Item 7.     Management's Discussion and Analysis of Financial Condition
             and Results of Operations.


 Results of Operations

  The Company has not generated significant revenues and none of its products
 have been submitted to or received approval from the FDA for the sale of such
 products to the diagnostic or therapeutic markets.

 	Fiscal 1996 and Fiscal 1995 (Year Ended June 30, 1995)

  Sales decreased $87,788 (13.5%) in Fiscal 1996 as the result of lower
 cytokine assay sales.  The sales decrease was in the domestic market while
 international sales increased.  Worldwide competition continues to be
 intense.  Average sales price per kit increased slightly in Fiscal 1996
 versus Fiscal 1995 due to lower sales volume of bulk assay components.  In
 Fiscal 1996, three customers accounted for approximately 50% of sales
 compared to 32% of Fiscal 1995 sales.  Loss of any of these customers, if a
 comparable new customer is not found, would have a material adverse effect on
 the Company's sales.

  Cost of sales decreased $20,612 (6%) due to the lower sales volume, lower
 usage of manufacturing materials, lower salary expenses and lower
 depreciation offset, in part, by higher repair expenses.  Gross profit
 decreased to 43% from 48% in Fiscal 1995.  
	
  The Company received $400,000 of funded research and development fees
 pursuant to the Research and Development Agreement between the Company and
 R&D Systems under which the Company will receive $400,000 of funding in
 Fiscal 1997 and $200,000 in Fiscal 1998.  In Fiscal 1995, the Company
 received $1 million in license fees from R&D Systems and $50,000 in license
 fees related to the grant of a sublicense to another company.   The Company 
 paid $70,000 in fees to the Institutions in Fiscal 1995 which were offset
 against the license fee income.  Other income decreased $580,000 in Fiscal
 1996 versus 1995, as a result of these transactions.

   Operating expenses increased $762,320 (74.9%) from Fiscal 1995 due to the 
 significant expenses incurred as the result of ongoing litigation, increased
 salary expense and due to the initiation of a periodontal disease study
 which the Company is funding at a dental school.

  Interest income increased $18,354 in Fiscal 1996 due to the investment of
 cash balances.

 	Fiscal 1995 and Fiscal 1994 (Year Ended June 30, 1994)

  Sales decreased $224,678 (25.7%) in Fiscal 1995 as the result of lower
 cytokine assay kit sales offset, in part, by higher sales of cytokine
 proteins and antibodies.  The sales decrease was seen in both the Company's
 domestic and international markets.  Worldwide competition in the cytokine
 research market resulted in lower pricing.  Bulk sales of assay components
 decreased in Fiscal 1995 while bulk cytokine protein sales increased.  The
 lower bulk assay component sales were largely the result of the end of a
 two-year research program at one customer that had purchased approximately
 $100,000 of components over each of the last two calendar years.  Assay
 sales continue to reflect a trend towards lower unit pricing within the
 research market as well as lower bulk component sales to another company
 under a private labeling supply agreement. An independent European
 distributor and two domestic customers accounted for 44% of Fiscal 1995
 sales.  Of the two domestic customers, one accounted for more than 25% of
 Fiscal 1995 sales and the other, a new customer, accounted for 10% of Fiscal
 1995 sales.  The European distributor, which has purchased products from the
 Company since 1985, accounted for approximately 11% of sales in Fiscal 1994,
 but only 7% of Fiscal 1995 sales.   The loss of any of these three customers,
 if a comparable new customer is not found, could have a material adverse
 affect on the Company's sales.

 The Company continues to seek to augment its distribution network.  To this
 end, the Company entered into a license and supply agreement with R&D
 Systems in March 1995.  Under this agreement, the Company will sell IL-1
 protein and bulk IL-1 assay components to R&D Systems for their resale to the
 research market worldwide.  

  Cost of sales decreased $18,136 (5.0%) due to the lower sales volume, lower
 usage of  manufacturing materials and lower depreciation offset, in part, by
 higher salary expenses.  Gross profit decreased to 48% from 59% in Fiscal
 1994 due to the relative decrease in sales being greater than the decrease in
 cost of sales.

