in the United States consistently applied.


<PAGE>


          1.03 "Legal Requirements" shall mean all laws,  statutes,  ordinances,
codes, rules, regulations,  published standards,  permits,  judgments,  decrees,
writs,  injunctions,  rulings,  orders  and  other  requirements  of all  Public
Authorities.

          1.04  "Person"  shall  mean any  natural  person,  corporation,  firm,
business trust, joint venture, association,  organization,  company, partnership
or  other  business  entity,  or any  government,  or any  agency  or  political
subdivision thereof.

          1.05 "PMC Supply  Agreement"  shall mean the PMC Supply  Agreement  of
even date herewith, between CLL and Aphton.

          1.06  "Product"  shall  mean  Aphton's   Gastrimmune(TM)   product  as
currently  being  developed by Aphton,  as it may be improved or modified at any
time during the term hereof.

          1.07  "Public  Authority"  shall  mean  any  supranational,  national,
regional,  state or local government,  court,  governmental  agency,  authority,
board, bureau, instrumentality or regulatory body.

          1.08 "Specifications" shall mean the specifications for the Product as
described in Aphton's product license applications.

          1.09 "Third  Party" shall mean any Person which is not an Affiliate of
any party hereto.

          2. SUPPLY OF PRODUCT

          2.01 Subject to Section 2.02 hereof,  Aphton agrees to manufacture (or
have  manufactured)  and supply,  and PMC agrees to  purchase,  such  amounts of
Product for sale by PMC pursuant to the Marketing License,  as PMC may from time
to time order in accordance with the terms of this Agreement.

          2.02 In the event that the available quantities of Product are limited
due to an Event of Force  Majeure (as defined in Section 12.08  hereof),  Aphton
shall notify PMC of such shortage as soon as possible and shall  allocate to PMC
a pro rata share of the  amount of Product  available  to Aphton  from  Aphton's
manufacturing facility (or contract manufacturer, as applicable), based upon the
number of doses of Product reflected in the applicable Forecast in comparison to
the total number of doses of Product reflected in the Operating Plan (as defined
in the Marketing  License),  subject to  verification  by PMC in accordance with
Section 4.02 hereof.

          3. FORECASTS AND ORDERS FOR PRODUCT

          3.01 Commencing sixty (60) days prior to the date first established by
the Steering  Committee as the likely date of  Commercial  Launch (as defined in
the  Marketing  License)  of the  Product in any  Regulatory  Jurisdiction  (the
"Commercial  Launch  Date"),  Aphton will  supply,  and PMC will  purchase  from
Aphton,  quantities of Product  determined in accordance with the procedures set
forth in this Article 3.