                                   13

<PAGE>
 
  In Fiscal 1995, the Company received $1 million in license fees related to
 the license and supply agreement with R&D Systems. The Company paid the
 Institutions $70,000 in fees which were offset against the license fee
 income.  The Company also received $50,000 in license fees related to the
 grant of a sublicense to another company for use of IL-1 in its
 pharmaceutical research program and $5,000 of royalty income under a non-
 exclusive sublicense granted to a third company in 1991. These transactions 
 resulted in a $980,000 increase in other income versus Fiscal 1994.

  Operating expenses increased $222,287 (28%) as compared to Fiscal 1994 due
 to increased legal and consulting expenses associated with ongoing
 litigation offset, in part, by lower advertising and printing expenses. 
 Research and occupancy expenses were essentially unchanged from Fiscal 1994.

  Interest income increased $7,657 in Fiscal 1995 due to the investment of
 higher cash balances.

  The Company has reflected a tax provision of $5,700, calculated under the 
 Alternative Minimum Tax method, against Fiscal 1995 income.
	
  Liquidi`ty and Capital Resources

  At June 30, 1996 the Company had current assets of $601,986, including cash
 of $359,600.  The Company made an operating profit in Fiscal 1995, but
 incurred a loss in Fiscal 1996.  There can be no assurance that operations
 will return to profitability.

  There were no capital expenditure commitments outstanding at June 30, 1996.

  The Company will continue to seek new product development and distribution 
 opportunities to increase sales.  In April 1995, a Research and Development
 Agreement between the Company and R&D Systems will provide the Company with
 $1 million of research funding, payable over a two and a half year period
 which began July 1, 1995.

  In July 1995, PeproTech filed for protection under the Bankruptcy Code and
 has filed an amended appeal, which resulted in additional expense for this
 litigation.  Under a fee arrangement with the attorneys handling the
 litigation against Immunex, the Company's fee payment obligation was
 completed in July 1994.  However, significant ongoing out-of-pocket expenses
 of this suit continued to be incurred in Fiscal 1996, which will be partially
 shared by the Institutions pursuant to a January 1994 agreement under which
 the Institutions will also participate in any award or settlement which may
 result.  Trial in the Immunex suit which had been scheduled for September
 24, 1996 is being rescheduled to November 1996, due to other scheduling
 conflicts of the Court. Expenses of these lawsuits will continue to place
 demands on the Company's liquidity and may effect its profitability.
	
  The Appeals Court has scheduled a hearing of PeproTech's appeal for October
 7, 1996.  It is not known when the Appeals Court might rule, or if the
 approximately  $3 million award for damages, interest and attorneys fees by 
 the District court will be overturned, remanded or confirmed.  See Item 1 -
 Business - Patent Protection.

  In its suit against Immunex, the Company is seeking damages of approximately
 $30 - $70 million.  There can be no assurance that the Company will be
 successful in receiving the amount sought either at trial or by settlement or
 that any award might not be overturned on appeal.  See Item 1 - Business -
 Patent Protection.

 The Independent Auditors' Report includes an explanatory paragraph regarding
 certain conditions which raise substantial doubt about the Company's ability
 to continue as a going concern. See - Independent Auditors' Report and Note 1
 to Financial Statements.

 While management believes the Company will be able to generate sufficient
 cash flow from operations to meet its obligations on a timely basis, the
 Company's liquidity and ability to fund its needs in Fiscal 1997 will be
 affected by the ongoing litigation with PeproTech and Immunex lawsuits.
 Should both these suits not reach conclusion in Fiscal 1997, the Company
 will seek additional sources of capital or debt financing and will reduce
 operating expenses.  There can be no assurance that such financing will be
 available to the Company on acceptable terms, if at all.  If adequate funds
 are not available from operations, the outcome of the lawsuits or other
 sources, the Company's business would be materially adversely effected.  

  Impact of Inflation

  For the Company's three most recent fiscal years, inflation and changing
 prices have had no material impact on the Companys' sales, revenues or income
 from continuing operations.

                                  14

<PAGE>

   Item 8. Financial Statements and Supplementary Data.

           The response to this Item is submitted in a separate section of 
           this Report on page F-1. 

   Item 9. Changes In and Disagreements with Accountants 
            on Accounting and Financial Disclosure.

           Not applicable.

                                  15

<PAGE>


                                PART III

    Item 10.  Directors and Executive Officers of the Registrant.

         The following table sets forth each current Director and executive
         officer of the Company, together with his age and office held:
<TABLE>
<CAPTION>


      Name                        Age                Office


<S>                               <C>                <C>
 Henry Grausz, M.D.                56   Chairman of the Board of         
                                        Directors and Chief Executive Officer

 Isidore S. Edelman, M.D.          75   Vice Chairman of the Board of Directors

 Bruce C. Galton                   44   President, Chief  Operating and
                                        Financial  Officer, 
                                        Secretary and  Treasurer, Director

 Richard S. Dondero                46   Vice President of Operations and
                                        Product  Development


 Thomas P. Carney, Ph.D.           81   Director

 Frank G. Stout                    47   Director

</TABLE>
  Henry Grausz, M.D. is co-founder of the Company and has been Chairman of
 its Board of Directors since its inception.  Dr. Grausz's speciality is
 nephrology and he holds degrees from Tufts University (B.S.) and Chicago
 Medical School (M.D.).  Since 1993, Dr. Grausz has been President of
 Lans-downe Development Company, L.L.C. in Virginia and since 1994 a Senior
 Managing Director of Galway Partners, L.L.C., an investment and merchant 
 banking firm in Washington, D.C.   From 1991 through 1994, Dr. Grausz was
 President of GFI, a commercial real estate brokerage firm, and from 1989
 to 1990, Dr. Grausz was a partner of Smith Ranch Homes, a real estate
 partnership.

  Isidore S. Edelman, M.D. is co-founder of the Company and has been a
 director since  its inception.  Dr. Edelman holds degrees from Indiana
 University (B.A.) and Indiana University School of Medicine (M.D.).  Dr.
 Edelman is  the Robert Wood Johnson, Jr. Professor of Biochemistry and former
 Chairman of the Department of Biochemistry and Molecular Biophysics,
 College of Physicians and Surgeons, Columbia University.  Prior to joining
 the faculty of Columbia University in June 1978, he was the Samuel Neider
 Research Professor of Medicine and Professor of Biophysics at the
 University of California School of Medicine in San Francisco.  Dr. Edelman
 is a member of the National Academy of Sciences and the Institute of
 Medicine of the National Academy of Sciences and the American Academy of
 Arts and Sciences.

  Bruce C. Galton has been President, Chief Operating and Financial Officer
 and a director since November 1988.  Prior to November 1988, Mr. Galton was
 Vice President and Chief Financial Officer, Secretary and Treasurer of the
 Company since January 1985.  From 1977 to 1984, Mr. Galton was employed in
 various capacities by Becton Dickinson & Co.  Mr. Galton was Manager of
 Cost and Budgets at Becton's B-D Immunodiagnostics division from August
 1983 to December 1984 and Financial Manager of its Becton, Dickinson
 Laboratory Systems Division from May 1981 to August 1983.  He holds a B.S.
 from the University of Virginia and an MBA from Fairleigh Dickinson
 University.

  Richard S. Dondero has been Vice President-Operations and Product
 Development since May 1991.  Mr. Dondero joined the Company in 1985 and was
 named Director of Operations in 1988.  From 1977 to 1985, Mr. Dondero was
 employed by Ortho Diagnostics.  Mr. Dondero holds a master of science
 degree (biology) from Seton Hall University and a bachelor of arts degree
 (biology and chemistry) from Jersey City State College.