                                      -2-


<PAGE>


          3.02 Beginning on January 1 of the year in which the Commercial Launch
Date is expected to occur and every three months  thereafter for so long as this
Agreement  shall  remain in  effect,  PMC shall  provide  Aphton  with a rolling
9-month  forecast of its  requirements  for Product (each, a "Forecast"),  which
Forecast will be consistent with the relevant Marketing Plan for each Indication
contemplated by the Marketing  License.  The initial  Forecast shall specify the
number of doses per Regulatory Jurisdiction in which licensure is expected to be
obtained in order to permit  Commercial  Launch and the expected delivery dates,
based  upon  the  expected   Commercial  Launch  Date.  As  to  each  Regulatory
Jurisdiction in which Commercial Launch has occurred,  the quantities  specified
in the  Forecast (i) in respect of the first three month  period  following  the
actual  date  of  Commercial   Launch  covered  thereby,   shall  constitute  an
irrevocable,  firm  order (a "Firm  Order")  as to the  quantities  of  Product,
delivery dates and delivery locations specified therein,  (ii) in respect of the
second three month period following the actual date of Commercial Launch covered
thereby, shall constitute a Firm Order as to the quantities of Product specified
therein only, and (iii) in respect of the third three month period following the
actual date of Commercial Launch covered thereby, shall constitute a non-binding
estimate;   provided  that  such   quantities  do  not  exceed  Aphton's  annual
manufacturing  capacity for Product as of the date of the Forecast. The Forecast
will specify  quantities  per Regulatory  Jurisdiction  only in respect of those
Regulatory  Jurisdictions in which Commercial Launch has occurred as of the date
of the  Forecast.  No  quantities  in excess of  Aphton's  annual  manufacturing
capacity for Product as of the date of the Forecast will constitute a Firm Order
if Aphton  has  notified  PMC  (within  ninety  (90) days of the  receipt of the
applicable Forecast) that the annual Product  manufacturing  capacity of its (or
its contract  manufacturer's)  manufacturing  facility would be exceeded by such
quantities.  If Aphton so notifies  PMC, the  parties,  in  accordance  with the
provisions of the Marketing License, will consider the possible expansion of the
manufacturing capacity (either through new contract  manufacturing  arrangements
or by delegating all or a portion of  manufacturing  responsibility  to PMC) and
the costs thereof. In the event that Aphton cannot for any reason supply Product
to  PMC in  accordance  with  this  Agreement,  PMC  shall  have  the  right  to
manufacture the Product pursuant to the Marketing  License. A Firm Order may not
be canceled and,  following  performance by Aphton of its obligations  hereunder
with  respect to such order,  PMC shall be  obligated  to pay the price for said
order  as  provided  in  Sections  4.01  and 4.02  hereof.  Notwithstanding  the
foregoing,  in the event that market conditions  require an increase or decrease
in the  quantities  of Product  specified  in any Firm Order,  the parties  will
negotiate in good faith alternative arrangements to meet the business objectives
of the parties.

          4. PRICE AND PAYMENT

          4.01 The price for Product shall equal [Redacted]*.

          4.02 The price of Product  may be changed by Aphton  from time to time
(but no more than a reasonable  number of times per year) in accordance with the
provisions  of the  Marketing  License to  reflect  changes  in  Aphton's  Fully
Absorbed Cost for Product. During the term of this Agreement and for a period of
three (3) years  thereafter,  upon reasonable  request and notice of PMC, Aphton
shall,  at the sole  expense  of PMC,  permit  a  reputable  independent  public
accountant not providing  significant  services to either Aphton,  PMC or any of
their respective  Affiliates,  to have access during ordinary  business hours to
Aphton's  financial  records  necessary to determine (i) the  correctness of the
calculation of Aphton's Fully Absorbed Cost for  manufacturing  Product,  and/or
(ii) the  correctness of the amount of any Product  allocated to PMC pursuant to


------------------------
*    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>


Section 2.02.  Such accountant  shall not disclose any information  other than a
statement concerning the correctness of such calculation. Such examination shall
not take  place  more than once  every  two (2)  years,  in the case of any cost
determination,  and may occur in any year in which there is a supply  shortfall,
in the case of any  allocation  pursuant to Section 2.02. The right to request a
determination  under this Section 4.02 with respect to any year shall  terminate
two (2) years after the end of such year. In addition,  in the event that either
party hereto believes that cost factors or market conditions adversely affect to
a significant degree the cost structure of the transactions contemplated by this
Agreement, the parties agree to discuss in good faith appropriate adjustments to
the  price of  Product  hereunder  to  respond  to such cost  factors  or market
conditions.

          4.03 Product  supplied  hereunder  shall be invoiced when delivered to
PMC in accordance  with Section 5.01.  PMC shall pay to Aphton the price of each
shipment of Product  delivered to PMC as provided in Section 5.01 within  thirty
(30) business days after the invoice date with respect to such delivery. Payment
shall be remitted in immediately available funds in United States dollars.

          5. DELIVERY AND RISK OF LOSS

          5.01 Aphton  shall  deliver or arrange for the  delivery of Product to
PMC, DDP to a point or points of destination selected by PMC.

          5.02 Title to Product sold  hereunder  shall pass to PMC upon delivery
to PMC in accordance  with Section 5.01,  whereupon PMC shall assume all risk of
loss or damage.