  Thomas P. Carney, Ph.D. has been a director of the Company since September
 1989.   Dr. Carney has been Chairman and CEO of Metatech Corporation, which
 develops medical devices, since it was organized in 1976.  Prior to forming
 Metatech Corporation, Dr. Carney was an Executive Vice President of G.D. 
 Searle & Company (1965-1976) and was Vice President of Research and
 Development of Eli Lilly and Company prior to joining Searle. Dr. Carney
 holds a B.S. in chemical engineering from the University of Notre Dame and 
 Masters and Ph.D. degrees from Pennsylvania State University.

                                16
<PAGE>

  Frank G. Stout has been the Vice President-Research Administration of New
 England Medical Center Hospitals, Inc. (Tufts University) since 1983.  Prior
 to 1983, Mr. Stout was Assistant Director of Research Administration of the
 Center for the Advancement of Research and Biotechnology.  Mr. Stout
 received his B.Sc. in Biology from the University of South Dakota and his MPH
 in Health Administration from the Tulane Medical Center.
                ___________________________________

  All directors hold office until the next annual meeting of stockholders and
 until their successors are elected and qualified.  Officers hold office
 until their successors are chosen and qualify, subject to earlier removal by
 the Board of Directors and subject to rights, if any, under contracts of
 employment.  As part of the Company's Chapter 11 settlement agreement, the
 Institutions have the right to designate one individual nominated by
 management to the Board of Directors.  If Cistron is consolidated or merged 
 or acquired by a third party whose primary products and/or interest is in
 areas other than IL-1, its variants, derivatives or applications, Cistron
 will no longer be obligated to appoint such a representative and the
 representative of the Institutions then acting as a Director of Cistron will
 resign. Currently, Mr. Frank G. Stout is the Institutions' designee on the 
 Board.  Drs. Grausz and Edelman each devote approximately 10% of their time
 to the affairs of the Company without compensation therefor.
                   ___________________________________
	
  Dr. Edelman filed one Form 4 approximately two months late on  which he
 reported a  June 3, 1996 sale of shares of common stock.

 Item 11. Executive Compensation

  The following table sets forth all cash compensation paid or accrued by the
 Company  during the last three Fiscal years to the Chief Executive Officer
 and to the only executive officer whose cash compensation during such year
 exceeded $100,000 (no bonuses or other annual compensation having been paid
 in any such years):

                      SUMMARY COMPENSATION TABLE




<TABLE>
                                                Long-Term Compensation
                                                ----------------------
<S>                           <C>         <C>                  <C>    
                                           Annual                                            Annual 
                                         Compensation          Awards
                                         -------------------------------------
     Name and                Fiscal                           Common Srock    
Principal Position            Year         Salary($)    Underlying Options (#)
---------------------------------------------------------------------------------
   Henry Grausz, M.D.          1996           ---                --- 
Chairman, Chief Executive      1995           ---                --- 
      Officer                  1994           ---                ---
                             

Bruce C. Galton                1996          $156,667          784,000      
President, Chief               1995          $140,000           73,053 
Operating and                  1994          $140,000             ---
Financial Officer

</TABLE>
 	The following table sets forth certain information concerning options
 granted in  Fiscal 1996 to the individuals named in the Summary
 Compensation Table:


                      OPTION GRANTS IN FISCAL 1996
<TABLE>
<S>             <C>                    <C>                   <C>             <C>            
Name            Common Stock Under-    % of Total Options    Exercise Price  Experation
                Lying Options Granted  To Employees in 1996    ($/Share)        Date       
---------------------------------------------------------------------------------------
Bruce C. Galton     109,031 (1)             13.4%                .375          4/26/06     
Bruce C. Galton     674,969 (2)             82.8%                .1875        11/20/05  
---------------------------------------------------------------------------------------
</TABLE>

(1)  Exercisable in full commencing October 24, 1996.
(2)  Exercisable in full commending May 21, 1996.

                                  17

<PAGE>

 The following table sets forth certain information concerning unexercised
options held at June 30, 1996 by the executive officer listed in the Summary
Compensation Table (who did not exercise any options during Fiscal 1996):


                   OPTION VALUES AT JUNE 30, 1996
<TABLE>
<S>                <C>             <C>                  <C>              <C>
---------------------------------------------------------------------------------------
                   Number of Unexercised Options      Value of Unexercised in-the-Money
                         at June 30,1996                 Options at June 30, 1996 (1)
                         ---------------                 ------------------------
Name               Exercisable     Unexercisable         Exercisable     Unexercisable        
---------------------------------------------------------------------------------------
Henry Grausz M.D.    259,587           ---                $  66,195          ---  

Bruce C. Galton     1,302,126        109,031 (2)          $ 118,259          --- 
----------------------------------------------------------------------------------------
</TABLE>
 (1)  Based on the average of the bid and asked prices on June 30, 1996 of
      $.275
 (2)  Unexercisable options to purchase 109,034 shares are out-of-the-money.

  In April 1994, Mr. Galton entered into a new five-year employment contract
 with the Company.  The employment agreement of Mr. Galton also contains a
 confidentiality provision that requires Mr. Galton to maintain as
 confidential any confidential information obtained during the course of
 employment for the period of such agreement and for three years after 
 termination thereof.

  The employment agreement of Mr. Galton provides that in the event the
 employment of Mr. Galton is terminated without cause by the Board of
 Directors, or if the Company refuses to renew the employment agreement of
 Mr. Galton upon his written request, then the Company will (i) pay Mr.
 Galton an amount equal to six months of Mr. Galton's current salary in
 equal monthly installments, commencing the month in which the termination
 occurs or the salary which would be due under the remaining unexpired term of
 the agreement, whichever is greater, (ii) enter into a consulting contract
 with Mr. Galton's at full pay and benefits for a minimum of three months
 and (iii) lend Mr. Galton such amount as may be required to exercise any
 stock options then exercisable by Mr. Galton to purchase shares of the
 Company's Common Stock.

  The employment agreement also provides that in the event the Company 
 relocates during the term of the employment agreement, and Mr. Galton
 relocates with the Company, the Company will reimburse Mr. Galton for all
 relocation costs and pay Mr. Galton a bonus of $25,000 upon completing such
 relocation.  If Mr. Galton chooses not to relocate with the Company, he will
 receive the applicable termination pay described in clauses (i) and (iii) of
 the preceding paragraph plus an additional three months salary as severance
 pay.

  During Fiscal 1996, the Company maintained a "key man" life insurance policy
 on the life of Mr. Galton in the amount of $1,000,000.

  Starting in Fiscal 1996, directors who are not employees received a
 retainer fee of $1,200 per annum and $500 for each meeting of the Board of
 Directors attended.  Also starting in Fiscal 1996, Dr. Edelman will be paid
 at the rate of $200 per hour for any scientific consulting services he may
 perform at the Company's request. Directors who are not employees or
 officers of the Company also receive options to purchase 50,000 shares
 of Common Stock for each year of service as such, up to a total of 150,000
 shares.  Mr. Stout has agreed to serve without cash compensation and without
 receipt of stock options.

                                      18

<PAGE>

 Item 12.  Security Ownership of Certain Beneficial Owners and Management.

  The following table sets forth information as of August 30, 1996 with
 respect to the beneficial ownership of Cistron's Common Stock by (i) each
 person known by Cistron to own beneficially more than five percent of such
 Common Stock, (ii) each Director, (iii) each executive officer named in the
 Summary Compensation Table under Item 11, and (iv) all Directors and
 executive officers as a group, together with their percentage ownership of
 such shares:
<TABLE>
<CAPTION>
<S>                                   <C>                         <C>
													