          6. WARRANTY; RECALLS

          6.01 EXCEPT AS EXPRESSLY SET FORTH IN THIS SECTION 6.01,  APHTON MAKES
NO WARRANTIES OF ANY KIND,  EXPRESS OR IMPLIED,  WRITTEN OR ORAL,  INCLUDING ANY
IMPLIED  WARRANTIES  OF  MERCHANTABILITY  OR FITNESS FOR A  PARTICULAR  PURPOSE.
Aphton  warrants  that (a) Product,  when  delivered to PMC in  accordance  with
Section 5.01 hereof, shall meet the Specifications, and (b) it shall manufacture
and store Product in strict  compliance with any Legal  Requirements.  Copies of
the  relevant   establishment  and  product  licenses  (with  all  confidential,
proprietary  material  deleted  therefrom)  shall  be  provided  to PMC upon its
request.

          6.02 If PMC claims that the Product in any given  shipment  did not at
the  time  of  delivery  to  PMC  in  accordance  with  Section  5.01  meet  the
Specifications,  Aphton shall conduct an assay of its retained samples from such
shipment. If PMC's claim is correct, Aphton, at its option, shall either replace
such  shipment or reimburse or give credit for such payment to PMC, in each case
together with any out-of-pocket expenses incurred by PMC.

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


                                      -4-


<PAGE>


          6.04 Aphton and PMC 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 Aphton or PMC deems
it necessary  to effect a recall of the  Product,  it shall give the other party
reasonable  notice  under  the  circumstances  of such  intended  recall  and an
appropriate time to discuss and agree on such intended recall. In the event that
agreement  cannot be reached on  effecting  the recall  within five (5) business
days, the party who desires,  in its reasonable  judgment,  to effect the recall
may do so,  provided  that all costs of the  recall  shall be paid by such party
unless the other party acted  unreasonably in desiring not to effect the recall,
in which  event such costs  shall be shared  equally by the  parties.  The other
party shall take no action contrary to the recall and shall cooperate fully with
the party effecting the recall.

          7.  GMP  COMPLIANCE;  INSPECTION  OF  FACILITIES;  ADVERSE  EXPERIENCE
REPORTING; RECORDS

          7.01 The  parties  undertake  to comply  with all  regulations  of any
Public Authority having jurisdiction over the manufacturing,  storage,  handling
or sale of the Product in effect  related to  obtaining  and  maintaining  legal
approval for the marketing and sale of the Product.

          7.02 Upon reasonable request by either party (the "Inspecting Party"),
the other  party  (the  "Other  Party")  shall  permit  (or  cause its  contract
manufacturer to permit) duly authorized  employees of the Inspecting  Party and,
with the consent of the Other  Party (not to be  unreasonably  withheld),  other
representatives  of the Inspecting  Party,  to inspect the Other Party's (or its
contract  manufacturer's)  facilities,  procedures  and  capabilities  to insure
continued  compliance  with this  Agreement and applicable  Legal  Requirements,
provided  that the Other  Party  may,  in its sole  discretion,  refuse to grant
access to any areas of its  facilities or  manufacturing  records if such access
could  jeopardize the  confidentiality  of any of the Other Party's  proprietary
technology.

          7.03 During the term of this  Agreement,  each party shall  notify the
other  immediately  of any  information  (howsoever  obtained and from  whatever
source) concerning any unexpected side effect,  injury,  toxicity or sensitivity
reaction, or any unexpected incidence, and the severity thereof, associated with
the  clinical  uses,  studies,  investigations,  testing  and  marketing  of the
Product.  For purposes of this Section 7.03,  "unexpected"  shall mean (x) for a
non-marketed  product, an experience that is not identified in nature,  severity
or frequency in the current  clinical  investigator's  confidential  information
brochure,  and (y) for a marketed product,  an experience which is not listed in
the  current  labeling  for such  product,  and  includes  an event  that may be
symptomatically  and  pathophysiologically  related  to an event  listed  in the
labeling  but differs from the event  because of increased  frequency or greater
severity or specificity.  Each party shall further notify the other  immediately
of any  information  received  regarding any threatened or pending action by any
Public Authority which may affect the safety and efficacy claims of the Product.
Upon receipt of any such information,  the parties shall consult with each other
in an effort to arrive at a mutually acceptable procedure for taking appropriate
action;  provided,  however, that nothing contained herein shall be construed as
restricting  either  party's right to make a timely report of such matter to any
Public  Authority  or take  other  action  that it  deems to be  appropriate  or
required by applicable law or regulation.