 Name and Address of                   Shares Beneficially       Percent
 Beneficial Owner                            Owned             Outstanding
 -------------------------------------------------------------------------
 Henry Grausz, M.D. (1)                5,917,993 (2)               21.8%
 Mark Capital Corporation              1,839,760 (4)                6.8  
  535 Madison Avenue 18th Floor
  New York, New York 10022
 Med-Tech Ventures Inc.                4,126,365 (3)               15.4
  c/o Warner-Lambert Company
  Mt. Tabor Road
  Morris Plains, NJ 07950
 Isidor S. Edelman, M.D. (1)           2,411,681 (5)                9.0 
 Bruce C. Galton                       1,411,157 (6)                5.0
 Thomas P. Carney, Ph.D.                 150,000 (6)                 *
 Frank G. Stout                              600 (7)                 *
 All directors and executive          10,263,038 (8)               35.3 
 officers as a group
 (6 persons)
 ______________

</TABLE>         
 * less than 1%

(1) c/o Cistron Biotechnology, Inc. 10 Bloomfield Avenue, Pine Brook, New
    Jersey 07058.

(2) Includes 259,587 shares issuable upon currently exercisable options.

(3) Med-Tech Ventures, Inc. ("Med-Tech") has the right, exercisable at any
    time to require the Company to register all of Med-Tech's shares under
    the Act at the Company's expense.  Med-Tech is a venture capital
    subsidiary of Warner-Lambert Company, and has no other business
    relationship with the Company.

(4) Of which, 1,337,298 shares are held beneficially by Mark Capital
    Corporation and 502,462 shares are held beneficially by the Kimberlin Family
    Partnership.  The General Partner of the Kimberlin Family Partnership is
    Kevin Kimberlin, the President and principal stockholder of Mark Capital
    Corporation. Mr. Kimberlin shares the power to vote and to direct the
    disposition of all shares held by Mark Capital Corporation.

(5) Includes 54,374 shares issuable upon currently exercisable options, but
    does not include 194,935 shares owned by Dr. Edelman's spouse, as to which
    he disclaims beneficial ownership.

(6) Consists of shares issuable upon exercise of currently exercisable options.

(7) Mr. Stout disclaims beneficial ownership of 400,534 shares, 302,289 shares
    and 136,870 shares owned as of August 31, 1994 by the Massachusetts
    Institute of Technology, the New England Medical Center Hospitals, Inc. and
    Wellesley College, respectively, the Institutions of which Mr. Stout serves
    as designee on the Company's Board of Directors.

(8) Includes options described in notes (2), (5) and (6) and options to 356,722
    shares held by an executive officer not named in Summary Compensation
    Table, but excludes 194,935 shares owned by Dr. Edelman's spouse.
                             _____________________________


Item 13.  Certain Relationships and Related Transactions 

          None.

                                   19

<PAGE>

                               PART IV

 Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.


          (a) and (d) Financial Statements and Schedules.
              See Index to Financial Statements on page F-1.

          (b) Reports on Form 8-K.
              None.

          (c) Exhibits.
              See Index to Exhibits on page E-1.
              Exhibits 10.2a, 10.3a and 10.9 relate to management
              compensatory agreements.

                                  20

<PAGE>

                              SIGNATURES





  Pursuant to the requirements of Section 13 or 15(d) of the Securities
 Exchange Act of 1934, the Registrant has duly caused this Annual Report on
 Form 10-K to be signed on its behalf by the undersigned, thereunto duly
 authorized, in the town of Pine Brook, State of New Jersey, on the 24th
 day of September, 1996.


                                                                       
                   CISTRON BIOTECHNOLOGY, INC.
	
                                                                         
                                                 By: /s/HENRY GRAUSZ, M.D.   
                                                 -------------------------
                                                     Henry Grausz, M.D.
                                                    Chairman of the Board
                                                  and Chief Executive Officer


 Pursuant to the requirements of the Securities Exchange Act of 1934, this
 report has been signed below by the following persons on behalf of the
 registrants and in the capacities and on the dates indicated.

								 	

 Signature                     Title                                 Date




/s/HENRY GRAUSZ, M.D.      Chairman of the Board and         September 24,1996
------------------------
Henry Grausz, M.D.         Chief Executive Officer

/s/ISIDORE S.EDELMANM M.D. Vice Chairman of the Board        September 24,1996
--------------------------
Isidore S. Edelman,M.D.

/s/BRUCE C. GALTON         President, Chief Operating and    September 24,1996 
--------------------------
Bruce C. Galton            Financial Officer and Director
                           (Principal Financial and
                            Accounting Officer)   

/s/THOMAS P. CARNEY,Ph.D.   Director                         September 24,1996
---------------------------
Thomas P. Carney, Ph.D.

/s/FRANK G. STOUT           Director                         September 24,1996
---------------------------
Frank G. Stout



                                   21

<PAGE>






                         INDEX TO EXHIBITS

3.1  Registrant's Certificate  of  Incorporation...........................(1)
3.1a Registrant's Amendment to Certificate of Incorporation, dated July 9,
     1986..................................................................(1)
3.1b Registrant's Amendment to Certificates of Incorporation, dated August
     14, 1986............................................................. (1)
3.2  Registrant's Amended By-laws .........................................(1)
10.1 Settlement Agreement, dated June 30, 1991, among Registrant, E.I. du 
     Pont de Nemours and Company and The DuPont Merck Pharmaceutical Company
     ......................................................................(2)
10.2a Employment Agreement, dated April 30, 1994,  between Registrant and 
      Bruce C. Galton .....................................................(8)
10.3a Employment Agreement, dated April 30, 1994, between Registrant and 
      Richard S. Dondero ..................................................(8)
10.4  License Agreement, dated March 30, 1992, between Registrant and Genetic 
      Therapy, Inc. .......................................................(6)
10.5  Sponsored Research Agreement and License Agreement, effective as of 
      October 1, 1983 and December 1, 1983, respectively, each between 
      Registrant and the Institutions, named therein.......................(1)
10.5a Amendments to Sponsored Research Agreement and License Agreement, each 
      dated July 9, 1986...................................................(3)
10.5b Amendments to Sponsored Research Agreement and License Agreement, each 
      dated February 19, 1987..............................................(6)
10.5c Amendment to sponsored Research Agreement, dated May 6,1988..........(4)
10.6  License Agreement, dated September 15, 1988, between Registrant and 
      Rijksuniversiteit of Limburg (Holland)...............................(6)
10.6a License Agreement, dated September 15, 1993, between Registrant and 
      Rijksuniversiteit of Limburg (Holland)...............................(6)
10.8  Lease, dated September 4, 1984, between Registrant and Stanley 
      Karczynski...........................................................(1)
10.8a First Amendment to Lease, dated February 10, 1989, between Registrant 
      and Stanley Karczynski...............................................(6)
10.8b Second Amendment to Lease dated November 19, 1991, between Registrant 
      and Stanley Karczynski...............................................(6)
10.9  Registrant's 1985 Employee Stock Option Plan, as amended.............(5)
10.13 Settlement Agreement, dated May 17, 1993, between Registrant, Biotech 
      Australia Pty. Limited and the Institutions, named therein...........(7)
10.14 Sponsored R&D and Supply Agreement, dated June 30, 1993, between 
      Registrant and Genzyme Corporation...................................(7)
10.14aSupply Agreement, dated July 10, 1996, between Registrant and Genzyme 
      Corporation...........................................................40
10.15 License Agreement, dated March 21, 1995, between Registrant and Research 
      and Diagnostic Systems, Inc..........................................(9)
10.16 Research and Development Agreement, dated April 10, 1995, between 
      Registrant and Research and Diagnostics Systems, Inc................(10)
24.1  Consent of Deloitte & Touche LLP with respect to financial information 
      contained in the Registrant's Registration Statement of Form S-8
      (File No. 33-13704)..................................................47
27    Financial Data Schedule..............................................48
 