                                      -5-


<PAGE>


          7.04 If reasonably requested by PMC, all technical records relating to
the  manufacturing,  supply or  provision  of  Product by or on behalf of Aphton
shall be  retained  for a period of at least  eleven (11) years from the date of
delivery of Product.

          7.05 Aphton agrees to provide such reasonable assistance and access to
regulatory  filings on the Product as may be reasonably  necessary to permit PMC
to obtain  regulatory  approval in any Regulatory  Jurisdiction  for the Product
where  Aphton  does not obtain  such  regulatory  approval  under the  Marketing
License.

          8. SUPERIORITY

          8.01  No  provision  on the PMC  purchase  order  form or on  Aphton's
general conditions of sale which may purport to impose different conditions upon
Aphton or PMC shall modify the terms of this Agreement.

          9. INDEMNIFICATION

          9.01 Aphton hereby agrees to indemnify,  defend and hold harmless PMC,
its Affiliates,  officers, directors,  employees and agents from and against any
liabilities,  claims,  damages,  costs, expense (including reasonable attorneys'
fees),  judgments  (collectively,  "Damages")  arising  out  of,  based  upon or
resulting  from (i) the  manufacturing  of the Product,  (ii) the failure of the
Product to meet the  Specifications  therefor  at the time of delivery to PMC in
accordance with Section 5.01 hereof, or (iii) the breach by Aphton of any of its
obligations or warranties hereunder, except to the extent any such Damages arise
out of, are based upon or result from the  negligence  or willful  misconduct of
PMC or a breach by PMC of any of its  obligations  or  warranties  hereunder  or
under the PMC Supply Agreement.

          9.02 PMC hereby agrees to indemnify,  defend and hold harmless Aphton,
its Affiliates,  officers, directors,  employees and agents from and against any
Damages  arising out of, based upon or resulting  from the negligence or willful
misconduct  of PMC or a breach by PMC of any of its  obligations  or  warranties
hereunder or under the PMC Supply Agreement.

          9.03 (a) Any party entitled to  indemnification  under Section 9.01 or
Section  9.02  (an   "Indemnified   Party")  shall  promptly  notify  the  party
potentially responsible for such indemnification (the "Indemnifying Party") upon
becoming  aware of any  claim or  claims  asserted  or  threatened  against  the
Indemnified Party which could give rise to a right of indemnification under this
Agreement,  provided,  however,  that the failure to give such notice  shall not
relieve the Indemnifying Party of its indemnity  obligation  hereunder except to
the extent that such failure substantially prejudices its rights hereunder.

          (b) The Indemnifying Party shall have the right to defend, at its sole
cost and expense, such claim by all appropriate  proceedings,  which proceedings
shall be prosecuted  diligently by the Indemnifying  Party to a final conclusion
or settled at the discretion of the Indemnifying Party, provided,  however, that
the  Indemnifying  Party may not enter into any compromise or settlement  unless
(i)  the  Indemnified  Party  consents  thereto,  which  consent  shall  not  be
unreasonably  withheld,  and (ii) such  compromise or settlement  includes as an
unconditional  term  thereof,  the giving by each  claimant or  plaintiff to the
Indemnified Party of a release from all liability in respect of such claim.


                                      -6-


<PAGE>


          (c) The Indemnified  Party may  participate  in, but not control,  any
defense or settlement of any claim controlled by the Indemnifying Party pursuant
to this Section  9.03 and shall bear its own costs and expenses  with respect to
such participation,  provided,  however,  that the Indemnifying Party shall bear
such  costs and  expenses  if  counsel  for the  Indemnifying  Party  shall have
reasonably  determined  that such  counsel may not properly  represent  both the
Indemnifying Party and the Indemnified Party.