                                         E-1

<PAGE>

(1) Filed as the same numbered Exhibit to the Registrant's Registration
    Statement on Form S-1 (File No. 33-5824) (the "Form S-1") and
    incorporated herein by reference thereto.
(2) Filed as Exhibit 10.2a to the Registrant's Annual Report on Form 10-K for
    the year ended June 30, 1991 (the "1991 Form 10-K") and incorporated
    herein by reference thereto.
(3) Filed as Exhibit 10.12 to the Registrant's Form S-1 and incorporated
    herein by reference thereto.
(4) Filed as Exhibit 28.1 to the Registrant's Report on Form 10-Q for the
    quarter ended March 31, 1988 and incorporated herein by reference thereto.
(5) Filed as Exhibit 4 to the Registrant's Registration Statement on Form S-8
    (File No. 33-13704) and incorporated herein by reference thereto.
(6) Filed as the same numbered Exhibit to the Registrant's 1992 Form 10-K and 
    incorporated herein by reference thereto.
(7) Filed as the same numbered Exhibit to Registrant's 1993 Form 10-K and
    incorporated herein by reference thereto.
(8) Filed as the same numbered Exhibit to Registrant's 1994 Form 10-K and
    incorporated herein by reference thereto.
(9) Filed as Exhibit 10.14 to the Registrant's Report on Form 10-Q for the
    quarter ended March 31, 1995 and incorporated herein by reference thereto.
(10) Filed as Exhibit 10.15 to the Registrant's Report on Form 10-Q for the
     quarter ended March 31, 1995 and incorporated herein by reference
     thereto.
                                          E-2
<PAGE>


                       Cistron Biotechnology, Inc.

                      (A Development Stage Company)


               Index to Financial Statements and Schedules



                Years ended June 30, 1994, 1995 and 1996











  Financial Statements:


  Independent Auditors' Report                                 F-2
  
  Balance Sheets                                               F-3
    
  Statements of Operations                                     F-4
  
  Statements of Shareholders' Equity/(Deficiency)              F-5
  
  Statements of Cash Flows                                     F-7
  
  Notes to Financial Statements                                F-9










                                * * * *









                                   F-1

<PAGE>

 INDEPENDENT AUDITORS' REPORT




 To The Board of Directors and Shareholders
 Cistron Biotechnology, Inc.
 Pine Brook,  New Jersey




  We have audited the accompanying balance sheets of Cistron Biotechnology,
 Inc. (a development stage company) as of June 30, 1996 and 1995, and the
 related statements of operations, stockholders' equity (deficiency)
 and cash flows for each of the three years in the period ended June 30, 1996,
 and for the period from February 2, 1982 (date of commencement of
 operations) to June 30, 1996.  These financial statements are the 
 responsibility of the Company's management.  Our responsibility is to express
 an opinion on these financial statements based on our audits.

  We conducted our audits in accordance with generally accepted auditing
 standards.  Those standards require that we plan and perform the audit to
 obtain reasonable assurance about whether the financial statements are free
 of material misstatement.  An audit includes examining on a test basis, 
 evidence supporting the amounts and disclosures in the financial statements.
 An audit also includes assessing the accounting principles used and 
 significant estimates made by management, as well as evaluating the overall
 financial statement presentation.  We believe that our audits provide a
 reasonable basis for our opinion.  

  In our opinion, such financial statements present fairly in all material
 respects, the financial position of the Company as of June 30, 1996 and
 1995, and the results of its operations and its cash flows for each of the
 three years in the period ended June 30, 1996, and for the period from
 February 2, 1982 (date of commencement of operations) to June 30, 1996, in
 conformity with generally accepted accounting principles.

  The Company is in the development stage as of June 30, 1996.  As discussed
 in Note 1 to the financial statements, the Company has not generated any
 significant revenues and must obtain approval of its products for sale or
 license to the diagnostic and/or therapeutic market in accordance with its
 business plan.

  The accompanying financial statments have been prepared assuming that the
 Company will continue as a going concern. As discussed in Note 1 to the
 financial statements the Company sustained recurring losses from operations,
 negative cash flows, and stockholders' capital deficiency. These matters raise
 substantial doubt about the Company's ability to continue as a going concern.
 Management's plans in regard to these matters are also described in Note 1.
 The financial statements do not include any adjustments that might result from
 the outcome of this uncertainty.



 /Deloitte & Touche LLP/
  Parsippany, New Jersey
  September 12, 1996







                                    F-2




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