          (d) If the  Indemnifying  Party fails to notify the Indemnified  Party
within twenty (20) days after  receipt of notice of a claim in  accordance  with
Section 9.03(a) that it elects to defend the Indemnified  Party pursuant to this
Section  9.03,  or if the  Indemnifying  Party elects to defend the  Indemnified
Party but fails to prosecute or settle the claim  diligently and promptly,  then
the  Indemnified  Party  shall  have the right to  defend,  at the sole cost and
expense of the  Indemnifying  Party,  the claim by all appropriate  proceedings,
which proceedings shall be promptly and vigorously prosecuted by the Indemnified
Party to a final  conclusion  or settled,  provided,  however,  that in no event
shall the Indemnifying  Party be required to indemnify the Indemnified Party for
any amount paid or payable by the  Indemnified  Party in the  settlement  of any
such claim  agreed to without the consent of the  Indemnifying  Party (not to be
unreasonably withheld).

          10. TERM AND TERMINATION

          10.01 The term of this  Agreement  shall  commence  on the date hereof
and, unless terminated by a party in accordance with Section 10.02 hereof, shall
terminate on February 14, 2017,  unless  extended upon the written  agreement of
the parties hereto for an additional five-year term.

          10.02 This Agreement may be terminated:

          (a) by either party, if (i) the other party fails to observe,  perform
     or  otherwise  breaches  any  of  its  material  covenants,  agreements  or
     obligations  under this  Agreement  in any  material  respect and (ii) such
     failure  continues  for a period of thirty  (30) days after  receipt by the
     other party of notice  thereof  from the  electing  party  specifying  such
     failure.  Following such period, the electing party has ninety (90) days to
     give notice to the other party of its election to terminate this Agreement;
     or

          (b) by Aphton in the event of a termination  of the Marketing  License
     due to a material breach by PMC.

          10.03 Upon any termination of this Agreement, each party shall have no
further liability or obligation to the other,  except to pay any amount accruing
to the other party under the provisions of this Agreement while it was in effect
and damages for any breach.

          10.04 In addition,  anything  herein to the contrary  notwithstanding,
the following  provisions of this  Agreement  shall survive  termination of this
Agreement for the longest period  permitted by applicable law and/or required by
this  Agreement  with  respect to all Product  delivered  prior to  termination:
Sections 4.02, 7.02, 7.04, 10.03,  10.04, 12.01, 12.02 and 12.08 and Articles 6,
9 and 11.


                                      -7-


<PAGE>


          11. CONFIDENTIALITY

          11.01  Except as  expressly  set forth in this  Article 11, each party
shall,  and shall cause its  Affiliates and its and their  officers,  directors,
employees, agents and subcontractors (collectively,  "Representatives") to, keep
confidential any and all technical, commercial, scientific and other proprietary
data,  processes,  documents  or other  information  (whether in oral or written
form) or physical object (including, without limitation,  intellectual property,
marketing  data,  agreements  between  any  party  and a  third  party,  license
applications, and business plans and projections of any party) acquired from the
other  party,  its  Affiliates  or any of their  respective  Representatives  in
respect of the transactions contemplated by this Agreement and which relates (in
the case of a  party)  to the  other  party  or any of its  Affiliates  or their
respective businesses or products ("Confidential  Information"),  and each party
shall not  disclose  directly  or  indirectly,  and shall  cause its  respective
Affiliates  and  Representatives  not to disclose  directly or  indirectly,  any
Confidential  Information  to anyone  outside such Person,  such  Affiliates and
their respective  Representatives,  except that the foregoing  restriction shall
not apply to any  information  disclosed  hereunder  to any party if such Person
(the "Receiving Person") can demonstrate that such Confidential Information:

          (a) is or hereafter becomes generally available to the trade or public
     other than by reason of any breach hereof;

          (b) was already  known to the  Receiving  Person or such  Affiliate or
     Representative as shown by written records;

          (c)  is  disclosed  to the  Receiving  Person  or  such  Affiliate  or
     Representative  by a third  party  who  has  the  right  to  disclose  such
     information;

          (d) is developed by or on behalf of the Receiving Person or any of its
     Affiliates  independently,  without  reliance on  Confidential  Information
     received hereunder; or

          (e) based on such  Person's  good  faith  judgment  with the advice of
     counsel,   is  otherwise  required  to  be  disclosed  in  compliance  with
     applicable  Legal  Requirements by a Public  Authority and such information
     shall  remain  Confidential  Information  for  all  other  purposes  unless
     subparagraphs (a) through (d) above otherwise apply.

          11.02 Each party agrees that it shall not (and shall not permit any of
its Affiliates to) at any time use any  Confidential  Information in the conduct
of its  businesses  without the prior  written  consent of the other party.  The
obligations  set forth in this  Article 11 shall  extend to copies,  if any,  of
Confidential Information made by any of the Persons referred to in Section 11.01
and to documents  prepared by such Persons which embody or contain  Confidential
Information.

          11.03 Each party  shall deal with  Confidential  Information  so as to
protect it from  disclosure  with a degree of care not less than that used by it
in dealing with its own information  intended to remain  exclusively  within its
knowledge and shall take reasonable  steps to minimize the risk of disclosure of
Confidential Information.


                                      -8-


<PAGE>


          11.04 The  obligations  set forth in this Article 11 shall survive the
expiration,  termination or assignment of this Agreement for a period of fifteen
(15) years thereafter.

          11.05 Within thirty (30) days after the termination of this Agreement,
the Receiving  Person shall (and shall cause its Affiliates and  Representatives
to), at the option of the Disclosing Person,  return to the Disclosing Person or
destroy  all  Confidential  Information  in its or their  possession;  provided,
however,  that the Receiving  Person may, upon notice to the Disclosing  Person,
retain in its legal files or in the office of outside  legal counsel one copy of
any  document  solely  for use in any  pending  legal  proceeding  to which such
document relates.

          12. MISCELLANEOUS PROVISIONS

          12.01 Any notices to be given  hereunder shall be in writing and shall
be delivered by one of the  following  means:  personal  delivery,  certified or
registered airmail, facsimile with confirmed receipt or confirmed delivery by an
overnight commercial courier service:

          (a) if to Aphton, to:

              Aphton Corporation
              80 SW 8th St.
              Miami, Florida  33130
              USA
              Attention:   Chairman, President and Chief Executive Officer
              Telephone:   (305) 374-7338
              Facsimile:   (305) 374-7615

              with a copy to:

              Dimitrios T. Drivas, Esq.
              White & Case
              1155 Avenue of the Americas
              New York, New York  10036-2787
              USA
              Telephone:   (212) 819-8286
              Facsimile:   (212) 354-8113

          (b) if to PMC, to:

              Connaught Laboratories Limited
              1755 Steeles Avenue West
              North York, Ontario  M2R 3T4
              Canada
              Attention:     Vice President and General Counsel
              Telephone:     (416) 667-2615
              Facsimile:     (416) 667-2860


                                      -9-


<PAGE>


              with copies to:

              Pasteur Merieux Serums & Vaccins S.A.
              58, avenue Leclerc B.P. 7046
              69348 Lyon Cedex 07
              France
              Attention:   Senior Vice President, Secretary and General Counsel
              Telephone:   (33)(4) 72.73.77.84
              Facsimile:   (33)(4) 72.73.70.61

              L. Kevin O'Mara, Jr., Esq.
              Akin, Gump, Strauss, Hauer & Feld, LLP
              590 Madison Avenue
              New York, New York  10022
              Telephone:   (212) 872-1021
              Facsimile:   (212) 872-1002

          12.02 This Agreement shall be governed by, and construed in accordance
with, the internal laws of New York, without regard to principles of conflict of
laws (other than Section 5-1401 of the General Obligations Law).

          12.03  This  Agreement  shall be binding  upon and shall  inure to the
benefit of the parties and their  respective  successors and permitted  assigns.
Notwithstanding the foregoing,  neither party shall have the right to assign its
rights or  obligations  hereunder  (whether by  operation  of law or  otherwise)
without the prior written consent of the other party.

          12.04 The parties shall  execute and deliver such other  documents and
take such other action as may be reasonably necessary to implement and carry out
the intent of this Agreement.

          12.05 If any  provision  of this  Agreement is  ultimately  held to be
invalid, illegal or unenforceable,  the validity, legality and enforceability of
the  remaining  provisions  hereof  shall not in any way be affected or impaired
thereby,  unless  the  absence  of  the  invalidated  provision  materially  and
adversely  affects the substantive  rights of the parties hereto.  To the extent
permitted by applicable law, each party hereby waives any provision of law which
renders any provision  hereof invalid,  illegal or unenforceable in any respect.
In the event that any provision  hereof shall be held to be invalid,  illegal or
unenforceable and the absence of such provision materially and adversely affects
the substantive  rights of the parties  hereunder,  the parties hereto shall use
their best efforts to replace the invalidated  provision with a legal, valid and
enforceable  provision which,  insofar as practicable,  implements the intent of
the invalidated provision.

          12.06 Except as  otherwise  provided  herein,  no term or condition of
this  Agreement  may be  waived  or  qualified  at any time  except by a written
instrument  executed by both parties hereto.  No waiver of any provision of this
Agreement  shall  constitute  a waiver of any other  provision,  nor shall  such
waiver  preclude  subsequent  reliance on such  provision.  Except as  otherwise
expressly  provided  herein,  no  omission,  delay or failure on the part of any
party in exercising any right or remedy,  and no partial exercise thereof,  will


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constitute a waiver of any right remedy or preclude its further  exercise or the
exercise of any other right or remedy.

          12.07 Each of the parties shall pay their respective legal, accounting
and other professional  advisory fees, costs and expenses incurred in connection
with  the  execution  and  delivery  of this  Agreement  and all  documents  and
instruments executed pursuant to this Agreement and any other costs and expenses
incurred.

          12.08 No party  shall be liable to the other,  or be in default  under
the  terms  of this  Agreement,  for its  failure  to  fulfill  its  obligations
hereunder  to the extent such failure  arises for any reason  beyond its control
including,  without limitation,  strikes, lockouts, labor disputes, acts of God,
acts of nature, acts of governments or their agencies, fire, flood, storm, power
shortages or power failure, war, sabotage, inability to obtain sufficient labor,
raw materials,  fuel or utilities,  or inability to obtain transportation (each,
an "Event of Force Majeure"),  provided that the party relying on the provisions
of this Section 12.08 shall  forthwith give to the other notice of its inability
to observe or perform the provisions of this Agreement and the reasons therefor,
and provided  further that the  suspension  of the  obligations  of the party so
affected  will  continue  only  for so long  as  such  Event  of  Force  Majeure
continues.

          12.09 This Agreement contains the entire  understanding of the parties
with regard to the subject  matter of this  Agreement and  supersedes  all prior
agreements and  understandings of the parties with respect to the subject matter
hereof.  This Agreement may not be supplemented or amended,  except by a writing
signed by both parties.

          12.10 This  Agreement  may be executed in any number of  counterparts,
each of which when delivered  shall be deemed to be an original and all of which
together shall constitute one and the same document.

          12.11 The parties  acknowledge  that it is in their mutual interest to
ensure that the transactions  contemplated  hereunder are structured in the most
tax-efficient manner. In the event that a party believes that these transactions
can be  restructured in order to achieve a more efficient tax outcome for one or
both  parties,   the  parties   agree  to  work   together  to  implement   such
restructuring,  provided  that such new  structure  respects the economic  terms
(disregarding tax effects) of the relationship.


                                      -11-


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          IN WITNESS  WHEREOF,  the parties  have caused  this  Agreement  to be
executed  as  of  the  date  hereof  by  their  duly   authorized   officers  or
representatives.


                                   APHTON CORPORATION


                                   By /s/ Philip Gevas
                                      ------------------------------------------
                                      Name: Philip Gevas
                                      Title:   Chairman, President & CEO


                                   CONNAUGHT LABORATORIES LIMITED


                                   By /s/ J. Mark Lievonen
                                      ------------------------------------------
                                      Name: J. Mark Lievonen
                                      Title:   Senior Vice President and General
                                               Manager, Oncology Business Unit


                                   By  /s/ Dr. E. F. Fahim
                                       -----------------------------------------
                                       Name:    Dr. E. F. Fahim
                                       Title:   Vice President, Industrial
                                                Operations




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